Will the Hunts buy silver again after selling Hunt Petroleum?

Filed under: Gold & Silver, US Stocks — peterjcooper @ 10:41 am

This week XTO Energy finally agreed to buy Hunt Petroleum for $4.2 billion after a long legal tussle between Hunt family heirs. The firm was founded by the late billionaire HL Hunt whose sons Nelson Bunker Hunt and William Herbert Hunt once cornered the world silver market in the 1970s.

Hunt is a privately held company which makes no public comment on its affairs. But commentators think the Hunts are calling the top of the oil market and that the price for Hunt Petroleum suggests a quick deal was the objective.

However, market watchers are bound to wonder if the Hunts are planning to re-enter the silver market which they so dramatically dominated in the 1970s. It was in 1973 that the family first decided to buy precious metals to hedge against inflation, much as many rich investors are doing today.

Together with several wealthy investors the Hunts formed a silver pool and by 1979 held half the world’s deliverable silver supply, some 200 million ounces. Having effectively cornered the markets, the pool used leverage to drive the price of silver to $54 an ounce. But the authorities changed the rules on margin trading and crashed the market. The Hunt brothers eventually declared bankruptcy and by 1987 their liabilities of $2.5 billion exceeded assets of $1.5 billion.

After that experience you would have to have a pretty thick skin to try playing the same game again. But history does have a habit of repeating itself, and you have to wonder what investment options are open to a family with $4.2 billion to tuck away in present markets.

Precious metals are once again an attractive diversification strategy at a time of high and mounting inflation. Nothing erodes the value of cash deposits like inflation. The ever secretive Hunts could learn from their past mistakes and avoid margin trading, and still take a commanding position in the silver market, although this sum is too small to impact much on gold.

Of course, the irony of the 1970’s episode may not have been lost on the next generation of Hunts. They did indeed select one of the best possible investment strategies for that decade, and if they had not gotten too greedy with margin trading their position would have been unassailable.

So personally I would imagine the Hunts might well venture back into precious metals, and probably in a big way. But don’t expect to read any announcements or for the family to get carried away trying to corner the market again.

How high could silver go? We are still a long way shy of the $54 an ounce high of 1980 reached courtesy of the Hunt pool, and every other commodity is now past its previous all-time high. The silver market is a relatively tight and small one, so any renewal of serious investor interest, perhaps on the back of another bull run for gold is likely to take prices far higher.

An inflation adjusted all-time peak silver price would be $120 on simple adjustment to the consumer price index and much higher if related to the money supply increase over 28 years. Could the Hunts again invest in the most undervalued commodity in the world to beat inflation? They would be foolish not to!+

Arabianmoney.net

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PAUL: Rising Energy Prices and the Falling Dollar
Congressman Ron Paul
June 9, 2008

Oil prices are on the minds of many Americans as gas hits $4 a gallon, and continues to surge. How high can prices go? How can we solve these problems? What, or who, is to blame?

Part of the answer lies in understanding bubbles and monetary inflation, but especially the Federal Reserve System. The Federal Reserve is charged with controlling inflation through interest rate manipulation, however, many fail to realize that creating money, and therefore inflation, is really its only tool. When the Federal Reserve inflates the dollar as drastically as it has in the past few decades, the first users of the newly created money go in search of investments for their dollars. They must invest this money quickly and aggressively before it loses value. This causes certain sectors to expand beyond what would naturally occur in the free market. Eventually the sector overheats and the bubble bursts. Overinvestment in dotcoms eventually led to a collapse of the NASDAQ. Next we had the housing bubble, and now we are seeing the price of oil being bid up in the creation of another new bubble. Investors are now looking to commodities like oil, for stability and growth as they pull capital out of real estate. This increased demand for investment vehicles related to oil contributes to driving up the price of the actual product.

If the Fed continues with its bubble blowing policies of the past, the new commodities bubble will continue to grow, gas prices will continue to go up, as the value of your dollars go down. We will see an overinvestment in these commodities as solutions are desperately sought for a supply shortage, which is only part of the problem. Make no mistake, though, this is not the free market at work. Government manipulations have added levels of complication and unintended consequences to the marketplace.

This is not the time for members of Congress to take political potshots at each other, or to imagine that the free market is somehow to blame. This is the time to understand and fix problems. That begins with making sure the decision makers have a firm grasp on the causes of the problems and possible effects of their decisions. This is absolutely crucial if we want to get it right this time. That is why I am in the process of calling for hearings on Capitol Hill on how the falling value of the dollar affects energy prices.

Governments need to get out of the way and let the people get back to work so that we can get our economy back on stable footing. Our destructive regulatory environment, confiscatory tax policies, and managed, rather than free trade have chased many businesses overseas. The bottom line is average Americans are being seriously hurt by these flawed policies, and they are not getting good information about the true dynamics at work. The important thing now is to get the diagnosis absolutely correct so we can administer the appropriate treatment and move on to a healthier economic future. To do this it is absolutely necessary to address the subjects of central banking and fiat money.

http://www.house.gov/paul/tst/tst2008/tst060908.htm

Alex’s Notes: Little plug here for the company I was the CEO for once upon a time. I am impressed that they signed Disney. Now all they need is some revenue, and an uplist to a real exchange, and they might have something here.

ReelTime to Offer Video on Demand Rentals From the Walt DisneyStudios

Jun 17, 2008 12:11:02 (ET)

SEATTLE, WA, Jun 17, 2008 (MARKET WIRE via COMTEX) — ReelTime Rentals, Inc. (PINKSHEETS: RLTR) has entered into an agreement with Disney-ABC Domestic Television (DIS, Trade ) to provide popular video on demand rentals as they become available from The Walt Disney Studios, including new and classic titles from Walt Disney Pictures, Disney-Pixar, Touchstone Pictures, Hollywood Pictures and Miramax Films.

New and classic Disney hits such as “Dumbo,” “Enchanted,” “National Treasure: Book of Secrets,” “Pirates of the Caribbean: The Curse of the Black Pearl,” “National Treasure” and “The Princess Diaries,” as well as the Academy Award(R)-winning “No Country for Old Men” from Miramax Films and Touchstone Pictures’ “Dan in Real Life” and “The Life Aquatic with Steve Zissou” will be available to rent at ReelTime.com.

Barry Henthorn, CEO of ReelTime, stated, “We are thrilled to now offer an assortment of blockbuster new releases and classic titles from The Walt Disney Studios to our customers. Reeltime’s unique method of content delivery positions us squarely at the forefront of internet technology, allowing us to provide the public with the fastest and most efficient offering of online entertainment available to date. The addition of titles from Disney-ABC Domestic Television will have an immediate and positive impact on our service.”

About Disney-ABC Domestic Television:

Disney-ABC Domestic Television’s pay television and interactive media division is a leading distributor of movies in the video-on-demand arena. DADT distributes movies domestically from The Walt Disney Studios, including titles from Walt Disney Pictures, Disney-Pixar, Touchstone Pictures, Hollywood Pictures, and Miramax Films. It currently licenses movies through a wide range of distributors and platforms including cable MSOs, satellite companies, internet distributors, telcos, mobile operators, and via other emerging technologies.

About ReelTime Rentals, Inc.:

ReelTime Rentals’ mission is to deliver diverse programming, for rental or by subscription, over its online broadband network, enabling viewers to watch whatever they choose, anytime and anywhere they want to see it — all they need is a broadband connection. ReelTime offers the first DVD quality “Point, Click, and Watch” user experience available on the World Wide Web. ReelTime is providing the public the next generation of online viewing technology, designed with the built in capacity for unlimited growth. ReelTime Rentals can be found on the internet at www.reeltime.com .

Forward-Looking Statements

This news release includes comments that may be deemed forward-looking within the meaning of the safe harbor provisions of the U.S. Federal Securities Laws. These include, among other things, statements about expectations of future events or transactions, sales of products or performance. Forward-looking statements are subject to risks and uncertainties that may cause the company’s results to differ materially from expectations. These risks include the company’s ability to execute its business plan, having necessary financing in time to meet contractual obligations and support the business activity, and other such risks as the company may identify and discuss from time to time, including those risks disclosed in the company’s current and future filings with the Securities and Exchange Commission. Accordingly, there is no certainty that the company’s plans will be achieved.

FOR FURTHER INFORMATION, please contact:

ReelTime Rentals, Inc.:
Joe DeLaura
(732) 904-3872
jd@reeltime.com

Disney-ABC:
Bridget Osterhaus
Bridget.osterhaus@disney.com

Hello dear reader, this will be a brief entry as I just returned from a trip to Dallas where I spoke at a leadership summit for gold distributors.

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This is not for fraud purposes, as we are very careful about who we allow as clients, and will cooperate with government authorities in regards to criminal activity.

The main point, is privacy. It is not difficult, or even complicated to protect your wealth in an ever financially hostile environment, but taking steps of due diligence and most importantly action are absolute keys to protecting the estate of your future generations.

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If you want more information on this topic, please contact us.

I was reading an article today on Seeking Alpha where the author was talking about inflation. His point was, that the US continues to inflate (we are talking about monetary inflation here), and that all other countries are forced to inflate in order to maintain some semblance of world trade.

This phenomenon has basically allowed the US to push its inflation out onto the rest of the world, and enjoy the ability to run massive trade defecits, by virtue of of the USD being the worlds reserve currency.

I have said often recently that this may not be for very long. The interesting thing is, that few actually make the connection in what is happening to currencies all around the world, because so many are still trading the currency markets.

What I think so many are misunderstanding, is that its not just the USD thats in trouble, its all fiat currencies around the world. They are all sinking. They are all inflating.

Dont believe me?

June 5 - Bloomberg (Simon Kennedy): “Asian governments are falling behind in their battle against record oil prices, risking public protests, higher interest rates and slower growth. Indian Prime Minister Manmohan Singh and his Malaysian counterpart, Abdullah Ahmad Badawi, relaxed fuel price controls yesterday, joining Indonesia, Taiwan, Pakistan and Sri Lanka in boosting costs for business and consumers. The moves will drive India’s inflation to 8.5%, a 13-year high… Malaysia’s consumer-price growth may double to more than 7% this month… Central banks in the region may also follow Pakistan in raising rates, as policy makers lose bets that a global slowdown would temper price increases… This is going to cost these governments politically,’ Michael Spencer, Hong Kong-based chief economist for Asia at Deutsche Bank AG, said… ‘The governments are basically saying they can’t keep subsidizing fuel.’”

June 4 - Financial Times (John Burton): “Malaysia will raise petrol prices by more than 40% from Thursday as it seeks to rein in government spending on fuel subsidies at the cost of ending a low inflation policy. Government officials said Malaysia was in danger of spending M$50bn ($15bn) on fuel subsidies this year if government-set prices for petrol and diesel were not raised… Before today’s increase, Malaysia’s fuel subsidy accounted for nearly a third of total government spending and was equivalent to about 7% of gross domestic product… The fuel price increase was bigger than those recently announced by Taiwan, Indonesia and India, which raises its fuel prices by 10% from Thursday.”

June 4 - Bloomberg (Kartik Goyal and Soraya Permatasari): “India and Malaysia were forced to raise fuel prices after crude oil almost doubled in a year, risking fanning inflation and social unrest. Gasoline will rise 11% in India’s capital New Delhi… Pump prices in Malaysia will increase 41%… Asian nations are grappling with record crude prices that have raised the cost of subsidies and caused losses for refineries… ‘The countries in Asia, which are dependent on imports, will have to live with the specter of accelerating inflation and slowing economic growth this year,’ said Kaushik Das, an economist with Mumbai-based Kotak Mahindra Bank Ltd.”

June 3 - Bloomberg (Sungwoo Park): “South Korea, struggling to rein in the highest inflation in seven years stoked by surging oil and food costs, may release rice and frozen fish from state reserves and intensify a crackdown on steel hoarding to cool prices.”

June 3 - The Wall Street Journal (James Hookway): “A proliferation of labor strikes in Vietnam is dragging foreign manufacturers into the country’s worsening inflation crisis, while Hanoi’s Communist leaders struggle to keep rising prices under control… The strikes reflect the anger of the tens of thousands of Vietnamese who have left rural farming communities to seek work in the new industrial zones around Hanoi and Ho Chi Minh City, only to see the buying power of their wage packets dwindle amid rising food and fuel costs. According to government statistics, about 300 strikes took place in the first quarter, up from 103 strikes recorded in the first quarter of last year.”

June 6 - Financial Times (Simeon Kerr): “The sovereign ratings of Middle Eastern states could be hit by the political and economic risks caused by soaring inflation across the region, Moody’s…said… Poorer regional states, such as Egypt and Jordan, are most likely to be affected in the short term, as inflation prompts strikes and fiscal loosening by governments under pressure… ‘Given enhanced sensitivities to the risk of social unrest, some governments in the Middle East are finding it difficult to maintain fiscal discipline,’ said Tristan Cooper, Moody’s senior sovereign analyst…”

June 3 - Bloomberg (Fiona MacDonald): “Kuwait will tighten controls on prices and increase subsidies on staple consumer goods, the state-run news agency KUNA reported… Inflation in Kuwait accelerated to a record 10.1% in February…”

June 2 - Gulf Times: “Though the Arabian Gulf is reaping a windfall from sky-high oil prices, soaring food prices have hit countries such as Saudi Arabia, Abu Dhabi and Qatar hard. The Gulf nations have to import more than 80% of the food needed for their rapidly growing populations. To brake the runaway inflation that is fuelled by high food costs, Gulf rulers have a new strategy. They are buying unused agricultural land in countries such as Pakistan, Thailand, and Sudan and turn to large-scale farming.”

June 3 - Bloomberg (Matthew Brown): “Abu Dhabi plans new measures to control price and salary increases as it seeks to curb inflation, Emirates Business 24/7 reported, citing a government report.”

June 5 - Bloomberg (Mike Cohen): “Rising food prices could fuel political instability that African governments will be unable to contain, said Jacob Zuma, leader of South Africa’s ruling African National Congress. ‘The issue of food prices is actually a time bomb,’ Zuma said at a World Economic Forum meeting… ‘An uprising could emerge. I don’t think there is lots that governments could do.’ Rising food prices have sparked protests across the continent in countries including Kenya, Ivory Coast, Cameroon and South Africa… ‘Oil prices are driving up food in a way we cannot deal with,’ South African Finance Minister Trevor Manuel said… Governments in rich nations must to do more to contain food demand or ‘the wealthy are going to take everything, leaving the poor destitute.”

June 5 - Financial Times (Barney Jopson): “Food prices in Kenya rose 44% in the year to May reflecting a combination of global trends and the after-effects of the country’s post-election turmoil earlier this year. Overall inflation in Kenya rose to 31.5% year-on-year, the highest rate since the early 1990s… Kenya experienced its first small-scale protests over soaring food costs in Nairobi at the weekend, but analysts fear that continued inflation in months to come could stoke more serious unrest among the urban poor.”

So what does this all mean?

Well, Simon Heapes, one of the finest minds in precious metals and wealth protection today, describes it like this: “Yes some will make money trading in Forex. But it reminds me of a sinking ship, surrounded by sinking ships. The big one in the middle is the US. The ones surrounding it are all the other nations forced to devalue their currency because of US Inflation. The rats are jumping from ship to ship, trying to figure out which ship isnt going to sink (in terms of inflation). The answer is, none of them.”

Its my opinion, that the best way to protect our wealth in a Global Inflationary Storm, is to get off the ships and on to solid ground, which is gold and silver.

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