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Wednesday
Jul062011

Whistleblower Maguire - This Will Destroy Gold & Silver Shorts

China gold coin.JPG



Good Day Team, I know that we drag you around the web to read various articles from time to time, but it is important to read as widely as you possibly can. Today we are popping over to King World News to for this commentary on the launch of a new gold and silver exchange in China.


This morning London whistleblower Andrew Maguire told King World News that the launch of the new gold and silver exchange in China will destroy the remaining gold and silver shorts.  Maguire stated,

 “The launch of this new gold and silver exchange has flown under the radar, but certainly has my attention.  I firmly believe we are marking a pivotal point that will in very short order affect current precious metals price discovery dynamics.  We now have an additional factor to be vended into the supply demand equation.  This factor will ultimately destroy the remaining short positions in both gold and silver.”

The Agricultural Bank of China has over 320 million retail customers and 2.7 million corporate customers and has integrated its customer account information system with this platform.

By creating the first ever rolling spot contract, Chinese bank customers will for the first time have ease of access to 10 ounce gold contracts in Renminbi directly from their bank accounts and with the click of a mouse.  To give a further idea of scale, if just 1% of their customers bought a single 10 ounce contract, that would equate to 1,000 tons of physical gold being drawn down....

We can only add our two cents worth regarding Andrews calculations in that he uses 1% of the customers which we would agree with, but, we are not sure that 10 ounces is within their reach, after all that's $15000.00. However, the opening of this exchange has to be a game changer and if the banks in the western world seize the opportunity and offer similar services then we can only imagine just how many customers would divert some of their wealth into the precious metals sector.



Regarding www.skoptionstrading.com. We currently have a number of trades on the drawing board, two of which have been placed as they met our selection criteria. Patience is the order of the day as it is very important to trade only when the set up is in our favour.


Our model portfolio is up 338.11% since inception

An annualized return of 128.07%

Average return per trade of 40.41%

81 closed trades, 78 closed at a profit

Average trade open for 46.27days


sk chart 22 May 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.

SK logo 26 May 2011.JPG




Monday
Jul042011

The Downside In Gold Is Limited

Despite some calling for an explosive summer rally in gold, prices fell again this week on the back of easing concerns over Greek sovereign debt as the Greek parliament successfully passed the austerity legislation required to access additional bailout funds. This was due to the erosion of what we call gold’s “Eurozone Debt Crisis Premium” and, as explained in our article last week; gold prices were not likely to rally in any sustainable manner. However the question is where are gold prices heading from now and how should one go about trading or investing in this environment.

The summer doldrums are in full flow, so seasonal weakness is to be expected. However it is during this period that the most money can be made, since it can be used to establish positions in anticipation of the next major move in gold. As the great Chinese General Sun Tzu said “Every battle is won, before it is ever fought”. The big money in the last major move wasn’t really made as gold hit $1425 in November or $1550 in April, it was made during the summer weakness of July and August when gold traded at less than $1200. The trades that are placed and investments that are made over this period can bring fantastic returns when the more exciting time of year comes around.

Having fallen roughly 6% from its highs around $1577, we now think that the downside for gold is limited. Technically speaking we are seeing some important support lines and the 150 day moving average converge around $1445 and we therefore think it is unlikely that gold prices will fall past this level.



In addition to this, the Relative Strength Index for gold currently stands at 36.76. Historically speaking, if the RSI falls to 30 it is a screaming buy signal. We aren’t seeing that screaming buy signal just let, but it could be just around the corner.

Looking to the fundamentals that drive gold, we think fears over the Eurozone crisis will continue to subside (despite the longer term underlying problems remaining unresolved). In additional to this, money markets are now fully pricing in a hike by the ECB in July and the December Euribor interest rate futures indicates that there is roughly a 70% chance the ECB will hike again in 2011. These two factors signal to us that the Euro is likely to go higher, the US dollar lower and gold priced in dollars to increase. Keep in mind that the ECB’s main objective is price stability, ie to control inflation, as opposed to the Federal Reserve’s dual mandate to strive for full employment as well. Therefore the ECB can be considered more likely to hike relative to the Fed, leading to some possible interest rate differential induced strength in the Euro against the Greenback.

Taking a technical look at the USD Index, the 76 level appears to be offering significant resistance. This is also the same level that the USD bounced off in November 2010.

USD Index Chart 040711

Whilst some choppy lateral motion is possible in the short term, we think the dollar will endure a serious decline in the medium to long term, coupled with the next major rally in gold prices.

Another factor being discussed that could possibly cause a large move higher in gold prices is that of a possible QE3. At present we do not see much likelihood of a QE3 program, at least not in the same nature as the previous quantitative easing programs. However we do think US monetary policy will continue to be supportive of higher gold prices, with the Fed keeping rates at zero and the TIPS yielding negative rates for multiple maturities (Please see our previous article: The Key Relationship between US Real Rates and Gold Prices).


Equally as important as devising what the move in gold will be and when it will occur is how one trades the move. This is a point that is often not given enough emphasis. As we have stated before, we think options are the best way to trade these moves. No other instrument can offer opportunities that options offer. Using options one can create a position that exactly matches one’s view on the market. Suppose one agreed with the views expressed above, that gold would not fall significantly. Using options one can be rewarded for the exact scenario. Gold stocks, futures or ETFs cannot offer that flexibility or adaptability, they simply offer the investor the chance to bet up or down.

It is for these reasons that options trading offers up many attractive opportunities from a risk-reward viewpoint. We specialise in indentifying these opportunities and executing trades to take advantage of them. We have executed 81 trades since inception, with 78 closed at a profit and an average return of 40.41% per trade including losses. Our model portfolio is up 338% since inception but over the same period gold is up only 55%, the 200% leveraged gold ETN (DGP) is up 115% and the HUI gold stocks index is up 40%.

In conclusion, if one has a long term bullish view on gold then this is the summer shopping season so try not to get too tied up in the day to day market action. Keep the big picture in mind. This gold bull has a while to run yet. We are not perma-bulls and do not consider ourselves “gold bugs”, we simply see market conditions as bullish for gold in the longer term. Recently we sold all our positions in gold banking profits and more than doubling our money, just before the May correction took prices down as low as 1461. If you would like to subscribe to our options trading service, SK OptionTrader, then you can do so at www.skoptionstrading.com. Our service offers market updates and both buy and sell trading signals on US options, with a strong focus on gold. We also run a model portfolio and give suggested capital allocations with each trade.

Return on SKOT Port 040711

Subscribe for 6 months - $499

 

Subscribe for 12 months - $799

 

Thursday
Jun302011

Economic Armageddon and You

Economic Armageddon JS 01 July 2011.JPG

Good Day Team,

This morning we received this video clip from Jim Sinclair which if you can find the time, is well worth watching.

Dear Friends,

Wondering about the American economy? This animated video explains 
 
Here is the entire story. I would suggest spreading the truth to offset the lies.

Jim Sinclair.


Please click here.






Taxes in the US 01 July 2011.JPG




Regarding www.skoptionstrading.com. We currently have a number of trades on the drawing board, the first of which has been placed as it met our selection criteria. Patience is the order of the day as it is very important to trade only when the set up is in our favour.


Our model portfolio is up 338.11% since inception

An annualized return of 128.07%

Average return per trade of 40.41%

81 closed trades, 78 closed at a profit

Average trade open for 46.27days


sk chart 22 May 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.

SK logo 26 May 2011.JPG




Wednesday
Jun292011

The Great Nugget Scam

Gold nugget.JPG

By Doug Hornig, Casey Research

You know an asset class is hot when the scam artists start coming out of the woodwork. Such was the case during the real estate bubble of this century’s first decade, as those selling mortgages packaged them in ever more complex vehicles, many of which are now known to have been utterly fraudulent.

Is gold where real estate was?

No, not quite. But the notion that we are approaching the same ballpark seems borne out by one of the more creative scams we’ve seen recently. And we’re not talking about all those hucksters now trying to separate you from your old jewelry for a fraction of its value.
We’re talking about the great nugget scam.

Some readers who follow all things gold may remember the story. In February of 2010, a California landowner named James Grill was walking his property near Washington in Nevada County, California. Using a metal detector, he unearthed a 98-ounce gold nugget in an unmined ancient stream bed adjacent to the south fork of the Yuba River.

It wasn’t the biggest nugget ever discovered – the largest known from California weighed a whopping 54 pounds and was found in 1859 in Butte County – and good-sized ones have turned up in Australia in recent years. But nothing similar had been found in the Golden State in a very long time. And the older biggies have almost all been melted down and sold. The Smithsonian’s top sample weighs 80 ounces.

This find caused quite a stir, leading to a frenzy of speculation as to what would happen to it, and what price it might fetch if sold. The nugget could be expected to command a premium from a collector who wanted to own the biggest pristine hunk of California gold still in existence.

All questions were answered on March 15 of this year, when the Washington nugget was auctioned in Sacramento. After a short but frantic bidding war among a half dozen anonymous buyers, the piece went for $460,000, well over three times melt value at the time.
Now we have to revise that last paragraph. All questions were answered but one: where did the nugget come from?

The answer to that one is now up for grabs. On June 4, a Melbourne prospector named Murray Cox came forward after seeing a photo of the Washington nugget in a mining magazine, and claimed that it is actually the Orange Roughie nugget (for its fish-like shape), an exact match at 98 ounces, which he discovered in Australia and sold in 1989. He provided a Stockton TV station with a 1987 newspaper article from the Melbourne Sundetailing the find. In side-by-side photographs of the two nuggets, they appear to be identical.

(Of some further suspicion is the fact that after the original “discovery,” a website appeared seeking investors to help develop a commercial mining operation called the Lost Scotchman Mine, on the 180-acre property. The nugget was prominently displayed, with the suggestion that it might be just the "tip of the iceberg." The property is landlocked, and federal court documents show that Grill has been involved in a long-running legal battle with the United States Forest Service to gain road access.)

At first, Reno auctioneer Fred Holabird, who handled the sale of the Washington nugget, stood by its authenticity. Now he says, “I got taken as bad as anyone,” although he expressed surprise that no one recognized it while it was on public display for three months prior to the auction. He’s still willing to pay for scientific testing that’ll definitively verify the nugget's origin, but hopes to avoid the expense and effort by encouraging Grill to come clean.

How the buyer will take all this is unknown at the moment. Holabird said he has contacted the Irvine-based Spectrum Group International, a precious metals broker that represented the anonymous buyer, but he has not yet heard back from the company. Legal wrangles are almost certain to ensue.

As we said at the beginning, this apparent scam is indicative of the exploding interest in gold. It won’t be the last, you can be sure. But we prefer the straight dope on the subject,which you can get monthly here.

BIG GOLD subscribers aren’t fooled as easily as these hapless men. Every month, Editor Jeff Clark explains the ins and outs (as well as ups and downs) of the gold and silver markets—and recommends the best large-cap stocks and funds, as well as how, when and where to buy the physical metal. For only $79 per year, you can get an education and handsome portfolio gains at the same time. Details here.




Regarding www.skoptionstrading.com. We currently have a number of trades on the drawing board, the first of which was placed last night as our selection criteria had been met. Patience is the order of the day as it is very important to trade only when the set up is in our favour.


Our model portfolio is up 338.11% since inception

An annualized return of 128.07%

Average return per trade of 40.41%

81 closed trades, 78 closed at a profit

Average trade open for 46.27days


sk chart 22 May 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
Jun282011

Trading Gold and Its Eurozone Crisis Premium

Recently gold challenged it’s all time highs, being propelled largely by renewed concerns over the Greek debt crisis and the possible ramifications a default could have on global financial markets. Whilst fears of a possible default in Greece are supportive of gold prices in the short term, it is important to understand that such pressures are largely temporary in nature and they do not significantly change the underlying market dynamics in the longer term. We feel the best way to describe this is by way of visualising that there is a premium built into the gold price that varies with regard to how prevalent fears over the Eurozone crisis are. Just to clarify, we are considering the effect that fluctuations in fears over the Greek situation have on the gold price, not the effect that an actual default would have on the price. When fears escalate, the gold price increases and when fears subside, then so does the gold price. It does not necessarily significantly alter the overall direction of gold prices over the longer term.


We think it is important to understand how changes in this “Eurozone debt crisis premium” impact the gold price. Distinguishing between price swings caused by fears over Greece and price swings that occur when a true fundamental or structural change has taken place in the market is imperative for valid and reliable market analysis.

For instance the quantitative easing programs implemented by the Federal Reserve are examples of events that truly changed the market fundamentals for gold and triggered a significant and sustainable rise in prices. Fears over the Greek crisis may cause the gold price to move, often significantly, but once fears subside the price will come right back. This is because the degree to which people are afraid of turmoil in Greece has not changed significantly, the underlying structure of the gold market.

To demonstrate this point we will take a look back to around this time last year, when the Greek issue was dominating the headlines and there was plenty of fear in the market around a possible default. Then the bailout package came though, fears subsided and gold prices fell back. The chart below illustrates the accumulation and erosion of the “Eurozone debt crisis premium” in gold prices at the time.

Eurozone gold premium may 2010

Gold had undergone a correction from December 2009 to February 2010 and was in a consolidation phase during a seasonally weak time of year when concerns over Greece began to make headlines. This caused an increase in the “Eurozone debt crisis premium” and therefore an increase in gold prices. However, it did not trigger a major rally as it did not alter anything fundamental in the gold market.

The market dynamics at work here are as follows. Traders and investors were concerned over the Greek situation and therefore gold was bought as a safe haven or hedge against the financial turmoil that could follow a Greek default. As the bailout package came through, the probability of a default decreased and therefore those who were long gold as a hedge against a crisis began to unwind their positions. This is what we are defining as the “Eurozone debt crisis premium” and the erosion of this premium contributed to the 8% fall in gold following the bailout. Without the fears over Greece, we think that gold prices would have likely followed a path similar to the blue dashed line on the chart above.

Just as an increase in the premium did not signal a new major rally in gold, a decrease in this premium did signal a downtrend. Changes in this premium do not significantly affect the overall trend or market fundamentals.

Another way to picture this is to presume that fears over Eurozone debt can be measured on a scale of 0-100%, with 100% meaning that the market is as fearful of a default as it can be and 0% being equivalent to the market not having any fears of a default. When this measure is at 100%, the “Eurozone debt crisis premium” is fully priced into gold and when it is 0% it is not priced in at all.

Without the “Eurozone debt crisis premium” gold prices would still follow on the path set by the fundamental factors that move gold significantly and sustainably over the longer term, such as quantitative easing.

Eurozone Gold Premium Diagram

This is obviously a large simplification, but we are merely trying to make the point that changes in fears over the PIIGS and the subsequent “Eurozone debt crisis premium” is more like changing the intercept of the gold bull market trend than the gradient.

So why is this important? After all changes in the price of gold, whether due to changes in the “Eurozone debt crisis premium” or any other factor, are still changes in price and so impact our gold positions. Well we think this is important for two main reasons.

Firstly a rise in gold due to an increase in the “Eurozone debt crisis premium” is not necessarily sustainable and therefore can impact the validity of technical analysis. An example of this was seen last year, when a rise in the gold due to Eurozone concerns sent prices to a new all time high. However shortly after this breakout prices retreated and therefore we consider this a “false breakout”. Trading this breakout from a purely technical perspective could have led to losses since gold did not go on a run after this break out. This emphasises the importance of understanding the fundamental dynamics of the gold market and combining them with technical analysis to reach a more reliable conclusion.

False Breakout Gold 2010

We noted the similarities in recent market action and the situation last year in an update to SK OptionTrader subscribers on June 21st, just a day before gold prices topped out and fell over $50, saying:

“The Greek crisis and fears of contagion have prompted a fair amount of safe haven buying and have kept gold prices reasonably well supported. However should the situation in Greece improve with say another bailout (or be perceived to improve) then these safe haven hedges could begin to unwind, creating a downward pressure on the gold price.

“We saw a similar scenario unfold in 2010 when gold prices gradually ticked upwards, even setting a new all time high at $1265 before falling back to around $1150 shortly afterwards. Given that the 2010 spring rally was also driven by Greek debt concerns, we are getting a feeling of déjà vu when we observe the markets. Therefore although a new all time high in gold would cause us to seriously consider taking a long position again, any technical breakout to a new high would have to be supported by some fundamental reasoning as to why gold was about to embark on a major rally. This is important as there is a big difference between a breakout that signals the start of a major move and a breakout that is caused mainly by a lot of safe haven hedge positions in gold that could be easily unwound should the Greek crisis subside.”


The second important reason for indentifying and understanding why gold prices are rising is that it should affect what type of vehicle one uses to trade or invest in gold’s movements. This mainly affects whether gold stocks should play a part in your position or not. Whilst we tend to avoid gold stocks (for reasons that will require a separate discussion), many investors use them to benefit from gains and falls in the price of gold.

Using gold stocks to benefit from a rise in gold prices may be a decent idea if the anticipated price movement is due to a fundamental change in the gold market that will cause a sustainable increase in prices, such as the implementation of quantitative easing programs. However it is not a good idea if the movement is due to something like the Greek debt crisis.

The logical reasoning why gold stocks have performed poorly in the recent run up in gold prices is as follows. Suppose there were two outcomes from the situation in Greece. One is that some form of bailout package is given and fears over the sovereign debt situation subside. The other is that Greece defaults on its debt and financial markets go into turmoil.

Whilst it may be debatable how gold prices will behave under each scenario, neither outcome is positive for gold stocks. The first would probably see gold prices rally temporarily and then subside as fears abated. How much more valuable are gold stocks if the gold price is higher for a month or so? Chances are it doesn’t have a great impact on how much money the companies are going to make and therefore the stocks aren’t worth that much more under this scenario. With the second outcome, it is likely there would a massive flight from risk assets across all markets and a scramble for liquidity. That means gold stocks would be sold, as after all they are still equities and therefore would be dumped in a dash for cash.

Therefore if one wishes to trade gold on the back of fluctuations in fears over a Greek default, gold stocks should play no part in that strategy. In fact one could even make the argument that the best trade for that type of situation is a long gold/short gold stocks position, but we digress.

In conclusion our main point is that we think it is important that one understands how the “Eurozone debt crisis premium” impacts the gold market and the ramifications that price movements caused by the changes in this premium have on how one analyses and trades gold. This is an example of the analysis that we undertake at SK Options Trading, pass on to subscribers of SK OptionTrader via trading signals and market updates. Gold is a major focus of our trading and we use options on US equities such as GLD in an attempt to profitably trade gold. SK OptionTrader has recommended 61 gold related trades since inception and 60 of those have been profitable, a success rate of 98.36%. Overall our model portfolio is up 338.11% since inception and we have an average return of 40.14% per trade including losses. Our full trading record is available at www.skoptionstrading.com so feel free to visit the site for more information and to sign up.

A six month subscription costs just $199, or $1.10 per day.

An investment of just $1000 in the average trade would have more than paid for an annual subscription fee of $349
.

Subscribe for 6 months - $499

 

Subscribe for 12 months - $799

 

>Return on SKOT 280611
Thursday
Jun232011

Death by a Thousand Cuts

The political landscape:

The Greeks need even more boat loads of cash to stay afloat and its richer European partners are scrambling to put a package together. The German government are desperately trying to enlist more contributors and the UK is an obvious target. So the question is will David Cameron rollover or stand firm. One of the reasons for keeping the pound was to avoid such nonsense. This bailout is good money after bad, all in aid of keeping the Eurocrats in highly paid jobs rather than helping the Greeks solve their debt problems. Taking on more debt is not a cure for debts, it is akin to giving smokers another cigarette as they try to kick the habit.

The Greeks would be far better off walking away from the euro and starting again with their own currency and a clean slate. The thought of living through a twenty year austerity programme and enduring a fire sale of state owned assets is too high a price to pay as the riots in Athens clearly demonstrate.

Business taxation in Greece amounts to around 52%, about four times more than it is in neighboring states such as in Romania. In Turkey there is a five year tax holiday to entice new businesses, so the outlook for inward investment looks bleak. That being the case, the possibility of Greece paying its debts via internal growth is zilch.

Yes a default would mean that the banks would be in for a haircut, but as we see it, its one they truly deserve.

However, we will still be subjected to the pain of the political system as those who attend the 'G' meetings, with the best of intentions, do not employ one brain between them and have been wrong footed a number of times by economic reality, as frequently highlighted by Nigel Farage in this clip entitled: Your euro-predictions have been 100% wrong, Mr Barroso.

Nigel Farge 23 June 2011.JPG
Nigel Farage of UKIP


Unfortunately those who run Europe are no brighter than those who have taken the United States to the very edge of the abyss, where there will be more quantitative easing albeit in a disguised form, as they to continue with their 'extend and pretend' policies.

Going back to the UK we can see that Gold has been making new highs in the GB Pound as shown on the chart below:

Gold chart  vs GBP 24 June 2011.JPG

One ounce of gold now costs in the region of nine hundred and fifty pounds, thought of as a ridiculous possibility only a few short years ago.

We could bring in other countries such as Spain, as their time in the bailout spotlight is drawing ever closer, however, we think you have got the drift.

As advocates of honest money just what does this mean to us?

We need to realize that our political masters are devoid of ideas other than the printing of even more money. The debasement of currencies will gather pace as each of the sovereign states smile sweetly, while devaluing their own currency in the now frantic race to the bottom. As an asset class the folding stuff generates very little in interest payments and buys less each year as prices for commodities, goods and services, power, etc, become more expensive.

To stick with paper currency is akin to a death by a thousand cuts.

What to do now

Start by calculating your net worth and ascertain just how much of it is in cash and how much is in hard assets. Allocate a certain amount of cash to act as a cushion and cover your living costs for a period of time that will put you at ease. The portion that is your 'investment cash' can then be allocated to an asset class that you consider has value. The agricultural sector is popular, so is the oil sector and energy in general. Time is usually a constraint to gaining an understanding of all the possible sectors that are vying for your cash, so focus on what suits your investment goals and criteria and then learn everything that you can about it, before making an actual purchase.

In our case its the precious metals sector where we have invested and traded for many years and have gained a 'feel' for how it performs. Our strategy has been to acquire both physical gold and silver along with a select few of the associated stocks and when the opportunity arises we also utilize the options facility to add some leverage to a particular trade.

Protecting your wealth and self preservation is the name of the game. Whether you like it or not you have a position and no matter how small it is you have to get your head up and think, is this the best that I can do, if not, then get your skates and put some effort into it, after all its your financial future that is on the line here.

Regarding www.skoptionstrading.com. We currently have a number of trades on the drawing board which will be executed once our selection criteria has been met. Patience is the order of the day as it is very important to trade only when the set up is in our favour.


Our model portfolio is up 338.11% since inception

An annualized return of 128.07%

Average return per trade of 40.41%

81 closed trades, 78 closed at a profit

Average trade open for 46.27days


sk chart 22 May 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.

SK logo 26 May 2011.JPG




Wednesday
Jun222011

The UK to be sucked into the Greek Bailout by the Germans

Merkel and Cameron 23 June 2011.JPG
David, got a quid for the Greeks....
Sorry Pet...



The German government signalled yesterday that Britain would need to contribute to the new EU bailout being negotiated for Greece despite David Cameron's repeated assertions this week that the issue is a "red line" for the government.

The conflicting messages from Berlin and London paved the way for a likely clash between Germany and Britain at an EU summit opening in Brussels on Thursday and will unleash howls of protest from the eurosceptic media and the prime minister's backbenchers if he is forced to pledge more for Greece's rescue.

The bulk of the new bailout – the second for Greece in just over a year – is to come from a €440bn fund guaranteed by the other 16 governments of the eurozone.

But a separate European commission-administered fund of €60bn, for which Britain is also liable and which is known as the European financial stability mechanism (EFSM), should also be used for part of the proposed Greek rescue, senior German government officials said.

Cameron told the Commons that the Greek disaster – which will dominant the Brussels summit – was an issue for the eurozone.
"We don't believe the European financial stability mechanism should be used for Greece. We have made it clear that's not appropriate, and I don't think it will happen," the prime minister said.

But a senior German official contradicted this. He said the Greek rescue, expected to amount to up to €120bn, would not be agreed by the EU until next month, but that under German law the EFSM needed to be involved.

"The German legal situation is clear," he said. "The EFSM should contribute." Asked whether the UK could veto such a move obliging it to guarantee billions for Greece, the official answered: "I don't understand the question because the decision is taken by qualified majority vote … Everyone is tied to a QMV decision."

Britain is also liable for more loans to Greece through its contributions to the International Monetary Fund, which is heavily involved in the Greek rescue.

This is not contested by the government. But its stance on the EFSM would be supported by the Czechs and the Slovaks, both reluctant to help Greece avoid a sovereign default. The Czechs, outside the euro, are in a similar position to Britain. The Slovaks are in the common currency.

British officials say that in the past 10 days of turmoil in Greece and acrossEurope, the UK has not been asked to make a contribution and that they have also received assurances from the French they will not be asked to take part. Furthermore, the key decisions on what to do about Greece have been taken by eurozone governments, reinforcing the British case for not being involved.

In the €110bn bailout of Greece launched in May last year, the EFSM and the UK were not involved, the British point out. But this is simply because the EFSM did not then exist. In the two bailouts since then, of Ireland and Portugal, the EFSM has been used and Britain has been exposed.

"This is a political battle between Germany and the UK," said a senior European commission official.

A German parliamentary resolution 12 days ago said that "the future aid [for Greece] may involve bilateral payments as well as from the EFSM."

The new bailout deal, which may not be finalised until September, has to go before the parliament's budget committee in Berlin for endorsement.

Despite the Berlin official's emphasis on the German legal position, senior commission figures in Brussels said there was no legal obligation for the EFSM to be used in the Greek crisis and that this was a political issue to be decided by the 27 governments of the EU.

Thanks to The Guardian for this piece.

Regarding www.skoptionstrading.com. We currently have a number of trades on the drawing board which will be executed once our selection criteria has been met. Patience is the order of the day as it is very important to trade only when the set up is in our favour.


Our model portfolio is up 338.11% since inception

An annualized return of 128.07%

Average return per trade of 40.41%

81 closed trades, 78 closed at a profit

Average trade open for 46.27days



sk chart 22 May 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.

SK logo 26 May 2011.JPG




Tuesday
Jun212011

If the Dollar Goes, What Happens to Your Portfolio?



By Jeff Clark, BIG GOLD

Have you considered what will happen to your portfolio―and all the other areas of your life―if the dollar fails? The ramifications will be widespread, painful, and inescapable if you’re not properly diversified.

Last month, I attended the Global Currency Expo sponsored by EverBank. The overarching theme, as you might expect, was that diversification out of one's home currency is paramount. While there were plenty of traders on hand, it was the big-picture talks that had the most pressing messages.

I came away feeling that I needed to reexamine my exposure to the dollar. Have you considered what will happen to your portfolio―and all the other areas of your life―if the dollar fails? The ramifications will be widespread, painful, and inescapable if you’re not properly diversified.

With that in mind, I want to pass on some highlights from a few speakers, along with their investment recommendations... many of which were framed as the “trade of the decade.”

Frank Trotter of EverBank Direct stated that the U.S. dollar “will see a significant decline in the next 5-10 years.” His five favorite currencies for the next decade are the Swedish krona (which he thinks is better than the Swiss franc), the Norwegian krone, the Australian and Canadian dollars, and a surprise, the Brazilian real.

Eric Roseman of Commodity Trend Alert warned that we’ll see a food crisis within three to five years. He’s convinced China will become a net importer of agriculture, which will have major ramifications around the globe. His trade of the decade is the exchange-traded note for grains, JJG.

Sean Hyman of World Currency Watch said his trade of the decade is the Singapore dollar (SGD). “Buy it and forget it.”

Doug Casey also spoke; he laid out five “sure things” for the next ten years:

1. Short bonds/bet on rising interest rates
2. Short the yen/go long on Japanese small- and mid-cap stocks
3. Borrowed money: “It’s an excellent way to short the dollar, and you get a tax deduction.”
4. Gold: “It’s not cheap, but it’s going higher. Buy it and store it abroad.”
5. Small-cap mining stocks

Rodney Johnson, president of HS Dent, got some audible groans from the audience when he claimed the trade of the decade was the U.S. dollar versus the euro. He’s convinced that deflation is coming and that inflation hedges will get hurt. He predicted that the dollar will rebound and that interest rates and prices will fall. While it’s always healthy to check one’s assumptions, I heard no reason to change my mind about the dollar’s long-term woes. Interestingly, most of the speakers do expect the dollar to temporarily strengthen this summer, though they have no doubt the currency is ultimately headed to the graveyard.

But the most thorough and convincing presentation by far came from Chuck Butler, president of EverBank World Markets and a 35-year currency analyst. If anyone knows currencies, it’s him. It's been said that he’s advanced awareness of the currency markets more than almost any other banker working today.

Chuck outlined the case against the U.S. dollar with damaging conviction. He pointed out that the pound sterling was the world’s reserve currency until WWII, and “we became the reserve currency by financing England because they couldn’t pay their debts and had diluted their currency… They needed assistance from other countries to service their debt and had overextended their military.” Sound familiar?
He noted that China, with little fanfare, started signing swap agreements in 2009. To date, they’ve signed agreements with much of Asia, the European Union, Canada, Russia, Brazil, Belarus, Argentina, and will soon with Japan and Korea. There are even rumors of them working on currency swaps with the Arab nations. He reminded us that China’s president recently stated publicly that the U.S. dollar is a “product of the past.”

The scary ramifications of this were couched in a stark warning: “The U.S. dollar will lose its reserve currency status sometime between 2014 and 2020. There will be no trumpet; it will just happen.”

He said SDRs (Special Drawing Rights) from the IMF may be used first, but that it won’t matter since the dollar losing its reserve status is “inevitable.” He, too, felt there will likely be some strength in the greenback this summer, but that this will change nothing in the long-term picture.

When it comes to preparing one's investments for this eventuality, Chuck stated that “94% of investment return is based on the asset-class selection, and a low covariance with other assets.” On a practical basis, this means owning an investment that is not correlated with U.S. stocks, and one that is not denominated in U.S. dollars. He said the key to diversification is applying the same logic you would to stocks: “You wouldn’t buy just one stock, so why would you own just one currency?”

He likes the renminbi, which can be played via CYB or CNY. He also likes the Singapore dollar, the Norwegian krone, and the Swedish krona.

The point of the weekend was to examine one's portfolio from the point of view of a failing currency. It won’t matter too much how diversified your stocks are if they’re all exposed to the same currency. If this outlook turns out to be correct―and I see no way around it―then the U.S. dollar will undergo a sea change that will erode and ultimately destroy any investment backed by it.

So, how much exposure do you have to the U.S. dollar? And what happens to your portfolio when the greenback reaches its ultimate resting place? Even if you think it avoids becoming fancy green toilet paper, prudence suggests that you at least consider preparing your investments for a prolonged erosion. By the time you carry your investment “bucket” to retirement, the persistent leak from dollar devaluation could buy half of what it did ten years earlier. Will this be acceptable to you and your family?

Gold and silver are one of the easiest and simplest ways to diversify out of the dollar, regardless of one's portfolio size. They are a confidential, personal, and immediate purchasing-power protector. Pretend your financial life depends on it, because the abuse continually heaped upon the dollar doesn’t come free of consequences.

FREE Special Report: Learn all about how, when and where to buy silver… which forms of silver are the best to own… and why we could soon be running out of silver altogether… in Casey Research’s 2011 Silver Investing Guide. Read and download it for free here.

Regarding www.skoptionstrading.com. The stats and the charts have been updated and are as follows:.


Our model portfolio is up 338.11% since inception

An annualized return of 128.07%

Average return per trade of 40.41%

81 closed trades, 78 closed at a profit

Average trade open for 46.27days


sk chart 22 May 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.

SK logo 26 May 2011.JPG




Friday
Jun172011

IMF reduces forecast for US, global growth Share




IMF Logo.JPG

WASHINGTON -- The International Monetary Fund said Friday that it expects the U.S. economy to grow at slower pace this year than previously estimated, dragged down by higher oil prices and lower factory output.

The lending organization also warned that the European debt crisis poses a growing threat to the global economy. It cited investors' increasing concerns that Greece's government won't be able to implement the changes necessary to avoid defaulting on its debt.

The U.S. is forecast to grow 2.5 percent this year, down from the IMF's April estimate of 2.8 percent. Growth will likely be 2.7 percent next year, the IMF said, rather than 2.9 percent. Both estimates are below the 2.9 percent growth the U.S. recorded in 2010. The global economy will likely grow 4.3 percent this year, down from an earlier estimate of 4.4 percent.

The lower U.S. forecast is similar to many recent downgrades by private economists. A survey this month of 38 economists by The Associated Press found that they expect growth of 2.6 percent this year, down from an earlier estimate of 2.9 percent.

By contrast, the IMF boosted its forecast for the 17-nation euro area, which it said it expects to grow 2 percent this year. That's compared to a previous forecast of 1.6 percent. The improved outlook is largely due to higher business investment spending in Germany and France.

Large budget deficits in the U.S. and Japan could threaten their economies, the IMF said.

Both countries should take steps to cut their deficits, but at a gradual pace, the IMF said. Rapid spending cuts or tax increases could threaten the two countries' "tepid recoveries."

"For the U.S., it is critical to immediately address the debt ceiling and launch a deficit reduction plan that includes entitlement reform and revenue-raising tax reform," the fund said.

The Obama administration and Republican lawmakers are negotiating over how to raise the nation's legal debt limit of $14.3 trillion, which the administration says it will reach Aug. 2. Republicans are insisting on about $2 trillion in cuts over 10 to 12 years before agreeing to raise the ceiling.

The Washington-based fund has 187 member nations and lends money to countries in financial distress. It has played a key role in negotiating and financing European Union bailout packages for Greece, Ireland and Portugal.

We would like to know just where this recovery is!



Regarding www.skoptionstrading.com. The stats and the charts have been updated and are as follows:.


Our model portfolio is up 338.11% since inception

An annualized return of 128.07%

Average return per trade of 40.41%

81 closed trades, 78 closed at a profit

Average trade open for 46.27days


sk chart 22 May 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.

SK logo 26 May 2011.JPG




Friday
Jun172011

Nigel Farage: Bankers+politicians = ‘unholy alliance’ vs people

Nigel Fargae Unholy alliance 17 June 2011.JPG


Renowned Eurosceptic and British Euro MP Nigel Farage says saving the banks is why politicians are so determined to bail out Greece and keep it in the Eurozone. To listen to what he has to say please click this link: Euro.

Nigel is correct when talks about throwing good money after bad, right at the outset we were against the bailouts for the Northern Rock, Bank of Scotland and the other poor performers. Liquidity is not a cure for inepotitude or insolvency it is akin to giving a junkie another fix.


Meanwhile over at Reuters we have this snippet on the situation - Greek Prime Minister George Papandreou will name a new cabinet on Friday to muster support for painful economic reforms, despite public unrest and a split in his party that could push the country closer to debt default.

He is likely to jettison Finance Minister George Papaconstantinou, author of a belt-tightening program that has fueled public anger, national strikes and a violent demonstration this week on the steps of parliament.

Papandreou delayed announcement of the new team late on Thursday in what looked like a signal he was struggling to find a suitable person for the key financial post. The reshuffle will be announced at 9 a.m., the government said.

The political upheaval has pounded markets and drawn criticism from other European Union states, where policymakers dithered over how best to keep funding Greece and forestall a "credit event" that could cause global economic havoc.

China weighed in again on Friday, with Vice Foreign Minister Fu Ying saying it was "vitally important" Europe sorted out its debt mess. China's central 



To us this situation is now in dire straights, for the northern Europeans to have to come to the rescue again could be the straw that breaks the camels back. The next two weeks are critical for the euro and as it slides we can expect its poor performance to over shadow that of the dollar. Should the inverse relationship of the dollar and gold remain intact then we would expect the progress of gold prices to remain some what muted.

We were anticipating a lackluster summer which would give us the time to do some more research as to where the bargains might be found come the fall, however, events may rob us of such a luxury.

Keep a tight grip of your core position as 'trouble' appears to be just around the corner.




Regarding www.skoptionstrading.com. The stats and the charts have been updated and are as follows:.


Our model portfolio is up 338.11% since inception

An annualized return of 128.07%

Average return per trade of 40.41%

81 closed trades, 78 closed at a profit

Average trade open for 46.27days


sk chart 22 May 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.

SK logo 26 May 2011.JPG