Day: March 10, 2011

Petrobank’s THAI presentation

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Please click on the above picture to watch the video presentation of Canadian oil company Petrobank.

THAI seems like a pretty straight forward method for extracting many billions of barrels of heavy oil from underground reservoirs, while at the same time making it into to a lighter, more useful, grade of oil.  Perhaps projects like this make oil an energy not just of the present but of the future by greatly increasing the world’s known reserves.  Canada is second only to Saudi Arabia in oil reserves.

Disclosure: I have a position in Petrobank.

Hyperinflation is now here: throwing gasoline on the fire

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Kapitalcon cited my post discussing the $223 billion dollar US Federal deficit in February, and then went further to predict QE III:

Important to note is the Federal Reserve’s recent announcement that it may have to begin its third round of QE in response to sky-rocketing oil prices.  Atlanta Fed President Dennis Lockhart stated at the National Association of Business Economics in Arlington that “If [the rising price of oil] plays through to the broad economy in a way that portends a recession, I would take a position we would respond with more accommodation.”  As oil increases, so too does the cost of most, if not all, goods and services. This includes anything that requires petroleum in the production process, not to mention increased transportation costs for moving the product to market.  Such is the rationale for QE3.

Do I fear my commodity stocks going down like they did in 2008-9?  Not with people like Mr. Lockhart running the Federal Reserve Bank.  The problem of the commodities is too much liquidity chasing too few goods.  If the Federal Reserve Bank’s solution is to just throw more fuel on the fire, then I’ve nothing to fear.  QE, which I affectionately call the Bernanke Put, will be the ultimate cause of hyperinflation.  It is as though they are trying to fulfill this prophetic video that the National Inflation Association created a few months ago:

Jeet kune do investing IV: Venezuela

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The Globe & Mail presented a contemporary example of hyperinflation in article by Frank Jack Daniel:  “Trying to survive inflation? Ask Venezuelans“.  One point stood out to me:

Over the past 25 years, its citizens have developed all sorts of techniques for stretching their money and offsetting price rises. The main rule is get rid of cash fast.

“There’s no point leaving it in the bank, it’s better to invest. I bought this car for example,” said Caracas town hall official Jorge Juarez, who leaves home at 4 a.m. to beat the snarled traffic and uses his 2007 Fiat as a taxi after work.

Mr. Juarez is in many ways a typical middle-class Venezuelan. Through a mix of hard work and shrewdness he has kept up his family’s living standard even as his salary’s buying power shrinks.

Cars are a good investment in the Caribbean nation, where gasoline is subsidized to the point of being almost free and demand for vehicles far outstrips supply. As such, they increase in value as they age, faster than consumer prices.

Cars were seen as a good investment during hyperinflation in Chili, according to Gonzalo Lira, as I mentioned in an earlier post about  why I was buying Toyota RAV4 on 0% 36 month financing.  If gold is the measure of real estate, then real estate is suffering in price even while here in Canada it is experiencing phenomenal nominal gains.  This too accords with what happened in Chili according to Lira.

NB:  this post is part of a series on Jeet kune do investing, named after Bruce Lee’s martial arts, a style which is no style.