saveyourassetsfirst3 |
- The Real Reason for Silver's Run
- My Prediction for GSR and Price
- Week in Review: Investors Seeking Safe Haven Trading Options
- Euro Approaching Major Inflection Point
- Wal-Mart: Good to Shareholders
- Is the Price of Silver Suppressed? Not likely.
- Silver and the Minimum Wage
- Nymex Palladium Margins Rising 25% After Close Of Business On Friday
- $40 silver this year but short term correction likely- Morgan
- jason Hommel: Why Silver is Headed to $500/oz, Backwardation Explained
- Steady as She Goes
- 2010 Gold Demand and Supply Figures and Market Changes
- Gold Manipulation Quiz
- every. single. dip. has proven itself a great buying opportunity
- Paging Blythe, I was told the NFP would be good-NOW WHAT?, Paging Blythe
- Why gold could surprise everyone and soar even higher now
- Ben, Stop Depreciating the Dollar
- Marc Faber: It's finally safe to buy these stocks
- WHAT'S AHEAD
- SIR #17: Two Momentum Champs Struggling on the Ropes
- How To Buy Gold Or Silver
- More QE could send silver above $50, Hathaway tells King World News
- Zell: Dollar's Global Fall Will Be 'Disastrous’ for US Living Standard
- More Q.E. Could Send Silver Above $50
- What is gold telling us? Gold’s gains may have meaning beyond the market
| The Real Reason for Silver's Run Posted: 04 Mar 2011 07:12 AM PST Jeffry Chmielewski submits: The New York Times recently published a blog post outlining the case for a price suppression 'conspiracy' in silver – and pointed to a nearly 80% run since in the last six months as circumstantial evidence. As a former hedge fund manager, I find the article preposterous. A collection of circumstantial evidence does nothing to prove causation. The reality is that commodities go through huge boom and bust cycles all the time. Just because the price has moved higher after the emergence of allegations of a price suppression scheme, doesn't mean there was actually a conspiracy. An increase in investment demand for silver on the back of rumors is all that is needed to push the price up. Remember, only 50% of silver is used industrially. The rest is used for jewelry, silverware and investment - and the incremental investment demand sets the price. A few extra buyers can move Complete Story » | ||
| My Prediction for GSR and Price Posted: 04 Mar 2011 06:15 AM PST We will see GSR of 1/30 @ $1800/$60 by years end. :five: | ||
| Week in Review: Investors Seeking Safe Haven Trading Options Posted: 04 Mar 2011 06:00 AM PST MarketPulse FX submits: By Dean Popplewell
The EUR continues to outperform the dollar as investors interpret the ECB's view to oil price shocks as inflationary events requiring a tighter monetary policy, in contrast to the Fed and the BOE, which are focusing on the deflationary impact. Trichet has followed in the hawkish footsteps of his coworkers and plied the EUR with enough ammo to dominate the non-inflationary Bernanke effect. The ECB will take the fight to inflation, maybe as early as next month. With the Libyan situation showing little signs of improvement and with the sovereigns continuing to weigh on the dollar, safe heaven trading strategies are the only option in this current environment. Below, we have some of the highlights of the week. EUROPE
Complete Story » | ||
| Euro Approaching Major Inflection Point Posted: 04 Mar 2011 05:46 AM PST Simit Patel submits: Since 2008 the Euro (EU) and the US dollar (UUP) have been in a heated battle regarding which currency is more troubled. Let's take a look at the fundamentals and technicals to see where each currency stands. Complete Story » | ||
| Wal-Mart: Good to Shareholders Posted: 04 Mar 2011 05:34 AM PST Tim Ayles submits: Despite the well known problems Wal-Mart (WMT) is facing, the company today raised its dividend more than 20%, giving the stock a respectable 2.75% yield. Some of the problems it is facing:
These problems are real, and Wal-Mart will have to work hard at shedding some perceptions of it as an 'evil empire.' Complete Story » | ||
| Is the Price of Silver Suppressed? Not likely. Posted: 04 Mar 2011 05:24 AM PST I figured to follow up on the premium for cash settlement issue, why not tackle the price suppression claims as well? From: http://northeastbullion.tumblr.com/p...ice-suppressed One of the underlying premises on the story that silver longs are being paid a premium to cash settle is that the bankers/shorts are engaged in an ongoing price suppression scheme. Given that if they defaulted, or failed to deliver, the result would very likely be the collapse of trading on the Comex market. Since the suppressors need the Comex market to engage in their manipulation activities, such a result would be that their scheme would implode and silver prices would skyrocket. Thus, why not pay longs a premium to go away if it could keep their scheme going for at least another month? Before I address that, let me first say that there clearly is manipulation in the silver and gold markets. The evidence is overwhelming in both the price action and documents that have come to light. However, there is also manipulation in the currency markets, equities, bonds and all other commodities. Big traders and even governments are known to step into markets and use their power to push prices in whatever direction best benefits their positions. Sometimes they push them up, sometimes they push them down. They have been doing it forever in all markets and silver investors shouldn't think themselves so special. But is there a global scheme to suppress the price of silver? Not likely, because there is nothing to gain by doing it. Silver is one of the tiniest markets in the world. Some think that if silver were to rise, it would lead to a collapse in the dollar and the breakdown of international banking system. That's insane. The total commercial net short position amounts to approximately 50,000 contracts, representing only $8.7 billion. That amount is not going to bring the system down. Hell, AIG lost about $100 billion and they didn't even go bankrupt! You want to look for something to bring down the global financial system, try the quadrillion dollar derivatives market. Most bank CEOs probably don't even know what silver looks like. It is entirely insignificant. But what about JPM's short position? First of all, it is highly unlikely that JPM is net short silver in a material way. JP Morgan, like all other banks, are in the business of making money. Being net short silver is not a good way to make money. It is far more likely that their books are hedged with physical or OTC longs, otherwise they already would have posted billions in losses, which wouldn't be good for their bonuses. But let's assume that JPM has such deep hatred of silver (and silver bugs) that it doesn't mind losing money and is in fact short all 50,000 contracts. So their exposure is $8.7 billion on a $2 trillion balance sheet. Immaterial, a rounding error. You are not going to bankrupt JPM by buying silver. Finally, let me say again that certainly large traders, JPM included, no doubt step in from time to time and knock things around a bit. But all they could really hope to achieve is a short term benefit. Once they step away, prices resume their normal course. An ongoing suppression scheme is just not likely. | ||
| Posted: 04 Mar 2011 04:20 AM PST Many of us who write about the precious metals field have put out their 2011 forecasts and predictions for the New Year. This writer is no exception, but it seemed to me that it might be nice to look at my mission statement and determine if I could compose a simple story that might engage the reader to think about the current dire state of affairs in the economy and how an honest "money" system might help on an individual basis. | ||
| Nymex Palladium Margins Rising 25% After Close Of Business On Friday Posted: 04 Mar 2011 04:17 AM PST
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| $40 silver this year but short term correction likely- Morgan Posted: 04 Mar 2011 03:24 AM PST Mineweb | ||
| jason Hommel: Why Silver is Headed to $500/oz, Backwardation Explained Posted: 04 Mar 2011 02:58 AM PST Enjoy! :biggrin: | ||
| Posted: 04 Mar 2011 01:31 AM PST HOUSTON – In recent news a "peace plan" brokered by, of all people, Hugo Chavez, the president of Venezuela, is being credited for helping to put the brakes on gold's march to new and higher highs. Gold and silver pause and step back a little on short term charts, but they would need to correct a good deal more before we might be tempted to reenter. Here's what some of the people we want to hear from were saying as of Thursday: Bernanke's Electronic Printing Press "There is a vast difference between how China and Japan came to own their US treasuries and how the Fed came to own its hoard. China and Japan came to own their US treasuries because both countries produced goods that Americans wanted to buy. The Fed came to own its hoard by simply turning on what Fed Head Ben Bernanke has called the "equivalent of an electronic printing press." The Fed did not have to produce anything tangible, anything with any intrinsic value. No goods were produced, no trade was done. The Fed simply... | ||
| 2010 Gold Demand and Supply Figures and Market Changes Posted: 04 Mar 2011 01:26 AM PST
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| Posted: 04 Mar 2011 01:18 AM PST
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| every. single. dip. has proven itself a great buying opportunity Posted: 04 Mar 2011 12:52 AM PST I have no more to say | ||
| Paging Blythe, I was told the NFP would be good-NOW WHAT?, Paging Blythe Posted: 04 Mar 2011 12:05 AM PST NFP was pathetic, to everyone's surprise. Myself, as well as TD over Zerohedge thought this was going to be a nice fake number to keep the ponzi going. The numbers sucked. No one, including myself knows what to do right now in regards to the trade. Gold silver hanging in there. Blythe is lurking, dont think she wont pounce at any minute. But again, who gives a shit. There is no metal out | ||
| Why gold could surprise everyone and soar even higher now Posted: 03 Mar 2011 11:37 PM PST From The Daily Crux: As you're probably aware, gold broke out to new all-time highs this week... but an unusual development suggests the rally may be just getting started. Mark Hulbert, editor of Hulbert's Financial Digest, says typically when gold rallies he sees a corresponding increase in bullishness among gold traders. But instead of the "widespread excitement" he usually sees at new highs, he says traders remain "quite cautious and subdued about the yellow metal's prospects." His Hulbert Gold Newsletter Sentiment Index is hovering at half its all-time highs, and has barely moved over the past few weeks as gold has rallied to new all-time highs. Says Hulbert: "That's a textbook example of the wall of worry that bull markets like to climb. Eventually, of course, gold's bandwagon will become overcrowded. According to contrarian analysis, that's when gold traders need to be particularly worried." Read full article... More on gold: MASSIVE gold demand is breaking new records in China An incredible development is taking place in gold mining stocks The IRS just issued a new ruling on this popular gold investment | ||
| Ben, Stop Depreciating the Dollar Posted: 03 Mar 2011 11:30 PM PST Ron Paul | ||
| Marc Faber: It's finally safe to buy these stocks Posted: 03 Mar 2011 11:19 PM PST From Bloomberg: After a two-decade bear market, now is the time to buy and hold Japanese stocks, Marc Faber, publisher of the Gloom, Boom & Doom report, said. Faber, who is credited with predicting the 1987 stock market crash and said two years ago that shares would decline just as they began the biggest rally in more than 50 years, said the Japanese government will be forced to print money to monetize the country's public debt, the developed world's biggest. That will cause the yen to weaken, helping boost earnings for the nation's exporters and buoying stock prices. Faber joins other bullish investors on Japan, such as Goldman Sachs Group Inc. and David Herro of Oakmark International Fund, in countering skepticism about Japan earned through four recessions and dismal stock returns after the 1990 crash of the bubble economy. The Nikkei 225 Stock Average has fallen about 73 percent since it peaked in December 1989. "If I had to make a bet for the next ten years in terms of equity markets, I would seriously consider a very strong weighting here in Japan," Faber said yesterday at the CLSA Asia-Pacific Markets' annual conference in Tokyo. "Once the debt market starts to go down, the yen will begin to weaken and that will lift equity prices. I would buy equities at the present time." Nikkei's Rise and Fall The Nikkei rose for a second day, advancing 1 percent and extending gains for the year to 4.5 percent. Still, investors have had reason to be wary. Japan's rebound from the crash after the 2008 bankruptcy of Lehman Brothers Holdings Inc. has also lagged behind that of every other major market. The Nikkei has gained about 52 percent since its low in March 2009, while in the U.S. the Standard & Poor's 500 Index has surged about 97 percent. Moody's Investors Service last month joined Standard & Poor's in lowering Japan's debt outlook. Moody's cut its rating to negative from stable, saying political gridlock will hamper Prime Minister Naoto Kan's ability to cut the debt, which has risen to about twice the country's gross domestic product. "If I look at the next five to ten years, the interest payments on the government debt in Japan and the fiscal deficits will become very burdensome and that will necessitate monetization," Faber said. "That will bring about a huge shift of money out of cash and bonds into equities." Oakmark's Herro Faber isn't the only one recommending Japan. Oakmark's Herro said last month it was time to buy Japanese shares as they "are a steal" considering that companies are exporting more to China and have started to pay bigger dividends. Goldman strategist Kathy Matsui said in December the Topix is likely to surge 20 percent in the first six months of this year as a retreating yen boosts profits for exporters. Faber has a mixed record for predictions. In March 2007, the 65 year-old investor said the Standard & Poor's 500 Index was more likely to fall than rise because the threats of faster inflation and slower growth persisted. The S&P 500 then climbed 10 percent to a record 1,565.15 seven months later, ending the year up 3.5 percent. Faber said in an interview with Bloomberg Television on March 9, 2009, that it was "very difficult to see a scenario where you wouldn't make any money" owning stocks over the next 10 years, while also warning the S&P 500 might lose 26 percent before the bear market ended. Predictions The benchmark gauge for American equities began its biggest advance in five decades that day, climbing from 676.53 to 1,295.02 on Jan. 18, 2011. Faber said on Sept. 17, two days after Japan's government intervened in foreign-exchange markets for the first time since 2004 to weaken the yen, that the nation's stock prices would rise in the next 12 months as the yen depreciates. The Topix index has climbed 12 percent since then, while Japan's currency has appreciated about 3.9 percent against the dollar since the government's intervention on Sept. 15. The yen is trading near its strongest level in 15 years versus the U.S. currency. Japan has been in a "20 year bear market," Faber said. "Statistically speaking, after a 20 year bear market, if it continues to go down, then it's game over." To contact the reporters on this story: Anna Kitanaka in Tokyo at akitanaka@bloomberg.net; Yuki Yamaguchi in Tokyo at yyamaguchi10@bloomberg.net. To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net. More from Marc Faber: Marc Faber: This is the "end game" Marc Faber: Sell stocks now... buy this instead Marc Faber answers the most important question in the world | ||
| Posted: 03 Mar 2011 09:55 PM PST From the March 2nd nightly report. "Folks I want to start preparing you for what's ahead. Once we get into the final daily cycle up in gold I think we are going to see a parabolic move unlike anything we've seen yet. And on the flip side as the dollar starts to drop, or maybe crash is a more appropriate term, into it's final three year cycle low we are going to see an absolute horror show unfold. That combination is going to drive gains unlike anything any of us have likely ever made before. The world will be in an utter panic to get rid of dollars. And the stock market is not going to provide protection from this kind of inflationary storm so a lot of those dollars are going to end up in the commodity markets, and especially in the precious metals. When that kind of money hits a thin market like gold, and especially silver, it will drive gigantic gains. There is going to be extreme temptation to jump off early simply because one can't believe they could possibly make that much money that fast. Let me warn you now don't give in to that temptation. We know what to look for at a three year cycle low and we know what to look for at a C-wave top. Until we see those signs sit tight. Trust me it's going to be one of the hardest things you'll do all year. Folks, fortunes are going to be made in the next two months."        | ||
| SIR #17: Two Momentum Champs Struggling on the Ropes Posted: 03 Mar 2011 09:41 PM PST This report was sent to subscribers on March 2, 2011. Join our free mailing list to receive actionable SIR information 48 hours before it is posted for the public… EXECUTIVE SUMMARY:
• Momentum names with extremely high multiples are particularly vulnerable. • Management hubris along with slowing growth metrics are hallmarks of great rollover bearish trades. • Two particular high-flyers are showing signs of topping and look like explosive short candidates:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ The last 18 months have been a great period for momentum traders. For what has seemed like an eternity, Wall Street momentum bulls have continued to buy the dips, pushing speculative stocks higher – regardless of fundamental valuations. Every time the popular momentum names have sold off for more than a session or two, LOLO investors (long-only, leveraged-outright) have stepped in – and have been rewarded for taking on more risk. To a certain extent, momentum stories can become self-fulfilling prophecies. At least for an extended period of time… Higher stock prices lead to investor confidence. The Wall Street marketing machine takes this confidence and justifies buying at ever-increasing multiples. Valuations can be justified by extrapolating a few historical quarters of strong growth. If you believe that a company can grow earnings by 30% year after year, then it's much easier to make a case for a PE multiple of 50, or 80 – or heck, even triple digits! The stories all make sense when the economic backdrop is rosy. Even when challenges begin to appear, the "buy the dips" mentality can become self-sustaining. Buyers begin to salivate when their favorite stocks tick lower – just like Pavlov's dogs responding to a bell. But at some point, excessive speculation breaks down. It may take months, a number of quarters, or even several years – but eventually, reality will crash the party. When this happens, the ride back down is usually much faster and much more volatile than the climb. Great news for nimble traders, ulcer-inducing for the buy-and-hold crowd. Today's environment has a number of the elements necessary for sharp declines in speculative names:
Anatomy of a speculative market You and I have both seen this story dozens of times. A company is launched with a good idea – maybe even a great idea… The IPO is successful and things continue to go perfectly. Products find favor with customers, resulting in higher sales. Scalability kicks in and strong revenue growth results in even stronger earnings growth. Investors start to get comfortable with the business and fall on top of each other – trying to get in on the action. It seems illogical not to own these speculative names in size… And the stock price rises along with investor confidence. Sure, there are some nay-sayers along the way, but their words are regularly swept under the rug. Sell-side brokers begin to tout lines like: "Traditional metrics just don't apply to this situation." and of course the age-old "This time, it's different." When you start hearing these arguments, it's time to take a good-long look at the risk levels – and at the very least have an escape hatch ready. Usually the turning point is somewhat difficult to pinpoint. A positive earnings report fails to push the stock to a new high. Or a breakout immediately runs into resistance and pushes the stock back into a trading range. But where wary traders are taking a hard look at risks, LOLO investors simply see another opportunity to buy the dips. Once all of the speculative buyers have been sucked in, the risk of an extraneous event can become all the more dangerous. A fire alarm in a well-lit restaurant may disrupt dinner, but doesn't cause panic. A fire alarm in a crowded theater may be an over-used cliche, but the point is all-too clear: When everyone decides to hit the exits at the same time, price doesn't matter. Bids can disappear in a moment's notice and large institutional desks with massive positions are especially vulnerable. If you see the danger signs before the "event," you can bypass a lot of the risk. And if you're flexible enough to take a short position heading into one of these events, a few good trades can make your year! The key is to play these situations from a position of strength – entering trades at inflection points. It does no good to understand the fundamental risk in play, if you step into a short position while the speculative buyers are still active. But using price action as a timing mechanism, nimble traders can put their capital to work at specific points along the way – instances where risk is properly controlled, and the opportunity set is most advantageous. Below are two speculative rollover candidates we are tracking for breakdowns this week:  Salesforce.com Inc. (CRM)
• Headline growth numbers are slowing, and behind the headlines the details are much more sketchy. • Hubris is in full-force, spending capital on Super bowl ads and a luxurious corporate campus. • Chart pattern suggests bulls are weakening and trend reversal is imminent. ~~~~~~~~~~~~~~~~~~~~ It's tough to imagine a rational argument for buying CRM. Of course there are two sides to every market, but from a logical perspective, the stock just seems dangerous. To start with, CRM is trading in the high $120′s while the company's adjusted earnings for the last year are just a bit over $1.20 per share. (I mention "adjusted" because there are some very big issues with the reported earnings figures – more on that in a minute…) The bottom line is that investors are paying more than 90 bucks for every dollar the company earns. Now there are situations where a stratospheric multiple like this could make sense. Take for instance, a company that is coming out of bankruptcy, marginally profitable, and on track to return to a more stable business in the next 12 months. Looking forward, the company might have a much more reasonable multiple – even though the PE based on past performance is so high. Another example would be the small, entrepreneurial company which is currently just a shadow of its future potential. In many cases, investors will pay 100 times earnings – respecting the company's scalability and long-term growth expectations. But in the case of CRM, these arguments just don't carry water. The company is only expected to grow earnings by 13% in 2011, and the expectations for 33% growth in 2012 seem more than a little "academic." After all, can we really know what the cloud computing business environment is going to be like in two years? Cooking the Books? Ok, that phrase may be just a bit too harsh. I'm not actually accusing Salesforce.com of outright fraud (although stranger things have happened), but the way the company reports earnings is misleading at best. While GAAP earnings figures are required to account for stock options issued to executives and employees, CRM management has created a policy of reporting "adjusted" earnings which exclude these expenses. Stock options are a non-cash expense – but that doesn't mean they don't carry economic significance. In the six years since the company's IPO, CRM's share count has ballooned from 111 million to 140 million and is expected to hit 145 million in the next year. A large part of this share increase is due to stock options being awarded. Of course, a higher share count means that each existing share owns a smaller portion of the company. A significant dilution that is glossed over by the "adjusted earnings" practice. Hubris in Full Swing When traders achieve success too quickly, they often become a bit cocky. The same can be said about Chief Executive Officers. Unfortunately, early success can lead to decisions that don't always incorporate proper risk management or efficiency. As Jack mentioned in A Trader's Mindset, some of the best growth opportunities come out of challenging circumstances. When it comes to recent strategic decisions out of Salesforce.com, it appears that success has gone straight to CRM management's head. In addition to a pair of multi-million dollar super bowl commercials (which by the way were a bit insulting to our intelligence), the company has also spent $278 million for a corporate campus in San Francisco — and that's just the land! Meanwhile the recent "chatter" product launch is really just a glorified chat room, and the majority of subscribers are not paying customers… CRM may be able to convert some of these subscribers and generate some revenue from the project, but the approach seems incredibly risky given the amount of competition springing up. Non-paying chat members likely have very little attachment to the Salesforce.com brand, and it would be very easy for these users to gear up with other providers when it comes to making a financial commitment. CEO Marc Benioff appears to see the stock as fairly risky as well. Honestly, it's hard to fault him when investors are willing to pay up to 100 times the company's earnings. In the past year, Benioff has unloaded $220 million worth of stock – this during a period in which the Wall Street Journal notes that the company only earned $64 million in profit. With the stock apparently running out of steam, and the broad market working back into "risk-off" mode, it's time to consider adding CRM to the short radar – and pulling the trigger as the stock breaks through support levels.
Amazon.com Inc. (AMZN)
• Laws regarding collection of sales tax may challenge the business model and create more room for competition. • A PE multiple north of 50 implies robust growth expectations – despite modest actual EPS growth projections. • The chart pattern is breaking through support after forming a double-top – a warning sign for trapped momentum bulls. ~~~~~~~~~~~~~~~~~~~~ Amazon.com has come a long way from the late '90′s internet bubble days… The company has morphed into a retail powerhouse, offering items to consumers in nearly every corner of the world. With revenue of nearly $13 billion in the fourth quarter alone, the company commands the respect of nearly every retail operation in business. Investors have been well rewarded for holding the stock recently. Over the last year, AMZN has risen some 80% from the July low to the January peak, and the stock's premium multiple points to robust confidence in the company's business model. But behind the scenes, things haven't been going so smoothly for the company's growth plans. Challenges are mounting in a number of areas, threatening to undermine confidence – and potentially send the stock spiraling lower. During times of expansion, investors can't get enough risk and speculative opportunity. But at the scent of danger, these speculative buyers can send a growth stock down in a hurry. With AMZN's out-sized growth rate being called into question, the premium stock price could hit the discount page over the course of a few weeks of trading. Challenges Abound Despite a 36% year-over-year increase in revenue this past quarter, AMZN was only able to generate a 7% increase in earnings per share. The disparity caught the attention of sell-side analysts and portfolio managers as well – and the stock gapped sharply lower following the announcement. Mass retailers typically have tight profit margins and AMZN is no exception. In the fourth quarter of 2009, the company reported a 4.6% operating margin – healthy but challenging considering the company keeps less than 5 cents for every dollar of merchandise sold. But this past quarter, operating margins dropped to 4.1% – a significant decline – raising significant red flags and punching holes in analysts' tedious earnings models. Looking forward, management didn't give the analysts much hope for a rebound. Overall revenue is expected to grow by 28% to 39% in the first quarter, but operating income will fall below last year's levels. Not exactly the kind of report you expect to hear from a company that is commanding a PE multiple of 54. In addition to slowing growth, Amazon is fighting an uphill battle when it comes to assessing sales tax. For its entire existence, AMZN has resisted any regulations that would require it to collect tax. The company's perspective is that they only offer the conduit for transactions to occur – and are therefore not responsible for assessing various state and local taxes. But as state budgets become tighter, AMZN's robust business becomes an appealing target for raising revenues. Amazon has already had to take steps preventing affiliates in certain states from selling products on the company's site – and more restrictions could have a material effect on the company's revenue and profit growth. Expensive, and Rolling… It's important to mention once again, that valuation is a horrible timing metric for traders. Just because a stock is expensive doesn't mean it is ready to head lower. But on the other hand, valuation can give us a clue as to how vulnerable a stock is – and how far it might decline. In the case of AMZN, the stock is selling for more than 53 times earnings – while at the same time, analysts are revising their growth assumptions lower. The current expectation is for AMZN to earn $3.17 in 2011 – up 25% from last year's figures. A 25% growth rate coupled with a PE north of 50 is like a cardboard box sitting next to a gas stove… Plenty of danger in plain sight. On top of the high PE and declining growth rate, we also have significant macro economic risks quickly coming into play. As the Middle East conflict increases in intensity, oil prices are rising and global discretionary spending is falling. Higher food and housing costs in emerging markets simply make this problem worse. The cumulative effect of all of these pressures are weighing on AMZN's chart pattern. After gapping lower from the poor earnings announcement in January, bullish traders made one last valiant attempt to push AMZN to new highs – but were turned back at the $190 resistance area. Now the fun begins… If the stock breaks through the $168 – $170 area, it could trigger a hasty exit for momentum players. A double top and break of support is a pattern even a LOLO investor can recognize. Taking an objective look at the situation, it would be easy for analysts to revise their models to price the stock at 25 to 30 times earnings – and if they keep lowering their earnings projections we could have a sub-$100 stock in just a few months time. Of course, price action will dictate our trading – and proper risk management will require us to tighten our risk points along the way. But AMZN represents one of the more appealing "cult-stock" breakdowns which could materially impact our P&L stats over the next quarter or two.
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| Posted: 03 Mar 2011 09:00 PM PST | ||
| More QE could send silver above $50, Hathaway tells King World News Posted: 03 Mar 2011 08:24 PM PST Image:  Silver could rise to $50 or $60 if quantitative easing continues into July, Tocqueville Gold Fund manager John Hathaway told King World News yesterday. Of course, as you well know dear reader, that's not the only reason why silver could be at those prices [or higher] sometime this year. The link to this short must read blog is here. | ||
| Zell: Dollar's Global Fall Will Be 'Disastrous’ for US Living Standard Posted: 03 Mar 2011 08:24 PM PST Image:  In line with the graph above, here's another story about the demise of the U.S. dollar. Billionaire real-estate magnate Sam Zell warns that Americans should brace for a "disastrous" 25 percent decline in the standard of living if the U.S. | ||
| More Q.E. Could Send Silver Above $50 Posted: 03 Mar 2011 08:24 PM PST SLV ETF adds another 976,380 ounces of silver. What is gold telling us? Gold's gains may have meaning beyond the market. In Colombia, New Gold Rush Fuels Old Conflict...and much more. ¤ Yesterday in Gold and SilverAs I mentioned in the closing paragraphs of my column on Thursday, the gold price had recovered back to Wednesday's closing price of $1,435.70 spot before a not-for-profit seller showed up. From that point, the gold price got sold off another three or four times during London and New York trading sessions...and gold closed down over $20...but off its low of the day...which was $1,409.40 spot.
I also mentioned in yesterday's column that silver was "knocking on the $35 door" around 1:30 p.m. Hong Kong time on Thursday before it, too, got smacked...and from that point, followed the gold price down for the rest of the day. As you can see from the chart below, silver [like gold] made many attempts to recover, but got sold off every time it tried to advance any significant amount. From its high to its low on Thursday...silver was down about 80 cents...but [like gold] did not close on its low.
The dollar didn't do a lot between the Far East open and the Comex open at 8:20 a.m. Eastern time in New York. Then, over the next 35 minutes, the dollar cratered by about 40 basis points...and recovered a bit of that before the 5:15 close of electronic trading. During this mini-crash in the dollar...and within the space of less than 10 minutes...the gold price got smacked by eleven bucks. Go figure. It's quite obvious that the dollar paid no part in the gold and silver price shenanigans on Thursday.
The gold stocks, which gapped down more than 2% at the open...hit their nadir minutes before 12:30 p.m. Eastern. From there...and despite the negative price action...the HUI rallied into the close of trading. It ended virtually on its high of the day...down only 1.11%. The silver stocks, most of which were down pretty big as well, recovered nicely too. Of the eighteen different silver and gold stocks I own...five of them were actually up on the day. But, now that all is said and done, I must admit that I really don't know what to make of Thursday's price action...in the metals, or in the shares.
Opening the CME's Daily Delivery report on Thursday was a relief at first...as 40 gold contracts were posted for delivery on Monday. But, when I scrolled down to check the silver deliveries, there weren't any to be found for the second day running. This is now beyond bizarre...and, as I said yesterday, it's almost right out of the Twilight Zone. The link to yesterday's action is here. There was a smallish withdrawal from the GLD ETF yesterday...only 10,946 ounces, which may have been a fee payment. The SLV ETF added 976,380 ounces of silver yesterday. The U.S. Mint had no report. Wednesday's report from the Comex-approved depositories showed that a very small 26,775 ounces of silver were received..and 36,305 ounces of silver were shipped out. Nothing to see here. Washington state reader S.A. sent along this neat graph titled "Money Leaders". It's self explanatory. From this graph, the US dollar's position looks pretty solid.
¤ Critical ReadsSubscribeZell: Dollar's Global Fall Will Be 'Disastrous' for US Living StandardIn line with the graph above, here's another story about the demise of the U.S. dollar. Billionaire real-estate magnate Sam Zell warns that Americans should brace for a "disastrous" 25 percent decline in the standard of living if the U.S. dollar's reign as the global reserve currency ever ends. He says that there are signs in the market that it could eventually happen. This is a longish read, but worth it if you have the time. I thank reader Ray Wiberg for sending this story along, which is posted over at moneynews.com...and the link is here.  U.S. postal service faces cash shortage by end of yearToday's next two stories are courtesy of reader Scott Pluschau. The first is an AP story. Unless things change, the post office will run out of money by the end of the fiscal year in October, Postmaster General Patrick R. Donahoe told the House Oversight subcommittee on the postal service. Donahoe said that as of Sept. 30 his agency will owe the federal government a payment of $5.5 billion to fund medical costs, in advance, for future retirees...and in November it will need to make a $1.3 billion payment for worker's compensation. These entitlement programs will bleed the western world dry...and note today's cartoon. The link is here.  World Food Prices Climb to Record as UN Sounds Alarm on Further ShortagesScott's second offering today is a story that was posted over at Bloomberg yesterday. An index of 55 food commodities rose 2.2 percent to 236 points from 230.7 in January, the eighth consecutive gain, the UN's Food and Agriculture Organization said yesterday. Wheat rose as much as 58 percent on the Chicago Board of Trade in the past 12 months, corn gained 87 percent and rice added 6.5 percent. This is a long read, but if you're interested in eating three meals a day for the rest of your natural life...this is worth your time. Here's the link.  Announced U.S. Job Cuts Rose 20% From Year Ago, Challenger SaysThis Bloomberg story is one that I stole from yesterday's King Report..."Planned firings increased 20 percent to 50,702 last month from February 2010, the first year-over-year gain since May 2009, according to a report today from Chicago-based Challenger, Gray & Christmas Inc. Announcements at federal, state and local government offices almost tripled from last year." This is worth the read...and the link is here.  What is gold telling us? Gold's gains may have meaning beyond the marketMy first gold-related story is courtesy of reader U.D. It's commentator Peter Brimelow over at marketwatch.com. He notes that gold reached a new high on Wednesday...and asks if that is telling us something. This story is definitely worth reading...and the link is here.  Global Gold Mining Production: An Interactive MapGold-producing countries are found on all continents, and represent the gamut of economies from developed super-powers to small, emerging market countries. With gold's spectacular rise in price and related demand, it's worth your time to know a little bit about where all the gold comes from. All you have to do is click on the map to learn more about each country's gold production. This interactive map is posted over at U.S. Global Investors...and the link is here. I thank reader U.D. for this piece.  The Seasonality of the Longwave PrincipalCanadian reader John Sawkins provides today's next item that's was posted over at The Gold Report earlier this week. It's a short piece by my good friend Ian Gordon over at Longwave Group. He has been asked: "Under what circumstances would he change policies and start investing in areas other than gold." That's easy, he said. I'll move my investment money out of gold and gold shares and into the general stock market when the Dow:Gold ratio reaches an extreme low. You won't believe how extreme that low is...and you can find out by clicking here.  In Colombia, New Gold Rush Fuels Old ConflictI stole this from a GATA release yesterday...and it's a story out of The New York Times. Now the Columbian warlords are getting into the gold mining business. The result is a gold rush unlike any now under way in South America, both feeding off Colombia's evolving conflict and keeping it alive. Up and down the sweltering river basins around Medellín, miners from across Colombia are flocking to sites where backhoes are tearing up forest and tree canopies, leaving behind lunaresque landscapes. This is a 2-page story which is well worth reading...and the link is here.  More QE could send silver above $50, Hathaway tells King World NewsSilver could rise to $50 or $60 if quantitative easing continues into July, Tocqueville Gold Fund manager John Hathaway told King World News yesterday. Of course, as you well know dear reader, that's not the only reason why silver could be at those prices [or higher] sometime this year. The link to this short must read blog is What is gold telling us? Gold’s gains may have meaning beyond the market Posted: 03 Mar 2011 08:24 PM PST My first gold-related story is courtesy of reader U.D. It's commentator Peter Brimelow over at marketwatch.com. He notes that gold reached a new high on Wednesday...and asks if that is telling us something. This story is definitely worth reading...and the link is here. |
• Higher energy prices and Middle East tensions are leading to "risk-off" decisions by institutional and retail investors.
• PE multiple near triple digits sets the stage for significant disappointment.
• Recent profit margin declines are challenging analyst growth models.
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