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Why Gold & Silver Are Soaring PDF Print E-mail
Written by Ben Kramer-Miller - Wall Steet Cheat Sheet   
Monday, 23 June 2014 04:11

478887481Gold and silver have had phenomenal weeks, with the metals rising nearly 3 percent and 6 percent, respectively. Many columnists are claiming that this is due to escalating tensions in Iraq and the rising possibility that the Iraqi state will enter a state of chaos.

But this really isn’t the case, or it is in the same way that the assassination of the Archduke Ferdinand “caused” World War 1: It was the trigger, but in itself it was not the driving force behind the war. So perhaps there are some speculators that bought gold this week because they are concerned that political tensions in Iraq will escalate, but there are deeper factors driving the price that have been driving the price higher for many years now. Only those investors who understand this will have the confidence to buy gold when the market is weak, or when geopolitical tensions in Iraq (or anywhere for that matter) dissipate.

The price of gold has been rising for several fundamental reasons. The first is...continue reading HERE

 
Why I'm Bullish on Hookers & Heroin PDF Print E-mail
Written by Alexander Green - Investment U   
Sunday, 22 June 2014 22:55

rsz dollarphotoclub 37318432-e1402929286602-150x150Recently I've turned more bullish on prostitutes and illegal drug sales. 

This is not some newfound libertarian streak. I'm really just thinking about what's best for the eurozone. 

This takes a bit of explaining...

Last week Italy announced that beginning next year it will include revenues from drug trafficking and the sex trade, in addition to contraband tobacco and alcohol, in calculating GDP. 

You're probably hoping that someone will pinch you, but in the Maastricht Treaty that established the euro in 1992, member states were asked to meet strict criteria, including a budget deficit of less than 3% of GDP.

Unfortunately, Italy - whose economy is contracting rather than expanding - cannot meet that criterion, unless it includes black market activities. Will that really be enough to make a difference?

Surprisingly, the answer is maybe. Last month Britain said including revenue from drugs and prostitution into European Union accounts would total $16.8 billion a year, equivalent to 1% of output. 

In Italy, it seems, gross criminal conduct may become an essential part of gross national product. (I can just see a few economists from the Chicago school shouting "at last!")

This Isn't Working

The real eye-opener here is just how far the European Union and its central bank are willing to go to try to patch up an inherently unworkable currency.

Bear in mind, the euro is still very much an experiment. That surprises some investors since the euro is the world's second-largest reserve currency and the second-most traded currency after the U.S. dollar. With approximately $1 trillion worth in circulation, the euro also has the highest combined value of banknotes and coins in circulation. And, considered as a whole, the eurozone is the world's second-largest economy.

But the problem is that the currency must serve different countries with different governments, different political and economic needs, and different strengths and weaknesses.

At Cross Purposes

In Germany and the Netherlands right now, for instance, economic growth is increasing. (Not enough but at least the figure is a positive one.) However, Greece and Spain have seen their economies contract for six years now. Unemployment in both countries is at 25%. 

The Greeks and Spaniards would love to see a weaker currency to boost exports and attract international tourists to their seaside resorts. But that can't happen because they have outsourced their monetary policy to Frankfurt. 

And much of their fiscal policy, too. Another plank of the Maastricht Treaty is that fiscal deficits must be less than 60% of GDP. This was widely flouted after the euro's introduction but stronger European nations still pay lip service to the idea and encourage "austerity" for profligate member states Portugal, Italy, Ireland, Greece and Spain (the PIIGS).

Unclear Path Forward

How will all this play out? Your guess is as good as mine. After all, the geniuses that dreamed up this common currency didn't even create an exit. There is no pathway or precedent for dropping out. And it would be a nightmare for any countries that did - since their new currencies would plunge and their borrowing costs would soar - as well as those of the countries holding their sovereign debt. 

And so I suppose we will see the Italians keeping closer tabs on their streetwalkers and meth dealers. (You really couldn't make this stuff up.) 

In addition, eurozone depositors will start receiving negative interest on their bank balances. That's right. They're going to have to pay to keep their money in cash.

You might ask why the European Central Bank doesn't take a page from the Federal Reserve's book and stimulate the euro economies by buying up euro-denominated government debt to lower longer-term rates. 

But the yield on the 10-year Spanish Treasury is already lower than the yield on 10-year U.S. Treasury bonds.

That looks like a bad bet. So it's hookers and heroin for now. 

Good investing,

Alex

This Weeks Standout Articles:

Strong Sectors Mean
Strong Accounts

We've just seen a key signal from one sector ETF that usually leads to a strong surge in price. When we see a relative strength buy signal occur, the security that generated the signal tends to outperform the stock market for several months, or even years. Read On…

Walk Before You Run

Lightning Trend Trader focuses on high-flying biotech stocks. There is a ton of money to be made in this sector, as these stocks can move double- or even triple-digit percentages in a day. Their options do so regularly. But with that kind of potential comes greater risk. Read On…

How to Profit From the World's Fastest-Growing Energy Source

What's the fastest-growing energy source in the world? Solar? Natural gas? Nope. It's old king coal. It's often seen as one of the world's dirtiest power sources. But it's also one of the cheapest. And that led to an explosion of coal use in developing countries last year. Read On…

How to Profit From the Turmoil
in Iraq

ISIS, the terrorist group that makes Al-Qaeda and the Taliban look like pussycats, has Iraq embroiled in an all-out civil war. It's the largest security threat that Iraq has faced in years. Read On…

 
The Markets Versus The Fed PDF Print E-mail
Written by Lance Roberts - The X-Factor Report   
Sunday, 22 June 2014 22:01

 

This past week the Janet Yellen, and her band of merry men, concluded their two day FOMC meeting with little surprise or fanfare.  For the most part, there were few changes to the overall tone of the press conference as the Fed revised down its forecast for economic growth and nudged up their projections for short-term interest rates.

Here are some of the more important highlights
from the Fed statement:

  • “Information received since the Federal Open Market Committee met in April indicates that growth in economic activity has rebounded in recent months.”
  • “Labor market indicators generally showed further improvement. The unemployment rate, though lower, remains elevated.”
  • “Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.”
  • “The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and labor market conditions will continue to improve gradually, moving toward those the Committee judges consistent with its dual mandate.”
  • “The Committee sees the risks to the outlook for the economy and the labor market as nearly balanced. “
  • “The Committee decided to make a further measured reduction in the pace of its asset purchases. Beginning in July, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $15 billion per month rather than $20 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $20 billion per month rather than $25 billion per month.”

The markets primarily expected as much.  However, as shown in the next chart, with the economy “struggling” in the first quarter, the overriding “fear” by market participants has been the extraction of “accommodation” from the markets.

SP500-Chart1-062114

As you can see, Yellen managed to assuage those fears by stating:

.....read what Yellen had to say & more HERE

 

 

 

 

 

ere

 

 
#1 Most Viewed Article: Grandich Observations PDF Print E-mail
Written by Peter Grandich   
Saturday, 21 June 2014 06:40
 
 
Here’s my latest thoughts on some markets and individual companies I have spoken about. (Posted June 15th, below are his views on 9 Metal & Mining Shares including those he owns - *note, updated with June 20th Weekly Charts Editor Money Talks)
 

U.S. Stock Market – It’s been my belief since the New Year began that greatly lowering one’s overall exposure to general U.S. equities should prove to be worthy over the next few years. By now those who felt the same should have done so. This doesn’t mean having no exposure. Both the financial planners I refer people to in Canada and the U.S use one family of very low-cost index funds called Dimensional Funds. I will be issuing a Q & A regarding Dimensional in the near future.

U.S Bonds – Both bonds and equities can’t be right. The stock market would have you believe the economy is going to roar (it certainly has already priced in such a feat). Bonds meanwhile, suggest weak if not recession-like economy coming.

Gold – This commentary has had a nice little follow through but as of now it’s little more than the old saying even a blind squirrel finds a nut once and awhile.

U.S. Dollar – As major western countries race to debase, more and more trading that was once done in U.S. dollars is finding alternatives. The U.S. Dollar is terminally ill.

Oil – The markets haven’t begun to appreciate the true ramifications that are taking place in Iraqi and Syria. The fragile world economy can ill-afford an oil shock.

Geopolitical – The “Talking Heads” on TOUT-TV would like you to think political, economic and social events outside the U.S. don’t have major impacts on U.S. markets. Yet at the same time they want you to buy into we’re one big economic world no longer divided by oceans. Just another case of the “don’t worry, be happy” false tale you can have your cake and eat it too.

Individual Companies – As noted earlier, I won’t get too excited that many of these companies mentioned for the first time less than a week ago have had a nice pop already. After a couple of years of getting one’s head handed to them, I think we’ll just keep what body parts are left crossed and hope for the best.

I've spoken about the coming battles for water and the dangers to our electric grid.

GRANDICH ON METALS AND MINING SHARES
 

I like to update some past individual equity opinions and note some new ones.


Because of my very bearish U.S. outlook, I personally would not want large equity exposure to general equities. I would though, use Dimensional Funds as a core holding (you need to speak to a licensed financial advisor on your specifics. I can suggest one in the U.S. and Canada if you like – email me at  This e-mail address is being protected from spambots. You need JavaScript enabled to view it ).


I do think precious metals and related equities are either:


• Having a going out of business sale of the century
• Going out of business – period!


These articles help explain why (at least to me they do) there’s compelling fundamental and technical reasons to now have an over-weighted metals and mining share exposure.


Past individual companies mentioned include:


• Barrick Gold (ABX, NYSE $16.15) – Taking baby steps to turn around from a fall from the penthouse to basement of mining companies.
• Banro Corp (BAA, NYSE $.40) – Highly speculative (gambling) play 
• Silver Wheaton (SLW, NYSE $20.99) – This article helps explain why I think SLW is a core holding.
• Timmins Gold (TGD, NYSE $1.51) – I’ve said TGD is either a takeover target or shall need to do a takeover. The former has evolved over a proxy battle. I think the party leading the proxy battle is off-base in its assessment but it has brought people’s attention to a very undervalued play.


Some new individual equity thoughts:


• Argonaut Gold (AR, TSX $3.61) – Mostly relative short-term operational hiccups led to sharp decline. This decline has made shares quite attractive and similar to Timmins Gold, a takeover target or needs to do takeovers (mergers).
• Kirkland Lake Gold (KGI, TSX $2.98) – Looking to be profitable again in 2015. Down like 75%+ from its highs of just a couple years ago, I think KGI is a prime takeover target.
• Pretium Resources (PVG, NYSE $6.75) – Has one of the best deposits in the world. 13 million ounces @ 13,5 g/t. NPV is around $2.6 billion with a 43% IRR and a payback period of just two years. I believe this company has a bulls-eye on it.


Update on my two personal holdings:


• Sunridge Gold (SGC, TSX-V $.20) – Spoke at length with CEO Michael Hopley last evening. Nothing discussed made me alter my opinion on my holding other than he agreed with my “strong” counsel that putting a target date on anything to do with Eritrea
sets us up for unnecessary and unwarranted “negativity” (as in the latest case with shareholders agreement).

• Teranga Gold (TGZ, TSX $.61) – Held hostage to the price of gold. Incredibly undervalued.
Please note – I think (and sometimes it feels more like pray) that SGC and TGZ could be taken over/merged before years-end.


Finally, a commentary on mining equities without mention of a couple companies led by the #1 mining executive in my book, Mark Morabito, would not be complete.


While the price of iron ore and the whole resource sector is currently going against them, Alderon Iron Ore continues to work up the corporate ladder of success to that rare goal of actually becoming a producer.


Excelsior Mining appears to have put $.25 as the line in the sand where they believe the bottom of their share price is with a “bought deal” at that price.


If I could clone Morabito and replace most of the inept and fledgling mining and exploration management that litters the resource industry with these clones, I would finally hit the ultimate gold mine and do shareholders the justice they so deserve at the same time


 
#2 Most Viewed Article: Silver To $65 On Historic Breakout PDF Print E-mail
Written by King World News   
Saturday, 21 June 2014 06:30

KWN 6-17-2014Today KWN is putting out a special piece which features a chart showing a historic breakout in the price of silver.  This is the type of chart that the big banks follow closely, as well as big money and savvy professionals.  David P. out of Europe sent us the astonishing silver chart that all KWN readers around the world need to see.

Below is the extraordinary silver chart sent to KWN by David P. out of Europe along with his commentary.

...larger chart & commentary HERE

 
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Mark Leibovit
23 July 2014 ~ Michael Campbell's Commentary Service

We intruded on Mark Leibovit's summer break and asked him for...   Read more...

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