Labour Leadership Contest - 62 days until Gordon Brown goes

"The Millipede’s going head-to-head with Harman!"

That’s how I heard the news yesterday afternoon, when a colleague shouted it across the room. A Labour leadership contest is shaping up between David Miliband, the Foreign Secretary, and Harriet Harman, the Leader of the Commons.

Of course, Harman has now denied this. For his part, Miliband is talking of the need for a "radical new phase". He also mentions the importance of being humble about shortcomings. This has been interpreted as an implicit challenge to the PM. But never mind what politicians say. The cat is now well outside the bag — Labour has begun the process that will lead to a new leader. Gordon Brown’s premiership has entered the final, doddery furlong. So let’s have some with this...

How many days do we think Brown has left? On a more serious note, how will a change of leader affect the economy? How will it impact on you as an investor?

On the first question, I plump for 62 days. This isn’t because I have some Deep Throat-style Whitehall insider. My (crude) reasoning is this — the leadership speculation will rumble on for the rest of the summer. MPs will strike secret deals, put out feelers, make (and break) promises... all the way to the Labour Party conference, which starts on 20 September.

At the conference, movers and shakers will gather in huddles, move and shake a bit, then finalise a plan to oust Brown. The pressure to quit will be unrelenting. I can’t see the man staying beyond September.

Potential replacements are now out in the open. It’s only a matter of time before Brown goes. My man-down-the-pub analysis puts that time at 62 days.

But what of more pressing matters? Will binning Brown help the economy?

In the (very) short-term, perhaps. I expect there’ll be a national sigh of relief, and we’ll read about a boost to the ‘feel good factor’.

But it’ll be short-lived. Whoever takes charge — be it Miliband, Harman, or, post election, David Cameron — there’s precious little can be done about our stuttering economy.

The upcoming leadership contest merely adds a layer of distraction to the prevailing gloom and uncertainty. So defensive investing is still the order of the day.

Over at The Fleet Street Letter we already have a number of non-cyclical and counter-cyclical stocks — the kind of companies that are less susceptible to a downturn.

We’re also working on a brand new recommendation. One that offers investors a non-stock hedge against Britain’s political and economic woes.

The newspapers will continue to obsess on leadership machinations. But we’ll be keeping our eye on the real, economic story. After all, that’s the one that really matters.

[NB As well as writing Fleet Street Daily, I also edit our sister publication The Fleet Street Letter. Our latest report is about an investment opportunity that, despite the current malaise, offers excellent long term potential. Find out more about The Fleet Street Letter here.]

Electricity problems set to keep metals prices high

A lot of things influence the price of precious metals. On the demand side there’s end-user demand from the likes of jewellery makers. That tends to be fairly predictable — well, at least when you compare it to investment demand. Investment demand, as far as I can see, is dependent upon how many people think enough other people will find the metal attractive in the future to push up its price and therefore deliver a profit to those who invest now. Confused? So are most people.

It’s that kind of market...

On the supply side it’s a tad easier (only a tad, mind). There’s still a lot of speculation. Producers speculate on future demand when they choose how much to invest in production.

But there are more prosaic matters of which to take account. Could something physically prevent producers from bringing supplies to market?

The answer, of course, is yes. Miners in South Africa, for example, have suffered a number of power cuts this year.

Our Miner Diarists, Erin and Isabel, reckon this electricity crunch will continue. As it does, it’ll keep metals prices buoyant for a while yet...

This guy made a profit of 10,800%

Ever heard of Australian David C Moore? No, neither had I. That is, until I read colleague Tom Bulford’s latest report.

In 1999, Moore founded a small nickel mining company called Mincor resources. It proved successful — so successful, in fact, that Mincor’s share price saw a 10,800% rise. Moore’s 2.02% stake is now worth A$13.4 million.

Tom mentions Mr Moore because he believes something very similar could happen again. In fact, the opportunity Tom wants to show you could be even better.

You see, Mincor made its money by digging nickel out of the ground. But, as Tom explains, the tiny resource company he’s found doesn’t need to do any digging at all.

Find out how much Tom reckons this share could make you right here.

Until tomorrow

Ben Traynor

Editor

The Daily Reckoning — Borrow too much, and you’ll suffer when you pay it back

Last week’s Globe and Mail of Canada headline spoke of a miracle.

"Record crude prices force US oil company into chapter 11." We read the headline twice. It was no mistake. Even with the sunniest skies in the oil industry in more than 33 years, the Tulsa-based oil marketing company, SemGroup, still managed to find a puddle deep enough to drown itself.

Yesterday we reported Merrill’s $5.7 billion in write-downs. Even with the smartest people on Wall Street running things, the firm couldn’t avoid big losses. And last week, Fannie and Freddie had our attention. The twin mortgage lenders had been playing the game with a deck stacked in their favor; still, they couldn’t seem to win.

How could this be? What would cause seasoned businessmen to go so wrong? For once, the president of the United States of America seemed to have it right. He said Wall Street had gotten "drunk." The party got a little out of hand, he might have added. Some lamps got broken, and a fight broke out in the parking lot. And now the financiers needed to "sober up," continued the president.

You can read today’s Daily Reckoning in full here. P.S. If you enjoyed this article then we encourage you to sign up for the free Fleet Street Daily eletter. Learn what you can expect from today's markets -- and how to prosper in the face of uncertainty. You won't find more thought provoking writing anywhere on the Internet.

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Labour Leadership Contest - 62 days until Gordon Brown goes

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62 Days Until Gordon Brown Goes