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Thursday
Sep012011

Tracking Gold

GLD Logo 25 February 2010.JPG


Recently, we’ve received a number of emails from readers asking why the primary gold ETF, SPDR Gold Trust (NYSE:GLD), doesn’t more closely track the price of gold, and other related questions. For those readers who aren’t already familiar with the workings of this innovative way to “own gold,” it’s worth going over a few of the details, because there are some common misunderstandings regarding the ETF.

The creators of GLD were as savvy as it gets.

Click to read more ...

Wednesday
Aug312011

International Monetary Fund: Central Banks still acquiring Gold

CMI Logo.JPG

Good Day Team,

First up is a plug for a site called cmi-gold-silver.com just for those who may not know of its existence. Headquartered in Phoenix, Arizona, CMI Gold & Silver Inc. is one of the oldest gold and silver dealers in the United States and has played a major role in introducing investors to the gold and silver markets. Although domiciled in Phoenix, Arizona, CMIGS buys and sells gold and silver with investors across the United States.

Click to read more ...

Monday
Aug292011

Gold Mining Stocks: A Questionable Performance

HUI Chart 29 aug 2011.JPG

The gold bull remains intact and continues to show strength despite the recent take down. However a question mark still hovers over the gold mining stocks which are trading as though gold is in its seasonally summer doldrums.

Taking a quick look at the the chart of the HUI* we can see a possible short term double top forming, as the mining stocks make another attempt to rally high enough to break the 610 level.

Click to read more ...

Friday
Aug262011

Has the Fed Started QE3?

Casey1 27 aug 2011.JPG



By Bud Conrad, Casey Research

The Fed surprised the market by extending its policy of 0 to 0.25% Fed funds rate to mid-2013. The way the Fed manages to drive rates lower is to buy Treasuries with newly created money – driving the price up and the rates down. The big question is whether the policy will have a sizeable effect on markets. The chart below shows the historical jump in the Fed’s combined policy tools that were used to lower rates and bail out financial institutions through a variety of programs. These include the big purchase of mortgage-backed securities (MBS) called QE1 and the large purchase of Treasuries called QE2.

Click to read more ...

Thursday
Aug252011

Tensions mount as we wait for Ben Bernanke to speak

usd vs gold 26 aug 2011.JPG



We kick off we with a short video starring Peter Schiff and a panel of experts who share their views on just what might be included in tonight's speech by the Chairman of the Federal Reserve Board, please click here.


Now across to Reuters for a quick update on the state of play:

U.S. stocks fell on Thursday as investors raised cash ahead of a critical speech from Fed Chairman Ben Bernanke, hoping he will give them a clearer picture of the Fed's plans for the struggling economy.

Several negatives contributed to the market's weakness after three days of gains. Jitters over a sharp drop in German stocks and a report showing continued U.S. job market weakness helped fuel the selling.

Stocks rose earlier this week, partly on expectation the soft U.S. economy could trigger another round of monetary stimulus from the Federal Reserve, much like the one suggested by Bernanke at the same conference in Jackson Hole, Wyoming, a year ago.

"There is an assumption there is not going to be an announcement on monetary policy, but the market set up this week like that was the case," said Art Hogan, managing director of Lazard Capital Markets in New York.

"There seems to be a bit of a dichotomy from what people are saying to what they are doing."

Bernanke, who is scheduled to speak on Friday at 10 a.m. New York time (1400 GMT), is most likely to outline gradualist measures, which would disappoint those looking for dramatic action, such as a fresh round of asset purchases.

Stocks opened higher after Bank of America (BAC.N) said Warren Buffett's Berkshire Hathaway (BRKa.N)(BRKb.N) would be taking a $5 billion stake in the bank, whose shares had fallen to two-year lows earlier this week.

"We had some upbeat emotion at the open with Warren Buffett's investment in Bank of America but that fizzled very quickly when we looked across the pond and saw what was going on with German markets," said Hogan.

The S&P 500 is still up 3.2 percent so far this week, which could be the first positive one for the benchmark index in the
past five. The Dow Jones industrial average .DJI dropped 170.89 points, or 1.51 percent, to 11,149.82. The Standard & Poor's 500 Index .SPX fell 18.33 points, or 1.56 percent, to 1,159.27. The Nasdaq Composite Index .IXIC lost 48.06 points, or 1.95 percent, to 2,419.63.

Volume has decreased from the frenzied first three weeks of August. Major averages have stabilized, with 1,120 on the S&P 500 now viewed as a key support level, but it remains to be seen whether stocks can gather enough steam for an extended rally.

"I think a lot of what's been happening in the market is positioning or repositioning for different events," said Doreen Mogavero, CEO of Mogavero, Lee & Co in New York. "I'm not sure how much of it is real investing."

Bank of America gained 9.4 percent to $7.65 in trading of more than 855 million shares, or almost 10 percent of total composite volume on the day.

Prepare for another bumpy ride when Ben Bernanke speaks as his words will be analyzed to pieces with every possible scenario being proffered from all corners of the universe.

Regarding www.skoptionstrading.com, we currently have six open trades all of which are showing a good profit.

For those subscribers who are too busy to trade their own accounts we are now able to offer an Autotrading program with our SK OptionTrader service, as we are pleased to announce that we have entered into a partnership with GlobalAutoTrading and also with eOption therefore auto trading is now available for SK OptionTrader signals


Our model portfolio is up 396.58% since inception

An annualized return of 119.04%%

Average return per trade of 42.21%

85 closed trades, 82 closed at a profit

Average trade open for 45.41 days


sk chart return on SK OptionTrader Model Port 22 aug 2011.JPG



The above progress chart shows our performance when profits are re-invested, however, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.








Wednesday
Aug242011

Margin requirements to trade gold have been increased

We kick off with a quick look at Myra Saefong's article on Market Watch which summarizes this announcement by the CME Group Incorporated and then we have a missive that we received today from Jim Sinclair.



For the second time this month, the CME Group Inc., the parent company of the main metals and energy exchanges in the U.S., announced late Wednesday an increase in margin requirements to trade gold. It raised the amount of money needed to trade gold contracts by 27% to $9,450 per 100-ounce contract.

The move comes on the heels of a $104-an-ounce drop in gold futures prices, which some analysts had blamed partly on speculation that the CME would raise margin requirement again.

Gold’s approach to $2,000 an ounce “invited excess speculation and therefore margin concerns for exchanges,” said Richard Hastings, a macro strategist at Global Hunter Securities. “The quasi-exponential price behavior was dangerous and the exchanges today view this with significant concern — and act quickly.”

Brien Lundin, editor of Gold Newsletter, said “raising margin requirements after a major decline doesn’t affect the speculative bulls as much as the bears.”

“We may see this move help foster a rebound by forcing shorts to cover,” he said.

In electronic trading on Globex, December gold GC1Z was trading $3.70 higher, after closing at $1,757.30 on the Comex division of the New York Mercantile Exchange.

-Myra Saefong

...........................


My Dear Extended Family:
 
What is at the heart of the violent markets? The answer is Skier Illustration number 3.
 
Will Bernanke do something in the coming week? It does not matter in reality as business conditions are headed to a double dip in which the double could be wild on the downside. The Fed will act because of the balance sheet condition of the US and Western world financial industry devoid of false OTC derivative values.
 
Liquidity will be provided and Skier Illustration number 3 will take place, taking the US dollar lower and Gold to higher highs either now or very soon. As far as margin rates are concerned, they will rise to cash on both gold and silver before either sees full valuation.
 
 
You have heard from me on this gold reaction. Now hear from the extremely accurate Alf fields:
 
"The good news is that once the anticipated correction has been completed, gold should commence intermediate Wave 3 of Major 3. This should be the longest and strongest up-wave of the entire Bull Market. Expect high volatility and very high prices during that up-wave."
 
Now let's here from Kenny Adams, Master Technician, on long term trends:
 
"So far we have the potential for a topping action that may generate a moderate to deep correction - but not a long extended correction - not a termination of a bull trend."
 
Now lets hear from Dean of Gold, Harry Schultz:
 
"Don't bother me now. Call me when gold trades at $2400."
 
So stop worrying. At the worst this is a fast, deep correction before much, much higher prices for Gold.
 
Respectfully,
Jim

Despite today's correction we are holding fast and intend to ride this one out. The focus of attention is now firmly on the words, actions, inuendo and the spin that goes with of the Federal Reserve Chairman, Ben Bernanke.

Its also expiry day for silver traders tomorrow so we expect prices to stay suppressed, however, this is a dip and maybe it should be bought. Too tight for us to call.


Regarding www.skoptionstrading.com.

For those subscribers who are too busy to trade their own accounts we are now able to offer an Autotrading program with our SK OptionTrader service, as we are pleased to announce that we have entered into a partnership with GlobalAutoTrading and therefore auto trading is now available for SK OptionTrader signals


Our model portfolio is up 396.58% since inception

An annualized return of 119.04%%

Average return per trade of 42.21%

85 closed trades, 82 closed at a profit

Average trade open for 45.41 days


sk chart return on SK OptionTrader Model Port 22 aug 2011.JPG



The above progress chart shows our performance when profits are re-invested, however, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.








Wednesday
Aug242011

85th Trade Takes SK OptionTrader’s Model Portfolio to Gains of 396.58%

On the 28th of June we signalled to our subscribers to “...sell the GLD August 2011 $140/$139 Vertical Put Spread for $0.20 with 10% of our capital allocated to this trade. This trade involves selling the $140 puts and buying the $139 puts, resulting in a net credit of $0.20.”

Then on the 20th of August we told our subscribers that “Our short GLD Aug 20 '11 $140/$139 Vertical Put Spread position has now been closed. As expected, the puts have now expired worthless and so we have banked a 20% profit on this trade. This profit level was achieved some weeks ago, however letting the position expire rather than closing it saves unnecessary commission costs”. Not only did we close yet another profitable trade, but we saved our subscribers the commission costs of closing the trade with their broker. Our 85th trade brought our model portfolio up to record gains of 396.58%! That is an annualized return of 119.04%!

Even with a simple trade such as this, $1000.00 invested would have generated profits of $200.00, paying for your subscription fee in this trade alone! This is not to mention the profits that could have been generated if one had invested in our other trading signals. In fact if one had invested a $10,000 portfolio in accordance with SK OptionTrader signals, that portfolio would now be worth $49,657.88. For more information on our past performance, feel free to check out our trading record.

Once again SK OptionTrader has continued to outperform other vehicles for trading gold, even during times when gold has gone sideways our model portfolio has increased to a massive 396.58% gains.

Currently the SK OptionTrader model portfolio is up 396.58%, which means a $10,000.00 portfolio invested in accordance with SK OptionTrader signals would now be worth $49,657.88. On average position gains 42.21% in 45.41 days, which provides an annualized return of 119.04%.

We currently have trades open which are showing gains of over 260%, and we see these positions as well as others in our portfolio gaining further! We also recently closed a trade with gains of 197.14%. So now is the perfect time to open a subscription with SK OptionTrader and begin increasing the profitability of your options trading portfolio.

Subscribe for 6 months - $499

 

Subscribe for 12 months - $799

 

sk chart performance of 10k mod port 22 aug 2011.JPG

sk chart return on SK OptionTrader Model Port 22 aug 2011.JPG

Wednesday
Aug242011

Fear Mania Comes to Gold

By Jeff Clark, Casey Research

Is the mania here?

When most investors hear the word “mania” they think of a runaway market induced by greed. You know, that animal-like instinct we all occasionally feel, the one promising riches from a market on a rip-roaring tear.

Gold is up 28% since July 1, a mostly one-way rocket ride that’s transpired in just 36 trading days. It’s up 35% year-to-date, and it’s still summer. But it isn’t greed driving our runaway gold price.

Welcome to the Fear Mania.

Pick your headline – the downgrade of US debt, solvency concerns with European banks, the sudden negative outlook for the global economy, or crashing stock markets. While none of those are exactly shocking developments to most readers here, it caught much of mainstream off-guard, driving them to safe havens. Gold has responded.

Here’s some evidence that we’re in a fear mania. First, as economic fears suddenly took a turn for the worse, investors didn’t rush into stocks. They didn’t even really pursue other precious metals.

Here’s a look at how the four primary precious metals have performed as fear in the marketplace increased. Notice how the returns shifted as the gloom ratcheted up.

What Metal Performs Best in a High Fear Environment?

casey what metals 25 aug 2011.JPG

Since industrial and jewelry uses comprise roughly 93% of all demand for both platinum and palladium, a reasonably positive economic outlook is required for these metals to perform their best. We don’t have that right now, and when a strong economy will return is highly debatable.

Silver started the year with a bang – but even it lagged gold as negative economic news made bigger headlines. Industrial use alone comprises 52% of all demand for silver, so it, too, is vulnerable in a slowing economy. (The price will soar again, though, as we’ve seen the past few days, when bad economic news leaves the front page and investors once again pursue it as an alternative currency.)

There are more clues we’re in a fear mania. Many U.S. investors don’t realize this, but only 8% of bullion and jewelry demand comes from North America. A full 92% of the critical drivers of physical demand originate elsewhere. Gold in these countries (China, India, Vietnam, Indonesia, South Korea, Thailand, etc.) has been intertwined in culture, religion, and economy for 2,000 years. We can thus garner hints about the gold market from these regions, where the metal is a longstanding and ingrained part of the financial makeup.
First, are they pulling back on their purchases in light of rocketing prices? Or perhaps even selling to grab a profit? The World Gold Council reported last week that “signs of strength in the market remain concentrated in India and China… It is quite hard to see what is going to dent strength of demand at the moment.” And this from the UK: “Even at these elevated price levels, interest in physical gold remains excellent,” said Ross Norman, CEO of Sharps Pixley.

A second clue from this large group comes from scrap sales. One would think now is the optimal time to cash in your old gold jewelry, with prices reaching such unexpected highs. So scrap sales are up, right?

From the Wall Street Journal yesterday: “Scrap sales are down by 50%-60%. People are feeling that gold is the only safe place left for investments,” said Pawan Chokshi, an Ahmedabad-based bullion dealer. “There are hardly any scrap sales happening and I think that’s a phenomenon cutting across India. Even at these prices, people are feeling that it’s better to invest in gold rather than sell their old gold.”
Martin Grubb of the WGC said this to Reuters last week: “The price elasticity of recycling seems to be changing. Normally, you would see a lot of recycled gold coming back into the market at such a high gold price – but recycling was very muted in the second quarter, and so far the evidence is that there isn’t a lot of recycling coming back now, either.”

According to Grubb, these regions have adjusted to the current price environment and expect the upward price trend to continue. If fear were muted, scrap sales would be rising at these price levels, not falling dramatically.

And last, don’t forget central banks. South Korea just disclosed a big bullion purchase, buying 25 tonnes last week, more than doubling its holdings. Mexico, Russia, and Thailand have already been major buyers this year. In fact, year-to-date, governments have almosttripled their net gold purchases over 2010, increasing their holdings by 203.5 tonnes this year, up from a 76-tonne rise last year.

Central banks have “fiat fear” and are diversifying their reserves away from the dollar and other afflicted currencies. And this is not a trend that will change on a dime, as most of these countries have a tiny percentage of their reserves denominated in gold. They’ll be buying for quite some time. Remember, they were net sellers of gold for 23 years, becoming buyers just last year.

The bottom line is that gold is doing exactly what it’s supposed to do. Global fear is high, and these are the exact circumstances where gold fulfills its ultimate role.

There are direct investment implications here. First, if you believe there is further shock-and-awe type bad news ahead, you’ll want to favor gold over most other assets and even other metals. Second, prices in a mania tend to go higher and further than what most expect. I certainly wouldn’t chase it here, but I wouldn’t be without some exposure either. Last, high levels of fear also increase volatility. Expect big swings in gold going forward, and that includes corrections. The next one could be a doozy.

In the big picture, think about this: The relentless rise we’re witnessing is just the beginning. We haven’t even hit an inflation-adjusted price from 1980 yet; we’re at least 21% away from that, and that’s assuming the government measures inflation correctly. Here’s an excellent video demonstrating that we’re not yet in a bubble; it also shows just how high the price could climb.

You might not think the price will fetch the high four-digits in this Fear Mania. But don’t forget what comes next.

The Greed Mania.

[Owning physical gold is good protection from the sinking value of the US dollar; investing in the right gold miners can yield even higher returns. BIG GOLD focuses on the larger miners that have strong profit potential, and will help you build your wealth. Give it a ninety-day risk-free trial.]



Regarding www.skoptionstrading.com.

For those subscribers who are too busy to trade their own accounts we are now able to offer an Autotrading program with our SK OptionTrader service, as we are pleased to announce that we have entered into a partnership with GlobalAutoTrading and therefore auto trading is now available for SK OptionTrader signals


Our model portfolio is up 396.58% since inception

An annualized return of 119.04%%

Average return per trade of 42.21%

85 closed trades, 82 closed at a profit

Average trade open for 45.41 days


sk chart return on SK OptionTrader Model Port 22 aug 2011.JPG



The above progress chart shows our performance when profits are re-invested, however, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.








Tuesday
Aug232011

Exiting the Eye of the Storm - Doug Casey

Eye of the storm.JPG





[Ed. note: This is an interview of Doug Casey by Louis James, both of Casey Research.]

L: So, Doug: London has suffered more damage from recent rioting than from anything else since the Blitzkrieg; the stock market had its most volatile week in years; gold shot well north of $1,800; and the U.S. government almost crashed into its debt ceiling. Smells like blood in the streets. What does a street fighting man like you make of all this?

Doug: Well, it was about 40 years ago in 1971 [laughs] when I read Harry Browne’s first book, How to Profit from the Coming Devaluation. In that book, Harry said that if gold went as high as $200, it would be a sign runaway inflation was coming, and readers might need their survivalist retreats, etc. He was actually right about everything he said in the book, and for the right reasons, but things didn’t get as bad as quickly as Harry thought they would.

That just goes to show that if you predict any particular number or outcome, you should not say when it will happen, or if you predict a time for important events, you should not say specifically what will happen.

Anyway, I’m very uncomfortable predicting serious gloom and doom for two reasons: One, most individuals intuitively look out for themselves by producing more than they consume and saving the difference – so the amount of net wealth in the world grows. Two, technology continues to improve – Moore’s Law and all that.

L: I’ve heard you say that before, but you’re the guru, so you don’t get off so lightly. What do you feel comfortable telling us?

Doug: My sense is that we are definitely exiting the eye of the storm at this point, and we’re heading back into the raging winds of financial, political, and social turmoil. The riots you see now are just an indicator of what’s ahead – an appetizer… hardly the main course.

L: That’s a pretty bold statement, Doug. We’ve been talking about the so-called recovery really being nothing more than the eye of the financial storm that hit in 2008. But the U.S. and other governments around the world have been able to animate the corpse of the 20th-century economy and keep an appearance of life in its zombie motions longer than we thought possible. To say we’re exiting the eye of the storm implies that zombie is going to stop moving and the smell of decay will soon overpower everything else. Are you ready to make that call?

Doug: You’re asking me to do what I just said was unwise: to say both what and when. But yes, it does look grim to me. With the markets fluctuating so wildly, the Dow going up and down hundreds of points per day, that’s very likely to spook the government, investors, business managers, and consumers even more than they already are. Normally I don’t pay much attention to consumer confidence; it’s an emotional state, and emotions can change in a New-York second. But at this point the economy rests on nothing more substantial than confidence. It’s a confidence game. And confidence can blow away like a pile of feathers in a hurricane.

L: So what we’re looking at is not just a bump in the road. It’s going to change priorities and marching orders for market participants – and for those who interfere in the markets in various ways.

Doug: Yes. It’s the kind of thing that accelerates a negative spiral, in good part because everybody wants the government to “do something,” in the idiotic belief that it can improve things by doing more. Actually it can only help by doing less.

L: So… the economy slows more. Why can’t the government reanimate the corpse one more time, turning up the juice on the stimulus heart-shock paddles?

Doug: They’ve already created trillions more currency units. Most of these are currently sitting in banks rather than circulating. That’s partly because people are afraid to borrow and banks are afraid to lend, but also because the Fed is paying banks interest to keep what are considered to be excess reserves locked up. So these trillions of dollars that were created to bail the banks out are sitting there, but they’re not going to sit there forever. Once those dollars start circulating in the economy, prices will rise rapidly.

The other way for prices to really explode would be for the foreigners holding some six or seven trillion hot-potato dollars to start dumping them. With the U.S. government clearly unable to deal with its debt and the consequent credit rating downgrade – which was both inadequate and long overdue – those foreigners are getting pretty nervous holding dollars. Almost any sort of financial calamity could spook some central bank into exiting its dollar position wholesale. And once one of them starts, the race will be on, because no one is going to want to be left holding the bag.

These are two time bombs that are ticking away right now – the trillions of dollars outside the U.S. that could come pouring back in, and the trillions of dollars inside the U.S. that were created to paper over the leading edge of the storm. Either of those things could bring on the end of the dollar as we knew it, and both may well happen at once.

L: Okay … But the state has been very good at convincing people to pay no attention to the man behind the curtain. If the markets settle down, why can’t people go back to imagining that everything’s fine?

Doug: I’m not sure that many people really ever believed there was a recovery under way. Wall Street acted like there was – but only somewhat, since banks never started lending again. But unemployment has remained high; it’d actually be about twice the official 9% level, if it was calculated the same way it was 30 years ago. And outside of the price collapse of certain asset classes – like real estate – the cost of living has increased greatly for most people; the calculation of the government’s CPI is as corrupt as its unemployment numbers. I think it’s a mistake to talk about a double dip in the economy; we entered the Greater depression in 2007 and are still in it. A “jobless recovery” is not a recovery. The only thing that’s recovered is the stock market, to some degree. Aside from government hocus-pocus, the mirage of corporate earnings, and foolish investors wanting to believe it was safe to get back in the water, things have not gotten better. And they are about to get much worse.

L: That may be so, but the government, the press, and corporate America have all been talking about a recovery. With the Fed promising easy money, if the markets calm down, couldn’t the illusion of recovery be reestablished?

Doug: I don’t think so. The economy isn’t going to stay in the eye of the storm for much longer. The stab of panic we saw last week gave lie to the emperor’s new recovery clothes. It’s not just the losses on the stock market, but gold hitting significant new all-time highs in nominal terms, and Bernanke saying that the Fed would hold interest rates close to zero for another two years. That’s huge – and a huge mistake. It tells me that Bernanke has truly panicked. The impact this will have on the dollar cannot be overstated; it’s a guaranteed disaster. It assures that people will do all sorts of things they would not do without that artificially easy money.

L: Okay, but if they go into debt to buy houses and cars, they’ll create jobs and there will be more appearance of recovery, won’t there?
Doug: That’d just be digging the hole deeper at this point. What needs to be done is to let the market raise interest rates, to encourage savings – the accumulation of the capital needed to start moving forward on a solid basis. Instead of encouraging people to work, spend less than they make, and save the difference, these low interest rates encourage profligacy. They encourage people to liquidate savings and live above their means. As usual, the government isn’t just doing the wrong thing, it’s doing the exact opposite of the right thing.
L: Because...

Doug: Because of the false belief that printing money stimulates the economy. The artificially depressed interest rates of today will result in very high inflation and very high interest rates in the near future. A healthy economy gets naturally low interest rates as a result of a lot of savings, a lot of capital creation. A healthy economy has stable interest rates that relate to the amount of new wealth being created, typically just above the natural rate of inflation that results from real money – gold – being mined out of the ground. Artificially low interest rates stimulate malinvestment.

The Fed is also keeping rates low because of the government’s massive debt problem. The U.S. is already running trillion-dollar deficits – if interest rates go up, say, to 12% like back in the ‘70s, that would add another trillion to the deficit right there. Financing a $16 trillion debt at 12%, rather than 2%, equals another $1.6 trillion of spending – just for interest.

This really means they have no choice. The situation is completely out of control – the U.S. financial house of cards is irredeemable at this point, even with interest rates at close to zero. The whole financial structure is close to collapse, and that’s why I think we’re exiting the eye of the storm.

L: The Titanic has been struck, but Captain Obama just doesn’t yet realize how badly?
Doug: Exactly. And – adding insult to injury – not only are they doing the opposite of the right thing, they are actively punishing people who did the right things, who worked hard and saved. Pensioners living on fixed incomes are being forced to reach for higher and higher yields, which means they are being forced to put their nest eggs into riskier and riskier investments. This guarantees that the pensioners and the savers will be wiped out.

L: Unless they put their savings into gold.

Doug: Sure, but nobody but crazy goldbugs even thinks about that. And it gets worse: The current course guarantees the total destruction of the U.S. dollar. Again, I cannot emphasize enough how serious this is. People all around the world save in dollars. If the dollar is destroyed, it won’t just be Americans who’re hurt, it will be all the hard-working people around the world who’ve struggled to scrimp and save and put money away for future needs. All these people who were wise and frugal, they are going to be wiped out. They are going to be left with absolutely nothing. This is criminal – it’s the stuff revolutions are made of. And that’s exactly what I expect we’ll see plenty of, all around the globe.

L: Seems so clear – what could they possibly be thinking?

Doug: Perhaps Bernanke’s making the same mistake people with maxed-out credit cards make, when they think hyperinflation will wipe out their debts. They forget how nasty, brutish, and short life can be in a society in a hyperinflationary collapse. And think about it: What happens if you wipe out these debts? Who are the debtors? They are the most profligate people in society. So these artificially low interest rates reward the most irresponsible and punish the most responsible people in society.

L: Absolutely perverse.

Doug: [Chuckles] Took the words right out of my mouth.

L: Easy enough to do in this case.

Doug: Well, there’s your answer. What’s going on now really is creating the foundation for revolution, and not just in the U.S. The riots in London and Chile, and other outbreaks of chaos around the world aren’t anomalies – they’re a warmup. An overture before the symphony starts. Things will be especially bad in British and European cities, where there are millions of people who’ve never worked. Ever. They’ve just lived off the state.

L: Maybe we’ll hear the music on November fifth.

Doug: “Remember, remember, the fifth of November…” That would be interesting indeed. Readers should rewatch V for Vendetta to put them in a proper frame of mind on how serious things are. I mean… it is going to be a time when Street Fighting Man will be a most appropriate theme song. Turn up your speakers.

L: I agree with you, Doug, but I have to say it makes me a bit nervous to come out and say we’re exiting the eye of the storm. The powers that be have proven far more adept at keeping the balls they are juggling in the air than I ever thought they could be. Every time I think it can’t get worse without things coming apart, it does get worse, and somehow things don’t come apart, they keep going.
Doug: Of course. As I started out saying, Harry Browne’s prediction 40 years ago was essentially the same that I’m making today. Harry was a bit early – and I was too, in 1980. But this time really is different, with so many unprecedented actions and reactions between the market and the state. I truly see no way out for the state this time, and it’s going to be much, much worse than it would have been had it collapsed back then. I can’t say for sure exactly when things will fall apart, but I’m more convinced than ever that they will, and that we are about to plunge deeper into the Greater Depression.

L: What if you’re wrong?

Doug: I honestly hope I am, because if I’m right, the global economic devastation is going to have a very real and significant death toll. The price in human suffering these fools in government are setting us up for is truly monstrous. As a human being, of course I’d rather see good times.

L: But as a speculator…

Doug: Yes, as a speculator, I know the crisis will create phenomenal opportunities. If we lived in a stable society, with a stable monetary order and a non-predatory government, it’d be impossible to be a reliably successful speculator, because there’d be few or no politically induced distortions in the economy to take advantage of. So, always looking on the bright side, we can look forward to many new bubbles to result from the state’s massive interventions today and in the future.

L: Such as?

Doug: There will be a huge bubble in gold ignited, and maybe soon. That seems pretty much baked in the cake at this point.
L: That’s interesting. A lot of people say gold is already in a bubble – that the recent surge up to $1,800 per ounce is a sure sign of that. But you’re saying it hasn’t even started yet?

Doug: Well, I hate encouraging people to buy gold at $1800 an ounce, because that level is already more than 700% above the bottom in 2001, and I’m a bottom fisher. I like bargains, and I can’t call gold a bargain today. But it’s plain as day that gold is going to go higher. There’s simply no other place for people to try to safeguard their wealth as the dollar, euro, and other currencies plummet toward their intrinsic values. What else could people buy as they get more and more afraid of paper currencies losing acceptance? What are corporations going to do with the billions of dollars in their treasuries when their management gets frightened? Where else can they go when they need to get rid of dollars, euro, yen, and yuan? Central banks, too – what will they do when they need to dump dollars in favor of something that will hold value?

This is why I see a bubble in gold still ahead. It has nothing to do with the supply and demand for gold in the jewelry trade, or whatever – it’s going to be a result of there being no viable alternatives when the paper-money con game is over. Gold is the ultimate cash, and that’s where people will go when there’s a global, total, panic to cash.

L: Agreed. Other investment implications?

Doug: Gold mining stocks. Most good ones aren’t bargains, even though they’ve been lagging gold in recent trading, maybe because of the fear in the marketplace. But they’re going higher.

L: Of the two major forces that drive markets, greed and fear, which do you think will predominate going forward? Because there are different buying patterns, depending on whether it’s greed or fear in the driver’s seat…

Doug: You’re quite right. I think it will be a market driven primarily by fear for some time, and that will favor profitable producers, emerging, high-margin production stories, and maybe the best of the best explorers advancing projects with obvious merit towards production. Nobody buys the risky junior exploration plays when fear is driving the market.

L: Except a bottom fisher.

Doug: Except a bottom fisher, yes. There will be some fantastic opportunities in earlier-stage exploration companies that will get smashed because of fear. But speculators looking for those have to be patient. Many junior explorers will dry up and blow away during the fear-induced drought. Eventually, the best will come roaring back when the bubble inflates and the real mania phase of this bull market kicks in. Then, everything with “gold” in its name will trade at ridiculous premiums, even the crappiest juniors whose only gold is in their name.

L: How long before greed kicks back in?

Doug: There you go asking for a time as well as a prediction again. I don’t know, but it could be a while: A lot of greed has been washed out of the system with the big panic of 2008, the real estate collapse, and the stock market really going nowhere for the last ten years. Plus, when the bond market collapses, as I think it will, that will be the final blow. That’s really The Big One on the horizon these days – the bond market is three times the size of the stock market, so a major reversal there will cause enormous damage.

L: So, stay away from the junior explorers?

Doug: Just the crappy ones – and as you well know, 95% of explorers have nothing and never will have anything. But there are some which actually have gold or silver in the ground – or clear drill indications that they are close to being able to report having such assets – the kind you specialize in finding for the International Speculator. Those stocks are going to benefit from the flood of money hitting the precious metals sector. Remember, the whole gold market is trivial in size. It’s only a tiny fraction of the oil patch, and not even a rounding error compared to the global market. When the average investor wakes up to the need to own gold for safety and the potential profit from owning gold stocks for leverage to gold, it’s going to be like trying to fit the contents of the Hoover Dam through a garden hose. Prices will go ballistic, and there will be plenty of money hitting even the smaller juniors that have good stories.

L: Good reminder about safety.

Doug: And that’s another factor that will be driving the price of gold: It won’t just be speculation, it will be prudence – the flip side of fear. Prudence will drive people into buying more physical gold. Greed will drive people into gold stocks. I own a lot of physical gold already, but I’m still buying, even at these levels. And I own a lot of gold stocks, but I’m still accumulating those too, when we dig up good opportunities.

I look forward to seeing the pictures I know you’ll take on your next rock-kicking expedition, trying to dig up one of those good opportunities. ‘Til next time.

L: All right then – ‘til next time.

[The dollar crisis Doug alludes to isn’t some far-fetched, distant possibility: It’s very real, and it’s in progress now. Join Casey Research in a free online event – September 14 at 2 p.m. Eastern time – to learn more about the American debt crisis and how to protect yourself from the coming storm.]


Regarding www.skoptionstrading.com.

For those subscribers who are too busy to trade their own accounts we are now able to offer an Autotrading program with our SK OptionTrader service, as we are pleased to announce that we have entered into a partnership with GlobalAutoTrading and therefore auto trading is now available for SK OptionTrader signals


Our model portfolio is up 396.58% since inception

An annualized return of 119.04%%

Average return per trade of 42.21%

85 closed trades, 82 closed at a profit

Average trade open for 45.41 days


sk chart return on SK OptionTrader Model Port 22 aug 2011.JPG



The above progress chart shows our performance when profits are re-invested, however, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.



To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.










Monday
Aug222011

425% Gain in 8 Weeks for SK OptionTrader Subscribers

425pct gain skot

A trade recommended to SK OptionTrader subscribers on July 1st 2011 is now showing a gain of 425% after just 8 weeks.

Are we taking our profits and closing the trade, since we have increased our capital five times over? No.

Why not?

Because we think the trade could double again from here!


On June 14th we wrote to SK OptionTrader subscribers saying that we were looking at placing this trade since “the risk reward dynamics in these trades could be about to become too good to pass up”. We said that we were waiting for prices to drift lower before we placed the trade.

On June 27th we informed subscribers that the the risk-reward dynamics were becoming attractive to us and we stated that we thought it was possible to at least quintuple the capital invested in the trade.

Then on July 1st we signalled to enter the trade. Our patience paid off since the cost of entering this options trade was now 43% lower than it was just two weeks before on June 14th when we first stated our intention to place the trade.

Given our comments that we thought it was possible to make 5 times one’s money in this trade and our track record in options trading, many subscribers followed us in to this trade.

Those subscribers who bought at a price similar to ours our now sitting on a gain of more than 425%.

The best part of this trade is that we think there is a lot more to come.

As we told our subscribers, “we aren’t about to flip these calls for a 14% gain, this trade is one that is looking for a home run, a return of multiple times the capital invested”.

Since this trade is still open we cannot reveal its details, as it would be unfair to our current subscribers.

However if you would like to find out what the trade is you can subscribe for just $199.00

Just think if you had subscribed this time last month and placed $1000.00 in this trade, you could be sitting on a gain of 425%.

Your $1000 investment would now be worth $5250.00

That’s a profit of $4250.00 in two weeks, which pays for a subscription more than twenty times over!

If you think we are worth a try and you would like to find out what this trade is along with other trades in the future then you can subscribe below.

In the interest of full disclosure, we do have other trades open at present and all of our open trades are showing significant gains.

Our subscribers get straightforward buy and sell signals as well as market commentary, which make options easier to understand and ensure trades are simple to execute.

So click the subscribe button to sign up and see our trading recommendations that could have increased your capital five fold in just eight weeks, and paid for a six month subscription fee twenty times over in just two months.


Other key stats on the performance of SK OptionTrader are as follows:

Our model portfolio is up 396.58% since inception

An annualized return of 119.04%%

Average return per trade of 42.21%

85 closed trades, 82 closed at a profit

Average trade open for 45.41 days

For those subscribers who are too busy to trade their own accounts we are now able to offer Autotrading programs with our SK OptionTrader service. One can sign up for autotrading with Global AutoTrading or eOption.

Subscribe for 6 months - $499

 

Subscribe for 12 months - $799

 

sk chart return on SK OptionTrader Model Port 22 aug 2011.JPG

sk chart performance of 10k mod port 22 aug 2011.JPG