Timing & trends

"A Huge Buying Opportunity"

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Posted by Mark Leibovit - VR Trader

on Tuesday, 07 August 2012 11:28


Gold rallied yesterday as the Dollar fell. Gold rose 8.00 to 1611.60. But, why do I get the feeling that the rug can be pulled out from under us at almost at anytime? If you've been following the circus at the CFTC and Bart Chilton's pilgrimage to get to the bottom of what appears to be blatant manipulation of the silver market (as well as gold), you know traders are watching very carefully. Chilton said yesterday (despite the weekend story from London's Financial Times that the CFTC was going to drop the investigation) "I continue to believe, consistent with my previous statements and information from the public, that there have been devious efforts related to moving the price of silver. There have also been silver and gold market anomalies outside of the silver investigation window that have raised, and continue to raise, market concerns." As you know, there is a strong inference that the manipulation is being done at the bequest of the U.S. Government and JP Morgan is simply a 'broker' taking orders. I cannot imagine the U.S. Government being exposed here simply because they would argue it can't happen due to 'national security issues' and the whole matter would simply be hushed up. Though silver could rally on the anticipation of a positive outcome (the government is exposed), more than likely silver bulls will be disappointed and the market could nosedive to new lows instead.

Though seasonal studies and my own Annual Forecast Model along with current bearish sentiment (especially in the gold mining shares) suggest we should remain overall optimistic (forgetting the risk of a Fall shakeout). It's like building a mental bomb shelter you never use. If you believe as I do that we cannot discount the viciousness of our adversaries, Bernanke and Geithner could attempt to drive gold toward 1300 using the 'phony' paper market at the COMEX/CME in order to discredit gold as a viable alternative to progressively worthless Dollars. With gold suppression schemes underway for decades (gata.org has the documented proof, if you care to read it), nothing is really new here. It appears 1520 on the low end and 1635-1650 on the upper define near-term trigger points for the bears and the bulls. In silver 26.00 has been surprisingly holding, while the upside breakout would have to be over 31.00-32.00 in my opinion.

Should we see a waterfall decline in either gold or silver, we have to be prepared to back the truck up for a huge buying opportunity. The availability of physical metal, however, at severely discounted 'phony' prices engineered in the paper market may be a big problem. Do you think physical holders of gold and silver are going to sell for worthless paper currency at bargain basement prices? Good luck. You might get a few coins, but don't hold your breath.

Recall, gold hit an all-time record high of 1922.20 on September 6, 2011, but fell to a 6-month low of 1521.80 on December 29. These are the two important benchmarks that traders and investors are focusing on at this time. Gold stocks are a special opportunity because by certain valuation metrics, they are cheaper than their 2008 lows and are as cheap as they have ever been. The 12-year bull is going to continue, driven by central bank purchases, currency destruction, movement away from the U.S. Dollar as the world's Reserve Currency and the general momentum of a bull market.


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Timing & trends

How to play “the fattest, juiciest financial bubble that’s ever existed”

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Posted by Bill Bonner - The Daily Reckoning

on Monday, 06 August 2012 08:25


 Picture 4

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily ReckoningDice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010. 

Special Report: How Will Your Life Change If The U.S. Gov’t Can’t Borrow Another Dollar? Complete political and social unrest could be just the beginning. You owe it to your family’s safety and security to watch this urgent video report right now. There might not be much time for you to act… Don’t wait, watch now.

Read more: Uncharted Territory: An Interview with Bill Bonner http://dailyreckoning.com/uncharted-territory-an-interview-with-bill-bonner/#ixzz22lSLq4rV

Timing & trends

Chart of The Day

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Posted by Chart of the Day

on Friday, 03 August 2012 08:30

The latest jobs report came out today with the Labor Department reporting that nonfarm payrolls (jobs) increased by 163,000 in July. Today's chart puts the latest data into perspective by comparing nonfarm payrolls following the end of the latest economic recession (i.e. the Great Recession -- solid red line) to that of the prior recession (i.e. 2001 recession -- dashed gold line) to that of the average post-recession from 1954-2000 (dashed blue line). As today's chart illustrates, the current jobs recovery is much weaker than the average jobs recovery that follows the end of a recession. Today's chart also illustrates that the jobs market continues to improve at a fairly steady pace -- a pace very similar to what occurred following the recession of 2001.NA


Quote of the Day
"Four little words sum up what has lifted most successful individuals above the crowd: a little bit more. They did all that was expected of them and a little bit more." - A. Lou Vickery

To Subscribe to Chart of the Day go HERE

Timing & trends

Bill Gross: ‘Stocks Are Dead!’

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Posted by Robert Zurrer for Money Talks

on Thursday, 02 August 2012 11:00

Bill Gross runs PIMCO's $252.2 billion Total Return Fund. With such a massive fund investing in income bearing instruments during a collapse in interest rates, its no wonder many call Gross the world's pre-eminent bond fund manager.

As for Gross's calls on the stock market,  the chart below shows that that he was consistently wrong on his macro stock market calls. He was negative throughout the 6000 odd point Dow Rally from the Stock Market bottom in 2002. Negative again for most of another 6000 point Dow Rally from the early 2009 stock market bottom. . 

Specifically Gross says that "The cult of equity is dying",  that stock investors should rethink the age-old investing mantra of buying and holding stocks for the long run. He says consistent, annual returns from stocks are a thing of the past.

Gross makes the case that stocks have averaged a 6.6% annual gain on an inflation-adjusted basis since 1912. That said he thinks that the 6.6% return was a  "historical freak" that is unlikely to occur again because of slowing economic growth around the world. He says that return "belied a commonsensical flaw much like that of a chain letter or yes—a Ponzi scheme.". In short that with growth on the US economy averaging 3.5% over that period of time, "investors were "skimming 3% off the top each and every year." 

Of the $1.8 trillion Pimco has under management in its various funds, only about $6 billion is in active equity assets.

With Gross's track record in calling stock market moves so negative, one has to wonder if its not time to buy. Be sure to click on the chart below and view his track record. 

Click on the Chart or HERE for Larger Image. To read Bill Gross's entire commentary "The cult of equity is dying" go  HERE


Timing & trends

How To Trade Today’s Oil Markets

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Posted by Keith Schaefer: Oil & Gas Investments Bulletin

on Wednesday, 01 August 2012 11:27

What’s the biggest lesson retail investors need to learn to increase profits in these markets?

It’s knowing how and when to trade volatility.

The professionals say trading volatility really is the only way to make money in a flat to down market, which the energy sector (especially the juniors!) has gone through since February 2011 – a full 16 months ago.

“A flat bear market can give flat performance, but with a lot of volatility,” says Martin Pelletier, managing director at Trivest Wealth Counsel of Calgary. “Fifty per cent to 100% swings either way are quite common.

“Unfortunately investors have reacted incorrectly – buying the tops of secular bull markets and selling the lows of secular bear markets.”

Josef Schachter, president of Schachter Asset Management Inc., says “the oil and gas sector has been good to investors – just sell during euphoria and buy during duress.”

Now of course, that’s easier said than done, and to a large degree that separates out the wealthy investors. But Schachter – who is bearish on oil for the next three to five months – says there are some turning points investors should look for in the Toronto Stock Exchange Energy Index.

TSX Energy Index 5-year chart

8-1-12-oagib-1-tsx 5_year_2

TSX Energy Index 1-year chart

8-1-12-oagib-2-tsx 1_year_2

“Given how devastated the S&P TSX Energy Index is, if it goes below 180 then it’s a great buy. We would then switch from being bears to being bulls again.

“I look at the market internals. We’re in a bounce wave now. It could go up again, but then it could go below 200 down to 180 maybe. I expect the timing on that to be the third or fourth week of October.”

Are other sectors as volatile as energy?

“From a broader perspective, if you overweighted telecom, utilities and financials you would have best risk weighted return,” says Pelletier, but adds “over the last ten years, if you were willing to accept a little more risk to get better returns, then energy is the best space to invest.”

And that means a little more active trading – even in the senior producers’ stocks.

“Just look at large cap Canadian energy stocks like Suncor (SU-TSX; NYSE) and Canadian Natural Resources (CNQ-TSX; NYSE). Both have shown a lot of volatility through the year, but there’s nothing good for those who bought and held the stock over the past five-six years.

Are other sectors as volatile as energy?

“From a broader perspective, if you overweighted telecom, utilities and financials you would have best risk weighted return,” says Pelletier, but adds “over the last ten years, if you were willing to accept a little more risk to get better returns, then energy is the best space to invest.”

And that means a little more active trading – even in the senior producers’ stocks.

“Just look at large cap Canadian energy stocks like Suncor (SU-TSX; NYSE) and Canadian Natural Resources (CNQ-TSX; NYSE). Both have shown a lot of volatility through the year, but there’s nothing good for those who bought and held the stock over the past five-six years.


“It’s been even worse for junior oil and gas have even more volatility given their greater capital demand. They typically spend 2x-4x their cash flow on exploration.

“Therefore buy and holding juniors is not the way to play them at all – you have to trade them to manage risk,” because when the market turns down, they can’t raise money to bridge the gap between exploration spending and cash flow – so the junior stocks get hit really hard.

The junior oil and gas market has definitely turned down – but for how long?

Schachter says, “If they (national governments) face the music (on their debt issues), we could see a multi-year bull market in energy through to 2015-2016 and set all-time highs. But if they just continue to kick the can down the road, then the market malaise could drag out with trading rallies and year end bounces, and you’ll need a trading mentality, as we’ve had a good year then a bad year.”

Pelletier believes there is another two to three years to go before the next secular bull market in the major indexes and energy markets – it’s a traders market until then.

But the juniors will once again have their day, says Pelletier.

“Juniors will outperform when the market returns to normality especially those with good management teams with attractive growth profiles.

“Interestingly, there is an opportunity among those who have sold off from their financings. We think these companies will be able to take advantage of this market environment and consolidate. And there are some other stories well liked among my peers which we think are attractively valued – we think it’s important to own stocks everyone likes that are backed up by strong fundamentals.”

In Part II, both Schachter and Pelletier will share some of their favorite investment ideas going into the last half of 2012.

Keith Schaefer will make a newsletter presentation and present an expert view in two sessions on Friday, Sept. 21, during the Chicago Hard Assets Investment Conference.

About the Author

Keith Schaefer

Keith Schaefer

Keith Schaefer, Editor and Publisher of Oil & Gas Investments Bulletin, writes on oil and natural gas markets – and stocks – in a simple, easy to read manner. He uses research reports and trade magazines, interviews industry experts and executives to identify trends in the oil and gas industry - and writes about them in a public blog. He then finds investments that make money based on that information. Company information is shared only with Oil & Gas Investments subscribers in the Bulletin – they see what he’s buying, when he buys it, and why. 

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