Are You Prepared for the Next Economic-Depression?
Dear PGM Capital, Blog readers,
In our blog post of Last Sunday, May 6th 2012, entitled “Are You Prepared for a World Heading for Populism?” we analyzed how growing populism, combined with excessive debt and aging population in the west, may trigger a very hard, deep and long depression.
Although we dislike being right about our predictions that they will have a deep impact on the life of great part of world population. However the reactions of world capital markets after the results of the elections up to now are in line with our analysis and prediction done in above mentioned article.
So what’s next for the markets and World Economy?
With coming elections, in the Netherlands, (an AAA rated Eurozone country) in September and the USA (World largest Economy and also the most indebted country on earth) in November of this year, politician and policy makers will try to do their utmost to do window dressing in order to avoid results like the ones in Greece and France.
We believe that both the FED in the USA and the ECB in Europe will try to do their utmost to avoid a start of a big depression in 2012. The only way for them to achieve this is by massive stimulus and money printing.
Below Quote of Abraham Lincoln, proves that this will be unsuccessful in the longer term:
You can fool some of the people all the time, and all of the people some of the time, but you cannot fool all of the people all the time.
For those who believes in entitlement and populist politician, the following quote of
“Johann Wolfgang von Goehte” might be an eye opener.
None are more hopelessly enslaved than those who falsely believe they are free.
Politician, policy makers, and central bankers may be successful in 2012, in creating the proper window dressing in order to achieve their (political) objectives in the short-term, but sooner or later the bitter truth will come out as follows:
- Accumulated Debt obligations must be repaid.
- Entitlement has never worked in the longer term.
- Success is only guaranteed by Hard work, Dedication, combined with an Ahead of the Curve Education and Good Governance.
When reviewing below Exter’s Pyramid we should agree that the Economies in the West have been moving since 2001 downwards in this Exter's Pyramid and that we are currently in the phase of purchasing of Government bonds & Cash Soon Investors motivated by massive money-printing, bond purchasing by Central bankers and subsequent hyperinflation, will realize that the only safe place for their money will be GOLD
With the current temporary correction in the price of Gold, Silver and other precious metals we believe that an excellent entry momentum has been created for those who want to have a long-term position in these precious metals as a safe-haven for them to weather the coming perfect Socio-Economic storm.
Due to this we advice investors and the middle class to exchange their paper or fiat currency for Real Money: Gold, Silver, and other precious metals.
Before following any investing advice, always take your investment horizon and risk tolerance into consideration and keep in mind that the price of Commodities, Precious metals as well as the stocks of their producers can be very volatile and that sharp corrections may happen in the short term.
Yours Sincerely,
Eric Panneflek
Chairman
Are you Prepared for a World heading for Populism?
Dear PGM Blog readers,
If you have watched the headlines lately, the following news headlines of the last two weeks should have captured your attention:
Today, Sunday May 6th 2012 will go into history as the day that Greece and France shifted politically from the center to respectively extreme left to left from the center.
The big questions Investors will be asking themselves are:
- Is there a correlation between the nationalizations in Argentina and Bolivia and the results of the elections in France and Greece?
- How will the markets react on the election results in France and Europe?
Without wishing to meddle in internal politics and political decisions in the above-mentioned countries, we should agree with each other that the above-mentioned four events are consequences of populism.
History has proven that populism and populist decisions will trigger the opposite reaction from the outside world.
In the sense that it will scare (foreign) creditors & Investors, which will result in isolation and a downward spiral for the countries with a populist leadership.
What most populist leaders forget are two very import rules of life namely:
- The one who pays always has the final word.
- Natural selection or birds of the same feathers fly together.
The basic message in today’s election in Europe is that voters in both Greece and France refuse to take more austerity measures and want to reduce the power of Germany in the Euro debt crisis.
What these voters forget is that Germany and German voters and population are the ones who are now paying for these countries to stay afloat and due to this logically demand from both Greece and France to take austerity measures in order to reduce their budget deficit and to bring it in line with the “Maastricht Treaty”.
A tough stance in both these countries might lead to Germany no longer willing to finance their deficits any longer, which will lead to a break-up of the Euro and Euro-zone as we know it today.
This will lead to the second rule, namely
birds of the same feathers will always fly together.
If this is the case, France, Spain, Portugal, Greece, Italy (and eventually Malta) will either go back to their former currency or will form a so-called “South Euro Zone”.
On the other hand Germany, The Netherlands, Luxembourg, Finland, Estonia, with eventually Slovenia and Slovakia, will form the so-called “North Euro Zone”
You don’t need to have a PhD degree in Economics to draw the conclusion that the Southern Euro will become a 'loser' currency with down-grading of credit-rating and devaluation against major foreign currencies
On the other hand the “Northern Euro” will be a very strong currency of Europe's major export champions and solid economies, with the chance that Norway, Denmark and Sweden may join them in the future.
This will send a very strong signal to Euro-zone countries like Belgium & Ireland to choose position. “North or South” ("Loser or Winner”)
We foresee that the markets will dump the Euro against all mayor currencies and that French as well as Greece capital markets will go through very difficult times in the near future. The VIX or FEAR index might spike to levels comparable with the ones of the fall of 2008 or summer 2011.
Chances are that Investors who dump the Euro will flee in the short term into the USD and US-Treasuries and by doing so will send the yield of the 10-year note to a record low.
But it will be only a question of time before people will start seeing that the USA and the USA-Dollar are more or less in the same financial and debt mess as the Southern European countries, with the consequence that investors then flee into the ultimate safe-haven which is GOLD and other precious metals.
We believe that this growing populism will hasten the West going into a severe Kondratieff Winter or Depression, which due to the demography and entitlement programs in the West might be much worst that the great depresssion of 1930.
For the sake of humanity we hope and pray that we are wrong but, if after reading the above you (partially) agree with the content of this blog post, we advise you to start putting a great portion of your savings into GOLD, hold on to “Asset Protection” vehicles, stored in low-debt, good-governed countries, with a history of asset and investors protection.
Last be but not least, before following any investing advice, always take your investment horizon and risk tolerance into consideration and keep in mind that the price of Commodities as well as the stocks of their producers can be very volatile and that sharp corrections might may in the short term.
Yours sincerely
Eric Panneflek
Chairman
Canadian Oil Sands Ltd, Q1-2012 Financial Results, Increase Dividend with 17%
Dear PGM CAPITAL Blog readers,
Today Monday, April 30 2012, after the bell Canadian Oil Sand Ltd (TSX: COS),
(ISIN CA13643E1051), reported its financial results for the three months period ended March 31, 2012.
Highlights:
- Cash flow from operations was $454 million ($0.94 per Share) in the first quarter of 2012, down five per cent from cash flow from operations of $478 million ($0.99 per Share) recorded during the 2011 first quarter. The decrease was due mainly to lower sales volumes and higher Crown royalties, partially offset by a higher sales price and lower operating expenses.
- Operating expenses in the first quarter of 2012 decreased by a significant 17 per cent to $321 million, or $32.68 per barrel, from $387 million, or $35.53 per barrel, in the same period of 2011. The decline primarily reflects decreased purchased energy costs due to lower natural gas prices in 2012.
- Increasing the quarterly dividend to $0.35 per share from $0.30 per share, payable on May 31, 2012 to shareholders of record on May 25, 2012.
"The increase in the dividend to $0.35 per share reflects confidence in our business fundamentals and the commitment to delivering excess cash to our investors," said Marcel Coutu, President and Chief Executive Officer.
All figures are in Canadian Dollar (CAD)
We have placed Canadian Oil Sands Ltd, on our watch list early October 2011 and based on its fundamentals, P/E ratio of 9.20 and dividend yield of 6.41% (based on today's closing price of CAD 21.83 a share and dividend hike of 17%) we have a BUY rating on the company.
Last be but not least, before following any investing advice, always take your investment horizon and risk tolerance into consideration and keep in mind that the price of Commodities as well as the stocks of their producers can be very volatile and that sharp corrections might happen in the short term.
Yours sincerely
Eric Panneflek
Chairman
Is the West Spiraling Down to Bankruptcy?
Dear PGM-Capital Blog readers,
During this weekend we took some time to read the book "Der Staatsbankrott kommt" (The state bankruptcy is coming!) by Michael Grandt, with the fitting sub-title
"Retten Sie Ihr Vermögen, solange Sie es noch können!"
(Save your wealth as long this is still possible).
Using lots of examples taken from Greece, Michael Grant shows that what's happening there is only a foretaste of what will follow. The book explains that the fear of a national bankruptcy is quite real. Government expenses that again and again turn out to be much bigger than desirable, the same as the almost unlimited printing of money as a consequence thereof, as well as the practically unlimited printing to 'help out' the 'victims', will have disastrous consequences for the inflation.
The book has been written from a German perspective as a warning for the German consumer. The reality is, in our opnion, that in the Western World (USA, EU & Japan), it is precisely Germany, with a trade surplus, AAA credit rating and a high savings quota, they will have to worry about the least.
The USA with a trade deficit of US$124.1 billion, a current account deficit of
US$473.4 billion and a Debt to GDP of over 100% is spiralling down to disaster, which will not be restricted to its own territory. Every country is in danger, and no one knows when it will happen.
Grandt ask some fundamental questions with these grim perspectives in mind:
- How long will the US-Dollar remain as the reserve currency?
- How long will the euro exist?
- Will there be another inflation?
- May we expect a currency reform?
- What have we learned from Japan (1990)? Russia (1998)? Argentine (2001)? Iceland (2008)? Zimbabwe (2009)?
Based on most currency reforms we have seen during the last one hundred years, Michael Grandt gives a carefully executed and coherent analysis.
The government will lay its hands on our wealth if the going gets tough and there is no other way out.
If only because politicians hardly ever manage to learn form the past, or because they only deal in short-term solutions.
A default of the government or of our currency will affect us personally, although only few people seem to realize this. Grandt describes what you must do and how to react adequately:
- See to it that you’re not stuck with government bonds
- See to it that you have as little debt as possible
- See to it that you convert your savings into gold and/or silver
- As to equities, value stocks are to be preferred
- Do not buy with borrowed money, so that you are free to sell your possession when you decide
- See to it that you have a small stock of silver/gold within reach, should your bank not be available all of a sudden.
For the sake of humanity we hope that the points discussed in this blog, based on Grandt's article, which has a lot in common with our own analysis, will never happen.
But if after reading this you agree with the content, please feel free to contact us, for us to talk with you about your future and the best investment plan that meets your profile to protect you and your loved ones against the disaster that lies ahead.
Yours sincerely
Eric Panneflek
Chairman
How to Profit from Market Volatilities
Dear PGM-Capital Blog readers,
This weekend we would like to discuss with you the “Market Volatility Index”, better known as the VIX-Index or Fear-Index.
The volatility index ("VIX") is an index that measures expectations of volatility, or fluctuations in price, of the S&P 500 index. Higher values for the volatility index indicate that investors expect the value of the S&P 500 to fluctuate wildly 'up', 'down', or both, in the next 30 days.
Thus, this Volatility Index (VIX), is a contrarian sentiment indicator that helps to determine when there is too much optimism or fear in the market. When sentiment reaches one extreme or the other, the market typically reverses course.
When the VIX is low, it means that fear in the market is low and when the VIX is high it means that fear in the market is high. Normally the markets behave rationally in a low VIX environment and irrationally in a High VIX environment. Due to this fundamental investors can use the VIX index to hedge against market volatility caused by fear and irrational trader and investor behavior.
For the past two years. our research team has been putting a lot of effort in trying to find a correlation or inverse correlation between the VIX index and the value of our portfolio, which is based on fundamentals in accordance with Value-Investing.
As you can see from below 5-year chart of the S&P-500 and the VIX-Index, the value of the S&P-500 has a reciprocal correlation with the value of the VIX. Which means that by trading a Long or Double Long VIX ETF in order to hedge against market volatility, subsequent irrational behavior of the markets in time of fear and uncertainties, investors can protect the total value of their portfolio and make it less volatile.
With the S&P-500 at a 4-year high and the VIX index at a 4-year low, and closing today March 23 2012 at 14.82 -0.75 (4.82%), we think that the time is right for buying the VIX and/or Double VIX ETF in order to protect the portfolio against increasing volatility that might eat into portfolio value.
Keep in mind that buying the VIX ETF is one way of hedging against volatility and market incertainties, Gold is also a good hedge against incertainties and dilution of portfolio purchasing power.
Before following any investing advice, always take your investment horizon and risk tolerance into consideration.
Please feel free to call us for us to talk about your future.
Yours sincerely
Eric Panneflek
Chairman
BAYTEX Energy Corporation Announces 2011 Financial Results
Dear PGM Capital Blog readers, today March 14 2012, Baytex Energy Corp.
(NYSE: BTE), (TSX: BTE) (ISIN: CA07317Q1054) reported its Q4-2011 and FY 2011 results.
Hightlights:
- Produced record quarterly production of 53,054 boe/d in Q4-2011
(an increase of 18% over Q4-2010) and
record annual production of 50,132 boe/d in FY 2011 (an increase of 13% over 2010) - Generated record quarterly funds from operations (“FFO”) in Q4-2011 of $163.0 million or $1.39 per basic share in Q4-2011 (an increase of 32% over Q4-2010) and record annual FFO of $555.5 million or $4.79 per basic share in FY 2011
(an increase of 24% over 2010) - Maintained a cash payout ratio in Q4-2011 of 31% net of dividend reinvestment plan (“DRIP”) participation
- Generated total market return (including reinvestment of dividends) of 31.6% in Q4-2011 and 28.1% in 2011
(all amounts are in Canadian dollars unless otherwise noted)
Traders today totally ignored the company’s blockbuster earnings report and Baytex Energy Corp sold off, trading as low as C$52.04 per share and falling below 30 on the technical important RSI indicator.
A fundamental investor could look at BTE’s RSI reading of 30 as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side.
Taking the above mentioned technical analysis and the company’s fundamentals such as a P/E ratio of 10.9, a dividend yield of approx. 5.% (These based on today’s closing price of C$ 52.30), we have a BUY rating on the stock.
Please receive here below an all tine chart of the company.
Last but not least, before following any investing advice, always take your investment horizon and risk tolerance into consideration and keep in mind that the price of Commodities, as well as the stocks of their producers can be very volatile and that sharp corrections might happen in the short term.
Yours sincerely
Eric Panneflek
Chairman
PGM Capital launches their first One Ounce Fine Silver Coin
‘Gold is out of the question at this moment for many people and the precious metal silver is the right alternative at this moment. That is why we decided to have our One (1) Ounce Fine Silver Coins made as a solid property everyone should have.’
This according to Eric Panneflek CEO of PGM Capital.
The first coin was officially presented last Friday March 2, during the opening night of the 9th Annual Women Conference 'About Women and Influence' to Reyna Joe, the organizer of the annual women conference in Curaçao.
Eric Panneflek expressed himself proudly for having this silver coin on the market with on one side the island of Curaçao and on the other side the logo of PGM Capital. The value of the coin is based on the silver price market, and coins like these are interesting for collectors who are turning their money into valuables with continuing growing profits’.
Panneflek indicated that their company continues to raise the awareness of people on investing and how to manage their asset and wealth and specifically to motivate them to as soon as possible invest their money in precious metals.
AMBEV Reports Q4-2011 & Full Year 2011 Results
Dear PGM Capital Blog readers, today March 9th 2012, Companhia de Bebidas das Américas (AmBev) (NYSE: ABV) reported its Q4-2011 and full year 2011 financial results
Highlights:
- In the fourth quarter, Net sales increased 11.6%, while for the whole fiscal year 2011, net sales increassed with 9.9%
- Normalized EBITDA reached R$ 4,506.1 million in Q4 2011, an organic growth of 21.4%, with a margin of 53.8%
- Full year 2011, Normalized EBITDA was R$ 13,141.1 million an increas of 14.8% YOY, with a margin expansion of 48.4%
- Cash generated from operations in Q4-2011 was R$ 5,791.9 million an increase of 44.3% as compared to Q4-2010, and R$ 13,785.8 million for the year 2011 an increase of 19.3% vs FY 2010.
- Full year 2011 Normalized Profit reached R$ 8,617.9 million, with normalized EPS growing 11.2%.
Based on Company's fundamental and this earnings report the stock closed today at an all time high of USD 41.01 +0.29 (0.71%)
By mid March 2010, we have placed AmBev on our watch list, and currently have a STRONG BUY Rating on the stock.
Please receive here below an all tine chart of the company.
Last be but not least, before following any investing advice, always take your investment horizon and risk tolerance into consideration and keep in mind that the price of Green Commodities, as well as the stocks of their producers and processors can be very volatile and that sharp corrections might happen in the short term.
Yours sincerely
Eric Panneflek
Chairman
Bank of England injects 50 Billion British Pound into UK-Economy
Dear PGM Capital Blog readers,
Today February 22nd 2012, the Bank of England published the minutes of their
February 8 & 9 2012, Monetary Policy Meeting, which shows that members had considered increasing its quantitative easing programme by more than the 50 billion British Pound cash injection made earlier this month.
Policymakers voted by seven to two to raise QE by £50 billion to £325 billion, for which 2 (two) policy makers, who argued that a greater stimulus would help reduce the risk of increasing unemployment and businesses downscaling.were calling for a bigger, 75 billion british pound stimulus.
Following the negative GDP Growth of the UK Economy in Q4-2011, the decision by the Monetary Policy Committee for another cash injection had been widely anticipated, in order to avoid another quarter of negative Economic growth which would have plunged the UK back into recession.
Gold, Silver, Platinum and Palladium which were trading sideways the whole morning reacted immediately on the news as can be seen here below.
We believe that the problems of the West are structural and that politicians and centralbankers for political reasons don't have the guts to tell the truth to their people and to tackle the current debt crisis structurally and due to this is trying to choose the easy way out via stimulus programs and kicking the can further down the road.
This will lead to huge hyperinflation, which will destroy savings, pensions, and purchasing power of the middle-class.
As can be seen today, Gold, Silver and precious metal which are REAL MONEY, that cannot be printed on thin-air, by central bankers, will react immediately and massively on these QE-programs of Central Banks.
Due to this we advise investors and the middle class to exchange their paper or fiat currency for Real Money: Gold, Silver, and other precious metals.
Before following any investing advice, always take your investment horizon and risk tolerance into consideration and keep in mind that the price of Commodities, Precious metals as well as the stocks of their producers can be very volatile and that sharp corrections may happen in the short term.
Please feel free to contact us, for us to talk with you about your future and the best investment plan than meets your profile.
Yours sincerely
Eric Panneflek
Chairman
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- Gold Slides to New 2012 Low: Buying Opportunity or Bull Market Breakdown? May 15, 2012
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- Joseph Hart on Are You Prepared for the Next Economic-Depression?
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