Economist/Banker

2015-03-12T00:46:00.001-07:00

WHY INFLATION DRIVEN GDP GROWTH IS POSITIVE FOR MALAYSIA? ---By Shan Saeed I hope after Govorner Dr. Zeti Aziz conference, economic experts in malaysia can understand what she actually means that Ringitt is undervalued and how exporters can benefit from depreciating ringitt. I admire and respect the woman for her economic thoughts. She is very suave and smart woman. I am still relatively bullish on the Malaysian economy based on my solid market based intelligence gathering in the last 3 years. Some experts might have different economic thoughts based on their financial analysis. The policy levers especially monetary and fiscal policies are working well for the country with confidence as the key driver which is keeping the GDP growth 6% on the upsurge. Inflation driven growth is the new agenda for the policy / decision makers to keep the growth trajectory moving as we navigate through treacherous times. All credit goes to Governor Dr Zeti Aziz for playing the monetary policy in a strategic manner despite exogenous factors dragging various global economies down in the modern day of financial repression. If I were to analyze few key variables of the Balance Sheet of the Malaysian Government, here would be the key statistics on Dec 31, 2014 to share with my valued readers. 1. GDP growth: 6% 2. Inflation rate: 2.7% 3. Foreign Reserves: $116 billion 4. Fiscal Deficit: 3.5% 5. Debt to GDP ratio 55% 6. Economic Confidence: High 7. Current account: Surplus 8. Domestic demand: Strong 9. Unemployment rate 3% 10. Political Stability Yes 11. Financial Stability Yes 12. Investment climate: Favorable Sources: Bank Negara Malaysia, Independent Sources, Market Intelligence, Economist, World Bank, IMF, ADB, Financial Times. There is a strong correlation of economic confidence in those countries whereby GDP growth is higher than fiscal deficit or inflation rate, economies are witnessing growth trajectory in a structured manner. Looking at the economic performance of the Malaysian government in the current environment, it clearly illustrates why her economic growth is in a healthy mode and economic confidence is running high because GDP rate 6% is higher than fiscal deficit 3.5% / inflation rate 2.7% of the Malaysian government. Government looks totally committed in providing level playing field to all players in the market, demonstrating fiscal brinkmanship in reducing the deficit, controlling the Debt to GDP ratio well under 60% and above all keeping the economic confidence in the economy which is currently lacking in many EU-28 countries and even Japan. REAL ESTATE MARKET IN MALAYSIA----The winning horse Investors are still interested in buying properties around KL and Penang because of few good reasons 1. Economic confidence 2. Political stability 3. Financial stability 4. Life-style stability 5. Infra-structure stability 6. Freehold status 7. International significance These above mentioned reasons make it fairly attractive for foreigners and local to take position in REAL ESTATE MARKET to derive long run benefits. GST come or go, smart investors will continue to buy property for WEALTH PROTECTION in these turbulent times.

THE RISE OF NEW GLOBAL CURRENCY-----CHINESE YUAN, By Shan Saeed

2014-04-28T22:16:00.001-07:00

THE RISE OF CHINESE CURRENCY YUAN, By Shan Saeed, I love this news story that went unreported in WSJ, FT, NYT or Forbes. Latest sign of a move away from the dollar as a reserve currency is that China and South Korea recently came to an agreement that allows firms to settle deals in either the Chinese yuan or the South Korea won instead of the U.S. dollar. The agreement is part of a push among emerging countries to internationalize local currencies after the global financial crisis. According to Bloomberg.: "Fed up with what it sees as Washington's malign neglect of the dollar, China is busily promoting the cross-border use of its own currency, the yuan. Chinese leadership will remove capital controls the amount she will achieve Gold target of 10,000 MT in the next 2 years. Yuan is the only currency that appreciated 35% against USD since 2005. CHINA's STRATEGIC GAME PLAN IN ACTION---Follow the Chinese leadership to meet your financial goals Displacing the dollar will reduce volatility in oil and commodity prices and belatedly erode the ‘exorbitant privilege' the United States enjoys as the issuer of the reserve currency at the heart of a post-war international financial architecture it now sees as hopelessly outmoded.In fact, in the past couple years, China has signed international currency agreements with Germany, Brazil, Russia, Australia, Japan, Chile, the United Arab Emirates, Pakistan, Saudi Arabia, Kuwait, Peru, India and South Africa. Japan and India also recently signed a currency deal linking their currencies closer together, and lessening their dependency on U.S. dollars. These agreements are part of a trend that started a few years ago, when a group of the world's most powerful countries, including China, Japan, Russia, and France, got together for a secret meeting – WITHOUT the United States being present or even knowing about the meeting. According to Sam Zell, the 60th richest man in America according to Forbes Magazine, said on a rare interview with CNBC. He said: "My single biggest financial concern is the loss of the dollar as the reserve currency. I can't imagine anything more disastrous to our country. I'm hoping against hope that ain't gonna happen, but you're already seeing things in the markets that are suggesting that confidence in the dollar is waning. I think you could see a 25% reduction in the standard of living in this country if the U.S. dollar was no longer the world's reserve currency. That's how valuable it is." He is my fellow alumni from Uni of Chicago, Booth School of Business, USA. One of the top most respected Middle East reporters Robert Fisk reported on this event in Britain's newspaper, The Independent. Here's what he wrote: "In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealing for oil, moving instead to a basket of currencies including the Japanese Yen, Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar." I recently spoke to a Chinese banker who said: These plans will change the face of international financial transactions. America must be very worried. You will know how worried by the thunder of denials this news will generate. HAPPY INVESTING IN CHINESE YUAN, THE NEW GLOBAL CURRENCY.

INVESTORS WILL TAKE POSITION IN GOLD AGAIN IN 2014------By Shan Saeed

2014-03-03T01:09:00.001-08:00

GOLD IS A SAFE HEAVEN IN TIMES OF UNCERTAINTY------By Shan Saeed Physical Gold and Silver are your WEALTH INSURANCE. Major banks, hedge funds, big investors were bearish on Gold in 2014. I am still bullish on Gold and Silver. The only real assets with solid fundamentals and favorable macro environment. Gold will be trading in the range of $1450 to $1500/oz in the next 3/4 months. Investors are snapping up gold now. Ukraine /Russia crisis is an ideal setting for Gold and Silver upsurge. Oil prices might go out of the roof and touch $120/barrel. Investors are seeking a safe haven amid turmoil in emerging markets and signs of weakness in the U.S. economy. US economy will continue to see slow growth and fear among consumers going forward. Europe will achieve sub-par growth and Japan would try to boost the economy by monetary easing or balance sheet expansion. Gold has soared 12 percent to-date, after plunging 28 percent in 2013, its worst performance in 32 years. A reset is needed to happen in gold and silver. Last week, SPDR Gold Shares, the biggest gold exchange-traded fund, saw a net inflow for the first time since December 2012. SPDR Gold Shares last month reported and suggests that new clients are holding gold for the long run. Meanwhile, trouble continues to percolate in emerging markets, with political unrest in Ukraine and Venezuela. And U.S. fourth-quarter GDP growth was revised downward Friday. Gold has been playing its role as a great diversifier. This will continue for the next 5 years. This rally is for real and investors will take refuge in Gold and Silver. Gold is on track for its biggest monthly gain since July 2013. In general whether it's Ukraine, the U.S. economic data or worries about China, there seem to be a lot more reasons than there were six weeks ago for looking at gold. Take position in Gold, Silver and Oil for solid profits and healthy returns. Disclaimer: This is just my strategic thoughts and global view. All financial transactions carry a RISK.

GOLD WILL RALLY SOON------------By Shan Saeed

2013-07-22T23:17:00.001-07:00

GOLD WILL RALLY SOON------------By Shan Saeed Gold have finally emerged from the losing break and showing its head above $1300/oz. Last week, I told my friend Rola Ezzedine that Gold was going to rally due to an oversold position and a fat doji formation on the chart...I got it right. A doji is a candlestick formation that looks like a cross. If it shows up at the end of a long up (or down) trend, it is a turnaround signal. It is the visual representation of the bear and bulls fighting it out gladiator style... When they fight themselves to a standstill, the momentum is exhausted and the change in direction is almost certain. Gold in a Key Reversal Trend In the last week gold jumped from $1270 to to $1293. The next trigger will be $1,300. If the yellow metal can break $1,300 an ounce, look for a move up to $1,450... If not, look for it to go back and test $1,200 again. Above is how it looks on the Gold ETF GLD. The probability is that this recent rally is a dead cat bounce. So if you're trading options, it is time to sell and buy back when it retests the low. You can trade this chart, but don't count on it going straight up from here; “V”-shaped recoveries are rare. My prediction is consolidation throughout the summer. Long-Term Bullish for GOLD. DON’T SELL YOUR GOLD: Even though Rogers has evidence that gold could drop down to $900 an ounce, he says to hang on to it . . . and start buying more. Soon, he says, it will start an unprecedented move to $2,000 an ounce. In the long term, the prospects for gold look good simply because the prospects for currency look poor. Gold climbed last week after Helicopter Ben Bernanke said he was just kidding about “tapering” his bond buying. What he meant to say was that he was going to keep printing money as long as Wall Street and Washington wanted him to. And they do. Bernanke's proposal to reduce spending $85 billion a month on debt was met with such abhorrence and fear-induced selling that he quickly recanted. And the market rejoiced. I don't know what I'm doing!” Ben exclaimed. “There is no exit plan! “Alright!” cheered the bankers. Gold loves money created out of thin air because gold bugs still believe you can't just print money forever without consequences, that you can't get something for nothing; that there is no free lunch. We all know that money printing destroys money. History is replete with examples: Zimbabwe, Argentina, the United Kingdom. But who knows, maybe the world GDP can grow its way out this hole like the Keynesians talk about... Maybe it can't. No one knows for sure. But buying gold after a 40% sell-off seems like a wise idea either way. Buy low, sell high is what Grandma used to mumble. ________________________________________ Gold Up Again The numbers tell us that the world isn't growing very fast...The consumer has traditionally been two-thirds of the economy. The economy can't expand unless people buy stuff. People are up to their eyebrows in debt, and two-thirds of the new jobs are all part time positions. Gold loved the bad retail number globally and opened up again yesterday. Bad news is good. Poor retail sales mean Bernanke can keep printing, which drives down the dollar and pushes the malleable metal to a three-week high. Stocks go up and stocks go down, but the dollar has been falling since they invented the Federal Reserve in 1913... The 1913 dollar is now worth four cents. Gold was worth $20.67 an ounce a hundred years ago. It is worth $1,293 now. Disclaimer: This is just s research and not an investment advice. All financial transactions carry a RISK.

SAUDI ARABIA IS RUNNING OUT OF OIL-------By Shan Saeed

2013-05-20T04:35:00.002-07:00

Saudi Arabia is running out of oil------By Shan Saeed, Riyadh's Hidden Energy Crisis: While the world wasn't watching, the Saudis have been covering up a huge secret...A secret so big and game-changing, they've gone to great lengths to keep it hidden. A secret that, when the rest of the world wakes up to its implications, will send massive ripples through the energy markets. For those bold enough to see the truth and act quickly, the opportunity it presents is immense. Saudi Arabia is running out of oil. You didn't read that wrong. It's not a joke, nor is it just my opinion. And I'm most certainly not crazy. It's a stone-cold fact. The report I'm talking about is from the world-renowned think tank Chatham House. I'm sure you didn't see anything in the media touting this report or anything about the Saudis running out of oil on the evening news.Don't take my word for it... Here's an excerpt of the report from Chatham House: " Saudi Arabia's energy consumption pattern is unsustainable...That means on a 'business as usual' trajectory, it would become a net oil importer in 2038." That's right. If the Saudis continue at their current rate of oil consumption, they will become net oil importers even sooner than they want to admit. And truthfully, I think we're looking at much sooner than 2030. Because it seems Saudi Arabia has developed quite a penchant for wasting the one thing the world covets most... How much do they waste? To be blunt, too much. We're talking about nearly three MILLION barrels PER DAY. That's a staggering number, for sure. But get this: That's more than 25% of their oil production. According to the International Energy Agency, the Saudis consume more oil than Germany, a country with 3x the population. Talk about waste! The Saudis use as much oil per person as people in USA do and it has a far higher car-to-person ratio. This is a great opportunity for smart and savvy investors to take position in the global energy market. USA will dictate the global energy market by producing more and more Oil and Natural gas and becoming the net exporter globally. Disclaimer: This is just a research piece and financial market insight. All financial transactions carry a RISK

Shan Saeed on Al Jazeera TV on Feb 6, 2013 with Sami Zaidan

2013-02-08T06:29:00.000-08:00

ECONOMIC OUTLOOK FOR UNITED KINGDOM---By Shan Saeed

2013-02-01T06:43:00.002-08:00

ECONOMIC OUTLOOK FOR UNITED KINGDOM---By Shan Saeed Bank of England--Main task The new Governor of the Bank will have unprecedented powers to direct and regulate the UK banking and monetary system. He will need to work closely with the government of the day, so that Bank policy is complementary to fiscal policy and to the government’s legislative priorities. He will need to shape and lead the team at the Bank to use the new powers wisely, in the national interest. He will need to decide what to do with the large QE program he inherits, and what to do about the malfunctioning banks still with large state shareholdings. Let see and hope the new Governor is someone with good judgement about the state of the UK economy and its position in the world. I suggest there are two crucial tests of an individual’s past judgement. Did they realise the Exchange Rate Mechanism would be damaging to the UK? Did they understand how tying the pound to the DM in the early days would lead to faster inflation, and then the opposite once the inflationary effects undermined confidence in sterling? And did they read the 2005-10 cycle correctly? Did they understand that credit and money was too loose in the period up to 2007, and did they understand that this was corrected too abruptly in 2007-8, jeopardising the liquidity and even the solvency of some banks? Did Mr Carney see the problems with ERM membership prior to the entry, and the dangers of DM shadowing. Did he think the previous policy of money targeting , as the German Central Bank did, was a safer way of controlling events? Did he argue for tighter monetary control with higher interest rates in the boom phase prior to 2007, and argue for a more rapid injection of liquidity in 2007-8? This approach should be allied to controlled administration for any bank that could not meet its obligations, is something that has now been adopted as policy for future crises. Clearly when he took over as Canada’s Central Bank Governor he did understand the need for easier money. Lets see what he has studied the unhappy monetary history of the UK and formed the right conclusions from the torrid and bumpy ride the Establishment gives UK, both through its espousal of the ERM and its encouragement of Boom/Bust in the noughties. Today the priority is to assist the government in its wish to promote faster growth. This in turn will help bring the budget deficit down. The Bank needs to relax immediate controls over bank capital and cash, whilst maintaining a more prudent level than in the period prior to 2007 to assist the recovery. There will be time to demand higher levels of cash and capital once the recovery is under way and as banks generate better profits. The Bank also needs to ensure its current policies of QE and Funding for lending are well designed to maximise the beneficial impact of these extraordinary interventions. The US and the UK – different approaches to fiscal stimulus RBS published some interesting figures on the US. Over the last twelve quarters US public spending has fallen in ten of them, making a total decline of 6% over the period. Despite or because of this tightening of the spending stance, the US economy has grown overall by 4.8%. In the UK the last eleven quarters (since the Coalition arrived) have seen a significant rise in real public spending but only a 0.4% increase in output. In most quarters in the UK the public sector has made a positive contribution to output growth. Those who argue the US has grown faster because Mr Obama has avoided austerity whilst the Coalition has gone for it should look again at the figures. Mr Obama has not increased Federal spending by sufficient to offset state spending declines, so the US has been much tougher on public spending overall than has the UK. Why haven’t the US cuts in spending led to economic decline, as some argue here. Some points to ponder upon.

Shan Saeed comments on Al Jazeera TV on Jan 9, 2013

2013-01-14T12:01:00.002-08:00

US DOLLAR DETHRONED, CHINA'S NEW GAME PLAN---By Shan Saeed

2012-12-22T06:22:00.000-08:00

U.S. Dollar Dethroned. China new game plan-----By Shan Saeed

Welcome to China. Enter the new great country called China. China holds more U.S. government debt than any other country in the world. They currently hold more than one trillion U.S. dollars. Beginning in 2007, China began to get worried.

What if the U.S. collapsed? What if dollars suddenly became worthless? Could they really afford to hold onto $1 trillion forever? If China was worried in 2007, they were downright panicky in late 2008, as it seemed a total financial collapse was imminent in America.

China held massive amounts of U.S. dollars, but they couldn’t sell them without causing a huge drop in the dollar’s value. What’s more, China still needed dollars to buy oil. Yet, China understood it was extremely risky to continue buying and holding dollars, so they began to diversify by buying up massive amounts of GOLD and other precious metals like SILVER. China bought 520 tons of gold in 2011—twice the amount they bought in 2010.

And their gold-buying binge doesn’t seem to be letting up any time soon. In the first six months of 2012, they’ve already bought 383 tons of gold. At that pace, they’d acquire 766 tons of gold by the end of 2012. More importantly, China is following in Iraq’s footsteps. Just as Iraq had planned to trade oil in euros, China began to explore the idea of bypassing the dollar by trading oil directly with oil-producing countries.

You see, while the U.S. was willing to attack a small country like Iraq, I don’t see any way that the U.S. would attack a country as large and powerful as China, especially when you consider that China produces most of the consumer products purchased in the U.S. However, USA is trying to play games in South China Sea through Australia, Japan and Philippines. USA has stationed 2500 troops in Australia and Naval ships in Philippines. I have shared this with Pk Biz, Philip Sigglekow, Rola Ezzedine,Umaer Abid, Kate Otto Swann and Shaun Rein.

CHINA AND RUSSIA'S NEW GAME PLAN FOR THE MARKET

Let me be clear: China’s plans are no longer just plans. They are now reality. As of October 2012, China and Russia reached an agreement and formally announced that they would begin trading oil directly. Russia will provide oil to China, and China will pay for the oil—not with U.S. dollars—but with yuan. By trading directly with oil-producing countries, China would then be able to off-load dollars before they became worthless—and still have access to as much oil as they want.

While this announcement has not been widely publicized or came in the main stream newspapers LIKE Wall Street Paper, Financial Times, New York times or Washington post, it spells the end of the petrodollar. In other words, the U.S. dollar is the world’s reserve currency in name only for the next 25 to 30 years . Now that China and Russia have abandoned the petrodollar, other countries like Iran, India, Argentina, Jordan, South Korea, Venezuela, Luxembourg and Brazil are expected to soon follow China’s lead. And there is nothing the United States can do to stop it!... But it will get pretty severe going forward.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK.

PAKISTAN ECONOMIC OUTLOOK FOR 2013----By Shan Saeed

2012-12-18T00:57:00.001-08:00

PAKISTAN ECONOMIC OUTLOOK FOR 2013----By Shan Saeed

ECONOMY

Pakistan economy will continue to remain in un-chattered waters due to political uncertainty, militancy, growing fear of unpredictable policies of the PPP government.

GDP will stand at 3.2% by June 30, 2013.

Fiscal deficit will remain 6.5% of GDP.

Inflation will hover around 10% .

Foreign exchange reserves will be $14 billion,

Remittance will kiss $ 13 billion

COMMODITIES

Due to global upsurge in demand of commodities, Pakistan being the agriculture based economy will benefit from the international commodities boom. SUGAR, RICE, COTTON , WHEAT will benefit from rise in prices

CURRENCY

Due to election year,political and economic turmoil will keep the Pak Rs under pressure against USD. However, if Pk Rs does appreciate against USD it would be due to QE4 launched by the FED to keep the USD lower globally. Pak RS will stand at 98.5 against USD on June 30, 2013

PAK RUPEES OUTLOOK FOR 2013

There are 7 variable making an impact on Pak Rupees in 2013

A. ELECTION YEAR

This year heralds an economic change whereby government will hold elections under the supervision of army and independent Election Commission of Pakistan. Most parties will get their funding from abroad and lobbies working locally. This election will be the bloodiest elections in the history of Pakistan. So most of the spending will happen in Pak Rupees and supply of PKR will be more in the market.DEMAND SIDE FOR PAK RUPEES

B. POLITICAL TURMOIL

This economy is going through lot of hiccups and instability, fear and uncertainty, this will make entrepreneurs and people think to keep their savings in DOLLAR OR Canadian Dollar OR Gold. Political instability will have NEGATIVE impact on Pak rupees thus keeping money in FOREIGN CURRENCY attractive and rationale. DEMAND SIDE FOR FOREIGN CURRENCY

C. REMITTANCES

The global economy is getting messier as Europe is deep in recession and US is struggling to come to terms with fiscal cliff i.e. raising taxes and reducing spending and deliberation of Debt ceiling continues. Many Pakistanis are sending their saving back home to avoid losing their funds in European and American banks. Swiss secrecy laws are outdated and authorities are sharing data with various countries as per their jurisdiction requirement. Most Pakistani will be routing their funds back to Pakistan for other destinations including Dubai, Kuala Lumpur, Singapore, Hong Kong, London and Luxembourg. DEMAND SIDE FOR PAK RUPEES

D. COALITION SUPPORT FUND

Pakistan is expected to get some inflows from the War of Terror support money. This will increase the Dollar inflow in the country. $700 million^ was expected. DEMAND SIDE FOR PAK RUPEES

E. IMF DEBT PAYMENT

Pakistan need to make debt payment during the first quarter of 2013. This will put little pressure on PAK rupees since Dollar outflow will happen to meet the debt payment requirement. More than $800 million^ to be paid. DEMAND SIDE FOR FOREIGN CURRENCY

F. OIL PAYMENT

Pakistan imports huge quantity of oil to meet her domestic requirement. OIL payment needs to be made to keep the oil supplies running to meet the domestic demand. DEMAND SIDE FOR FOREIGN CURRENCY

G. REGIONS IMPACT ON THE PAKISTAN EXPORT

Since our neighboring country India is witnessing a slower growth, she will continue to keep her currency and interest rates low in line with international STRUCTURED DEPRECIATION of currencies. Many countries globally are keeping low interest rates to boost domestic economy, increase exports, keep the growth momentum going in order to bring structural changes to move on the growth trajectory with sustainable economic returns for their people. DEMAND SIDE FOR PAK RUPEES.

NUTSHELL

In view of the above 7 variables, Pak Rupees will remain choppy in line with the strategies adopted by various countries of STRUCTURED DEPRECIATION to boost exports in the short run to compete with the region. SBP will supply more Dollars to keep the Pak Rupees away from a free fall. There could be capital controls imposed if the economy deteriorates if election results are not fair. Strikes, social unrest and anarchy situation cant be ruled out. CAUTION IS THE WORD FOR INVESTORS

CHINA STRATEGIC ENERGY GAME PLAN---By Shan Saeed

2012-12-04T00:00:00.001-08:00

CHINA'S STRATEGIC ENERGY GAME PLAN----By Shan Saeed

A REAL ALL OF THE ABOVE ENERGY PLAN-----INSIDE STORY.

China accounts for more than 20% of the world's global energy demand. As it is known, the Middle Kingdom surpassed the U.S. to become the world's biggest energy consumer in 2009. Today the race is still neck and neck. And if the market has grave concerns over slower growth in China, somebody might want to tell China that..China's growth is the main reason the country is so interested in securing its future energy supplies. Luckily, China's real targets are much closer to home. It was seen how quickly they were catching up to U.S. oil consumption.

CHINA TO DUMB OPEC
Do you think China is dumb enough to trust in OPEC to keep them well supplied? Can Chinese really expect them to continue getting gouged by Russian fuel exports? The answer to both these questions is a resounding 'No.'
China's Energy Race Heats Up: To say that China is buying up the future energy supplies would be a gross understatement. Over the last few years, I have seen this time and again through their strong merger and acquisition activities. Things are heating up with two of China's latest deals: CNOOC's $15.1 billion buyout of Nexen and Sinopec shelling out $1.5 billion for Talisman Energy's stake in the North Sea. Hey, if you can't beat 'em, just throw a lot of money around. What's interesting here isn't so much the amount of cash that China spent, but rather where they're spending it... Not only are they dishing out billions of dollars in the North American shale boom — but they're more than willing to go anywhere for these resources. In one fell swoop, CNOOC picked up operations in the North Sea (Nexen was one of the leading producers in the UK North Sea), the Canadian oil sands, and the rich shale gas resources in British Columbia. I have known for a long time this deal was in the making. China's newly acquired operations in British Columbia's Horn River Basin is a precursor for the LNG exports that will soon be sent across the Pacific. So, what's next on China's agenda? China will secure South China Sea for gas discovery.

OIL OFF THE RADAR.
Here's a little-known fact about these buyouts: Sometimes it's not just the new oil fields the buyers are after. Truth is the Chinese are also benefiting by gaining access to the technology being used to reach these new oil resources. Take their interest in the various U.S. shale plays, for instance. The real prize isn't production, but rather learning how to extract the oil and gas from the shale formations.
It is no coincidence the Chinese are spending billions of dollars here while trillions of cubic feet of natural gas lie trapped in Asian soil. The next leg of this energy race may not come from new, huge oil field discoveries — but rather from pumping oil it is already known to be there. Don't forget that conventional drilling methods can only produce a small percentage of the total resource. (In the United States alone, there's an estimated 430 billion barrels that are still obtainable.)

CHINA IS HUNGRY FOR SHALE GAS
China's huge thirst for shale gas, a new way to transport gas. Why the U.S. will remain the top spot for shale…China's thirst for natural gas around the world continues unabated. As I have shared before… the U.S. is producing incredible volumes of natural gas… Once she starts exporting her massive new supplies, the market for natural gas will become a global one – with consistent global prices – just like the oil market. And it looks like China will become one of the largest customers. China's liquefied natural gas (LNG) imports could make up 35% of its needs by 2015.

According to contracts already in place, China could purchase as much as 93 billion cubic meters (bcm) of natural gas in 2015. China's economic planning agency, the National Development and Reform Commission (NDRC), estimates the country's domestic production will equal 176 bcm by the same year. [That number is likely high, more on than reported). The NDRC says consumption will increase 20 bcm every year to 230 bcm by 2015.

Natural gas represents only 4.6% of China's current energy consumption. That is far below the global average of 24%. China's government has pledged to increase the natural gas share to 10% by the year 2020. Through the end of Mid November [the most recent available figures]… China had spent $6.9 billion on gas supplies via pipeline from Turkmenistan and Uzbekistan. It spent another $6.6 billion on LNG shipments – the majority of which arrives from Qatar and Australia.

And a report from petroleum giant BP estimates China accounted for around 22% of Asia-Pacific gas consumption and about 4% of global demand. China's demand for natural gas will grow to massive proportions over the coming decades. And it's not the only Asian giant with a thirst for gas… India is the second-most populous country on the planet. Today, gas only makes up 7% of its energy consumption. (Again, the global average is 24%.) And India only produces about one-third of what it consumes.

The biggest boon for China will be the technology to produce the billions of barrels that are currently unattainable using today's techniques...Just imagine what will happen when China catches wind of this technology and starts digging around in its deep pockets of Asia, East Africa and USA. Happy investing with Chinese oil companies. I am bullish on China's energy needs.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry risk.

HOW TO NAVIGATE THROUGH POLITICIZED ECONOMY------By Shan Saeed

2012-12-02T00:23:00.002-08:00

HOW TO NAVIGATE THROUGH POLITICIZED ECONOMY------> By Shan Saeed,

BACKGROUND
I am writing from an american perspective that holds water in the international economy. It's not likely to happen until US reach much higher levels of inflation and she has something approaching financial repression – but that's exactly where the direction is pointing towards. The mania is likely to be fear-driven much more than greed-driven. Fear is a depreciating asset that hurts the economy badly. Gold is still in the climbing-the-wall-of-worry stage. Mania is still in the future. It's going to happen. I feel confident of that. There's going to be a rush to Gold/Silver. The economies need to learn how to survive and profit in a market bogged down by crippling government regulations, billion-dollar bailouts, excessive money printing, and cronyism; that's how the markets are manipulated at present.

INVESTOR VS WEALTH

But to be frank, it's very hard to be an investor in a highly politicized macro-environment. Investors need to look for real, productive wealth and consistent growth. Speculators, on the other hand, try to capitalize on the chaos that is caused by the myriad of destructive government regulations, taxes, and, of course, currency inflation. That's why I look at all markets, in all countries. But right now there are very few bargains. At some point, for instance, real estate is going to be of interest again. Not right now because governments everywhere are going to raise taxes on it. I believe investors should re-position their portfolio audit for wealth preservation. REAL ASSETS ARE GOLD, SILVER, OIL, LITHIUM, NATURAL GAS, CHINESE YUAN, SHALE GAS, TECHNOLOGY, BIOTECH, HEALTH CARE. I've always been kind of a boy scientist; technology interests me from an intellectual, as well as a financial, point of view. Technology is the real mainspring of human progress. No question about that...I read science magazines sometimes. There are more scientists and engineers alive today than in all the history of the world put together. Hopefully, with the continued blossoming of India and China – where students are generally going into science and engineering as opposed to things like gender studies, political science, and English literature, which students idiotically are doing in the West – there will be even more scientists and engineers 20 years from now. What areas are they going into? Nanotechnology, microbiology, robotics, Stem Cells, Tissue Culture – these things will blossom the way computers have over the last few decades.

MONEY PRINTING OUT OF THIN AIR

Its at the end of the story, not the beginning. More QE – I prefer not to call it that because it's really just printing money. I dont prefer euphemisms, words that are intended to make something sound better than it really is. Euphemisms, like exaggerations, are the realm of politicians and comedians. Anyway, the next round of money printing is going to result in radical and rapid retail price rises. There is no prosperity possible from this; rather the opposite. The Strategic Intent of QE is to discourage people from saving and encourage them to invest tin Stocks and Housing to create artificially high prices.
USA is a completely free market economy, prices would constantly be dropping. That's a good thing, because as prices constantly drop, it means money becomes more valuable. That induces people to save money. When people save, it means that they are producing more than they are consuming – that's a good thing. The way governments have it structured today, however, prices are always going up. That discourages people from saving because their money is constantly worth less, which encourages them to borrow. Inflation induces people to try to consume more than they produce, which is unsustainable over the long run.

2012-11-09T17:06:00.000-08:00

HARVARD ENDOWMENT FUND IS INVESTING IN AGRICULTURE------By Shan Saeed

STRATEGIC INSIGHT ABOUT THE ENDOWMENT WORKING

It would be surprising for many investors/readers/people in general. Harvard Management Company, the endowment fund of Harvard University is investing in farmland in New Zealand and other Real Estate projects globally. The total fund stands at $30 billion in which 10% portfolio has hit the Real Estate allocation in farmland. For some people Harvard University endowment works in secret environment and nobody knows the amount of investment it is making globally. Indeed, the entire crew at Harvard Management Company is routinely described as “secretive” and “tight-lipped.” It uses its status as a non-profit to keep its dealings as hush-hush as possible. Not even the students know how it operates or where it invests. But I got this information from my networking who is an alumni of Harvard Business School with strong inside connections. The school's student magazine, The Crimson, recently noted: “The managers operate behind a veil of secrecy under the pretext of losing competitive financial advantage.”

They certainly have an advantage. The fund has tens of billions more under management than the next closest fund over at Yale. It raises more money than any other non-profit in the United States. And it does so with zero fundraising expenses, so people are literally throwing money at it. Why not? It's returned an average 12.9% for the past two decades — far better than the average return of the Dow, S&P, or NASDAQ. However, Harvard Endowment lost the highest money among the major endowments during the financial market crisis running from 2007 to 2009. In the modern era of information, nothing stays secret for long. And if you look closely enough, over the past few years, some of this fund's secrets have started to be revealed...

Endowment has become Land Barons: New financial investors

HARVARD ENDOWMENT IS GOING TO NEW ZEALAND------INSIDE STORY

Harvard Management Company bought over 400,000 acres of the Kaingaroa forestry estate in New Zealand in 2003. Though the price wasn't disclosed, it's rumored to have sold for over $800 million. The question is why New Zealand. Since one of the alumnus who is a Kiwi and handles the funds has taken this position in the farmland in New Zealand. It helped that Andy Wiltshire was from New Zealand and had worked for the New Zealand Forest Service, which originally developed the Kaingaroa Plantation. He also went to school with the CEO of Kaingaroa Timberlands. After that investment, Harvard set its sights on Maniototo's Big Sky Dairy Farm, New Zealand's first “superfarm” with 6,000 cows on 4,000 acres. Financialization of commodities is happening now as big financial investors are taking position in this new asset class for wealth preservation and protection

RATE OF RETURN FOR ENDOWMENT

The bets have paid off nicely: Last year the portion of Harvard's portfolio that owns real estate posted an 18.8% return. Meanwhile, major market indices only posted a 5% return. Already this year, the fund has made a $4.0 million profit on the dairy farm alone. And the party is just getting started. Under Wiltshire's watch, forests, farms, and other real estate have grown to 10% of Harvard's portfolio, over $3 billion. Of course, making lucrative profits on billion-dollar investments isn't hard when you run in the same circles as Harvard alumni.

Many of the funds it manages come from wealthy graduates — a list that includes countless heads of state, congressmen, governors, Nobel and Pulitzer winners, and chief executives. Names like Obama, Romney, and Bernanke are all on the list.

IN THE HARVARD CLUB, OUT OF THE MARKET PLAYERS.

The Harvard Management Company ['management' and 'company' certainly aren't nonprofit words] is definitely “in the club.” It shares an office with the Federal Reserve Bank in Boston — the same building from which Jane Mendillo, head of the fund, gave a rare interview this year that offered some insight into their strategy...According to her, what is she looking for in property deals that produce something that the world is going to want more of, and the increase in the supply is difficult. Makes sense to many potential investors.

NETWORKING IS THE KEY IN THE END:

Harvard endowment fund people rub elbows gives it a distinct advantage. A lot of other investors don't have the expertise, don't have the team to go out and look at individual [real estate opportunities]...”Armed with that expertise, Harvard is the first endowment fund to directly buy real estate outside of the United States.

After it became one of the largest foreign landholders in New Zealand, it bought the majority of a company that's one of the largest landholders in Romania, with over 86,000 acres. Most recently, it bought three huge farms in Brazil. And here's the most important thing in all of this: These are investments you and I typically can't be a part of. These investments are for Ivy League people only. There's an Ivy League/Insider velvet rope. They aren't delivering monster returns by investing in publicly-traded land ETFs or real estate funds. They know that stuff's for us underlings. No, they buy the assets directly and manage them themselves...And this is their key to success: They play the insider game.

JIM ROGERS FAMOUS WORDS: FUND MANAGERS WOULD BE ACTING LIKE FARM MANAGERS

I had the pleasure of meeting Jim Rogers in Singapore and London who shared an investment advice for the next 5-10 years. Become a FARMER. I have penned down in one of my articles published in Investors Guide Magazine: http://investorguide360.com/aig/press-release/agriculture-is-the-best-investment-for-the-next-5-10-years-by-shan-saeed/

BLOOMBERG REPORTED

According to Bloomberg in September-2012, “It was Harvard’s early and enthusiastic embrace of alternative assets such as private equity and hedge funds that turned it into one of the top performers among endowments.” For too long, surefire investments like these have been off the table for everyday folks, reserved instead for Ivy League graduates and their cocktail party buddies. In recent years, there have been thrown some scraps as similar funds, like The Carlyle Group (NASDAQ: CG), Blackstone (NYSE: BX), and Kohlberg Kravis Roberts (NYSE: KKR), have taken a portion of their assets public.

But you don't get to profit directly from their deals. You still have to buy a stock and be at the whim of the market. While the heads of those firms and the people they make deals with have undoubtedly made billions this year, each of those stocks is only up between 5% and 15%.

The key to investing and profiting like these funds is not to own a piece of the fund — but to do the same kind of deals they do on your own. It's something I've spent a great deal of time researching lately. And I have found a way for people like us to do it without having been introduced to a senator or private equity billionaire...You see, there's an overlooked way you can make real estate investments just like these top-notch people do — without buying a single share of a public company. They are private deals with extraordinarily high returns and they are available to people now It may not get you in their club, but it will allow you to similarly profit without touching the actual stock market.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK

2012-11-06T18:29:00.002-08:00

CHINA IS THE GOLD POWER HOUSE----------By Shan Saeed

WEST VS EAST MIND SET. INDEPTH ANALYSIS

People are selling Gold and Silver in the west. In the east, investors and people are only buying Gold and Silver for wealth protection. Recent views and market indication, all reveal, investors have built their trust in Gold and Silver for wealth preservation and financial repression. China is the world’s largest gold producer. Align your strategy with Chinese yuan and PAGE i.e. Pan Asian Gold Exchange set up in June 2012 to make sustainable revenues going forward. Gold is a classy strategic asset for the rich people to stay rich. Gold is not for every investor.

GOLD PRODUCTION CHART OF 2011

Countries Gold production in Metric Tons

China 355

Australia 270

USA 237

Russia 200

South Africa 190

Peru 150

Canada 110

Indonesia 100

Ghana 100

Uzbekistan 90

Mexico 85

Papua New Guinea 70

Brazil 50

Chile 45

Mongolia 27

Sources : US Geological Data -2012,

World Gold Council,

IMF & Economist magazine

ROMANCE IN LUXEMBOURG

China has made her intentions very clear after she did not get a good response from London financial center to trade its transactions to choose Luxembourg as the next best destination for economic growth and emergence of the new Chinese era of financial innovation with European pioneers. According to Financial Times and Wall Street Journal newspapers, British regulators are not impressed by Chinese way of accounting and style of leadership in banking industry. So many big chinese financial institutions are relocating to a new found love in Luxembourg. Luxembourg would provide an ideal platform to execute Chinese presence and make China’s next financial hub globally. China will trade Gold, Oil, Silver, Copper, Agri –commodities and everything under the sun in the heart of Europe i.e. Luxembourg.

GOLD BULLION MARKET

And yet – according to some experts and reliable sources – gold bullion brokers have not seen any gold coming from China. In other words, China is producing more gold than any other country, but isn’t exporting any of it. In addition, china is importing huge quantity of Gold from Africa, Australia and Indonesia. As such, China is quietly becoming a gold superpower. China has an excellent habit of being quiet for several years at a time, and then announcing big increases in gold holdings. So quoting old numbers will only mean that one is caught flat-footed as to China’s current holdings. Happy investing in the Gold market.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK.

2012-11-01T19:25:00.000-07:00

BREAKTHROUGH IN OIL TECHNOLOGY IN USA

By Shan Saeed

NEW TECHNOLOGY: STRATEGIC INSIGHT ABOUT THE OIL INDUSTRY

Major breakthrough has happened in the oil industry. The main players are excited with this cutting edge technology which heralds a new boom in the energy market. With all the talk about the fracking boom under way in the Bakken, Marcellus, and Eagle Ford, investors have not forgotten there are other earth-shattering drilling projects and technologies going on around the world.

NEW TECHNOLOGY: WELL PAD DRILLING

I have been sharing with my investors and people who are following me about this new technology coming 7 months back that's emerging in America's oil and gas-rich shale formations...It's called "well pad drilling," or "multi-well pad drilling. Multi-well pad drilling allows companies to drill four to ten wells on a single pad site.

Historically only one well was drilled on a pad site, but with the revolution in horizontal drilling, companies can spread out their drill bits from a single pad site — almost like tentacles of an octopus. It's estimated that multi-well pad drilling can double the recovery rate of oil in North America.

As American companies perfect horizontal drilling and hydraulic fracturing with multi-well pad drilling, another technology is quickly emerging on the scene. And it's being utilized by "old oil" companies... In fact, this method — called "extended-reach drilling" — recently helped Exxon destroy a record for drilling depth. From the Russian island Sakhalin (just north of Japan), Exxon drilled onshore wells to a depth of 12,376 meters. That's over 7.5 miles down into the earth.

MEDIA HYPED THIS TECHNOLOGY AS WELL

According to some media reports: Exxon, the world's largest oil company, has completed drilling the world's deepest well in the Chayvo oil field on the Sakhalin Shelf in the Russian Far East. The shaft of well Z-44 is 12,376 meters deep — the equivalent of 15 times the height of the world's tallest skyscraper, the Burj Khalifa in Dubai. This is a remarkable achievement, which furthers the successful implementation of the successful project.

Six of the world's ten deepest wells, including Z-44, have been drilled in Russia for the Sakhalin-1 project using ExxonMobil drilling technology — the so-called "fast drill," Russia companies are also moving forward on this very quickly.

Chayvo is one of the three Sakhalin-1 fields and is located off the northeast coast of Sakhalin Island in eastern Russia. The Sakhalin-1 project is being developed by an international consortium led by ENL, which holds a 30% stake, the Japanese SODECO (30%), India's ONGC Videsh Ltd (20%), and subsidiaries of Russian oil major Rosneft, RN Astra (8.5%) and Sakhalinmorneftegaz Shelf (11.5%). The total project is estimated to cost $12-$17 billion. The fields of Chayvo, Odoptu, and Arkutun-Dagi are estimated to yield 2.3 billion barrels of oil and 17.1 trillion cubic feet of natural gas. The total resource value of these three fields is estimated to be above $350 billion. But this is just the beginning...

Extended-reach drilling allows companies to go after reserves that were previously too costly and out of the reach of traditional drilling methods [sound familiar?]. In other words, oil reserves that have been known about for decades — but weren't produced because of economic and technology constraints — are now open for business.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK

2012-10-30T19:49:00.000-07:00

Why I am bullish on Silver-------By Shan Saeed

Strategic insight from the market: Bullish on silver

Silver is called a poor man’s gold. Its so true and correct in the present circumstances when there are lot of headwinds in the global financial market. Silver is your wealth insurance and protection. Silver prices set to rise in 2013 thanks to China. Consumption in China, the world's second largest user, could climb to record 7,700 metric tonnes next year.

Investors in China are seeking out silver as an alternative value investment with the economy cooling for a seventh quarter. According to the research firm from Beijing Antaike notes that demand for silver is set to jump as much as 20% in 2013, with investors seeking to preserve their wealth and get insurance.

Consumption may climb to 7,700 metric tonnes after gaining 6-8% in 2012. Even for China, this would be a record level. China is the world's second biggest user of the metal.

Silver soared 15% and holdings by exchange traded funds jumped 6.5% in 2012. According to my research, the demand for silver is coming from jewellery and coins, which accounts for 33% of demand, and electrical appliances and solar panels.

A possible solar industry recovery is also expected to help the white metal's demand, with the government targeting 21 gigawatts of solar power installations by 2015. This compares to an installation of 2.6 gigawatts in 2011.

Moreover, statistics have also shown that overall jewellery sales in China rose 19.3% for the first eight months of 2012 as compared to last year. China's week-long National Day Holiday dubbed 'Golden Week' for domestic consumption lasted longer than usual this year, aiding sales.

Buyers mainly targeted gold and silver jewellery and clothes. Chinese consumers also became top luxury buyers resulting in 25% of global purchases. Shoppers from the Asian continent are also pushing global sales of luxury items to new heights, aiding the sector post its third straight year of strong growth since the global recession.

While Europeans contributed 24%, Americans 20% and Japanese 14% to global luxury sales, China's retail and catering industries saw a surge in sales during the eight-day national holiday, driven by demand for jewellery, clothes and home appliances. Combined sales of major retail enterprises in the country rose 15% to $126.3 billion during the September 30-October 7 holiday period as compared to the previous year's holiday period. Even as the Shanghai Composite Index heads for a third straight annual drop, silver has climbed to touch 592 million ounces as of mid-October-2012.

Bailouts will continue: Moral Hazard, High Economic Cost and Burning of Tax Payers money

For those whose bread is buttered by the status quo, falling money supply raises the never-ending cry for more stimulus. Again from the Telegraph:

"This credit contraction is what happened in Japan in the early 1990 and we have to be careful not get into deflationary spiral," said Prof. Richard Werner from Southampton University, a Japan expert. "They to need to launch true QE or an expansion in broad credit creation, and it cant be done easily."

The Bank of Japan threw money into the big black hole of stimulus for decades. The country now has pretty bridges that no one uses, and a debt-to-GDP ratio of over 239% — the highest in the known world. Japan is a country where the young can't find jobs, won't marry, and live with their parents well into their thirties. Real estate has yet to find a bottom and exports are shrinking. The Nikkei 225 is at 8,900 — well off its all-time highs of 39,000. Japan is a case study in what not to do.

SILVER IS THE BEST OPTION IN THESE UNCERTAIN FINANCIAL MARKETS.

Since that high-volume, blow-off top in the spring of 2011, silver has slowly but surely lost value. Few investors stayed out of silver until late August 2012 when it met its five-year up-trend line and broke out of its shorter-term down-trend range.

SILVER OUTLOOK FOR 2013: Positive

I expect the price of silver will bounce along that uptrend in a similar way to the action I saw from 2008 through 2010. Strategic investor’s goal should be to buy when it hits that line. Legendary asset manager Eric Sprott said this will be the "decade of silver" during which silver will hit $100. Silver is the next best investment after agriculture.

On June 18, 2012, the Federal Reserve (and the Office of the Comptroller of the Currency) quietly issued firm warnings to all banks to prepare to implement the new rules that make gold a legal currency — the same as cash.

I will tell you all about this "Bank of Bankers," a powerful cabal that presumes to dictate even to the U.S. Fed, and how their actions will lead to the most profitable gold opportunity of lifetime. There is no reason for Europeans to expand a business or buy a house when the European economy continues to fall apart and the political situation is in chaos. To own or build is to become a target in the next riot. You can't spend your way out of a debt crisis. The world has to eat the pain at some point. Sooner will be less painful than later. But, the powers that be won't listen to reason. There will be more stimulus, bailouts, and money printing. It will continue until it can no longer stay afloat. Buy silver on the dips.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK

2012-10-29T19:28:00.003-07:00

Upside of the energy market: Oil secret at north dakota's bakken pool belt By Shan Saeed

THE GOLD INVESTMENT IN OIL

I think most investors and people in general have probably heard plenty about North Dakota's Bakken oil pool. After all, investors are aware of this huge development taking place. My job as a financial market economist and wealth protection strategist is to share new investment opportunities that nobody is talking about. So my passion for people in my networking, I call them savvy and strategic gurus to remain ahead of the curve as investors, they need to recognize the incredible potential of this unique shale oil formation... and details on top Bakken oil producers since 2007. Let me share few facts flowing out of the Bakken suggest there is much more light, sweet crude there than previously believed...

I'll to get right to the point. Here are a couple quotes from two of the biggest oil companies in the Bakken, Continental (NYSE: CLR) and EOG Resources (NYSE:EOG).

ENERGY MARKET EXPERTS AND GURU

From Continental's CEO Harold Hamm:

"The latest game changer is the Three Forks lower benches. We've literally found an additional oil saturated reservoir in the Bakken that again, makes this world-class oil play bigger and better."

From Continental's President Jeff Hume:

"I believe we just have a larger petroleum storage system than we previously thought, and the reserves will increase as we get that data in hand, and that will be later this year."

From Continental's Senior VP Jack Stark:

"Continental acquired 6 cores of the entire Three Forks formation in 2011 and discovered there were up to 3 additional layers within the Three Forks formation. The significance of this discovery, and what makes it such a game changer, is that the volume of oil in play for the field almost doubles with these added reservoirs."

And from EOG CEO Mark Pappas:

"... we have more potential upside and growth opportunities than we've previously indicated... we're much more excited than we were a year ago about our remaining Bakken and Three Forks potential."

These insiders are estimating Bakken recoverable oil reserves may be 60% higher than currently thought... And it all has to do with layers. Shale is a sedimentary rock, meaning it is layered. Further exploration keeps turning up deeper layers of oil-producing shale.

At first it was just the Bakken, the upper level. Then they found the Three Forks Formation beneath the Bakken. Together, the Bakken and the Three Forks have around 3.5 billion barrels of recoverable oil.

More recent drilling revealed the Sanish formation under the Three Forks, which has another 1.5 billion barrels of oil. But now companies are finding more oil below the Sanish level — and they're pretty excited about it. Continental is in the process of selling off other assets and plans to focus all of its future spending on its Bakken holdings. That's right, Continental — the same company that drilled the very first Bakken well in 1995 — is going "all in" on the Bakken.

Knock, Knock: This is Opportunity

The vast majority of investors have never heard of the Bakken. Even those who know about the Bakken don't know that there could be 60% more oil there. This is what you might consider "breaking news." The U.S. Geological Survey is currently reassessing the Bakken's recoverable reserves.

Results are due in 2013, but I guarantee the "whispers" will begin circulating sooner than that. In fact, they may have already started. Oil prices have dropped sharply over the last few weeks as investors are terrified of what the lunatics in Greece will do next... And they've pushed my favorite Bakken stocks down to the point where they trade with P/Es of 7, even 5! If reserve estimates jump 60%, these P/Es would effectively be 3 and 4. But don't worry — those ultra-low P/Es won't last...Happy investment in the energy market

Disclaimer: this is just a research piece and not an investment advice. All financial transactions carry a RISK.

2012-10-12T23:07:00.002-07:00

NATURAL GAS WILL BE KING IN 2013------> By Shan Saeed

I wrote an article for a malaysian magazine in Sept 2012, SMART INVESTOR in which I mentioned about the growing important of Natural Gas. In July NG was trading at $2.5 bttu. Today, the price stand at $3.6 bttu--[ New York Times Oct 12, 2012]. An increase of 44% in just 75 days. Pure increase in wealth preservation in these turbulent times. Natural gas will remain king in 2013. In my humble opinion, Natural Gas prices will touch $4.95 bttu by next year. And while it will continue to be dirt cheap, prices will start inching back up next year. Also worth noting is that going forward, I foresee and definitely we would see more trucks and buses running on natural gas. There will be major approval on exports. The economics on exports are just too juicy to ignore. Those who are properly positioned now in natural gas are going to see some nice, steady growth in 2013.

In USA, Domestic oil production will also remain strong, offering dozens of opportunities for investors. I'm particularly fond of some of the latest enhanced oil recovery technologies, like this one that's now being utilized by BP, Exxon Mobil, Chevron, and Halliburton. North Dakota will continue to pump out oil fortunes as well, and Arctic drilling will aggressively resume next year when the season starts up again.

Although I suspect to see more delays and more proof that the economics of many of these Arctic drilling operations simply don't make sense right now... And I don't even want to think about an oil spill up there, where it will be impossible to properly clean it up or control a gushing well-head. But you know how that goes... The bureaucrats and oil companies will worry about that when it happens. Fabulous.

Regardless, the Arctic drilling experiment in USA will continue in 2013. But I'm sharing with my clients and potential investors how to take position in the energy market on enhanced oil recovery and domestic operations in North Dakota for the big pay-day.
These are just a few of my predictions that I shall use to make my strategy in 2013 for the energy market. Of course, nothing is set in stone...
Major geopolitical events, social unrest, economic recovery revisions, Europes doomday, acts of God, Arab Spring. Israel/Iran tension. Potential war. Supply disruption. Pick your poison. All of these issues go with us into 2013, and the risk premium — which I calculate to be around $20 per barrel will remain. All of these things can make us change course at any given time. I will stay nimble.

OIL PRICES IN 2013. -----STRATEGIC ANALYSIS
Get ready for the oil disruption going forward. Saudi Arabia is quitting oil business in the next 10 years and changing their energy mix. It's a super tight oil market, and it will only get tighter. And the market knows this. It's pricing in the potential for all of these scenarios. And I believe at least of one will hit home next year...The geo-political and strategic position makes oil premium very high and oil supplies will remain under pressure. Oil is headed for $150 a barrel in 2013. Happy Investment in the energy market.

Disclaimer:: This is just a research piece and not an investment advice. All financial transactions carry a RISK.

Japanese are ready with QE as well

2012-09-29T16:28:00.002-07:00

Japanese Yen is ready

for Quantitative Easing

as well------By Shan Saeed

Ben Bernanke formula QE--Quantitative Easing is going global. Japanese,
Europeans and British are following him. I was the first one who informed
last year that QE will go global and many advance economies would adopt
QE in order to spur growth and stimulate the GDP rate. Just look at Japanese,
the country is adopting QE in her market. The global economy is in the midst
of printing money and this will eventually give rise to gold and other real
assets going forward. Investors need to critically analyse their assets and
pre-position audit of their portfolio for asset and wealth protection.

inShare

Japan's Debt to GDP is 227%, no real plan to pay down this debt,
interest rates near zero, close to zero economic growth for the past
20 years and horrible demographics making it difficult to grow,
would you buy buying the currency of this country? Throw on top
of all this that the country is trying wildly to devalue its currency,
now would any investor buy?. Japan recently announced it is expanding
its quantitative easing program by 10 trillion yen to 55 trillion yen
(something in the $120 billion range). The Japanese have stated over
and over again during the past year that they want to devalue the yen,
which is trading near all-time highs. In the foreseeable future, Yen
will be in the range of 95-100. At present, Yen stands at 80 against USD.

Part of the problem is most of the currencies around the world
are just as bad. Europe is going to enter a recession and has huge
debt and banking woes, and the United States is printing money
and spending like a drunken sailor. Therefore, Japan is a total
fiscal basket case and cannot devalue its currency!

With the major global economies printing money Real Assets
like Gold and Silver will rise in value against all of the currencies.
What will happen is the yen, dollar and euro will remain in trading
ranges against each other, but all will fall in value in terms of gold.
The yen’s inability to devalue against other paper currencies despite
being so fundamentally weak is just another argument to invest in
gold and other real asset stocks going forward. Happy investment in
the global financial market.

Disclaimer: This is just my research piece and not an investment advice. All financial transactions carry a RISK

2012-08-26T09:56:00.001-07:00

FISCAL PROFLIGACY COULD BE DANGEROUS.

By Shan Saeed

INDEPTH ANALYSIS OF THE MAJOR GLOBAL PLAYERS:

Some people feel that fiscal policy is the only hope to get the economy out of recession or to get into the growth momentum. Its debatable. I know there is a portion of the economic populace out there who thinks the government needs to spend its way and stimulate its way out of this recession [see Nobel Memorial Prize in Economics Sciences-winning economist Paul Krugman]. Expansionary fiscal policy could be devastating for some economies in the developed world. I think it is the monetary policy that gets the economy out of recession. Nobel Laureate Late Milton Friedman from Uni of Chicago was a strong advocate of this policy and I follow him very closely in terms of economic strategy. Christina Romer [ ex-Chairwoman Obama Economic team] while addressing at Brooking institution in March 2009, made the same emphasis on the importance of monetary policy over fiscal policy.

However, I do not think it is possible at the moment. Let’s forget the writings of John Maynard Keynes and if spending by the government would even succeed. The fact of the matter is that I do not think the United States is even in a position to do this with analyst, economist and other experts talking about fiscal cliff hanging on the wall.

STRATEGIC ANALYSIS OF COUNTRIES HAVING DEBT TO GDP RATIO HIGHER THAN 100%

According to the International Monetary Fund, some of the countries in the world that have debt-to-GDP ratios of over 100 percent, or larger debts than the size of their economies.

Countries %Debt to GDP Year Region

Japan 230 2011 Asia

Greece 160 2011 Europe

Saint Kitts/Nevis 153 2011 North America

Jamaica 139 2011 North America

Lebanon 136 2011 Asia/Middle East

Eritrea 134 2011 Africa

Italy 120 2011 Europe

Barbados 117 2011 North America

Portugal 107 2011 Europe

Ireland 105 2011 Europe

USA 103 2011 North America

Singapore 101 2011 Asia

Sources: IMF Via Wikipedia, World Bank, ADB, Economist, Bloomberg

As you can see, other than Singapore, these are mostly really weak economies. There are four of the five PIIGS (Portugal, Italy, Ireland, Greece and Spain) and some small Caribbean nations that have been hurt by the global slowdown as it hit the tourism industry. Most of these countries are experiencing near zero growth or in a recession. In the case of Greece, we have an out and out collapse of the economy, and Japan has basically been in a 20-year recession.

My point is, even if the USA can stimulate the economy by QE3, it will not have a positive impact in the long run. With a debt-to-GDP ratio near 103 percent, and headed to more than 110 percent by next year, the debt is too high to spend more. Most studies show that when your debt gets over 100 percent of GDP, your economy slows, productivity slows down, purchasing power is reduced, living standards come down and inflation rises

When President Franklin D. Roosevelt started his New Deal in the early 1930s and Japan began its downturn in the early 1990s, both countries had debt-to-GDP ratios of less than 30 percent. They had room to spend to stimulate the economy not only in the short run but also in the long haul.

Therefore, even if you believe in Keynesian economics, the United States has betrayed the belief that you should save during bad times to have money to spend during bad times. The United States for the last 40 years has mostly run deficits and failed to save for the rainy day that has now arrived. It’s not so much that austerity works. It’s that it is forced. It’s either you cut back or default or print money and go into hyperinflation.

ECONOMIC OUTLOOK FOR USA

Right now, USA need tough decisions to made. A combination of defense cuts, streamlining of entitlements (e.g., raising the retirement age) and decreasing taxes must be implemented. However, both President Barack Obama and Mitt Romney, the likely Republican Presidential nominee, are failing to address any of these real problems. This will probably see the so-called fiscal cliff pushed back another year no matter who gets elected.

The way this will end is either in stagnation, with rates staying low and little to no economic growth; mediocrity for the next 10 years; or, more likely, sometime in the next three to five years, despite all of the Federal Reserve’s efforts, interest rates will begin to spike and it will cause a crisis that will force streamlining of the economy and real change to occur. My money is on the latter. I feel that the market will force the hands of politicians, not the other way around.

What does this mean? In the long run, it means the USA will need to reshape it economic model to show the turnaround. When cuts are made, it will be the closing of dozens if not hundreds of U.S. military bases and a change in the U.S. political system. It may seem unlikely because it will have been open for so long.

However, remember that at one time the “Sun Never Set on the British Empire,” with Britain controlling one-fourth of the world’s land mass. The British Empire was far more powerful and greater than the American Empire has ever been. It might come under pressure as well in the next 3-5 years. The only way to really get out of this mess is by making tough decisions, decreasing taxes, cutting entitlements, cutting spending and letting the free market system to work without government intervention /regulation. The question is, does the United States have politicians with guts enough to make these changes or will the market force the government’s hand?

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK.

2012-08-25T18:26:00.002-07:00

Gold is ready for an upsurge: Get your hands on the yellow metals before it gets too late

By Shan Saeed

GOLD SUPPORT FROM ROMNEY

Gold is on the rise. FED has finally decided to launch QE3 to stimulate the economy which is showing little improvement in economic growth. With Romney sharing in one of his addresses that Gold standard needs to be brought back, giving further boost to Gold prices in the international markets. Even Nobel Laureate and New York Columnist Paul Krugman wrote in New York Times titled Galt, Gold and God on Aug 23, 2012 issue.

I’ve watched markets and how they act for over 14 years now. All of that history has helped to give me an edge when investing in the financial markets and advising my investors globally.

For instance, many investors say that $1,900 per ounce was the ultimate top on the price of gold. I tend to disagree with many people and investors. I was the one of the persons coming out with a shout of $2000/per ounce for gold in the next 4-years in 2009. If we pay attention, the market will demonstrate us that 2000 is very much on the cards. How does the market guide us? It guides us by going through a period of consolidation. Gold has consolidated in a sideways triangle [descending triangle] for right at a year now.

Well, when any financial asset is “topping out,” it doesn’t consolidate anywhere near its highs. Instead it has a blow-off top and makes another failed stab at the highs and then sinks like a rock. That’s not what I’ve seen happen in the price of gold at all. But those who don’t understand market patterns and the cycles that it goes through think that the pullback and range that has happened in gold is a sign of weakness. But actually it’s a sign of strength. Plus Gold has got solid fundamentals, i.e. REAL CURRENCY, NO DEFAULT OR DEPRECIATION RISK OR COUNTERPARTY RISK.

You see, any asset occasionally needs to tread water sideways for a bit to build a base from which to launch from. It’s actually a very healthy thing and keeps an asset from going parabolic into an unsustainable trend. Also, it’s been normal for gold to go through long periods of consolidation before hitting new highs. Pull backs and consolidation are part of the market game.

GOLD HISTORY FOR INVESTORS TO GET DEEP INSIGHTS.

2008

For instance, this happened going into 2008. Gold slumped into a range that bottomed in about eight to nine months and then hit fresh highs around 19 months from its peak (or 10 months after its lows).
2006
This very same pattern happened in 2006. Gold bottomed about five months later, but ultimately took around 16 months to go on to new highs.
Both of these consolidations were followed by very “trendy” periods, where gold launched higher and seemed almost unstoppable. But that’s the kind of thing that routinely happens out of healthy, sideways consolidations.

So, where gold stands now, it’s been within that descending triangle consolidation for about a year. Even within that consolidation there’s formed an even tighter consolidation known as a symmetrical triangle ever since last May. This symmetrical triangle will break out within the next month or two to the upside. The price target will push gold out of the roof and making manay investors rich. That larger pattern has a minimum price target of almost $2,000 an ounce is very much there

In simple English, let me explain what the end result of all of this gold movement. It means that within a couple of months a spike higher in gold will happen. That spike will be large enough to shake up the gold bears, who thought gold had topped out. As it begins to stop them out and margin call them out of their positions, it will unleash quite a bit of buying pressure on gold, which will eventually take it up to around the $2,000 mark, likely within the next 9 to 12 months. China wil shake the market as she has already started a new market called PAGE i.e, Pan Asia Gold exchange just like COMEX ^ LME.

I believe we are at the bottom of gold’s range now and we’ll soon see it have mostly “up days” from here on as it begins its ascent higher. As gold trades above $1,675 an ounce, we’ll see the upward ascent speed up quite a bit. This will mystify many investors and have them scratching their heads because they’ve felt that gold was “dead in the water” for so long now. They won’t expect it to “come back to life” like that and they’ll wonder where all of this upside momentum has come from. Happy investing in the gold market.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK.

2012-07-25T19:11:00.001-07:00

MARKETS WILL SWING INTO DESPAIR----By Shan Saeed

I see a lot of volatility in the global financial markets till 2015. Markets are swinging into all directions these days, not from hopeful to guarded but rather, from panic to despair, as positive news is hitting the wire with less and less frequency. Corporate profits will hit rock bottom and massive umemployment is on the way. There will be more volatility and downside risk to the market creating massive selling pressure. USA is set to hit recession by Q-1 2013 with high unemployment rates and softening retail sales and confidence numbers indicate the world's largest economy is facing something more sinister than a soft patch. UK is already in recession while Europe is a sinking ship with no life. The European debt crisis is getting worse, as borrowing costs soar in Spanish bond markets on fears the country will need a bailout. China's once red-hot growth rates are cooling but it will rebound with GDP expected to touch 8.7% in H2 going forward. With such uncertainty building, expect volatile market swings fueled by fear-based trades to continue. The market sits somewhere between panic and despair. People are worried, market policy makers have thrown everything people can expect but still the slow down continues. Europe, meanwhile, must pay down massive debt burdens, which won't happen overnight. Europe's economy will go in deep recession for the next 3 years.

A giddy mix of slow developed world growth and a meaningful cyclical slowdown in the emerging markets makes growth in the second half and therefore earnings vulnerable. The most visible sign of stress is the European crisis and this rumbles on. Talk that Greece may default on its debts and exit the euro-zone has gone on for some time now, with many hoping for policymakers to design an orderly exit for the country while keeping the larger Spain and Italy in. That might no longer be possible but will happen soon as countries will find the exit door from the euro zone. Yields on the 10-year Spanish bonds have soared beyond 7.60 percent, well above a 7 percent level branded as out of hand by the markets and suggesting the country needs a massive financial lifeline.

Euro-zone nations have created a financial firewall, known as the European Stability Mechanism, to prop up struggling economies, though a court in Germany is mulling a case to decide if bailing out other nations violates national law. That court isn't expected to decide anytime soon, which hampers policy makers' room to act. As a result, a messy Greek exit from the Eurozone is becoming increasingly likely, which could prompt the larger Spain to default and ditch the currency as well. Although it is frequently argued that a Greek exit is now manageable, no one knows what the consequences of such a development would be, especially now that Spain looks more likely than ever to have to apply for a full program and Europe's weak firewalls seem likely to be tested.

Disclaimer: This is just a research piece and not an investment advice. All financial transactions carry a RISK.

2012-07-22T06:31:00.002-07:00

AND THE WINNER IS?

By Shan Saeed

Canada is the winner. Canadians are richer than Americans. A study released last week illustrates the average Canadian household is worth $363,202, while the average American household’s net worth was $319,970. That means each Canadian household is $43,000 richer than Americans.

Let's start with Paul Martin, Canada's Finance Minister from 1993-2002 and Prime Minister from 2003-2006. Martin represented Canada's Liberal Party. But don't let that name fool you. During his tenure in public service, Martin was credited with reducing a debt level that reached 70% of Canada's GDP down to 50%. He successfully delivered a balanced budget in 1998, managed a Canadian pension crisis, and reduced taxes to spur growth. But most importantly, Paul Martin forced Canadian banks to keep relatively high loan loss reserves. And thus prevented them from going on the merger spree that would create over-leveraged, too-big-to-fail behemoths.

Anatomy of a Winner

Now, Canada didn't escape the financial/housing crisis — but its real estate market has recovered more quickly than Uncle Sam's. The average Canadian home is worth $140,000 more than the average American home. Canada still has an unemployment rate at 7%, but that's far better than the 8.2% we have here in the U.S.

Of course, Canada has vast natural resources that help it sustain its economy. It has the third largest oil field in the world, with as much as 170 billion barrels of recoverable oil in the Alberta oil sands. It also has timber, fishing, and gold and copper mining. But these industries make up only around 5%-6% of GDP. And Canadian GDP has risen from $1.3 trillion to $1.7 trillion in the last three years. There's no doubt about it: Canada is further down the road to economic recovery.. And the best thing Americans can do to improve their own household wealth is to invest in strong stable economies like Canada's.

How to Improve Your Household Wealth

I expect most investors would be surprised to hear it, but Real Estate Investment Trusts (or REITs) have been among the strongest stocks so far this year. It's an impressive turnaround for a sector that was absolutely crushed by the financial crisis...But the combination of large dividends and upside potential makes these stocks very attractive — especially in the current low-growth environment.

In fact, Canadian REITs are at a five-year high as office vacancies have dropped to just 8.2%. Even better, office property values are expected to rise between 10% and 20% in Canada this year. I've recommended Canadian REIT to my valued investors. It pays a 5.6% dividend and its revenues are rock solid as it has long-term leases with some of the world's biggest retailers.

2012-07-17T18:58:00.002-07:00

What could be the best scenario for BEN—FED Chairman ? By Shan Saeed

Ben Bernanke is doing his best to ward off recession for the US economy. Lets give credit to the gentleman who is sitting on the Hot seat and trying to revive the economy. The current financial crisis may spark a new depression, so severe that I don’t think our civilization could survive it. Governments in developed countries should borrow “massive” amounts of money at the low interest rates currently and invest in new technologies so that trade comes back into balance and economy takes momentum. In order to understand this crisis, it’s necessary to understand the role that credit has played in bringing it about.

When you broke the link between money and gold, this removed all constraints on credit creation. This explosion of credit created the world we live in, but it now seems that credit cannot expand any further because the private sector is incapable of repaying the debt it has already, and if credit begins to contract, there’s a very real danger that it will collapse into a new Great Depression. Policymakers believe that if they allow credit to contract, there will be a new depression. So they are going to do whatever it takes to keep credit expanding. And that means more quantitative easing (QE), and when the Fed does QE3, everyone knows that stock prices are going to go higher and people would start to believe to spend more.

If this credit bubble pops, the depression could be so severe that I don’t think our civilization could survive it. To prevent the credit bubble from bursting, I suggest that governments borrow money to invest in new technologies, such as energy market like shale and natural gas, renewable energy, Biotech revolution like Stem cells, Tissue culture, IVF, RFID and other genetic advanced engineering technology.

Even if this is wasted, at least the world could enjoy this civilization for another ten years before it touches the abyss of the financial system. The recent stimuli from central banks seem to be just prolonging the inevitable depression. It could keep deferring the depression, but that could just encourage the bad guys. If you do this, you possibly do more harm than good. When you throw money into the system at a rate much in excess of the requirements of the real economy, you’re trying to get people to borrow and spend, but the good guys out there won’t because they’re too cautious. It’s the bad guys who come in, the malefactors. Once the central banks realize what is happening and increase interest rates, the world economy gets thrown into a depression.

2012-07-10T08:02:00.005-07:00

Gold to skyrocket---But Why? Few good reasons.

By Shan Saeed

According to Michael Pento:

“Spanish and Italian bond yields have now risen back up to the level they were before last week’s EU Summit. We also learned last Friday that U.S. job growth remains anemic, producing just 80k net new jobs in June. The global manufacturing index dropped to 48.9, for the first time since 2009. And emerging market economies have seen their growth rates tumble, as the European economy sinks further into recession”

It isn't much of a surprise to learn that central banks in China, Britain, Europe and America have indicated that more money printing is just around the corner. In fact, we have recently witnessed the People's Bank of China cut their one-year lending rate by 31 bps to 6 percent. The European Central Bank cut rates 25 bps, to .75 percent and dropped their deposit rate to zero percent. And the Bank of England restarted their bond purchase program just two months after ending the previous program, which indicates the central bank will buy another 50 billion pounds of government debt....

Last week’s Non-farm payroll report in the U.S. virtually guarantees the Fed will take action to compel commercial banks into expanding loan output within the next few months. It would be unrealistic to believe Ben Bernanke would watch U.S. inflation rates fall, the major averages significantly decline, employment growth stagnate; and do nothing to increase the money supply--especially while his foreign counterparts are aggressively easing monetary policy and trying to lower the value of their currencies.

As I predicted, as far back as June of 2010, the Fed will soon follow the strategy of ceasing to pay interest on excess reserves. Since October 2008, the Fed has been paying interest (25 bps) on commercial bank deposits held with the central bank. But because of Bernanke's fears of deflation, he will eventually opt to do whatever it takes to get the money supply to increase.

With rates already at zero percent and the Fed's balance sheet already at an unprecedented and intractable level, the next logical step in Bernanke’s mind is to remove the impetus on the part of banks to keep their excess reserves laying fallow at the Fed. Heck, he may even charge interest on these deposits in order to guarantee that banks will find a way to get that money out the door. The move would be much more politically tenable than to increase the Fed’s balance sheet yet further, most likely because people don’t understand the inflationary impact it would have. Ceasing to pay interest on excess reserves would allow the Fed to lower the value of the dollar and vastly increase the amount of loan creation, without the Fed having to create one new dollar.

If commercial banks stop getting paid to keep on their dormant money at the Fed, they will surely find somebody to make a loan to. They may even start shoving loans out through the drive-up window with a lollipop. Banks need to make money on their deposits (liabilities).

If banks no longer get paid by the Fed, they will be forced to take a chance on loans to consumers, at the exact time when they should be getting rid of their existing debt. But it has already been made very clear to them that the government stands ready to bail out banks. So in reality, they don’t have to worry very much at all about once again making loans to people that can’t pay them back.

Commercial banks currently hold $2.17 trillion worth of excess reserves with the central bank. If that money were to be suddenly released, it could, through the fractional reserve system, have the potential to increase the money supply north of $15 trillion! As silly as that sounds, I still hear prominent economists calling for just such action. If they get their wish, watch for the gold market to explode higher in price as the dollar sinks into the abyss. Bet on Gold