Our trading partner John Carter of Simpler Options is back with another one of his wildly popular free trading webinars. His focus this time is "Why you should trade Options on ETFs". John took the time to give us idea what he'll be walking us through step by step in this weeks webinar by producing this great video [just click here to watch] that included how we can play the next big move in the dollar. A move that John predicts most traders will miss.
Just Click Here to get your Reserved Seat for the Webinar
This weeks webinar is Tuesday evening November 18th at 8 p.m. est
In this free webinar John Carter will discuss....
* Why trading options on ETFs are perfect for newbies, retirees, part time traders, and full time traders
* Why options on ETFs are safer than trading futures or forex while allowing you to hold on for bigger
moves
* What ETFs should you trade options on and which ones should you avoid so you’re choosing the most
consistent ETFs to trade
* The 5 reasons why you should learn how to trade options on ETFs and stabilize your trading account
* Why options on ETFs are ideal for small account traders who want to either safely grow their account
or try for a home run trade
And much more….
Just click here to get your reserved space asap, John's classes always fill up and turn people away so sign up now and make sure you log in 10 minutes early so you don't lose your spot.
See you Tuesday evening!
Ray C. Parrish
aka the Gold ETF Trader
Here's a great primer for the webinar, watch John's FREE video he released this week....Just Click Here!
We focus on Gold, Oil, Silver, Index & Sector ETFs. When following our technical analysis and proven ETF trading strategy, trades become very clear and simple to execute
Tuesday, November 18, 2014
The Looming Uranium Crisis: Strategic Implications for the Colder War
By Marin Katusa, Chief Energy Investment Strategist
In the wake of one singular event—the disaster at Fukushima in March 2011, the effects of which are still being felt today across the planet—nuclear power has seemingly fallen into utter disrepute, at least in the popular mind. But this is largely an illusion.It’s true that Japan took all 52 of its nuclear plants offline after Fukushima and sold much of its uranium inventory. South Korea followed with shutdowns of its own. Germany permanently mothballed eight of its 17 reactors and pledged to close the rest by the end of 2022. Austria and Spain have enacted laws to cease construction on new nuclear power stations. Switzerland is phasing them out. A majority of the other European nations is also opposed.
All of this has resulted in a large decrease in demand for uranium, a glut of the fuel on the market, and a per-pound price that fell as low as $28.50 in mid-2014, down nearly 80% from its peak of $135 in 2007.
Currently, it’s languishing around $39 per pound, still below the cost of production for many miners—about 80% need prices above $40 to make any return on investment, and even at that level, no new mines will be built. It’s easy to hear a death knell for nuclear energy on the breeze. And that may well be the case for Europe (except for France). But Europe is hardly the world.
South Korean plants are back online. Japan is planning to restart its reactor fleet (despite a great deal of citizen protest) beginning in 2015. Russia is heavily invested, with nine plants under construction and 14 others planned. China, faced with unhealthy levels of air pollution in many of its cities due to coal power generation, is going all in on nuclear. 26 reactors are under construction, and the government has declared a goal of quadrupling present capacity—either in operation or being built—by 2020. India has 20 plants and is adding seven more. And in the rest of the developing nations, nuclear power is exploding.
Worldwide, no fewer than 71 new plants are under construction in more than a dozen countries, with another 163 planned and 329 proposed. Many countries without nuclear power soon will build their first reactors, including Turkey, Kazakhstan, Indonesia, Vietnam, Egypt, Saudi Arabia, and several of the Gulf emirates.
For years, China, with its stunning GDP growth rate, has been seen as the leading destination for natural resources. “Produce what China needs” has been every supplier’s ongoing mantra. Yet, as many Americans fail to realize, it’s their own home that is the biggest uranium consumer. Despite having not opened a new plant since 1977 (though six additional units are scheduled to open by 2020), the US is the world’s #1 producer of nuclear energy, accounting for more than 30% of the global total. France is a distant second at 12%; China, playing catchup, sits at only 6% right now. The 65 American nuclear plants, housing just over 100 reactors, generate 20% of total US electricity.
Yet uranium is the one fuel for which there is very little domestic supply.
As you can see, the US has to import over 90% of what it uses. That’s a huge shortfall—and it’s persisted for many years. How has the country made it up?
In a word: Russia.
America’s former Cold War archenemy—and antagonist in the unfolding sequel, the Colder War—has in fact been keeping the US nuclear fires burning, through conduits like the Megatons to Megawatts Program.
When the USSR collapsed, Russia inherited over two million pounds of HEU—highly enriched uranium (the 90% U-235 needed to fashion a bomb)—and vast, underused facilities for handling and fabricating the material. Starting in 1993, it cut a deal with the US dubbed the Megatons to Megawatts Program. Over the 20 years that followed, 1.1 million pounds of Russian weapon-grade uranium, equivalent to about 20,000 nuclear warheads, was downblended to U3O8 and sold to the United States as fuel.
That source was very important in helping to fill the US supply gap for those two decades. It represented, on average, over 20 million pounds of annual uranium supply, or half of what the country consumed. I’m sure it would have come as a shock to most Americans if they’d realized that one in ten of their homes was being powered by former Soviet missiles.
Megatons to Megawatts expired in November 2013, but US dependence on Russia did not. Russia is easily able to maintain its sizeable export presence, due largely to present economics.
Because of all the uranium swamping the market since Fukushima, separative work units (SWUs) are trading at very low prices. SWUs measure the amount of separation work necessary to enrich uranium—in other words, how much work must be done to raise the product’s concentration of U-235 to the 3-5% that most reactors require for fission?
The tails that are left behind when U-235 is separated out to make warheads still contain some amount of the isotope, usually around 0.2% to 0.3%. When the price of SWUs gets low enough, it’s a condition known as “underfeeding,” meaning it’s worth the effort to go back and extract leftover U-235 from the tails. That’s done through the process of re-enrichment, the reverse of the procedure that creates HEU. It’s kind of like getting fresh gold from old ore that had already yielded the easy stuff.
After the Soviet Union broke up, Russia had a lot of enrichment capacity it no longer needed for its military program. And major uranium companies like Areva and Urenco had sent trainloads of enrichment tails to Russia in the 1990s and early 2000s.
Great stockpiles were built up, and they’ll be put to use until the pendulum swings the other way and we get “overfeeding,” where the price of SWUs makes re-enrichment too costly to continue. We will go from under- to overfeeding in the near future. Rising demand from the Japanese restart and new plants coming online ensures that it will happen, and probably within the next 24 months. The market is already anticipating it, with the per-pound price of uranium up more than 35% in the past few months. It’s going to double to $75… at the least.
Meanwhile, though, the ability to profitably produce fuel-grade uranium from tails confers on Russia a number of significant advantages. Among them:
- It permits the country to exploit a previously worthless resource.
- The more tails it can use as feedstock, the fewer it has to dispose of.
- Most important, it means Russia can conserve much of its mineral supply for a future when higher prices will dramatically increase its leverage. That includes in-ground ore, of which it has a lot, and probably uranium picked up on the cheap when Japan did its massive post-Fukushima fuel dump (though it has never been officially confirmed who the buyers of Japan’s uranium supply were, I have some very connected sources who tell me it was the Russians who snapped most of it up).
In January 2014, Sergei Kiriyenko, head of Russian energy giant Rosatom, was bursting with enthusiasm when he predicted that Russia’s recent annual production rate of 6.5 million pounds of uranium would triple in 2015.
Rosatom puts Russia’s uranium reserves in the ground at 1.2 billion pounds of yellowcake, which would be the second largest in the world; the company is quite capable of mining 40 million pounds per year by 2020. Add in Russia’s foreign projects in Kazakhstan, Ukraine, Uzbekistan, and Mongolia, and annual production in 2020 jumps to more than 63 million pounds. Include all of Russia’s sphere of influence, and annual production easily could amount to more than 140 million pounds six years from now.
No other country has a uranium mining plan nearly this ambitious. By 2020, Russia itself could be producing a third of all yellowcake. With just its close ally Kazakhstan chipping in another 25%, Russia would have effective control of more than half of world supply.
That’s clout. But it doesn’t end there.
Globally, there are a fair number of facilities for fabricating fuel rods. Not so with conversion plants (uranium oxide to uranium hexafluoride) or enrichment plants (isolating the U-235). And the world leader in conversion and enrichment is…. yes, Russia.
All told, Russia has one-third of all uranium conversion capacity. The United States is in second place with 18%. And Russia’s share is projected to rise, assuming Rosatom proceeds with a new conversion plant planned for 2015. Similarly, Russia owns 40% of the world’s enrichment capacity. Planned expansion of the existing facilities will push that share close to 50%.
That’s Putin’s goal—to corner the conversion and enrichment markets—because it wraps Russian hands around the chokepoints in the whole yellowcake to electricity progression. It’s a smart strategy, too—control those, and you control the availability and pricing of a product for which demand will be rising for decades.
And that control will tighten, because the barrier to entry for either function is very high. Building new conversion or enrichment facilities is too costly for most countries, and it is especially difficult in the West due to the influence of environmentalists.
It’s worth reiterating. Russia is on track to control 58% of global yellowcake production; currently responsible for a third of yellowcake-to-uranium-hexafluoride conversion; and soon to hold half of all global enrichment capacity.
There’s a word for this: stranglehold.
That is what Putin and Russia will have on the supply chain for nuclear fuel in a world where new atomic power plants are being constructed at warp speed, which will force the price of uranium ever higher. It will give Russia enormous global influence and great leverage in all future dealings with the US America can mine some uranium domestically and buy some more from its Canadian ally. But even taken together, those sources put only a small patch on the supply gap.
The US government would do well to make peace with Putin, if it can, because the domestic nuclear power industry—and by extension the economic health of the country—is at the mercy of Russia, indefinitely.
To get the full story, click here to order your copy of my new book, The Colder War.
Inside, you’ll discover more on how Putin has cornered the market on Uranium, and how he’s making a big play to control the world's oil and natural gas markets. You’ll also glimpse his endgame and how it will personally affect millions of investors and the lives of nearly every American.
The article The Looming Uranium Crisis: Strategic Implications for the Colder War was originally published at casey research
Get our latest FREE eBook "Understanding Options"....Just Click Here!
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Sunday, November 16, 2014
New Video: How You Can Profit with ETFs from the Unexpected Move in the Dollar
You've seen us talking about a new Options strategy that John Carter was working on recently...and he is finally sharing it with us.
Video: My Favorite Way to Trade Options on ETFs
This strategy is the "sleep at night as you trade options" strategy. And we ALL need that!
Here's just a taste of what John shows you in this video:
* Why trading options on ETFs cuts your risk so you can sleep at night
* How you can profit with ETFs from the unexpected move in the dollar
* Why you avoid the games high frequency traders play by trading ETFs
* Why most analysts have the next move in the dollar wrong and how to protect your investments
* What are some of the markets that will be impacted by the dollars next move
Here's the link to watch the video again
Enjoy the video,
The Gold ETF Trader
Reserve your seat now for John's next FREE webinar "Why You Should Trade Options on ETF's"....Just Click Here!
Video: My Favorite Way to Trade Options on ETFs
This strategy is the "sleep at night as you trade options" strategy. And we ALL need that!
Here's just a taste of what John shows you in this video:
* Why trading options on ETFs cuts your risk so you can sleep at night
* How you can profit with ETFs from the unexpected move in the dollar
* Why you avoid the games high frequency traders play by trading ETFs
* Why most analysts have the next move in the dollar wrong and how to protect your investments
* What are some of the markets that will be impacted by the dollars next move
Here's the link to watch the video again
Enjoy the video,
The Gold ETF Trader
Reserve your seat now for John's next FREE webinar "Why You Should Trade Options on ETF's"....Just Click Here!
Friday, November 14, 2014
Paper Gold and Its Effect on the Gold Price
By Bud Conrad, Chief Economist
Gold dropped to new lows of $1,130 per ounce last week. This is surprising because it doesn’t square with the fundamentals. China and India continue to exert strong demand on gold, and interest in bullion coins remains high.I explained in my October article in The Casey Report that the Comex futures market structure allows a few big banks to supply gold to keep its price contained. I call the gold futures market the “paper gold” market because very little gold actually changes hands. $360 billion of paper gold is traded per month, but only $279 million of physical gold is delivered. That’s a 1,000-to-1 ratio:
Market Statistics for the 100-oz Gold Futures Contract on Comex | |
Value ($M) | |
Monthly volume (Paper Trade) | $360,000 |
Open Interest All Contracts | $45,600 |
Warehouse-Registered Gold (oz) | $1,140 |
Physical Delivery per Month | $279 |
House Account Net Delivery, monthly | $41 |
We know that huge orders for paper gold can move the price by $20 in a second. These orders often exceed the CME stated limit of 6,000 contracts. Here’s a close view from October 31, when the sale of 2,365 contracts caused the gold price to plummet and forced the exchange to close for 20 seconds:
Many argue that the net long term effect of such orders is neutral, because every position taken must be removed before expiration. But that’s actually not true. The big players can hold hundreds of contracts into expiration and deliver the gold instead of unwinding the trade. Net, big banks can drive down the price by delivering relatively small amounts of gold.
A few large banks dominate the delivery process. I grouped the seven biggest players below to show that all the other sources are very small. Those seven banks have the opportunity to manage the gold price:
After gold’s big drop in October, I analyzed the October delivery numbers. The concentration was even more severe than I expected:
This chart shows that an amazing 98.5% of the gold delivered to the Comex in October came from just three banks: Barclays; Bank of Nova Scotia; and HSBC. They delivered this gold from their in house trading accounts.
The concentration was even worse on the other side of the trade—the side taking delivery. Barclays took 98% of all deliveries for customers. It could be all one customer, but it’s more likely that several customers used Barclays to clear their trades. Either way, notice that Barclays delivered 455 of those contracts from its house account to its own customers.
The opportunity for distorting the price of gold in an environment with so few players is obvious. Barclays knows 98% of the buyers and is supplying 35% of the gold. That’s highly concentrated, to say the least. And the amounts of gold we’re talking about are small—a bank could tip the supply by 10% by adding just 100 contracts. That amounts to only 10,000 ounces, which is worth a little over $11 million—a rounding error to any of these banks. These numbers are trivial.
Note that the big banks were delivering gold from their house accounts, meaning they were selling their own gold outright. In other words, they were not acting neutrally. These banks accounted for all but 19 of the contracts sold. That’s a position of complete dominance. Actually, it’s beyond dominance. These banks are the market.
My point is that this market is much too easily rigged , and that the warnings about manipulation are valid. At some point, too many customers will demand physical delivery and there will be a big crash. Long contracts will be liquidated with cash payouts because there won’t be enough gold to deliver. I saw a few squeezes in my 20 years trading futures, including gold. In my opinion, the futures market is not safe.
The tougher question is: for how long will big banks’ dominance continue to pressure gold down?
Unfortunately, I don’t know the answer. Vigilant regulators would help, but “futures market regulators” is almost an oxymoron. The actions of the CFTC and the Comex, not to mention how MF Global was handled, suggest that there has been little pressure on regulators to fix this obvious problem.
This quote from a recent Financial Times article does give some reason for optimism, however:
UBS is expected to strike a settlement over alleged trader misbehaviour at its precious metals desks with at least one authority as part of a group deal over forex with multiple regulators this week, two people close to the situation said. … The head of UBS’s gold desk in Zurich, AndrĂ© Flotron, has been on leave since January for reasons unspecified by the lender…..
The FCA fined Barclays £26m in May after an options trader was found to have manipulated the London gold fix.
Germany’s financial regulator BaFin has launched a formal investigation into the gold market and is probing Deutsche Bank, one of the former members of a tarnished gold fix panel that will soon be replaced by an electronic fixing.
Eventually, the physical gold market could overwhelm the smaller but more closely watched U.S. futures delivery market. Traders are already moving to other markets like Shanghai, which could accelerate that process. You might recall that I wrote about JP Morgan (JPM) exiting the commodities business, which I thought might help bring some normalcy back to the gold futures markets. Unfortunately, other banks moved right in to pick up JPM’s slack.
Banks can’t suppress gold forever. They need physical gold bullion to continue the scheme, and there’s just not as much gold around as there used to be. Some big sources, like the Fed’s stash and the London Bullion Market, are not available. The GLD inventory is declining.
If a big player like a central bank started to use the Comex to expand its gold holdings, it could overwhelm the Comex’s relatively small inventories. Warehouse stocks registered for delivery on the Comex exchange have declined to only 870,000 ounces (8,700 contracts). Almost that much can be demanded in one month: 6,281 contracts were delivered in August.
The big banks aren’t stupid. They will see these problems coming and can probably induce some holders to add to the supplies, so I’m not predicting a crisis from too many speculators taking delivery. But a short squeeze could definitely lead to huge price spikes. It could even lead to a collapse in the confidence in the futures system, which would drive gold much higher.
Signs of high physical demand from China, India, and small investors buying coins from the mint indicate that gold prices should be rising. The GOFO rate (London Gold Forward Offered rate) went negative, indicating tightness in the gold market. Concerns about China’s central bank wanting to de-dollarize its holdings should be adding to the interest in gold.
In other words, it doesn’t add up. I fully expect currency debasement to drive gold higher, and I continue to own gold. I’m very confident that the fundamentals will drive gold much higher in the long term. But for now, I don’t know when big banks will lose their ability to manage the futures market.
Oddities in the gold market have been alleged by many for quite some time, but few know where to start looking, and even fewer have the patience to dig out the meaningful bits from the mountain of market data available. Casey Research Chief Economist Bud Conrad is one of those few—and he turns his keen eye to every sector in order to find the smart way to play it.
This is the kind of analysis that’s especially important in this period of uncertainty and volatility… and you can put Bud’s expertise—along with the other skilled analysts’ talents—to work for you by taking a risk-free test-drive of The Casey Report right now.
The article Paper Gold and Its Effect on the Gold Price was originally published at casey research
Get our latest FREE eBook "Understanding Options"....Just Click Here!
Sunday, November 9, 2014
U.S. Dollar Continues to Pressure Gold, Here's this Weeks Trading Levels
Gold futures in the December contract rallied sharply this Friday afternoon closing up $27 an ounce to finish at $1,170 after falling over 100 dollars in the last 2 weeks as massive profit taking sent prices to the upside as prices are still trading below their 20 & 100 day moving average settling last week at 1,170 finishing basically unchanged which is amazing in my opinion as Fridays come back was remarkable rallying over $40 from session lows.
Gold prices are trading right near a 5 year low as major support is around 1,100 as the chart structure is awful at this time so I’m advising clients to stay away as the 10 day high is too far away with too much risk as the U.S dollar continues to move higher pressuring many commodities especially the precious metals but wait for the chart structure to improve reducing monetary risk.
Get our latest FREE eBook "Understanding Options"....Just Click Here!
I’m certainly not recommending any type of bullish position in gold as I believe the stock market will continue to grind higher for the rest of 2014 as money flows will continue to pour into equities and out of the precious metals so look for opportunities to sell while placing your stop above the 10 day high make sure that you only risk 2% of your account value on any given trade as volatility is extremely high as I think today’s action was just a kick back in price which was probably overdue.
If you really think about it what’s the reason to own gold at this time as equities continue to trade at all time highs while paying dividends in many sectors were as gold is used as an inflation hedge and at this point in time deflation is a problem not inflation so avoid this market to the upside and take advantage of any rally to get short.
Trend: Lower
Chart Structure: Awful
See you in the markets Monday!
Mike Seery
Get more of Mike Seerys calls on commodities....Just Click Here!
Gold prices are trading right near a 5 year low as major support is around 1,100 as the chart structure is awful at this time so I’m advising clients to stay away as the 10 day high is too far away with too much risk as the U.S dollar continues to move higher pressuring many commodities especially the precious metals but wait for the chart structure to improve reducing monetary risk.
Get our latest FREE eBook "Understanding Options"....Just Click Here!
I’m certainly not recommending any type of bullish position in gold as I believe the stock market will continue to grind higher for the rest of 2014 as money flows will continue to pour into equities and out of the precious metals so look for opportunities to sell while placing your stop above the 10 day high make sure that you only risk 2% of your account value on any given trade as volatility is extremely high as I think today’s action was just a kick back in price which was probably overdue.
If you really think about it what’s the reason to own gold at this time as equities continue to trade at all time highs while paying dividends in many sectors were as gold is used as an inflation hedge and at this point in time deflation is a problem not inflation so avoid this market to the upside and take advantage of any rally to get short.
Trend: Lower
Chart Structure: Awful
See you in the markets Monday!
Mike Seery
Get more of Mike Seerys calls on commodities....Just Click Here!
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