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Gold & Precious Metals

What Gold Is Saying ...


Posted by Larry Edelson - Uncommon Wisdom

on Monday, 24 September 2012 06:21

New, unlimited money-printing from the Federal Reserve. Unlimited euro-printing from the European Central Bank. And that’s not all.

Japan’s central bank is printing more yen. The Bank of England is on the fray as well, announcing even more pound-printing.

And yet, as you can see from this chart, the price of gold has not even bettered this year’s March high at roughly $1,802, nor last year’s November high at the $1,823 level.

Despite all the money-printing, gold has not even made new highs above those levels.


So where’s the beef? Where’s the evidence that gold is now headed to $5,000?All that money-printing, and gold is nearly $150 below its all-time record high.

Where’s the evidence that all that money-printing is overpowering the credit contraction that’s occurring nearly worldwide?

Where’s the evidence that inflation is about to break out to the upside and send the U.S. economy into hyperinflation?

There isn’t any.

image1

In fact, gold is telling you exactly the opposite: That more debts are about to be liquidated than the central banks can offset with money-printing.

That inflation has not yet broken out to the upside.

That there isn’t even record demand for gold right now; instead, demand is actually slumping.

Look, I would love nothing more than to tell you that gold has finally embarked on its next leg up to $5,000-plus.

But the fact of the matter is that there is no evidence that it has. Period.

That evidence may yet come, but until it does, I’m not willing to stick my head out and load up on more gold. Nor should you.

So let me state for the record: I will NOT change my interim forecast for gold to go bullish until spot gold has closed above $1,823 an ounce on a weekly and monthly basis. That will be the signal that gold’s next leg up is beginning.

Until then, gold remains highly vulnerable to a move back down to the $1,400 level, perhaps even a tad lower.

Until then, gold remains highly vulnerable to the kind of action we saw this week in crude oil. Crude oil, with all the geopolitical tension with Iran and in the Middle East — coupled with all the money-printing — should be soaring, right?

Well, dead-wrong. The price of oil collapsed this week, plunging more than $9 a barrel — a full 9.4%, in a matter of days.

 

image2-1

Or gold may end up looking like the rout that occurred in the grain markets this week, where soybean prices plunged 8.4% — despite nearly everyone remaining wildly bullish on food prices.

image3-1

Don’t get me wrong. I am extremely bullish on gold prices over the long term.

And I will issue the signal to buy more gold as soon as the coast is clear and we see, as mentioned above, gold close above $1,823 on a weekly and monthly basis.

So then, the question of the day must be: With all the money-printing going on, why hasn’t gold broken out yet?

Why is gold below its March 2012 and November 2011 highs?

To me, the reasons are simple:

First, money-printing means absolutely nothing when most of the money being printed is merely ending up sitting in banks. The banks are not lending and, instead, that money is parked back with the Federal Reserve in the form of excess reserve deposits, for which the Federal Reserve is paying 0.25% interest to the banks!

Second, all that money-printing means nothing when consumers aren’t interested in adding to debt by increasing their borrowings and credit lines ... and the velocity of money, or its turnover, is virtually non-existent.

Ditto for corporations that are conserving cash and largely paying down or refinancing debt rather than taking on new debt.

 

hird, all the money-printing means practically nothing when Europeans are still scared to death the euro will fail, and are pulling their money out of European banks like there’s no tomorrow; some $465 billion in capital has fled the euro region in the past three months alone.

In short, money-printing by itself means nothing. If it did, gold would already be at new record highs. And it’s not.

The dollar would already be at record lows. And it’s not.

Crude oil would be soaring. And it’s not. Most other commodities would also be soaring. They’re not, either.

All the conditions necessary for the next leg up in gold and commodities are not here yet.

So if you think it’s a no-brainer now that gold is taking off to the upside like so many investors and analysts do think, I urge you to be skeptical and very, very careful.

Until next time ...

Best wishes,

Larry

P.S. September has been filled with uncertainty. But it's also filled to the brim with opportunity. And in my newest Real Wealth Report, which just went to press Friday, I show my subscribers how to seize the profit potential from the opportunities that global events are creating for us. Start your risk-free trial subscription by clicking here now!


About Uncommon Wisdom
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Uncommon Wisdom (UWD) is a free daily investment newsletter published by Weiss Research, Inc. This publication does not provide individual, customized investment or trading advice. All information is based upon data whose accuracy is deemed reliable, but not guaranteed. Performance returns cited are derived from our best estimates, but hypothetical as we do not track actual prices of customer purchases and sales. We cannot guarantee the accuracy of third party advertisements or sponsors, and these ads do not necessarily express the viewpoints of Uncommon Wisdom or its editors. For more information, see our Terms and Conditions

 


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Stocks & Equities

This 30-Second Quiz Will Drastically Improve Your Investment Results


Posted by Dr. David Eifrig, editor, Retirement Trader

on Saturday, 22 September 2012 08:16

For more than a decade, I've used a simple quiz to guide my investments.

This quiz has helped my Retirement Trader readers close 61 consecutive trades with a profit. And it's allowed myRetirement Millionaire readers to safely make more than 20% per year in regular stocks.

This quiz takes less than 30 seconds to complete. And if you start using it, you could drastically improve your investing results.

All you have to do to take the quiz is ask, "Does the company I'm investing in enjoy tremendous customer loyalty?

If the answer is no, chances are good that you should pass on the stock.

But if the answer is yes, chances are good that you've found a safe, long-term stock investment… one you can hold for years and compound wealth at 10%-15% per year.

Take Coca-Cola for example. Coke enjoys customer loyalty because its products taste good. They are consistent. They are everywhere. And for less than a dollar, a customer can enjoy a brief bit of pleasure. Since 1995, Coke's shareholders are up 250%, including dividends. 

Other great consumer brands like Hershey (chocolate) and McDonald's (fast food) enjoy this loyalty as well.

These are familiar examples of "retail" loyalty. But there's another little-known type of loyalty… This form of loyalty comes down to "switching costs" for larger companies.

You see, when a company is considering moving its business from one service provider to another, it must consider the costs. 

Take Microsoft, for example. If your 500-employee office is used to using Windows and Office software, it's going to be difficult for your company to ever switch to new software. 

If your company is going to switch 401(k) providers or payroll managers, there's going to be a big cost. If it's going to switch the phone system it uses on thousands of phones, there's a big cost. A company might think another service provider would be better, but it won't ever switch from its current provider because the "switching costs" are too high. 

This means constant sales and insulation from competition for Microsoft, communication equipment provider Cisco, and tech giant IBM. Since 1995, IBM investors have seen a total return of more than 1,100%. 

No matter what form it comes in, loyalty ensures a constant and unrelenting demand for products… which keeps profit margins high and sales growth strong. It also helps insulate a company from competition… which is a crucial attribute for a long-term investment. 

Remember… in the "survival of the fittest" world of capitalism, a business must get every possible bit of insulation from upstart competitors. Otherwise, it will eventually fail and leave its shareholders empty-handed.

By now, most DailyWealth readers know that owning great dividend-paying businesses is the key to long-term stock market success. These companies get you on the road to compounding.

These businesses are almost always identified by their extreme customer loyalty. And this loyalty ensures big profit margins, steady sales growth, and extreme resistance to competition. Plus, they allow you to sleep well at night. These are the sorts of companies I look for in my advisories.

And all it takes to recognize them is a 30-second quiz.

Here's to our health, wealth, and a great retirement,

Dr. David "Doc" Eifrig

 

Retirement Trader is written by Dr. David Eifrig Jr., MD, MBA. David worked for major Wall Street banks (including Goldman Sachs) before retiring, going to medical school, and becoming an ophthalmologist. Now, in his latest "retirement," David is sharing the trading and investing secrets he learned while working for the Street. 

With over 32 years of investing experience "Doc" (as we call him around here) Eifrig will show you how to apply simple and safe investment strategies, used by many of the elite trading desks on Wall Street.

Twice a month, Doc will show you step-by-step how to extract more money from the markets than you knew possible. From insight into the market's safest investments in high yielding stocks, to selling options on below book value businesses, to uncovering cheaply priced warrants and convertible bonds, Retirement Trader covers a wide range of investment strategies, all designed to improve your retirement and your portfolio.

Subscribe Now | Click here to learn more.

Canadian-Money



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Stocks & Equities

Six predictions for the Canadian economy


Posted by Kevin Press - BrighterLife.ca

on Friday, 21 September 2012 10:11

canadian-economy

Consumers are paying down debt rather than spending, businesses leaders remain nervous and governments across Canada are unlikely to invest in further economic stimulus unless something major threatens our recovery. TD Economics’ latest quarterly outlook for the Canadian economy is a mixed bag at best. Next year will be better, we mean it this time.

The report makes a number of predictions about Canada and global factors that could impact our economy:

  1. The economy will grow, but not dramatically. Real gross domestic product (GDP) growth will be 1% this quarter, 1.8% in Q4 and plus-2% throughout 2013. Diana Petramala, an economist with the bank, told me that what’s holding us back has less to do with the 2008 financial crisis than it does with other, more systemic factors. “The first is poor productivity performance,” she said. “The second is our aging population. The labour force isn’t growing as fast as it has in the past … We’re pretty much growing right at our potential growth rate.”
  2. Federal and provincial governments will spend less, and may even raise taxes. Despite Prime Minister Stephen Harper’s comments last week, we shouldn’t count on further government stimulus. This will have a negative effect on economic growth. Petramala told me that if the domestic economy went into a sustained downturn, then of course this wouldn’t be the case. “But we think that the economic environment will start to improve in 2013 and government will have the capacity to remain on-track and get their budgets balanced,” she said.
  3. Consumer spending will be relatively soft. Relative to income levels though, consumer and household debt will remain high. “Incomes aren’t growing as fast as they have in the past,” said Petramala. Still, a lot of consumers have gotten the message about debt. “In the last quarter, we saw the savings rate rise from 3.1% to 3.6%. So it’s not that they can’t go out and spend, it’s that they’re choosing to focus more on restraint.”
  4. The Canadian housing market is 10% over-valued on average, and prices will come down accordingly. We’re not looking at a crash. Prices are expected to come down over a two- to three-year period. Vancouver and Toronto are over-valued by something more like 15%.
  5. Business spending, particularly among exporters, will start to pick up next year. There’s still uncertainty in Europe, the U.S. and in emerging markets. This all contributes to the Canadian economy’s weakness in the short term. But next year and the year after will see a 7% to 10% boost in business spending according to TD Economics.
  6. The Bank of Canada’s overnight interest rate isn’t moving until the second half of 2013. Expect a 50-basis point increase next year, followed by the same again in 2014. From there, look for gradual steps to “bring the overnight rate back to a more normal level,” Petramala told me. One of the effects of the latest round of quantitative easing in the U.S. is that “the Bank of Canada won’t be able to go as quickly as maybe it would like.”

A couple of other interesting calls: the U.S. recovery will strengthen next year; we’ll see more positive growth in the eurozone and emerging markets; and crude oil will hit US$102 per barrel.

 
Keep up to date on what’s happening in the capital markets and the real economy. Subscribe to receive Today’s economy blog automatically by RSS or email.
 


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Gold & Precious Metals

Silver – What to Do About That 25% Jump


Posted by Steve Sjuggerud via True Wealth

on Friday, 21 September 2012 09:26


But that's what got me interested. Based on history, Buying Silver when investors give up, like they did in early August, is a great idea. The last four times investors gave up, silver rose an average 20% in three months. 

The trade worked even better this time. If you stepped in and bought in August, you're up 25% in less than seven weeks. And investors are excited about silver again. So what should you do now? 

Back in August, futures traders speculating on silver were near all-time "short" levels. As a rule, when futures traders all think the same thing, the market tends to do the opposite.

And that's exactly what happened. Silver soared. 

But today, silver isn't the contrarian trade. Silver futures traders are nearing an extreme in bullishness. Take a look...

silver21ix12

The blue line in the chart above indicates bets made by futures traders. When the line is low, like it was in August, traders expect silver to fall... When the line is high, silver traders expect the metal to go higher.

As you can see, silver traders have completely reversed their bets in the last two months,Buying Silver positions hands down. Now, traders are nearing a bullish extreme. But that doesn't mean it's time to sell silver.

You see, when sentiment bottoms, it usually signals a move higher in prices. But when sentiment peaks, it doesn't always mean prices crash.

Take another look at the chart above. On October 20, 2009, silver sentiment peaked. Prices then drifted sideways for the next month before making new highs. A similar situation happened in late September 2010. Silver sentiment peaked. But Silver Prices didn't slow down, they kept on rising.
 
I believe that's exactly what will happen today. Here's why...

In 2010, the market was expecting "money printing" from the Federal Reserve. Silver hit a bullish sentiment extreme and continued rising. 

We're in a similar situation today. Last week, the Federal Reserve announced the next round of so called "quantitative easing." Silver sentiment soared. But I believe there's much more room for silver to move higher. 

We've already seen the 20% gains we expected in three months. But the negative sentiment extremes tend to kick off new bull markets in silver. Based on history, these new silver bull markets return 91% in just nine months. So even after a quick 25% move, silver still has 50%-plus upside from here.

If you're already in this silver trade, I suggest sitting tight. But if you haven't bought yet, you haven't missed it.

Sure, silver could fall slightly from here. Or it could move sideways for a while. But the long-term trend – I believe – is up. And based on history at least, you'd want to be Buying Silver today.

Steve Sjuggerud21 Sep '12
 
Former stock-broker, mutual-fund vice-president and hedge-fund advisor Dr. Steve Sjuggerud is the founder and editor of True Wealth. Launched in 2001 and now one of America's best-followed newsletters for private investors, True Wealth also provides free analysis and ideas in the Daily Wealth email service.


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Personal Finance

Embry - We’re Witnessing A Historic & Frightening End Game


Posted by John Embry via KingWorldNews

on Friday, 21 September 2012 07:30

Today John Embry gave a stunning interview to King World News.  In it he made some rather frightening predictions.  Embry believes, “... we are in the early stages of a global ‘Weimar’ event.” Embry stated, “This is very historic what’s happening here,” as we have now entered “the end game.” 

 

Here is what Embry, who is Chief Investment Strategist at Sprott Asset Management, had to say:  “I think the attempts to restrain the gold and silver prices here are the most intense they’ve been in the last 15 to 18 years.  This is because we are now in the end game.  Everybody has now stated they will have QE to infinity.”



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