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    • Fri Oct 31st 09:55 AM | Rating: 0 0
      Commented on:
      Four Ingredients to Create the Ultimate Gold Portfolio
      These are good comments. "Printing Press" Ben will soon start dropping money from helicopters -- so get ready for a large pop in the price of gold and other precious metals (PM's). Historically, almost all of the bull markets for gold have lasted 10-14 years -- and we are in about midway in the current growth cycle.

      With the lowering of the Fed lending rate to 1% this week, it now costs less to borrow money. Any time money costs less to borrow, the value of the dollar goes down. Unemployment is also rising quite quickly, so there is a stronger need to start hoarding. The inflation vs. deflation effects on gold is chaotic at present; however, this should stabilize in next few weeks.

      Also important is the fact that China is not overleveraged to the extent the US/EU are, and in fact has less gold in its central banks than Germany! If China starts buying gold in gangbusters, you wouldn't want to be on the sidelines watching. You can purchase bullion and certificates online at the (offshore) Perth Mint (Perth Australia). Happy investing.



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    • Wed Oct 15th 18:48 PM | Rating: 0 0
      Commented on:
      Gold ETFs: What Went Wrong With Conventional Wisdom?
      It's the gold carry trade, which keeps the price of gold down.

      Here, multiple tonnes of gold are loaned daily by central banks which artificially show up as supply via bullion banks via the London bullion market -- while on the same day other central banks have paperwork showing that they own the gold that's listed for sale (simultaneously). This is not transparent - and IMF is supposed to be going public the end of the year. Getting this trickery out in the public is part of the $2000/oz that goldbugs are hedging on.
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    • Tue Oct 14th 23:30 PM | Rating: 0 0
      Commented on:
      All Eyes on the U.S. Dollar
      There is an incredible amount of growing yet unobserved unemployment. The huge losses in equity over the last month has resulted in multi-billion dollar losses in portfolios of many institutions with deep pockets, especially endowments, or gifts. Given this, many have already lost their jobs but don't know it -- jobs tied to existing projects that will come to an end. Without new project starts, the extra staff won't be needed when their projects come to an end. The lack of new projects translates to little employment growth. Little or no growth is *the* problem.

      With slowing growth (of employment and revenue-->dividend yield), I wouldn't get too exited about the dollar or the markets right now. You'll need to stay in T-bills for quite while until this is over.
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    • Sat Oct 4th 10:31 AM | Rating: 0 0
      Commented on:
      Job Losses Now At Recession Levels
      Indeed, god bless those who are jobless, those who have become, and those in the future who will lose their jobs. This is not over yet, and unfortunately, the majority of the workforce is not likely following the economic patterns which have emerged of late. The 0.8t bailout is too little too late, since we are now on the edge of a whirpool just waiting to be sucked into the swirling vortex.

      The big problem is that, when it comes down to it, our Gov't basically throws money at problems, like an irresponsible overpriveleged kid would do. The Fed, Treasury, and majority of people in Gov't won't be around after the new administration is set in place -- and even McCain isn't going to keep any of the current people around, since he's from a different breed (he really flew jets and was behind enemy lines). Thus, anything things guys do is is a "last great act of desperation."

      All you can do now is hedge somewhere on the sidelines hoping you can bring your portfolio back into the black. Don't listen anymore to those who think a dollar rally is on the horizon, or those who recommend "good" large steel companies e.g. MT, or good energy companies like TGP. These are great companies with the strongest fundamentals on the planet. What's not good, however, is that the multibillion dollar motherload they were counting on falling out of the sky has vaporized. Foreign inflation is very high, China essentially told MT that they are getting squat for a new megabuck deal, and gas/energy/material prices is taking its toll on new construction, so TGP price has gone down the tubes over the last six months. Look at the charts for MT and TGP, and then think of those who recommended buying these over and over again. (there is a lot of new construction occurring in Asia, but the market has seriously gotten tighter, so many companies got squeezed out by natural market conditions. Also, the Chinese gov't commonly cuts deals with a limited number of vendors, so if you're not one of the winners, you're history).

      It's a new day. Having strong fundamentals is no longer good enough for attracting investor/fund money. The economic conditions have to be supportive of the given sector, the dollar has to be strong, government leadership has to be at its highest, and financial institutions need to fiscally responsible. Over the next few years, the American dream is gone.

      What matters now is the level of speculation that's assumed for an investment. The old way is to assume that good fundamentals attract money -- but this no longer works. Sure, value is the best investment (buy good companies with low prices, since, again, the assumption is that their price will go up). What's not clear is whether the projected revenue growth and dividends will remain as high as projected. With everyone speculating, you'll need to keep your money safe for some time.
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    • Wed Oct 1st 15:33 PM | Rating: 0 0
      Commented on:
      The Amazing Dollar - Gold Correlation
      What about the gold carry trade, which keeps the price of gold down. Here, multiple tonnes of gold are loaned daily by central banks which artificially show up as supply via bullion banks via the London bullion market -- while on the same day other central banks have paperwork showing that they own the gold that's listed as being for sale (simultaneously). This is not transparent - and IMF is supposed to be going public the end of the year. Getting this trickery out in the public is part of the $2000/oz that goldbugs are hedging on.
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    • Tue Sep 30th 22:35 PM | Rating: 0 0
      Commented on:
      Play the Bounce to Hedge Your Longs
      Very good points. SKF, SCC, DOG, REW, etc. are good options. A pattern that has emerged is when 1/5th to 1/4 of your portfolio is inverse ETFs, it can balance the downside from having growth stocks. However, during the current crisis you will need to keep 4/5 of your wealth in treasury-only (bond) funds which are the lowest risk investment in the market. Check out Capital's CPFXX, or Fidelity's FDLXX, and Ishares Lehman TIP. TIP has actually weathered the storm quite well over the last few weeks.

      By now we have heard it all: stay long, go short, don't panic sell, or "the US markets have a history of surviving incredible corrections/bubbles&qu... so just ride out the storm. Some groups that are so bent on fundamentals expect you to assume that good fundamentals attract money -- so just hang on and every will be fine. Unfortunately, most of the (irreversible) damage regarding toxic money has already been done, and it appears that we will need to brace ourselves for the ensuing shock wave. In business, variation (variance) means risk, so if you think the 400 point rebound today following yesterday's correction of 700 points are good news, then you need to expand your horizons. Daily volatility bouncing plus/minus 150, 300, 450, 700 is a telltale sign of huge market instability -- like a wire cable that's getting ready to snap.

      The political side of the equation is not good either. Have you realized that Congress now has Executive Branch (which includes the Fed and Treasury) in a stranglehold? All Gov't expenditures have to be approved by Congress, so until that happens, we are far from any bailout approvals. Last, a bailout would have nothing to do with the ideology of having free markets -- since a true free market will let the bankrupt and poorly run businesses die out.

      Finally, financial debt now exceeds 41 trillion, and this is why the skimpy 0.7 trillion (700 billion) bailout is a band aid fix. Throwing money at the problems plaguing Wall Street is not the solution, instead, fundamental changes need to be made. Transparency has a lot to do with it. Specifically, increased transparency is needed for the gold carry trade, where central banks loan bullion every day to bullion banks, who list it for sale in the London bullion market -- this only serves to keep the price of gold down. Problem is, the actual listing is duplicative, so the same gold bullion can be listed for sale and listed in storage by multiple banks on the same day. No one knows what goes on here except for the central banks, bullion banks, and IMF. Supposedly, IMF is going public at the end of 2008 -- and this is in part what some of the gold bugs who expect 2000 are hedging on.
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    • Tue Sep 23rd 21:38 PM | Rating: 0 0
      Commented on:
      Saut: Sell Financials, Gold; Some Buy Ideas
      The ultimate oscillator for GLD is again approaching 70, and just like in March (08), there will be a drop -- so play it safe and get out. Also, look at the 1 year EMA chart for DBA and GLD on the same plot. GLD usually follows DBA's by about a week or two, and with DBA going down, what do think GLD will do next? Kitco.com also showed gold down today, so if everything is so bad right now, why is gold down? These are signals of deflation, when money is pulled back resulting in trading days when everything is down (shorting ETFs, gold, equities). Indeed the definition of deflation is when everyone is pulling out and the money is circulation slows significantly -- most likely due to people cutting back on consumption. Drug companies are now hurting because a large percentage of prescription drug patients are stopping out of pocket co-payments. Look at the medical and equipment and supply sector, which was up earlier in the year but correcting down as we speak.

      Recommendation is to go with good asset allocation based on e.g. 50% low risk funds, 40% (foreign) growth and income stocks, and 10% risky explosive equities -- all of which have consistent high yield (dividends) and consistent revenue growth. These are the only things that attract money from a fundamental perspective.

      Last, there will be no bell sounded for when to get back into the market. Buy low and sell high, and don't by and sell, go in, go out, since you'll never get ahead. I was a gold bug, and am doing my part for goldville by having 10% in gold mining stocks, and may by a small amount of GLD and SLV this week. However, if you ask smart investors about gold (the rich guys, -->not me), the response is typically: "I wouldn't touch it."
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    • Fri Aug 22nd 09:20 AM | Rating: 0 0
      Commented on:
      America on the Edge
      I agree. Energy is supposedly a good 10-year play with great returns. The other issue is that tax laws were made for essentially real estate and small business, and there are some investments that are private -- so look int these.
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    • Thu Aug 21st 09:28 AM | Rating: 0 0
      Commented on:
      The Merits of Staying in Cash
      Most of the companies mentioned are US companies: Dow, Dupont, Home Depot. Try looking at foreign stocks with large dividends which are far-removed from the dollar. Also, don't assume everyone is going to jump to GLD and SLV, for example, since we are in a deflationary period where money is being pulled back. Sure these PMs (precious metals) may go up, and I suspect I will get back into them as heavily as I was before the sharp correction over the last 3 weeks. Nevertheless, good article, since it points out equities that will poison a portfolio.
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    • Wed Aug 20th 08:57 AM | Rating: 0 0
      Commented on:
      3 Things That Could Reverse the Dollar Rally
      The dollar is way above its moving average, and as most know, the further it climbs the more it will fall. The points above are all well-taken, and you could also say what about the economy as a whole? Throw in Iraq, Afghanistan, Georgia, Poland's signature of the missile shield agreement, what's next for Ukraine, the election, oil? Markets are down 12-14% this year, so a catalyst is needed to get things back on track.

      As a (former) gold bug, it seems that the sentiment during pullbacks is that no cares about gold. It's these times when gold bugs get the jitters -- when the expectation is that gold will sky rocket, but people are not buying. This is a definite case of deflation: After significant money pumping from monetary policy by the Fed, money is pulled back and people cut their expenses (high gas prices are killing families), and there is significantly less buying. The big money also jumps somewhere else. What I would like to know is where is the money going. Yesterday if you tracked MTU (Mitsubishi Bank-->huge loans to China), TSM (Taiwan Semiconductor), YUM (global foods), they were all down significantly. This rules out money jumping to several example global stocks, although more detailed analysis is probably warranted. Maybe those with a crystal ball know the answer.

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    • Sun Aug 17th 15:46 PM | Rating: 0 0
      Commented on:
      The Great Consumer Crash of 2009
      Great article -- it makes doom & gloom sound like the understatement of the year. One sure investment to protect from the onslaught of problems is to hedge with gold; however, gold is dropping like gangbusters now because the groups that originally hedged when the financials starting going south last fall (2007) currently envision a dollar rally. Even as a gold bug myself, it doesn't take more than the 20% correction that occurred last week for me to realize that the party with gold and gold mining equities is over.

      A different long-term solution is to invest offshore in global growth stocks. Several international stocks are now growing explosively and are offering good dividends. YUM and DEO are good examples which are linked to food and beverages in EU and Asia. Fundamentally, they are very well-managed companies with strong books, and they are recommended for a "buy & hold" strategy by many groups all over the Internet, that is "buy & forget."

      Another angle for approaching the doom & gloom issues is to view everything as a "numbers game." If you think the dollar will undergo something like what happened to the Ruble during the dissolution of the USSR, then consider the price fixing history of gold over the last 50 years. What happened in Japan is also not likely to occur, since the problem there was that the Japanese government didn't do anything. (Our Fed monitors everything very closely). It would be beneficial to start reading up on the history of fiat currencies (paper money) and their demise, why the US got off the gold standard, history of how much gold is in Fort Knox and what happened in the 30's and 70's in the lifetime history of gold. Once the picture becomes clear, you will begin to realize that there is no way that goldville will be the only place to live in the future. There's a lot of manipulated (paper) money out there in the form of electronic digits, and thus, it's an erroneous assumption to expect that significant dollar devaluation will occur and that gold will explode to 2000 overnight. With gold, history has shown that the advantage is related to the long-term chronicity of hedging against dollar devaluation, and not some get-rich-quick scheme based on overnight rallies. Over the long term, you would actually want a lot of gold in your portfolio, so after the price of PM's (precious metals) settles down, then maybe buy again for safety reasons. One thing is certain, if the price of gold got down to say the true value (not overpriced significantly) then you would want to buy say 500K or 1m of it, and then you will have a nice nest egg. Of course, the timeframe here is over the next 10-20 years, when the dollar won't be the fiat currency of the world. Fundamentally, whatever you are doing, you have to invest in growth - companies with rock-solid management and profitable books. Betting (hedging) that your portfolio is going to grow with e.g. a PM is not growth. Last, be careful about groups that focus solely on investment with US stocks, because the US economy makes up only 15-20% of the global economy. In real terms, because we're the greatest debtor nation, the true percentage is probably 5-10%.
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    • Fri Aug 15th 09:30 AM | Rating: 0 0
      Commented on:
      How Far Will the US Dollar Rally?
      This is one of the most instructive articles on dollar devaluation seen on SA for quite a while. Of late, the majority of negatively correlated sectors, e.g., gold and silver, are snapping like rubber bands. If you combine the strong vertical rally in the dollar shown in the figure above, with the strong downtrend in gold the occurred during this week's huge correction, there is strong potential for gold to rebound. The gold mining companies are known to bounce up a lot more than gold since they correct to a greater extent -- so be sure to load up on the mining companies like ABX, ASA, AUY, BAA, GFI, GRS, GSS, MFN, NEM, NGD, NSU. The bullion plays for gold ETFs are GLD and IAU, while silver ETFs (bullion) are DBS and SLV. Once in gold, watch the "ultimate oscillator" for GLD on (for example) stockcharts.com, and when it goes above 70, get out of gold, and then wait for the next occurrence of the CCI to break above -100 or ultimate oscillator to break above -70. The "on balance volume" (OBV) for GLD is also starting to approach a one-year low, which means that there is only once place for GLD to go: UP.

      In summary, get into gold and silver now before it's too late. There will probably never be another buying opportunity like the one we are currently in. Fundamentally, every day there is negative news about the US economy: an incurable credit disease, huge bank write-downs, bank failures, money pumping, inflation, plus potential for OPEC to get out of the dollar, and news today of a growing separation between Ginnie Mae and the 10-year US Treasury Note.
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    • Mon Aug 11th 09:14 AM | Rating: 0 0
      Commented on:
      Bob Moriarty: Gold is Safe Haven for Looming Crash
      You would probably be a fool not to buy gold right now. With regard to technicals -- look at the MACD and ultimate oscillator of GLD. The on balance volume (OBV) is not at a 1-year low, however, (probably because you will never see gold at extreme oversold levels). For fundamentals, you really don't have to do any homework. As an alternative, if you start playing the S&P500- or DJIA-associated equities, or BRIC-type plays, you will likely get burned.
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    • Tue Jul 22nd 23:06 PM | Rating: 0 0
      Commented on:
      Asset Class Correlations
      The majority of correlation coefficients shown are actually not that good. When you get down to 0.2 - 0.6, the association between the pairs of variables can still be jumpy. In fact, if you showed the X-Y scatter plots for a number of these matrix elements, you would probably be surprised at how noisy, jumpy and unrelated a lot of the series are. X-Y scatter plots would likely reveal problems and cause readers to ask why you tried to correlate a lot of these pair-vectors in the first place. At values of r=0.8 (-0.8) you will truly begin to see very tight patterns and tight trending between the data being correlated. The goal is to focus on high negative correlation, and the large negative correlation between the dollar and gold is actually good, since you would want to load a portfolio with something that is going to go up, on average, when the dollar goes down. (remember, though, gold is a commodity so the price is inflated in the direction in which the speculative buyers/sellers think it will go. ). Again, the majority of the coefficients are near-zero and low (less than r=0.2 or greater than r=-0.2) and uninteresting. Last, you are probably showing Pearson correlation, which can be biased by outlier pairs. Try using Spearman correlation, which is not biased by outliers.
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    • Sat Jul 19th 12:31 PM | Rating: 0 0
      Commented on:
      How the U.S. Financial Crisis Resembles Japan’s 'Lost Decade' - And How to Play It, Part II
      This is wholly true. However, there is really no safe haven for hedging and being *totally* removed from the ever-reaching tentacles of the dollar. Worst case is that having a cache of gold at home would be confiscated (remember, I said "worst case"). In the 1930's, the US monopolized the gold price and set it at something like $23/Oz. Certainly, if you think you are fully hedged in gold and the price will sky rocket, and 2-3 years from now you can cash in and will be on "easy street," you are probably making bad assumptions. If things get really bad, there will be frag everywhere, and you will need to be able to side-step a lot of landmines. Developing a good strategy for gaining financial and economic intel (self-study) will go a long way, and in spite of the above being in gold now at the 20-30% level is a very good idea.

      Investing in European equities (e.g. growth stocks) will be profitable, as well as in Brazil and/or Japan. It is possible that telecom companies (cellular providers) in Japan (DCM, NTT) and EU (DT, TEF, ERIC, NOK, VOD) will do well due to explosive population growth, popularity of cell phone usage, and little dependence on oil. (For example, it is not expected that Verizon has huge transportation costs requiring gas/oil expenses, of for buying construction/building materials -- all of which are hinged to commodities whose prices are up 50-78% in the last year).

      Regarding a free economy (free commerce), it would be logical that the markets operate perfectly like a well-greased machine. In addition, you would expect that each new day, on average, brings growth to a variety of sectors. But we now find ourselves amidst a system where there is lost trust where there are players who care and those who just don't care. The Fed is almost at the point of saying "uncle," so you need to do you own due diligence on what to play next.

      For gold, you can always purchase bullion on line with a credit card from the Perth Mint, in Australia -- if you don't have a way to purchase via your brokerage account or transfer funds electronically . Perth is owned and backed up 100% by the Australian government, and gold owned there can't be confiscated. (I actually have never purchased at Perth -- but it is a hip-pocket move that I know of if I see things going poorly). There are risks with owning bullion through etf's or at home, so be aware of the Perth route. Don't store gold in a bank safety deposit box, since the banks took ownership of boxes when gold was confiscated by Presidential Act in 1933 (www.the-privateer.com/...). You can own gold in the form of historical coins (Eagles, Canadian Maple Leafs, Austrian Philharminics) and these *likely* would survive , but watch out for Krueggerands, since I believe they're not protected. Last, there is no law that states you can own gold bullion in the US, since owning gold is a privilege, not a right. You can gain some extra insurance by owning pre-1964 silver coins ("poor-mans gold") if you need to barter for something using US currency. At this point, paper dollars wouldn't be worth much. All of the above regarding gold and the extreme doom & gloom is anyone's guess on what might happen in the future. As you retire, and bring your off-shore profits back into the US, you will be supporting your local economy -- so *anything* you do for asset protection will be meritorious service.
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