Commodities

  • 04 May
    Here’s What Happens When An ETF Gets Too Big

    Here’s What Happens When An ETF Gets Too Big

    • When an ETF owns more than 10% of a company, any kind of rebalancing can be very dangerous for the stock.
    • The VanEck Vectors Junior Gold Miners ETF is becoming too big for its index, and has been forced to look beyond junior miners and to sell up to 50% of some of its positions in order to rebalance.
    • The main danger coming from ETFs is the lack of underlying liquidity, especially when there is no one to buy the assets sold in a fire sale.

    Introduction

    ETFs are potential vehicles of mass destruction. There is a high chance that in a few years from now, we’ll be talking about the 2000 dot-com bubble, the 2009 subprime crisis, and the 201X ETF liquidity crisis.

    After ETFs took the investment stage, there weren’t many issues with them as they remained relatively small. However, the continuous inflow of capital has already made some ETFs too big.

    In today’s article, we’ll describe the issue with the VanEck Vectors Junior Gold Miners ETF (NYSEARCA: GDXJ) and how it’s affecting index constituents. More →

  • 24 Apr
    Global Growth Is Finally Getting Some Traction, Be Sure Your Money Follows

    Global Growth Is Finally Getting Some Traction, Be Sure Your Money Follows

    • Macroeconomic trends are extremely important for your investing or trading returns.
    • The IMF’s World Economic Outlook is a great starting point for understanding where the risks and opportunities lie.
    • Long term trends show emerging markets and commodities are the place to be.

    Introduction

    Investing is both difficult and easy. It’s difficult if you try to guess what the market’s sentiment will be next week or next month, while it’s easy if you simply look at slow moving structural macroeconomic trends. These trends are like little forces that shape the market, similar to the gravitational forces among planets in our solar system. More →

  • 12 Apr
    How To Prepare For Anything The Economy Throws At You

    How To Prepare For Anything The Economy Throws At You

    • All stocks will rise with a rising tide, therefore it’s wise to buy those stocks that won’t fall off a cliff in a recession.
    • The usual suspects—like consumer staples, utilities, and healthcare—are good ideas, but not at any price.
    • Bonds are close to becoming a win win situation.

    Introduction

    Yesterday we analyzed the FED’s latest meeting minutes, and saw how when the FED applies historical probability calculations to their own estimations, the result is that anything can happen.

    The FED itself stated that, in the next few years, economic growth could be anywhere between -0.5% and 4%, unemployment between 2% and 7%, and inflation between 1% and 3% with a 70% confidence interval. A 70% confidence interval means that there is a 30% chance economic indicators end up outside the above mentioned ranges. More →

  • 19 Mar
    Sunday Edition: Sugar – The New Epidemic Killer Could Offer Your Portfolio A “Sweet” Low Risk Boost

    Sunday Edition: Sugar – The New Epidemic Killer Could Offer Your Portfolio A “Sweet” Low Risk Boost

    Being somewhat of health nut, a recent article published on FortuneThe Hunt for the Perfect Sugar” caught my attention.

    Today, it’s pretty common knowledge that high sugar consumption has been linked to obesity and type 2 diabetes. However, it’s now being linked to dreaded conditions such as heart disease, Alzheimer’s and even cancer – including lung cancer. More →

  • 02 Mar
    A Low Risk High Reward Investment Approach To Oil

    A Low Risk High Reward Investment Approach To Oil

    • Oil prices have stabilized, however, both further upside and downside are possible as nobody knows what OPEC will do or decide.
    • U.S. shale producers are back in the game as oil prices stabilize above $50.
    • A low risk high reward investment strategy is to start investing in oil at prices below $40, or even $30. If oil doesn’t reach those levels, well there will always be other investment opportunities.

    Introduction

    Oil prices have relatively stabilized in the last three months after three years of high volatility. More →

    By Sven Carlin Commodities Investiv Daily Oil
  • 19 Feb
    Sunday Edition: Copper May Be The Strongest New Bull Market Over The Coming Decade

    Sunday Edition: Copper May Be The Strongest New Bull Market Over The Coming Decade

    The Escondida mine problems are only the tip of the iceberg for Copper, which appears to be in a bit of a panic since workers of BHP Billiton Ltd.’s Escondida copper mine in Chile started an indefinite strike on February 9, forcing a force majeure declaration on its shipments.

    Adding more fuel to the fire is a one-month delay to exports at Indonesia’s Grasberg mine when Freeport-McMoRan suspended copper concentrate output while in negotiations with the government over the terms of its mining permit which has expired. More →

  • 17 Feb
    Sven Is Still Bullish On Copper And You Should Be Too

    Sven Is Still Bullish On Copper And You Should Be Too

    • Copper bottomed in 2016 and the outlook remains bullish in the long term.
    • The short term could also offer positives due to strikes and political issues.
    • The long term balance for copper should be above $3.5 per pound and that price will be increasing due to lower copper ore grades and higher mining costs.

    Introduction

    The last time I wrote exclusively on copper was in April 2016. The bullish article is available here. Since then, copper prices have increased 22%, from $2.22 per pound to the current $2.73. As the dollar has also strengthened by 7% since then, we should add 7% to the current copper price to show the real appreciation in copper. Thus, copper would be at $2.92 in real terms. More →

  • 10 Feb
    How A Hedge Fund Manager Researches A Stock

    How A Hedge Fund Manager Researches A Stock

    • Researching stocks is simple: you have to leave no stone (stock) unturned, meticulously assess risks, calculate present values of future cash flows, compare the stock price, and if your estimated value is much higher, assess how much of your portfolio to put into a stock.
    • Unfortunately, this is more than a full-time job. You have to love it and more than a decade of experience helps. For those that don’t have the time, we’ll provide a solution.
    • This article also includes a detailed example of an investigation on a stock that didn’t turn out as an investment. Usually, only one of 20 thoroughly researched stocks turn out as a potential investment. In the end, it boils down to the fact that only 1 out of more than a 1,000 researched stocks is a good investment.

    Introduction

    I was a spear fisher for many years. It was my passion, and I went fishing more than 150 times per year. You can watch a video of what I was doing here.

    If you are or know fellow fishermen, you know that we live for the big catch. However, catching the fish of the year takes thousands of hours gaining experience, patient searching for the best spot and the best time, and analyzing many variables that can increase your odds at catching the big one with billions of small fish swimming around.

    After a few years of diving, I learned that it all boils down to pure statistics. The more time I spent at sea, dives I made, and the more times I came home empty handed, the higher the probability became for a big catch. More →

  • 30 Jan
    There’s Buzz Around Cobalt But Don’t Buy Yet

    There’s Buzz Around Cobalt But Don’t Buy Yet

    • The cobalt hype reminds me of the 2008 uranium and 2011 rare earth element spikes. Both ended badly for investors.
    • The bull case is tempting, but you should always investigate mining costs of junior miners because the cheapest way to get to cobalt is as a by-product, and there are big copper mines that can supply it.
    • Be careful of dilutive capital raises, liquidity issues, and stock liquidity and all other issues that penny stocks have, no matter how attractive the cobalt pitch might seem.

    Introduction

    Many of you might be wondering what’s going on with cobalt as its price has gone up lately which has created an interesting buzz in the financial world.

    On top of it, many mention cobalt alongside sexy names like Tesla (NASDAQ: TSLA) which further increases the buzz.

    Today I’ll shed some light on cobalt in order to see if there is a long term profitable trend forming in its supply and demand, or if it’s just a fad like rare earths, graphite, or uranium were back in their days. More →

  • 24 Jan
    Will Your Portfolio Explode Or Implode? A Look At Uranium

    Will Your Portfolio Explode Or Implode? A Look At Uranium

    • The short and medium term don’t look that great for uranium as military inventories, idled reactors, and negative sentiment push prices down.
    • In the long term, increased demand from new nuclear reactors should eventually push prices higher and may create tremendous returns given the current low investment environment – think 3 to 10 years.
    • In the long-long term, there is plenty of uranium for the next thousand years.

    Introduction

    Uranium has been in a five-year long price slump with several factors having impacted the decline.

    The 2011 Fukushima disaster forced Japan to idle its reactors. According to the Nuclear Energy Institute, only three reactors of the 42 commercially operable are currently in use in Japan. As Japan represents one third of global nuclear capacity, this blow was tremendous for uranium. More →

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