Discussion Forum

US Navy off Costa Rican Coast

supercyclereport@gmail.com ("Meridian") — Wed, 25 Aug 2010 14:50:00 PDT

Here's something you won't hear on CNN:

In July, the legislative assembly here approved a U.S. request for permission to dock 46 warships and 7,000 military personnel, mostly for narcotics missions on Costa Rican territory, sparking outrage among skeptics of the global war on drugs. The critics include outspoken politicians, pacifists, student groups and everyday Ticos, who are proud of their country’s six decades without a military.

So what gives?

Well, here is one theory and it is a doozy !!

The US economy is in the crapper and people are starting to fret and worry about the double dip scenario. Mid-term elections are just around the corner and Obama's popularity is waning.

Somehow, Team Obama needs a diversion. A way to make the peasant class focus on something other than the negative equity in their houses and the dim job prospects.

So, what is this diversion?

How about a skirmish with good old Hugo Chavez?

And with 40 some ships off the coast of Costa Rica, such a skirmish is easiloy at hand. Lift anchor, sail south, take a left at the Panama Canal and when you come out the other end of the canal...let er' rip with Tomahawk missiles and whatever other arsenal you have. Watch Hugo come to his knees then. Watch the media go into a frenzy. Watch the peasant class quickly forget their woes. Watch the Democrats maintain control of the House and Senate after the November election.....

Just a thought....however twisted it may be.

Ceridian-UCLA Commerce Index

supercyclereport@gmail.com ("Meridian") — Tue, 24 Aug 2010 16:15:00 PDT

In a previous blog, I noted how society has lost its ability to critically think. The media preys on the masses with dire warnings of double dip recessions and the like.

Thankfully the folks at the UCLA School of Business have not lost their thinking ability. Edward Learner and his team have created an index that tracks economic activity based on the diesel fuel truckers buy as they move freight across the land. Ceridian provides many of the corporate charge cards that truckers use when buying fuel so the data is real time and accurate.

Take a visit to www.ceridianindex.com and have a look. What you will see is interesting. The Index reflects slow but steady growth in the economy.

As a further testament to its ability to act almost as a leading indicator, take a look at the period in early 2008. Notice how the GDP was trending sideways in a stable pattern. But observe how the Ceridian Index was trending down and thus hinting that something was amiss. Well something was amiss and we all recall how 2008 finished up.

So, the next time the media has you feeling unsure of what the economic future holds, take a peek at the Ceridian Index to find out the real story.

Foraco Drill..Baby Drill

supercyclereport@gmail.com ("Meridian") — Fri, 20 Aug 2010 18:32:00 PDT

Beacon Securities has a $3 target on Foraco Drilling (TSX:FAR). Foraco is a Marseilles, France based driller with exposure to mineral, energy, water and environmental drilling services. So, how does Beacon arrive at a $3 target ? Well, .....not too much of a logical leap as $3 is the recent high hit in Feb 2010.

I have long been partial to drilling companies. When you see the huge fees they charge mineral exploration companies, you will understand why I like the drillers. Without drilling, the average mineral exploration story is....well, not a story at all. Whether the drill results are good or bad, it matters not as the driller will get paid. Foraco is working on acquiring both Advisor Drilling and Eastern Drilling to expand their reach. Both acquisitions should be accretive to earnings.

Look at the chart and you will see the last trading was at $2.13. If I see price action get above the 55 day Exp moving average at $2.34, I will be looking to enter a trade. Until then, I do like the drillers, but I am not about to chase a driller in an unsure market like this......

Rare Earths - Caveat Emptor

supercyclereport@gmail.com ("Meridian") — Sat, 14 Aug 2010 14:59:00 PDT

In case you have been absent the planet lately, you should know that the whole Rare Earth (REE) argument is about to heat up again. China has now imposed export restrictions and the National Defence Authorization Act working its way through the hallowed halls of Washington calls for the creation of neodymium based magnet supply chain in the USA. Yes, America is waking up to a cold reality of being shut out of the REE market by China.

Surely then, the REE space must be a money maker ?

Not so fast, I say.

Mining companies are clever in that they tend to omit some critical details at times. From having a mineral claim and a handful of drill results, company spin-meisters like to make a huge leap to the finished product stage and dazzle would-be investors with visions of huge profits.

If you are tempted to dive head-first into one of these REE stories, you need to take a step back, take a breath and start asking two questions.

Ask - what is the infrastructure at the project. Does the project depend on eventually having the Gov't spend millions of tax dollars to bring roads and power into the site? If so, just step aside and look for the next story.

Ask - what is the Metallurgy is like on the rocks. This will floor them and have them reeling on the backs of their heels. Few if any of these REE juniors have taken rock samples to Labs to see of the REE can even be liberated by crushing and grinding. I can think of one REE project in Hoidas Lake, Saskatchewan that has very complex Metallurgy. The spin doctors have nicely buried this boogey-man and have diverted investor attention elsewhere. In any of these REE stories, if the Metallurgy question proves to be too tough for company officials to answer...just walk away.

Now, if you do manage to find a company that has proper answers to these questions, then you may have a winner. At the risk of blowing my own horn, I say take a look at Strategic Resources (TSXv:UVR). True... share price is low, because it does not pay big $$$ to spin doctors. It goes about its work quietly and efficiently. Yes, the infrastructure in its New Mexico project is excellent. and yes, the Metallurgy is good too. A rock study is underway at the Montana School of Mines right now and results are showing the REE can easily be liberated from the host rock.

As the REE space heats up, I fear that anyone with even a hint of REE in their back yard garden will be trying to issue shares, so it is critical that shareholders pay attention and stay on guard.

For further reading, I strongly advise the site www.techmetalsresearch.com

Gloom, Doom and the Flight to Fixed Income

supercyclereport@gmail.com ("Meridian") — Sat, 14 Aug 2010 14:30:00 PDT

America's trade deficit with China jumped to $26.2 billion. Clearly a sign that America is ailing and not exporting. A recent trip to Detroit underscored this when I saw far too many strip malls sporting vacancy signs and far too many fire-sale real estate deals. The industrial manufacturing heartland of America is wounded.

Recent attempts at market rallies have been nothing more than perfectly executed opportunities for the big serious money to jump off the equity ship.

Yields on US Treasuries have been driven down to silly levels as money pours into the fixed income market quicker than a flash flood deluge. In an encore to this silly drive to fixed income, this past week saw $7.9 billion in junk bond sales by players such as Peabody Energy, First Data and even the sickly OPTI Canada.

America needs to come to grips with the notion that Keynesian economics does not work in a situation where there already is an overwhelming debt load. In other words when in debt up to your eyeballs, you cannot spend your way out of it. You must start to embrace the "A" word - austerity. Cut Gov't spending. Admit that the stimulus money that paved Main Street in America during 2009 was a flop. And here is the big daddy - get your troops the hell out of the Middle East at $10 billion a month. The markets are not stupid. The markets can well sense that on its current spending course, the only solution will be higher taxes to generate the revenue to pay the debt. Higher taxes are a death blow for an economy already on its back in the global wrestling ring.

September has an ugly reputation as being the worst month in the markets. I am beginning to fear that we could see a watershed event in a few weeks. I am sitting largely on cash in anticipation of something ugly.

Be careful out there....