silver
Top Metal for Profits Right Now
By George Leong for Daily Gains Letter | Sep 12, 2014
A look at precious metals shows gold and silver are devoid of any momentum at this time, while copper has been steadily retrenching from its recent highs.
Copper is playing off of the global economic growth, but a metal that is surging on the charts and catching the imagination of metal traders on the London Metal Exchange is zinc.
Zinc is used in numerous industrial and consumer applications. Steel companies use zinc as a rust inhibitor, so it’s quite important to manufacturing. The United States Mint also uses zinc to make pennies.
The problem is that the world supply of zinc is contracting.
However, zinc is currently around a three-year high and looks good as an investment opportunity at this time.
An intriguing small-cap zinc play that has been sizzling on the chart and is an investment opportunity in the global economic renewal and supply issues is Horsehead Holding Corp. (NASDAQ/ZINC). The company’s share price is up 62% from its 52-week low and has easily outperformed the S&P 500 over the past year with a 45% advance. But despite the company’s advance, Horsehead seems to still have upside potential, which suggests the company could offer a good investment opportunity.
Operating via its Horsehead Corp. subsidiary, the company produces specialty zinc and zinc-based products that are made from recycled materials.
The company closed an old plant and replaced it with a newer, more advanced facility that will produce better fabricated steel products along with raw materials found in the manufacturing of rubber tires, alkaline batteries, paint, chemicals, pharmaceuticals, and stainless steel.
Products include zinc metal used as a protective coating to … Read More
Three Silver Plays That Can Weather a Short-Term Downturn
By John Whitefoot for Daily Gains Letter | Mar 27, 2014
Technically, the Federal Reserve’s job is to oversee the monetary policy (short-term interest rates) of the world’s biggest economy. Obviously, it does, but it’s also important to remember that its opinion and carefully chosen words also have a major impact on the global markets and world economies.
If the Federal Reserve says the U.S. economy is doing well, investors flood the markets. If, on the other hand, the Federal Reserve says the U.S. economy is having difficulty gaining traction, investors turn their attention to precious metals to hedge against a weak U.S. and global economy and inflation.
It’s worked like clockwork since the Federal Reserve stepped in to help kick-start the U.S. economy with its generous monetary policy after the markets crashed. During the first round of quantitative easing (November 25, 2008 to March 31, 2010), silver climbed 65%.
Sensing the economy was still unstable, the Federal Reserve initiated its second round of quantitative easing (November 3, 2010 to June 30, 2011), during which time silver climbed an additional 39%. In September 2012, the Federal Reserve commenced its third, open-ended round of quantitative easing. If history is any indicator, the third round of quantitative easing should have been a boon for silver—but it wasn’t.
Silver prices edged steadily lower over the ensuing months. In April 2013, The Goldman Sachs Group, Inc. famously trimmed its outlook for gold to $1,450 an ounce by the end of 2013 and $1,270 at the end of 2014. The company noted that the banking crisis in Cyprus didn’t have the expected positive effect on the price of gold.
Silver and gold prices fell lower in … Read More
Geopolitical Events Boosting These American Stocks
By John Whitefoot for Daily Gains Letter | Mar 19, 2014
When it comes to Wall Street, oil isn’t the only commodity investors are seeking stable supplies of—you can add platinum to the list.
Besides being home to great beaches, South Africa is also home to the vast majority of platinum. South Africa produces roughly 80% of the world’s total demand for platinum. Together South Africa and Russia (both geopolitical hotspots) mine 90% of the world’s annual supply of the precious metal, which is around 130 tonnes per year, equivalent to six percent of the world’s annual gold production.
Labor strife that has gripped South Africa over the last two years at the country’s three biggest platinum mines has brought the industry to its knees, with the global output dropping by more than 40% in just a few weeks.
Rising production costs (South African platinum is located in deep subterranean seams) and wage demands have led to a number of labor strikes. The first one to make us sit up and take notice occurred in August 2012, when South African police shot and killed 34 miners. More recently, wage strikes at some of South Africa’s biggest platinum mines are almost into their second month.
With no end to the labor disputes in sight, many are calling on the government to step in and usher miners back to work. The sense of urgency comes with stockpiles of platinum at the largest producers expected to last only until the end of March, after which, platinum prices could move significantly to the upside—or rather, much more than they already have. Platinum prices are up 6.6% since the beginning of February and are currently hovering … Read More
How the Trend Is Changing for Silver
By Sasha Cekerevac for Daily Gains Letter | Feb 12, 2014
One of the interesting things about investors is how so many become complacent over time. When precious metals like silver were rising steadily, more and more people jumped on the bandwagon. But times have changed.
With few people in the media talking about precious metals, I think it’s a good time to take a look at silver, as 2014 could potentially be a very strong year for the metal.
Obviously, we know that 2013 was a tough year for most of the precious metals, as investors began to believe that economic growth was going to accelerate globally. Over the last couple of months, it is clear that global economic growth is far from certain.
Uncertainty is an important component for the precious metals market, and we have seen silver react much more sharply than the other commodities, both to the upside and the downside.
As people become more uncertain, they look to assets that they believe can help protect their wealth. The emerging markets are getting hit badly, including Turkey hiking rates massively in one day, Argentina and Venezuela having serious issues, the Ukraine experiencing riots, and China now exhibiting signs of a slowdown in economic growth. Considering all of this, it’s no surprise that many people in nations around the world continue to accumulate precious metals, including silver.
An interesting note from last week made by the European Central Bank (ECB) president, Mario Draghi, in his comments following the central bank meeting is the possibility that there could be additional monetary stimulus (money printing) coming shortly.
With economic growth nowhere in sight in Europe, to have yet another central … Read More
Will 2013’s Worst-Performing Metal Rebound in 2014?
By John Whitefoot for Daily Gains Letter | Jan 9, 2014
The year 2013 was not kind to gold; the yellow metal closed the year down about 28%—its biggest annual drop in three decades. But in spite of the awful year for gold, it wasn’t the worst-performing metal in 2013. That dubious distinction goes to silver.
On the heels of quantitative easing, a devaluation of the dollar, and inflation, safe haven investors were expecting silver prices to trade in the $30.00–$50.00-an-ounce range. Sadly for these investors, that did not come to fruition.
After starting 2013 at $30.00 an ounce, the white metal finished the year around $19.50 an ounce—an annual loss of 36%. The dismal year is even more cringe-worthy when you consider silver recorded an average price of $31.15 in 2012—the second-highest on record.
Silver prices tanked in mid-April on the back of gold’s violent descent. Gold prices plummeted (in part) on the rumored sale of gold reserves in Cyprus. This decline occurred despite the demand for physical gold remaining strong in India and China. This point is important because, together, these two countries account for more than half of the annual demand for gold.
Still, silver prices fell in step with gold and then continued to slip lower over the ensuing months after the Federal Reserve hinted it might begin to taper its $85.0-billion-per-month easy money policy.
While analysts are divided as to how silver will perform in 2014 (some of them are calling for a range of $19.00–$26.00 an ounce and others are suggesting $30.00–$34.00 an ounce), the year will present investors with some solid opportunities.
For starters, the recently announced pullback in quantitative easing from $85.0 billion … Read More
This Cheap Sector Set to Outperform in 2014
By Sasha Cekerevac for Daily Gains Letter | Jan 7, 2014
With the new year just beginning, many investors will begin looking at their portfolio and trying to figure out how to shift their investment strategy to include sectors that should outperform in 2014.
One investment strategy I like to use during the beginning of the year is to look for a situation where fundamentals are improving, but market sentiment remains weak.
At year-end, many times you will see tax loss selling occurring. Essentially, investors are selling those holdings that have gone down the most to crystallize the losses for tax purposes. This also presents an opportunity—if the long-term investment strategy is sound.
One sector that has been hit hard is the precious metals sector. This should be no surprise to many readers, as the sell-off in precious metals has gotten a lot of negative media attention. However, I would like to bring to your attention an investment strategy of looking to add industrial precious metals, such as platinum and palladium, to your portfolio.
The vast majority of demand for both platinum and palladium is for industrial purposes, especially for catalytic converters in the automobile industry. These precious metals are crucial for the production of vehicles, and demand in this sector continues to rise.
While total vehicle sales for the full year of 2013 aren’t in yet, it is expected that U.S. auto sales will be the highest in six years, with an approximately 50% jump from the lows experienced in 2009. In 2014, U.S. auto sales will continue to be strong, with an estimated total number of over 16 million units sold.
The investment strategy in these industrial metals is … Read More
The “For Sale” Sign on Precious Metals
By Sasha Cekerevac for Daily Gains Letter | Dec 13, 2013
Do you feel wealthier today compared to last year?
According to the Federal Reserve, you should, as the household net worth of Americans rose 2.5% between the second and third quarters of 2013 for a total of $77.3 trillion. (Source: “Financial Accounts of the United States,” Federal Reserve, December 9, 2013.)
The Federal Reserve calculates household net worth by looking at the value of stocks, homes, and other assets, minus mortgages and debts.
In fact, the nominal total wealth is at a record high. Adjusted for inflation, the current level of net worth is approximately one percent below the peak prior to the Great Recession. On paper, it appears as though economic growth is booming thanks to the Federal Reserve.
But if you’re like most Americans, you’re probably skeptical of this so-called economic “growth,” and rightfully so, since the underlying fundamentals of economic growth really are missing.
While we are seeing some jobs growth, it’s obvious that the current situation is far from ideal. Millions of people remain unemployed, and the jobs being created are of poor quality.
However, because of the Federal Reserve’s easy money printing, asset prices have been boosted upward, creating a significant amount of wealth for the top portion of America’s society.
Over the long term, we cannot have sustainable economic growth if only the top five to 10% of Americans participate. While the Federal Reserve has tried to create economic growth for everyone, the policies are quite clearly tilted toward the very wealthy.
What does this say about the current level in the stock market?
Many people in the mainstream media are stating that the … Read More
Three Indicators to Turn Your Trust Back to Precious Metals
By John Whitefoot for Daily Gains Letter | Dec 12, 2013
Despite the wintry Arctic chill, the economic recovery is in full bloom. Or is it? Wages are stagnant, unemployment remains stubbornly high at seven percent, and consumer confidence remains tepid at best. The average American investor clearly isn’t enjoying the Wall Street perpetual momentum machine.
Are stocks fairly valued (i.e. cheap), and is the current momentum sustainable? If you consider the charts, it looks like well-heeled investors think the market is inexpensive; how else can you explain the current bull market marathon? This is after an increasingly larger number of companies on the S&P 500 warned about revenues and earnings.
In the third quarter, a record 83% of all S&P 500 companies revised their third-quarter earnings guidance lower. So far, 92 of the S&P 500 companies, or 89%, have already issued negative earnings guidance for the fourth quarter. In spite of the warnings, the markets continue to tread higher.
I’m not the first person to say you can’t beat the Fed; but this market proves it every day. Thanks to the Federal Reserve’s $85.0-billion-per-month easy money policy, the markets just go higher and higher.
So, are the markets fairly valued? Not if you think S&P 500 revenues and earnings are important. Over the last few years, companies have been doing a good job at cutting costs; in fact, corporate profits are at an all-time record high at 70% of GDP. (Source: “Corporate Profits Are At An All-Time Record Peak At 70% Of GDP,” Forbes web site, November 30, 2013.)
S&P 500 earnings are also being artificially inflated due to low corporate tax rates. While the top corporate tax rate is … Read More
Bitcoin: The New Gold?
By John Whitefoot for Daily Gains Letter | Dec 9, 2013
Back in March, a Canadian man listed his house for sale in exchange for Bitcoins—5,362 of them. At the time, the digital currency was exchanging hands at US$73.00, which means the house was available for about $395,000. (Source: “Canadian house first on sale for Bitcoin currency,” RT.com, March 25, 2013.)
The listing was considered a risky (and bizarre) idea; after all, the digital currency is experimental, decentralized, and can be transferred to anyone, anywhere in the world. Until recently, it was debatable as to whether or not this currency would even gain traction.
Because it is digital, the currency does not exist in a physical sense. It also isn’t issued by any central bank, and that might be part of the appeal; without a central bank, accounts cannot be seized or frozen. (That’s an attractive point for those in Cyprus who had 10% of all savings and deposits seized by the government.)
The lack of an intervening central bank also means the currency cannot be manipulated. While the digital currency is regularly being “minted,” there is a limit to how much can be created; this is to prevent inflation. There are currently around 12 million Bitcoins in circulation. After the year 2140, no more will be minted, and the total amount available will stand at a maximum 21 million.
Still, the price of a Bitcoin can fluctuate wildly. First introduced in early 2009, the digital currency floundered, coming in at about US$14.00 earlier this year. Now, the digital currency is “worth” around $1,080. Had the above-mentioned house sold for 5,362 Bitcoins, and had the owner held onto those coins, his … Read More
Fundamentals & Technicals Pointing to Silver as the Next Big Trade
By Moe Zulfiqar for Daily Gains Letter | Oct 10, 2013
I have been a very big advocate of using both fundamental analysis and technical analysis together to get a better idea of what to expect next when it comes to prices, be it for stocks, precious metals, currencies, or other investment instruments. But when I use this strategy to look at silver, I can’t help but be bullish.
First, let’s look at the technical side:
As you can see in the chart below, silver hasn’t performed well since the beginning of the year—it’s down roughly 30% from its peaks in February—but few things have changed since it had sell-offs in April and June. The prices found support at the $19.00 level, and have not seen those levels again; as a matter of fact, the precious metal’s prices have been trending higher since then.
In addition to this, the moving average convergence/divergence (MACD), a momentum indicator, is suggesting that bulls are coming in slowly. Furthermore, silver prices recently crossed above their 50-day moving average, a move considered to be significant and in favor of the bulls.
Chart courtesy of www.StockCharts.com
On the fundamental side, there’s a significant amount of information that suggests the price of the white precious metal may increase going forward.
First and foremost is the relationship between gold and silver. I have mentioned in these pages before that we are seeing the fundamentals of gold prices getting better. The central banks are continuously printing, keeping easy monetary policies low, and those in the emerging markets are buying the precious metal. As the gold prices go up, silver prices will follow the same direction.
Secondly, the demand for the … Read More
How the Debt Fiasco Will End for Long-Term Investors
By Moe Zulfiqar for Daily Gains Letter | Sep 24, 2013
The financial crisis struck the U.S. economy five years ago. Those who remember the collapse of Lehman Brothers know how much uncertainty was actually there. It seemed the U.S. economy was going to halt and the financial system would collapse. Ripples across the global economy were felt. Nothing looked safe—it was a total bloodbath. Investors had many questions, including if they would be able to protect their nest eggs.
As a result of all this, to fight the uncertainty and handle the issues at hand, the U.S. government and the central bank jumped in and started to spend. They bailed out the big banks in the U.S. economy to make sure everything would continue to run smoothly. We passed through that successfully, and the worst didn’t come upon us.
Sadly, as all this happened, we saw troubling trends starting to form in the U.S. economy.
Look at the national debt.
As the government started to rev up its spending spree, it posted a budget deficit and eventually borrowed money. To give you some idea, in January of 2008, when the behemoth was starting to awaken, the national debt of the U.S. economy stood at $9.2 trillion. Fast-forwarding to now, it stands at $16.7 trillion. Simple math suggests this is an increase of more than 81%. (Source: “The Daily History of the Debt Results,” Treasury Direct web site, last accessed September 20, 2013.)
Unfortunately, it doesn’t end here. Not too long ago, Treasury secretary Jack Lew sent a letter to the U.S. government saying that if they don’t increase the national debt limit currently in place by October, the U.S. economy … Read More
A Bullish Case for the “Other” Precious Metal
By Moe Zulfiqar for Daily Gains Letter | Sep 20, 2013
Silver has been one of my favorite precious metals. One of the reasons I like the white metal is because not only is it used as a store of value, but it also has industrial uses. With that said, this shouldn’t suggest that I don’t like gold. The yellow metal has its own place; it provides a hedge against inflation and uncertainty. Silver, however, I see as having much more potential than gold when it comes to percentage change.
Putting it simply, for silver to increase 100% in value, it will have to go to $40.00, considering the current price is $20.00. For gold to go up by the same degree, it will have to increase to $2,700; it can get there, but it will be a very rigorous battle.
We are currently seeing the demand for silver increase, just like we did with gold. This shouldn’t go unnoticed by investors.
Since the beginning of this year, we have seen the Indian government working together with the country’s central bank to curb the demand for gold bullion. We were told that “it was impacting the country’s trade accounts.”
India has since imposed higher taxes and tariffs. As a result of this, a new trend emerged, with the demand for white precious metal increasing in the country that prides itself as the biggest consumer of gold. Silver imports from April to July in India increased 258.65% to 857 tonnes, compared to 239 tonnes in the period a year ago. (Source: Mishra, P., “July silver imports highest in 5 years,” The Times of India web site, August 2, 2013.)
Looking at the … Read More
Natural Gas the Next Big Commodity Trade?
By Moe Zulfiqar for Daily Gains Letter | Sep 19, 2013
To put it mildly, natural gas simply doesn’t get as much attention as crude oil, or even gold. Mr. Speculator, my good old friend, once said, “Why would you want to even bother looking at it? The prices have collapsed and have been ranging for years.” It’s certainly true that natural gas prices have come down from where they used to be. Just take a look at the chart below to see what has happened to the price of natural gas in the past few years.
Not very long ago, natural gas prices were trading above $13.00 in 2008. Now, they are below $4.00; that’s a decline of almost 70%. With this, one should really wonder if natural gas has any future. Is this commodity even worth paying any attention to?
As I dig further into the details, I see natural gas prices going higher in the future. When this will happen is very hard to predict, but all the cases are pointing towards that conclusion.
When it comes to evaluating the prices and their direction, the most important factor I look at is the supply and demand, be it for gold, silver, oil, or any other commodity, for that matter. The basic rule of economics suggests when the demand goes up and the supply stays the same or declines, the price increases.
Chart Courtesy of www.StockCharts.com
This is exactly what is happening when it comes to natural gas.
Let’s backtrack a little. In the first half of 2013, 39% of electricity in the U.S. economy was created using coal-fired plants. This is troublesome, because the U.S. government is actively … Read More
Our Top Three Defensive Plays for Falling Commodities Prices
By Moe Zulfiqar for Daily Gains Letter | Aug 8, 2013
While investors with balanced portfolios have enjoyed great returns provided by the key stock indices thus far, those who were heavily focused on commodities and the basic material sector most likely beg to differ. Commodities prices have come down across the board: precious metals like gold and silver have been trending downward, copper prices are edging lower, and agricultural products like corn and soybeans are outright facing selling pressures.
With these happenings comes a question: what should an investor do in situations like these, when the commodities prices are sliding lower?
One action investors might want to take before falling commodities prices take a further toll on their portfolio is to cut their losses and change their allocation, selling what has gone down significantly. Simple math would suggest this: if a stock has fallen 50% in value, it has to increase 100% for an investor to just break even.
If investors continue to be persistent with a belief that commodities prices have a great future ahead, but are witnessing a minor sell-off now, they may want to look at companies that are involved in making, exploring, or doing business with those commodities and have some sort of income attributes to them.
The idea behind this investment strategy is simple: until the commodities prices settle down, companies can provide investors with income in the form of dividends. For example, if a stock price goes down 10%, but over the year it provides a six-percent dividend, then, in essence, their loss is only four percent for the year.
The following are a few ways investors can be exposed to certain commodities and … Read More
Forget Gold & Silver for Now: This Is the Mineral Investors Should Be Playing
By Moe Zulfiqar for Daily Gains Letter | Jul 26, 2013
There’s a rush happening in the U.S. economy, but no one seems to have heard much about it. No, it’s not for gold, silver, or oil. This time around, it has to do with rare earth elements, or what are sometimes referred to as rare earth metals.
Before going into further details about how investors may be able to profit from this situation in the making, it is necessary to know what these rare earth elements are and what they are used for.
Rare earth elements, at the very core, have many different uses. They are used in technology like cell phones, televisions, and lighting systems. They are also used in aerospace, automotive, and energy industries. Note that these are just a few of the uses of rare earth elements; there are many other uses for them, as well.
How critical are rare earth elements? According to Ian Ridley, director of the U.S. Geological Survey Central Mineral and Environmental Resources Science Center in Colorado, “without rare earths we’d be back to having black-and-white cellphones again.” (Source: “Gold rush trash is Information Age treasure,” USA Today, July 21, 2013.)
One must ask the question: why call it a rush?
As their name suggests, these elements are rare, found only in certain locations. This leaves them vulnerable to demand and supply shocks.
As a matter of fact, we saw something similar back in 2011. A rare earth element called neodymium, used in the automotive industry, could be purchased for $15.00 a kilogram in 2009. Fast-forward to 2011, and the price of this rare earth element reached $500.00 a kilogram; that’s an increase … Read More
Why Are Short Sellers Avoiding These Two Gold Stocks?
By John Whitefoot for Daily Gains Letter | May 2, 2013
Is the global economy recovering? While the economic indicators aren’t exactly robust, that hasn’t stopped some investors from seeing the silver lining. Gold, held in exchange-traded funds (ETFs) and other gold-related equities, is primed for the biggest monthly drop ever as investors, sensing the global economy is in recovery, are selling off bullion.
And it’s selling fast. Gold slipped into bear-market territory in mid-April, on the heels of improving global growth and weakening fears of rampant inflation. On Friday, April 12 and Monday, April 15, gold prices sank 14%, the biggest decline in 20 years. And on Tuesday, April 15, gold hit an intraday low of $1,321.50 per ounce.
You can’t keep a hard asset like gold down, though. Over the last couple weeks, the price of gold has rebounded and is currently trading up more than 11%, near $1,472. That’s still 19% below the $1,559 per ounce gold was trading at on April 11, the day before it was trounced.
Gold still has a long way to go to make up for the mid-April rout. At depressed prices, though, many astute investors realize some gold companies are sitting in attractive ranges—the operative word being “some.”
The path to recovery is still fraught with challenges. With global production costs currently hovering around $1,200 an ounce, a further price depreciation could send some of the lesser financially stable gold producers into a tailspin.
One indicator investors like to consider when looking at stocks is the number of short sellers. Short sellers are those who are betting a company’s share price is going to fall.
While no single indicator can predict a … Read More
Bull or Bear, Here’s How to Make Money with Silver
By Moe Zulfiqar for Daily Gains Letter | Apr 23, 2013
Do silver prices have any room to run up, or has the metal lost its shine? This question is getting a lot of traction these days among investors, as the price of the gray metal has declined significantly since the beginning of this year—more specifically, since the recent drop in prices in April.
In April of 2011, silver prices hit a record high and reached almost $50.00 an ounce. In 2012, the metal traded in a sideways channel, from $27.00 to $35.00. Take a look at the long-term chart of silver prices below:
Chart courtesy of www.StockCharts.com
Historically, since the bull run in silver prices began—in the midst of 2001, when it traded close to $4.00—there have been sharp corrections. In 2008, silver prices fell from trading above $21.00 to $9.00 per ounce; this was before the financial crisis started to really unfold. Similarly, in 2006, silver prices dipped more than 30%, dropping from $15.00 to below $10.00 per ounce. Going back even further, in 2004, silver prices plummeted from trading well above $8.00 to below $5.50. (All these periods are circled in the chart above.)
In all these instances, it took silver more than a year to recover and reach a high.
Keeping all this in mind, the bulls are saying that as long as the global economy remains treacherous, governments continue to spend, and central banks around the world keep printing money; then just like gold, silver prices will soar higher, as well. The bulls argue that the global economy is still fragile: China is slowing down, the U.S. is witnessing dismal growth, and the eurozone is still … Read More
Time to Add Commodities to Your Retirement Portfolio?
By John Whitefoot for Daily Gains Letter | Apr 17, 2013
In an effort to reduce volatility and protect their investments against the rising cost of living, many investors add commodities to their retirement portfolios. That’s because a large number of commodities are influenced by inflation well before it impacts the overall economy.
The perfect reflection of supply and demand, commodity prices climb when there is strong demand and taper off when the economy is doing poorly; in the latter case, the future looks bleak.
Gold prices collapsed earlier this week, suffering their sharpest fall in 30 years. Silver is also down; so, too, is copper, oil, lead, aluminum, corn, wheat, soybeans—simply put, commodities are getting hammered.
It’s not as if there isn’t news to support the decline in commodities. The U.S. has seen a raft of negative economic news trickle in. April consumer confidence levels fell from 78.6 in March to 72.3—its lowest level in seven months. (Source: Smialek, J., “Consumer Sentiment in U.S. Declines to a Nine-Month Low,” Bloomberg, April 12, 2013.) U.S. retail sales fell 0.4% in March—the largest drop in nine months. (Source: Kowalski, A., “Retail Sales in U.S. Decline by Most in Nine Months,” Bloomberg, April 13, 2013.)
Weaker-than-expected growth in China, Asia’s largest economy, is weighing on global sentiment. China’s economy expanded just 7.7% during the first quarter, below the forecasted eight percent. Industrial output was expected to expand by 10%, but it only climbed 8.9%. (Source: “Market Buzz: Negative outlook on weak data from China,” RT web site, April 15, 2013.)
And conditions in the 17-member eurozone are still dismal. Joachim Starbatty, one of Germany’s pre-eminent economists, said he wants to see the dissolution … Read More
Underlying Economic Indicators Dim, but Gold ETFs Retain Their Shine
By John Whitefoot for Daily Gains Letter | Mar 28, 2013
Americans save for retirement by building wealth through a number of different ways. In addition to personal savings accounts, we build wealth through home equity, pension plans, retirement accounts, and Social Security.
Unfortunately, since 2008, the underlying values of our tried and true wealth management techniques have come under attack. Housing prices are still down 41.0% from their peak in 2007. In fact, 10.5 million homes in the U.S. are in negative equity territory, meaning 21.5% of all residential homes in the U.S. are worth less than their mortgages. (Source: Panchuk, K.A., “CoreLogic: 10.4 million mortgages still in negative equity,” Housing Wire, March 19, 2013.)
At roughly 52.4%, Nevada has the highest percentage of properties with mortgages in negative equity; Florida follows with 40.2% in negative equity, and the housing rebound–rich state of Arizona comes in third, with 34.9% of all properties underwater.
Social Security amounts to $1,237 a month, less than $15,000 a year; that’s not a lot to rely on. And there’s really nowhere to park your extra cash, either. Bank interest rates are a measly 0.5%, bonds are near 3.1%, and jumbo five-year certificates of deposit (CDs) only return around 1.5%.
The downturns in home values, interest rates, and retirement accounts have significantly reduced the amount of wealth available to finance retirement for the average American.
Yes, the Dow Jones is in record-high territory, but the underlying economics can’t support the gains for much longer. Eventually, Wall Street has to reflect Main Street, and right now, it isn’t. Unemployment is hovering near eight percent, as is household debt. Gross domestic product (GDP) is flat. And the economic … Read More
The Inflation Apocalypse: Here Comes the Next Super Cycle
By Mitchell Clark for Daily Gains Letter | Mar 22, 2013
Two big trends are about to collide: global warming and global re-inflation. And the result is going to create a lot of shocks and opportunity. I’ve heard people refer to the recent tsunamis, rising temperatures, floods, and droughts as the “weather apocalypse.” Whatever you call it, the re-inflation in prices combined with global warming is going to create a new super cycle in agriculture and agribusiness.
The business cycle is changing in financial markets. Currencies are being devalued. The bull market in bonds is over. Central banks are repatriating their gold. There’s massive monetary stimulus, and now there are rising prices, which should help boost earnings initially. The stock market could go a lot higher this year.
The re-inflation cycle has staying power, even through the next U.S. recession. An inflationary business cycle, product scarcity, increasing demand, and the weather represent a fundamental, long-term uptrend for agriculture—the final leg of the commodity price cycle.
The stock market’s recent breakout was very powerful. Wall Street is now ahead of first-quarter earnings season. Before the next big crash, I think the stock market will have one final push higher—a lot higher than current levels.
I absolutely agree with Jim Rogers’ view about agriculture. But hey, even Jim has something to sell you. The re-inflation definitely has consequences, but global monetary stimulus is on a tear. And as an investor, it doesn’t pay to fight it.
The stock market is holding firm ahead of first-quarter earnings season. Its performance is very similar to the strength experienced during the first four months of last year. “Sell in May, and go away?” I think it’s … Read More
