Faber wants to jump out of the window

Reiterating his bullishness of gold Faber recently at a event in Helsinki said, In the worst case scenario, in the systemic failure that I expect, it(Gold) would still have some value. When the system goes down and only plastic credit cards are left, maybe then people will realize and go back to some gold-based system or such.

Faber said his outlook was so bleak that he is “hyper bearish. Sometimes I’m so concerned about the world I want to jump out of the window.”

Private equity firm bets on Asia's frontier markets - Moneycontrol.com

As investors chase yields by investing in high growth emerging markets, private equity firm Leopard Capital is looking beyond traditional economic powerhouses like China and India, to less talked about frontier markets including Myanmar, Bangladesh and Cambodia based on their future growth potential.

"Myanmar will be one of the great investment stories of 2013, it`s changing very rapidly now. This is a country, for 50 years that missed out on the whole Asian miracle," said Douglas Clayton, Founder and CEO of Leopard Capital, which is in talks to launch a fund there.

"It is going to catch up very rapidly as the reforms take place.... everything is being changed, (from) the foreign exchange regime to the foreign investment code, and so on," he added.

Cayman Islands-based Leopard Capital was set up in 2007 to invest in "pre-emerging" markets. The firm`s consulting partners include veteran investors such as Marc Faber and Jim Walker.

In terms of investment opportunities in Myanmar, Clayton says the firm is looking at sectors which represent the "essentials of life" including power, Internet, agriculture and financial services.

However, he notes that the lack of a stock exchange in the country means that it is difficult for institutional and retail investors to gain exposure to the market now. According to local media sources, Myanmar`s government has committed to developing a viable stock exchange in the country by 2015, and will start selling shares in state-owned enterprises this year.

Emerging manufacturing hubs

In addition to Myanmar, Clayton says Bangladesh and Cambodia, both of which are emerging manufacturing hubs and have growing consumer markets, look attractive.

"Bangladesh is one of the cheapest places to manufacture in, and as China gets more expensive, factories are rapidly moving down into places like Bangladesh and Cambodia," he said.

In Bangladesh, the potential lies in traditionally "Indian-dominated" sectors such as textiles, pharmaceuticals, technology and outsourcing, he said. "We have a chance to `relive` the now foregone India play."

According to Clayton, the best ways to invest in Bangladesh are via the stock market, the Dhaka Stock Exchange, which slumped over 35% in 2011, or private equity funds. Leopard Capital is currently putting together a USD 100 million fund for Bangladesh.

In Cambodia, where the company manages the country`s first private equity fund worth USD 34 million, sectors including financial services, consumer goods, power and telecom infrastructure and property, are the main focus, he said.

He said the 35 banks and 11 cell phone operators in Cambodia, most of which are international companies, illustrate the vast potential of the market.

While there is huge growth opportunity in these frontier markets, there are also risks to conducting business there, the most "daunting" being the lack of in-depth managerial experience within most of the local companies seeking capital, he said.

"Our team has to provide intensive operational support to help bring some portfolio companies up to international best practices," Clayton said.

The State of the World Markets for 2012 - Moneyshow.com

It's not the markets but the governments in which those markets exist that bear watching, for this year in particular, says Marc Faber in Prieur du Plessis'
Investment Postcards from Cape Town.
Investors in the Indian market are not a happy lot as it crashed 24% in 2011. The new year does not begin on a very happy note, either, and experts still see India in a danger zone.

In an interview, Marc Faber, editor and publisher of The Gloom, Boom & Doom Report
, warned that the Bombay Stock Exchange may bottom out between 12,000 and 15,000 levels. Expecting further weakness in the emerging markets in the initial part of 2012, he is not so positive on India. Faber is looking at an entry into India in the next six to nine months.
There is, however, a bit of good news for foreign investors interested in the Indian market. The government will now allow individual foreign investors direct access to its stock market from January 15.

Foreign fund inflows, a major driver of Indian stocks, dried up with net outflows of about $ 380 million as of Wednesday, a far cry from record inflows of more than $29 billion in 2010 that had powered a 17% rise in the benchmark index, following an 81% surge in 2009.

Below is an edited transcript.

What are the expectations you would have of 2012 from equity markets, given how bad last year was for equities worldwide?

We have to clarify the statement about how bad it was for equities worldwide, because the US market was flat and it significantly outperformed most other markets in the world, in particular emerging economies' stock markets. This resembles the underperformance we had in 2008 that made the major buying opportunity.

What we will have in 2012 is initially maybe some maybe further weakness in emerging economies against the US market, and then a major low in emerging stock markets, including India. I was looking for India to bottom out the Sensex between 12,000 and 15,000, and we are getting there slowly.

It's not just India but all the BRIC markets fell off between 20% and 30% in dollar terms last year. Are you expecting significant outperformance from those markets relative to the US in 2012?
What we had in 2008 was the outperformance of the US and emerging economies' stock markets and commodity markets got hit very hard, but it led to a major low in emerging stock markets that bottomed out between October 2008 and March 2009. After that, emerging stock markets outperformed the US until the end of 2010.

So I think we may get a similar picture. That's why when I read all the strategies that say we should invest in the US, I say maybe that's correct for the next three months or so, but I would rather be looking at an entry point in markets like India over the next six to nine months.

Equity market performance was driven by what happened in the currency market. For this year, what will you say is the likely outcome on parameters such as the dollar index, what happens with the euro-dollar exchange, and how currencies are impacted by that?

To make forecasts about free markets is very difficult. The free market and the perfectly functioning market is a market where no market participant has dominated the market...but today you have a manipulated market.

It is the governments which intervene continuously to influence the price of money—in other words, interest rates and fiscal policies. So to make any predictions of political issues, we can't know exactly how far the ECB in Europe will monetize and at what stage QE3 will come about in the US.

But if the S&P drops another 10% you can be sure that there will be more QE in the US. So the markets would be supported by additional liquidity injections.

Where does all this leave the commodity markets for 2012? If you had to take calls on gold and crude, how do you think they will do this year?

We have to distinguish between precious metals and industrial commodities. My concern is that the Chinese economy is going to be weaker than is expected and that the demand for industrial commodities will probably disappoint. So I am not particularly keen on buying industrial commodities at this stage.

In the case of gold, as you know we had a ten-year bull market and we peaked out in dollar terms on September 6 at $1,921 per ounce, at which stage the gold price had somewhat overshot on the upside and we are in a correction phase.

I happen to think that the correction phase is not completely over, but recently sentiment on both silver and gold have turned very negative. We may have a trading rebound rally, and then some further weakness into possibly February or March, and then probably a major low. Then the question will be whether the precious metals rally again, and will they exceed the peak of 2011 or not.

By how much would you postpone expectations of a big up move for equity markets? When do you think there will be a clean resumption of the trend or possibly the potential for markets to get into a bull phase again?

This is a good question, because essentially what you could get in the world is worsening geopolitical and economic conditions.

Let's say Israel attacks Iran. It's a negative event, basically, but it could be countred by monetization everywhere in the world—in other words, liquidity injections. So stocks could go up while conditions worsen. This usually happens when you massively inflate the quantity of money.

But a mentally sound market in my opinion will only come about when the system has been cleaned and moved down after the financial crises of 2008. It's essentially just painting the building with fresh paint, but we haven't addressed the fundamental problem of the Western world, which is an over-indebted society.

Marc Faber: 2012 could see a major low in emerging markets

In an interview on CNBC-TV18, Marc Faber, editor and publisher of The Gloom Boom & Doom Report, said although there could initially be some further weakness in emerging economies against the U.S. market, he expected a major low in emerging markets later this year. “I think we should invest in the U.S.; I say maybe that’s correct for the next three months or so but I would rather be looking at an entry point in markets like India over the next six to nine months,” he said.

2012 could see a major low in emerging stockmarkets

“I think we should invest in the U.S.; I say maybe that’s correct for the next three months or so but I would rather be looking at an entry point in [stock] markets like India over the next six to nine months,” he said.

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.

Investors thirsty for new markets looking to water - Reuters

ATLANTA (Reuters) - Oil and water may not mix, but managing water -- moving it, filtering it, recycling it and ultimately exhausting it -- is one of the fastest growing sectors of the oil and gas industry, industry experts and investors said on Thursday.
Because getting U.S. oil and natural gas out of the ground requires billions of gallons (liters) of water a year, "oil companies are the largest water companies in the world," Amanda Brock, CEO of the water treatment company Water Standard, told a conference on water investment and technology.
Energy companies don't seek the limelight in this area, Brock said, but they are effectively in the water business. The oil and gas industry needs water and water services for drilling and hydraulic fracturing, as well as help in storing and transporting water used in energy extraction.
Environmental advocates have taken aim at oil and gas companies for what they see as profligate use of water in extraction processes, along with the use of chemicals the advocates see as health hazards or substances where health effects are unknown.
Opponents of hydraulic fracturing to get at natural gas maintain the process can contaminate ground water, a claim the energy industry denies.
The key is using and re-using every bit of water as efficiently as possible, given global pressures on the water supply, said John Lucey of the Heckmann Corporation, which provides pipelines and disposal wells used in the drilling technique known as fracking.
"What we want you to do is wear out a drop of water," Lucey said at the American Water Summit. Heckmann Water Resources, founded less than two years ago, contributed $47.8 million in third-quarter revenues to Heckmann Corporation, up from $1.9 million in the same quarter in 2010.
Investors see the potential for growth, but have been wary because traditionally, the water business has operated on a scale of decades, not years, and has been slow to adopt new methods.
James Collet of NLM Capital Partners of Irving, Texas, said most of his clients are natural resource investors, and the water industry has similar characteristics that make it attractive to them.
"WE DO NOT EXIST"
"Over time, it's probably going to be OK, but it's probably going to take a lot longer because the momentum to make change in this industry is typically less than in other industries," he said.
That slow pace is because U.S. water systems are generally built to last 50 to 100 years, Collet said. Now aging infrastructure is wearing out, spurring the need for new investment. And the older systems are prone to waste and inefficiency, which new technologies are designed to remedy.
A dominant theme at the water summit was the industry's need to re-invent itself, or at least to raise its profile.
"For the average person, for the average politician, we do not exist," said Debra Coy, a principal at Svanda & Coy consulting.
The U.S. water industry is seen as fragmented, without a recognizable voice to the powerful in U.S. government, as contrasted with the energy sector, Coy said.
A subtext at the summit was the expectation that global water supplies will be stressed as world population grows. Climate change and the increasing collective thirst of the developing world will add to the pressure.
That too offers opportunity, said Randall Hogan, CEO of Pentair, a global water systems business.
Unlike the United States, Hogan said, China, India and countries in the Middle Easet are investing in new water technologies.
"They take a different approach in thinking about water. They will fund it. They have to fund it, because of the growth in wealth and population ... and the kind of pressure that puts on energy, food and infrastructure," Hogan said.
His task now, he said, is to ensure that his most talented staff, now located primarily in the United States and western Europe, are available to take advantage of "the opportunities at hand, which are in the new, new world."

Gold: Still a Safeguard Against Problems in the Financial Markets -Daily Reckoning - American Edition

We don’t mean to frighten you today, dear reader, but an influential gentleman whose opinion we respect thinks it might end up going much lower.

Heh, not that he’s selling.

Gold traded as low as $1,532 overnight before recovering to $1,603 as of this writing.

That’s a $50 loss tacked onto Friday’s $100 loss. Even examining the action in the context of a one-year chart, it looks dramatic…



As of today, people who want to trade gold on the Comex once again have to post additional margin to their accounts.

Fueling the drop on Friday was an announcement by Comex parent CME Group: Gold margins were rising 21%. In addition, silver margins were raised 18% and copper, 16%.

An initial position on a 100-ounce gold contract will cost $11,475 up front.

This is the third margin increase for gold since August. Put together, the increases have totaled 55%.

And today? The Shanghai Gold Exchange is following the Comex’s lead and raising margin requirements on precious metals.

“Even with the recent correction,” comments Byron King, “gold is still priced within its long-term trading range” — as evidenced by this chart:



At $1,500, gold would remain within the “channel” that’s been in place for nearly three years.

“We overshot on the upside when we went over $1,900,” Vancouver veteran Marc Faber told CNBC today. “We’re now close to bottoming at $1,500” — the bottom of the aforementioned channel, as it turns out.

But… “If that doesn’t hold, it could bottom to between $1,100-1,200.”

Not that Faber is worried. He’s been buying in since — well, probably around the same time we recommended our Trade of the Decade at the start of 2000, when gold was near $300.

So here’s a little historical perspective: Gold first broke through $1,000 in March 2008, touching $1,010 briefly. That turned out to be a high point that wouldn’t be exceeded for 18 months.

By November, the Panic of 2008 was in full swing, and gold was at $715. That’s a 29% drop.

By September 2009, gold had reclaimed $1,000…and didn’t look back.

“With history as our guide,” says Matt Insley at Daily Resource Hunter
, “it’s clear that gold’s been doing this sort of thing all along its massive run-up — since 2005 it’s seen five similar corrections.”
So what now? Are we in line for another $29% drop… which would take us to $1,350? Or something steeper, as Marc Faber warns about? Will it take another 18 months for gold to reclaim the old highs and break through $1,900?

The good news is that you don’t have to know the answers to these questions to continue feeling confident about holding gold. “Nothing has changed since last week in the physical gold market,” Mr. Insley continues. “There wasn’t a mother lode discovery, and there’s clearly no substitute. So other than a market correction, gold is still high on our list of investable resources.”

“I’d buy every month a little bit of gold,” Faber advised back on Sept. 6, when gold was at its (for now) all-time high of $1,921. “When you buy gold, it’s an insurance against systematic failure and problems in the financial markets.”

Of which we still have plenty.