The Dow Jones Industrial Average, Dow Jones Transports, Russell 2000, and the S&P 400 (mid-cap) are currently near their highs for the year. As my colleague Tom Smith has explained already this week, that’s no small feat considering what we’ve been through in the first quarter of the year: regional instability in the Middle East, an extreme earthquake and tsunami disrupting the 3rd ranked economy in the world, gasoline up 25 percent, and overall commodities pushing higher and higher.
The prices of major rare earth metals have just gone through the roof! Below is a chart of Cerium, Lanthanum, and Neodymium, all of which basically doubled in price in just this month alone. Is this due to reduced exports from China, exploding demand worldwide, or a speculative frenzy fueled by the Wenzhou? Perhaps all of the above. Either way, this doesn’t bode well for the price of any good that uses rare earths as an input, i.e. electronics, batteries, hybrids, etc.
2011 is turning out to be a boom year for OPEC. If oil can stay consistently above $100 until December, the cartel is projected to reap $1 trillion in oil revenues by year’s end. This would be OPEC’s most profitable year on record.
Martin Armstrong, considered to be one of the best – if not the best - market prognosticator in history, had maintained until recently that the price of gold would correct sideways to down into the next bottom of his Economic Confidence Model into June 13, 2011. In a new article that appears to be an apparent response to a recent editorial I wrote he seems to have changed his position somewhat. Let me explain.
In Part five of the series Charting the Economy, we examine Debt. This series is intended to present a recent history of the economy in an easy to understand format using graphs.
Last year the European Union (and the euro) teetered on the verge of collapse when the Greek financial crisis strained the viability of the EU construct. This year, as other EU countries domino in similar fashion, no one seems to care – certainly not the markets.
Social Security had its 75th birthday last year. A more important event will take place in April of 2011. That will be the first month that Social Security benefit payments hit $60 billion. Think of that. $60b a month is one hell of a lot of money. This payout (annualized) is approximately equal to the entire GDP of the Netherlands, Turkey or Indonesia. It is 50% higher than the entire economy of Switzerland.
The following is commentary that originally appeared at treasurechests.info for the benefit of subscribers on Thursday March 10th, 2011.
Silver, it's turned positive in relation to gold. The chart below tells the story. Back in October 2009 one ounce of gold would buy over 80 ounces of silver. From that point on the ratio of gold to silver changed in favor of silver.
Rare Earth prices in China are sky-rocketing. Since the beginning of the year prices have doubled. Speculators from Wenzhou are taking supplies off the market with an investment technique called "Wenzhou Stir-Fry"