Investing Assets Held in a TFSA

[goodguy1977]

Hello all,

Just to play devils advocate. If things get so bad where they really have to print even more currency around the world (and i get the whole bad for the USD good for commodities) has anyone thought maybe it's because there is serious deflationary pressures? If that truly is the case and Europe will not grow, US grows very slowly and China putting on the brakes on their economy the value of commodities should actually fall. And here's another thought, everyone expects the US to hit the QE3 button, but if Japan, Europe and other major countries hit the printing presses would that not cause the USD to actually appreciate against other world currencies? I may be wrong but there is usually a negative correlated relationship between the USD and commodities. So in that case woud it not be wise to avoid commodity companies and actually have a balanced port with fixed income?

I do think the other poster has done great work on his research on his recommendations but external factors may add major risk to the final outcome.

GG

 

[msog87]

Hello all,

Just to play devils advocate. If things get so bad where they really have to print even more currency around the world (and i get the whole bad for the USD good for commodities) has anyone thought maybe it's because there is serious deflationary pressures? If that truly is the case and Europe will not grow, US grows very slowly and China putting on the brakes on their economy the value of commodities should actually fall. And here's another thought, everyone expects the US to hit the QE3 button, but if Japan, Europe and other major countries hit the printing presses would that not cause the USD to actually appreciate against other world currencies? I may be wrong but there is usually a negative correlated relationship between the USD and commodities. So in that case woud it not be wise to avoid commodity companies and actually have a balanced port with fixed income?

I do think the other poster has done great work on his research on his recommendations but external factors may add major risk to the final outcome.

GG

your right, let me put it into perspective. all fiat currencies are losing value vs commodities aka hard assets. the bank of england, bank of japan etc are all printing money, the ecb is eventually going to print money too unless there is an outright default. the u.s. fed is the king of printing money they have done more qe than all these other countries combined. if the ecb came out tomorrow and said they were gonna do 1 trillion of QE, the usd would soar against the euro, but commodities would also soar bc what the ecb is doing is highly inflationary. people who hold euros are gonna dump them for other assets and the traditional inflation hedges are precious metals and commodities. many foolishly will buy the dollar but the dollar is no better than the euro bc the u.s. is debt ridden and has horrible monetary policy as well. if you look at the usd dollar index, for example it hit a record low of 70 back in 2008, at that time gold was around 800 an ounce. the dollar index today is 83, and gold is at $1600. basically all the dollar index does is measure the value of the dollar vs other fiat currencies. if you wanna measure a currencies value just go to goldprice.org, select the currency of your choice, and view a 10 year chart of gold priced in that currency. deflation will cause high commodity prices to fall but central banks hate deflation, its their enemy number one, all they talk about is how bad it is and they will fight it with all they have. so I wouldnt worry about deflation.

 

[goodguy1977]

Alot of valid points, however again to play devils advocate i'd argue that true commodity demand is nowhere near the current valuation of the commodity due to speculative positions put on by the financial community. If there really is a global slowdown with real estate globally causing it i think deflation might really be a problem. Banks and central banks for that matter can only do so much as the natural economic cycle will win out in the end (in my opinion). And even worse, if deficits get to the point of forcing central banks to reverse their positions (ie raise rates) commodities will get absolutely destroyed. Another factor would be taxes, if governments decided to raise taxes to help pay off those deficits, that would slow economic activity and really hammer commodities. I'm also not so sure that a soaring USD would equate to a long term bull run for commodities, it hasn't happened historically. And especially with the speculative premium in the market.

GG

 

[danibbler]

allana is one or two steps away from starting construction, they have their feasibility study coming out this year which is basically the last step. if BHP leaves thats better for allana, there are many reasons why BHP could be leaving I can tell you its not political risk which is probably the greatest importance to a company. do you know how many mining firms operate in africa? you keep going on about ethiopia being high bc it has troops in somalia how about mexico? its like the wild wild west over there with mass killing and basically an all out war with the army vs drug cartels and the mining industry is doing very well, mexico is considered one of the best places to operate in the mining industry. 50% of the worlds goods that get transported by boat go through pirate country in the horn of africa. I also recommended he diversify by buying spanish mountain gold and wildcat silver.

First off, production is at least 3 years away. Check Allana's own presentation.
Second, unless you're BHP you can't tell me why they're leaving. It could be politics or it could be economics but no one knows.
Third, I can't say for sure but I've heard that some companies are thinking of moving out of Mexico due to the violence.
Fourth, yeah, there's a ton of shipping going through there but with the pirate threat it's much better to simply buy from Canada.

 

[danibbler]

excerpt from allana's website:
the government wants allana to succeed so badly they are building a multibillion dollar railway so that it is cheaper for allana to ship its product. allana has a NET PRESENT VALUE of OVER 1.8 BILLION, this means once in production market value for the company should be 1.8 billion to be considered fairly valued, right now the market cap aka value of the company is 100 million. so if the OP buys today he could make 18+x his money. now, allana is also talking about doubling the estimated rate of production which means the NPV will go much higher. so you have to ask yourself, is the risk worth the reward. I think its a no brainer as the company is very close to starting mine construction this is a winner folks.

You do realize that NPV is a theoretical number, right? It's not carved in stone or anything.

 

[danibbler]

Re above ^^^

Thanks msog87.

I'll give your recommendations a shot.

There goes the Hail Mary shot. hehehe

 

[johnnyone1]

There goes the Hail Mary shot. hehehe

Lol,

FYI... although I'm basically a conservative guy, I can also be quite a risk-taker... I get bored quite quickly.

Msog's recommendations appeal to the risk-taker side of me and yours appeal to the conservative side, so this is the best of both worlds... I value all of the opinions expressed here.

That being said, I'm not about to gamble all my assets on one spin of the wheel and I wouldn't do it with funds that I couldn't afford to lose.

And, on occasion, Hail Mary shots do work out .

 

[msog87]

First off, production is at least 3 years away. Check Allana's own presentation.
Second, unless you're BHP you can't tell me why they're leaving. It could be politics or it could be economics but no one knows.
Third, I can't say for sure but I've heard that some companies are thinking of moving out of Mexico due to the violence.
Fourth, yeah, there's a ton of shipping going through there but with the pirate threat it's much better to simply buy from Canada.

I said construction not production, and unfortunately for you and me this kind of opportunity doesnt currently exist in canada. go with potashcorp if you want less risk but you are gonna get a fraction of the return.

 

[msog87]

Lol,

FYI... although I'm basically a conservative guy, I can also be quite a risk-taker... I get bored quite quickly.

Msog's recommendations appeal to the risk-taker side of me and yours appeal to the conservative side, so this is the best of both worlds... I value all of the opinions expressed here.

That being said, I'm not about to gamble all my assets on one spin of the wheel and I wouldn't do it with funds that I couldn't afford to lose.

And, on occasion, Hail Mary shots do work out .

then put 1k in each company I mentioned and put the rest of your money into a more mature company, get the best of both worlds.

 

[msog87]

You do realize that NPV is a theoretical number, right? It's not carved in stone or anything.

they base it on current potash prices which more than likely are going to go up, and they base it on the cost of mining and their production target. the point is once they go into production if you know the mining industry they will be a billion dollar company easily, lets say for the sake of argument they only get to 50% of the estimated NPV, the investor who buys today still made a very large return. the shares will already have had a huge rally by the time they are to start producing in 2015, construction is going to start in late 2012-early 2013. do you know how many junior mining companies make it as far as allana has? not many. as soon as they secure the investors to build the mine, the company has made it and we are 6 months or so away from this milestone

 

[msog87]

Alot of valid points, however again to play devils advocate i'd argue that true commodity demand is nowhere near the current valuation of the commodity due to speculative positions put on by the financial community. If there really is a global slowdown with real estate globally causing it i think deflation might really be a problem. Banks and central banks for that matter can only do so much as the natural economic cycle will win out in the end (in my opinion). And even worse, if deficits get to the point of forcing central banks to reverse their positions (ie raise rates) commodities will get absolutely destroyed. Another factor would be taxes, if governments decided to raise taxes to help pay off those deficits, that would slow economic activity and really hammer commodities. I'm also not so sure that a soaring USD would equate to a long term bull run for commodities, it hasn't happened historically. And especially with the speculative premium in the market.

GG

the global money supply has exploded in the past decade, this is why prices are so high. there is no end in sight to loose monetary policy, the fed is about to announce printing another 600to a trillion dollars and interest rates are going to be low for as far as the eye can see. yet even if rates are raised a few points in the next few years which is highly unlikely, we are already so behind the curve when it comes to the inflation rate that the u.s. and europe etc need rates close to 10%, that is if you don;t believe the govt's propaganda on inflation. if we get tighter minetary policy we head back to the great depression or even worse, no central banks and politicians want this to happen. NOW, on the other side of the equation emerging markets are not suffering, china is having a slowdown but they are a rich country and will stimulate the economy with cash, latin america, asia, africa, are all growing strong and demand for commodities is growing very strong. so you out this all together and its a perfect storm. I should also add that many emerging market currencies are pegged to the dollar, so when bernanke keeps rates low and prints billions the central banks of other countries have to print their own currencies and buy dollars thus stopping their currency from rising, creating inflation in their own economies.

 

[danibbler]

That being said, I'm not about to gamble all my assets on one spin of the wheel and I wouldn't do it with funds that I couldn't afford to lose.

You're over 55 with a 5 figure portfolio. That's not really a scenario where you can afford to lose anything. But, it's your money.

 

[danibbler]

they base it on current potash prices which more than likely are going to go up, and they base it on the cost of mining and their production target. the point is once they go into production if you know the mining industry they will be a billion dollar company easily, lets say for the sake of argument they only get to 50% of the estimated NPV, the investor who buys today still made a very large return. the shares will already have had a huge rally by the time they are to start producing in 2015, construction is going to start in late 2012-early 2013. do you know how many junior mining companies make it as far as allana has? not many. as soon as they secure the investors to build the mine, the company has made it and we are 6 months or so away from this milestone

Have you seen the price chart on potash? It's done pretty poorly over the past four years. Yes, it was doing pretty well until about 2008 but that may be because of price fixing.

Now, you're saying that they have yet to secure the investors to build the mine?

 

[msog87]

You're over 55 with a 5 figure portfolio. That's not really a scenario where you can afford to lose anything. But, it's your money.

this is bad advice, im telling him to put a small amount of his net worth into these companies. putting 1k into allana for a 10k+ return is a great risk reward. putting your money into govt bonds is much more dangerous. but its gonna be up to him to decide. its not gonna be hard for them to get the mine built, the hard part is doing all the drill work and defining your resource, bc you have proven nothing and you need to convince people to lend you millions so that you can start exploring and drilling.

 

[msog87]

Have you seen the price chart on potash? It's done pretty poorly over the past four years. Yes, it was doing pretty well until about 2008 but that may be because of price fixing.

Now, you're saying that they have yet to secure the investors to build the mine?

go back 10 years, prices hit $700 in 2008 so if your bearish on potash 4 years back is a good time period. point is prices are still at $450-500 a ton, and demand is only going to get stronger as the world population grows. corn and soybeans and wheat which are agriculture commodities just surpassed their 2008 highs, oil, potash, gold etc are all gonna follow suit, all are in the same secular bull market . even if potash were to fall 50% which aint gonna happen allana is still going to make a huge profit. I don't see any foreseeable risk bc I understand the fundamentals and through my research I know a good mining project when I see one

 

[goodguy1977]

the global money supply has exploded in the past decade, this is why prices are so high. there is no end in sight to loose monetary policy, the fed is about to announce printing another 600to a trillion dollars and interest rates are going to be low for as far as the eye can see. yet even if rates are raised a few points in the next few years which is highly unlikely, we are already so behind the curve when it comes to the inflation rate that the u.s. and europe etc need rates close to 10%, that is if you don;t believe the govt's propaganda on inflation. if we get tighter minetary policy we head back to the great depression or even worse, no central banks and politicians want this to happen. NOW, on the other side of the equation emerging markets are not suffering, china is having a slowdown but they are a rich country and will stimulate the economy with cash, latin america, asia, africa, are all growing strong and demand for commodities is growing very strong. so you out this all together and its a perfect storm. I should also add that many emerging market currencies are pegged to the dollar, so when bernanke keeps rates low and prints billions the central banks of other countries have to print their own currencies and buy dollars thus stopping their currency from rising, creating inflation in their own economies.

I get it, but your scenerio either points to a rosy economy or ultimate doom. With all due respect I do think you believe greatly in your thesis and i don't think anything will change your mind. To the oringial poster, I think you may want to build a balanced port with taking speculative positions with a small fraction of your portfolio. If you remember 2008, that's exactly why. If you wanna gamble really you should go to the casino.

Good luck.

GG

 

[danibbler]

this is bad advice, im telling him to put a small amount of his net worth into these companies. putting 1k into allana for a 10k+ return is a great risk reward. putting your money into govt bonds is much more dangerous. but its gonna be up to him to decide. its not gonna be hard for them to get the mine built, the hard part is doing all the drill work and defining your resource, bc you have proven nothing and you need to convince people to lend you millions so that you can start exploring and drilling.

Bad advice? In post #103 you told him to put all of his available 6k into speculative ventures. Now you're amending it to putting 3k or 50% of his available cash into said speculative ventures.

You are also now saying that they haven't proven anything and they still need to convince people to invest even more money for exploring and drilling.

If that is not a case of giving bad advice I don't know what is.

 

[danibbler]

I get it, but your scenerio either points to a rosy economy or ultimate doom. With all due respect I do think you believe greatly in your thesis and i don't think anything will change your mind. To the oringial poster, I think you may want to build a balanced port with taking speculative positions with a small fraction of your portfolio. If you remember 2008, that's exactly why. If you wanna gamble really you should go to the casino.

Anybody who digs up a 3-yr old article on oil prices to bolster his case while ignoring a 3 week old one is a fanatic and nothing will dissuade them from reality.

Anyways, anyone interested in Macau in September? I'm really hoping to visit there this year.

 

[goodguy1977]

Anybody who digs up a 3-yr old article on oil prices to bolster his case while ignoring a 3 week old one is a fanatic and nothing will dissuade them from reality.

Anyways, anyone interested in Macau in September? I'm really hoping to visit there this year.

Hi there, I don't think i quoted a 3 year old oil article?

GG

 

[msog87]

Bad advice? In post #103 you told him to put all of his available 6k into speculative ventures. Now you're amending it to putting 3k or 50% of his available cash into said speculative ventures.

You are also now saying that they haven't proven anything and they still need to convince people to invest even more money for exploring and drilling.

If that is not a case of giving bad advice I don't know what is.

6k from 5 figures is a very reasonable amount. just bc your a pussy and can't handle the risks of something you don't really fully understand don't try to discourage someone else. He showed some hesitation about putting 6k imo, so I said you know what fine then just put 1k into each, and if one of these companies is a success he'll have 10k, if all 3 of these companies reach maturity he'll have 30k. thse arnt 3 random companies ive chosen in the sector, these are advanced quality projects. the OP has gotta do his homework, I have