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- Richard Russell - I Will Stay With Gold & Gold Stocks to the End
- Despite current commodity doldrums, McEwen stands pat on $5,000 gold
- Iceland Recovery: Democracy and the power of the marketplace
- Greeks fearing collapse of eurozone bailout pulled record sums from bank
- My thoughts on Freegold
- Huge gold deliveries/More sovereign downgrades/
- WATCH: Jim Wyckoff on Gold
- John Doody: What Triggered Gold’s Decline?
- Silver Update: “Silver Optimism”
- LISTEN: Interview with Jim Sinclair
- Phys. Demand “Huge” as Gold Touches $1600, but “Bears in Driver’s Seat” as European Govts Fear Possible Downgrades
- Can the Second Coming of Paul Volcker Save the Dollar ?
- George Washingston on SOPA: America’s Future: Russia and China Use Copyright Laws to Crush Government Criticism
- Enron Scandal Marked End of Innocence
- Bob Chapman - Discount Gold & Silver Trading - 16 Dec 2011
- Friday ETF Roundup: GLD Surges On Bargain Buys, XLU Falls On Profit Taking
- Rhodium: A Complicated Commodities Play
- Gold on Verge of Move into Bubble Phase
- Gold And Silver Seasonal Trends
- Why the Gold Price is Falling Far and Fast
- These Charts Say It All: Gold Is Still a Buy
- Central banks are steadily losing their cover in the gold market
- Nero, Bonaparte and Hitler Walk Into an Economic Union
- Remember this if you're forced to brave the malls for last-minute holiday shopping
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- These three numbers are essential to building long-term wealth
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| Richard Russell - I Will Stay With Gold & Gold Stocks to the End Posted: 17 Dec 2011 12:39 AM PST ¤ Yesterday in Gold and SilverThe gold price climbed slowly but surely through all of Far East and early London trading on Friday. But the moment that the price touched the $1,600 spot level shortly before 1:00 p.m. in London, there was someone waiting to sell it off to its New York low of the day, which occurred minutes after 9:30 a.m. Eastern time. The New York low was $1,581.50...and by the time the New York trading day was over at 5:15 p.m. Eastern, gold was back within a dollar of the $1,600 mark...closing at $1,599.20 spot...up $28.60 on the day. Net volume was around 144,000 contracts.
Silver's price path was more or less similar to gold's. The only difference in silver was that its New York low [$29.22 spot] came at half-past lunchtime instead of 9:30 a.m. From that low, silver gained 52 cents to close just under the $30 mark at $29.74 spot...up 46 cents on the day. Net volume was about 31,000 contracts.
The dollar spent most of Friday barely trading above 80 cents...and dipping below that mark between 7:30 and 8:40 a.m. Eastern time. The dollar was not a factor in the precious metals market yesterday.
The gold shares mostly followed what the gold price was doing...and finished up about as much as the gold price did in percentage terms...with the HUI closing up 1.80%.
Most of the silver producers, both junior and senior, turned in a stellar performance yesterday...and Nick Laird's Silver Sentiment Index closed up 2.88%.
(Click on image to enlarge) The CME Daily Delivery Report for Friday showed that 15 gold and 119 silver contracts were posted for delivery on Tuesday. In silver, the big short/issuer was Jefferies with 114 contracts posted for delivery...and there were fourteen longs/stoppers lined up to take delivery, including all the 'usual suspects'...except for the Bank of Nova Scotia. The link to the Issuers and Stoppers Report is here. There were no reported changes in either GLD or SLV yesterday. The U.S. Mint's daily sales report yesterday showed that they sold another 18,000 ounces of gold eagles...2,000 one-ounce 24K gold buffaloes...and 103,000 silver eagles. Month-to-date the mint has sold 65,500 ounces of gold eagles...13,500 one-ounce 24K gold buffaloes...and 1,559,000 silver eagles. It was a reasonably busy day over at the Comex-approved depositories on Thursday, as they reported receiving 866,020 troy ounces of silver...but only shipped 36,444 ounces out the door. The link to that action is here. Yesterday's Commitment of Traders Report was more or less what I was expecting to see. In silver, the Commercial traders reduced their net short position by 2,214 contracts. The Commercial net short position in silver is now down to 101.5 million ounces. The four largest commercial traders are short 149.4 million ounces of silver...and the '5 through 8' largest traders are short an additional 36.9 million ounces. What the other 33 Commercial traders in the short category do with their positions is irrelevant, when the 'big 8' are short this much silver. Not surprisingly, the biggest declines were in gold. The Commercial traders reduced their net short position by a rather large 15,283 contracts, or 1.53 million ounces. The Commercial net short position is now down to 18.6 million ounces. The four largest commercial traders are short 13.7 million ounces...and the '5 through 8' traders are short an additional 4.3 million ounces. These eight large commercial traders are short 18.0 million ounces of the 18.6 million ounce Commercial net short position, or almost 100% of the total. As bad as that is, in silver the eight largest traders are short 183% of the Commercial net short position. The really big declines in both gold and silver came after the cut-off for yesterday's COT report...and if we make it through next Tuesday without any major rallies, we'll see another monster decline in the Commercial net short position in gold, as gold's 200-day moving average got taken out with real authority. But how much improvement we'll see in silver is anyone's guess, as we're already at the bottom of the silver barrel. In an usual turn of events, silver analyst Ted Butler had an essay for his paying subscribers on Friday. In it, he discussed the new short position numbers for both GLD and SLV that I mentioned very briefly in Thursday's column. Here are a couple of free paragraphs about the short position in SLV that you might find interesting. "Starting this year, the short position in SLV had grown dramatically, from around 13 million shares, to a peak of 37 million shares in the spring. Not only is the percentage of shorted shares of total outstanding shares higher in SLV than in any other hard-metal ETF, it is higher for a very unique reason – there is not enough physical silver available to allow for the normal issuance of shares as dictated by the prospectus. Aside from the harm short sellers are having on SLV shareholders, these short sellers are also manipulating the price of silver. If they had to go out and buy 25 or 37 million ounces of silver to issue shares as dictated by the prospectus, the price of silver would have soared. Instead, the SLV short sellers are helping to manipulate the price of the metal itself by defeating the intent of how shares should be issued." "This is not the first time I have raised this issue. Back in the summer of 2008, when silver was near the $20 mark, I wrote how the short position in SLV had grown to 25 to 50 million equivalent silver ounces, which was unprecedented at that time. This was back when Barclays still owned SLV and naked unreported short selling was prevalent. This naked SLV short selling played a big role in the collapse of silver from $20 to under $9 back then, just like the SLV short selling this year has contributed mightily to the collapse in silver from $49 to under $30. Certainly, the percentage decline in prices is strikingly similar between 2008 and this year. It is no coincidence that the price collapsed in 2008 and 2011 when the short selling in SLV was at an extreme." Here's the article that Ted wrote about this very thing back on June 16, 2008. The headline of the essay reads "A Hidden Silver Default?". This must read commentary is posted over at the investmentrarities.com website...and the link is here. Here's a graph that Australian reader Wesley Legrand sent my way yesterday. It's a 3-year chart of the HUI index...with all its significant highs and lows over that period of time. Wesley commented that "It's amazing that twelve months ago the HUI was about the same as it is today, but gold was around $1,300 back then. I wonder how many times the HUI can bounce off the 500 level?" I'm sure that when the gold price breaks out to new highs...or even before then...we'll see new highs in the HUI.
(Click on image to enlarge) I only have a modest number of stories for you today...as I was very ruthless in my editing for today's column. The really big event of the week was the utter obliteration of gold's 200-day moving average to the downside. Despite current commodity doldrums, McEwen stands pat on $5,000 gold. Valuable Gold Coin Appears In Pennsylvania Donation Kettle. Fitch says that a comprehensive solution to the eurozone crisis is 'beyond reach'. ¤ Critical ReadsSubscribeCommissioner Jill E. Sommers Responds to Concerned Customers of MF Global, Inc.Here's her 2-paragraph commentary on this issue. How concerned she really is, is another matter, as she is one of the Commissioners who has been against position limits in silver since day one. Her comments were posted over at the cftc.gov website yesterday...and I thank Florida reader Donna Badach for sending it along. The link is here.  Ex-heads of Fannie and Freddie sued by US regulator over sub-prime exposureDaniel Mudd, who ran Fannie Mae between 2005 and 2008, and Richard Syron, who headed Freddie Mac between 2003 and 2008, were among six senior former executives of the lenders sued in a New York court by the Securities and Exchange Commission. Fannie Mae and Freddie Mac, which were created to help promote home ownership in the US, were bailed out by the US taxpayer in 2008 after the value of their holdings of mortgage debt collapsed. Together they've received almost $170bn (£109bn) of taxpayers' funds and are now under government control. "Fannie Mae and Freddie Mac executives told the world that their sub-prime exposure was substantially smaller than it really was," said Robert Khuzami, head of the SEC's enforcement division. "These material misstatements occurred during a time of acute investor interest in financial institutions' exposure to sub-prime loans," he said. This story appeared in The Telegraph yesterday afternoon...and it's Roy Stephens first offering of the day. The link is here.  Congress to Examine S.E.C. Settlement PolicyThe Securities and Exchange Commission's practice of settling cases while allowing corporations or other defendants to neither admit nor deny the charges will be the subject of a hearing early next year by the House Financial Services Committee. The committee chairman, Representative Spencer Bachus, Republican of Alabama, said Friday that "the S.E.C.'s practice of using 'no-contest settlements' has raised concerns about accountability and transparency." He said the hearings were supported by both Republican and Democratic lawmakers. Settlements of enforcement actions using the "neither admit nor deny" construct have been the focus of increased scrutiny, including in the recent Citigroup case, where United States District Court Judge Jed S. Rakoff rejected a $285 million settlement between the financial company and the commission. This story was posted in The New York Times last evening...and reader Phil Barlett sent it to me in the wee hours of this morning. The link is here.  Fitch says comprehensive solution to eurozone crisis is 'beyond reach'Fitch placed six eurozone countries on downgrade watch on Friday, in a damning judgment of the crisis which saw the ratings agency declare that a comprehensive solution to the eurozone crisis is "technically and politically beyond reach". Here is its statement in full. This story is also from The Telegraph...and was posted on their website early in the evening local time. I thank Australian reader Wesley Legrand for sending it along...and the link is here.  Fitch warns Spain and Italy of downgrade as Moody's cuts Belgium by two notchesSpain and Italy were both told to brace for a debt downgrade after a leading rating agency concluded that a "comprehensive solution to the eurozone crisis is technically and politically beyond reach". It cited the "sustained deterioration" in funding conditions for eurozone countries with relatively high levels of public debt, like Belgium, and new risks stemming from the country's troubled banking sector. The downgrade and warnings, delivered after the markets closed last night, came as Spain said its debts had soared; talks with Greece's private bondholders stalled; and Hungary broke off talks with the International Monetary Fund. This story from The Telegraph was posted minutes before midnight in London last night...and is far more comprehensive that the above story on this subject, which just reprinted the Fitch statement. They're both worth reading, but if you want to narrow it down to just one...this would be it. It's another Roy Stephens offering...and the link is here.  Despite current commodity doldrums, McEwen stands pat on $5,000 gold Posted: 17 Dec 2011 12:39 AM PST  As gold bugs get discouraged in the wake of year-end sell offs, über precious metals mining entrepreneur Rob McEwen still is firmly bullish on gold in the long run and stands pat on his $5,000 per ounce gold price prediction. I found this story posted over at the mineweb.com website just now...and the link is here. |
| Iceland Recovery: Democracy and the power of the marketplace Posted: 17 Dec 2011 12:39 AM PST  In the 2008 economic meltdown, Iceland nearly collapsed. Its three banks failed, it's currency lost 50 per cent of its value and in an unprecedented display of anger, usually peaceful Icelanders took to the streets to protest. But Iceland defied the orthodox economic wisdom of the time---bailouts and slashing government services---and now is on the road to a recovery that the rest of Europe envies. The hero of the hour and the man almost solely responsible for this remarkable turnaround is the country's president Olafur Grimmson. By refusing to go along with conventional thinking and by asking the people themselves what they wanted, he set a course for Iceland's remarkable economic recovery. |
| Greeks fearing collapse of eurozone bailout pulled record sums from bank Posted: 17 Dec 2011 12:39 AM PST  An unprecedented exodus of capital from Greece – peaking in a record number of withdrawals from banks in recent months – has exacerbated the liquidity crisis now wracking the recession-hit country. The latest figures released by the Bank of Greece reveal that in September and October alone investors pulled €12.3bn (£10.3bn) from domestic banks, spurred by fears of political uncertainty and economic collapse. Theodore Pelagidis, an economics professor at the University of Piraeus, said: "This is part of the death spiral of the recession as a result of austerity measures. People realise that contagion has come to banks and they are very afraid of losing their deposits. On average around €4bn-€5bn in capital flees the banking system every month." |
| Posted: 17 Dec 2011 12:03 AM PST A reader, LS, asked for my thoughts on the following topics: 1) freegold 2) the gold for oil trade 3) the current price is not a real physical price of gold because of happenings in COMEX/LBMA 4) do you believe the current world affairs will resolve itself towards freegold or something similar? Firstly, I haven't had the time to read FOFOA in depth given the amount of material and thus give it justice. My comments here are therefore tentative thoughts. Freegold is very interesting and I can see the logic of the idea of leaving fiat to perform the medium of exchange role and gold the wealth store role. I have a feeling free banking (see also) and a restriction on maturity transformation would need to be involved for it to work. There is a hell of a lot of discussion condensed in that sentence, more than I have time for at the moment. I would also argue that Freegold needs to allow gold leasing but not gold lending. By "leasing" I mean as in leasing a car, ie physical asset rented (not borrowed and sold). Manufacturers of gold products like the Perth Mint could not operate without leasing because with Freegold's ban on lending of gold and other financialisations it would be difficult (impossible?) to hedge against gold price movements. This leads to my next point, which is that the gold price under Freegold would not be stable and still exhibit some volatility. This is because under Freegold people can save excess wealth either in gold or by investing in productive enterprises (ie true investment). Human nature being what it is we will still have overestimation of the success of productive enterprises, thus failures, thus business cycles, ths varying preferences to store wealth in gold versus investments. On the Oil/Gold idea, I don't have an option as this is not an area of FOFOA I've looked at much. The current price is a real physical price as physical buyers and sellers of size (giants) are willing to exchange at that price. When aversion to counterparty risk really hits market players (MF Global you'd think should have been enough), then we will see a divergence between paper and physical. As to the fourth question, well this is bound to my answer in the paragraph above, which is a necessary condition, but not sufficient, for Freegold to emerge. You would also need consensus that a gold standard is not the answer, and there are strong forces working towards that end. Possibly the biggest problem is getting people to understand the reason why financialisation of gold needs to be banned. How it will end is impossible to predict. Either way it is going to be exciting to see how it plays out.  |
| Huge gold deliveries/More sovereign downgrades/ Posted: 16 Dec 2011 11:38 PM PST |
| Posted: 16 Dec 2011 08:58 PM PST Jim Wyckoff discusses the week in gold with Daniella Cambone. ~TVR |
| John Doody: What Triggered Gold’s Decline? Posted: 16 Dec 2011 08:51 PM PST
From Jim Puplava and Financial Sense: John Doody: The Paper Gold Market vs. the Physical Gold Market Jim looks at what triggered the recent sharp decline in gold. His Big Picture analysis contrasts the paper gold market versus the physical gold market and why you need to understand the difference. John Doody of the Gold Stock Analyst joins Jim to also discuss the recent gold declines, as well as give his analysis on the direction of gold and gold & silver stocks looking ahead. Lastly, Jim takes more of your Q-Calls. Much More @ FinancialSense.com |
| Silver Update: “Silver Optimism” Posted: 16 Dec 2011 08:48 PM PST from BrotherJohnF: Got Physical ? ~TVR |
| LISTEN: Interview with Jim Sinclair Posted: 16 Dec 2011 08:47 PM PST JIm Sinclair defeats deflation and guarantees money printing in his latest with Ellis Martin. ~TVR |
| Posted: 16 Dec 2011 05:43 PM PST BullionVault Friday 16 December, 08:45 EST Phys. Demand "Huge" as Gold Touches $1600, but "Bears in Driver's Seat" as European Govts Fear Possible Downgrades SPOT MARKET gold prices briefly touched $1600 an ounce Friday lunchtime in London – 2.3% up on this week's lows – while stocks and commodities were broadly flat compared to Thursday's closing prices. "Physical market demand continues to improve," says Walter de Wet, commodities strategist at Standard Bank. "The demand is not stellar, but much stronger than a week ago." "We saw huge physical demand [on Friday] from Thailand and Indonesia," adds one dealer in Singapore. "But there isn't much demand from India, mainly because the Rupee is very weak." Silver prices rose to $29.96 per ounce – still 7.0% down on last week's close – while on the currency markets the Euro rallied against the Dollar despite fears that Eurozone government downgrades may be imminent. Heading into the weekend, Dollar gold prices were down 6.9% for the week. Based on gold prices at the afternoon London Fix, the last time gold fell further in one week was the first week of December 2008. Bigger Friday-to-Friday falls were seen in October of that year. Today's London Fix would have to come in below $1488.75 per ounce to surpass the 12.9% weekly drop in gold prices seen in the week ended 17 October 2008. Nevertheless, net outflows saw the volume of gold bullion held to back shares in the SPDR Gold Trust (ticker: GLD) – the world's largest gold ETF – fall yesterday by nearly 15 tonnes to just under 1280 tonnes, the biggest one day outflow by volume since August this year. "Bears are in the driver seat," says Miguel Perez-Santalla, New York-based vice president of sales at Heraeus Precious Metals Management. "But the problems in Europe have not been solved and buying will come back and we will see higher prices because of a lack of confidence in the financial system." "Could Eurozone sovereign ratings be cut as early as this evening?" asks this morning's note from Standard Bank currency analysts Steve Barrow and Jeremy Stevens. Ratings agency Standard & Poor's last week announced it had placed every country in the Eurozone on CreditWatch negative, stating that Eurozone governments have demonstrated they "are not prepared to act collectively in a way that convinces markets". "This sounds to us very reminiscent of the warning S&P gave to the US government ahead of the August 2 debt ceiling deadline," note Barrow and Stevens. "The US had its AAA rating taken down to AA+ a few days later. Notably the rating cut occurred late on Friday August 6, after the markets had closed." The potential downgrade of France – which is currently rated AAA – "does not seem justified based on economic fundamentals," Bank of France governor Christian Noyer said Thursday. "Or if it is, they should start by downgrading the UK, which has a bigger deficit, as much debt, more inflation, weaker growth and where bank lending is collapsing." "It is true," agreed French finance minister Francois Baroin today, "that the economic situation in Britain is very worrying today and one prefers to be French than British at the moment on the economic level." "If the international community doesn't work together," International Monetary Fund chief Christine Lagarde warned last night, "[it risks] retraction, rising protectionism, isolation…this is exactly the description of what happened in the Thirties and what followed is not something we are looking forward to." Lagarde added that the Eurozone crisis "is not a crisis that will be resolved by one group of countries taking action". "It is going to be hopefully resolved by all countries, all regions, all categories of countries actually taking action." European Central Bank president Mario Draghi meantime has repeated that the ECB's program of buying government bonds – which is said to be capped at €20 billion per week – is "neither eternal nor infinite." In a speech given in Berlin yesterday, Draghi also said a "firewall" to prevent contagion across different sovereign debt markets "will be in place and can be activated when needed subject to proper conditionality". Eurozone leaders have agreed to "assess the adequacy of the firewall by next March," he added. Ratings agency Fitch meantime has cut the credit ratings of seven major banks. Bank of America, Citigroup and Goldman Sachs have been downgraded by one notch from A+ to A. Barclays, BNP Paribas, Credit Suisse and Deutsche Bank have all been cut by two notches from AA– to A. "With access to liquidity being constrained, market participants have increasing problems to refinance," says a note from Credit Suisse researchers. "As a result they have to sell their assets – including precious metals – to raise the much needed cash. This is the main reason why gold prices fall on days of increasing funding stress." Over in the US, the House of Representatives is due to vote today on a spending bill agreed last night that, if approved, will avert a shutdown of government agencies. Negotiations continue meantime on a separate deal to extend unemployment benefits and a payroll tax cut. "Congress should not and cannot go on vacation before they have made sure that working families aren't seeing their taxes go up by $1,000 and those who are out there looking for work don't see their unemployment insurance expire," US president Barack Obama said Thursday. Ben Traynor Gold value calculator | Buy gold online at live prices Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK's longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. (c) BullionVault 2011 Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.
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| Can the Second Coming of Paul Volcker Save the Dollar ? Posted: 16 Dec 2011 04:00 PM PST |
| Posted: 16 Dec 2011 01:07 PM PST By George Washington. Cross posted from Washington's Blog. Leading American Internet businessmen warn that the draconian copyright bill on the verge of being passed by Congress would let the US government use censorship techniques "similar to those used by China, Malaysia and Iran." If you want to know what the United States would look like after this bill is passed, just look at what's been happening in Russia: The Russian government has been crushing dissent under the pretext of enforcing copyright law. As the New York Times noted last year:
Since the American copyright bills (SOPA and PIPA) target online activities, the same thing happening to Russian critics' computers could happen to the websites of any Americans who criticize the government, the too big to fail banks, or any of the other powers-that-be. Indeed, the American copyright bill is modeled after the Chinese system. As I noted Monday:
Of course, it might seem over-the-top to worry about copyright laws being used to stifle government criticism in America … if it weren't for the fact that:
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| Enron Scandal Marked End of Innocence Posted: 16 Dec 2011 12:50 PM PST Do you remember how shocked everyone was about Enron? The recent 10-year anniversary of the Enron scandal has inspired a rash of near-nostalgic essays looking back at the roots of what was then the largest bankruptcy in history and its impact on the lives of investors and employees. Today, jaded by trillion-dollar tax-funded bailouts of failed firms easily as culpable as Enron execs, one would scarcely raise an eyebrow were another Enron to occur. Energy giant Enron was the poster child of the go-go '90s; it miraculously racked up billions in profits and earnings as it expanded into scores of new ventures unrelated to its core business. But in late 2001, the company suddenly crumbled, and in the wreckage it was revealed it had been a house of cards along, daisy chains of shell partnerships that allowed the company to conceal the fact it was drowning in debt. As the Associated Press sets the scene: |
| Bob Chapman - Discount Gold & Silver Trading - 16 Dec 2011 Posted: 16 Dec 2011 12:26 PM PST Bob Chapman - Discount Gold & Silver Trading - 16 Dec 2011 , you got to... [[ This is a content summary only. Visit my blog http://www.bobchapman.blogspot.com for the full Story ]] This posting includes an audio/video/photo media file: Download Now |
| Friday ETF Roundup: GLD Surges On Bargain Buys, XLU Falls On Profit Taking Posted: 16 Dec 2011 10:31 AM PST By Jarred Cummans: For a brief moment, it seemed like Friday was going to end the week on a positive note, but a sell-off midway through the day ensured that markets would finish relatively flat. All in all, the Dow finished out the day down 2 points and the S&P 500 gained just 0.3%. The euro was able to hold on to its $1.30 level against the greenback, though that comparison is likely to remain volatile over the coming days. Oil had a relatively volatile day, with its prices swinging back and forth between big gains and losses. Crude eventually finished the day up just 11 cents/barrel. Gold, which has been through a tough week, finally posted strong numbers with a jump of 1.5%. Though many were looking to December to bring a "Santa rally," the month has been a disappointment for the most part. Keith Wirtz, chief investment officer of Fifth Third Complete Story » |
| Rhodium: A Complicated Commodities Play Posted: 16 Dec 2011 09:41 AM PST By Hard Assets Investor: All that glitters is not gold. On May 19, 2011, Deutsche Bank issued db Physical Rhodium ETC securities. Johnson Matthey recently (Nov. 15, 2011) forecast that the metal will remain in surplus (by 123,000 troy ounces (one troy ounce (oz) = 31.10 grams)) in 2011, and now its price has fallen from a "stratospheric" level of over $10,000/oz in June 2008 to "languish" around $1,700 (midprice on Nov. 30, 2011), somewhat lower than that of gold. So, what's with rhodium? The PGMs The platinum group metals, or PGMs, of which rhodium is one, are a group of six metals clumped together pretty much in the middle of the periodic table. The others are iridium, osmium, palladium, platinum and ruthenium. The metal, which is extremely difficult to separate from the other metals with which it naturally occurs (including the other PGMs), is always produced as a byproduct of the extraction of Complete Story » |
| Gold on Verge of Move into Bubble Phase Posted: 16 Dec 2011 09:07 AM PST |
| Gold And Silver Seasonal Trends Posted: 16 Dec 2011 09:03 AM PST |
| Why the Gold Price is Falling Far and Fast Posted: 16 Dec 2011 09:01 AM PST Gold Forecaster |
| These Charts Say It All: Gold Is Still a Buy Posted: 16 Dec 2011 09:01 AM PST |
| Central banks are steadily losing their cover in the gold market Posted: 16 Dec 2011 09:01 AM PST |
| Nero, Bonaparte and Hitler Walk Into an Economic Union Posted: 16 Dec 2011 09:00 AM PST The latest news out of Europe is that British Prime Minister Yes, the hilarity continues. Meanwhile, in the wake kicked up as Europe continues its doomed collision course, the Australian stock market has been making investors sea sick. Shares have been toing and froing on the back of Europe's political mischief every day this week. But are you surprised by what's happening in Europe? That probably depends on how you think about it. Here are some ideas to help you explain the shemozzle so far ... and what lays in store for us here in the land of Oz. 1. This is the end of the welfare state. Believe it or not, the problem with socialism is that you run out of other people's money. You might think British Prime Minister Margaret Thatcher said that. But no, she was even brighter than your editor. She said 'The problem with socialism is that you eventually run out of other people's money.' We added the underline in case you missed the difference. If Lady Thatcher worked at the Daily Reckoning Australia, we wonder how long she'd give Europe. A couple of weeks? A few months? Or do you think she'd say political solutions can and will solve the economic problems? 2. Political solutions don't solve economic problems. Politicians are used to overcoming hurdles by breaking promises and changing their opinions. Some stage coups. But the solutions that work in politics don't work so well when it comes to economics. Economic laws (like 'socialists run out of other people's money') simply hold. No matter what your opinion is of them or what policy you have to fight them. No matter the name and face at the head of your country. Economic laws get you in the end - eventually. The most important economic law that Europe has nipping at its heels is that debt must be paid. You can't pass on the bill to the next politician... and the next... and the next... and the next... forever. 3. Different countries are different countries. It is not The United States of Europe. It is the European Union - the same name the Soviets chose for their fiscal and monetary union. So if the Soviet Union collapsed miserably, why did the Europeans copy the name? And why, for crying out loud, are the Eastern Europeans wanting to join? They just got out of one bungled mess, now they join a different one! When politicians get a wind of this, they will probably try and change the name of the European Union to The United States of Europe. Again, another political solution to an economic problem. And one that suggests a civil war might be in the making. You just can't win. What people seem to have missed in all this talk about unity in Europe is that Europe's history is a reason to keep nations apart, not bind them together. At least as far as their governments are concerned. Do you get your pet cat and dog to become friends by putting them in a sack and shaking it? Worse than just mixing oil and water, the European Union has seen politicians get into cahoots with each other in ways they couldn't before. Politicians have more in common with each other than their citizens. Another level of government has seen more bureaucrats and more politicians leeching off the private sector. 4. The problem is not the Euro Blaming Europe's problems on the Euro is like blaming the size of your credit card bill on the Australian dollar. The currency is a constant. It's spending versus income that's the issue. The entire United States of America exists just fine with the single currency. The world, when it was on the gold standard, used gold as money just fine. The problems for Europe's governments come from the difference between piddling tax revenue and voracious spending. That difference was financed with debt. Politicians promised a free lunch and voters ate it up. The debt grew behind the scenes. If governments had not spent money like drunken sailors, there would be fewer dependents for them to deal with. 5. The latest European solution is a sellution There's something you need to know about the latest European solution. It's happened before. It's almost identical to what was in place in 1997. In fact, this is the third time European leaders have tried to address the issues of debts and deficits in the same way. The idea was, and is again today, to put sanctions on countries that violate certain debt and deficit limits. They're still working on the details. But like the 1997 agreement, the 'pact' will simply be adjusted, amended and then ignored. At best. That means the new pact is going to fall short - at best. And that will leave investors hoping for a miracle disappointed. Not to mention what will happen to the people of Europe. So now you have our observations about Europe's woes. But what's in store for the Europeans ... and us here in Australia? We are entering an increasingly politically dangerous time Plenty of respectable forecasters reckon the world is ripe for a war. That probably seems very unlikely to you. About as unlikely as it did for the world months before World War 1. Back then, things were not as they seemed either. But there was no Daily Reckoning to warn you. The warmonger index is flashing red hot. And here is a tell tale sign: governments are spruiking nationalism to sell government bonds. The Sovereign Man website reports:
In Spain, they're actually issuing instruments called 'Bonos Patrioticos,' or 'patriotic bonds'. Ad campaigns say that the bonds are "good for you, good for the future." Using Italian soccer players to sell bonds is a declaration of war as far as many Germans are concerned. The Irish are being far more creative, but just as stereotypical:
In Ireland, they've issued "Prize Bonds" which carry a 0% interest rate; instead of receiving interest, bondholders are entered into a weekly lottery contest. Yes, the Irish are back to relying on luck. In the spirit of things, Dan Denning has framed and hung up one of his favourite posters here at the office:  Of course, an economic war is far more likely than a military one ... at first. Your editor is reading a book called Currency Wars by James Rickards. It starts out with Rickards reminiscing about his involvement in the Pentagon's first proper economics-based war games. We won't spoil the first chapter's kicker, but how things went down made us laugh out loud. A point Rickards makes is that things descend from economic problems to economic tensions to military ones. And quickly. Sometimes all hell breaks loose, as in WW2. Sometimes it's a standoff, as in the Cold War. But almost all conflicts have their roots in economic tensions. So how should you invest here in Australia as the Old World falls into political turmoil? You've got three options. The first is to own a little bit of everything and a lot of nothing. That's defensive. The second is to be a trader. One person who isn't surprised or worried about the markets' daily to and fro is Murray Dawes of Slipstream Trader fame. Murray reminds us of a theme park attendant down the road at Luna Park. The fellow stands on the rollercoaster (the part of it that moves) and applies the brakes if the carts are moving too fast. It's an absurd sight to see someone standing up on a rollercoaster and calmly applying brakes via a giant lever while fare goers around him scream their heads off. What does Murray have to do with that? Well, Murray is on a rollercoaster of a stock market, surrounded by screaming voices. He calmly adjusts the speed and risk of his trading to whatever he's comfortable with. We're sure his subscribers are enjoying what Murray's served up in the last few days. They were expecting things to wind down over Christmas. Instead, the market has served up a basket of trading opportunities. So far, things are going swimmingly with his last six trades all 'in the money'. In trader speak, that's 'better than a poke in the eye.' Whatever that means. You can watch Murray's free weekly analysis of the markets here. But the third option for you as an Australian investor is the one we really like. If the first two are defensive and aggressive, this one is just smart. You see, governments can make stock markets go up and down. They can even control interest rates. But at the end of the day, some things are just un-alterable. Even for politicians. It's time to invest in the Unalterables It's no coincidence that there's a periodic table hanging on the wall in our office. It includes several 'elements' that would make great unalterable investments. You've heard plenty about gold (atomic number '79' and symbol 'Au'). But what else is out there for the hard asset investor who only wants to invest in tangible assets that the government can't manipulate, devalue or confiscate? For the answers, we turn to Dr. Alex Cowie, editor of Australia's premier resource stock advisory, Diggers and Drillers. I sat down down with him recently to ask what he thinks the best way would be for you to protect and grow your wealth with these unalterables. Long-time DR readers know you're a big fan of silver. And we know that's a story you have your eye on for 2012. What other big resource trends do you see for the year ahead? AC: Potash and tungsten are two commodities I've tracked since the start of the year. Potash is a fertiliser, which is very important in food production. And tungsten has military uses (like hardening the tips of bullets and missiles), amongst other applications. They are too important to their end users to be impacted by the chaos in the global market. And both have risen steadily in price this year. Of the precious metals, palladium is one not too many are talking about that's on my radar right now. Most of the supply comes from Russia. But its stockpiles are running low. And I'm that will trigger a price rally. I'll be focusing more attention next year to changing geopolitical trends. China, in particular, is starting to throw its weight around, and the US is going head to head with it. We've had the currency war for years, now we've got a trade war starting. This is a well-trodden path that leads to military brinkmanship. What we are seeing reminds me of the lead up to the cold war. What this means for Australia - and specifically the resource sector - is a question that needs to be asked. It's clear that you prefer smaller sized companies at the riskier end of the ASX to safe blue chips. Why is that? Wouldn't it be best (and safer) for our readers to make money from the run-up in commodity prices just by buying BHP Billiton? AC: Hahaha. Did you just put the word 'safe' in the same sentence as 'blue chip'? Have you seen Bluescope Steel (ASX:BSL) recently? That 'safe blue chip' has lost 96% in the last three years. Energy Resources of Australia (ASX:ERA) has lost 95% in just two years. APN New (ASX:APN) has lost 90%. These are big blue-chip stocks... and far from safe. As for BHP Billiton, investing in the big mining companies is about as much fun as a root canal. Since the start of 2009, it has managed a 23% gain. Compare that to smaller iron stocks like Atlas (ASX:AGO), which has gained 270%. Or Finders Mines (ASX:FMS), which has put on 570% in the same time. Many fund managers invest in the blue chips as they have such vast amounts of money to manage, the big stocks are the only ones large enough for them to buy into without pushing up the stock price. Often they are legally restricted to investing in the companies on the ASX200. With these stocks you can risk losing 30%, so you can have a crack at gaining 30%. Yawn. And take Australia's biggest gold stock, Newcrest mining (ASX:NSM). Since April, it has fallen 22%. In the same time, one of the South American gold explorers I tipped has gained 66% There are around 800 small-cap mining stocks that are too small for the big players to touch. It's a rich hunting ground for the everyday investor, if you have some risk tolerance and patience. The stocks that do perform can often double or triple in price. But you need to be prepared to lose 30% of your stake to see it pay off. My job is to filter out the duds and identify the stocks that have a real shot at making money for my investors. First I'm looking for companies that are exploring for, or producing, certain types of commodities. I focus on the commodities that are set to keep rising in the next few years. The list has got a lot shorter in the last six months. The chaos in Europe, a slowdown in China, and the stagnating US economy are all making the fundamentals for many industrial commodities look a bit dodgy. You've closed out with a number of winners ranging from 74% gains right up to 125%. But what about the losers? What's your strategy for when a stock you recommend doesn't perform as you expect? AC: I always ask readers to decide their own sell level. Everyone has a different risk tolerance. So, say a 10% loss level is as much as you can face, then decide in advance to sell if it falls that much. Small-cap stocks can be notoriously volatile, meaning they can rise and fall wildly. If you're used to see stocks move by 1 or 2%, it can be a bit disconcerting when the price of a small-cap stock suddenly drop 20%. But this is exactly what can happen with many of the small caps that go on to post gains of 100% or more. Particularly when a stock has a good future, the market functions to get as many people scared and selling so that others can buy their stock cheap. It's ruthless. I try to give stocks as much wiggle room as possible. But when a stock falls beyond an acceptable level, I email readers to let them know that it is time to take the loss, recover their capital, and move on. I don't publish this level, because I want to encourage readers to choose their own risk level. Why did you get told to "f*** off" by a copper mining executive? AC: I introduced myself at a conference and he told me to "f*** off" because I'd put a sell on his company. There's not much good that can come from a conversation that starts like that, so I ended it. The share price of his company had fallen hard, and I decided the time had come to take the loss and move on. This hadn't pleased our friendly mining exec. But so far this has been the right call - the stock has fallen much, much further since then. The point is I work for my readers. Not the mining companies. My goal is to make money for readers. And if things aren't going to plan, then I have to take the heat and make some tough decisions. I can guarantee it's no way to win a popularity contest, but the fact is it has saved readers from further losses time and time again. I want to point out that I have a great deal of respect for the majority of the people in the mining sector. There are a few rogues out there I can assure you, and I give them a wide berth. Most of them, however, are passionate, smart people who love their jobs. It's the favourite part of my job, getting on site or to conferences and meeting them. Over the last year and a half you've hardly been in the office. You've been to countries like Botswana, Peru, Morocco, South Africa, Dominican Republic, the United States, Hong Kong… the list goes on. Not to mention just about every part of Australia. But what's the real point in all this travel? Can't you do all the research you need to from your desk here in Melbourne? AC: In a word - No. Put it this way. If you were internet dating, would you marry a person based on their internet profile alone? OK. Bad example - plenty of people do that. But you get what I mean. Staring at a screen can only get you so far. It's a starting point to gather all the publically available information. But I back the people behind a project as much as the project itself. I spend a lot of time meeting with management. In fact I have caught up with two different companies just this morning. I've had four coffees so far today - my hands are shaking. I get on site a great deal as well. What's not to like about wandering around a wild part of Tasmania, Utah, Peru, wherever the project may be, and talking to interesting mining people? The reason I go is get the real story. Believe me when I say it's helped my readers dodge a lot of bullets. I sleep well at night knowing I've done as much as I can to make sure I haven't missed anything. Regular readers of the DR often hear us referring to you as "The Doc". So let's have it once and for all… what does the "Dr." stand for? AC: Early on in my life, I fulfilled a lifelong ambition of graduating as a veterinarian. That took five years of intense study at the University of Liverpool in the UK. I then worked successfully as a vet for 10 years in seven different countries including the UK, Australia, New Zealand, Kenya, Zimbabwe, Nepal and Thailand. So this is where the doctor comes from. I use it because I've earned it. As an adult, my burning ambition became to work independently in the financial markets. People are always surprised when I tell the tale of my career change, but it was the best thing I ever did. The fact is that when it comes to being an analyst, I've found the scientific training, the ability to take on and process a huge amount of information, and the resilience I developed to graduate and then work in the vet industry, were all excellent foundations for a career in finance. Plus it prepared me for all the animals in the mining sector (joking). As for the formal financial training, I completed the Graduate Diploma in Applied Finance and Investment, which is a post-graduate course. I did this in my spare time years ago, and can recommend the course to anyone. I'm now currently halfway through a Masters degree in Finance, which I do on the side. I like learning and intend to make it a lifelong pursuit. But what I like about the markets is that they reward results, not training. And in that respect, I've found that having a methodical and scientific approach has been just as valuable in financial markets as it was at the clinic. If you'd like to watch Alex's free presentation and find out which six resource investment opportunities he's most excited about for 2012, click here. Nickolai Hubble |
| Remember this if you're forced to brave the malls for last-minute holiday shopping Posted: 16 Dec 2011 08:02 AM PST From Economic Policy Journal: One key is to stop at a location from where you can see as many parking spaces as possible. WSJ explains... Alternatively, from my experience, there is a back parking lot in most malls that is not intuitively easy to find. This is designed purposely in this fashion and it it usually close to... Read full article (with detailed graphic)... More Cruxallaneous: Jim Rogers: Buying this is "a terrible mistake" Why gold is plummeting... And why it's unlikely to last very long A frightening fact that should matter to every man, woman, and child in the United States |
| Four timeless car questions almost everyone has wondered Posted: 16 Dec 2011 08:00 AM PST From LewRockwell.com: Lots of questions come up when the subject turns to cars. Here are a few that come up often – along with some answers that may help: Is it a good idea or a bad idea to buy a former rental (or cop) car? Mixed bag! Most people would probably be fearful of acquiring a former rental/fleet car, thinking it was probably abused by not just one driver but many drivers. But while that’s possible, it’s not likely – with the exception of high-performance or sporty models that were rented by people specifically looking for a good time, not just a way to get from A to B. Meanwhile, the models that were rented for that – transportation – were probably just driven. Not driven abusively. And – important point here – rental cars are usually much better maintained than the average privately owned vehicle. They get regular oil and filter changes according to specific time/mileage intervals, for example. Sometimes, detailed records of the work done will be available. So, there’s that. Also, you can often get a great deal on a former fleet vehicle because the seller is eager to get rid of the car and probably has a half dozen others (or more) that have to go, too. It’s much less personal than when dealing with an individual private seller, who may be determined to get top dollar for his vehicle. The bottom line: Don’t rule out ex-rental/fleet vehicles; check out what’s available and whether it’s worth pursuing. You might get yourself a great car for a great price. Is a diesel powered vehicle more economical than a gas-powered vehicle? Read full article... More on autos: This could be an excellent time to consider buying a new vehicle There's a new criminal threat to your car that you may not expect Where to find pure, ethanol-free gasoline to boost your car's fuel efficiency |
| These three numbers are essential to building long-term wealth Posted: 16 Dec 2011 07:56 AM PST From Mark Ford in The Palm Beach Letter: In marriage, there are three numbers you must know by heart: your spouse’s birthday (October 18), your anniversary (April 19), and how many minutes you can be late before you are in trouble (twelve). To run a business, there are also three vital numbers you must know: net cash flow, the cost of acquiring a new customer, and that customer’s lifetime value. It is no different when it comes to financial planning. The three numbers you should know are: 1. Your lifestyle burn rate (LBR) 2. Your start-over-again fund (SOF) 3. Your take-a-hike target (TaH) If you don’t know these numbers, it is difficult to retire and nearly impossible to feel comfortable about the state of your finances. And yet, most people go through their lives, striving for financial independence, without any idea of what these numbers are or should be. As a result, financial peace of mind is always around the next corner. (By the way, this is just as true for high earners as it is for working class people.) Perusing wealth without a specific knowledge of these three numbers is like driving around a city searching for a particular restaurant without any idea of its address. It doesn’t have to be that way. You can chart a direct path to wealth with these three numbers, and you can do it today. I’ll show you how... Read full article... More on building wealth: Why you should start paying attention to the price of gold The one lesson everyone should learn from Warren Buffett How to become financially independent in three years or less |
| VIX, St. Louis Fed's Financial Stress Index Moving In Concert Posted: 16 Dec 2011 07:53 AM PST By Bill Luby: Last year I talked about the St. Louis Fed's Financial Stress Index (which I am calling the STLFSI in order to lower my carpal tunnel risk) as a measure of financial market risk that I consider complementary to the VIX and in some cases perhaps even a superior alternative. Given the fact that some investors have difficulty coming to terms with the "holiday effect" and the seasonal swoon in the VIX, I thought it might be timely to update a chart I have posted here previously which captures the movements in the more broad-based STLSFI. Note that the chart dates from January 2007 and includes all the data from the financial meltdown of 2008, as well as the various permutations of the European sovereign debt crisis that have plagued the financial markets during the last two years or so. (Data are through the last update to the STLFSI, 12/9/11.) Looking Complete Story » |
| Forget Lehman, Watching For Another Credit-Anstalt Moment Posted: 16 Dec 2011 07:45 AM PST By Eric Parnell: It has been a common refrain from nervous investors since the initial outbreak of the financial crisis back in 2008. "Are we on the brink of another Lehman moment?" The translation of this question is readily apparent given that the Lehman failure is still so fresh in our memories. Will we soon see the collapse of a systemically important banking institution that will lead to another financial market contagion and sudden stock market collapse? Given the persistent risks in Europe, this is a critically important question to consider. But in contemplating this possibility, it is worthwhile to take this thought process one step further. "Are we on the brink of another Credit-Anstalt moment?" The translation of this question is less obvious. First, what exactly is Credit-Anstalt? Founded in the 1850s, it was an Austrian bank that was a systemically important financial institution as one of the largest banks in Europe. Complete Story » |
| Is Embraer An Emerging Defense Industry Leader? Posted: 16 Dec 2011 07:21 AM PST By Investment U: By Mike Kapsch It's already the fourth-largest aircraft manufacturer in the world. Brazil's Embraer S.A. (NYSE: ERJ) has produced more than 5,000 aircraft that operate in 92 countries on five continents. Annual revenue from commercial and private jet sales alone total nearly $4 billion. But the company isn't satisfied. It's expanding its defense and security operations, as well. And it may have struck gold in its home country. According to SunTrust Robinson Humphrey Senior Analyst Peter Skibitski, three pending defense deals with Brazil's government could add "several billions of dollars" to Embraer's coffers "over the next four or five years." Considering Embraer's current annual revenue is $5.28 billion, an additional $1 billion a year is an enormous opportunity. The only question is, is Embraer ready for the challenge? Three Reasons Embraer's Shares Could Fly Although it has spent the majority of its time producing aircraft for commercial and private use Complete Story » |
| Home Builders (Technically Speaking) Posted: 16 Dec 2011 07:09 AM PST
Editor's Note: Today, Nathan O. gives us some technical observations on a couple of select homebuilder stocks. The article gives you a great view into Nathan's process of isolating trade opportunities and identifying proper entry and exit points. By the way, you can still beta-test Nathan's new service – The Global Trend Capture – FREE of charge with no credit card required. We're letting traders give it a try in exchange for some honest feedback. The goal is to create a quality product that truly enhances any trader's strategy. Anyway, without further adieu, here is Nathan's take on the homebuilders… ~~~~~~~~~~~~~~~ Last week, Mike outlined Toll Brothers (TOL) recent success for the fourth quarter (which ended October 31st for them). One of the things I often do is evaluate sectors as a whole, drill down to the individual components and then plug those stocks into my trading system. The process typically takes only 15-20 minutes once I have narrowed down the choices. The "narrowing down the choices" process consists of essentially two steps. If you took advantage of my supercharge your trend trading report or participated in the Global Trend Capture service you know that when faced with several opportunities I try to narrow it down. For example, if we have three trade opportunities in one sector (say GLD, SLV & JJC) I analyze each and typically take or favor one. Get your 14-day Free Trial to the Live Feed See our trading book in real-time. Trade setups, execution reports and real time market commentary. Claim your 14-day trial to the Mercenary Live Feed. I primarily have two methods that help me make that decision. One is relative weakness or strength and the other is time of consolidation. I will cover the first method in more detail below, using the two companies listed:
Let's examine each one, compare and I will give my feedback. For relative strength or weakness I typically use a daily chart. I use weekly charts for consolidation analysis. I know what you are thinking….."Wow, this sounds so complicated" (sarcasm intended). Maybe you were hoping for an exciting new indicator or neural network program I developed that you can plug into your TradeStation charts for $99.95. Similar to my trading intelligence level, I prefer "simple" approaches. Traders in my opinion try too hard to overcomplicate things. Not sure if it is done to look smarter than the next trader or prove their savvy with the markets, but more complicated is not usually "more" better. Maybe I am just not smart enough to understand all this new technology, blinking lights and colored waves that intertwine most traders' trading screens. I assume it is not because I am lazy, I mean you guys take two naps a day like me correct? Ok, let's get a bit more serious here.  RELATIVE STRENGTH / WEAKNESS I don't use RSI or an indicator for my definition of relative strength or weakness. I simply pull up a daily chart and look at the price action over the last six months and compare it to other stocks, ETF's or currencies in the sector. Let's compare (TOL) and (NVR) and their respective charts to better summarize my view of relative strength/weakness:
I put a simple 89 day exponential moving average to show overall long trend. Since price is now trading above this moving average, I consider this an uptrend. The blue bars mark higher swing lows, which also confirm strength. I don't consider swing lows in place until the most recent swing high is broken. We see that the red bar swing low was actually broken briefly before the trend resumed. I don't consider the trend over necessarily when this happens, only that it tells us we are now in a consolidation or pause stage until the most recent swing high is broken (marked by the larger purple arrow) or if another swing low is broken that the trend could possibly be truly changing. The orange bar is not a swing low until the swing high (marked by larger green arrow) is broken. Due to the higher swing lows and price relative to the longer-term moving average this would qualify as strength. The analysis becomes more meaningful when comparing to another stock. Below is a chart of (NVR):
With respect to the moving average, we are slightly above, but overall the line has sliced through the daily bars. This represents choppy consolidation to me when viewing price relative to the moving average. Compare it to TOL, where once price breached the moving average we only had a couple days below or riding the line. NVR has made a habit or riding the line like a tightrope walker. When looking at the swing low picture, we have only had two confirmed swing lows (vs. 6 with TOL), as the last swing low (orange) is unconfirmed. Price must break above the larger green arrow before the orange bar is confirmed. In summary, on a relative basis TOL is considerably stronger relative to NVR. We can argue about many things, but you can't really dispute the price bars position relative to the moving average or the number of confirmed swing lows.
Now the decision part is where many of you will argue with me about which is the better company to trade. While 100% of the time (just looking from a relative strength/weakness comparison) I would go long TOL over NVR if given a signal by my system, many traders are married to the idea we should buy the stock that has not gone up as high (as it has gone up less relative to the most recent bottom). It is not my job to convince you otherwise, but let me ask you a few simple questions: 1) If two animals are traveling to the top of a hill (a Doberman and a donkey), who would you think has the greatest potential to get to the top first and with the most momentum? I'm partial to Dobermans because I am on my third one, but I believe most people would go with the Dobe in this scenario. 2) On the flip side, should it start to rain, get muddy and become tough to navigate (i.e. the trend changes and we head south), chances are again the Doberman will fight much harder vs. tumbling down the hill as the donkey would. There are exceptions to this, as high momentum stocks speed up and also down when the rocket fuel runs out, but in most cases buying relative strength and selling relative weakness is the right approach. Bottom line, if we had a choice between buying TOL or NVR if they both broke their current swing high I'd go with TOL every time. If we were to go short and they both broke through their swing low I'd go with NVR every time. One other important point is to always recognize the following: "As trader's we don't trade guaranties or certainties – we trade probabilities". Even if you are fortunate enough to have "tiger blood", at best we increase our probability of a good trade. Especially with individual stocks, where anything can happen, there is nothing to prevent TOL from reporting accounting "irregularities" and getting hammered days after our entry. Over time; however, consistency with regard to relative strength/weakness should pay off in your trading results. 'Til we trend again – Nathan |
John Doody on the Direction of Gold and Gold & Silver Stocks and listener questions.
I am not pretending you could not simply look at both charts and figure out which one is stronger. I am offering methods you can use to quickly make a decision between competing investments.| You are subscribed to email updates from Gold World News Flash 2 To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
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