They are also predicting an average silver price of $35 this year and $42 this year - which I believe are EXTREMELY conservative estimates. Their 2012 average price is $1,845, which I actually agree with (considering we're only around $1,650 now and haven't even touched $1,800 yet in 2012).
They are saying QE3 could happen in the first half of this year.
"Investor demand for gold as a hedge is likely to keep gold prices
elevated and Morgan Stanley analysts are bullish on gold in 2012."
"While the current strength in the USD is a headwind to USD gold
prices, we expect aggressive Fed action, including and the likely
adoption of QE3 in 1H12, to be positive for gold, even if the USD
continues to strengthen."
Source: Morgan Stanley
Wednesday, March 28, 2012
Inflation Doesn't Necessarily Make Real Estate a Good Idea...
We all know that inflation is good for gold, silver and commodities in general. But what most people don't realize is that an inflationary environment does not necessarily make real estate a good investment (but don't tell this to Ben Bernanke!).
"Inflation—and hyperinflation—affects two things immediately: Near-term necessities (such as food and fuel), and credit.
The effects on basic necessities is obvious—but the effects on credit are more subtle and complex.
How does inflation and hyperinflation affect credit? By driving up interest rates—obviously. But what is the effects of rising interest rates in an inflationary/hyperinflationary environment?
Real estate prices collapse."
I urge everyone to read this blog below. And remember that PRICE is nothing... and VALUE is everything. We could very well see real estate prices go up a little bit in the coming years, but in no way does this mean that real estate will be a good investment. Sure, your home could go up in price from $250K to $300K, but what does that matter if gasoline is $6, food prices and health care costs much higher, gold at $5,000, etc? Some things may go up in price - but nothing will go up in value more than gold and silver in my opinion. There will be much better buying opportunities in real estate, but that time is not now.
Read more: http://gonzalolira.blogspot.com/2011/02/inflation-hyperinflation-and-real.html
"Inflation—and hyperinflation—affects two things immediately: Near-term necessities (such as food and fuel), and credit.
The effects on basic necessities is obvious—but the effects on credit are more subtle and complex.
How does inflation and hyperinflation affect credit? By driving up interest rates—obviously. But what is the effects of rising interest rates in an inflationary/hyperinflationary environment?
Real estate prices collapse."
I urge everyone to read this blog below. And remember that PRICE is nothing... and VALUE is everything. We could very well see real estate prices go up a little bit in the coming years, but in no way does this mean that real estate will be a good investment. Sure, your home could go up in price from $250K to $300K, but what does that matter if gasoline is $6, food prices and health care costs much higher, gold at $5,000, etc? Some things may go up in price - but nothing will go up in value more than gold and silver in my opinion. There will be much better buying opportunities in real estate, but that time is not now.
Read more: http://gonzalolira.blogspot.com/2011/02/inflation-hyperinflation-and-real.html
Primero Mining Posts Solid 4Q
Primero Mining posted a pretty good 4q and full year 2011 results today:
"The Company reported 2011 net earnings of $67.8 million ($0.77 per share) with adjusted net earnings of $28.3 million ($0.32 per share). Operating cash flows(3) were $80.2 million ($0.91 per share)."
For the 4Q: "The Company earned net income of $36.8 million ($0.42 per share) in the fourth quarter of 2011, compared with net income of $6.9 million ($0.08 per share) in the fourth quarter of 2010 due mainly to the impact of the APA filing and the resultant recovery of income taxes retroactive to the date of acquisition of the San Dimas Mine." I do expect this filing to be ruled in favor of Primero at the end of this year.
A production decision to expand the San Dimas mine will be made in the 3Q. Primero currently trades at only $2.50 with a market cap just over $200 million. They are expecting upwards of $90 million in free cash flow for 2012 - Can you say undervalued?
I am long PPP.
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