India Top Court Rules Mines Illegal in Setback to Billionaires

India’s highest court ruled giving away coal mines to companies since 1993 was illegal, spurring concern mining permits may be canceled and deprive power and steel projects of fuel.

The policy of allocating 218 mines for captive use to companies including Hindalco Industries Ltd. and Jindal Steel & Power Ltd. without auctioning them didn’t follow transparent norms, a three-judge bench headed by Supreme Court Chief Justice R.M. Lodha said yesterday, after a report by the nation’s main investigating agency. The court on Sept. 1 will hear arguments regarding termination of the mining licenses.

Annulment of mining rights may lead to fuel shortages at several factories, including power plants, cement and steel mills, undermining Prime Minister Narendra Modi’s aim to revive economic growth and curb blackouts in Asia’s third-biggest economy. Inadequate coal output has prompted companies to seek supplies overseas, as state producer Coal India Ltd. battles slow land acquisition and government approvals.

“The ruling has brought in uncertainty and if the situation prolongs, it could severely strain coal supplies to customers,” said Deven Choksey, managing director at K.R. Choksey Shares & Securities Pvt. in Mumbai. “I would expect the government to act on this matter in urgency and allow companies to retain coal mines on the basis of merit.”

Shares Tumble

Shares of metal and power producers tumbled in Mumbai yesterday after the ruling. New Delhi-based Jindal Steel plunged 14 percent to 253.45 rupees, the lowest close since May 13. Hindalco, the nation’s largest aluminum producer led by billionaire Kumar Mangalam Birla, dropped 9.7 percent to 164.85 rupees, the biggest decline in almost five years.

The policy of giving away coal mines to non-state companies caused a loss of 1.86 trillion rupees ($31 billion) to the state exchequer, the federal auditor said in August 2012. The Comptroller and Auditor General’s report on the estimated losses added to a series of corruption charges on the Manmohan Singh- led United Progressive Alliance government and prompted the Supreme Court to order an investigation by the federal investigative agency.

“We see significant downside for metal and power stocks if allocations are ultimately canceled,” said R.K. Gupta, managing director of New Delhi-based Taurus Asset Management Co., which oversees about $686 million. “This has the potential to hurt the India growth story as power companies are reeling under huge coal shortage.”

Bringing Clarity

The ruling may bring clarity in the mines allocation process and will be beneficial to the industry in the long term, Coal Minister Piyush Goyal told reporters in New Delhi yesterday. “I hope the work to deliver coal to increase generation and reduce imports will be expedited and the court’s judgment will go a long way in helping us achieve our goal of providing 24x7 power to people.”

Jindal Steel is evaluating the impact of the ruling on the company and wouldn’t comment further, it said in an e-mailed statement. Chanakya Chaudhary, Tata Steel spokesman, declined to comment on the ruling saying he hadn’t yet seen the court order. Pragnya Ram, spokesman at Hindalco, didn’t respond to an e-mail seeking comments.

“The news is negative for Jindal Steel and Hindalco,” Kunal Agrawal, analyst at BNP Paribas Securities (Asia) Ltd., said by phone from Hong Kong yesterday. “Hindalco was expecting to get a final clearance and start mining at Mahan coal mine and for Jindal Steel it’s Gare Palma coal mine.”

Thermal Coal

Jindal Steel is also counting on a final permit for its Utkal B1 coal block that will fuel its steel project in eastern state of Odisha, the first in the country to use gas produced from thermal coal to run a steel mill. Essar Power, controlled by billionaire brothers Shashi and Ravikant Ruia, and Hindalco have invested about $3.8 billion to build power plants and an aluminum smelter to be fueled by coal from Mahan coal mines.

A panel of retired judges may be formed to probe the case, the court said in a 163-page ruling.

To increase coal production, the federal government in 1993 started allocating mines to companies for their own use. The discretionary process of allocation would later come under criticism, forcing the government to amend the mining laws and adopt a policy of auctioning coal mines. The nation has yet to auction its first coal mine.

The Coal Ministry allocated 218 coal blocks between 1993 and 2011, of which it has canceled 80 permits for failure to meet production milestones, according to the ministry.

www.bloomberg.com

Gold should be $1,400/oz: Global Investors's Holmes

Frank Holmes, CEO and CIO of US Global Investors, a company known for its focus on the natural resources sector, says he believes the price of gold should be $1,400 per ounce, according to an interview on Ceo.ca.

Holmes mentions several reasons for his bullish stance on the yellow metal, including economic concerns in Europe and China that trigger stimulus.

"We saw, three weeks ago, Germany go to a negative real interest rates. Well, when that happens all of a sudden you start seeing gold rise in euro terms," Holmes tells interviewer Shannon Nelson.

"I think that is important to witness, that we could see gold, based on negative real interest rates in the US, the CPI numbers this week based on the fear in Europe, gold should be trading around $1,400 an ounce," he says.

Holmes discusses a number of other subjects in the podcast, from what it takes to get him to invest to his favorite websites, and gives entrepreneurs some advice.

To listen to the podcast, click here 

Gold and Oil on the Verge of Something Big

Gold and Oil on the Verge of Something Big - Hero's Rarely Win

Everyone has been calling for a bottoming Gold the last year. But the fact is that gold and gold stocks are still clearly in a bear market. Just look at the 200 day moving averages. The previous trends were down and prices have been moving sideways for the past year.

A lot of newsletter and analysts are calling a bottom. Technically it's just a consolidation pattern. Consolidation patterns are a continuation pattern, meaning if the previous trend was down, which it was from 2011 till now, the odds favor price will continue lower after this consolidation.

If this consolidation does happen to be the bottom then we can classify it as a stage I base. Gold and gold stocks will start a new bull market, but price needs to break to the upside of this consolidation pattern. Until it breaks to the upside, it is still in a down trend.

Gold topped out over three years ago. And I am in no rush to try to pick a bottom and be a hero here. I'm just going to continue waiting on the sidelines until price confirms either a new bull market has started or for price to breakdown and we get another leg lower.

Oil Outlook

Taking a look at the big picture of crude oil the chart looks bearish. It too has been trading in a range since 2011 and the price is nearing the apex of a consolidation pattern.

It's important to know that a pennant formation which is what crude oil has formed are the most predictable when price breaks out of the pattern within the first 1/3rd of the formation.

The longer price consolidates and gets squeezed into the narrowing apex of the pennant pattern, the more unreliable. The trend breakout will be, and it becomes at best a 50/50 bet.

Crude oil's previous trend was up, but it's been consolidating for such a long time that price is now squeezed into the apex. This negates that bias for the previous trend to hold true so we have no idea which why it will breakout but when it does expect an explosive move.

A breakdown in crude oil will send price to the $70 or $75 per barrel range, and that will hammer on the Canadian dollar also. I can see $1 USD being equivalent to $1.20 Canadian in a year.

My Gold and Oil Conclusion

Looking at the US dollar, it has been rising partly due to the euro falling. This strong dollar will put a downward pressure on commodities overall.

Gold and oil have not been that exciting for investors since 2011 when they topped out, but both are setting up for massive moves that should last month, if not year or more. Once these new trends emerge expect to see them in the headline news every hour.

It does not matter which way these commodities breakout of the consolidation patterns. With the dollar continuing to rise and the bearish chart patterns for both gold and oil there is a good chance much lower prices are ahead.

This will catch most investor's off guard. It's human nature to try to predict tops and bottoms in the market. But this is why most investors get caught on the wrong side of the market. The market always has a way of catching the majority of people on the wrong side of a position.

I am happily sitting in cash with some of my investment capital waiting for gold and oil to breakout of these large patterns. I would not be surprised if we see $900 gold, gold stocks like the gold bugs index $HUI to be at $150, and $70 per barrel for crude oil. I am not saying this is what I want, but you should be mentally prepared so you can get back into cash position and so you can take advantage of falling prices with me.

Big money will be made on the next price movements in these commodities. Whether we have to go long the market or short sell the market. Either way, we can make money. So don't be a hero and try to pick a top or bottom, just wait for confirmed breakout then invest with the trend.

By Chris Vermeulen

China’s Reaction: America Is A “Disgusting Thief Spying Over His Neighbor’s Fence”

China’s Reaction: America Is A "Disgusting Thief Spying Over His Neighbor’s Fence"

Only hours ago the US government announced that a Chinese fighter jet had intercepted an American military patrol plane over international waters east of China’s Hainan Island.

A Pentagon spokesman called China’s actions “unsafe and unprofessional”, and blasted such unprovoked aggression.

There was no mention as to why a US surveillance plane was just off the Chinese coast to begin with. They’re just playing the victim… and rather loudly at that.

Needless to say, the Chinese government has a slightly different story. I asked one of our Sovereign Man team members in mainland China to translate the following article from Sina News.

The first part of the article praises the pilot’s skill and boldness, as well as the efficiency and superiority of Chinese aviation technology.

The Jian-11B fighter, in fact, is 100% Chinese. There is no foreign engine or major component.

As for the rest of the article– I present it below with only one comment– it should be obvious to anyone paying attention that the US is no longer the world’s dominant superpower. It’s certainly obvious to the Chinese.

——–
From Sina News

Stop thief: China rejects the U.S. government calling our aircraft “dangerously close”

Sure enough, it is the American government who stamps its foot first after a similar event.

First the famous anti-China military scholar Bill Gertz played his “danger close” speech for the Washington Free Beacon.

And then the Pentagon also followed and said that it was a “dangerous intercept”. The White House called it “deeply worrying provocation”.

Adm. John Kirby, the Defense Department spokesman, said Washington protested to the Chinese military through diplomatic channels, and called the maneuvers “unsafe and unprofessional.”

Deputy National Security Adviser Ben Rhodes said it was “obviously a deeply concerning provocation and we have communicated directly to the Chinese government our objection to this type of action.”

Such remarks are laughable. As we all know, the United States is the world’s largest hegemonic force and biggest rogue country.

Their various reconnaissance aircraft have been wandering around foreign airspace for decades and watching the military secrets of other countries like a disgusting thief spying over his neighbor’s fence.

However, when the neighbor comes back with a big stick, the thief will turn tail and run away, blaming the neighbor.

When you show people weakness, they will bully you. When you show people strength, they will respect you.

We [the newspaper] believe the Chinese Air Force and Naval aviation should maintain a high level of vigilence and morale in southeast coastal region to prevent the further US action.

America has lost face and does not want to show the world they are sick. They have been lording over other countries for so long, and they will never let it go after they eat this loss.

Sourced from Simon Black of Sovereign Man

World refined copper market ended in 69,000 mt deficit in May '14: ICSG

According to figures released by the International Copper Study Group (ICSG), the global refined copper market ended in an apparent deficit of 69,000 mt in May this year. The figures are exclusive of adjustment for changes in Chinese bonded stocks.

The refined copper balance after adjustment to changes in Chinese bonded stocks ended in a deficit of 305,000 mt during Jan - May ‘14, compared to deficit of 65,000 mt during the corresponding five-month period in 2013. The Chinese bonded stocks increased by nearly 160,000 mt during the initial five-month period of the year.

The data also indicates that the refined copper balance for the initial five-month period in 2014 ended in a deficit of 466,000 mt. This is when compared with the production surplus reported during the same period last year, ICSG noted.

The Copper body also notes that the Chinese apparent copper demand increased by 29% during the period. The net copper imports by the country surged 65% year-on-year during Jan-May ’14. The strong demand growth in China elevated the world apparent copper usage by 15.5% during the five-month period when compared with 2013.

The global production of refined copper increased 7% in the initial five months of 2014. During this period, primary production saw growth of 6.5%, whereas secondary production was up by 7%. The ICSG data points out that world mine production is estimated to have increased by 5% during this period.

NIFTY FUTURE HOURLY CHART

THE RALLY STARTED FROM 7560 TO 7940.
IMPORTANT LEVEL 7940 7883 & 7835 (Blue Line)
LEVELS ON CHARTS ARE OF FIBONACCI RETRACEMENT LEVEL

All you want to know about Jackson Hole Summit

The Jackson Hole Summit is set to take place starting Thursday to Saturday this week, and traders are already buzzing about its potential impact on the financial markets. Allow me to break down what the event is all about, why it matters, and what might happen.

What is the Jackson Hole Summit all about?

While the symposium is held in a ski resort in Jackson Hole, the world’s financial leaders and central bankers won’t just be cruising down the icy slopes for three days. Instead, they are set to discuss current economic issues, potential action steps, and their global outlook… over steaming mugs of hot cocoa around the fireplace inside a log cabin.

This annual forum has been held since 1978 and has been sponsored by the Federal Reserve Bank of Kansas.

Why is this event important?

The fact that this economic event is held only once a year makes it a pretty big deal. Apart from that, this forum is also an opportunity for economic decision-makers to coordinate their plans for monetary and fiscal policies. With that, any announcements made during this summit tend to have a strong impact on longer-term Financial market price action.

Just to give you an idea of how this event rocked the markets in the past, remember that former Fed head Bernanke first dropped hints on QE2 back in 2010′s Jackson Hole Summit before actually implementing this policy change a few months later. Last year, the main topic discussed during the symposium was the Fed’s taper plans.

What could happen this time?

For the upcoming summit, market participants are expecting to hear clearer clues from Fed Chairperson Yellen on when the U.S. central bank might start hiking interest rates. After all, the U.S. economy has been showing consistent progress across most economic sectors yet the FOMC appeared hesitant to disclose any details on potential policy tightening. Many are expecting to hear dovish or cautious remarks from the Fed head, which could lead to dollar weakness and a surge in risk-taking.

Aside from that, the slowdown in employment trends might also be a hot topic. As seen in some major economies like the U.K., headline figures haven’t been so bad yet underlying components such as average earnings have reflected a concerning degree of economic slack.

Geopolitical tensions could also stir up a lot of conversation among economic heads, as the conflicts in Russia, Gaza, and Iraq could pose a huge threat to global growth. In line with this, leaders could also assess the potential repercussions of the sanctions imposed on Russia and by Russia.

As I’ve mentioned earlier, this event could set the tone for longer-term price action so make sure you keep your eyes and ears peeled for any important announcements. Do watch out for potential gaps if you’re keeping trades open over the weekend though!