Proactiveinvestors USA & Canada column

Where’d All the Fear Go?

Wed, 22 May 2013 16:29:00 -0400

With the US stock market grinding to new nominal highs on what seems like a daily basis, you might be wondering: where'd all the fear go? Just a quarter or two ago, it was cool to be a bear. Analysts were citing a high unemployment rate, weak GDP growth, and swelling debt as just a few of several albatrosses that would prevent the economy from taking off anytime soon.

Fast forward to today, and the bears are in hibernation. The same economic drags persist, but for some reason, most analysts are no longer worried about them. Unless you actively seek out contrarian viewpoints, you're likely to hear all good news all the time.

Maybe the best way to understand this abrupt about-face in sentiment is through the prism of a childhood game: Jenga.

If you're not familiar with Jenga, play begins with a sturdy column of wooden bricks stacked to form a vertical tower. Players take turns removing one block from near the foundation of the tower and placing it on the top. The goal is to make it through your turn without knocking the tower over. As the game progresses, the tower grows taller at the expense of structural integrity, as blocks that once formed a strong foundation are now balancing high in the air.

As the tower becomes more precarious with each turn, the participants become more fearful, and act more cautiously – entirely logical responses, given that the taller the tower grows, the more likely it is to topple.

Applying that principle to financial markets, one would think that, all else equal, a stock market at record highs would induce similar emotions as a too-tall Jenga tower. Because stocks are currently scraping the sky, any slight breeze – perhaps in the form of a bad jobs report or another scandal – could bring them tumbling.

Such a tumble would be especially violent, because it would commence from heights never before seen.

The parallels continue when you consider that several cracks are beginning to form in the ostensible foundation of this stock market rally. Recent earnings have been mediocre at best, and trading volumes have been steadily declining – classic indicators that momentum may be petering out.

I'm sure you see where I'm going with this: sober analysis indicates that the stock market is a wobbly Jenga tower. But investors are not treating it that way. On the contrary, as I quickly skim the financial headlines, I note that US economic confidence is at a five-year weekly high. Two other surveys peg both investor complacency and bullishness at multiyear highs as well.

What gives? My best guess is that investors see a stock market that has risen for five straight years, their 401(k)s or bonuses rising with it, and assume it will continue unabated… which makes as much sense as a Jenga player believing that, because the tower has not fallen in the past few turns, it won't fall for his turn either.

Obviously, no one is that foolish. We all understand that what's important in this scenario is that the tower becomes less sturdy, and thus more likely to fail, with each turn. By eschewing that truth and substituting for it an extrapolation of a past trend, you'd be setting yourself up for disaster.

But as easy as it is to call out that type of reasoning as fallacious, it's exactly what's happening in the stock market today. For some reason, the thinking becomes muddled when money is at stake. And the result is a level of fear in the market today that is incommensurate with the fundamental risks present.

Fear is cheap… cheaper than it has any business being.

So how can we "buy" fear? That's the topic of this week's feature in which Stephen Belmont, chief market strategist and senior partner with futures brokerage RMB Group, measures just how low fear is compared to historical norms. Stephen then goes on to explain how investors can "buy" fear while it's cheap in order to make money when it inevitably spikes, or at least reverts to the mean.

The article was originally published in World Money Analyst, a premium publication dedicated to sharing the best investment ideas of a collection of international experts, each of whom specializes in a different region. Our good friends at Mauldin Economics, which publishes WMA, have allowed us to share this article – usually reserved for subscribers – with our readers.

With that, I'll leave you to explore the piece yourself. For those of you in the US, enjoy the long weekend. I won't be with you next week, but I'm leaving you in the capable hands of Nick Giambruno, editor of InternationalMan.com.

Dan Steinhart
Managing Editor, The Casey Report

Fear Is Cheap… Is It Time to Buy?

Steve Belmont, RMB Group

Most markets spend most of their time tracing out the middle of a range, oscillating on either side of their statistical means like a water skier tethered to a boat. They move in the direction of the boat, hopping back and forth across a "wake" that is a trend. The trend can be up, down, or sideways.

It is very difficult to trade these small oscillations – deemed by many analysts as mere "noise" – so we don't try most of the time. But there are periods when a given market pegs so far to one extreme or the other that it becomes hard to ignore. Such is the case with the market that measures fear – known by stock investors the world over as "VIX."

VIX is telling us that fear – at least as it relates to stock prices – is dirt cheap. With what we know about markets and human nature, we do not expect fear to remain cheap forever.

VIX is the symbol for the Chicago Board Options Exchange (CBOE) Volatility Index. It measures the volatility embedded into options traded on the S&P 500 (SPX) and reflects investors' 30-day consensus view of the future. S&P 500 puts grant the buyer the right, but not the obligation, to sell the S&P 500 Index at a fixed price for a limited time.

VIX Measures Fear

The greater the investors' fear, the more they will pay for put option protection. The more they pay, the higher the market volatility implied in the cost of the S&P 500 options. This is what VIX measures. Since fear is the strongest human emotion, it's no surprise that VIX rises and falls in proportion to investor fear.

A VIX of 10.00% means option buyers only expect the market to move 10% in the foreseeable future. A VIX reading of 20.00% means option traders expect the market to be twice as volatile. VIX does not measure actual volatility; it measures traders' anticipated volatility, based on how much they are willing to pay for protection against it. The VIX is forward-looking, which means it can spike much higher than actual market volatility.

The VIX tends to rise when investors either expect or experience big market declines; it tends to fall as fear of those declines subsides. This relationship can be seen clearly in the "Monthly VIX" chart below. Note how VIX spiked to 89.00% during the Lehman crash while stocks dropped a much smaller 58%.

Data Source: CQG

Data Source: Reuters/Datalink

Take a look at the long-term chart of the S&P 500 right below the long-term chart of VIX and you'll see just how correlated these two markets are. VIX tends to rise during a stock market fall, and to fall when the market rises. Note how it tends to fluctuate in a well-defined range, from a low of roughly 9% to a high of approximately 45%. (I ignore the Lehman crash spike in VIX to nearly 90% as a "one off" – unlikely to happen again anytime soon.)

By measuring expected volatility, VIX also measures probability. A reading of zero assumes an absolutely flat stock market with no volatility at all. While theoretically possible, that kind of market condition is extremely improbable. This is why VIX has a practical floor at around 9.00% – it is reasonable to assume that stocks as a whole could fluctuate this much in even quiet market conditions. Similarly, VIX rarely climbs above 45.00% because the chances of the market staying that volatile for any length of time are slim.

Data Source: CQG

The thick blue line on the long-term chart above shows multi-decade support in VIX just above 9%. The thick gold line (representing the 276-month moving average of VIX) is a close approximation of the "mean" of expected volatility. It covers almost every conceivable market scenario – bull markets, bear markets, and numerous "crashes." Like the water skier in our metaphor, VIX crisscrosses this "wake" of expected stock market volatility and either reverts to it, or close to it, nearly every year.

Will it do so again this year? Only time will tell. However, with VIX close to its practical low of 9% (currently 12.22%) and the public getting more complacent and starting to pile back in to stocks, now may be a good time to consider adding a bit of fear to one's portfolio. We recommend our trading customers consider doing precisely that.

VIX Futures: A Pure Play on Fear

The underlying value of VIX futures is $1,000 times the Index. That makes VIX futures at a price of 15.00% worth $15,000, and at a price of 45.00% worth $45,000. VIX is purely an electronic contract. Normal trading hours are 8:30 AM to 3:15 PM, and extended trading hours begin at 7:30 AM (all times Central). Liquidity, especially in the first two contract months, is very good and so is open interest.

Since volatility cannot drop below zero, buying VIX futures represents a maximum risk of your buy price times $1,000. Let's say we buy a VIX futures contract at 15.00; the most we can lose is $15,000 plus transaction cost. However, given the fact that VIX has never dropped below 9.00, our practical risk is probably far less.

Use VIX as an Effective Hedge

VIX can be a very effective hedge for a stock portfolio. Let's assume that we purchased one VIX futures contract for each $100,000 of stock exposure in our portfolio in 2010 and 2011, and paid an average of 15.00% ($15,000) for each contract. When VIX subsequently spiked to 47.00% ($47,000) in both years, gains in each futures contract would have offset roughly $32,000 worth of losses (or roughly 32%). Similarly, buying one VIX futures contract for each $200,000 in our portfolio would have offset a loss of approximately 16% in the underlying portfolio.

While there is no guarantee this level of protection will manifest itself in future declines, the charts above clearly show a tendency of VIX to increase sharply during major stock market corrections. Margin to trade one futures contract is currently $5,000. Hedgers should consider posting at least $9,000 to avoid potential margin calls.

With the "Sell in May and go away" timeframe upon us, using VIX futures to hedge is an appealing idea. Consider one futures contract for each $100,000 to $200,000 in portfolio value, depending on your risk tolerance and the level of protection you desire.

We can also take a speculative position in VIX by going long VIX futures at the low end of its historical trading range and using the 20.00% level as a potential exit point. To make either of these long-VIX scenarios work properly, you must be committed to your position and willing to endure shorter-term losses, "rolling" your position forward as the market dictates.

Stephen Belmont is chief market strategist and senior partner with the Rutsen Meier Belmont Group (RMB), a futures and futures options brokerage firm in Chicago specializing in commodities, currencies, and interest rates since 1984. For more info about these 2013 plays, call 800-345-7026 (toll free) or 312-373-4970 (direct), emailsuerutsen@rmbgroup.com, or visit www.rmbgroup.com.

Video: Equity Fund Update

Wed, 22 May 2013 15:02:00 -0400

Blog: Cutting Through the Noise

Video: Equity Fund UpdatePrint

Posted on May 22, 2013

By Scott Ronalds

We caught up with Gord O'Reilly earlier this month for an update on the Equity Fund. Gord is a founding partner of CGOV (he's the "O"), the firm that manages the fund.

The portfolio has performed well over the last few years and we wanted to provide investors with an update on CGOV's current thinking and the positioning of the fund.

Topics of discussion include the fund's emphasis on high-quality companies, the role of foreign investments, the manager's thoughts on dividends, and their views on valuations.

Download, subscribe via iTunes or RSS, or watch now:

Gord was firing on all cylinders on the day of filming, so we kept the camera rolling and also updated our 'Overview of CGOV' video, which you can watch here.

Management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns.

Ted Butler: Blockbuster in Gold

Wed, 22 May 2013 14:59:00 -0400

¤ YESTERDAY IN GOLD & SILVER

After an exciting day on Monday, trading in the Far East was very quiet...and the attempt to break through the $1,400 spot mark around 1:30 p.m. Hong Kong time was the start of a long, slow sell-off that ended at the London p.m. gold fix. The low tick at that point was, according to Kitco...$1,359.00 spot.

The subsequent rally lasted until noon in New York...and that was it for the day.

Gold closed at $1,376.00 spot...down $24.10 from Monday. Net volume was very heavy...around 195,000 contracts.

Silver was under selling pressure right from the New York open on Monday evening...and was down about 50 cents by 9:00 a.m. Hong Kong time. It rallied until around 2:00 p.m...and then, like gold, went into a slow decline, with the low also at the London p.m. gold fix...10:00 a.m. EDT in New York.

And also, like gold, rallied until noon before selling off a bit into the close. The noon low, according to Kitco, printed $22.00 spot.

Silver closed at $22.43 spot...down 49 cents on the day. Gross volume was a chunky 63,000 contracts.

The platinum and palladium charts looked mostly similar.

The dollar index closed at 83.76 in late-afternoon trading in New York on Monday...and then traded more or less sideways until 2:00 p.m. Hong Kong time...and the subsequent rally peaked out at 84.20 about 10:20 a.m. in New York. Then, in less than three hours, the index fell to its low of 83.70 at precisely 1:00 p.m. EDT...giving up all of its earlier gains...and a few basis points more. The index closed at 83.76...unchanged on the day.

The gold price fell $40 as the dollar index rose 41 points between 2:00 p.m. in Hong Kong...and 10:20 a.m. in New York...but when the dollar index declined 52 basis points during the following two and half hours, the gold price only rose by about $15.

The gold shares gapped down almost 4 percent at the open...hit their low at 10:00 a.m. EDT when gold hit its low...and then rallied until around 1:00 p.m. in New York, before selling off into the close as gold did the same. The HUI finished down 2.75%.

The silver chart looked similar...and Nick Laird's Intraday Silver Sentiment Indexclosed down 2.37%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 18 gold and 10 silver contracts were posted for delivery tomorrow within the Comex-approved depositories. The link to yesterday's Issuers and Stoppers Report is here.

GLD had another withdrawal yesterday. This time it was 270,710 troy ounces...and as of 11:38 p.m. last night, there were no reported changes in SLV.

The U.S. Mint had another sales report yesterday. They sold 5,000 ounces of gold eagles...1,500 one-ounce 24K gold buffaloes...and 217,500 silver eagles.

Over at the Comex-approved depositories, there was big movement in silverinventories on Monday. They received 968,451 troy ounces...and shipped 1,119,034 troy ounces out the door. The link to that activity is here.

In gold on Monday, these depositories didn't receive any, but shipped 32,033 troy ounces out the door...and the link to that activity is here.

Here is today's "cute quota"...

I have the usual number of stories for a mid-week column...but not too many ones related to precious metals...and a couple of them are must reads.

¤ CRITICAL READS

Moody's: US Faces Downgrade Without Budget Deal

U.S. policymakers must address debt loads projected to rise later this decade to avoid a 2013 downgrade, even as the latest budget projections are “credit positive,” according to Moody’s Investors Service.

The U.S. budget deficit will drop to $378 billion in 2015 from a record $1.4 trillion in 2009, according to Congressional Budget Office data. The federal government will post a $642 billion deficit this year, the first time in five years that the shortfall has been less than $1 trillion. Moody’s said Sept. 11 that the U.S.’s top Aaa rating would likely be cut to Aa1 if an agreement on the debt ratio isn’t reached.

“The fact that it showed much lower debt levels going forward, we view as a positive development,” Steven Hess, senior vice-president at Moody’s and based in New York, said in a telephone interview of the CBO forecast. “More needs to be done on the policy front to address this rising debt ratio.”

This moneynews.com article was posted on their website early Monday afternoon..and today's first story is courtesy of West Virginia reader Elliot Simon.

SAC’s Cohen Said to Mull Deal That Would Shut Hedge Fund

After five years under investigation for insider trading, Steven Cohen is considering proposing a deal to prosecutors that would shut his $15 billion hedge-fund firm to outside investors, according to a person familiar with his thinking.

Cohen has discussed an agreement under which his SAC Capital Advisors LP would admit wrongdoing but wouldn’t be prosecuted unless it broke the law again, said the person, who asked not to be named because the talks are private. As part of the deal, known as a deferred prosecution agreement, Cohen would close the Stamford, Connecticut-based firm to outside investors and make it a family office that manages his personal fortune. SAC Capital probably would also pay a fine.

That Cohen would ponder a deferred prosecution agreement suggests the 56-year-old billionaire sees it as unlikely that he could fight criminal insider-trading charges and continue to run a hedge fund. Prosecutors, who have already linked at least nine current or former employees to insider trading while at SAC Capital, probably wouldn’t accept an agreement that lets Cohen off the hook, said John Coffee a professor at Columbia University School of Law.

"...won't be prosecuted unless it breaks the law again???" That's saying that you can commit your first murder, bank robbery, or fraud...and get a pass. You can't make this stuff up. This story was posted on the Bloomberg website late Monday afternoon...and it's courtesy of U.A.E. reader Laurent-Patrick Gally.

Watch out Watford: Here comes the secretive Bilderberg Group

Whether it’s the shape-shifting group of reptilian descendants from the constellation Draco who control humanity, or the shadowy cabal of powerful financiers and politicians who covertly run all governments, conspiracy theorists are once again preparing for their annual jamboree of protest against those who really rule the world, this year in the highly secretive destination of... Watford.

For three days beginning on 6 June, a five-star hotel in Chandler’s Cross that normally hosts the England football team before Wembley matches, will turn over its 227 luxury rooms and 300-acre estate grounds to the über-secretive Bilderberg Group.

The Grove, once the home of the earls of Clarendon where prime ministers such as Palmerston and Walpole were guests and where a young Queen Victoria started the fashion for “the weekend break”, will turn back the clock when it welcomes around 140 of Europe and America’s most powerful leaders from banking, finance and politics with a scattering of royalty and aristocracy adding to the elite guest list.

Due to a tradition that stretches back to 1954 and the first conference held at the Hotel de Bilderberg in Oosterbeek in the Netherlands, nothing that is discussed or agreed at a Bilderberg meeting is reported. Until recently even the names of those who were invited was kept secret.

This news item appeared on the independent.co.uk Internet site on Tuesday...and I thank U.K. reader Tariq Khan for bringing it to our attention.

British P.M. tries to break deadlock on tax havens

EU leaders will make another bid to agree rules on tax evasion after UK Prime Minister David Cameron called on 10 British tax havens to "get their house in order" on secret bank accounts.

In a letter released Monday (20 May) to the leaders of the British islands, including the Channel and Cayman islands, Cameron urged them to disclose details of accounts used for company ownership.

The islands should "provide for fully resourced and properly managed centralised registries, that are freely available to law enforcement and tax collectors, and contain full and accurate details on the true ownership and control of every company," he said.

This story appeared on the euobserver.com Internet site early yesterday morning Europe time...and it's Roy Stephens first offering in today's column.

‘Cameron wants to kick E.U. exit issue into long grass’ – Nigel Farage

Despite the British government’s desire to soft-pedal the country’s possible EU exit, the referendum to decide UK’s future in the Union must be held before the 2015 general election, believes the leader of the UK Independence Party, Nigel Farage.

With a lot of hard feeling swirling around the EU, one thing many seem agreed on is anger at Brussels. Nine European countries are now in recession and, with no end to austerity in sight, EU membership appears to be more trouble than its worth for some.

The leader of the Euroskeptical UKIP party, Nigel Farage, says recent research show that by participating in the EU, Britain is annually losing more than £100 billion due to membership fees and the Union’s regulations.

This story was posted on the Russia Today website late Monday evening Moscow time...and it's another contribution from Roy Stephens.

Farage Bashes Tax-Advantaged Hypocritical European Politicians

With Tim Cook being fried on Capitol Hill, it is perhaps ironic that the issue of taxes is front-and-center in the European parliament today. However, as usual, the always-willing-to-tell-the-truth Nigel Farage points out the gross hypocrisy of a political elite calling for higher taxes (on the wealthy and more broadly in peripheral nations) when the reality is that the higher-ups in the European parliament have their marginal tax rates capped at 12%. Of course, none of that matters because stocks are rising and interest rates are falling; but perhaps the 60% of Greek youth or 57% of Spanish youth might be intrigued at the new normal idea of 'fair share' in Europe.

This 3:56 minute tirade was posted on the Zero Hedge Internet site early yesterday afternoon...and this video clip is courtesy of Marshall Angeles.

Wealthy bank depositors to suffer losses in E.U. law

A draft European Union law voted on Monday would shield small depositors from losing their savings in bank rescues, but customers with over 100,000 euros in savings when a bank failed could suffer losses.

On Monday, a group of European lawmakers in the house's economics committee voted that, from 2016, large depositors in the European Union might suffer losses if a bank gets into serious trouble, echoing a deal in Cyprus where wealthy depositors were hit hard at two banks to save the country from bankruptcy.

Under the EU proposal, a bank would only dip into large deposits of over 100,000 euros once it had exhausted other avenues such as shareholders and bondholders.

This Reuters story, filed from Brussels, was posted on their website late on Monday evening Europe time...and I thank Manitoba reader Ulrike Marx for sending it along.

Corporate Tricks: E.U. Faces Tough Battle to Close Tax Loopholes

Wealthy businesspeople shift millions of euros abroad while profitable companies use accounting tricks to minimize their taxable earnings and assets. The EU finally wants to create effective policies to curb these practices, but faces strong opposition from member states.

BASF, based in Ludwigshafen in southwestern Germany, has a large tax department, whose work consists partly in moving money around between continents. But now the company has discovered a tax haven right at home in Europe

In addition to a large plant, the company operates the BASF Belgium Coordination Center in Antwerp. Some 160 employees at the center spend a portion of their time searching for legal ways to reduce BASF's tax bill. In 2011, the company paid taxes on its many millions in profits at a rate of only 2.6 percent.

BASF is by far not the only company to take advantage of favorable tax conditions in a neighboring EU country to improve its bottom line. Volkswagen, currently the most profitable company in Germany, was even greedier. In 2012, Belgian subsidiary Volkswagen Group Services paid no taxes at all on profits of €153 million, and in the previous year it raked in €141 million in tax-free profits -- and it was all completely legal.

This story was posted on the German website spiegel.de yesterday afternoon Europe time...and I thank Roy Stephens for sharing it with us.

Taxes on some wealthy French top 100 percent of income

More than 8,000 French households' tax bills topped 100 percent of their income last year, the business newspaper Les Echoesreported on Saturday, citing Finance Ministry data.

The newspaper said that the exceptionally high level of taxation was due to a one-off levy last year on 2011 incomes for households with assets of more than 1.3 million euros ($1.67 million).

President Francois Hollande's Socialist government imposed the tax surcharge last year, shortly after taking office, to offset the impact of a rebate scheme created by its conservative predecessor to cap an individual's overall taxation at 50 percent of income.

This Reuters item, filed from Paris, was posted on their Internet site early Saturday afternoon EDT...and I thank U.K. reader Teresa Tannahill for bringing it to our attention.

New Arms Bill in Congress Could Involve Major Sanctions on Russia

The US Senate Foreign Relations Committee voted on Tuesday to pass a bill that will be highly unpopular in Moscow, not to mention Damascus.

The Syrian Transition Support Act would provide arms to Syrian rebels in support of a regime change — a precedent Russia deeply opposes. Moscow has already been overtly sending weapons to Assad (more intensely so as of late), so Washington's move to overtly arm the rebels could easily paint Syria as the battleground of a blossoming proxy war.

Russia won't like that idea, but it also won't like the paragraph in the bill about sanctions on anyone shipping arms or oil to the Syrian regime: Sanctions on arms and oil sales to Assad: Targeting any person or entity that the President of the United States determines has knowingly participated in or facilitated a transaction related to the sale or transfer of military equipment, arms, petroleum, or petroleum products to the Assad regime.

This very short article appeared on the businessinsider.comInternet site yesterday evening EDT...and it's Roy Stephens' final offering in today's column.

Abe’s Resurgent Japan Hurt by Lack of Business Spending

As Japan’s cherry trees bloomed and the stock market soared, Kohetsu Watanabe flew to a blossom-viewing party in Tokyo hosted by Prime Minister Shinzo Abe to tell the premier personally how bad things really are.

When the head of machine-parts maker Daikyo Seiki Co. shook hands with Abe at the 12,000-guest event in Shinjuku Gyoen park, he says he begged the premier to help small- and medium-sized companies that make up 70 percent of Japan’s industry.

“Stocks and the yen may have come back, but the state of the real economy is very different,” said Watanabe, 49, who has no plans to raise wages for his 17 employees and hasn’t paid a bonus since 2008. “It’s impossible for me to be optimistic.”

This Bloomberg story appeared on their website in the wee hours of yesterday morning MDT...and I found it in yesterday's edition of the King Report.

Four King World News Blogs/Audio Interviews

1. Dr. Stephen Leeb: "Gold, Silver and 100-Year Inflection Point to Crush the West". 2. Richard Russell: "I Haven't Seen This in 60 Years of Writing". 3. Ron Rosen: "Silver to Soar a Stunning 400% and Gold $1,500 in 10 Months". 4. The audio interview is with Egon von Greyerz.

Rubber bullets fired at South African mine strikers, several hurt

Ten striking South African miners were taken to hospital on Tuesday after being hit by rubber bullets, police said, as labour strife swells in mines and factories ahead of mid-year pay negotiations.

"If our demands are not met we will have no option but to go to the streets," NUMSA national treasurer Mphumzi Maqungo told Reuters.

The comments underscored the fragility of labour relations in Africa's biggest economy since last year's bloody mining sector unrest, and pushed the rand beyond 9.50 to the dollar for the first time since early 2009.

In This Issue.

* Will they or won't they???
* IMF tells the Swiss to go negative.
* BOE denies King his request to increase stimulus.
* Possibility of more stimulus helps the emerging markets.

And, Now, Today's Pfennig For Your Thoughts!

Looking for direction from Chairman Bernanke.

Good day. We finally got a break from all of the storms last night, with most of the major storms passing just south of the St. Louis area. The break was certainly appreciated, as my two dogs have kept me up most of the last two nights. I have a yellow lab and a smaller lahtese who work each other up whenever a storm rolls through. My wife actually went to the vet to get some 'doggie downers' yesterday as nobody in our house was able to get any sleep with our two dogs all hyped up by the storms.

Currency traders must have taken some good drugs the past two days as the currencies markets have been very mellow this week. The range on the dollar index has been tightening over the past 4 trading days, with the lower end of the range holding steady and the upper end continuing to come down. But testimony from Fed Chairman Ben Bernanke could certainly break the dollar out of this pattern today.

Bernanke will be testifying on the economic outlook before the Joint Economic Committee of Congress today and the minutes of the FOMC's last meeting will be released at about the same time. Investors have been waiting to hear which side of the fence the Chairman is on - is he going to be in favor of tapering the bond buying program or will he feel the plan needs to continue until the labor market improves? Without any data released here in the US this week, the markets have been trading up and down according to expectations of what Bernanke will say. Today we will finally get to hear from the man himself.

San Francisco Federal Reserve President John Williams started all of the hype around Bernanke's testimony with a suggestion at the end of last week that the Fed should start tapering their monthly purchases of Mortgage Backed securities. Philadelphia Fed Pres Charles Plosser added more fuel to the 'end stimulus' fire with his suggestion that the Fed should start shrinking their purchases at the next meeting. But then Boston's Eric Rosengren threw water on the fire by telling reporters that low inflation and high unemployment suggests there may be a need for MORE stimulus not less.

The St. Louis Fed President, James Bullard weighed into the argument yesterday during a speech over in Frankfurt, Germany. Bullard said the central bank should continue its bond buying program in order to boost growth which is slower than the FOMC would like. Bullard's words carry a bit more weight with the markets as he is one of the Fed Presidents who currently votes on the policy-setting FOMC. "Quantitative easing is closest to standard monetary policy, involves clear action and has been effective," Bullard said. "We may need to update our thinking with respect to the so-called exit principles."

After Bullard's comments hit the news wires, New York Fed President William C. Dudley was asked for his opinion on QE and probably gave the best indication of what Chairman Ben Bernanke will say during his testimony today: wait and see. Dudley said he has not decided on what the next move should be and suggested the FOMC should continue to monitor the markets and the economic data to see when to adjust the purchase program. "Because the outlook is uncertain, I cannot be sure which way - up or down - the next change will be," Dudley said in a speech yesterday. He believes the Fed needs to take some more time before making any changes to the policy, "Three or four months from now I think you're going to have a much better sense of, is the economy healthy enough to overcome the fiscal drag or not."

I think Bernanke will sound a lot like Dudley today during his testimony. The FOMC minutes will probably reflect that the committee members do feel the US economy is on a good recovery path, and there was probably some discussion of ending the bond buying. But Chairman Bernanke is a cautious dove when it some to economic policy, and he will suggest that more proof of the recovery will need to be reflected in economic data, and in particular we will need to see more positive signs from the labor market. The FOMC members will be worried about the nascent recovery here in the US, and have shown that they are much less worried about any longer term inflation. They will much rather be too late in removing the stimulus instead of too early. Therefore I think the chances are greater that we will see a drop in the dollar today instead of a dollar rally.

As I mentioned earlier, St. Louis Fed Head was in Germany yesterday, and certainly didn't keep his comments solely on the US stimulus program. During his speech Bullard also suggested that the ECB should take a more aggressive approach in their monetary policy. Bullard said Europe is risking an extended period of low growth and deflation similar to Japan's 'lost decades' and that the ECB should therefore start buying bonds similar to what the US and the UK have done. Bullard suggested that low interest rates weren't the answer for Japan, as they kept them near zero for over 15 years. QE is what will be needed for Europe according to the St. Louis Fed head.

The IMF is suggesting the Swiss National Bank should also get more aggressive with their policies, stating in a report released yesterday that the SNB should introduce negative interest rates. And SNB President Thomas Jordan says the negative interest rates are a tool the SNB is considering. By moving the rate the central bank pays on bank deposits into negative territory, the thought is that the banks will put more money to work in the markets instead of just keeping it with the central bank. This should increase the 'velocity' of money in the Swiss economy and lead to more inflation and activity; encouraging more economic activity. But as SNB President Jordan suggested yesterday, these negative interest rates could also have unintended side effects. He suggested simply moving the cap on the CHF/EUR may be a better short term option. The Swiss franc dropped through 1.26 CHF/EUR for the first time in two years after this suggestion by Jordan.

The minutes of the last BOE meeting were released this morning, and showed that BOE Governor Mervyn King was again defeated in his bid to expand the stimulus efforts. King has been pushing the BOE to increase the amount of bond buying they are doing in this latest round of quantitative easing, but other bank officials have cautioned against any increase on fear of stoking inflation expectations. King and two other members want to increase the bond purchases by 25 billion pounds to 400 billion pounds.

The pound sterling fell after the release of the meeting minutes, and moved down even further after a report showed UK retail sales unexpectedly declined last month. Retail sales dropped 1.3% from March when they declined .6%. Falling retail sales would seem to counter the 'inflation argument' being presented against the QE increase, so there is speculation that King will eventually wear down the other members and QE will be increased.

Commodity currencies fell yesterday as both the AUD$ and CAD$ were lower. The Australian dollar fell after a report showed consumer confidence dipped 7% this month, following a 5.1% drop in April. The RBA dropped rates at the beginning of May, and falling consumer confidence may encourage further rate cuts in order to try and stimulate the Australian economy. Lower rates are a problem for holders of Aussie dollars, as one of the key supports of the currency is interest rate differentials.

Oil prices fell a bit yesterday, snapping a four day rally and putting pressure on the petrol currencies including the Canadian dollar. Oil is Canada's largest export, so the fall in crude prices helped push the loonie lower. The talk of ending the QE program in the US has also weighed on the Canadian dollar as the US dollar rallies. The Canadian economy is still struggling, and the new BOC leader is seen as more of a dove than his predecessor, so the chances of a hike in rates are being reduced. The BOC has held rates steady since September of 2010, and these rates are now expected to remain at their current levels through the end of the year. Not good news for the loonie.

The emerging market currencies were buoyed slightly by the possibility that the US stimulus policies would be extended. Both the Mexican peso and Brazilian real moved higher yesterday on the suggestion by STL Fed Head Bullard that QE be extended. Brazil's real rose from a four month low, climbing for the first time in six days vs. the US$. Brazil's Central Bank President Alexandre Tombini said policy makers will act to ensure inflation slows in the second half of the year. "The central bank is vigilant and will do what's necessary in a timely fashion to make inflation decline." Tombini said yesterday. Inflation remains close to the 6.5% upper limit of the central bank's target range, and Tombini's comments may suggest interest rates could be increased in the coming months. This would be very good news for the Brazilian real, as this currency is very attractive for investors looking for higher yield.

In addition to Bernanke's testimony and the release of FOMC meeting minutes, Existing Home Sales data is scheduled to be released this morning. The housing market is one of the positive signs of the US economic recovery, so this number will be closely watched. Existing home sales are expected to have climbed in April to the highest level in more than three years, with a 1.4% increase.

To recap. The markets are eagerly awaiting the testimony of Ben Bernanke today along with the release of the FOMC meeting minutes. Everyone is looking for a clue as to when the Fed will start to reduce their Quantitative Easing efforts. Indications from the different Fed Heads show just how split they are regarding the end of QE, but I think we will see it continue through the end of the year. STL Fed Head Bullard feels the ECB should start a bond buying program of their own. The BOE kept their QE program at the current level in spite of the urging of King to increase it. Commodity currencies fell and emerging market currencies rose yesterday as the question of an end to QE swung in their favor.

Currencies today 5/22/13. American Style: A$ $.97484, kiwi .81136, C$ .9700, euro 1.2932, sterling 1.5094, Swiss $1.0259. European Style: rand 9.5103, krone 5.7820, SEK 6.6135, forint 223.73, zloty 3.2319, koruna 20.1597, RUB 31.16, yen 102.91, sing 1.2615, HKD 7.7612, INR 55.5875, China 6.1904, pesos 12.3344, BRL 2.0404, Dollar Index 83.889, Oil $95.52, 10-year 1.92%, Silver $22.645, Gold. $1,387.40, and Platinum $1,467.65.

That's it for today. The Cardinals won big last night, beating the San Diego Padres 10-2! The Cardinals will remain out west for an extended period as Busch Stadium is re-configured to host an International Soccer match. The pitcher's mound was removed and base-paths have all been sodded to allow the Manchester City and Chelsea football clubs from the English Premier league to play a 'friendly' tomorrow night. The soccer pitch will be slightly smaller than what the teams are used to, as they had to 'shoehorn' it into Busch Stadium. Our own Ty Keough will be calling the game on KMOX, the local radio station and the stadium was sold out within minutes. Chuck will be back in the saddle tomorrow morning, so this is it for a while from me. Hope everyone has a Wonderful Wednesday, and thanks for reading the Pfennig.

Chris Gaffney, CFA
Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837

Green as Grass

Wed, 22 May 2013 14:57:00 -0400

The 6 W’s: Who, what, where, when, why and what of it

RegMed equities and investors enjoy your day in the sun – today’s trading within the sector is in lock-step with the overall positive market. Could this be a sign of things to come? Perhaps, but as I mentioned yesterday the dichotomy between clinical data and trial risk performance must be addressed. Still, it’s always gratifying to see the sector leverage the bull market when it can.

Measuring the day - POSITIVE - 21 green (ups) followed by 7 red (downs) and 6 fluctuating black (flats).

Mid-Day - Stocks were upbeat at mid-day Wednesday following Fed Chairman Bernanke’s Senate testimony that the central bank will continue to apply stimulus efforts, though a step down in the pace of bond purchases could occur if the job market continues to improve. Traders were also pleased with data on U.S. housing showing sales at their highest level in more than 3 years. The NASDAQ is UP +15.93 or 0.45% at 3518.05 while the Dow is also UP +96.91 or +0.63% at 15,484.49. The CBOE volatility index traded above 13.

Research Notes:

RegMed Daily – The Early Movers … http://www.scimitarequity.com/blog/2013/05/22/the-early-movers-whos-hot-whos-not-28

Henry McCusker presenting at Sachs Cancer Bio Partnering Institute…http://www.scimitarequity.com/blog/2013/05/22/henry-mccusker-presenting-at-sachs-cancer-bio-partnering-institute

Roll Call:

Aastrom (ASTM) is UP … +0.0064 to $0.5799 with a pending offering about to dilute the price and share count. A SELL.

Athersys (ATHX) is UP… +$0.01 at $1.87 post earnings. A HOLD.

BioLife Solutions (OTC: BLFS) is FLAT…at $0.38 per share at mid-day. BLFS is growing its business, evidenced by its licensing of specific areas of intellectual property, while keeping high growth as the regenerative medicine market opportunity develops. BLFS hold the leading supplier position for pre-formulated, clinical grade bio-preservation media products. A STRONG BUY.

Cytori (CYTX) is UP … +$0.05 to $2.59 with today’s mid-day trading range of $2.51 – $2.60 and a 40 K share volume. A BUY.

Cytomedix (OTC: CMXI) is UP… +$0.0049 to $0.5149, with a trading range of $0.50- $0.5149 and moderate volume of 37 K shares compared to Tuesday’s close of $0.51. A BUY.

NeoStem (NYSE MKT: NBS) is DOWN …-$0.0025 to $0.5750 with moderate l share volume of 357 K at mid-day. The trending 50 and 200 day moving averages are at $0.61 and $0.63 respectively. A STRONG BUY!

Medistem (PINK: MEDS) is DOWN…-$0.10 at $1.10 … with no real news and minimal volume of 100 shares. MEDS needs to generate some significance to differentiate itself and forward … any visibility standing… A very thinly or no trading volume stock. A HOLD.

News

An expert panel of scientists and clinicians is warning people against going overseas for costly and unproven stem cell treatment for cerebral palsy. A forum held in Sydney last night heard from leading researchers in the field and a parent who sought treatment in the United States for his young son. The Cerebral Palsy Alliance estimates as many as 500 Australians have sought stem cell therapies overseas. But the alliance last night urged families to hold out for the possibility that Australia will undertake its own clinical trials of the treatment as early as this year. “We’re very worried about families travelling overseas for treatment,” Associate Professor Iona Novak, from the alliance, said. “A lot of these stem cell tourism companies don’t even describe what type of cells they’re giving, so first we don’t even know if they’re human cells… so, of course, it is a very risky procedure. “There have been a couple of cases internationally of children actually dying from these treatments.”

Cellular Biomedicine Group (OTCQB: CBMG) has achieved half of the enrollment of the total projected enrollment required for its PI trial to evaluate the safety and preliminary efficacy of TC-DC (Tumor Stem Cell Specific Dendritic Cell) therapy for hepatocellular carcinoma (HCC), the most common type of liver cancer. To date the trial has had no Severe Adverse Effect (SAE) reported.The Phase I clinical trial for TC-DC therapy for HCC, registered with NIH under number NCT01828762 is an open label clinical trial conducted with Shanghai’s PLA 85 Hospital, one of the Liver Disease Centers of People’s Liberation Army. The trial will evaluate the safety and efficacy in lowering the incidence of tumor recurrence and metastasis by means of autologous immune cell therapy in primary HCC patients following standard tumor resection and TACE chemotherapy.

Stemline ( STML) closed on its previously announced underwritten public offering of 4,137,931 shares of its common stock at a public offering price of $14.50 per share. The gross proceeds to Stemline from the public offering are $60 million, before underwriting discounts and commissions and other offering expenses payable by Stemline.

Worth Noting

Cytomedix (CMXI) chairman David Emerson Jorden bought 80,000 of CMXI 5/17-21/2013

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Doug Casey’s Primer on Internationalization

Wed, 22 May 2013 14:57:00 -0400

As many of you may know, International Man has its roots in the book of the same name. It was first published in 1978 by best-selling author, speculator, and renowned world-traveler Doug Casey.

The original intent of that book was to give readers a general sense of the exciting and opportunity-rich world that lay outside of their national borders, with a review of over 100 countries, valuable "opportunity intelligence," and the resources that anyone could follow to realize these opportunities.

Even though the book is now clearly out of date, the need for information on internalization is more relevant than ever, as governments the world over become more desperate. The purpose of this website is to preserve the mission of that book and be the premier location for up-to-date, highly actionable, and practical information on the topic.

So why is internationalization prudent?

Doug Casey has said over and over that spreading your political risk beyond one single jurisdiction is the single most important thing he can recommend today.

Political risk is minimized when you don't depend absolutely on any one particular country. Having all your eggs in one basket only makes it easier for someone to grab them all. Being internationalized makes it much harder for any particular government to control you.

We will no doubt see the major underlying trend of increasing political risk (especially for Westerners) get worse as governments sink deeper into fiscal and moral bankruptcy.

It is only prudent and logical to assume that you will, somehow and someway, continue to be squeezed harder in the pocketbook and subjected to escalating arbitrary and burdensome regulations and restrictions. In short, expect more government and less freedom all around.

The window to protect yourself from these risks by diversifying internationally gets verifiably smaller with each passing week. There are many ways to internationalize that do not require you to leave your home country. It is not necessary (at least, at the moment) that you immediately leave and become an expat.

However, it is necessary that you develop the options to internationalize before the government closes the window of opportunity to do so. If history is any guide, it won't be open forever.

In that sense, it is much better to have developed and implemented many parts of your internationalization game plan a year early rather than a minute late.

There are four broad areas of internationalization:

Savings: This covers how to setup offshore bank, brokerage, and financial accounts, foreign real estate and "bolt-holes" in case of trouble, moving and owning gold overseas, and structures like foreign trusts that help to legally reduce taxes. Placing your savings outside the immediate reach of your local government ensures that they cannot be trapped in the case of capital controls or outright seized at the drop of a hat, such as what happened when the government became sufficiently desperate in Cyprus.

Yourself: Obtaining a second passport from another country and establishing legal residency in foreign countries.

Income: The structuring of your cash flows to reduce dependence on any one source in any one jurisdiction. Establishing additional sources of revenue, international investment opportunities and trends, and setting up an offshore company.

Digital Presence: This commonly includes your IP address (which can often pinpoint you to a precise physical address), email account, online file storage, and the components of personal/business websites.

Last, I will leave you with a primer on internationalization with Doug Casey.

To navigate all the possibilities and options available, it is imperative to have the most accurate and current information possible. Casey Research has recently updated and expanded its popular Going Global report to give its readers exactly that. Going Global 2013explores in detail the choices investors have for moving investments offshore, including insurance and trusts; it discusses many stock markets and currencies; and it covers internationalizing yourself, starting with getting a second passport and including choosing a new country (or countries) in which to create homes. If you want to start internationalizing, you'll find no better resource on the subject. Click here to learn more and get started today.

The Early Movers – who’s hot, who’s not

Wed, 22 May 2013 14:54:00 -0400

Which RegMed companies are making moves in the 1^st hour?

Signs of life …

Shire ADR (SHPG +$0.35) and Wright-Medical (WMGI +$0.19) are the leaders as today’s market opens…

…followed by MiMedx (MDXG +$0.17), BioTime (NYSE MKT: BTX +$0.11), Harvard Bio (HBIO +$0.10), Osiris (OSIR +$0.10), Stemline (STML +$0.10), Verastem (VSTM +$0.08), Opexa (OPXA +$0.05), StemCells (STEM +$0.03), Proteonomix (OTC: PROT +$0.025), Dendreon (DNDN +$0.02), Geron (GERN +$0.02), Aastrom (ASTM +$0.015), NeoStem (NYSE MKT: NBS +$0.004), and Advanced Cell Technology (OTC: ACTC +$0.0017)

A view of the downside at the open …

Cryo-Cell (OTC: CCEL -$0.10) and ReNeuron (LON: RENE -$0.07) are the loss leaders…

…followed by Athersys (ATHX -$0.02),ThermoGenesis (KOOL -$0.02) Neuralstem (NYSEMKT: CUR -$0.01), International Stem Cell (PINK: ISCO -$0.01), Brainstorm (OTC: BCLI -$0.005), Vitro Diagnostics (PINK: VODG -$0.004), and Tengion (PINK: TNGN -$0.009)

And some of the sector is flat

Bioheart (PINK: BHRT), BioLife Solutions (OTC: BLFS), Cytomedix (OTC: CMXI), Cytori (CYTX), Fibrocell (NYSE MKT: FCSC), ImmunoCellular (NYSE MKT: IMUC), IntelliCell (OTCMKTS: SVFC), Medistem (PINK: MEDS), and Mesoblast ADR (PINK: MBLTY)

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Commodity weakness weighs on WEIR

Wed, 22 May 2013 14:48:00 -0400

A glance at the above chart of the FTSE 100 shows equities powered to fresh record highs, driven by the US, which continues to outstrip economic dynamics in the developed world.

Further positive news on the US economy came from data revealing that retail sales expanded faster than expected, despite fiscal tightening in the world’s largest economy. The Commerce Department said retail sales crept up 0.1% during the month, against forecasts for a modest decline, after a 0.5% fall in March, the largest in the past nine months.

Better data also prompted an improvement in sentiment towards Europe, after a larger than expected increase in industrial production raised hopes that the recession in the region has eased. Eurostat showed Eurozone industrial output rose 1% in March, double the rate expected and the biggest since July 2011.

Ratings agency Fitch even upgraded Greece’s credit rating, citing progress in the debt laden country reducing its budget deficit and the risk of a Eurozone exit receding. Fitch said it expected Greece to have a milder recession this year of 4.3% and a weak recovery in 2014.

The Japanese stock market also surged to a fresh five year high after the Group of Seven finance ministers failed to criticise the Bank of Japan’s aggressive monetary easing. The politicians and central bank have pushed the yen down against all its major trading partners, boosting the leading exporters’ shares. Data this week showed gross domestic product rose 0.9% from the previous quarter, against the median forecast of a 0.7% rise, providing the first hard evidence that Prime Minister Shinzo Abe’s sweeping stimulus is boosting the economy.

Concerns over the pace of global growth, however, remained in evidence elsewhere, with industrial commodities losing ground following disappointing economic data from China. The world’s second largest economy has faced a slowdown in fixed asset investment, worse than expected industrial production and disappointing retail sales. Brent crude fell back to $101.6 a barrel and gold moved below $1400 an ounce.

Growth data from Europe also disappointed after the region contracted more than expected in the first quarter of the year, weighing on the single currency. Official data showed growth in the Eurozone slowed by 0.2% in the first three months of the year, compared to expectations of a 0.1% fall, with both Germany and France growing at a slower than expected rate.

The German Zew survey of economic sentiment grew at a much lower rate than expected, while the gauge of current conditions dropped sharply, suggesting conditions are still deteriorating in Europe’s powerhouse economy.

Technical analysis illustrates the acute gains experienced this month, with the FTSE 100 nearing 12 year highs at 6750 and all-time highs during the technology bubble in 200 at 6930. Meanwhile, the oscillators are acutely overbought, suggesting the recent momentum could be nearing exhaustion. Strong resistance is likely at 6750, while support is seen at 6505, 6400 and 6240.

In conclusion, it has been an excellent run for equities, supported by an improving global economy that has strengthened the foundation for the stock market rally. That said, with the FTSE 100 nearing all-time highs combined with the acutely overbought technical suggests further short-term gains are growing increasingly unlikely.

Given the above analysis of the FTSE 100, I have been focusing on short-term selling opportunities and as commodity prices remain under pressure, I have concentrated my efforts on engineers with heavy exposure to the materials sector.

Weir Group (LON:WEIR) is a FTSE 100 listed specialist pump and valve maker, servicing the oil and gas, mining and power generation industries.

Despite recent improvement in the share price, the bears have still got their teeth into the company. Around 15% of its shares are currently out on loan to investors that are speculating the price will fall, making it the second most shorted stock in the FTSE All-share index.

An interim management statement on 1st May revealed Weir was trading in line with expectations, forecasting low single digit revenue growth and broadly stable margins, although the outlook highlighted a few concerns.

The mining sector represents 45% of group revenues, where capital expenditure is being squeezed by lower commodity prices. The company said first quarter trading was resilient, but the longer commodity prices remain weak, means margins will get squeezed.

Services to the oil and gas sector, including equipment used in the process of fracking, contributes a third of revenues, but with US gas prices near historical lows because of the Shale revolution, there has been less incentive for companies to invest in new drilling capacity.

The group’s performance over the first quarter was affected by a lower opening orderbook, particularly in the oil and gas division. Overall like-for-like order input fell 14% between January and the end of March when compared to last year, with analysts highlighting the likely implications on full year profits.

Weir offers a good geographical spread, but trading on a hefty 16.2x earnings, while only forecast to grow by 8%, leaves them looking fully rated on a PEG of 2 and a yield of 1.7%. Furthermore, a director recently selling £700,000 worth of shares at 2400p, doesn’t install confidence.

The above chart of Weir illustrates the rapid ascent experienced over the past year, although the shares appear to be running out of steam near the March highs of 2500p. The oscillators are showing early signs of rolling over in overbought territory, with the stochastics intersecting to the downside, implying a drop in momentum.

Given the earlier analysis of the FTSE 100 combined with the commodity related pressure at Weir, suggests the shares are vulnerable to a correction. At the time of writing the share price is 2470p and I believe a short trade with a tight stop-loss above resistance at 2544p, offers an attractive risk / reward bias, with targets seen at 2371p, 2252p and 2105p.

This report was written by Mark Allen – Head of Derivatives at Simple Investments Stockbrokers. The writer does not hold a position in Weir Group, but client accounts may. The material in this report has come from Simple Investments internal data sources, Simply Charts and Weir Group’s corporate website.

Higher open anticipated

Wed, 22 May 2013 14:48:00 -0400

Futures Point UP

Futures suggest a higher open on Wednesday, as investor attention remains focused on today’s testimony to the Senate by Fed Chairman Ben Bernanke. Markets are especially keen for clues as to next steps regarding a reduction or end to quantitative easing. Investors will also digest U.S. existing home sales data due out this morning.

RegMed sector share pricing remains volatile, often with dramatic swings in pricing throughout the trading day, with upwards of 7% – 12% in changes not uncommon.

Both the DOW and NASDAQ futures are UP 0.13% and 0.20% respectively.

In Europe, the FTSE 100 was down 0.2 percent at 6,790 while the DAX fell 0.3 percent to 8,443. The CAC-40 in France was 0.6 percent lower at 4,011. Meanwhile in Asia stocks rebounded, with Japan’s Nikkei up 1.6% to close at its highest point in five years. Hong Kong’s Hang Seng, where trading was suspended in the morning due to bad weather, fell 0.5%.

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Henry McCusker presenting at Sachs Cancer Bio Partnering Institute

Wed, 22 May 2013 14:48:00 -0400

Publicly Traded Companies Targeting Cancer Stem Cells

Scimitar Equity founder Henry McCusker is presenting this morning at the Sachs Cancer Bio Partnering Forum in Boston. The Forum brings together thought leaders from Cancer research institutes, patient advocacy groups, pharma, and biotech to facilitate funding and investment.

On a panel entitled Cancer Stem Cells, Henry will offer an update on the current state of cancer stem cell research from an investment perspective, and provide a snapshot on six companies and their efforts in this burgeoning area of medicine.

Click http://scimitarequity.com/HenryCSCPPRES5-18-4.pdf for a copy of Henry’s presentation.

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Index Falls for Two Consecutive Weeks

Wed, 22 May 2013 10:19:00 -0400

Oreninc Index Update: May 9 - 16, 2013

Index Falls for Two Consecutive Weeks

Note: The Oreninc Index image below has been inverted from previous weeks. The weekly state of the market is now the purple line and the five-week moving average is the grey area.

The Oreninc Index has returned following a one-week hiatus as most of the team traveled to New York City for the Metals & Minerals Investment Conference.

The Index fell for two consecutive weeks ending May 9 and May 16, 2013, changing the five-week moving average to its lowest in 2013 and its lowest level since August 2012. The markets remain incredibly soft and as summer and the Canadian exploration season begins, there is no reason to expect a stunning turnaround in the short term.

Summary (for the week ending May 16th only):

· Total deals announced fell to 23, a four-week low.

· Two brokered deals were announced for $18 million.

· One bought deal was announced for $15 million.

· Total dollars announced was $64 million, a two-week high.

· Average deal size moved to $4.1 million, a two-week high.

Major Financing Openings (for the weeks ending May 9th and 16th):

· Probe Mines Ltd. (TSX-V:PRB) opened a $15 million offering underwritten by a syndicate led by Cormark Securities Inc. on a bought deal basis. Each unit includes a 1/2 warrant that expires in 24 months. The deal is expected to close on or about May 28, 2013.

· Denison Mines Corp. (TSX:DML) opened a $13 million offering underwritten by a syndicate led by Raymond James Ltd on a bought deal basis. The deal is expected to close on or about May 28, 2013.

· St. Augustine Gold and Copper Limited (TSX:SAU) opened an $11 million offering on a best efforts basis.

· Armadillo Resources Ltd. (CNSX:ARO) opened a $10 million offering on a best efforts basis.

Major Financing Closings (for the weeks ending May 9th and 16th):

· Whitecap Resources Inc. (TSX:WCP) closed a $20 million offering on a best efforts basis. The deal is expected to close on or about May 16, 2013.

· True Gold Mining Inc. (TSX-V:TGM) closed a $10 million offering on a best efforts basis.

· Curis Resources Ltd. (TSX:CUV) closed a $6 million offering on a best efforts basis.

· Ucore Rare Metals Inc. (TSX-V:UCU) closed a $5 million offering underwritten by a syndicate led by Byron Capital Markets on a best efforts basis.

Author: Eli Fabens

Original Link: http://oreninc.com/orenthink/entry/oreninc-index-update-may-16-2013

Oreninc also publishes the Oreninc Deal Log, a daily list of all financing activity in the TSX resource sectors. Visit http://oreninc.com to see which companies and sectors to watch. Oreninc also writes custom reports for companies on effective capital raising strategies to help companies maintain long-term shareholder value.

Disclaimer: The views presented in Oreninc's blog reflect the opinions of the Oreninc Team only. We use the publicly available data we collect for the ODL to discuss greater market and financing issues. See Terms.

Be Better

Tue, 21 May 2013 15:07:00 -0400

Better Investors will experience higher returns, and be more comfortable and confident in the process.

This is our underlying belief and driving force behind a new report we’ve published on what makes a better investor. It focuses on the structural and behavioural elements of investing rather than the nitty gritty of picking stocks and determining an asset mix. As we’ve said many times, this isn’t rocket science. Yet, we’ve seen too many people who don’t have a plan or process, which has led to poor returns and a frustrating investing experience. We wanted to create a simple doctrine to assist investors. Call it a Jerry Maguire moment.

We identify five essential, yet simple, elements to being a better investor. In short, they are: (1) being realistic, (2) having a long-term plan, (3) committing to a routine, (4) being prepared for extremes, and (5) being a good CEO of your portfolio.

Our report expands on these elements in plain-English and is accompanied by sketches from Carl Richards, a contributor to The New York Times, author of The Behavior Gap, and expert at making complex financial concepts easy to understand.

The Hidden Bargain – Uranium

Tue, 21 May 2013 15:07:00 -0400

Over the past month, gold has seen a considerable decrease in price, dropping almost 15% since the beginning of May. If this trend continues, gold will have its first losing year since 2000. This has led many investors, from the housewives of China to the bankers on Wall Street, looking for a bargain in gold prices.

However, what they don't realize is that there is already a bargain available – in uranium. Despite being the source of 20% of electricity in the United States and 35% in the EU, its price remains at multiyear lows.

Yes, gold has dropped a lot in the past month, but an ounce of gold can still buy almost 35 pounds of uranium at today's prices – that's much more than the historical average of 22 pounds. In fact, back in 2007, an ounce of gold would only net you about five pounds of uranium.

What does this mean? If you consider paper fiat money to be worthless and gold as real money, then the fact that you can buy more of uranium with gold means that uranium is cheap. Right now, we are clearly in the territory of "uranium is cheap relative to gold." Since these types of ratios have a way of going back to their historical averages, this means that in a gold bull environment, uranium is set to increase even more.

Still not convinced about uranium? Join us in our free online video event, The Myth of American Energy Independence, to learn more about the future of nuclear power, energy security in the US, and the uranium sector as a whole. To set the record straight, we have invited some of the most knowledgeable experts in the field, including:

Spencer Abraham, former US Secretary of Energy
Lady Barbara Judge, chairman emeritus of the UK Atomic Energy Authority
Herb Dhaliwal, the former Canadian Minister of Natural Resources
Rick Rule, CEO of Sprott US Holdings; and
Amir Adnani, CEO of Uranium Energy Corp.

If you have always wanted to know more about this very important part of today's energy paradigm, then this is one video that you do not want to miss. For those who sign up, you will also receive a free copy of our Global Resource Intelligence report on uranium (a $29 value). Sign up today and get ready to profit from uranium – and the hidden contrarian bull market that's ahead.

Additional Links and Reads

EU Taps Top Oil Traders for Help in Price-Fixing Probe (Globe and Mail)

The price-fixing investigation continues, this time with the focus shifting to the top commodity trading houses of Europe. This is good news for Statoil and Shell, as it appears that they are not suspects in the investigation. It will be interesting to see what transpires, and to see how deep the wormhole goes.

Oil Pumping Suspended as a Result of Attack on Iraqi-Turkish Pipeline (Hydrocarbon Processing)

While oil transportation has now resumed, it is important to note that terrorist attacks or attempts on this pipeline are almost a monthly event. Now that ExxonMobil and other international majors are in Kurdistan, let's see what kind of security and diplomacy they can add to the area. A foreign oil company in Iraq at this point may actually be a good thing.

German Minister Calls EU Move on Chinese Solar a "Grave Mistake" (The Nation)

We expect that this has more to do with Germany's energy security rather than its exports. Germany is definitely reeling from its unrealistic energy goals, and we expect a major overhaul of them in the near future. Germany already subsidies solar very heavily, and the import tax will just make solar even more expensive. Germany cannot really justify this paradigm shift in the current European economy.

Daily Pfennig: Waiting and wondering when QE will end

Tue, 21 May 2013 15:04:00 -0400

In This Issue.

* Dollar is largely unchanged...
* Kiwi moves higher while rand falls.
* UK inflation is lower, driving the pound down.
* Precious metals rebound, but then turn back around.

And, Now, Today's Pfennig For Your Thoughts!

Waiting and wondering when QE will end.

Good day. I'll start this morning's Pfennig with a quick correction. Many readers emailed me after spotting my error in referring to Stephen Poloz as the new Prime Minister of Canada. Mr. Poloz was not elected to replace Stephen Harper, but instead will be joining the Bank of Canada as Governor, replacing Mark Carney who is transferring over the the top job at the Bank of England. Poloz will take over the reins of the BOC on June 3rd. Ok with that out of the way, let me see what confusion I can cause with today's Pfennig.

The dollar was largely unchanged through most of the trading day yesterday with the dollar range trading within the range established at the end of last week. The biggest mover on the upside vs. the US$ was the New Zealand currency which appreciated approximately 1% and the largest mover on the downside was the South African rand which lost over 2%. The South African rand lost ground as violent protests at a chrome mine raised concerns that labor disruptions could slow economic growth in this country which is so dependent on the export of commodities.

The kiwi was the best performer vs. the US$ yesterday, but its kissing cousin across the Tasman Sea, the AUD$ also traded higher overnight. The Aussie dollar had its biggest gain in almost two months as traders bet Fed Chairman Bernanke will probably throw cold water on the prospect of an early end to QE during his testimony tomorrow. As I mentioned yesterday, Chairman Bernanke will be up on Capitol Hill tomorrow, and many of the dollar bulls are now starting to worry that Bernanke may counter some of the talk about ending or reducing bond purchases which have been supporting the US equity markets and the US$.

The Aussie dollar was also on Chucks mind yesterday as he shuffled between waiting rooms down in Houston. He asked me to share the following with readers this morning:

I was doing some reading between things here, and came across something very interesting.

One of the problems for the Aussie dollar (A$) has been the maturing issues in Aussie Gov't bonds. Last week A$ 17 Billion of Aussie Gov't Bonds (AGB's) matured, and with the lower yields now available than when those bonds were originally issued, it has been difficult for the bond dealers to get investors to automatically roll into the new maturity and new much lower yield. So. The way this works is that the AGB's mature, and investors have boat loads of A$'s in the form of the principal and interest. If they don't decide to roll into the new maturity, they have to do something with the A$'s. And why wouldn't they join the sheeple and buy into the U.S. stock market? When they do, they have to sell the A$'s.

I had a reader a few months ago, really take me to the woodshed for using the term "sheeple". I wish I had originally thought of the word, but instead that honor goes to my friend, Bill Bonner. Look, if the term doesn't apply to you, then laugh that it applies to other people! But one day. just like interest rates in Greece that were once 18% before the introduction of the euro, and then on top of German interest rates for 10 years after the introduction of the euro, until one day. They weren't! But one day. someone in the markets with an ounce of brains is going to realize that the stock market is pumped up on stimulus, and then. it won't be. Until then, have fun!

Oh, I could go on, but I hear them paging me for another go at a round with the needle. besides, this is Chris' letter today! And. I've typed this all out on my mobile device, my finger is tired!

Chris again. Thanks to Chuck for taking the time to share his thoughts this morning, and good luck trying to avoid those needles!

The Japanese yen got back to losing ground against the US$ after a one day bounce back. The yen moved higher on Monday following comments by Japan's Economy Minister Akira Amari who stated that further weakness may hurt 'peoples lives'. Well it sounds like Mr. Amari got a bit of a talking to by Prime Minister Shinzo Abe and was backpedaling away from his earlier comments. Abe and his financial team need the weaker yen to help stimulate the Japanese economy, so Amari's comments were not what Abe wanted to hear. As Chuck stated last week, the yen may be nearing its low after a 22% drop last year; but we still wouldn't bet against further weakness and would stay away from the Japanese currency.

The pound sterling is the big mover in early European trading after a report showed consumer prices in the UK rose 2.4% last month from a year earlier. The compares to last month's 2.8% rise and a forecast of 2.6% by Bloomberg economists. The weaker inflation number was bad news for holders of the pound as it opens up the possibility of further monetary stimulus. The weaker inflation figure also confirms the thought that global inflation is well under control, which could lead Finance ministers to continue their stimulus measures without fear of inflation. Pfennig readers know that both Chuck and I don't agree that inflation will continue to be 'contained' but for now the inflationary impacts of stimulus have not made their way into price levels and therefore the leaders of major central banks will probably continue to keep the printing presses in overdrive.

The People's Bank of China increased the daily fixing rate to the strongest level since they released it from the dollar peg back in July of 2005. The daily fixing was set at 6.1911 last night, indicating the Chinese leaders may avoid entering the 'currency war' which the Bank of Japan has begun. The new Chinese leader has indicated that he is going to continue the financial reform efforts begun by his predecessor, and I continue to believe China will mature and grow their financial markets in an effort to eventually challenge the status of the US$ as the global reserve currency. President Obama announced he will be meeting with Chinese President Xi Jinping next month in California, the first meeting between the globes two most powerful leaders. Typically the Chinese allow the currency to appreciate in the weeks before major meetings with Western leaders; a not so subtle move to try and head off calls of currency manipulation. I continue to think World Markets clients should look to include the Chinese currency in their overall currency allocation.

Gold and Silver both rebounded a bit during the trading day on Monday, but then lost all of the ground gained in overnight trading. The metals rebounded yesterday after Moody's Investors Service said US policy makers must address debt woes in order to avoid a credit downgrade later this year. But Moody's has made this threat in the past, and as I discuss in the TTWT section following this paragraph, the recent positive economic news here in the US has taken most investors eyes off of the fiscal mess. The popular press has instead focused on the IRS hearing and events in the Middle East without even a mention that we have surpassed our debt ceiling again (the administration has enacted additional spending measures which will get us through the summer).

So with no worries about inflation nor the tremendous amount of debt sloshing around in the global financial system, the precious metals continue to slide today. The focus of metals traders will be on Fed Chairman Ben Bernanke who will begin testimony on Capitol Hill tomorrow, and on the FOMC meeting minutes which will be released tomorrow. Both of these events will be dissected by traders who are looking for any clues as to when the Fed's bond buying program will be tapered. If any indication is found, the precious metals could lose further. But on the other hand, if either Chairman Bernanke or the minutes indicate the bond buying program will continue then the precious metals could start moving back up. My call is for the latter. I think Bernanke will focus on the labor market which has not shown signs of a solid rebound. Until we see more jobs, I believe Bernanke will keep QE in place and the metals will actually benefit from the continued printing of money by our fed.

Then there was this. We recently installed a couple of Reuters terminals on the World Markets desk, replacing a Bloomberg terminal at a fairly large cost savings. I find it refreshing having another news feed, albeit most of the stories are fairly similar as there are only so many ways to write about the latest 'non-farm payrolls' number. But I digress. In scanning through the news feed on Reuters yesterday I ran across a headline which caught my eye; "Analysis: Shrinking deficit reduces pressure for budget deal". The story, written by Jason Lange and David Lawder does an excellent job of explaining how the recent good news for the US economy has reduced the chances of any 'Grand Bargain' when it comes to the US fiscal negotiations. According to the article, with the outlook for a shrinking US deficit, the pressure on lawmakers to act has been reduced. The numbers "put out the fire among the hair-on-fire crowd," said Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities and former economic adviser to Democratic Vice President Joe Biden. But, he said, "the chances that this Congress does anything useful, which were already low, are even lower."

But the story warns that while the CBO did lower their deficit projections for the near term, the deficits are still predicted to begin widening again in 2016 and continue on an upward path with "serious negative consequences" on the economy, increasing "the risk of fiscal crisis".

Chris again, and the CBO's new estimates don't include a big jump in rates. Can you imagine what happens when our historic low interest rate levels start to rise? Unless we get some 'emerging market' like growth here in the US, the cost of servicing our massive debt will all but squeeze out all other spending.

To recap. The dollar was largely unchanged yesterday as the markets wait to see what Bernanke will say about QE. The kiwi was the big gainer yesterday and the rand was the loser after labor unrest moved investors out of South Africa. Chuck shared his thoughts on why the AUD$ has lost so much ground lately. The Japanese economy minister got a good talking to and reversed his earlier comments which had sent the yen higher. The Chinese renminbi hit a record high vs. the US$. And the precious metals rebounded, but then turned around again in overnight trading as thoughts of an end to QE have investors selling the precious metals.

Currencies today 5/21/13. American Style: A$ $.97767, kiwi .8152, C$ .97318, euro 1.2863, sterling 1.5163, Swiss $1.0320. European Style: rand 9.6083, krone 5.8428, SEK 6.6654, forint 226.08, zloty 3.2569, koruna 20.3669, RUB 31.28, yen 102.79, sing 1.2617, HKD 7.7616, INR 55.295, China 6.1911, pesos 12.3297, BRL 2.0388, Dollar Index 84.017, Oil $96.35, 10-year 1.95%, Silver $21.66, Gold. $1,354.75, and Platinum $1,467.85.

That's it for today. My prayers go out to all of the folks in Moore, Oklahoma who were impacted by the massive tornadoes which rolled through yesterday afternoon. I have lived in the Midwest all of my life, and sometimes forget the devastation these tornados can cause. I hear close to 90 are now thought to be dead including 20 children; just tragic. After seeing that devastation, I feel lucky that we were only without power for a day after those storms rolled through yesterday morning. More storms rolled through here last night, but they held off just long enough for my niece and her graduating friends to perform their Maypole dance; it was really quite beautiful. And road blocks went up on several of the roads around my house this morning as the 74th Senior PGA Championship begins. The event is being held at Bellerive Country Club which is located about a mile away from my neighborhood, the weather forecast doesn't look friendly for the golfers as more storms are supposed to roll through today. With that I will get this out the door and hope everyone has a terrific Tuesday. Thanks for reading the Pfennig!

Chris Gaffney, CFA
Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837

Paul Craig Roberts: No Bear Market in Gold

Tue, 21 May 2013 15:03:00 -0400

¤ YESTERDAY IN GOLD & SILVER

The gold price jumped up about five bucks right at the 6:00 p.m. Sunday evening open in New York, but that rally got crushed immediately by the high-frequency traders...and in less than a hour, gold was down a bit over twenty bucks from its Friday close.

After that, the gold price chopped around the $1,345 spot price mark until the London open. Then a rally began that tried to break out a couple of times before it really took off at noon in New York, as the market went 'no ask'...and the price went vertical. But, as has always been the case in the past, a not-for-profit seller stepped in and became the short seller of last resort. If they hadn't been there, the price would have gone supernova.

Then shortly before 3:00 p.m. in the thinly-traded New York access market, the rally resumed, hitting its zenith at precisely 4:00 p.m. before sliding a hair into the close.

The low tick [around $1,339 spot] came just before 8:00 a.m. in Tokyo on their Monday morning...and the high tick came in New York. However it's impossible to tell from the N.Y. gold chart below, whether the high tick came at noon or 4:00 p.m. EDT. Not that it matter, I suppose. Kitco recorded the high tick at $1,400.60 spot.

Gold closed at $1,394.10 spot...up $33.90 according to Kitco's numbers...and an intraday move of fifty-five bucks. Net volume was an immense 222,000 contracts. It was a wild and crazy day...and I'll have much more about it in 'The Wrap'.

Here's the New York Spot Gold [Bid] chart on its own...and the big price spike at noon is even more noticeable.

Of course it should come as no surprise that it was silver that JPMorgan et al were after. In less than an hour, the high-frequency traders had the price down to its low tick of the day, which the CME reported as $20.25 in the July contract, which is the next front month for silver. That's a two dollar drop from the spot closing price on Friday...and it all happened in about forty-five minutes. Ted Butler said that only about 1,600 contracts were sold between the Sunday night open...and the low tick. In such a thinly-traded market, that's all it took to drop the price that low.

Silver recovered a bit as morning trading wore on in the Far East...and from about noon in Hong Kong, the silver price began a rally that ended with a vicious 'no ask' price spike at noon in New York...just like gold.

After the seller of last resort showed up, the silver price chart looked more or less the same as the gold chart for the rest of the trading day...right down to the rally that ended at precisely 4:00 p.m. in electronic trading in New York.

As I mentioned above, the low tick in the July contract was $20.25...and Kitco recorded the spot high price as $23.40 spot...an intraday move of $3.15.

Silver closed at $22.92 spot...up 66 cents from Friday. Gross volume was immense...96,000 contracts.

Platinum did not go unscathed either...although palladium was pretty much spared the beating that the other three precious metals got. Palladium had its price capped shortly after 12:00 o'clock noon in New York as well, or all four precious metals would have closed the Monday trading session at prices that would have made your eyes glaze over. Here are their respective charts from yesterday.

What we saw in all four precious metals were key-reversals to the upside so big that no T.A. analyst could possibly miss them. And as I said on Saturday, "da boyz" can print any chart pattern they want...and yesterday's example, especially in silver, will be talked about for centuries.

The dollar index closed at 84.21 on Friday afternoon in New York...and got hit for a bit more than 10 basis points the moment that trading began at 6:00 p.m. in New York on Sunday night. It's high of the day [84.25] came three hours later at 9:00 a.m. in Hong Kong trading on their Monday morning...and it was all down hill from there. The low tick [83.72] came a few minutes after 3:00 p.m. in New York...and the index rallied a hair from there. The dollar index closed at 83.76...down 45 basis points from Friday's close.

As is most often the case, the dollar index had zip to do with yesterday's moves in the precious metals.

The gold stocks opened in negative territory by a bit, but that didn't last long...rallying strongly into the noon price spike in New York. From there they traded basically sideways until the smallish rally developed just before 4:00 p.m. in electronic trading. The shares tacked on another percent or so..and the HUI finished up 6.04%...almost on its high tick.

It was a very similar story in the silver stocks as well...and Nick Laird's Intraday Silver Sentiment Index closed up 6.70%.

(Click on image to enlarge)

The CME's Daily Delivery Report showed that 3 gold and 65 silver contracts were posted for delivery within the Comex-approved depositories on Wednesday. In silver, JPMorgan was the short/issuer on 57 contracts...and they and the Bank of Nova Scotia stopped 55 contracts. The link to yesterday's Issuers and Stoppers Report ishere.

Another day...another withdrawal from GLD. This time an authorized participant took out 222,371 troy ounces...and there was also a withdrawal from SLV. This time it was 1,738,029 troy ounces.

The U.S. Mint finally had another sales report. They sold 2,000 ounces of gold eagles...500 one-ounce 24K gold buffaloes...and 611,500 silver eagles.

Over at the Comex-approved depositories on Friday, they reported receiving 1,260,558 troy ounces of silver...and shipped 211,435 troy ounces of the stuff out the door. The link to that activity is here.

In gold on Friday, these same depositories did not report receiving any, but shipped 32,001 troy ounces out the door...all from Scotia Mocatta. The link to that activity ishere.

Since yesterday was the 20th of the month, The Central Bank of the Russian Federation updated their website with their April data. It showed that they added another 200,000 troy ounces of gold to their reserves...bringing their total up to 31.8 million troy ounces. Here's Nick Laird's most excellent chart updated with that data...

(Click on image to enlarge)

Here's a chart that reader 'David in California' sent our way yesterday. It's a comparison of the 1976 bull market in gold compared to the one going on right now.

(Click on image to enlarge)

And here's your "cute quota" of the day...

Being a Tuesday column, I have more stories than normal, so I hope you have the time to read/listen to the ones you like.

¤ CRITICAL READS

S&P Cuts Rating for Buffett's Berkshire Hathaway

Warren Buffett's Berkshire Hathaway Inc. had its credit rating cut one notch by Standard & Poor's, which cited a new methodology for evaluating insurers and Berkshire's dependence on its insurance business for dividend income.

The rating was cut to "AA" from "AA-plus," and S&P assigned a "negative" outlook, suggesting another cut could occur within a few years. S&P left its credit and financial strength ratings for Berkshire's insurance operating units at "AA-plus."

"The lower credit rating on Berkshire better reflects our view of Berkshire's dependence on its core insurance operations for most of its dividend income," S&P analyst John Iten wrote.

This moneynews.com story from last Friday was sent to me by West Virginia reader Elliot Simon on Saturday afternoon...and I thank him for today's first story.

Ceiling suspended: US takes on $300bn in new debt after hitting $16.7 trillion

America’s ticking debt bomb has been reset. Washington has suspended the debt ceiling, setting a date, and not a concrete dollar sum as a deadline, an unprecedented first in US history.

Citing ‘extraordinary measures’, the US Treasury has further delayed tackling America’s debt, and will wait until Labor Day, September 2nd, to revisit the burgeoning crisis. The ceiling has been lifted, and the Treasury has promised it will keep cash pumping into government spending programs beyond the debt limit through a series of emergency cash tools.

“It will not be until at least after Labor Day" when Washington will have reached their full borrowing capacity, Treasury Secretary Jacob Lew, told CNBC television on May 10th.

Elliot Simon also sent me this Russia Today story. It was posted on their website mid-morning Moscow time.

Caterpillar North America Sales Collapse Suggests US Economy Back To 2010 Levels

While we have wondered on numerous occasions previously if the collapse in lumber prices is the far more accurate indicator of end demand for housing (as confirmed by the recent collapse in multi-family housing starts), perhaps an even better indicator of trends in housing (and by implication the broader economy) is private sector intermediate end demand, such as Caterpillar North America sales, which unlike government data, are far less subject to political intervention, interpolation, guesswork, seasonal adjustments and otherwise, general manipulation.

And even though we have previously reported on the woes ailing the world's largest seller of bulldozers, excavators and wheel loaders, such focus was primarily targeted in the offshore markets, and especially China (the abysmal European market needs no mention). So maybe the time has come to shift attention to the US, where as Caterpillar just reported, not only are all foreign markets still trending at several impacted levels, but where US machine retail sales just saw the biggest tumble in three years, falling 18% Y/Y: the most since early 2010. What is more disturbing is that CAT equipment is used in far-broader economic activities than merely housing, and likely is a far more accurate indicator of true industrial end-demand than any other number cherry-picked by the government.

This short article was posted on the Zero Hedge website...and I thank 'David in California' for sending it our way.

Jim Rickards: Fed Up With Bernanke...Economy in Depression

“We don’t have to worry about a recession — we are in a depression,” says James Rickards.

“If you take the classic definition of a sustained, long-term downturn with economic growth below trend, then we are in the midst of a depression,” says the senior managing director of Tangent Capital and author of “Currency Wars.”

Rickards doesn’t see Fed Chairman Ben Bernanke as having the solution to the economic malaise gripping the county.

“Bernanke’s not a trader, so doesn’t think like a trader; he has no exit plan,” Rickards points out.

“There’s a good possibility I may never see another rate hike in my lifetime,” says Rickards.

This very short item was posted on the New York Post website late on Saturday night...and my thanks go out to Harold Jacobsen for bringing it to our attention.

Hackers From China Resume Attacks on U.S. Targets

Three months after hackers working for a cyber-unit of China’s People’s Liberation Army went silent amid evidence that they had stolen data from scores of American companies and government agencies, they appear to have resumed their attacks using different techniques, according to computer industry security experts and American officials.

It is not clear precisely who has been affected by the latest attacks. Mandiant, a private security company that helps companies and government agencies defend themselves from hackers, said the attacks had resumed but would not identify the targets, citing agreements with its clients. But it did say the victims were many of the same ones the unit had attacked before.

In interviews, Obama administration officials said they were not surprised by the resumption of the hacking activity. One senior official said Friday that “this is something we are going to have to come back at time and again with the Chinese leadership,” who, he said, “have to be convinced there is a real cost to this kind of activity.”

This article was posted in the Sunday edition of The New York Times...and it's Roy Stephens' first offering in today's column.

Maligned Dollar Flourishes in Venezuela

The once almighty U.S. dollar has lost its luster in some corners of the world.

But there's one outpost where greenbacks have never been stronger: in socialist, anti-imperialist Venezuela, whose government rails against American-style capitalism as the bane of humanity. The dollar is not just holding steady here -- it is flourishing like nowhere else, the byproduct of the fast-wilting economy President Hugo Chavez left behind when he died in March.

Black-market dealers operating on the thriving underground market sell greenbacks at more than four times the official, government-set rate of 6.3 bolivars to the dollar. And the price they're getting these days -- 28 per dollar -- is more than three times what it was just eight months ago.

This very interesting read was filed from Caracas...and showed up on The Washington Post website on Friday. I found it over at thegata.org Internet site on the weekend.

Rumors Spark Bank Run, Break-Ins in Brazil

Rumors that Brazil's social security fund called Bolsa Familia was to be cancelled led thousands of people to rush to withdraw money from a Brazilian bank over the weekend.

Customers lined up at ATMs at dozens of bank branches of Caixa Economica Federal, a government-owned bank, which pays the social security subsidy on Saturday and Sunday.

"The bank branches themselves aren't open on Saturdays. What happened is that once the rumor gained momentum, people flocked down to their local branches to try to withdraw money from the ATMs," Rafael Carregal, a journalist at Brazil's main TV network Globo told CNBC.

Brazilian newspaper Estado de Sao Paulo reported that at five branches in the northeastern city of Sao Luiz and four others in the state of Maranhao, depositors broke into branches. Most of the branches that were affected were in the poorer northeast region of the country.

This short CNBC article was posted on their website early on Monday morning EDT...and I thank U.A.E. reader Laurent-Patrick Gally for sliding this into my in-box in the wee hours of this morning.

BIS and IMF attacks on quantitative easing deeply misguided warn monetarists

Monetarists across the world have warned that the International Monetary Fund and the Bank for International Settlements are making an historic error by calling for a withdrawal of emergency stimulus before the global economy has fully recovered.

The two watchdogs launched broadsides against central bank largess last week. The BIS -- the forum of central banks -- was particularly blunt, seeming to imply that quantitative easing "does not work".

Critics say this risks undermining the credibility of radical measures when more may yet be needed. They fear central banks could repeat the mistake made in 1937 when the Federal Reserve lost its nerve and tightened too soon, tipping America back into depression.

"The BIS and the IMF are deeply misguided and risk doing the world a grave disservice. The biggest threat right now is irrational fear of bubbles among central banks," said Lars Christensen, a monetary theorist at Danske Bank.

This longish piece by Ambrose Evans-Pritchard was posted on thetelegraph.co.uk Internet site on Sunday afternoon BST...and it's Roy Stephens' second offering of the day.

Tories begin defecting to Ukip over 'loons' slur

Conservative activists have begun defecting to the UK Independence Party in protest at the Tory leadership’s “arrogant and insulting” attitude towards grassroots members.

Local Conservative party campaigners, including the chairman of one constituency association, will this week pledge their support for Nigel Farage after one of David Cameron’s allies described grassroots Tories as “mad, swivel-eyed loons”.

Mr Farage uses an advertisement in Monday's Telegraph to urge Conservative voters to back Ukip. The “loons” description, he says, is “the ultimate insult” from a party leadership that has betrayed the trust of its own supporters.

He writes in the advertisement: “Only an administration run by a bunch of college kids, none of whom have ever had a proper job in their lives, could so arrogantly write off their own supporters.”

This short article appeared on The Telegraph's website late on Sunday evening...and is also courtesy of Roy Stephens.

Eight King World News Blogs/Audio Interviews

1. Dan Norcini: "Incredibly Important Developments in Gold and Silver Markets". 2. Egon von Greyerz [#1]: "The Big Upside Move in Gold and Silver is Now in Front of Us". 3. Hong Kong fund manager William Kaye: "Gold and Silver Smash and What Soros and Major Players are Doing". 4. Robert Fitzwilson: "Gold, Silver, Massive Leverage and Super Wealthy Panicking". 5. Andrew Maguire: "This Key Level to Trigger Huge Central Bank Buying". 6. Egon von Greyerz [#2]: "Clients Denied Gold at Major Banks as Shortage Intensifies". 7. The first audio interview is with Art Cashin...and the second audio interview is with Andrew Maguire.

Trading is cautious

Tue, 21 May 2013 14:57:00 -0400

The 6 W’s: Who, what, where, when, why and what of it

RegMed equities are still taking a pause for breath and probably aren’t going to move a stir, and we remain cautious on the sector due to the continuing dichotomy between clinical data and trial risk performance.

As I stated yesterday … The weakness in the RegMed sector comes as some traders looked to cash in on … any strength, as … buying is subdued – and traders remain reluctant to experience any further downside.

Measuring the day – POSITIVE– 17 green (ups), followed by 13 red (downs) and 6 fluctuating black (flats)

Mid-Day – Stocks struggled to find direction Tuesday as investors await Fed Chairman Ben Bernanke’s Senate testimony for clues as to when the Fed may begin tapering its bond buying program.

At mid-day the NASDAQ is UP +6.95 or +0.20% at 3503.38, while the DOW is also up +45.17 or +0.29% at 15380.45. The CBOE volatility index traded above 13.

Research Notes:

RegMed Daily – The Early Movers … http://www.scimitarequity.com/blog/2013/05/21/the-early-movers-whos-hot-whos-not-27

Research Note – The Maryland Stem Cell Research Commission funds 31 proposals…http://www.scimitarequity.com/blog/2013/05/21/the-maryland-stem-cell-research-commission-funds-31-proposals

Roll Call

Aastrom (ASTM) is DOWN … +-0.0003 to $0.5847 with a pending offering about to dilute the price and share count. A SELL.

Athersys (ATHX) is DOWN… -$0.04 at $1.8890 post earnings. A HOLD.

BioLife Solutions (OTC: BLFS) is DOWN… -$0.05 at $0.36 per share at mid-day, compared to $0.41 at Monday’s close with huge 198.4 K shares traded. BLFS is growing its business, evidenced by its licensing of specific areas of intellectual property, while keeping high growth as the regenerative medicine market opportunity develops. BLFS hold the leading supplier position for pre-formulated, clinical grade biopreservation media products. A STRONG BUY.

Cytori (CYTX) is UP … +$0.02 to $2.52 with today’s mid-day trading range of $2.50 – $2.5410 and a 68.2 K share volume. A BUY!

Cytomedix (OTC: CMXI) is UP… +$0.04 to $0.50, with a trading range of $0.46- $0.50 and moderate volume of 80.1 K shares compared to Monday’s close of $0.46. A BUY.

NeoStem (NYSE MKT: NBS) is UP …-$0.0049 to $0.5699 with moderate l share volume of 322 K at mid-day. The trending 50 and 200 day moving averages are at $0.61 and $0.63 respectively. A STRONG BUY!

Medistem (PINK: MEDS) is FLAT…at $1.20 … with no real news and nor share volume. MEDS needs to generate some significance to differentiate itself and forward … any visibility standing… A very thinly or no trading volume stock. A HOLD.

News

Medistem, Inc. (PINKS: MEDS) appointed Herm Rosenman to its Board of Directors and Chairman of the Audit Committee. Rosenman was Senior Vice President and Chief Financial Officer of Gen-Probe, Inc., from 2001, through its IPO in 2002, until its acquisition by Hologic, Inc., in August 2012 for $3.7 billion. His financial expertise and knowledge of public healthcare companies comes at a critical time for MEDS as it transitions to once again becoming a fully reporting company.

Brainstorm recently performed the 5th transplantation in its ongoing P IIa clinical trial with NurOwn(TM) at the Hadassah Medical Center in Jerusalem. 12 ALS patients are receiving combined intramuscular and intrathecal administration of NurOwn cells, in three cohorts, with increasing doses. The study participants will be monitored for six months following transplantation. In a recent radio interview on Israel’s “Galei Tzahal,” Professor Dimitrios Karussis, Principal Investigator, discussed the current trial as well as the results of the recently completed Phase I/II trial, which he referred to as “very encouraging.”

Share and Enjoy:

The Early Movers – who’s hot, who’s not

Tue, 21 May 2013 14:56:00 -0400

Which RegMed companies are making moves in the 1^st hour?

Signs of life …

Shire ADR (SHPG +$0.90) and are the leaders as today’s market opens…

…followed by Osiris (OSIR +$0.14) ReNeuron (LON: RENE +$0.08), Dendreon (DNDN +$0.07), BioTime (NYSE MKT: BTX +$0.07), Pluristem (PSTI +$0.06), Stemline (STML +$0.05), Cytori (CYTX +$0.04), Cryo-Cell (OTC: CCEL +$0.03), MiMedx (MDXG +$0.03), International Stem Cell (PINK: ISCO +$0.023), Opexa (OPXA +$0.02), NeoStem (NYSE MKT: NBS +$0.004), and Advanced Cell Technology (OTC: ACTC +$0.0017)

A view of the downside at the open …

Verastem (VSTM -$0.16), and Wright-Medical (WMGI -$0.14) are the loss leaders…

…followed by BioLife Solutions (OTC: BLFS -$0.10), Tengion (PINK: TNGN -$0.002), and Aastrom (ASTM -$0.005)

And some of the sector is flat

Athersys (ATHX), Bioheart (PINK: BHRT), Brainstorm (OTC: BCLI) Cytomedix (OTC: CMXI), Fibrocell (NYSE MKT: FCSC), Geron (GERN), Harvard Bio (HBIO), ImmunoCellular (NYSE MKT: IMUC), IntelliCell (PINK: SVFCE), StemCells (STEM), ThermoGenesis (KOOL Medistem) (PINK: MEDS), Mesoblast ADR (PINK: MBLTY), Neuralstem (NYSE MKT: CUR), Proteonomix (OTC: PROT), and Vitro Diagnostics (PINK: VODG)

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Lower open anticipated

Tue, 21 May 2013 14:55:00 -0400

Futures point south

Futures signaled a flat-to-lower open on Tuesday, as markets in Europe and Asia remained cautious ahead of Fed’s Bernanke’s testimony to the Senate on Wednesday.

RegMed sector traded lower on Monday … hopefully today will be better but I for see more of the same as share pricing is volatile a trader’ market.

DOW futures are FLAT 0.0% and the NASDAQ’s are DOWN -0.1.

European stock markets drop on Tuesday, taking a breather after climbing to multiyear highs in the prior day’s session while Australian stocks decline, Japanese and Hong Kong equities pull back from a 3 day winning run,

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The Maryland Stem Cell Research Commission funds 31 proposals

Tue, 21 May 2013 14:55:00 -0400

The Maryland Stem Cell Research Commission has completed its review of the 171 applications received in response to its FY13 Requests for Applications (RFAs).

The board of directors of the Maryland Technology Development Corporation (TEDCO) approved the Commission’s recommendation to fund 31 new proposals with the Maryland Stem Cell Research Fund’s (MSCRF) $10.4 M FY13 budget. These projects, which include pre-clinical research and a clinical trial, will advance the field of regenerative medicine.

This funding cycle, the Commission gave priority to proposals that focus on advancing regenerative medicine by selecting promising research targeting cancer, sickle cell anemia, ALS, Parkinson’s disease, heart disease, muscular dystrophy, diabetes, lupus, epilepsy, and spinal cord injuries as well as end stage lung disease and other debilitating medical conditions. Researchers will also study noninvasive in vivo imaging of transplanted stem cells to determine their location and longevity. In addition, the Commission will continue its collaboration with the California Institute of Regenerative Medicine (CIRM), now in its third year.

The Bottom Line:

Pre-Clinical Research Award — This new funding mechanism provides up to $500,000 of direct costs per year for up to 3 years, and is designed for companies conducting pre-clinical research in Maryland that seek to advance medical therapies in the State. The goal of this proposal is clearance from the FDA to initiate a new clinical trial. This grant, awarded to a biotech company collaborating with a research institute and a hospital, is focused on developing a stem cell suture for tendon and ligament reconstruction in healing-impaired patients.

10 Investigator-Initiated Research Awards — These grants provide up to $600,000 of direct costs per year, for up to three years, and are designed for Maryland investigators who have preliminary data to support their hypotheses. Among other promising projects, new awardees in this category will work to create stem cells to treat spinal cord injuries; develop a novel therapy for liver fibrosis; visualize stem cells in brain tumors; characterize cardiac stem cells in newborns; develop a stem cell therapy for diabetes; and conduct a clinical trial in patients with sickle cell disease and lupus.

10 Exploratory Research Awards — These grants provide up to $100,000 of direct costs per year, for up to two years, and are designed for Maryland researchers who are new to the stem cell field (young investigators and scientists from other fields), or for exploratory projects that have little or no preliminary data. FY2013 awards in this category will address such topics as stem cell imaging; nerve regeneration; a disease model of epilepsy; a deficient pathway in Parkinson’s disease; and improving lung transplant outcomes.

10 Post-Doctoral Fellowship awards — These grants provide up to $55,000 per year, for up to two years, including direct and indirect costs and fringe benefits, and are designed to train post-doctoral fellows who wish to conduct human stem cell research in Maryland. These grants will focus on ALS (Lou Gehrig’s disease), sickle cell disease, diabetes, colon cancer, and stroke, among other topics.

All MSCRF-funded research must be conducted in Maryland and must involve human stem cells.

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Neuralstem Phase I Results Encourage Market, Stimulates Buying

Tue, 21 May 2013 14:44:00 -0400

Although it seems that investors have lost their appetite for many stem cell investments at this stage of the broader rally in the stock market, there are exceptions worth pointing out. Neuralstem (NASDAQ: CUR), for instance, has been in a strong uptrend since the company finally on April 17^th that the company received approval from the FDA to commence a Phase II clinical trial in 18 patients with ALS (amyotrophic lateral sclerosis) using its line of spinal-cord derived stem cells NSI-566. These proprietary stem cells can be differentiated into neurons, which can (in theory) replace the dying cells in a patient with a neurodegenerative disease.

Although the jump from Phase I to Phase II development is not a reliable guarantee of eventual success for any therapy, this marks an important milestone for the company and also establishes the initial safety profile for Neuralstem’s NSI-566. The market became particularly enamored with shares of CUR after the company presented the results of the early stage ALS trial.

The trial, which was conducted on 15 patients with ALS, started in early 2010 and concluded only recently. According to PI Eva Feldman in a recent Neuralstem press release, 6 of the patients in the study experienced stability, slow progression, or even improved disease course 700 to 850 after implantation with NSI-566 cells. The remaining 9 saw no noticeable improvements, while 6 patients died of ALS within the first few months after the surgery.

The results imply that the therapy is very effective against the progression of ALS given that NSI-566 is introduced early on, which is very exciting due to the complete lack of any treatment alternatives for ALS patients. Having said this, investors should not make any conclusions about any drug or therapy’s efficacy in any particular disease without the numbers behind the Phase I results – especially with such a tiny patient population. More specifically, we will want to compare the improvements in the 6 patients relative to the others based on the ALSFRS (Amyotrophic Lateral Sclerosis Functional Rating Scale) in any ways possible to determine whether or not this kind of result can be replicated in future clinical trials with enough statistical significance to give NSI-566 an approval for the ALS indication later on.

The upcoming Phase II trial, which is expected to begin before the end of the H1 2013, should be watched closely since it will demonstrate to Neuralstem investors and the rest of the market whether or not the company can replicate the implied efficacy in the Phase I studies with NSI-566. The company’s market capitalization, just short of $100M, is likely to jump significantly if the Phase II trial produces similar results and much more down the line (presumably during Phase III development) due to the sheer size of the untouched multi-billion ALS market.

And, if Neuralstem can provide a working ALS treatment that can slow or even reverse the course of the disease based on the ALSFRS, it is unlikely that the company would have much trouble achieving extremely high market penetration and pricing power with even a modest budget for SG&A expenses. This would hopefully allow NSI-566 to avoid the kind of problems thatDendreon’s (NASDAQ: DNDN) Provenge therapy had, although manufacturing costs have proven burdensome as well.

Also baked into the $100M valuation is NSI-566’s development into a number of other indications that have significant unmet need, although the market seems fixated on ALS due to the unique affinity that Neuralstem’s product seems to have for this disease. It’s because of this that I generally expect less movement in shares of CUR in reaction to non-ALS related headlines coming out from the company, and exaggerated reactions to third party opinion regarding the program going forward.

Weekly Update

Tue, 21 May 2013 10:00:00 -0400

Gold & Silver
Gold closed on Friday at $1,360.20, a loss of $87.90 or 6.1% for the week. Silver did slightly worse and closed the week with a loss of $1.61 or 6.7% to close at $22.26. This brings the gold to silver ratio to 61.1.

As suspected, gold turned down and looks very weak. While we are at it (weakness in gold), we wouldn't mind (from a technical stand point) a re-test of the previous lows again ($1,321). Keeping this comment a bit short (as so many other sources love to comment on it extensively), we can only remind ourselves of the fact that nothing has changed in terms of reasons to own gold and silver. With the current weakness and summer around the corner, we will not deploy more money in the mining equities at this point and at these levels, unless we make trades from existing positions. We think the coming months could provide even better opportunities and we will hold on to the cash we have for now.

(Click to open in new window)

Rye Patch in court on Monday (May 13th)
We listened in on the hearings on Monday and while the court has not come to a decision yet (sometime in June most likely), we can't see why RPM would not get their motion through. What's being argued over, is the appointed of the so called Special Master and whether or not he should even be appointed in this case.
The lawyer for RPM came very well prepared and presented the court with facts that the CDE lawyer couldn't really argue against (as it seems that RPM actually has the law on its side in this argument). Reading between the lines, the court more or less agreed with RPM already on Monday (our interpretation) and we would be utterly surprised if the Special Master is not removed from this case.

Follow the case and read all related documents on the Nevada Supreme Court website:
http://caseinfo.nvsupremecourt.us/public/caseView.do?csIID=29833

Download from iTunes, the app of Nevada Supreme Court and listen to the hearing that took place on Monday:
https://itunes.apple.com/se/app/nv-supreme-court/id620025479?mt=8

Atna Resources (atn.to)
Atna released their Q1 report on Monday. Production from Briggs was a bit lower than expected due to two main reasons: increased waste stripping and the severe cold that hit Nevada in the beginning of the year. To increase mining of waste, two 100-ton haul trucks were purchased. The waste-to-ore strip ratio increased to 7.1 in Q1, waste-to-ore strip ratio budgeted for full 2013 are 4.8 so we expect Briggs to perform better in Q2-Q4 which is exactly what the company has communicated as well.

Pinson Underground is advancing and had three active stopes and another five under development by the end of Q1. Production for Q1 (pre-production), was approximately 110 tons per day. Guidance for Pinson in 2013 is 50-57,000 oz with major part of that being produced in Q3 and Q4. Pinson Underground should be cash flow positive within two months and commercial production will then be announced, all according to the company IR.

It is essential for Atna to get Pinson Underground into production, their balance sheet is not pretty and we would be happy to see a "bridge" credit line established for now, and once Pinson is cash flow positive the balance sheet should be cleaned up.

Even though Atna is looking very cheap at the moment, one should be aware of the current enhanced risk in the company. However, if the company can stay afloat during the next 6-8 weeks until commercial production is achieved, we may very well see a swift turnaround. Atna is negotiating terms with four different banks for a credit facility so we are not all too worried, but we really need to see them deliver in the next few months.

Silver Bull - "The next silver takeout"
Mr. Bob Moriarty, founder of 321gold.com, recently did a site visit to SVBL's flagship property Sierra Mojada in Mexico. He was joined with a number of newsletter writers on this trip and we should expect more write-ups in the next couple of weeks.

"I went to Mexico a week or so ago and saw what will be the next silver company to be taken out. Itâ€™s named Silver Bull and the name qualifies under the Truth in Advertising statutes. The company reported about 163 million ounces of silver in a 43-101 resource and they have about 159 million shares. So they have just over an ounce of silver per share. Someone who can add is going to take them out. Soon.

Coeur Dâ€™Alene Mines owns some 10.9% of the shares today. They are a natural buyer or counter bidder should another major take a run at the company. I donâ€™t own shares. Yet.Â But they will be taken out and it will be at a lot higher price. Do your own due diligence." (Bob Moriarty)
Read the whole article here.

Silver Bull is soon to release metalurgical testing for their Sierra Mojada project.

SilverCrest (svl.v)
Although not reflected in the share price, SVL is doing everything right and has done so for a long while. Fully funded for expanding Santa Elena and with very little risk associated to that expansion, SVL was recognized by Cormark Securities on Wednesday as they keep their $4.25 target price unchanged.

We expect the pre-feas to come out within a week or two on the Santa Elena expansion which will include a resource upgrade with a substantial upgrading of current resources to reserves.

A Small Selection of NEWS & ARTICLES Posted on Gecko this Week

Bob Moriarty: The Next Silver Takeout (May 17)

Ecuador pushes ahead with reforms to lure mining investors (May 17)

Nevada Assembly Taxation Committee votes to remove mining tax caps (May 17)

Sprott's Thoughts: Where is the gold coming from? (May 17)

Sprott's Thoughts: Equities Bull Market Wonâ€™t Last another Year (May 17)

Todayâ€™s ugly data raises questions about strength of U.S. economy (May 16)

John Rubino: Golden Bullseye (May 16)

China Shows Concern at Yen Weakness as Japan Growth Rises (May 16)

Gold buying becomes frantic in India, strongest since 2008 (May 15)

Eurozone stuck in longest recession (May 15)

NEWS: SilverCrest Reports Q1, 2013 Financial Results Net Earnings $6.0 Million ($0.06 Per Share) (May 15)

NEWS: First Majestic Reports First Quarter Earnings of $26.5 million on Revenues of $67.1 million (May 15)

Rye Patch Gold: NSC hears arguments in dispute over special master in mining case (May 14)

NEWS: Atna Reports First Quarter 2013 Earnings and Operations Results (May 13)

Look east and learn from the inventors of QE what will happen next (May 12)

INTERVIEWS

Financial Sense Newshour - with Jim Puplava

King World News - with Eric King

HoweStreet.com - various contributers

GoldSeek.com Radio

The Call by Don Coxe

Gecko Podcast

Please find all of this week's news releases and articles, published on the Gecko website. Check out the Gecko Blog (using Google Translate) for the latest blogs.

If you as a subscriber think we have missed out on an interesting article, interview or other things, please use the contact page and let us know. With this, we wish all of you a pleasant weekend.

Team Gecko Research
www.geckoresearch.com

We are not investment advisors and what we write is our own view only. Please read our disclaimer.

Platinum and Palladium: A Fundamental Shift

Mon, 20 May 2013 15:07:00 -0400

Dear Reader,

Gold is giving gold bugs another scare, with the last couple of trading days taking the price of our favorite investment back below $1,400 per ounce. Are we worried? No; the fundamentals remain in place, and we've no doubts about how this will end up.

That said, we're clearly not out of the woods yet for the near term, which we warned was likely. We alerted Casey subscribers to this threat and issued a second "gold insurance" recommendation (puts on GLD) that netted almost 200% gains as of Friday's close.

We will continue doing what we can to help our readers mitigate near-term risk, while helping them to build positions in companies with the best chances of delivering spectacular returns when gold and silver resume their upward march.

Meanwhile, as you can see below, your Casey Metals Team has a diversification strategy we're recommending, now that a new trend in Platinum group metals (PGMs) is solidifying.

We hope you'll take advantage of the opportunity, as prices have recently started rising.

Sincerely,

Louis James
Senior Metals Investment Strategist
Casey Research

Rock & Stock Stats	Last	One Month Ago	One Year Ago
Gold	1,360.20	1,382.70	1,574.90
Silver	22.26	23.31	28.02
Copper	3.29	3.19	3.48
Oil	95.19	86.97	92.94
Gold Producers (GDX)	26.38	27.38	41.34
Gold Junior Stocks (GDXJ)	10.46	11.48	18.59
Silver Stocks (SIL)	12.85	13.34	17.23
TSX (Toronto Stock Exchange)	12,613.05	11,947.29	11, 330.68
TSX Venture	934.68	923.60	1,228.07

Platinum and Palladium: A Fundamental Shift

Jeff Clark, Senior Precious Metals Analyst

Platinum is a precious metal, as is palladium, though to a lesser degree. However, like silver, both are also industrial metals. Unlike silver, it's their industrial use that is the primary price driver for both Platinum and palladium – and that use is undergoing a fundamental shift.

The largest source of demand for Platinum and palladium is the automotive industry, for use in autocatalysts. In turn, the fortunes of the auto industry are sensitive to the health of the world's major economies. We've been bearish on Platinum-group metals for years, primarily because we weren't convinced a healthy – much less roaring – world economy could be sustained when so many governments continue spending beyond their means.

We reconsidered the market last year, when strikes in South Africa – home to 75% of global Platinum production and 95% of known reserves – threatened supplies. But as we wrote last December, the strikes ended without great impact on long-term supply.

Since then, however, the fundamentals of this market have changed. Others may disagree with our economic outlook, which is still bearish, but it's due to supply issues – not demand – that our interest is now drawn to these metals, and particularly to palladium.

Here's a look at global supply against auto-industry demand for both metals.

Approximately 55% of Platinum and the bulk of palladium supply was used in catalytic systems last year. The shrinking supply that's under way with both metals is obvious, and palladium is approaching a supply/demand crunch.

Here's what's going on…

Platinum

The fall in Platinum supply has been so great that it moved from a surplus in 2011 to a deficit in 2012, with Johnson Matthey estimating that deficit to hit 400,000 ounces, the highest level since 2003.

Why the shift?

Labor strife and power outages. The mining industry in South Africa is, frankly, a mess. Labor strikes continue to haunt the Platinum mining companies. The largest mining union in South Africa, AMCU, recently refused to sign a collective bargaining agreement on worker compensation, and CNBC is predicting a massive strike. Amplats, the world's largest Platinum producer, is threatening to cut 14,000 jobs and mothball two operating mines due to various issues. Meanwhile, power outages, a longstanding problem, continue unresolved; they have already forced the closure of some mines and are widely expected to cause further cuts in production. As a result, supply from mining is expected to decline another 10% this year.

Recycling. This important source of supply is falling in reaction to lower metals prices. It is estimated that recycling fell by 11% in 2012.

Emission systems. Demand for Platinum in autocatalysts dropped by 1% in 2012, mostly due to lower vehicle production in Europe and lower market share of diesel engines. However, emission-system demand from Japan and India is expected to increase, anddiesel-emission controls recently introduced in Beijing will also support industrial demand for both metals. Auto sales in China rose a whopping 19.5% in the first two months of the year and are 6.5% higher in the US than a year ago.

Jewelry. Worldwide demand for Platinum jewelry rose last year, with strong demand coming from China and growth in India, and is mainly the consequence of lower prices. Jewelry accounts for 30% of total Platinum demand.

Investment. Although it represents just 6% of total demand for the metal, investor demand nonetheless grew 6.5% last year, adding to pressure on supplies.

Given these factors – primarily the first one – a supply deficit stretching into 2014 seems almost certain. Until South Africa can resolve its labor and power issues, pressure on Platinum supply will remain, producing a favorable environment for rising prices.

Palladium

Palladium, Platinum's "little brother," also faces a market imbalance. In 2012, the deficit totaled 915,000 ounces, the highest level since 2001.

Supply. Russia is the second-largest producer of palladium, and some analysts report that rumors of its stockpile being close to depletion are true. Recycling is also falling, and production disruptions in South Africa – the largest producer of palladium – are the same as outlined for Platinum. Overall supply of the metal is falling.

Demand. Autocatalytic demand rose by 7% in 2012, as palladium can be easily substituted for Platinum in emission-control systems for gas-powered motors (but not diesel-powered ones), such as are favored in China and India. In fact, several experts we consulted were more bullish on palladium than Platinum due to this "substitution factor" – and China just mandated catalytic systems for all cars in the country.

Palladium investment demand was positive last year, though palladium jewelry has yet to gain traction in China, one of the world's biggest jewelry markets. Total jewelry demand for palladium was 11% lower in 2012. However, we expect a greater shift to palladium in the expanding Asian automotive market, which in turn will boost palladium prices.

The fundamental drivers of the palladium market are similar to those for Platinum, which makes the palladium market an equally attractive investment.

If this all weren't bad enough, most companies' production costs are now above current Platinum and palladium prices. This can only be solved one way: higher metals prices.

Bottom Line

The supply disruptions in South Africa combined with secondary factors have led to deficits in both metals that won't be erased overnight. Such imbalances, together with mainstream expectations of global economic growth, create a favorable environment for PGM price appreciation.

This much seems like a safe bet. There is, however, a great deal of speculative upside in the not-inconceivable case of South Africa going off the rails in a major way. Massive – not marginal – supply disruptions in the world's main source of both metals would send their prices through the roof. You get this speculative potential "for free" when you bet on the more conservative projections that call for rising prices regardless.

While we wait for our gold positions to rebound, an investment in Platinum and palladium could be very profitable. How to invest? You can learn which company is our #1 pick for this space with a risk-free trial subscription to BIG GOLD.

Note: our longer-term outlook remains in place: most G7 economies are not fundamentally sound and continue to print money. Gold is still our priority asset class, so we don'trecommend that investors replace their gold holdings with Platinum and palladium investment vehicles. This PGM trend is simply an addition to and diversification of our current investment strategy.

Share or Comment on "Platinum and Palladium: A Fundamental Shift" by Jeff Clark

Gold and Silver HEADLINES

South Africa Importing Tons of Gold from the US (Moneyweb)

Data from the US Census show that South Africa's trade balance with the United States has changed drastically in the last couple of months. In the nine last months, South Africa – by nature a big exporter of commodities – has received two very big shipments of unwrought gold from the US.

"According to the US Bureau, South Africa had a $110m trade surplus with the US in March 2012 and a $401.5m surplus in January 2013. In March 2013 this changed to a deficit of $688.8m."

It's hard to say exactly what this means, but it doesn't look good for South Africa. It's a place to watch carefully.

US to the World: "No Gold Sales to Iran" (Mining.com)

The United States is pressuring governments – especially Turkey and the United Arab Emirates – to cease gold sales to Iranians as part of broader sanctions over Iran's nuclear program.

This is part of the US's strategy to isolate Iran from the international financial system, a keys component of which is an attack on the value of Iranian rial, thereby inducing the Iranian people to demand policy reforms of their government.

Ben Bernanke says gold is not money, but it is clear that the US government recognizes the reality that it is, and is reacting accordingly.

Anti-gold Campaign at Play in India? (Mineweb)

In order to stifle India's appetite for gold, the government has introduced inflation index bonds. The first tranche, amounting to around $364 million, is to be introduced on June 4.

"The concerted effort by the Indian government to discredit gold by imposing several curbs, and channel these consumers away from the precious metal, indicates a desperation that has not gone unnoticed by savvy investors," reports Mineweb. The authorities have said the objective of introducing such bonds is to direct savings into "productive" sources of instruments from the so-called "unproductive" ones, like gold.

This would be funny if it weren't so destructively counterproductive.

This Week in International Speculator and BIG GOLD – Key Updates for Subscribers

International Speculator

One of our favorite exploration teams has delivered another set of positive drill results. Its flagship project keeps adding value, yet the stock is cheaper.

A Canadian gold producer released its latest financial statements, delivering another quarter of solid operational results. The stock has gotten cheaper since our last recommendation, and we're buyers.

BIG GOLD

This top silver producer announced cutbacks in capital expenditures this year, but we're not concerned.

One of our gold producers announced that it paid off its hedgebook early, solidifying it as a Best Buy.

Daily Pfennig: Both Consumer Confidence and Leading Indicators surprise on the upside

Mon, 20 May 2013 14:58:00 -0400

In This Issue.

* US data sends the dollar higher...
* Could the Fed begin the end of bond their bond buying???
* Chinese home prices rise.
* Gold continues to see selling.

And, Now, Today's Pfennig For Your Thoughts!

Both Consumer Confidence and Leading Indicators surprise on the upside.

Good day. Storms knocked the power out at my house last night, so I woke a bit later than I wanted to and had to scramble to get ready by the light of my phone (yes, I have finally caught up with the rest of my family and have become dependent on my phone for more than just phone calls). I saw a number of branches littering the roads on the drive in, so the wind must have been pretty strong. The weather man said we will be getting more storms this morning, I hope Chuck was able to sneak out of here down to Houston for his 'regularly scheduled maintenance' with his docs down there.

The dollar continued to power its way higher on Friday as both the confidence report and Leading Indicators showed the US economy will continue to improve. As both Mike and Chuck suggested last week, the markets have been all about the growth story here in the US and that has boosted the dollar. Friday's data supported the recent 'love fest' for the US$ as the U of Michigan Confidence reading came in at 83.7 compared to expectations of 77.9 and substantially higher than last month's reading of 76.4. This was the best reading since the summer of 2007 and shows the resiliency of Americans as they have faced down a combination of higher taxes and federal spending cuts. Many believe the increase in confidence is a direct result of the record levels of the US equity markets and the beginning of a housing recovery. I guess all the work the Fed has been doing in keeping the printing presses in overdrive is beginning to show up in the attitudes of US consumers. But I still worry about the labor market here in the US, and while confidence can certainly be pushed higher along with the stock market, you can't 'spend' confidence at the store, so we continue to need to see more improvement in the labor markets.

The leading indicators were also released on Friday and painted a fairly rosy picture for the near term future of the US economy. The Conference Board's gauge of the economic outlook for the next 3 to 6 months climbed .6% in April, a big turn-around from a .2% drop in March. Economists had predicted the leading indicators to come in at a .2% increase so the markets were surprised by the strength of Friday's data. This strong reading supports the thought that the US economy will start to pick up steam in the second half of this year which could mean an early end to the quantitative easing efforts of our Federal Reserve.

This thought is what has been rallying the dollar over the past few weeks, as more Fed heads have been talking about beginning an exit from the $85 billion monthly bond buying program which began in September of last year. Fed Bank of San Francisco President John Williams made the speaking circuit rounds at the end of last week suggesting the central bank may begin to taper the bond buying sooner rather than later. This is a big change for Williams who is generally seen as a dove when it comes to monetary policy. Williams joins three other Federal Reserve regional bank presidents who have been calling for phasing out the month purchase of mortgage backed securities. Dallas President Richard Fisher, Philadelphia President Charles Plosser, and Richmond President Jeffery Lacker have all been calling for an end to the bond buying. "It's not good for the bank to be holding lots of mortgage paper" Plosser said on Friday. Fisher warned that if the bond buying continues at the current levels, the Fed could eventually be buying up to 100 percent of the MBS issuance which is "not only excessive, but also potentially disruptive to the proper functioning of the MBS market." The FOMC will release minutes of its April 30th meeting on Wednesday, and traders and economists will be looking for indications that an end of QE is starting to come into focus.

We won't have any big data releases here in the US today, nor any tomorrow so the markets will have to look overseas for any news on the global economy. Fed Chairman Ben Bernanke will testify before the Joint Economic Committee this Wednesday which could produce some good 'Pfennig pfodder' as our congressional leaders push him for more information on when he plans on ending QE. Chuck should have plenty to write about as the end of the week will be chock-full-o data. We get the existing homes data on Wednesday followed by the weekly jobs claims and some more housing data on Thursday. These housing numbers have taken on an even greater importance with the positive data we saw on Friday. If the housing data comes in strong, it would support the thought that the US economy will be able to withstand the reduction of federal spending which will accompany the end of QE. And Friday we will close out the week with April's reading of durable goods orders which are predicted to show a positive 1.5% increase after a fairly large drop in March.

In Europe, car sales rose in April for the first time since September of 2011 adding to signs that the latest recession in Europe may be short-lived. Another report showed consumer confidence in Europe increased in April to the highest level since July of last year. Last weeks trade data showed European exports expanded 3.4% from a month earlier as the EU trade surplus widened to 8.1 billion euros from just 1.6 billion euros in February. German auto sales finally showed an increase, jumping 3.8% in April ending five consecutive months of falling sales. The largest increases were in the UK where registrations increased 15% and in Spain where they were up over 11%. Both France and Italy showed drops in the number of cars sold. Interest rate reductions by the ECB were given some credit in turning around the auto data, and ECB President Mario Draghi said he is still considering further cuts if the economic outlook deteriorates. But with rates near zero, any additional cuts could move rates some rates below zero, and the overall impact of negative interest rates is still largely unknown for an economy the size of Europe.

The Japanese yen finally strengthened a bit after Japan's economic minister Akira Amari warned that further losses in the currency could negatively affect Japanese citizens. Amari suggested that the dramatic drop in the value of the Japanese yen has already corrected a lot of the imbalances in the Japanese economy. This was the first indication from a Japanese leader to suggest the Japanese yen is getting close to where they would like to see it. I guess the 20% move of the yen over the past six months is just about what the Japanese leaders were wanting, and they apparently would like to see the yen take a breather while the markets digest this huge move.

Staying in Asia, China's housing inflation accelerated to its fastest pace in two years. Average new home prices rose almost 5% from a year ago after a 3.6% increase last month. The rising prices add complexity to the job of Chinese leaders who would like to be able to spur a stronger overall economic recovery. These leaders have been trying to cool the housing market with measures aimed directly at this sector, but many thought these moves weren't broad enough to have a meaningful impact. Home prices continue to move higher in the large Chinese cities, with prices in Beijing rising 10.3% and Shanghai prices up 8.5% both of which were the fastest YOY gains since January of 2011. With property inflation edging higher, Chinese leaders will have less room to enact measures to try and stimulate their economy.

Closer to home, Mexico's peso fell again on Friday heading for its worst week since last June after data showed GDP rose at the slowest pace since 2009. GDP rose just .8% in the first quarter from a year earlier, much slower than Mexico's leaders would like to see. The data may force Mexico's central bank to cut rates which would definitely be a negative for the Mexican peso. Holders of the peso have enjoyed a nice 12% increase in the currency over the past year, partially due to the higher rates available to investors. A cut in rates, which could be seen to be necessary to stimulate the Mexican economy, would definitely be a negative for the Mexican peso.

And the Canadian dollar continued to get beat up on Friday as inflation data bolstered recent calls for relaxing monetary policy. Consumer prices in Canada rose just .4% in April down from a 1% increase the month before. This was the slowest pace of price increases in Canada since October of 2009. As Chuck suggested on Friday, the new Prime Minister Stephen Poloz has supported trade policies in the past which would seem to indicate he may reverse outgoing BOC Governor Mark Carney's bias toward higher interest rates. While most investors felt the BOC's next move would be higher, the change in leadership along with softer inflation data has many thinking rates could be headed lower.

Commodity currencies were softer across the board, as the Australian dollar, New Zealand dollar, and South African rand all followed the Canadian dollar down over the weekend. The slower global inflation is what seemed to be weighing on all of these currencies. A consumer confidence measure in New Zealand helped put a floor under the kiwi, showing confidence 'down under' climbed to a three year high. And another report showed producer prices in New Zealand rose .8% in the first quarter, the most since June of 2011.

Gold had another off day, dropping nearly $30 on Friday and another $10 over the weekend. With the dollar rising to nearly a 3 year high (according to the dollar index) there continues to be increased selling pressure on the precious metals, which have had an inverse relationship with the greenback. Talk of an exit from QE programs here in the US has added to the selling in gold, as inflation expectations seem to be softening. I still think these levels represent a great place to add or better yet start the accumulation of a position in the precious metals.

To recap. Data released on Friday sent the dollar higher as both the consumer confidence and leading indicators surprised on the upside. Fed heads are starting to discuss the exit from QE, and some believe we could now see a reduction in bond buying in the next few months. No data here in the US today or tomorrow, but the end of the week will bring Chuck plenty to write about. European car sales increased, perhaps the recession will be short lived? Chinese home prices shot higher, but Chinese leaders still want to stimulate their economy. And the commodity currencies all fell over the weekend as global inflation expectations caused a sell-off in precious metals and raw materials.

Currencies today 5/20/13. American Style: A$ $.97746, kiwi .8140, C$ .9723, euro 1.2859, sterling 1.5192, Swiss $1.0327. European Style: rand 9.4649, krone 5.8355, SEK 6.6724, forint 225.95, zloty 3.2522, koruna 20.3023, RUB 31.2895, yen 102.56, sing 1.2554, HKD 7.7622, INR 55.1062, China 6.1998, pesos 12.3216, BRL 2.0352, Dollar Index 84.042, Oil $95.53, 10-year 1.95%, Silver $21.685, Gold. $1,354.16, and Platinum $1,445.55.

That's it for today. Congratulations to all of the new graduates! I attended the high school graduation of my niece (and goddaughter) Meaghan yesterday evening. The event was held outdoors under the massive oak trees in front of her high school, and the weather cooperated to make it a wonderful event. Unfortunately the weather prediction isn't so good for the second phase of her graduation, the beautiful 'Maypole' dance which all of the senior girls are scheduled to perform this evening. They have been practicing for months now, and there is no 'indoor option' so I really hope the storms move through quickly and leave them a window of opportunity this evening. Meaghan graduated with honors, and is now on her way to Rhodes College where she will play field hockey and study psychology and art. Next week her twin brother will graduate and then head off to Georgetown University. I am extremely proud of both of them, as they have worked hard in high school and have set themselves up to be a success in life. Time really flies, it seems like I was holding the twins in my arms just a few years ago! I'll get this out the door now, and call home to check and see if the power is back on. Thanks for reading the Pfennig, and I hope everyone has a Marvelous Monday!

Chris Gaffney, CFA
Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837

A typical s l o w, Monday

Mon, 20 May 2013 14:53:00 -0400

RegMed equities traded lower again in choppy trading Monday.

In the broader market … stocks closed slightly lower in choppy trading Monday, pulling back after the Dow and S&P 500 hit fresh all-time highs and amid ongoing worries that the Federal Reserve may taper its bond-purchase program. With no major economic reports on tap, investors have been focusing on if or when the Fed should start paring back on its bond-buying program. The talk grew louder … last week, further fueled by the comments of Fed hawks John Williams and Charles Plosser. Investors will be closely watching Fed Chairman Bernane’s testimony before the Senate on Wednesday, which may illuminate the central bank’s plans regarding reducing or ending bond purchases.

There were some bright spots … the big bat in the park … is Shire ADR (SHPG) being UP +$1.85 to $95.28 – buying back some stock. Mesoblast ADR (MBLTY) is UP +$0.16 to $27.11 followed by Verastem (VSTM) is UP +$0.12 at $9.31 with MiMedx (MDXG) UP at +$0.11 to $7.37 – after receiving a $3 M line of credit with B of A. Athersys (ATHX) is swing the bat – UP +$0.07 to $1.93; while Opexa (OPXA) is also UP +$0.02 at $1.69. Aastrom (ASTM) is also out of the dugout … UP +$0.15 after slowly eroding up and down at $0.585 – just biding time to an offering – this is the most timed offering … I watched in a … l o n g … time!

Closing negative … stuck in the dugout was … Osiris (OSIR) was DOWN -$0.57 to $10.70; while BioTime (BTX) is DOWN – $0.20 to $3.92. Stemline (STML) is DOWN after an offering filing having felt the hot iron of downward trends -$0.08 to $14.67. Cytori (CYTX) is also DOWN -$0.13 to $2.50. Wright-Medical (WMGI) was DOWN -$0.05 to $24.59 while Pluristem (PSTI) is DOWN -$0.05 to $3.00 while Dendreon (DNDN) is DOWN -$0.07 to $3.94.Fibrocell (NYSE MKT: FCSCD) who’s had very good days is DOWN -$0.25 to $4.75 after a stock reverse!

Other favorites closing … at bat or in the warm-up were … BioLife Solutions (BLFS) closed UP +$0.105 to $0.41 after very good earnings and guidance. NeoStem (NYSE MKT: NBS) is DOWN -$0.025 to $0.595 along with Cytomedix (CMXI) who is also DOWN -$0.04 to $0.46 – wake up – a roaring -BUY – investors should wake to this one; just think hybrid and finally Medistem (PINK: MEDS) is FLAT at $1.20 on 1100 shares – barely a drop. Harvard BIO (HBIO) is DOWN -$0.02 at $5.18 – market adjustment following tax free spin-out versus HART IPO.

Measuring the close – NEGATIVE … 17 red (downs) led … 11 green (ups) followed by 9 black (flats) … The CBOE Volatility Index traded above 13.

Closing Bell: The NASDAQ closed DOWN -2.53 (-0.07%) to 3,496.43 while the DOW was DOWN -18.97 (-0.12%) to 15,335.43.

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The Early Movers – who’s hot, who’s not

Mon, 20 May 2013 14:52:00 -0400

Which RegMed companies are making moves in the 1^st hour?

Signs of life …

Shire ADR (SHPG +$1.43) and Stemline (STML +$0.24) are the leaders as today’s market opens…

…followed by Wright-Medical (WMGI +$0.22), Verastem (VSTM +$0.20), Fibrocell (NYSE MKT: FCSC +$0.15), BioLife Solutions (OTC: BLFS +$0.05), Cryo-Cell (OTC: CCEL +$0.03), ImmunoCellular (NYSE MKT: IMUC +$0.03), Geron (GERN +$0.01) and Opexa (OPXA +$0.01),

A view of the downside at the open …

Osiris (OSIR -$0.15) and ThermoGenesis (KOOL -$0.11) are the loss leaders…

… followed by MiMedx (MDXG -$0.10), Dendreon (DNDN -$0.06) BioTime (NYSE MKT: BTX -$0.05), Cytori (CYTX -$0.05), ReNeuron (LON: RENE -$0.03), Pluristem (PSTI -$0.03), NeoStem (NYSE MKT: NBS -$0.027), Neuralstem (NYSE MKT: CUR -$0.01), Athersys (ATHX -$0.01), Bioheart (PINK: BHRT -$0.002), Brainstorm (OTC: BCLI -$006) and Advanced Cell Technology (OTC: ACTC -$0.0018),

And some of the sector is flat

Aastrom (ASTM), Harvard Bio (HBIO), StemCells (STEM), IntelliCell (PINK: SVFCE), Cytomedix (OTC: CMXI), International Stem Cell (PINK: ISCO), Medistem (PINK: MEDS), Mesoblast ADR (PINK: MBLTY), Proteonomix (OTC: PROT), Tengion (PINK: TNGN), and Vitro Diagnostics (PINK: VODG)

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Fearful for direction as sector struggles, slips and slides

Mon, 20 May 2013 14:52:00 -0400

The 6 W’s: Who, what, where, when, why and what of it

RegMed equities have been bouncing back and forth against the sector walls – Pacman anyone?Stocks were narrowly mixed Monday, as investors seemed to take a breather after the past weeks of even deeper breaths as earnings completed.

The nature of this market always prevails but the RegMed sector consistently has been lagging as liquidity has trumped any semblance of fundamentals and technical.

The weakness in the RegMed sector came as some traders looked to cash in on … any recent strength in the markets, while … selling pressure is relatively subdued – traders remain reluctant to experience any further downside.

Measuring the day – POSITIVE– 14 green (ups) followed by 12 red (downs) 8 fluctuating black (flats)

Mid-Day – Stocks erased their early losses to poke higher Monday, with major averages extending their gains from last week and hovering around fresh all-time highs.

At mid-day, the NASDAQ is UP +5.86 or 0.017% at 3442.29 while the Dow is DOWN -23.31 or -0.15% at 15,095.18. The CBOE volatility index traded above 13.

Research Notes:

RegMed Daily – The Early Movers … http://www.scimitarequity.com/blog/2013/05/20/the-early-movers-whos-hot-whos-not-26

Advanced Cell Technology (ACTC.OB) Better vision after treatments …http://www.scimitarequity.com/blog/2013/05/20/advanced-cell-technology-actc-ob-better-vision-after-treatments

Roll Call:

Aastrom (ASTM) is trading UP … +$0.01 to $0.57 with a pending offering about to dilute the price and share count. A SELL.

Athersys (ATHX) is UP… +$0.06 at $1.92 post earnings. A HOLD.

BioLife Solutions (OTC: BLFS) is UP… +$0.095 at $0.40 share at mid-day, compared to $0.31 Friday’s close with huge 190.4 K shares traded. BLFS is growing its business, evidenced by its licensing of specific areas of intellectual property, while keeping high growth as the regenerative medicine market opportunity develops. BLFS hold the leading supplier position for pre-formulated, clinical grade biopreservation media products. A STRONG BUY.

Cytori (CYTX) is DOWN … -$0.08 or to $2.55 with today’s mid-day trading range of $2.53 – $2.65 and a 177 K share volume. A BUY.

Cytomedix (OTC: CMXI) is DOWN -$0.04 to $0.46, with a trading range of $0.46- $0.46 and tiny volume of 2 K shares compared to Friday’s close of $0.50. A BUY.

NeoStem (NYSE MKT: NBS) is DOWN …-$0.01 to $0.58 with moderate l share volume of 404 K at mid-day. Both the trending 50 day and 200 day moving averages are at $0.63. A STRONG BUY!

Medistem (PINK: MEDS) is FLAT…at $1.00 … with no real news and nor share volume. MEDS needs to generate some significance to differentiate itself and forward … any visibility standing… A very thinly or no trading volume stock. A HOLD.

News

Neuralstem (NYSE MKT: CUR) reported that Eva Feldman, MD, PhD, principal investigator, presented updated Phase I data from its spinal cord-derived human neural stem cell (NSI-566) trial in the treatment of amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease) at the Neuro Diabetes Special Medical Symposium in Bucharest, Romania. In a talk called “Recent Therapeutic Advances in Stem Cell Therapy,” Dr. Feldman reported that six study patients have a stable, very slowly progressing or improved disease course at more than 700-to-approximately-850 days post-surgery. Furthermore, she stated that these patients all share two common clinical characteristics: They had no bulbar features of ALS, a form of the disease that destroys motor neurons in the corticobulbar area of the brainstem in the early stages and typically progresses faster than the limb-onset ALS. Additionally, these patients all received stem cell transplantation early in the course of their disease (at an average of 2 years, 1 month after symptom-onset). Two of the patients showing stabilization or improvement were among the three to receive transplants in both the lumbar and cervical regions. Of the 9 remaining patients in the trial, three subjects had a long disease course (5.6, 11.6 and 12.7 years of known disease), at the time of their transplantation, likely representing atypical ALS, and have had little change in the trajectory of their disease. Finally, Dr. Feldman reported, six of the trial patients died of their disease, 7-to-30 months after surgery. Two of these patients had features of bulbar ALS at the time of their transplantation. Dr. Feldman is also Director of the A. Alfred Taubman Medical Research Institute and Director of Research of the ALS Clinic at the University of Michigan Health System and an unpaid consultant to Neuralstem.

Stemedica has added Robert L. Wilensky, MD, Professor of Medicine and Director of Interventional Cardiology Research at the University of Pennsylvania to its Scientific and Medical Advisory Board for Stemedica’s Cardiology Division. At the University of Pennsylvania, Dr. Wilensky divides his time between the cardiac catheterization laboratories and the translational animal laboratory. His research interests include acute coronary syndromes, diagnosis and treatment of
vulnerable coronary lesions and stem cell therapy for decreased left ventricular function and coronary artery disease.

RNL BIO will offer adult stem cell banking in the United States beginning on June 20, 2013. RNL BIO previously offered these services through another company, but will now provide the latest, safest technologies directly. As the sole global provider of its stem cell banking services, RNL BIO will provide clients with continuous quality assurance and constant innovation in adult stem cell technologies. RNL BIO operates facilities in Maryland, Los Angeles and a FDA-registered stem cell banking facility in the Houston, Texas metroplex. It has opened a 15,000 square foot GMP laboratory facility in Sugar Land, Texas with extensive, state-of-the-art stem cell research and banking equipment, staffed by highly qualified scientists.

Advanced Cell Technology, Inc. (OTC:ACTC) confirmed that the vision of a patient enrolled in a clinical investigation of the company’s retinal pigment epithelial (RPE) cells derived from human embryonic stem cells (hESCs) has improved from 20/400 to 20/40 following treatment. The improvement was first reported on May 15, 2013, in a news article published by Reuters.

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Lower or flat open anticipated

Mon, 20 May 2013 14:50:00 -0400

Stocks seen DOWN on Fed easing fears

Stock market index futures pointed to a lower open on Monday, with investors expected to take a breath after a blockbuster prior week and ongoing concerns the Fed may begin to taper off its quantitative easing program.

The RegMed sector share pricing is volatile. Sector sentiment and appreciation is fluctuating at a very dramatic rate – it is a trader’ market to why some pricing(s) have decreased and in some cases – increased.

DOW futures are DOWN -0.0% and the NASDAQ is DOWN -0.0.

European stock markets take a hint from an overnight rally in Asia and move higher on Monday.

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Advanced Cell Technology (ACTC.OB) Better vision after treatments

Mon, 20 May 2013 14:49:00 -0400

Clinical trial participant showed vision improvement from 20/400 to 20/40

The vision of a patient enrolled in a clinical investigation of the retinal pigment epithelial (RPE) cells derived from human embryonic stem cells (hESCs) has improved from 20/400 to 20/40following treatment. The improvement was first reported on 5/15/13, in a news article published by Reuters.

These trials are prospective, open-label studies, designed to determine the safety and tolerability of hESC-derived RPE cells following sub-retinal transplantation into patients with dry AMD or SMD at 12 months, the study’s primary endpoint.

The Bottom Line: ACTC is encouraged by the progress seen in ongoing clinical investigations, though the results included in the article were confidential and not intended for publication at that time. Their plan is still to publish additional results from the clinical investigations when they have a significant aggregation of data.

ACTC closed at $0.07 on 5/18/13. I just wish appreciation could be realized by a better outstanding share count.

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Enteromedics Rallies On Confirmed Path To Possible Approval

Mon, 20 May 2013 14:44:00 -0400

EnteroMedics (NASDAQ: ETRM) is a company that focuses on gastrointestinal and metabolic diseases with its flagship product VBLOC®, which is a first-in-class weight

loss treatment that prevents obesity by blocking signals in the nerve that

controls both hunger and fullness sensations in the human body (the vagal

nerve).

Unlike Vivus’ (NASDAQ:VVUS) recently approved phentermine and topiramate ER weight loss pill Qsymia or Arena’s (NASDAQ: ARNA) Belviq (lorcaserin) pill, VBLOC is implanted surgically and acts as a very direct inhibitor of the “hunger signal” that is

sent directly to the brain to induce a desire to eat more. It is a more specific product of the Maestro Rechargable System.

The stock never really gained the kind of momentum and investor interest that Vivus or Arena did right around their FDA approvals last year, and what the company did had was severely damaged after the company released the results from their phase III ReCharge study on February 7th.

The study, which tested the therapy in a randomized double-blind trial with 239 obese patients, failed to meet either of its primary efficacy endpoints. The primary analysis, which was based on achievement of a 10% greater EWL (excess weight loss) in the VBLOC arm based on the BMI scale, was close to its predefined threshold with

statistically significant 8.5% improvements across the board.

The safety endpoint, on the other hand, was met successfully. The endpoint required that the serious adverse event rate related to the device, implant/revision, and therapy be less

than 15% although this seems incredibly generous. Luckily, the results showed

an adverse event rate of 3.1% for the treatment arm. The completion rate was

also higher than one might’ve expected, with 93% of patients reaching the one

year mark.

These are the data that investors will have to mull over after EnteroMedics’ recent pre-PMA meeting with the FDA on May 15th. While the FDA has confirmed that EnteroMedics can submit a PMA for VBLOC/Maestro based on the results of ReCharge, and this is expected to be analyzed by an advisory committee prior to the FDA decision, probably in H2 2014. EnteroMedics expects to submit the PMA some time later this year.

The company has a cash burn rate of roughly $7 million per quarter, which should stay relatively close to that value due to ongoing expenses related to the continuation of the rest of the ReCharge trial. This gives the company enough time to operate well into

fiscal year 2014, although we could definitely see a financing early next year

prior to any regulatory action.

Investors who go long ETRM are generally expecting the advisory committee and the FDA to overlook technically-missed primary endpoints in favor of the somewhat established safety profile of VBLOC/Maestro and the statistically significant improvements that the treatment arm demonstrated versus the placebo arm. Since the ultimate decision is quite arbitrary in the end, ETRM is likely to stay rangebound until we approach the next major catalyst.

‘Naive’ to Think Gold Isn’t Manipulated Too, Fund Manager John Butler Says

Sat, 18 May 2013 14:57:00 -0400

¤ YESTERDAY IN GOLD & SILVER

The gold price traded around the $1,380 spot price mark through all of Far East and most of the London session on Friday. But minutes after the equity markets opened in New York, the gold price got sold down twenty bucks in short order...and the subsequent rally didn't get far. Once the Comex closed, the gold price got sold down to its low of the day in thin access market trading.

The low price tick came at precisely 4:00 p.m. EDT in New York...and Kitco recorded that as $1,354.60 spot. After that, it recovered a few dollars doing into the close of electronic trading.

Gold closed at $1,360.20 spot...down $25.70 on the day. Net volume was very high...around 193,000 contracts.

The silver price was more 'volatile' on Friday. It topped out around the $22.80 mark around 10:00 a.m. in Tokyo...and was as low as $22.40 shortly after the Comex opened in New York. The subsequent rally ran into selling just after 9:30 a.m. EDT...just like gold.

From there, the silver price got sold down until the close of London trading, which was 11:00 a.m. in New York...and the anemic rally that followed ended just after 1:00 p.m. Then, like gold, silver got sold down in the thinly-traded electronic market...and the low price tick came at, or very close to 4:00 p.m. EDT in New York. That was pretty much it for the day.

Silver's low tick was recorded as $22.09 spot.

Silver closed the Friday trading session at $22.26 spot...down 43 cents from Thursday's close. Gross volume was around the 46,000 contract mark.

The dollar index closed in New York at 83.745 late Thursday afternoon...and then traded in a tight range just under the 84.00 mark right up until 8:00 a.m. EDT. Then away it went to the upside...and almost all the gains were in by 9:20 a.m...ten minutesbefore the equity markets opened in New York. The high tick was 84.31...and it sold off just a hair going into the close, finishing the Friday session at 84.21...up 47 basis points on the day.

Gold and silver didn't even begin to seriously sell off until about fifteen minutes afterthe big dollar index rally was done, so to pin yesterday's precious metal price action on the currencies is laughable.

Once again the gold stocks gapped down at the open...and the followed the gold price lower, with the absolute low of the day coming at the 4:00 p.m. EDT close of the equity markets in New York...and also at the precise low of gold for the day. The HUIgot clocked again...down 4.09%.

Surprisingly enough, the silver miners that make up Nick Laird's Intraday Silver Sentiment Index weren't hit quite as hard...but that's little consolation to long-suffering stockholders...as they finished down 'only' 3.30%.

(Click on image to enlarge)

Here's the long-term Silver Sentiment Index that shows just how badly the silver stocks have been slaughtered since December of 2012.

(Click on image to enlarge)

One of the other reasons that the sell-offs in the metal are hitting the shares so hard, is that mutual funds are feeling the effects of massive redemptions...and they have to sell whether they want to or not. The markets are very illiquid...and this just makes matters worse.

But the one big question you should be asking yourself is this..."Who is buying all these shares that the precious metals investors are selling in such a panic?" Think about it. Somebody is...and whoever they are [and I have my suspicions] they have infinitely deep pockets...and are the very definition of "strong hands".

The CME's Daily Delivery Report showed that zero silver and 157 silver contracts were posted for delivery on Tuesday within the Comex-approved depositories. The big short/issuers were ABN Amro and Jefferies...with 120 and 29 contracts respectively. The two largest long/stoppers were, once again, the ringleaders in the silver price management scheme...Canada's Bank of Nova Scotia with 113 contracts, and JPMorgan Chase with 30 contracts. The link to yesterday's Issuers and Stoppers Report is here.

GLD had another withdrawal by an authorized participant yesterday. This time 96,987 troy ounces were removed for parts unknown. SLV had a big withdrawal as well, as 2,220,839 troy ounces were taken out.

The U.S. Mint reported selling another 3,000 ounces of gold eagles yesterday...and that was it. Month-to-date the mint has reported selling 45,000 ounces of gold eagles...9,000 one-ounce 24K gold buffaloes...and 1,733,500 silver eagles. Based on these figures, the silver/gold sales ratio is just over 31 to 1. Without question that ratio would be much higher if the mint was able to produce all the silver eagles that were required...and as the mint has already stated publicly, it could produce more if it had the necessary blanks.

Over at the Comex-approved depositories on Thursday, they reported receiving only one good delivery bar of silver, weighing in a 1,019.900 troy ounces...but they shipped 856,973 troy ounces of the stuff out the door. The link to that activity ishere.

In gold on Thursday, these same depositories reported receiving 65,425 troy ounces of the stuff...and shipped 64,659 ounce of same out the door. All the activity was at Scotia Mocatta...and the link to that is here.

The Commitment of Traders Report, for positions held at the 1:30 p.m. EDT close of Comex trading on Tuesday, was pretty much as I had hoped/expected...as there were small improvements in the Commercial net short positions in both gold and silver.

In silver, the Commercial net short position declined by 6.2 million ounces...and currently sits at 66.1 million ounces. Not a record low, but within hailing distance, that's for sure...and I'll have more to say about this in 'The Wrap'.

Ted Butler said that JPMorgan's short position didn't change much from the previous reporting week...and is still around the 18,000 contract mark, or 90 million ounces...which represents 136% of the Commercial net short position. That's outrageous!!! If their short position vanished overnight, the remaining Commercial traders would be net long the Comex silver market...just like the traders in the other two COT categories...and we'd have a 3-digit silver price in a heartbeat.

The total open interest in silver is reported as 144,666 contracts...but if you dip in the Disaggregated COT Report, you find that of that amount...36,620 of these contracts are market-neutral spread trades. So the true open interest in silver is only 108,046 contracts...and once you remove them from the equation, the concentrated short positions of the major players really stand out.

In silver, the Big 4 traders are short 34.1 percent of the entire Comex futures market, once you subtract out all the b.s. market-neutral spread trades. In troy ounces, that 34.1 percent represents 184.4 million ounces...two and a half times the entire Commercial net short position!

And, according to the monthly Bank Participation Report in silver, only three big bullion banks actually matter, so in fact, it's the Big 3...not the Big 4. They are JPMorgan Chase, Canada's Bank of Nova Scotia...and HSBC USA. The short position of the 4th largest bank is immaterial.

The '5 through 8' largest traders are short an additional 10.6 percent of the Comex silver market...but at well under 3% each, they just don't matter in the grand scheme of things.

But, in total, the Big 8 traders are short 45% of the entire Comex silver market...and that's a minimum number. You can't make this stuff up.

In gold, the Commercial net short position declined by 357,300 troy ounces during the reporting week...and now sits at 8.41 million ounces.

There are spread trades in gold as well...and the ones that are visible in the Disaggregated COT Report total 75,170 contracts. The total open interest shows as 443,806 contracts...and subtracting out these market-neutral spread trades leaves a true open interest of 368,636 contracts.

In actual fact, dear reader, there are more spread trades than are being shown in this report, but if they showed all spread trades, then the true concentrations of all the market participants would become instantly apparent...and that's precisely why the report doesn't show them all. That's why I say that the true concentrations are actually higher, but it's impossible to know by how much.

Anyway, the Big 4 are short 8.30 million ounces of gold...virtually 100% of the Commercial net short position of 8.41 million ounces. On a 'net' basis, they are short 22.5 percent of the entire Comex gold market. The '5 through 8' traders are short 4.39 million ounces of gold...and that represents an additional 11.9 percentage points of the Comex gold market.

So, the Big 8 are short 151% of the Commercial net short position in gold...and short 34.4% of the entire Comex futures market in gold.

But to show you how much more concentrated the short position is in silver vs. gold...the Big 4 are short 257% of the Commercial net short position in silver. In gold, the Big 4 are short 98.7% of the Commercial net short position. Both figures are outrageous and obscene...and the CME Group does nothing, the CFTC does nothing...and the precious metals mining companies do nothing. As I said a few paragraphs ago...you couldn't make this stuff up.

Here's Nick Laird's most excellent "Days of World Production to Cover Short Positions" chart. Except for the willfully blind, it tells you all you need to know at a glance.

(Click on image to enlarge)

I haven't spoken about how business has been at the bullion store recently, so I shall make amends now. There's no question that business has slowed down quite a bit now that we're four weeks past the big engineered price decline. Deliveries of bullion are still an issue, but somewhat better than they were ten days ago. However, because of the long-term 'special relationship' that the story owner has had with his bullion supplier, this 'better' delivery situation many not be applicable across the board for all bullion stores.

The wholesaler's premiums have come down a bit, but are still quite elevated compared to what they were before April 16th when all hell broke loose...and we're nowhere near being back to what I would consider 'normal'. We aren't able to offer the same discount on future orders that we used to be able to...but I suspect that the situation will slowly revert back to 'normal' over time.

The other things that aren't 'normal' anymore is the level of business activity...and the internal structure of it. I would estimate the silver sales are permanently higher by 25 to 50% on a daily basis, than the baseline amount that our store did prior to April 15th. And if that isn't impressive enough, I'd estimate gold sales are up between 300 and 500% now that things are 'back to normal'. This new level of activity is going to take some getting used to...and it will be interesting to see how the mints cope with this new demand structure as time marches on.

Of course these demand figures, whether local, national...or international, are price sensitive...and bear watching closely. But many customers are mentioning the fact that they are grateful that the precious metals are "on sale"...and as long as they are, demand is certain to remain strong.

And your "cute quota" for the day...

I have a lot of stories today...but since it's the weekend, I hope you can find the time to spend on the ones that interest you the most.

¤ CRITICAL READS

Bankster alert: Tom Harkin introduces Glass-Steagall bill in Senate

The push to restore the Glass-Steagall banking act has returned to the U.S. Senate.

Sen. Tom Harkin on Thursday introduced S. 985, which would rebuild the wall that had once separated commercial banking from brokerage and investment speculation. The Iowa Democrat’s bill came on the 80th anniversary of the original 1933 Glass Steagall Act.

The text of S.985 was not posted on the Senate website as of Friday afternoon, but it is believed to resemble HR 129, introduced by Reps. Marcy Kaptur, D-Ohio, and Walter Jones, R-N.C. Their measure has 62 bipartisan sponsors in the House.

Meantime, 20 state legislatures are considering resolutions urging Congress to reinstate Glass-Steagall. Lawmakers in four states -- South Dakota, Maine, Indiana and Alabama – have passed such measures.

This news item was posted on the examiner.com Internet site yesterday...and I thank Bill Gebhardt for today's first story.

This Is No Ordinary Scandal: Wall Street Journal

We are in the midst of the worst Washington scandal since Watergate. The reputation of the Obama White House has, among conservatives, gone from sketchy to sinister, and, among liberals, from unsatisfying to dangerous. No one likes what they're seeing. The Justice Department assault on the Associated Press and the ugly politicization of the Internal Revenue Service have left the administration's credibility deeply, probably irretrievably damaged. They don't look jerky now, they look dirty. The patina of high-mindedness the president enjoyed is gone.

Something big has shifted. The standing of the administration has changed.

As always it comes down to trust. Do you trust the president's answers when he's pressed on an uncomfortable story? Do you trust his people to be sober and fair-minded as they go about their work? Do you trust the IRS and the Justice Department? You do not.

This op-ed piece by Peggy Noonan showed up in The Wall Street Journal on Thursday...and I found it in yesterday's edition of theKing Report.

Surprise! Inflation is too low almost everywhere on earth

The leading economies of the industrialized nations may not have a lot in common, but they are all afflicted by this: Inflation is too low.

That was the astoundingly consistent theme out of a range of data released Thursday. Prices rose 1.1 percent over the 12 months that ended in April in Germany, 0.8 percent in France and 1.3 percent in Italy. In the United States, the consumer price index rose 1.1 percent over the last year. Japan reported surprisingly strong first-quarter growth this week as its aggressive new stimulus policies took effect, but that came against a backdrop of continued falling prices; its consumer price index fell 0.9 percent in the year that ended in March.

The below-trend inflation is partly attributable to falling commodities prices, and just as policy shouldn’t overreact when a short-term commodity blip causes inflation, it shouldn’t make the same mistake in reverse. But even excluding food and energy, U.S. CPI was up only 1.7 percent, still below the level of inflation the Federal Reserve is aiming for. And the situation in Europe is particularly worrisome; if the euro zone is going to have any hope of rebalancing its economy without a prolonged depression, it will need higher inflation in core European countries like Germany and France, offset by lower inflation in countries like Greece and Spain. Instead, prices are rising too slowly even in the core, and there is deflation, or falling prices, in Greece.

The biggest conclusion to draw from all of this is that warnings that massive quantitative easing efforts would spark explosive inflation are turning out to be as wrongheaded as can be. In the United States and Japan, central banks now have open-ended policies of printing money to buy assets. But while the money seems to be finding its way into asset markets, such as for stocks and corporate debt, it isn’t being circulated so widely as to drive up prices for consumers.

This article, along with some excellent charts, appeared in The Washington Post on Thursday...and it's courtesy of West Virginia reader Elliot Simon.

Doug Noland: Financial Euphoria

From my perspective, the global nature of excesses and fragilities is the most worrying aspect to the current Financial Euphoria. Essentially, the entire world faces acute financial and economic instability. The entire world suffers from a widening gulf between inflating asset prices and mounting economic vulnerabilities. Seemingly the entire world suffers from an increasingly protracted period of near-zero rates, aggressive central bank monetary stimulus and a desperate search for market returns. The entire global financial “system” is an over-liquefied speculative Bubble – stoked by central bankers responding desperately to acute financial and economic fragilities.

As noted above, find a speculative Bubble and there will be an underlying source of monetary disorder. From my perspective, Bubbles are at their core about a self-reinforcing over-issuance of mispriced finance. Major market misperceptions are integral to fueling Bubbles – and these misperceptions are often associated with some form of government support/backing of the underlying Credit financing the boom.

These days, the dynamic of over-issued, mispriced finance is a global phenomenon – the U.S., Europe, Japan, China, Asia and the “developing” economies. The perception that central bankers will ensure ongoing asset inflation is an unprecedented global phenomenon. The collapse in yields and risk premiums in debt markets across the globe is unlike anything I’ve ever witnessed or studied historically. These days, asset inflation, speculation and Bubbles prevail virtually everywhere. Moreover, the gulfs between inflating assets and weakening economic fundamentals seemingly widen everywhere, as Financial Euphoria engulfs debt and equity securities markets around the world. As noted this week by the great market watcher and historian Art Cashin: This market is unlike anything we’ve ever experienced.

Doug's Credit Bubble Bulletin, posted on the prudentbear.comInternet site every Friday, is always a must read...and yesterday evening's edition is no exception. I thank reader U.D. for sending it along.

Study Indicates That America's Driving Boom is Over

The "driving boom is over," or so says a new study of American attitudes toward the automobile.

After decades of adding more cars to their household fleet while moving further and further out into the suburbs, Americans are waiting longer to get licensed, driving less and increasingly turning to alternatives such as mass transit or car-sharing programs, according to a new study by the U.S. Public Research Interest Group, or PIRG.

Declaring the boom in automotive transportation "over," the study stresses that, "the time has come for America to hit the reset button on transportation policy—replacing the policy infrastructure of the driving boom years with a more efficient, flexible and nimble system that is better able to meet the transportation needs of the 21st century."

This very interesting CNBC article appeared on their website early in the afternoon on Wednesday...and I've been saving it for today's column. I thank Elliot Simon for bringing it to our attention.

Doug Casey: The Virtues of Capitalism

What can be said of Doug Casey? His life and career are the stuff of legend among investors and speculators, especially in the junior resource space.

Doug is a friend and mentor to Chris and I. For over 25 years I've read his monthly missives, devoured his books and attended his workshops. I credit Doug with leading me to my first big score, and imparting enough wisdom to make me see the sense of holding onto that winner as long as it made sense to. The value of that lesson was something that can never be repaid.

Doug was one of the key people, along with my friend "Dave" with whom I credit for arming me with the confidence to leave my comfortable life in the States, family, friends and business partners to experience the broader world and invest and speculate in the frontier markets.

Although he isn't always right, and has been early on many of his calls, his viewpoints are always enlightening and entertaining!

This interview with Doug was posted on the zerohedge.comInternet site on Thursday...and is definitely worth reading.

A Brazilian WTO chief could prove painful for the West

Late last Tuesday, after months of intense lobbying, and campaigning visits to 47 countries, Roberto Azevedo was confirmed as the next director general of the World Trade Organisation.

Amidst the Queen’s Speech and the resignation of a certain football manager, Azevedo’s appointment barely flickered on the U.K. news radar. Yet it was an event of some significance that could have major implications for the future shape of the global economy.

While less well-known than the International Monetary Fund, the WTO is the most important economic multilateral on earth. With 159 member states, this Geneva-based organisation can be likened to a vast and highly specialised international court, designed to arbitrate on complex trade disputes between governments that come into conflict, so as to keep protectionism in check.

If a nation feels another is unfairly blocking its exports, it complains to the WTO. Ranks of in-house lawyers then interpret international trade rules and issue an independent judgment. If countries found guilty don’t comply, then all members are meant to stop trading with them and close ranks — although it very rarely comes to that.

This story appeared on the telegraph.co.uk Internet site last Saturday...and it's been sitting in my in-box since then, awaiting a spot in today's column. I thank Roy Stephens for his first offering of the day.

BoE policymaker Martin Weale douses hopes of monetary stimulus when Mark Carney arrives

Martin Weale, a member of the rate-setting Monetary Policy Committee, warned that more stimulus risked a damaging surge in inflation because price rises have already been higher than the Bank's 2pc target for most of the past four years. The persistent overshoot, he said, “is a constraint on my freedom of action”.

“Failure to damp sufficiently any new shock pushing up on inflation would result in inflation expectations becoming more entrenched. That, in my view, limits the scope we have to support demand at the current juncture,” he told the British-American Business Council Transatlantic Conference in Birmingham.

George Osborne appointed Mr Carney on a ticket of “monetary activism” to help boost growth. The Chancellor has also asked the MPC to investigate how it might use “forward guidance” as an additional tool. But Mr Weale, who has been sceptical about the policy, suggested there is little it can achieve.

We met with Edinburgh Partners Limited’s Craig Armour recently for a thorough review of our Global Equity Fund. Craig is an investment partner at EPL and manages the fund.

EPL’s investment strategy has been out-of-favour with global markets and as such, performance was a key topic of discussion. Specifically, we reviewed the factors that have led to the poor relative returns (versus the overall market) and whether there have been any changes to the firm’s basic philosophy or decision-making process.

It was encouraging to hear that EPL’s philosophy and process hasn’t wavered. The team remains focused on investing in companies they believe are undervalued based on their 5-year earnings potential. As for personnel, the key decision-makers remain in place and have lots of gas left in the tank (the core group of analysts are in their mid 40’s to early 50’s).

In the current market environment, EPL is focused on businesses with more cyclical earnings because they are being overlooked by most investors and are trading at attractive valuations. Examples of the types of companies in which EPL is finding value include industrial goods & services (Mitsubishi, ABB, Maersk, Safran), technology(Samsung, SanDisk, Microsoft, Google) and automotive (Bridgestone, Toyota, Dongfeng Motor, Johnson Controls).

Conversely, EPL has had only modest investments in defensive stocks, particularly in the last two years. This has hurt the fund’s performance as these stocks have been driving the market’s returns. EPL believes that these more predictable companies (in industries such as health care, food & beverage, and other consumer sectors) are trading at expensive valuations and will generate sub-par returns in the long run.

Craig and the team in Edinburgh believe the divergence in valuation betweenpredictable and cyclical stocks is at an extreme based on historic measures (predictability is expensive and cyclical is cheap) and a reversion to the mean is inevitable. They feel risk is being misperceived and the so-called defensive stocks are vulnerable to a re-valuation. Cyclical stocks, on the other hand, will benefit from a more normal investing environment, and will really kick in when the global economy picks up.

While we place little weight on short-term returns, it’s heartening to see the portfolio perform better in recent months, with many of the above-noted cyclical stocks being key contributors. Notably, investments in Japan are bearing fruit as share prices in the region are recovering sharply.

To bring EPL’s thinking to life, we spent a fair amount of time in our meeting talking stocks. In the video below, Tom and Craig revisit some of the questions from our review, and discuss a few notable holdings.

Download, subscribe via iTunes or RSS, or watch now:

Management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns.

The Other Side of the Wall

Fri, 17 May 2013 16:13:00 -0400

Dear Reader,

By the time you read this, I will be in Asunción, Paraguay, on my way back to the United States for summer.

As we are finalizing the preparations for our departure, I suspect – but can never know for sure – today's missive will be brief.

In today's missive, I plan on providing a book-end to the journey that started about seven months ago when our family moved to the remote Northwest of Argentina.

Argentines have a phrase, "mi lugar," for when you find your special place in this world – the perfect combination of place and people that entirely suits your nature. The phrase translates simply as "my place."

As I have related in past missives, I was very fortunate in my early thirties to be able to spend three years on a quest for paradise on earth, visiting pretty much every country I thought might be a suitable candidate. It turns out, in hindsight, what I was really looking for was not paradise, but mi lugar.

Much like "love at first sight," mi lugar has almost mystical connotations – it is the place in this world where, should you be fortunate enough to find it, you belong more than anywhere else.

When we arrived in Cafayate, it was with some entirely natural trepidation. After all, not only were we going to be living in a remote corner of Argentina, we were bringing along our teenage kids with all that that implies.

It is entirely human to worry about the unforeseeable, and so we pondered all manner of questions and concerns. Would our stumbling knowledge of the local lingo prove a hamper? Would the highly dysfunctional government hereabouts be an impediment at every turn, the bureaucracy frustrating? Would the kids adapt to the new environment and be able to get a good education?

Yet, never ones to worry ourselves into inaction, we plowed ahead and on October 22 set down our bags in Cafayate.

So, how's it gone? Were our fears – any of our fears – realized?

To the extent that it may be of interest to those of you currently contemplating seeking solace on the other side of the wall, I would like to tick down some of the good and the not-so-good we have discovered as a result of our move.

Mi Lugar

The first, and possibly most surprising, thing about life in Cafayate has been how social it is. The Argentines are very warm and welcoming people, and we have made a surprising number of local friends. In addition, there are the generally like-minded and almost entirely agreeable owners at La Estancia de Cafayate, complemented by a steady stream of visitors.

Interacting with only one of those groups would be more than enough social life for me, by temperament something of a recluse (my wife always laughs when I say that, but it's true). When taking all three groups into consideration, however, the amount of socializing gets positively over the top.

Case in point, here is a partial list of what we have done in the past week.

Rode champion Paso Peruano horses on a five-hour ride with the head of one of the best local wine bodegas, followed by an al fresco lunch at his estancia with his extended family. The ride was one of the best in my life, riding spirited horses on beautiful trails, through sand dunes and for several kilometers up an empty river bed.
Played golf with my local coca-chewing, cigar-smoking cardiologist friend and a new golf buddy, a New Zealander who is renting at La Estancia for six months.
Watched the last couple of hours of the PGA Players Cup down at the clubhouse on Sunday night. The Clubhouse is normally closed at 6:00 pm on Sunday, but because we asked, they stayed open. That's how it works around here.
Joined in for an evening of beer pong with some of the younger residents. While I joined in a couple of games, such games are best left to the young and the foolish, so we mainly just observed.
Had a send-off dinner for my golf partner and his wife, one of our children's tutors (and a wonderful one at that), in the company of a great group of people.
Played "Mad Max" Volleyball on the sand court at La Estancia. It's called Mad Max Volleyball as a nod to the conditions the first time we played, in a roaring wind, with a rock-hard ball (I still have two swollen knuckles) that had a tendency to pick up nasty little thorns when rolling on the ground outside of the sand court. In our version of the game, hitting the ball back over the net with your head or feet was allowed.
Worked out at the Athletic Club pretty much every other day.
Had an al fresco dinner on the plaza at El Terruno, one of my favorite restaurants, with a group of friends.
Ate parrilla (bar-be-cue) for lunch with another group of friends at El Rancho.
Participated in a demonstration with the local volunteer firemen (the Bombaros) of the Jaws of Life that a group of us got together to buy. And by demonstration, I mean cutting the roof off an old car… serious fun!

Last week it was a charity poker match, then my wife's big birthday bash with forty friends at the Club… I don't even know forty people in the town in Vermont where we lived the last 25 years.

It just never stops.

In fact, after seeing our friends and enjoying the beauty of a Vermont summer, the next-biggest reason for returning to the States for four months is to get some rest!

Other aspects of life here that represented a significant change from life back on the other side of the wall:

Education of the Kids

Our children are now 14 and 16, ages considered very important in terms of personal development.

Before getting into what they got from living down here, a quick word on what they didn't get. For example…

They didn't get a state-mandated cookie-cutter curriculum replete with dogma and indoctrination about completely unimportant topics.
They didn't get an education by teachers whose sole purpose in life is to ultimately get a pension. In fairness, our children had had a couple of good teachers in their public schooling back in the States, but most seemed to have majored in sapping the creative juices out of students with minors in spirit crushing and teaching utter nonsense with a straight face.
They didn't pick up bad habits from fellow students. They didn't learn how to drink, smoke, do drugs, or have sex at an age when they are not mentally prepared to keep things in perspective. In fact, it became something of a running joke how many times we went to restaurants hereabouts and the kids were offered wine, which they turned down of their own accord. When it's not the forbidden fruit, it's not nearly so desirable.
They didn't live in fear. When I see an article such as this, on the US government's zero tolerance for, well, anything – including stupid kid pranks, I am shocked. Here's a link to the article.

For the time-stressed, a couple of relevant quotes…

The Methuen, Mass., high school student was arrested last week after posting online videos that show him rapping an original song that police say contained "disturbing verbiage" and reportedly mentioned the White House and the Boston Marathon bombing. He is charged with communicating terrorist threats, a state felony, and faces a potential 20 years in prison. Bail is set at $1 million.

And it continues…

Using a zero tolerance approach to track domestic terrorists online is the only reasonable way to analyze online threats these days, especially after the Boston Marathon bombing and news that the suspects had subsequently planned to target Times Square in Manhattan, Mullins says. The way law enforcement agencies approach online activity that appears sinister is this: "If you're not a terrorist, if you're not a threat, prove it," he says.

"This is the price you pay to live in a free society right now. It's just the way it is," Mullins adds.

That method can result in arrests of teenagers whose online activity may be more aptly characterized as stupid pranks.

In February, Jessica Winslow and Ti'jeanae Harris, two high school girls in Rapids Parish, La., were arrested and charged with 10 counts of terrorism each after they allegedly e-mailed threats to students and faculty "to see if they could get away with it," detectives told a local television news station. "We take every threat in our schools as a credible threat, and I am happy to say we have made these arrests," Sheriff William Earl Hilton told reporters.

What they did get, however, was…

Personalized instruction and coaching for their self-studies. In the beginning, there were another three children in the educational program, but the parents pulled up stakes fairly early on, leaving our two kids with a teacher ratio of 1:1 (except for a number of weeks when children of visiting owners and guests sat in on classes). My daughter, never before confident in math, became passionate about the topic and is now ahead of her grade back in the States. She is also now writing a book. My son is determined to learn computer programming. "Dad," he said to me confidently the other day, "you'll never have to worry about me needing money."
For much of the time we were here, there weren't a lot of other kids their age around. In hindsight, that worked out just fine. In addition to not picking up the bad habits mentioned above, they quickly adapted to interacting on the level of adults with the residents of La Estancia and those from town (many of whom act like kids anyway). Participating in craft groups, dining out in good company, and joining in on various activities gave them both a great deal of confidence in their interactions with adults. On a number of occasions, they sat in on classes in local schools, and my daughter participated in folkloric dance classes.
A shared family adventure. We've always been a close family, but living together as foreigners in a foreign land has made us only closer. No small feat given they are both in the challenging mid-teens. While there was, naturally, a certain amount of the teen drama, it always passed quickly and we moved forward in concert. Personally, I have learned to accept that they are no longer children but young adults who need to be able to make their own decisions and reap the rewards or suffer the consequences as a result. All in all, the family dynamic has changed, and only for the better.
Fresh air and a more active lifestyle. While my son is showing the classic characteristics of being something of a geek (by no means a detriment in this day and age), every day he walked to and from school wearing his heavy backpack and, sporadically, joined in on hikes and long walks around the sizable estancia on school projects (for instance, mapping all of the many fruit and nut trees on the property). In addition to the school walkabouts, our more active daughter also took advantage of the Athletic Club, horseback riding, dancing, hiking, and so forth.

What they didn't get was organized sports of the sort so treasured in the state school system but which, when you get right down to it, doesn't really have anything to do with education or with determining who you will be as an adult. In fact, the argument could be made that if you were a star on the school sports team, you might just be receiving indoctrination for a future stint in the military (for time immemorial, sports has a been a gateway for the military). Likewise, if you were bad at team sports and chosen last, or spent your time on the bench, who's to say that the psychological damage might not last long into adulthood?

In the final analysis, hiring our own tutors and having a hand in a curriculum that focused on the core subjects of reading, writing, and arithmetic – with a side course of Spanish, and all of it structured to inculcate the love of learning – turned out to be a big win. So much so that the kids volunteered to continue studying over the summer with the remote guidance of their lead tutor.

Personal Well-Being

In a phrase, I haven't felt this healthy, this fit, this alive, or this happy in decades. The active lifestyle, the high-quality food, the multitude of good-humored friends, the fun activities… the overall quality of life… have completely reenergized me.

Whereas before a dumb email from a colleague might have sent my blood pressure spiking, now it's all water off this duck's back. Hardly a day passes without me opening my arms to the beautiful skies, a happy grin on my face. Reflexively, I start singing, "Oh, what a beautiful morning" when walking outside first thing each day.

Call me goofy, but it sure feels like stark raving happiness to me.

Speaking of beauty, I have always been one of those people who, lost in thought, took almost no notice of my surroundings, no matter how striking (and Vermont can be pretty striking).

Down here, however, the beauty of the place grabs you by the collar and demands you view it in awe. It is like living in an ever-changing art display with the red rocks of the surrounding mountains the canvas.

Connection to a Community

I've written about this before, so won't dwell. But before moving here, I was only tenuously connected to the community I had lived in for 25 years. While it is not all fun and games – because every community, no matter how like-minded, has its small cadre of serial malcontents – the overwhelming majority of the people at La Estancia and in Cafayate are positive and constructive.

In short, they are people you want to spend time with… and so we do.

Additionally, there is a sense of wanting to help support and enhance the community. One day after lunch at the beautiful new Piattelli Bodega, a friend asked if we'd be interested in adopting a baby burro whose mother had been hit by a car. I didn't have to ponder the matter for more than a minute before agreeing.

And so it was that La Estancia gained a new resident, a three-month-old burro who picked up the name Princess Grace as we walked her into the property and passed by the sign for the five-star Grace Hotel scheduled to open here within the next few months.

And the community is not just physical, but virtual as well. There is constant email correspondence between the owners, and several of us have been involved in a writers' group going on a year now.

There is also a local photography group that a number of us have joined.

Here's my wife's entry for this month, a great shot (in my biased opinion) of the sort of transportation hijinks that are a common sight around here, but which would have you face down on the pavement, your arms handcuffed behind your back, were you to attempt the same in the Land of the Free.

In case you can't tell it from the dog's expression, it is having a great time (think sticking your head out the window, but better). Note his paw on the driver's shoulder… too funny.

The Concept of Time

Despite the active schedule, there is always time to linger over lunch or dinner, to have a siesta, to play a little golf with friends (even if it means getting up before dawn to get my work out of the way).

Today I ducked into town on an errand and ended up stopping for an hour and a half at Baco's café to have coffee with Mauricio the Chilean and Bausti, the son of the owner who is in the final phase of a three-week-long motorcycle ride from Cafayate to Northern Brazil and back.

Once the coffee was finished, the old David would have made his apologies and hit the road. Not anymore, as I settled into my chair at the table on the sidewalk, enjoying the perfect weather and sharing stories, music, and photos with my friends. Mauricio, despite having work to attend to at his lighting and paint store, stuck around as well. There are things far more important than money down here, especially time spent with friends.

The Nature of Reality

In the US and other media-saturated countries, reality is defined by deviants with degrees in manipulating minds. The old standard "If it bleeds it leads" has been bolstered with "If it's green, it's good" and "If it scares, it blares."

I can't stress the point enough… down here none of that counts. Reality is what you have for lunch, it's not some imagined threat lurking around every corner. Terrorists, cyber-surveillance, school lockdowns… none of it matters in the slightest.

As for the stories trumpeted over and over in the global press about the Mad Queen Cristina who is tenuously holding power over these lands, no one really cares. And the inflation has again made Argentina one of the least expensive countries in the world for those of us who are not peso-based.

Last night I had an excellent dinner at the best restaurant on the plaza – and it's a very good restaurant – and the cost of my entree was all of US$7.00.

Adventure Around Every Corner

One of the best things about climbing over the wall is that so many things you will experience are new and, at least to me, interesting and exciting. While here, we have been on stunning hikes, amazing horse treks, wonderful drives deep into the Andes – on one memorable occasion spending a few days at fellow Argentine aficionado Bill Bonner's massive estancia, a place so remote that, to reach it, you have to drive for many kilometers on a dried-up river bed.

A deep-thinking friend of mine once explained how important it is to the maintenance of mental acuity to challenge yourself, even – or maybe especially – when it comes to the mundane. For example, if you are right handed, try brushing your teeth with your left as it forces you to use new connections in your brain.

Moving here from a completely different culture, with a completely different language, forces you out of your comfort zone every single day. For instance, when the patron of the well-known local bodega offered to let me ride his powerful champion stallion – he had heard I was a polo player and so assumed I could handle it – my initial reaction was to think, "Are you crazy?!" Fortunately, that thought was quickly supplanted by one akin to, "When will I ever have an opportunity like this again?" So I took him up on his offer, and what an amazing ride it was.

Parting Thoughts

As our time here is growing short, I will sign off for the day with a few final thoughts.

First and foremost, as you may be able to tell from the above, despite the trepidations we felt before heading down here, my wife and I have not had a single regret… not for a second.

The house we built, which is fully paid for (as is the case with virtually all the houses in Argentina), was beautifully constructed. And, thanks to the competence of the architect who oversaw the construction, and the builder, the building went up with less hassle than was the case with our house back in Vermont.

We have fallen in love with the area, most ardently with Cafayate but also the province of Salta and the surrounding countries that, together, form what is called the Southern Cone. While life here, like everywhere, has its challenges, the challenges are nothing that a reasonably intelligent and patient person can't handle. In fact, with a little help from our local lawyer and knowledgeable friends, our interactions with the government amount to next to nothing… and, in most months, literally nothing.

Meanwhile, as noted above, the much-noted inflation here in Argentina has put the place on sale… and at a steep discount. Yet, even the locals in this tight-knit community don't appear to be overly disadvantaged. I suspect that's because, unlike the big city, this is an agricultural area where the cost of input is low, and so is the price of the output… thus the basic stuff of life is extremely cheap.

It is worth mentioning the cost of labor, as well. We have an exceptionally agreeable and hard-working maid who comes in for five or six hours a day, five days a week, at a cost equivalent to $40 a week. Simply put, that means that the drudgery of washing dishes and clothes, dusting, making beds, and so forth simply vanishes from your life, freeing you for far more agreeable pursuits. This is, in my view, almost the very definition of luxury – yet at a price many Americans push over the counter at Starbucks each week.

Now, this is not to say that other places in the world don't have their strengths as well as their weaknesses. If you love to snow ski or sail the big blue sea, this is probably not the place for you… at least not full time.

I also think, despite the low cost of living here, that it's probably not terribly well suited for people without at least some decent amount of money in the bank, or a source of revenue from outside the country. For example, from a job you can do over the Internet. That's because while there is 100% employment here, the local pay scale is low and the challenges of actually starting and running a business here are considerable.

While I have often said that "anyone who can live here and doesn't is a fool," in truth your own special lugar may have a completely different set of characteristics. I understand that some people even like big cities.

Whatever you do, if the place you are living doesn't make you feel alive, then do seriously consider setting out in the quest for a place that does.

This will be the end of what has turned into something of a series on life of an expat family in the Argentine outback. I hope you have found it of some interest and maybe even somewhat inspiring.

If you have any interest in visiting here, drop a note to VIPconnect@LaEst.com and they can help set you up with a customized itinerary. As the North American summer is the South American winter, the weather here will be growing somewhat less than perfect – though the skies are almost always blue with about 320 days of sunshine to chase away the night chills. If you live in the US deep south, I suspect you'd find the weather a refreshing alternative.

For those of you who might enjoy visiting as part of a small VIP group, this November – spring hereabouts – La Estancia will be hosting week-long visits for small groups in three successive weeks. The five-star Grace Resort and Villas will be in full operation, ensuring your stay at La Estancia is truly special. Again, if you are interested in participating, please contact VIPconnect@LaEst.com.

We will again be in residence here and will look forward to a bit of socializing.

Friday Funnies

The World's Worst Hotel Painting?

Earlier I mentioned a recent game of beer pong with some of the younger set here in Cafayate. The site of the game was a hotel with the odd name of Paris Texas where one of the participants acts as a manager on those rare occasions that a guest darkens the door.

The absentee owner of the hotel apparently fancies himself a painter, and likewise appears to have something of an affinity for the macabre. The result is that the hotel rooms proudly display large canvases of his work. A photograph of one appears here with compliments of Pete Chandler. Now, the really funny thing is that this particular canvas, which is about four feet high from bottom to top, is planted squarely in front of the beds in a room set aside for families with small kids (by virtue that it has a third bed). If you can zoom in, you'll see the blood dripping from the fangs.

Though I suspect you'll be hard pressed to find a worse example of the genre, if you can find a worse hotel painting, feel free to send it along to me at David@caseyresearch.com...

Mark the Dates!

The only Casey Research Summit of the year is being held October 4 – 6 at the beautiful Loews Ventana Canyon Resort in Tucson, Arizona.

Being the only Summit this year, we are pulling out all the stops for the faculty, most of whom are arranging their schedules to participate side by side with the attendees throughout the entire three-day event.

Among the faculty now confirmed is keynote speaker Dr. Ron Paul (who will be attending all three days). For the entire list of faculty, the schedule, and a secure registration form, click here.

I think you'll be most impressed. As always, registration at our events is strictly limited, and we expect a quick sell-out. Hope to see you there!

A Short Note from Doug Casey

A few years ago, Porter Stansberry started what may be the most unusual club in the world,The Atlas 400. He asked me to join, and I did, simply because I both liked the idea and like and trust Porter.

The concept is, in some ways, similar to something I put together years ago called The Eris Society. The idea was to provide a forum for accomplished people who should know each other, but didn't, to hang out together. Everyone enjoyed it and benefitted from it – where else could you expect to be in the same room, as an equal, with the world's leading aircraft designer, the leader of the world's largest outlaw motorcycle club, several billionaires, the most decorated living US soldier, several of the world's leading life-extension scientists, and lots of best-selling authors? Among many others.

Porter has done an excellent variation on that theme. And now that it's been around, and vital, for several years, I feel confident in recommending it.

Atlas is quite expensive, like most proper men's clubs. That's a good idea; it excludes those who aren't successful. And it turns away two out of three applicants. That's also a good idea; it does a pretty good job of excluding the annoying, the pushy, the dull, and those of bad character. And instead of having just one meeting a year, as Eris did, it sponsors a number of adventures, where you can get to know your fellow members while doing something memorable.

I don't know about you, but I'm always up for both making new friends and having fun. The Atlas 400 makes both of those things better and easier. That's a huge plus. It's why I don't go to most cocktail parties; it's like dealing with the public is usually a frustrating waste of time.

Atlas isn't for everybody, but if you can qualify, I think I can assure you that you'll be very pleased with your membership. Feel free to check out this interesting video of club highlightsand apply to join The Atlas 400 here.

David again. One other housekeeping item: There's a new Casey phyle starting in downtown Chicago – so if you're interested in getting together with like-minded investors, shoot us an email at phyles@caseyresearch.com and we connect you.

And with that, I will sign off for now and return to packing for the trip back to the States. Until next time, thanks for reading and thanks for being a Casey Research subscriber!

David Galland
Managing Director
Casey Research

John Rubino: The Golden Bull’s Eye

Fri, 17 May 2013 16:10:00 -0400

¤ YESTERDAY IN GOLD & SILVER

The gold price chopped sideways through most of Far East trading on their Thursday, but began to develop a negative bias just before London opened...and by 9:30 a.m. BST, the low tick was in for the day.

The subsequent rally ran out of gas shortly after 11:00 a.m. in New York...and then drifted a hair lower into the 5:15 p.m EDT close of electronic trading.

Gold closed at $1,385.90 spot...down only $6.60 from Wednesday's close. Net volume was a very impressive 197,000 contracts, down only slightly from the 204,000 contracts traded on Wednesday.

It was almost the same price pattern in silver, except the high tick of the day [$22.92 spot] in New York came at 11:00 a.m. EDT right on the button, which just happened to coincide with the close of the London bullion market. From there it traded sideways for the remainder of the day.

Silver closed at $22.69 spot...up a dime from Wednesday. Gross volume was 48,000 contracts, down substantially from the 65,000 contracts traded on Wednesday.

The platinum chart sort of looked similar to the gold chart. But in palladium, the price rallied strongly after its pre-London open low...and the high tick of the day [$746.00 spot] came at the Comex close.

For Thursday, gold closed down 0.47%...silver closed up 0.44%...platinum finished down 0.87%...and palladium closed up 1.66%.

The dollar index closed on Wednesday at 83.785...and then climbed to it's 83.98 high at 9:00 a.m. in London. From there, it was all down hill to its low of the day...83.48....which came a few minutes after 11:00 a.m. EDT in New York. From there it chopped higher into the close, finishing the Thursday session at 83.745...down a whole 4 basis points from Wednesday's close.

For the most part, the precious metal prices tracked the dollar index very closely...but the price moves in the precious metals [both down and up] were out of all proportion to the corresponding moves in the currencies.

The gold stocks started off in the red, but quickly rallied into the black. The high tick came shortly after 11:00 a.m. EDT...which was also the high for gold. The HUIchopped quietly lower from that point, finishing the day virtually unchanged...down 0.09%.

Most of the silver stocks that make up Nick Laird's Intraday Silver SentimentIndex fared only slightly better...and it closed up 0.07%.

(Click on image to enlarge)

The CME Daily Delivery Report showed that 9 gold and 127 silver contracts were posted for delivery within the Comex-approved depositories on Tuesday. In silver, the two biggest short/issuers were ABN Amro with 70 contracts...and Credit Suisse with 51 contracts. The two biggest stoppers were the ringleaders of the silver price management team...Canada's Bank of Nova Scotia...and JPMorgan Chase, with 90 and 24 contracts respectively. The link to yesterday's Issuers and Stoppers Report is here.

Both GLD and SLV had rather substantial withdrawals again yesterday. In GLD...183,707 troy ounces were withdrawn. In SLV it was a chunky 2,269,165 troy ounces. This looked like plain-vanilla investor liquidation to me...but you just never know any more.

Joshua Gibbons, the Guru of the SLV Silver Bar List, updated his website with the goings-on within SLV for the week ending on May 15th...and this is the first sentence of his very brief commentary..."Analysis of the 15 May bar list, and comparison to the previous week's list...289,605.1 oz. were added (all to Brinks London), no bars were removed or had a serial number change." The link to his website, about.ag/SLV/, ishere.

The U.S. Mint reported selling another 5,500 ounces of gold eagles yesterday...along with 1,500 one-ounce 24K gold buffaloes.

Over at the Comex-approved depositories on Wednesday, they didn't report receiving any silver, but shipped 638,463 troy ounces of the stuff out the door. The link to that activity is here.

In gold on Wednesday, these same warehouses reported receiving 2,424 troy ounces of gold...and shipped out 10,720 troy ounces of same. The link to that activity, such as it was, is here.

Here are a couple of charts courtesy of West Virginia reader Elliot Simon...and neither require any further explanation from me.

And, of course, your "cute quota" of the day...

I have a decent number of stories for you...and I'll happily leave the final edit up to you once more.

¤ CRITICAL READS

Big Banks Get Break in Rules to Limit Risks

Under pressure from Wall Street lobbyists, federal regulators have agreed to soften a rule intended to rein in the banking industry’s domination of a risky market.

The changes to the rule, which will be announced on Thursday, could effectively empower a few big banks to continue controlling the derivatives market, a main culprit in the financial crisis.

But critics worry that the banks gained enough flexibility under the plan that it hews too closely to the “pre-crisis status.”

“The rule is really on the edge of returning to the old, opaque way of doing business,” said Marcus Stanley, the policy director of Americans for Financial Reform, a group that supports new rules for Wall Street.

The Dodd-Frank Act now exists in name only, as it's basic tenets have been gutted. This is just another, if not the last, brick in the wall for what the bill stood for originally. This article was posted on The New York Times website late on Wednesday afternoon...and I thank reader Clive Sutherland for today's first story.

Alex Pollock: Forget Too Big to Fail Banks — It's Time to Break Up the Fed

By the Federal Reserve's own logic about breaking up banks that are too big to fail, it's time to break the Fed apart for the same reasons, according to a blistering analysis by Alex Pollock of the American Enterprise Institute.

Pollock, in a note to American Banker, said St. Louis Fed President Jim Bullard recently laid out four simple ways to determine when a bank is too big and needs to be split up — namely, if its assets are too voluminous, if it's too leveraged, if it has too much short-term funding of longer term assets and if it creates too much systemic risk.

Pollock said the Fed's current operating status could be accurately characterized by the following: It's too big, with over $3.3 trillion in assets, it's too leveraged at 60 to 1, it's extremely short-funded and it's "a frequent contributor through its interest rate and money-printing action of gigantic systemic risk."

"Therefore, it follows pretty clearly from the same logic that we should break up the Fed," said Pollock, former CEO of the Federal Home Loan Bank of Chicago.

All in favour say aye! This story was posted on themoneynews.com Internet site during the East Coast lunch hour yesterday...and it's courtesy of Elliot Simon.

Exiting Q.E. could 'undermine the recovery', IMF warns

Central banks, including the Bank of England, strayed into “unchartered waters” by cutting interest rates to near-zero and launching billions of pounds of quantitative easing, and they will find the exit “difficult to control”, the IMF said. “The market response [to a rise in interest rates] will be less predictable ... possibly for several months or even years.”

Long-term interest rates could spike as investors dump over-priced bonds and banks could face a fresh round of losses on both their gilt portfolios and loan books as borrowers struggle to meet higher monthly payments, it added.

For the economy more broadly, though, the IMF said the risks were considerable. “The risk is interest rate volatility and overshooting in the adjustment of long-term rates. The potential sharp rise in long-term interest rates could prove difficult to control, and might undermine the recovery (including through effects on financial stability and investment),” it wrote in a policy paper.

It also argued that there was clear evidence of “diminishing returns” in continuing with existing policies like QE. The most effective policy now, it suggested, was “conditional guidance” of the sort used by the US Federal Reserve and under review by the Bank. It has also been championed by incoming Governor Mark Carney.

This news item appeared on the telegraph.co.uk Internet site at 4:00 p.m. BST yesterday...and it's Roy Stephens' first offering in today's column.

Now Venezuela is running out of toilet paper

First milk, butter, coffee and cornmeal ran short. Now Venezuela is running out of the most basic of necessities , toilet paper.

Blaming political opponents for the shortfall, as it does for other shortages, the embattled socialist government says it will import 50 million rolls to boost supplies.

That was little comfort to consumers struggling to find toilet paper on Wednesday.

"This is the last straw," said Manuel Fagundes, a shopper hunting for tissue in downtown Caracas. "I'm 71 years old and this is the first time I've seen this."

This AP story showed up on the philly.com Internet site yesterday...and I thank Phil Barlett for bringing us the first story of any real importance in today's column.... )

Nigel Farage flees barrage of abuse from Edinburgh protesters

Perhaps for the first time in his political career, Nigel Farage, the scourge of British politics, found himself in retreat on Thursday evening as dozens of protesters hounded him out of central Edinburgh.

The Ukip leader was finally whisked away in a police riot van under a tirade of abuse from a crowd of about 50 young demonstrators – students, anti-racist campaigners and activists in the radical left pro-Scottish independence movement – after being forced to retreat not once, twice or three times, but four times.

Farage was first forced out of the Canon's Gait pub on the Royal Mile after the landlord took fright as the demonstrators disrupted his casual press conference with shouts of "racist", "scum" and "homophobe". Out on the street, as the fingers pointed and taunts escalated, he was rejected by one taxi and turfed out of a second.

This story appeared on the guardian.co.uk Internet site early yesterday evening BST...and I thank reader Bob Visser for sending it along.

Heroic Spain is damned if it does, and damned if it doesn't

The Telegraph has been accused by Spanish newspapers of launching a "brutal attack", succumbing to "Hispanophobia", leading an Anglo-Saxon assault, and otherwise trying to divert attention away from Britain's own lamentable condition. Spanish readers might be comforted to know that we are even more brutal with our own leaders.

Since I was in Madrid last week as a guest of the Spanish government, let me add my half-penny to the debate. Spain has already done all that can reasonably be expected of any nation, enduring its "calvario" with dignity and fortitude. It has slashed internal consumption by 16 percentage points of GDP without triggering a social explosion - "no mean feat", said one minister.

Whether the country proves to be solvent or insolvent by mid-decade depends almost entirely on the future actions of the European Central Bank and the northern creditor powers. Nothing is pre-determined.

Ambrose Evans-Pritchard is on the defence here...and the article from yesterday's edition of The Telegraph falls into the must readcategory. I thank Roy Stephens for his second offering in today's column.

World from Berlin: 'Austerity Is Making European Economy Sicker'

The European common currency zone has now been in recession for six straight quarters, with three of the bloc's four largest economies now suffering persistent negative growth. Could the Continent's pursuit of austerity be backfiring? German commentators believe the answer is yes.

The European Union statistics office on Wednesday noted that nine of 17 euro-zone member states are now in recession, with France being the newest significant member of that club. Furthermore, the common currency zone, with bloc-wide declines in economic output for six straight quarters, is now struggling through its longest recession ever, worse even than the downturn in the immediate wake of the 2008 financial crisis.

The contraction was not huge; the euro-zone economy shrank by just 0.2 percent in the first three months of this year. And the German economy narrowly avoided recession, posting growth of 0.1 percent. But the situation in large economies such as Italy and Spain, both of which saw contractions of 0.5 percent in the first quarter of this year, is worrisome.

The currency area's persistent stagnation has raised concerns that Europe could be facing a "lost decade" like the one Japan recently lived through. Klaas Knot, head of the Dutch central bank and member of the European Central Bank board, is just one of many significant voices sounding the warning.

This article appeared on the German website spiegel.de early yesterday afternoon Europe time...and once again I thank Roy Stephens for bringing it to our attention.

Israel Hints at New Strikes, Warning Syria Not to Hit Back

In a clear warning to Syria to stop the transfer of advanced weapons to Islamic militants in the region, a senior Israeli official signaled on Wednesday that Israel was considering additional military strikes to prevent that from happening and that the Syrian president, Bashar al-Assad, would face crippling consequences if he retaliated.

“Israel is determined to continue to prevent the transfer of advanced weapons to Hezbollah,” the Israeli official said. “The transfer of such weapons to Hezbollah will destabilize and endanger the entire region.”

“If Syrian President Assad reacts by attacking Israel, or tries to strike Israel through his terrorist proxies,” the official said, “he will risk forfeiting his regime, for Israel will retaliate.”

This news item was posted on The New York Times website on Wednesday sometime...and I thank Marshall Angeles for bringing it to my attention...and now to yours.

Russian warships enter Mediterranean to form permanent task force

Warships from Russia’s Pacific Fleet have entered the Mediterranean for the first time in decades. Russia’s Navy Chief says the task force may be reinforced with nuclear submarines, as the country starts building up a permanent fleet in the region.

“The task force has successfully passed through the Suez Channel and entered the Mediterranean. It is the first time in decades that Pacific Fleet warships enter this region,” the Pacific Fleet spokesman, Capt. First Rank Roman Martov told RIA.

The vessels are now heading to Cyprus and will make a port call in the city of Limassol, he added.

The group includes destroyer “Admiral Panteleyev,” two amphibious warfare ships “Peresvet” and “Admiral Nevelskoi,” as well as a tanker and a tugboat.

This article was posted on the Russia Today website early yesterday evening Moscow time...and it's another story from Roy Stephens.

China premier says little room for policy stimulus: media

China has limited room to use government spending and policy stimulus to boost its economy, China Premier Li Keqiang was quoted as saying on Wednesday, dashing hopes among some investors that Beijing may take steps to foster growth.

Li was quoted in the state-owned China Securities Journal as saying that though the economy faces considerable headwinds and uncertainty, China should allow market forces to do their work.

"If there in an over-reliance on government-led and policy driven measures to stimulate growth, not only is this unsustainable, it would even create new problems and risks," Li was quoted by the paper as saying indirectly.

His remarks were made at a meeting of the state council, or China's cabinet, on Monday after a series of data showed a recovery in the world's No. 2 economy faltered in April.

This Reuters story, filed from Beijing, was posted on their website in the wee hours of Wednesday morning EDT...and it's a little something I found in yesterday's edition of the King Report. It'sdefinitely worth reading.

Japan storms back on weak yen, but Asia trembles

Japan’s economy has roared back to life as the radical reflation policies of premier Shinzo Abe drive a surge of consumer spending, but fears are growing that the tumbling yen could set off a broader Asian crisis.

Growth jumped to a 3.5pc rate in the first quarter, vindicating the government’s efforts to break Japan’s deflation psychology and lift the country out of its 20-year ice age. “Abe’s kick start appears to have succeeded,” said Flemming Nielsen from Danske Bank.

Retail sales are soaring as a “wealth shock” electrifies the economy. The Nikkei index has risen has 70pc since November, with foreign hedge funds among the first to jump on the bandwagon.

The weaker yen is already delivering a powerful punch, accounting for almost half the growth. The currency has dropped 30pc against the dollar and China’s yuan since August, and 37pc against the euro.

This Ambrose Evans-Pritchard commentary was posted on thetelegraph.co.uk Internet site early yesterday evening BST...and I thank Manitoba reader Ulrike Marx for sharing it with us.

Like the United States, the European Union relies heavily on Russia and the Commonwealth of Independent States (CIS) for its uranium, as shown in the chart below:

Russia is projected to produce 64 million pounds per year by 2020. The majority – 40 million pounds – will come from Russia itself, and the remainder from its foreign projects in Kazakhstan, Ukraine, Uzbekistan, and Mongolia.

But there's an often forgotten subsector of uranium production: the processes necessary to convert U₃O₈ into something that power plants can use.

For that purpose, yellowcake is first converted into uranium hexafluoride (UF₆) at a conversion facility, then enriched, or concentrated, at an enrichment plant. Russia's main conversion facility is at Angarsk, with a capacity of 42 million pounds of uranium per year. A small facility near Moscow, rated at 1.54 million pounds per year, primarily converts recycled uranium.

Russia can claim about one-third of the uranium-conversion capacity worldwide. Rosatom, the regulatory body of the Russian nuclear program, is also looking to set up an additional conversion plant by 2015, with the planned capacity currently unknown.

The United States normally owns 20% of the world's conversion capacity; however, its plant, Metropolis, is currently shut down for maintenance and upgrades. Though the plant is scheduled to reopen in June 2013, the current shutdown just adds to the growing scarcity of UF₆.

You may have noticed that the United States isn't listed in the chart above. As of January 2013, the US has no conversion capacity and isn't expected to be back online till mid– to late 2013.

Almost half of the world's capacity to enrich uranium will lie in Russia once the country completes the planned expansion of its current enrichment facilities. Accordingly, the life source of reactors and power generation is not obtaining the uranium but having access to facilities that turn them into nuclear fuel.

Russian President Vladimir Putin is attempting to corner the uranium sector and the UF₆ and enrichment markets alike. Russia's squeeze will be felt around the world – not only in regard to uranium supply but to enrichment as well.

It's difficult to say how Putin's squeeze on uranium will play out, but it's pretty certain to contribute to what is shaping up to be a spectacular bull run in this energy subsector. Investors who choose the right companies and get in early could see life-changing gains. To help with that process, the Casey Research Energy Team has put together an informative webinar with several nuclear-power and speculative investing experts. The Myth of American Energy Independence: Is Nuclear the Ultimate Contrarian Investment? is free, and will premier on May 21 at 2 p.m. EDT. Get more information and sign up today.

Advanced Cell Technology (OTCBB: ACTC) Q1/13 Results, how many shares doesn’t it take to light a beacon – 2.39 billion?

Fri, 17 May 2013 16:03:00 -0400

Net loss of $6.4 M or $0.00 per share

A net loss of $6.4 M or $0.00 per share, compared to a loss in Q1/12 of $5.7 M or $(0.00) per share.

ACTC reported a loss from operations of $5.8 M compared to a loss from operations of $5.4 M in Q1/13 primarily as a result of higher clinical trial expenses. Net cash used in operations was $8.3 M, compared to net cash used in operations of $4.8 M during Q1/12. Cash utilization increased significantly as a result of $2.3 M used to settle litigation related to previously issued debentures. ACTC expects cash utilization to return to previous levels in the subsequent quarter. ACTC has 2.39 B shares outstanding and a 2.33 B float.

ACTC ended Q1/13 with cash and cash equivalents of $4.1 M, compared to $7.2 M as of 12/31/12.

Q1/13 Highlights:

Reached the midway point in 3 clinical trials in the US and EU to investigate hESC-derived RPE cells for the treatment of dry AMD and SMD, both forms of macular degeneration. These trials are prospective, open-label studies, designed to determine the safety and tolerability of hESC-derived RPE cells following sub-retinal transplantation into patients with dry AMD or SMD at 12 months, the study’s primary endpoint. With the addition of the new cohort 2a patients, each of the U.S. trials will now enroll a total of 16 patients across the ascending dosage format of 50,000 to 200,000 RPE cells;
Received DSMB approval to initiate treatment of the 3rd patient cohort in 3 ongoing stem cell clinical trials in the US and EU. Per each trial’s protocol, the first patient of “cohort 3” was injected in April with 150,000 human embryonic stem cell (hESC)-derived retinal pigment epithelial (RPE) cells. This represents a 50% increase in the dose of RPE cells as compared to the previously treated cohort of patients. The first patients treated at this escalated dose will be evaluated, with interim DSMB review after 6 weeks;
Received DSMB approval to treat additional cohorts of patients with … better vision;
Observed the persistence of visual acuity gains and engraftment of transplanted cells in clinical trial patients with no safety issues reported;
ACTC announced a settlement agreement resolving litigation associated with previously issued debentures.

The Bottom Line: Significant milestones in clinical trials and furthering the unraveling of past financial mistakes have been under-taken. Best part – they still have cash to advance the … vision and focus of the trials! Gary, Robert and Matt strives to take this “sows ear to a silk purse” but a reverse will only … unlock … any value to shareholders.

ACTC is trading at $0.07 – still with unbelievable million level trading volumes. Hopefully, the sins of the past are far gone and not forgotten to the future. When the trading volume runs from 6.6 M to 14.3 M – true and real … appreciation is hard to realize.

Share and Enjoy:

Neuralstem (NYSE MKT: CUR) Q1/13 Results – SELL – can’t argue with recent appreciation but how long will it last?

Fri, 17 May 2013 16:01:00 -0400

Net loss of approximately $3.59 M or $0.05 per share

CUR reported a net loss of approximately $3.59 M or $0.05 per share, compared to $2.453 M or $0.05 per share for Q1/12. The increase in net loss was primarily due to a non-CAsh charge of approximately $667 K related to the modifiCAtion of certain stock purchase warrants coupled with an approximately $125 K increase in project and lab expenses related to ramping up of cliniCAl trial and research efforts and an increase in non-CAsh stock based compensation expense of approximately $107 K.

CUR also recognized approximately $103 K in revenue from third party licensing of certain intellectual properties. The increase in CAsh and CAsh equivalents of $5.215 M was primarily due to proceeds from debt financing transaction completed in Q1/13 partially offset by CAsh used in operations. R&D expenses were $1.7 M compared to $1.4 M in Q1/12. G&A expenses were $1.195 M compared to $1.16 M in Q1/12. The total operating loss was $2.89 versus $2.46 M in Q1/12. Long term debt was 7 M compared to $0 in Q1/12. Shares used in computing the net loss were 68.7 M versus 51.4 M in Q1/12.

Total CAsh and CAsh equivalents were at 3/31/13 totaled approximately $12.659 M compared to approximately $7.444 M at 12/31/12.

Q1/13 Highlights:

NSI-566, was approved by the FDA to commence a P1 trial to treat chronic spinal cord injury (cSI). This open-label, multi-site study will enroll up to eight patients with thoracic spinal cord injuries (T2-T12) who have an AmeriCAn Spinal Injury Association AIS-A level of impairment, between one and two years post injury. These patients exhibit no motor or sensory function in the relevant segments at and below the injury, and are considered to be in complete paralysis. Study patients will receive six injections in, or around, the injury site: the first four patients will receive 100,000 cells per injection; the second four patients, 200,000 cells per injection. All NSI-566/cSCI patients will receive post-surgery physiCAl therapy, as well as immunosuppressive therapy, which will be for three months, as tolerated. The trial study period will end six months post-surgery for each patient. The primary objective of the study is to determine the safety and toxicity of NSI-566 for the treatment of paralysis and related symptoms due to cSCI. The secondary objectives are to evaluate graft survival in the transplant site by MRI, as well as the effectiveness of transient immunosuppression.
Received issuance of U.S. Patent #8,362,262, Divisional Compositions and Methods of Use, part of the small molecule IP; additionally, issuance of PCT Patent #2337517, Floating CAnnula and Method of Use, which is exclusively licensed by CUR, and validated in four European countries: Germany, France, Italy and United Kingdom, for a total of five European patents.
NSI-566 P1 CliniCAl Trial in ALS (amyotrophic lateral sclerosis, or Lou Gehrig’s disease) officially concluded, six months after the final surgery at Emory University Hospital.
Granted licenses to intellectual property surrounding its spinal cord delivery platform, floating CAnnula, and method for delivering therapeutic agents to the spinal cord to Cedars-Sinai MediCAl Center, a nonprofit aCAdemic mediCAl center in Los Angeles, CA, for aCAdemic research.
Received issuance of EP Patent # 1576134, Method for Discovering Neurogenic Agents, which is part of the small molecule IP, and granted in ten European countries: Belgium, Switzerland, Germany, France, United Kingdom, Ireland, Luxembourg, Netherlands and Sweden for a total of 11 European patents.

Subsequent Events:

In April, received FDA approval to commence the NSI-566 P2 trial, for ALS, following the excellent safety and tolerability demonstrated in P1. The P2 dose esCAlation and safety trial to determine the maximum safe tolerated dose will expand to two centers, Emory University Hospital in Atlanta, Georgia, where P1 was recently completed, and ALS Clinic at the University of Michigan Health System, in Ann Arbor, Michigan, subject to approval by the Institutional Review Board at each institution. The NSI-566/ALS Phase II trial is designed to treat up to 15 ambulatory ALS patients, in five different dosing cohorts, advancing up to a maximum of 40 direct injections and 400,000 cells per injection, based on safety. This compares to a maximum of 15 injections of 100,000 cells each, directly into the gray matter of the spinal cord, in the completed Phase I trial. The first 12 P2 patients will receive injections in the cerviCAl region of the spinal cord only, where the stem cells could help preserve breathing function; the final three patients will receive both cerviCAl and lumbar injections.
In April, announced an initiative to investigate feasibility of a NSI-189 trial to treat cognitive and psychiatric impairment of former NFL players from traumatic brain injury. These injuries CAn result in long-term and serious loss of cognitive function, depression, a shorter life span and, as has been reported in some high-profile NFL CAses, death by suicide.
In April, received notice of allowance for patent appliCAtion 12/404,841, which covers methods of treatment of ALS with expanded spinal cord stem cells, including NSI-566.

The Bottom Line: CUR continues to progress all of its cliniCAl trial programs, in the US and abroad. Internationally, the NSI-566 trial preparations are progressing well. CUR anticipates the P1/2 ischemic stroke trial at BaYi Brain Hospital, in Beijing, to commence in Q2/13representing the first-in-human direct stereotactic injections into the brain of NSI-566. The INDs for both acute spinal cord injury P1/2 in Seoul and ALS P1/2 in Mexico City are expected to be filed in June. CUR was approved by the FDA to treat the 3rd and final cohort of the ongoing P1b major depressive disorder trial with neurogenic small molecule compound, NSI-189. Dosing is proceeding well, and trial is expected to complete in 9/13. CUR has secured $8 M in debt financing with Hercules Technology Growth CApital for funding through late 2014 so monies are not an issue.

I am an “ AVOID-ER” on CUR, although there have been bits and pieces of good news about NSI-566 thus far, it comes down to this upcoming ALS trial and whether or not the stem cell line CAn prove its competitive advantage versus other stem cell lines in this particular indiCAtion.

I am still trying to reconcile, the company that “everyone loves to hate” … comment. Many results are pending – and … it CAn be said about the sector as a whole but this one … should be more than a “traders” play. So, I will consider this under my … “un-explainable dislike” which is kind of weird when rendering an opinion but … a “gut” feeling goes a long way. Everyone has their own – “OPINION”!

CUR has been UP since earnings were released and is trading at $1.50 +$0.05 or +3.45% on 5/17. The stock had been UP +47.9% from a year ago. The moving averages 50 and 200 are also UP – $1.17 by $1.17. Still NOT held by institutions at a paltry 3.4%. A … SELL.

Share and Enjoy:

Every day is an investment

Fri, 17 May 2013 16:01:00 -0400

The 6 W’s: Who, what, where, when, why and what of it

RegMed equities and investors take note – the investor is not lucky to have you in their portfolio, but rather you’re lucky to have their dollars… Every day, you invest a little more of yourself in your RegMed portfolio, and one of the biggest choices available to you is where you’ll be making that next investment. Investing in the wrong place for a week or a month won’t kill you. But spending years contributing to something that you don’t … now care about … as an investor … you can do better.

Measuring the day

NEGATIVE– 17 red (downs) followed by 5 green (ups) and 14 fluctuating black (flats).

Mid-Day

Upbeat economic reports on consumer sentiment and leading indicators helped stocks erase previous session losses with major averages sprinting to a higher weekly close for the fourth week in a row. At mid-day, the NASDAQ is UP +15.63 or 0.045% at 3480.87 while the Dow is also UP +56.04 or +0.37% at 15,289.26. The CBOE volatility index traded below 13.

Research Notes:

RegMed Daily – The Early Movers … http://www.scimitarequity.com/blog/2013/05/17/the-early-movers-whos-hot-whos-not-25/

Neuralstem (NYSE MKT: CUR) Q1/13 Results – SELL – can’t argue with recent appreciation but how long will it last? http://www.scimitarequity.com/blog/2013/05/17/Neuralstem-nyse-mkt-cur-q113-results-sell-cant-argue-with-recent-appreciation-but-how-long-will-it-last/

Roll Call:

Athersys (ATHX) is UP… +$0.01 or +0.53% …at $1.89 in a trading range of $1.80- $1.89 and share volume of 435 K. The 50 and 200 day moving averages are at $1.97 and $1.46 respectively.

BioLife Solutions (OTC: BLFS) is FLAT…at $0.3050 with 1.8 K share volume at mid-day, compared to 8.4 K at Thursday’s close. BLFS is growing its business, evidenced by its licensing of specific areas of intellectual property, while keeping high growth as the regenerative medicine market opportunity develops. BLFS hold the leading supplier position for pre-formulated, clinical grade biopreservation media products. The 50 and 200 day moving averages are at $0.31 and $0.32 respectively. A STRONG BUY.

Celgene (CELG) is DOWN… -$0.62or -0.50%…at $122.86 with a trading range of $120.35 -$124.97 and a share volume of 2.4 M. 50 and 200 day moving averages are at $120.83 and $99.18 respectively. CELG announced results from the PALACE 4 apremilast trial in DMARD-naïve psoriatic arthritis (PsA) patients. There were no new safety concerns. Recall that the NDA was submitted for PsA in 1Q13 and we expect launch in 1Q14. Thepsoriasis NDA is expected to be filed in 2H13. The MAA submission is planned for 2H13 for both PsA/psoriasis. CELG forecasts $250-$750MM in apremilast sales in 2015 and $1.5-2.0B in sales in 2017. Given the limited options in these diseases we believe these numbers are achievable. It was a particularly informative afternoon that explained how CELG’s partnerships are used to generate new internally generated product candidates. In addition, the company reported progress from its biologic pipeline that includes monoclonal antibodies and stem cell therapy. Of particular interest was the epigenetics program to treat cancers without tumor mutations. A BUY

Cytori (CYTX) is DOWN…-$0.02 or -0.75%…at $2.6301 with today’s mid-day trading range of $2.62 – $2.68 and a 82 K share volume. The 50 and 200 day moving averages stand at $2.58 and $2.90 respectively. A BUY.

Cytomedix (OTC: CMXI) is FLAT…at $0.50, with a trading range of $0.46 – $0.50 and moderate volume of 35.5 K shares compared to Thursday’s close of $0.50 and moderate volume of 42.7 K shares. The 50 day and 200 day moving averages are at $0.50 and $0.62 respectively. Visibility is still an issue but the financing got done! Ranked a BUY with a 3-6 month target of $0.85 to $1.00!

NeoStem (NYSE MKT: NBS) is DOWN…-$0.01 or -1.80% at $0.5799 with a moderate share volume of 451 K at mid-day. The trending 50 day and 200 day moving averages are at $0.62 and $0.63 respectively. Kudos to NeoStem’s overnight offering investors partially exercised … the over-allotment option granted to the underwriters to purchase an additional 1.5 M shares of its common stock. Bottom Line: the deal is done with the additional caveat of the over-allotment being picked off! Big point – NO WARRANTS! Fortunately, for those who truly understand the magnitude and potential of this company it’s a good price … that must and will be followed by supporting news and factual commentary to sustain the pricing. A STRONG BUY!

Medistem (PINK: MEDS) is FLAT…at $0.90 … with no real news and nor share volume. MEDS needs to generate some significance to differentiate itself and forward … any visibility standing… A very thinly or no trading volume stock. A HOLD.

Pluristem (PSTI) is DOWN…-$0.03 or -0.98%…at $3.02 with a trading range of $3.01– $3.06 and 34.9 K share volume. 50 and 200 day moving averages are at $3.04 and $3.24 respectively. PSTI has identified its first clinical indication in the hematology field for its Placental eXpanded (PLX) RAD cells for the enhancement of the engraftment of Hematopoietic Stem Cells (HSC) in patients experiencing a delay or failure of their bone marrow transplant (BMT). This follows Pluristem’s completion of additional pre-clinical studies showing promising results for PLX-RAD for this indication. PLX-RAD is currently being evaluated by the U.S. National Institute of Allergy and Infectious Diseases (NIAID), a division of the U.S.NIH, in models of the acute radiation syndrome (ARS). PLX-RAD cells have been shown to have an immunomodulatory effect via the secretion of cytokines and proteins that are known to stimulate Hematopoietic Stem Cells (HSC) to enhance the production of white blood cells, red blood cells and platelets. There was also evidence of a significant improvement in the recovery of these three blood lineages in bone marrow deficient animals compared to control animals. PSTI closed at $2.97 and is UP +$0.09 or +3.03% to $3.06 in the pre-market. I would add another $0.05-$0.07 to the current movement by the close of day. A “BUY”.

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The Early Movers – who’s hot, who’s not

Fri, 17 May 2013 16:00:00 -0400

Which RegMed companies are making moves in the 1^st hour

Signs of life …

Stemline (STML +$0.70) and Wright-Medical (WMGI +$0.24) are the leaders as today’s market opens…

…followed by Neuralstem (NYSEMKT: CUR +$0.13), StemCells (STEM +$0.03), Dendreon (DNDN +$0.02), ImmunoCellular (NYSE MKT: IMUC +$0.03), and BioLife Solutions (OTC: BLFS +$0.004)

A view of the downside at the open …

Verastem (VSTM -$0.24) and Reneuron (LON:RENE -$0.19) are the loss leaders…

…followed by MiMedx (MDXG -$0.13), Shire ADR (SHPG -$0.11), Athersys (ATHX -$0.06), Harvard Bio (HBIO -$0.04), Pluristem (PSTI -$0.04), BioTime (NYSEMKT: BTX -$0.03), Osiris (OSIR -0.03), Cryo-Cell (OTC: CCEL -$0.02), Cytomedix (CMXI -$0.02), NeoStem (NYSE MKT:NBS -$0.013), Cytori (CYTX -$0.01), and Brainstorm (OTC: BCLI -$0.008)

And some of the sector is flat

Advanced Cell Technology (OTC: ACTC), Aastrom (ASTM), Bioheart (PINK: BHRT), Fibrocell (NYSEMKT: FCSC), Geron (GERN), IntelliCell (PINK: SVFCE), Medistem (PINK: MEDS), Mesoblast ADR (PINK: MBLTY), Opexa (OPXA), Proteonomix (OTC: PROT), Tengion (PINK: TNGN), ThermoGenesis (KOOL), and Vitro Diagnostics (PINK: VODG)

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Higher open anticipated

Fri, 17 May 2013 15:59:00 -0400

Stock futures up ahead of consumer sentiment

Stock futures rise on Friday, with investors set to move past a bump in the rally road in the prior session and look ahead to potentially good news from consumer sentiment and leading indicators.

The RegMed sector has been weakness and anxiety as it dropped aligned with gravity. Stocks are also leading back … into uncharted territory following earnings reports.

DOW futures are UP +0.3% and the NASDAQ is UP +0.2.

European stock markets drop on Friday, while Asian stock markets trade mostly higher, with Japanese blue chips swinging to gains in the afternoon session.

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Aegerions Pricing Power Sends Shares Flying

Fri, 17 May 2013 15:41:00 -0400

Shares of Aegerion Pharmaceuticals (NASDAQ: AEGR) rocketed 33% higher in yesterday’s trading after the company reported that they would increase the price of flagship product Juxtapid (lomitapide) from $235,000 per patient to $295,000 beginning June 1^st, which significantly increases Wall Street expectations of the company’s top and bottom-line growth going into the next year. While many pharmaceutical companies struggle with the pricing power of their branded drugs for any number of reasons, it seems that Aegerion has found an extremely lucrative niche in hypercholesterolemia. Today shares are pulling back a tad as some shareholders look to take profits after such a violent move to the upside, but AEGR is expected to hold most (if not all) of the ground based on the long term financial effects of this pricing confirmation.

Investors are also anticipating a positive CHMP decision on the therapy. Expansion into Europe provides significant growth potential for Juxtapid prescriptions going into the end of 2013 and 2014 (depending on the timing of the company’s launch).

Specifically, Juxtapid was recently approved as a HoFH treatment (Homozygous familiar hypercholesterolemia), and targets the hypercholesterolemia patients that have the most severe cases of the disease due to two mutated genes (one from each parent) that affect the function of their low-density lipoprotein (LDL) receptors. Since there are a very limited number of patients in the United States (and the world) within this indication, Aegerion is only able to justify its valuation given that it can charge enormous amounts of money for its drug, although up to this point the company has had no problems doing so.

The primary competitor to Aegerion is Genzyme and ISIS Pharmaceuticals’ (NASDAQ: ISIS) Kynamro, has a competitive price advantage (it costs roughly $176,000 per patient) although it was not able to match the sheer efficacy of lomitapide in late stage clinical trials. Although we know that both of these drugs can be dangerous given their liver toxicity profiles, additional data from ongoing studies may be better able to judge the relative safety of these drugs.

Analysts are generally fond of Aegerion, and expectations have been adjusted (drastically) in light of Juxtapid’s recent display of pricing power. Two notable price target swings (to the upside) were seen from Janney ($47 to $71 per share) and Deutsche Bank ($52 to $85 per share).

Despite the stock’s momentum, investors should treat this as a very calculated play based on the momentum of a drug that has a known price and a niche market only threatened by Kynamro, which had an inferior efficacy profile. In their Q1 2013 results, the company reported a total of 185 Juxtapid prescriptions written, and 75 patients that were on the therapy at the time. The company reported $1.2 in net product sales for the quarter ended March 31^st, 2013, implying that we should see an enormous spike in revenues and earnings when the company reports Q2 2013 results later this summer.

Particularly interesting with regards to Aegerion’s business model is its ability to keep its costs extremely low while targeting an extremely lucrative drug indication. The company’s SG&A expenses did rise to $13.2M for Q1 2013 relative to $5.1M reported in Q1 2012, although this more so reflected the costs of a market launch for Juxtapid rather than a trend that investors should be worried about. Aegerion can keep its costs relatively low due to the small size of the HoFH market, and should see extremely high profit margins.