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David Fuller and Eoin Treacy's Comment of the Day
Category - Precious Metals / Commodities

    Ray Dalio Spells Out America's Worst Nightmare

    This article by Brian Chappatta for Bloomberg may be of interest to subscribers. Here is a section: 

    “We have to sell a lot of Treasury bonds, and we as Americans won’t be able to buy all those Treasury bonds,” Dalio said. That means foreign investors will have to step up. And they probably would, as long as the dollar remains strong.

    Otherwise, Treasury’s dollar-denominated interest payments to buyers in China, Europe and Japan will be worth less and less.

    But, to Dalio, that’s not going to happen. “The Federal Reserve at that point will have to print more money to make up for the deficit, have to monetize more and that’ll cause a depreciation in the value of the dollar,” he said. Pressed by interviewer Erik Schatzker, he said “you easily could have a 30 percent depreciation in the dollar through that period of time.” For context, the Bloomberg Dollar Spot Index fell 8.5 percent in 2017, and that was considered massive.

    It all leads up to this critique of how the U.S. has gone on a borrowing binge in recent years. Remember, the $15.3 trillion Treasury market was the $4.9 trillion Treasury market a decade ago.

    “We have the privileged position of being able to borrow in our own currency because we have the world's leading reserve currency. We are risking that by our finances — in other words, borrowing too much.”

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    FDA Threatens to Pull E-Cigarettes to Fight Rise of Youth Vaping �

    This article by Anna Edney for Bloomberg may be of interest to subscribers. Here is a section:

    “There is no question that a lot of the youth use is being driven by Juul,” Gottlieb said.

    Produced by San Francisco-based Juul Labs Inc., Juul devices resemble a USB thumb drive and have become popular among students. The company has more than two-thirds of the U.S. e- cigarette market, according to Nielsen data. The FDA is currently developing a survey to determine what percentage of youth vapers are using Juul products, Gottlieb said.

    A nationwide sting operation from June through August resulted in more than 1,300 warning letters and fines to retailers who sold Juul products and other e-cigarettes to kids.

    It was “the largest coordinated enforcement effort in the FDA’s history,” according to the agency.

    Gottlieb recently began to ask whether the use of Juul and other similar products by kids is overshadowing any benefit to adult smokers using the devices to help them quit cigarettes. He said in June tobacco companies “better step up and step up soon” but he didn’t divulge what consequences the industry could face -- until now.

    In July 2017, the FDA said it was considering lowering nicotine levels in traditional cigarettes. In addition, the agency pushed back until 2022 a deadline for electronic- cigarette companies to submit applications to the FDA. Gottlieb said at the time he was trying to ease the regulatory pathway for products that are potentially less harmful sources of nicotine than smoking. Critics of pushing back the deadline raised concern that more kids would take up vaping.

    Congress gave the FDA the authority to regulate tobacco products in 2009. The agency extended that reach to other tobacco products, including e-cigarettes, in August 2016 and allowed those products that were already on the market to continue sales while preparing an application for FDA clearance.

    The FDA is investigating whether some products on the market were introduced after the 2016 date and may need to halt sales, though didn’t name which ones may be violating the law.

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    Cotton, Hog Futures Jump as Florence Heads for East Coast

    This article by Mario Parker, Megan Durisin and Shruti Date Singh for Bloomberg may be of interest to subscribers. Here is a section:

    Cotton, corn and soybean fields along with massive hog and poultry facilities lie in the projected path for Hurricane Florence.

    The storm’s U.S. landfall could come Friday between Charleston, South Carolina and Norfolk, Virginia, the Hurricane Center said. As much as 15 inches (38 centimeters) of rain could flood cotton fields in parts of North Carolina, according to AccuWeather Inc. The state is also home to several pork- processing plants from major producer Smithfield Foods Inc.

    Florence will likely bring “wind and flood damage” for corn and soybeans in the region, Commodity Weather Group said in a report Monday.

    “Cotton is one of the largest commodities that can be affected by Florence,” Terry Reilly, senior commodity analyst for grain and oilseeds at Futures International in Chicago, said in an email. “Too much rain is never a good thing for any crop, unless it’s rice.”

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    MIT study sees nuclear power as integral to a low-carbon future

    This article by David Szondy for NewAtlas.com may be of interest to subscribers. Here is a section: 

    Much of this is a matter of intense debate, but one big problem is that if the world is to invest in a policy of deep decarbonatization by the year 2050, there is a real chance it can only be done at either massive expense or the price of much less electricity being available at higher costs, lower standards of living in both the developed and developing world, and even a shrinking global economy.

    To prevent this from happening, the MIT study says that nuclear power with its zero-carbon emissions must play a much larger role in electricity generation on a global scale. Today, the total share of global nuclear power as a primary energy source is a mere five percent, with very little growth in the West and some countries actually abandoning the technology.

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    UN holds emergency meeting as swine fever spreads in China

    This article by Hudson Lockett for the Financial Times may be of interest to subscribers. Here is a section:

    While ASF is not a direct threat to human health it is a highly contagious viral disease that can devastate pig populations in regions where it has never before spread, including Asia. 

    China has seen six outbreaks of the disease stretching from the first discovered in the country’s northeast at the beginning of August down to the province of Zhejiang, just south of Shanghai. The FAO said officials in China, which produces half the world’s pigs annually, had culled as many as 40,000 pigs so far in an attempt to control the disease.

    “It’s critical that this region be ready for the very real possibility that ASF could jump the border into other countries,” said Wantanee Kalpravidh, regional manager in Asia for the FAO Emergency Centre for Transboundary Animal Diseases. “That’s why this emergency meeting has been convened – to assess where we are now – and to determine how we can work together in a coordinated, regional response”.

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    Gold caught in the Trump Trade War crossfire; Stress-testing producers at $1,100/oz

    Thanks to a subscriber for this report from Canaccord Genuity which may be of interest. Here is a section:

    Major lithium-ion battery manufacturer planning output that may rival entire 2015 LIB market: analysts

    This article by Michael Allan McCrae for Mining,com may be of interest to subscribers.

    LG Chem, a major South Korean lithium-ion battery manufacturer, is increasing its cell manufacturing capacity to such an extent that it may surpass the entire LIB market in both output and raw material consumption from just three years ago.

    Roskill, industry analysts that ran the numbers on LG Chem's planned output, says that South Korean manufacturer plans to increase capacity to 90GWh in 2020 from a previous forecast of 70GWh.

    "Assuming 100% of output was to be NMC532, 90GWh would require around 100kt of cathode, containing 40kt nickel, 22kt cobalt, 16kt manganese and 50kt lithium (carbonate equivalent), and 90kt of anode materials which could be 100% graphite," writes Roskill.

    "If producing at capacity, LG Chem’s LIB output and raw material consumption would be greater than the entire LIB market in 2015."

    LG Chem, South Korea's largest chemical company, is one of the top five LIB manufacturers. It makes batteries for the Ford Focus, Chevrolet Volt and Renault ZOE.

    LG Chem has been making deals to ensure it has raw material. This past spring Zhejiang Huayou Cobalt and LG Chem announced they are planning a cathode material facilities with capacity of 40,000tpy and 100,000tpy capacity planned for future. It also signed deals other raw material deals with Nemaska Lithium and Ganfeng Lithium.

    While cobalt and lithium prices are currently falling, Roskills says cell manufacturers are locking in supply and ". . . that activity in the sector continues at a rapid pace."

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    Email of the day on ETF Holdings of gold

    A question Do we need to see a clear change of trend in the chart for Total known ETF holdings of gold before we take any uptick in the gold price seriously?

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