Daily Digest

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Daily Digest 2/11 - The Myth Of "Saudi America," The Big Mac Index

Monday, February 11, 2013, 12:44 PM

Economy

Aging baby boomers will create 'silver tsunami' for Sonoma County (Suzie G.)

Even with those programs, growing old has not been easy. Cohen struggles with arthritis, diabetes, high blood pressure and congestive heart failure. And as the ranks of the elderly begin to swell, it's not at all clear that the community will be able to maintain the level of care and resources Cohen has come to appreciate.

The Big Mac Index: Bunfight (Nervous Nelly)

At market exchange rates, the Canadian version of the burger costs $5.39, compared with an average price of $4.37 in America. By our reckoning, then, the Canadian dollar is roughly 24% overvalued relative to its American counterpart. In Mexico, by contrast, a Big Mac is just $2.90 at market exchange rates, suggesting the peso is 33% below its long-run value relative to the dollar. The greenback buys much more Big Mac south of the border than north of it.

Gold - Weekly Buy Signal (GE Christenson)

The highs in 2006, 2008, and 2011 reached that trend line. A price of $720 in 2006 was just as extreme as the $1,900 price in 2011 and a possible $3,500 price within the next two years. Will gold prices spike that high? Time will tell, but before you dismiss such a price as unlikely, consider the following:

Diane Francis: How The Senate Became Canada's National Joke (westcoastjan)

The importance of this reform cannot be overlooked. Regional-based representation counterbalances the domination of politics and policies by the populous. It would prevent another National Energy Program raid on Alberta's oil revenues by the federal government. It would prevent the west from always being trumped by the east in general. It would help nation-build by forcing collaboration and confrontation.

Maker's Mark Reduces Alcohol Content To Stretch Low Supply (westcoastjan)

"I just think that's a cheap business practice," Erik Lane, a bartender in Brooklyn, told The New York Post of watering down Maker's Mark. "Usually you're going to notice [an alcohol reduction like] that."

Energy

The Myth Of "Saudi America" (cmartenson)

The popularity of the abundance narrative waxes and wanes, and its current ascendance comes primarily on the heels of a report by Leonardo Maugeri, a former oil-industry chief and currently a fellow at Harvard's Belfer Center. When his cornucopian fantasy came out, I smelled a rat (or at least a not-too-deeply buried fish). But the International Energy Agency jumped on the bandwagon with breathless, and equally fishy, forecasts of the coming “Saudi America.” Most of the media swallowed the story hook, line, and sinker, with even the usually sober Economist rising to the bait.

Shale oil is no threat to oil producers (cmartenson)

February 4, 2013 reporting about a “growing school of bullish analysts believe that booming production in the US will put energy independence within reach.” And “With oil production from shale rock, oil sands and deep-sea drilling booming in the US, Canada, Brazil and elsewhere, worries about Middle East-based oil cartels and vulnerable Gulf supply lines are close to becoming things of the past.”

BP Energy Outlook 2030: An exercise in wish fulfillment (cmartenson)

The strategy for most of the majors now is to replace their reserves with something called “barrels of oil equivalent.” In essence, this means natural gas on an energy equivalent basis. (Approximately 6,000 cubic feet of natural gas contain the same energy as a barrel of oil.) But to admit the ongoing decline in their oil production capacity and then also to admit that there is little chance of turning that trend around would be tantamount to corporate suicide—at least if the objective is to collect the largest possible quarterly bonus and stock options payoff.

Despite Deepwater, Deep Pentagon Pockets for BP (James S.)

Now that BP has been suspended—after two long years—who will pick up the Pentagon pace? So far, it looks like Chevron Corp (NYSE: CVX) and Royal Dutch Shell Plc. (NYSE: RDS.A) The former has won over some of BP’s contracts, and the latter is shaping up to become the Pentagon’s biggest fuel contractor—at least as of 2012. Shell’s defense department earnings are now at about $2.64 billion.

Report sees flurry of ‘for sale’ signs throughout Canadian oilpatch (westcoastjan)

Though the survey’s results weren’t broken up by country, Munro said he has a good idea what kinds of conversations are happening around boardroom tables in downtown Calgary.

Gold & Silver

Click to read the Gold & Silver Digest: 2/8/13

Provided daily by the Peak Prosperity Gold & Silver Group

Article suggestions for the Daily Digest can be sent to dd@peakprosperity.com. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

13 Comments

saxplayer00o1's picture
saxplayer00o1
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BK524's picture
BK524
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westcoastjan's picture
westcoastjan
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interesting, but...

I could buy into this line of thinking more easily if gold prices were purely market driven. They are not; they are highly manipulated, as are silver prices. As there is no longer any reliability in the fundamental pricing mechanism, there cannot be any reliability in the data used to form theories such as this about the relative worth of gold. It makes for interesting reading, which in turn makes one think more. But the end of the day, I would still rather have a few gold coins to jingle in my pocket than a wheelbarrow full of fiat that will inevitably end up in my compost pile.

Jan

MarkM's picture
MarkM
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The Fourth Amendment does not apply

within 100 miles of the border.

The DHS "watchdog", which appears to be in-house, has determined that they need no suspicion to search your electronic devices.

Oh, and if you have any complaints they have a department to handle those as well.

“We also conclude that imposing a requirement that officers have reasonable suspicion in order to conduct a border search of an electronic device would be operationally harmful without concomitant civil rights/civil liberties benefits."

http://libertycrier.com/u-s-constitution/dhs-watchdog-oks-suspicionless-seizure-of-electronic-devices-along-border/?utm_source=The+Liberty+Crier&utm_campaign=acb030682a-The_Liberty_Crier_Daily_News_2_11_2013&utm_medium=email

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cmartenson
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Another useless gold hatchet job.

westcoastjan wrote:

I could buy into this line of thinking more easily if gold prices were purely market driven. They are not; they are highly manipulated, as are silver prices. As there is no longer any reliability in the fundamental pricing mechanism, there cannot be any reliability in the data used to form theories such as this about the relative worth of gold. It makes for interesting reading, which in turn makes one think more. But the end of the day, I would still rather have a few gold coins to jingle in my pocket than a wheelbarrow full of fiat that will inevitably end up in my compost pile.

Jan

That was a very typical, US-style gold bashing article.  If the author was really interested in dispelling myths about gold to prove that it did not perform any useful functions during any periods of history, then perhaps he should have sought to explain why the top performing asset allocation strategy of the past 100 years includes a 20% weighting in gold?

Also, the tip-off for me that this was a hatchet job was the cherry picking of the time frame from 1980 to 2000 to measure gold against inflation in a developing country.  Of course that was the exact top and bottom of gold's long bear run, brought to you courtesy of Rubin's strong dollar policy and Gordon Brown's gold-give-away among other notable interferences, and the Brazillian real spent time being pegged and then repegged against the dollar.  

That's about the worst inflationary test case you could concoct for gold to perform well against.

Allow me to cherry pick my time frames and I'll "prove" to you that stocks always result in the loss of your wealth too.  

Actually, it's quite embarassing when someone uses the 1980-2000 timeframe for gold as part of their 'analysis' in the same way it's embarassing when a boxer waits a full count after taking a light blow before falling to the mat in an obvious display of bad acting as they throw the match.

"Ooooohhhh....you should have practiced that a bit more!" I always think.

BK524's picture
BK524
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Re: Another useless gold hatchet job

Has anyone read the underlying study? The Gold Dilemma: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2078535

In the article (5 Reasons Not to Buy Gold) it says the study was published by the National Bureau of Economic Research in Cambridge, Mass. by Claude Erb, a former commodities portfolio manager for Trust Company of the West, and Campbell Harvey, a finance professor at Duke University.

Wondering if folks are thinking that the original paper is a hatchet job, or just the article that summarizes it?

Thanks.

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rjs
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Arthur Robey's picture
Arthur Robey
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Good spot RJS.

Massive methane release north of Russia. 

This should be interesting.

Doug's picture
Doug
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interesting but speculative

Do you have any scientific analysis of what this apparent increase in methane means?

MarkM's picture
MarkM
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or...

if a release of this magnitude is unprecedented.

saxplayer00o1's picture
saxplayer00o1
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rjs's picture
rjs
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Doug's picture
Doug
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rjs wrote: Arctic News:

Thanks for the links, I can't say I'm comforted.  Methane is far more volatile than CO2 as a GHG.  I hope this doesn't turn into run-a-way feedback.

Doug

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