Canadian Mining/Oil and Gas Companies in Dubai

Over 60 companies are scheduled to provide presentations to institutional investors in Dubai at an investment congress from Oct 30-Nov 2, 2006 at the Jumeirah Emirates Towers Hotel.

These companies are primarily Canadian publicly listed companies, with operations all over the world. They will be augmented with companies listed in the US, UK, and Australia. Canada is a global leader in the mining and oil and gas industries.

The Congress will be split into two sections: one for companies that are involved with mining and the other with those in the oil and gas sector.

The Congress is being organised by Meetings International Natural Resources Enterprise (MINE, LLC), which is an international professional services organization with 20 years experience in natural resources and financial industries and which specialises in private conferences for institutional investors.

Metals Update

Here is what Richard Russell (Dow Jones Letters) has to say about gold's prospects (May 22, 2006):

But now we are in the period where because of the recent enormous rise in deficits and debt liabilities, intelligent investors realize that these debt and debt liabilities must either be reneged on or paid off in devalued dollars.

This has centered attention on gold again. The rise in gold in terms of dollars is simply a function of the market looking ahead and discounting dollars in terms of gold. The market sees what must happen, and the market has been taking action accordingly.

I take the gold move from 250 to 735 as the first major phase of the gold bull market. This is the phase where gold once again enters the thinking and early buying of informed investors. The second phase will be the one in which the public enters wholesale into the gold market.

In a major bull market in stocks there will usually be a major correction which separates the first phase from the second phase. It's that correction that I believe we're now experiencing in gold.

As I see it, the dollar/gold/debt situation will be the central economic story of our times.

During May and June, markets globally suffered sharp sell-offs, with hedge funds exiting emerging markets, commodities and other high risk assets classes.

Precious and base metals markets saw substantial declines in the prices of their related commodities, with gold dropping from $ 735 to $ 550 and silver from $ 15 to $ 9 within a few weeks. This was not unexpected as these commodities have had a substantial rally, were overbought and due for a correction.

Here is how Adam Hamilton at Zeal LLC sees this correction:

It is crucial to remember that it is sentiment that drives all of these short-term swings that we want to trade. The entire reason corrections happen is to rebalance sentiment after it became too euphoric. A major correction really cannot fully run its course until sentiment gets outright bearish or at the very least disgusted and fed up. We are not even six weeks into these precious metals corrections yet, which is nowhere near enough time for sentiment to turn negative. Right now everyone still wants to "buy the dips" which is a greed sign, not fear. Major corrections usually linger about three to six months, enough time to really discourage traders. So from a pure sentiment perspective, the odds remain unlikely that this correction is over until greed is gone and is replaced by frustrated discouragement if not fear. Since gold fell so fast much of its downside price risk is out of the way, but it could still continue correcting by grinding relentlessly sideways to lower. Such behavior shreds the morale of speculators.

Silver, which usually mirrors gold's behavior, faces much the same situation. While it has retreated to its 200dma, the upslope of this metric has been very steep and raised really high by silver's massive upleg. This means that silver too is likely to fall under its 200dma before this correction ends.

As summer is a seasonally weak period for commodities, we are likely to see gold consolidate here for the next couple of months before it stages a strong rally in September.

It may get a boost earlier than that if the US$ begins to decline in the meantime, which may happen if the Fed indicates that it will pause its rate increases due to a real slowdown in the housing market and/or the rest of the economy.

As you can see, gold has bounced off its 200 moving average several times in the course of this bull market since June 2001. It is quite oversold according to the technical indicators and may bounce around here in its corrective phase before it rallies later this year.

Here is a quote from Bill Gross (MD, PIMCO Bonds in his May 2006 column – PIMCO is the largest bond management company in the world):

Higher inflation, higher personal and corporate taxes, and a lower dollar point U.S. and global investors away from U.S. assets and toward more competitive economies less burdened by health and pension liabilities – those personified by higher savings rates and investment as a percentage of GDP. Need I say more than to sell U.S. assets and buy Asian ones denominated in their local currencies; or if necessary to hire a global asset manager with sufficient flexibility and proper foresight to thrive in an increasing difficult investment environment?

Gold and silver are the natural beneficiaries of such changes in global asset allocations for years into the future.

8.7 Million Millionaires

About 8.7 million people held $1m in assets in 2005, with a total of $33.3 trillion in net assets.

According to Merrill Lynch's 10th annual World Wealth Report - produced in association with Capgemini - the combined assets of high net worth individuals (HNWIs) grew 8.5% in 2005.

It estimates that more than 85,000 people now have assets - excluding primary residence and consumables - of more than $30m.

Merrill Lynch said Asia's continued economic recovery helped boost the riches of the region's wealthiest, while oil and gas exports swelled the fortunes of the richest few in Latin America and the Middle East.

On the other hand, the rate of growth of US millionaires slowed to 6.8% in 2005, down from the 10% jump seen in 2004.

Besides South Korea, India and Russia saw the largest rise in new millionaires - their numbers growing by 19% and 17% respectively.

South Africa, Indonesia, Hong Kong, Saudi Arabia, Singapore, the United Arab Emirates (UAE) and Brazil also saw double-digit growth in the number of new millionaires.

Merill Lynch said the combined wealth of the world's wealthiest would not rise as fast in 2006, owing to the slowdown in the global economy.

While interesting, I am always a bit skeptical of these types of statistics. 300,000 millionaires in the Middle East strikes me as a tad low and I wonder how reliable is the data that is collected, particularly in those third world countries where tax and wealth returns filed are more likely works of fiction!

I predict that it will be investors in the mining sector that will help swell the number of millionaires in Merrill Lynch's 2010 World Wealth Report!