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Timing & trends

This is..... "What the heck is really going on"


Posted by Larry Edelson - Uncommon Wisdom

on Monday, 08 October 2012 10:11

As you know, I am not convinced that gold, silver and other commodities are ready to fully break out to the upside in the short term.

In fact, judging by the wicked 13% decline in oil prices in the last three weeks, I’d say deflation still has the upper hand.

Ditto for the 12.6% decline in the price of soybeans over the last month. Or the 8% decline in cocoa prices …

Or the bigger 44% decline in the price of coffee over the past 14 months … the 25% decline in sugar prices … the 34% decline in orange juice prices … and the 17% decline in economically sensitive copper prices.

Mind you, all of this is happening despite QE III and unlimited money-printing from the Federal Reserve and the European Central Bank. Not to mention more money-printing from the Bank of England, the Bank of Japan, and even the People’s Bank of China.

money-printing-press

If you just arrived from another planet and took a look at all that money-printing, you’d think most, if not all, hard asset prices would be at new record highs.

But, as I just showed you, not only are they not at record highs, most of them are DOWN considerably.

Yes, I know gold and silver prices have been creeping up. But gold is still some $121 BELOW its previous record high. Silver is roughly 30% below its previous high. And while all this money-printing is going on!

So what gives? Why are investors so wildly bullish on commodities right now, especially gold and silver?

What the heck is really going on?

Here are my answers:

First, investors are right. Almost all commodities will explode to new record highs. Eventually.

Gold to over $5,000. Silver to over $125. Food prices to double, triple and even quadruple their current levels. Oil prices to soar to over $150 a barrel. Gas prices of $5 a gallon. And more.

All of this will indeed happen. I have always maintained that view.

But second, the main reasons are not as obvious as they might seem. You see, sometimes it takes more than money-printing to inflate asset prices.

To understand why, let’s go back in time for a few minutes. When the commodities boom first began, largely in late 1999, almost everyone was bearish commodities and bullish stocks and bonds.

Then the tech wreck came. Then 9/11. And the Federal Reserve responded with massive money-printing.

Our government simultaneously went to war, spending hundreds of billions of dollars.

Those hundreds of billions of dollars … plus the initial Fed money-printing … were enough to kick off the first phase of the commodities bull market.

But it wasn’t enough to keep propelling commodities higher and higher in a non-stop fashion. That’s because one very important ingredient was still intact: Most of the world still had confidence in the U.S. government. In Washington.

Confidence that the U.S. government would be successful in keeping us safe from terrorism. Confidence that, between Washington and the Federal Reserve, the economy could be rescued from the ravages of the tech wreck. And more.

And indeed, stocks did recover. Confidence in the government largely boomed. The best gauge: The rip-roaring bull market in U.S. Treasury bonds.

That’s why I maintain my view that until confidence in the U.S. government (and in Europe’s government) completely collapses …

Commodity prices in general are not about to take off to the moon, no matter how much money-printing is going on.

You may disagree with me. After all, we all know about Occupy Wall Street … we are all angry at investment bankers and the government and how it seems like they are cahoots with each other …

But the fact of the matter is that confidence is not fully shattered yet.

If it were, U.S. Treasury bond prices would be collapsing … and money would be flowing from bonds (confidence in government) into commodities (no confidence in government) en masse …

Setting off the next spectacular stage of the biggest commodity bull market, ever.

That time is coming. But it is not here yet.

So how will we know when it’s here; when confidence in government is completely shattered, when the next phase of the commodity bull market really gets started?

I’ll tell you what I’m watching:

First, the U.S. Treasury bond market. When Treasury prices really start to show signs of cracking, take it as your cue that confidence in Washington is about to go completely and utterly down the tubes.

Second, the U.S. dollar itself. This used to be the primary leading indicator you wanted to keep an eye on. But the dollar is now being buffeted by so many different cross-currents, especially Europe’s crisis, that it is not as reliable an indicator as it was in the first phase of the commodity bull market.

Nevertheless, the key line in the sand for me is the Dollar Index’s past record low of 72.696 on May 2, 2011. As long as it continues to hold, the next big move up in commodities is not here.

Third, I am of course watching gold prices closely. The recent rally isn’t enough to cut the mustard. Gold must close above the $1,823 level to give me a clear-cut buy signal.

Do we need all three of the above signals? No. But I’d like to see at least two of them before I can say the next phase of the commodity bull market is here.

I may be one of the only ones out there who’s not rip-roaring bullish on commodities right now, but that’s OK. It reminds me of all the other times my forecast differed and, yet, I was proven right.

Best wishes,

Larry

P.S. For more in-depth analysis of today’s rapidly changing world and markets, including very specific entry and exit points for many more recommendations, consider a membership to my Real Wealth Report.

It could not only save you tens of thousands of dollars by helping you to appropriately protect your money — but also help you garner potential HUGE profits as well. To join, click here now.

Larry Edelson has over 34 years of investing experience with a focus in the precious metals and natural resources markets. His Real Wealth Report (a monthly publication) and Power Portfolio provide a continuing education on natural resource investments, with recommendations aiming for both profit and risk management.

For more information on Real Wealth Reportclick here.
For more information on Power Portfolioclick here.



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Stocks & Equities

Market Buzz - Cash in on Cash Rich, Profitable Stocks


Posted by Ryan Irvine: Keystone Financial

on Monday, 08 October 2012 03:10

More Proof they Crush the Market

In the past week, I came across an article in the Globe and Mail which highlighted an investment approach that sounded strangely familiar. The strategy was based on a paper entitled “Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers,” authored by Chicago accounting Professor Joseph Piotroski. The paper focused on stocks with high book/market ratios (the inverse of the price/book ratio). Mr. Piotroski realized that some high book/market stocks might be inexpensive for good reason - financial distress. These we would like to avoid.

To compensate for this risk, Piotroski ran high book/market stocks (those in the market’s top 20%) through a variety of accounting-type tests to make sure they were on solid financial footing. Mr. Piotroski showed that from 1976 through 1996, a portfolio that was long high book/market stocks that passed his tests, and short those that did not, would have produced a 23% annualized return - more than double the S&P 500’s return over that period. One Canadian fund manager who is now employing a 10-stock Piotroski-inspired portfolio stated in the article that it has been the best performer of his Canadian portfolios this year. Strangely enough, 2 of the 4 stocks mentioned from the portfolio are current BUY recommendations from KeyStone.

Of course this is why the strategy seems so familiar. It has been used for half a century as part of the tool box for some of this world’s most successful investors including, an investor you may have hear a little bit about, Mr. Warren Edward Buffett.

It is part of the strategy we have employed at KeyStone for the past 14 years.

While not revolutionary, we thank the Globe and the professor for highlighting the dramatic success this type of company specific investing can produce long term in a focussed growth stock portfolio. True, it is not as sexy or easy as following a pair of squiggly trend lines on a graph that will purportedly lead you to some euphoric truth about a stock. But, it works.

In fact, a modified version of this strategy was used in our “2012 Cash Rich, Profitable Small-Cap Stock Report” – Highlighting Great Cash Rick, Cash Producing Takeover Opportunities. The report has produced tremendously positive results and we are currently preparing our 2013 version for release.

Each year, the Special Report literally takes months to complete as we scan through all TSX and TSX Venture listed Micro to Mid-Cap stocks (with a weighting towards the mid-range Small-Cap stocks) using our own blend of fundamentals, cash flow, current cash, etc. and narrow our list down to about 65 individual companies on which we perform statistical analysis and management interviews if necessary. From here, we narrowed our list to 14 companies from varying industries to highlight in our report.

The Results for 2012

In the 7 Months since our Cash Rich, Profitable Small-Cap Report was published;

1. 12 of the 14 Stocks Highlighted Have Posted Positive Gains

2. 4 of the 14 Stocks Highlighted Have Already Been Acquired (Takeovers) - Miranda Technologies   Inc. (MT:TSX), La Mancha Resources Inc. (LMA:TSX), WGI Heavy Minerals Incorporated (WG:TSX), and Lifebank Corp.

3. 7 of the 65 Total Stocks Already Been Acquired (Takeovers)

4. Strong Gains Achieved in an Environment when the S&P/TSX Composite Index has Gained Only 3.8% Year-to-Date.

Sign-up for our Small-Cap Research Special Offer today via our special offer to gain access to our 2013 Cash Rich, Profitable Small-Cap Report – Do not miss out this year!

It is gratifying to see that we are looking for value and growth in the right areas and with the right methodology.

Invitation to an “Evening with Michael Campbell”

Finally, we end this week’s edition with a personal invite from our friend Michael Campbell who is hosting an evening with market prognosticator David Bensimon.

Date: Wednesday, October 10, 2012

Time: 6pm-9pm

Place: The Hyatt Regency, Vancouver

Click here for a personal invitation from Michael Campbell: http://moneytalks.net/featuring-david-bensimon.html


KeyStone’s Latest Reports Section

9/20/2012
JUNIOR LIGHT OIL PRODUCER WITH SOLID CASH FLOW & PRODUCTION GROWTH, LOW VALUATIONS & SOLID BALANCE SHEET, HIGH RISK-HIGH REWARD POTENTIAL IN UNLOVED REGION - SPEC BUY RATING

9/13/2012
CASH RICH COMMUNICATIONS SOFTWARE COMPANY POSTS SOLID Q3 2012, ORGANIC GROWTH REMAINS CHALLENGING, EXPECT ACQUISITION INTEGRATION RELATED ITEMS TO AFFECT NEAR-TERM BUT TO PROVIDE GROWTH IN 2013 – MAINTAIN RATINGS

9/5/2012
UNIQUE INVESTMENT CO WITH PORTFOLIO OF ESTABLISHED BUSINESSES POST SOLID Q2 2012 - COMPANY ON TRACK TO GENERATE STRONG GROWTH IN 2012 AND MAKES $9.9 MILLION ACQUISITION OF KENDALL SUPPLY SUBSEQUENT TO Q2

9/5/2012
CASH RICH JUNIOR COPPER PRODUCER WITH OVER 50% OF MARKET CAP IN CASH, NO DEBT, SOLID CASH FLOW, AND ATTRACTIVE LONG-TERM LOW COST PROJECT IN PIPELINE – INITIATING COVERAGE: BUY (FOCUS BUY)

9/4/2012
HIGH GROWTH JUNIOR-OIL PRODUCER POSTS CHALLENGING Q2 2012 FINANCIALS, PRODUCTION STRONG BUT UNEXPECTED LOWER REALIZED PRICE FOR OIL SOLD IN CONNECTION WITH UNDER LIFT (OIL PRODUCED/DELIVERED BUT NOT PAID) POSITION PROMPTS NEAR-TERM DOWNGRADE

image001

About KeyStone
 
KeyStone is a financial advisor with a 14 year track record of generating outstanding results for our clients. We take a GARP (growth at a reasonable price) approach to identifying and recommending fundamentally strong and low priced small-cap and income growth stocks. Through our investment research Services – KeyStone’s Small Cap Research Service and Key Stone’s Income Stock Research Service – clients receive regular monthly BUY/SELL stock recommendations, full updated reports, access to recommended stock portfolios (8-12 stocks each), online analyst hosted chat sessions, insightful market commentary, special reports and recommendations, comprehensive industry reports, and much more.
 
Our Small Cap Strategy
KeyStone has a proven track record of successfully uncovering undervalued small-, micro-, and mid-cap growth and value stocks with tremendous upside potential before the broader financial arena. Real companies, producing real revenue and earnings growth, trading at low prices – How do we do it? We simply dig deeper and search further into areas where traditional big bank or large institutional research will not look – providing you with independent first coverage on some of Canada’s fastest growing small-cap stocks.

[Find Out More]


Our Dividend Growth Strategy
Dividend stocks consistently outperform their non-dividend counterparts by a wide margin. KeyStone’s Income Stock Research helps investors identify the market’s best ‘dividend and income growth stocks’ –companies that not only pay a healthy income stream to investors, but also have the capacity to grow that distribution over time. We search for and discover companies with strong growth and cash flow, reasonable levels of business and financial risk that are trading at discounted prices, generating clients both steady income and solid capital appreciation.

[Find Out More]



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Stocks & Equities

STOCK MARKET ACTION ALERT BULLISH - GOLD


Posted by Mark Leibovit - VR Trader

on Saturday, 06 October 2012 00:00

Zurrer2

The Dow Industrials rose 80.75 or 0.60% to 13,575.36. The S&P 500 rose 10.41 or 0.72% to 1461.40, the NASDAQ rose 14.23, or .45% to 3149.46, and the Russell 2000 rose 5.87 or 0.70% to 844.65. Volume increased over Wednesday on the NYSE but dropped on the Nasdaq. Breadth was positive.

All nine sectors were in the green, led by financials (XLF +1.48%) for the second day in a row, with materials (XLB +1.29%) coming in second. Technology (XLK +0.29%) lagged.

Markets, including the metals, are inching higher in a timeframe (late September into mid October) where we often instead see a correction ahead of the big year-end rally.

CANADIAN SUMMARY: Leibovit Volume Reversal analysis now projects the TSX to first 13,029 and then possibly 13,529 in the months ahead based on technical action this past week!  - read more  HERE 

Political forces, especially Ben Bernanke who I affectionately call 'Pubic Enemy #1' are destroying all of us, especially the middle-class by laying the foundation for the ultimate default of U.S. debt and an horrific collapse in the U.S. Dollar castrating all of us. Even Kegel exercises(described below) won't help.

Sure, Wall Street likes this as stock prices temporarily rise and, sure, investors trapped in IRAs and 401(k) plans tied to the stock market may be celebrating over the short term. But, at what price? And, for what purpose? Bernanke's directions come from the bankers, the cartel known as the Federal Reserve System - a private corporation whose shares are owned by both domestic and foreign banks. Keeping interest rates at zero to aid the Federal Reserve partners (shareholders) and to minimize interest payments on a huge U.S. debt are criminal acts enough. But, upholding an institution who acts and conducts itself beyond the law is intolerable in a free society. The 'rule of law' must be upheld and, as we know, we see it slowly crumbling around us.

Back to the current reality: Unless my work has generated false signals (not impossible), upside potential in the weeks and months ahead could still be 1000 points higher in the Dow Industrials and TSX and 100 points higher in the SPX. That said, I am patient here awaiting a clearer short-term long-entry signal. A breakout to new highs (1475 S&P 500) would one such signal, but my hope is that we pinpoint a buy coming off a correction low instead. Will we get a dip or will the PPT continue to push prices higher right into the election? We will know in the fullness of time.

Mark Leibovit's Gold Letter, # 1 Gold Timer for 10 year period & #2 Gold Timer for 2011

ZURRER1

Mark Leibovit

 

VRTRADER.COM Trial Signup: Use this month to kick our tires. Pay 50% for the first 30 days (No refund) and sample our Silver or Platinum service and then decide what works best for you. Just send an email to mark.vrtrader@gmail.com" or call 928-282-1275

 

 IF YOU HAVE NOT SIGNED UP FOR THE LEIBOVIT VR GOLD LETTER, HERE IS YOUR CHANCE. THE October 5th EDITION IS HOT OFF THE PRESS. HERE IS THE LINK: WWW.VRGOLDLETTER.COM. YOU GET A 50% DISCOUNT FOR THE FIRST MONTH.

The Annual Forecast Model is now 'on-line' BUT YOU MUST SUBSCRIBE! It is a premium report. Call or email us today for a 50% discount. 
Here is the link: 

https://www.vrtrader.com/subscribe/index.asp 

The Annual Forecast Model (The VR Forecaster Report) is published each and every year in early February and comprises Mark Leibovit's proprietary cyclical forecast for the Dow Industrials and Gold. Don't miss the opportunity to see this Report that projects market direction and/or important cyclical change points months in advance. We have called it our 'Blueprint to the Future'. Unique to Mark Leibovit it has been published since the mid 1980s. Access to the report is provided via the website using the username and password provided to you.

 



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Stocks & Equities

(Fixed!!!) Confidence Game: Major Risk Rotation in - 5....4....3....2...1.....


Posted by Eric Coffin - Hard Rock Analyst

on Friday, 05 October 2012 16:37

balls rocket blastoff jurvetson l

Did we tell you or did we tell you? It’s a bit premature to claim bragging rights but the Junior market has been trading exactly how we hoped it would. Ben Bernanke delivered the early Christmas presents gold bugs were dreaming of and the market tenor looks better than it has for a year.

(Ed Note: Very sorry - this was published on Oct 3rd & 95% of the article and no charts appeared!) 

The operative word is still “better”, not “great”. The increase in volume in the Juniors is gratifying but still not enough. It will take higher volumes still to keep a rally alive through to year end. 

In keeping with that note of cautious optimism we are sticking with discovery stories that are already working and later stage stories that were under loved until the gold price took off. A number of these are trading impressively well. So far discoveries and undervalued developers/small producers represent most all of the positive volume. They are riding the wave but the tide has not come in for the rest of the companies in the sector. 

We still think the market may strengthen further in October but until that happens we decided to add a company to the list with built in protection in the form of a healthy back account. This company is not beholden to the market and should have news flow going forward. Like many companies, it still needs discovery news as a spark for a bigger move however.

 

 After months of nothing but ugly, the market for resource stocks finally took a meaningful turn for the better. We all know the reason for that. US Fed chief Bernanke delivered on QE3 and the gold market responded. 

The chart below shows how impressive the rally that kicked off in August has been.

Screen Shot 2012-10-05 at 3.14.22 PM

Bernanke telegraphed his move and the markets were already cheering a push by the ECB for its own money printing. By the time the Fed announcement of $40 billion a month in mortgage backed bond purchases was announced a lot of the gain was in. Since the announcement there has been another up-leg in price but that move appears to be stalled out in the $1770-1780 range. Where do we go from here? 

The Fed’s actions have weakened the Dollar but for the trend to continue there needs to be more “risk on” trading. Even better would be progress by Europe or other currency blocks that leads to traders exiting the greenback to go long Euros or other currencies. 

QE3 has certainly taken care of the risk-on part of the equation. That was probably the Fed’s main aim, in fact. Yes the buying will lower long term yields a little more but it also goosed the major market indices which we suspect was the major reason for doing it. 

Notwithstanding anemic economic stats consumer confidence has been rising steadily in the US. This has much to do with gains in the stock market. Equities are a bigger part of the personal balance sheet for Americans than others. Seeing their 401Ks growing (those with jobs, that is) is making Americans more confident. So too is increasing evidence that the housing market is finally bottoming after five years of pain. 

This confidence is not showing up in spending numbers yet. Other concerns like the Fiscal Cliff have been holding back hiring. The US economy needs to see some follow through for consumers to start spending. It will be tough to maintain momentum unless that happens. 

In Europe, the ECB has a more complicated monetary equation to solve. Announcements of “unlimited” bond buying have helped European bourses but shareholdings are less widespread and those gains don’t impact confidence the way they do in the US. 

Screen Shot 2012-10-05 at 3.19.15 PM

In the case of ECB head Draghi, it’s the bond market’s confidence levels that are the main concern. As the 3 year yield chart above for Spanish and Italian bonds shows Draghi too has had some success. 

Rates started falling as soon as Draghi decided to call the bluff of Euro area politicians in August. They fell farther as the plan to buy bonds was outlined early this month but doubts have begun to creep in. “Unlimited buying” made for good headlines but the latest European plan is as opaque as its many predecessors. 

In order to appease creditor countries the ECB plan calls for countries that need ECB backstopping their sovereign bonds to ask for help and to be willing to submit to further conditions. Three is no indication what those conditions would be. 

That was enough to spook both Spain and Italy which insist they don’t need the help. Until debtor countries ask for help ECB bond purchases will be extremely limited. Most traders think Spain at least will have no choice. Spain recently published bank stress test results that indicate its major banks need to raise $60 billion in capital, $40 billion less than the amount expected and offered by the ECB during the summer. 

Even so, Spain needs to issue about €300 billion in debt this year to cover its budget shortfall and maturing debt. The odds of Draghi turning on the printing press still look good. 

In Japan, the government seems powerless to defend the Yen from buyers, even though its export economy desperately needs a cheaper currency. The Bank of Japan has added $200 billion to its liquidity funds. Japan can least afford to pile up debt but its cornered in a classis liquidity trap and here too the printing press will hum.

With both risk-on trades and a known minimum amount of new money getting printed the path of least resistance for the Dollar is down. Even if the ECB starts printing too that might not change. ECB bond buying could actually strengthen the Euro in the short term as it would be considered a positive development in their debt crisis. Either way, the Dollar should be capped and gold and silver should see more gains in coming weeks and months. 

Base metals and materials need stronger economic stats. Most major economies published manufacturing indices in the past few days. While most readings improved marginally all of them except the US are still showing contraction. 

If Europe can complete negotiations on banking oversight and the US consumer continues to cheer up the Euro zone may also move out of contraction. China’s leadership starts its party congress on November 9th. Beijing hasn’t added any stimulus since early summer. If that is going to happen it will probably start in about a month. 

The chart below shows the turn around to date in the Venture Index. It’s still at depressing levels but the rally, such as it is, is the longest we’ve seen since the market turned down in March. Here too, confidence is needed. There have been early adopters buying (like HRA) but most are still on the sidelines. Higher volumes are the clearest sign more are joining the party so watch those. We expect the rally to run to year end. How far it climbs depends on who wins the confidence game.

Screen Shot 2012-10-05 at 3.23.46 PM

 

2012 hasn’t been an easy year for explorers but HRA has been calling for a fall rally since early in the summer. Thanks to a surging gold price that rally appears to have arrived. It’s not a broad rally yet. Traders are looking for companies with discoveries and management that knows how to add shareholder value. HRA is your key to uncovering and profiting from extraordinary resource shares by getting ahead of the crowd. At HRA, we look for companies with the potential to at least double over one or two years based on asset growth and development of metals deposits for production or take over by larger companies. 

To download our latest HRA Journal for free--which includes a recent new recommendation that is making gains--click HERE now!

Published by Stockwork Consulting Ltd.

Box 85909, Phoenix AZ , 85071 Toll Free 1-877-528-3958

hra@publishers-mgmt.com    http://www.hraadvisory.com



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Personal Finance

FUZZY MATH?: CNBC DESCRIBES NEW UNEMPLOYMENT NUMBERS AS 'CONTRADICTORY'


Posted by Administrator

on Friday, 05 October 2012 14:12

As soon as ex-General Electric CEO Jack Welch fired off a tweet questioning today's just released "unbelievable jobs numbers," the media went into a frenzy talking about how "conservatives" were launching conspiracy theories. Well, that's handy for the media and the Obama campaign, but it's not just "conservatives" who are confused by a full 0.3% drop in unemployment when only 114k jobs were created.

.... read more HERE

unemployment22



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