Subscribe for 12 months with recurring billing - $199

Buy 12 months of subscription time - $199

 

Search Gold Prices
Gold Price
[Most Recent Quotes from www.kitco.com]
Our RSS Feed

Gold Updates by Mail

Enter your email address:

Follow Us on Twitter
Monday
Jan172011

High River Gold Mines Limited Spikes on Good News

HRG Chart 18 Jan 2011.JPG


As we can see from the above chart High River Gold Mines Limited (HRG) has spiked on recent developments as brought to us of Chris courtesy Charlwood as per his missive below:



January 16th, 2011   
 
Symbol: HRG.TO
 
High River Gold Minority Shareholders,
 
It looks like things are heating up again for a possible Severstal/Nord Gold IPO on the LSE. I have posted links below to 4 recent articles. They state that pre - IPO marketing starts next week and that ex-Anglo American exec, Phillip Baum, is to become Chairman of Nord Gold. The articles mention Nord Gold's value at up to $3.2B pounds or US$5B. HRG made up approx. 57% of  Nord Gold's total production in 9 months to September 30, 2010 (233k oz vs. 408k oz). Shareholders await drill results and the Prognoz bankruptcy decision to bottom out HRG's resource numbers, but on a production only basis, HRG's pro-rata value would be $2.85B or $3.39/share.
 
Q4 and year end results will probably be out on March 31 and the expectation is that HRG is back up to its Q2 production level of  87k oz. The average gold price in Q2 was $1195/oz whereas in Q4 it was $1389/oz - an increase of $194/oz. In Q2 HRG had $48.8M in cash flow. Assuming costs have remained the same, the extra $16.8M in revenues would bring HRG's cash flow  to $65.6M. If so, then the current market cap of $1.02B has HRG trading at a low 3.9 times cash flow. At the end of Q3, HRG had $125.6M in cash and equivalents. HRG's third party stock holdings are currently worth $101M. Therefore, at the end of Q4, HRG should have $226M (cash, equivalents, third party stock) plus Q4 cash flow less exploration expenses. Perhaps we will see a net number over $250M or $.30/share.
 
As we wait for the Q4 results, we are hoping for announcements stating that our $101M of third party stock investments have been freed up for liquidation and that the Prognoz Silver bankruptcy has been resolved  in HRG's favour. Also, we are expecting updates on exploration and drilling at Bissa, Zun-Holba and Irokinda mines.
 
Articles 
http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=apcpJ97umBw8
 
http://www.interfax.com/newsinf.asp?id=215069
 
http://www.themoscowtimes.com/business/article/severstal-gold-unit-eyes-ipo/428962.html
 
http://www.fm.co.za/Article.aspx?id=131402
 
Chris Charlwood
Investor
Rainerc7@gmail.com

www.stockhouse.com  - ongoing communication on HRG
 
 
 

Footnote:



It's official! This announcement came out a few hours after I sent my previous communication. Severstal/Nord Gold is referencing the Prognoz asset as if it will be retained in the portfolio - a positive sign.
 
 
http://www.investegate.co.uk/article.aspx?id=201101170700105447Z
 
Chris Charlwood
Investor
Rainerc7@gmail.com

www.stockhouse.com - ongoing HRG communication

We are still holding on to our position in High River Gold Mines Limited and have no intention of selling any of this stock in the foreseeable future.



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

Over in the options trading pit, we now have 59 winners out of 61 trades, or a 96.72% success rate. If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.


sk chart 10 Dec 2010.JPG

The above progress chart is being updated constantly. 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, before we decide to cap membership.

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.

Friday
Jan142011

Are Gold Pool Accounts Safe?

By Jeff Clark, BIG GOLD

One of the cheapest ways to buy and store physical gold and silver is with unallocated (or pool) storage. With unallocated storage, a dealer holds metal that is owned by its customers, but without identifying any particular piece of metal belonging to any particular customer.

The advantages of this method are considerable: you avoid the risks inherent in storing the metal yourself (transport loss, fire, and theft); you can buy or sell just a few ounces of gold and silver at a time; you escape the big bid-ask spreads associated with coins and small bars; and perhaps best of all, storage is usually free.

To provide those benefits, a precious metals dealer buys and sells small quantities of gold and silver to and from its customers throughout the business day. When it needs more metal, it will buy it in the wholesale market. Or when the dealer has more metal than it wants to carry for its own account (because its customers have been net sellers), it will unload the excess in the wholesale market.

Many dealers that offer unallocated storage will accommodate customers who want to convert their metal into bars or coins and take delivery. The dealer will charge a so-called "fabrication fee" for this service. The dealer won't actually pick up a hammer and manufacture the bars or coins the customer wants; instead, the fee represents the price difference between buying 100-ounce or larger bars and buying small bars or coins.

Unallocated storage is an attractive option, which is why we have recommended it to Casey subscribers for a portion of their gold and silver holdings. Of course, there's no such thing as a free lunch, so we wouldn't want anyone to rely too heavily on unallocated storage or on any one dealer that offers it. Here are some of the things that might go wrong.

Wholesale fraud. A dealer might be a 100% hoax. It may not actually have the metal that customers have paid for, in which case the customers would get hurt. The proprietor would be committing a go-to-jail-forever crime, but it would be easier to pull off, perhaps for many years, with unallocated storage than with allocated storage. A customer who's bought metal in allocated storage can visit his gold or silver and check the serial numbers on the bars. A customer who's bought metal in unallocated storage may be allowed a tour of the vault, but all he's going to see is a whole lotta gold and a whole lotta silver.

Employee embezzlement. An honest dealer might have a dishonest employee. If the dealer's financial controls were lax, the employee could siphon off metal for himself or a confederate. Or if the dealer's physical controls were lax, the employee could swap bogus bars for real ones. If the embezzlement exceeded the dealer's net worth plus its insurance, customers would get hurt.

Bad bookkeeping. Gold and silver held in unallocated storage is legally the property of the dealer's customers, not of the dealer itself. So if the dealer goes bankrupt, the metal should not be available to the dealer's creditors. Customers of a bankrupt dealer should be able to collect their metal and walk away uninjured. That's how it should work. But if there are problems with the dealer's bookkeeping, the metal that the dealer and its customers thought was in unallocated storage could be up for grabs. The customers would have to fight the dealer's creditors to protect themselves – and they might lose.
Fabrication delays. When retail interest in gold heats up, much of the demand is for small bars and coins. This can lead to a temporary shortage of small bars and coins that makes it impossible for a dealer to accommodate customers who want to convert their unallocated gold into small pieces and take delivery. If such a thing happens when you want to convert and take delivery, you'll have to wait. It would be a small problem compared with losing part of your gold, but it would be a problem.

We offer these cautions not because unallocated storage is a bad choice, but because you will be better off if you understand what might go wrong. It's like the warning of possible side effects that is now standard with any medicine. The warning isn't a reason not to use the medicine; it is a reason to use the proper dose and to be alert to signs of trouble.

We can't say exactly how much metal in unallocated storage would be too much. The proper dose is up to you. But here's a starting point. If you have more than 20% of your gold or silver in unallocated storage with any one dealer, consider moving some of it. It could go to another dealer, or you could convert part of it to coins and take delivery.

This might be a chore, but we suggest that you go to the trouble even if the dealer has come highly recommended, even if your experience with the dealer has been entirely satisfactory, and even if you see no sign of trouble. There is a difference between an event being highly unlikely and an event being impossible. Sooner or later, an investor who neglects that difference gets hurt.

[Check out our hot-off-the-press Annual Gold Forecast Survey edition in BIG GOLD, where we interview 16 gold experts, fund managers, and authors, along with Doug Casey, about what to expect for 2011 and how to invest. It’s available risk-free here.]





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

Over in the options trading pit, we now have 59 winners out of 61 trades, or a 96.72% success rate. If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.


sk chart 10 Dec 2010.JPG

The above progress chart is being updated constantly. 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, before we decide to cap membership.

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
Jan112011

I don’t have any gold

Chinese New Year 12 Jan 2011.JPG

"I don't have any gold," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong. "Premiums are very high. Some say they have no stocks on hand." Well there's an interesting quote to get the year off to good start, physical gold is hard to get your hands on.


A surge in Chinese demand ahead of the Lunar New Year and shortage of bullion has driven premiums for gold purchases to the highest since 2008 in Hong Kong and Singapore.

Premiums for gold bars jumped to their highest in two years on Tuesday as worries about inflation drove investors in China, the second-largest consumer of the precious metal after India, to bullion ahead of the Lunar New Year.

China's inflation raced to a 28-month high of 5.1 percent in November, and it's not clear whether policy steps the government is taking will calm prices, benefiting gold which is traditionally seen as a store of value in times of uncertainty.

Gold bars were offered at premiums of $3 an ounce to the spot London price in Hong Kong, physical dealers said, matching a similar level seen in late 2008. Refiners were running out of stocks and some even quoted premiums as high as $6.

In Singapore, premiums for gold bars were at their highest in nearly 10 months at between 70 and 80 cents as stocks tightened and dealers struggled to meet inquiries not only from China but also from Thailand and India.

"There's a sudden surge in demand. Demand from China is very good and they are paying very high premiums. Refiners can't meet the demand," said a dealer in Singapore.

"I would think people are buying gold as a hedge against inflation. Food prices are expensive, for instance."

Inflation worries and limited investment options have fuelled demand for gold from Chinese investors, especially as bullion staged a record-breaking rally in 2010.

Bullion's role as a hedge against inflation also boosted it in other parts of Asia, with dealers noting steady interest from Thailand, where the central bank expects rising inflationary pressure this year.

Leading central bank policymakers warned on Monday of the threat of resurgent inflation in fast-growing emerging economies and voiced their resolve to keep price pressures in check.

Demand ahead of the Lunar New Year was also behind the sharply higher premiums in China, some traders said.

"Demand is high ahead of the Chinese New Year. The jewellery sector is gearing up, and giving gold bars as a gift has been getting very popular," said an independent investor in China.

To read the article in full please click this link. Author: Lewa Pardomuan and Rujun Shen (Reuters)




Over in the options trading pit, we now have 59 winners out of 61 trades, or a 96.72% success rate. If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.


sk chart 10 Dec 2010.JPG

The above progress chart is being updated constantly. 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, before we decide to cap membership.

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
Jan112011

New Year’s Resolutions for Your Gold Portfolio

By Jeff Clark, BIG GOLD


It's exciting to think we may be nearing a mania in gold. The price will likely double or more within a 12-month period not too far in the future (it rose 125.7% in 1979). And yet, amazingly, there will be investors who lose money in that run.

How? Chasing returns. Jumping in and out of positions. Too emotional. Underinvested. Lack of diversification. Inappropriate expectations. Ironically, all of these are within the control of the investor.

While you likely have some exposure to precious metals if you're reading this, is your portfolio arranged in the most effective ways to take full advantage of the ongoing bull market? In my opinion, there is a material difference between those who will make enough money to vacation in Malibu vs. those who could choose Milan.

And those differences mostly come down to mindset. With the assumption that gold has years to go before it peaks, here are a few New Year's resolutions to consider for your precious metals portfolio...

Resolution #1: I will buy gold until it doesn't matter how much money Ben Bernanke prints.

Even if the statements from your bank or stockbroker show an increase every month, inflation is eating away at your capital. To insure the real value your assets, include a meaningful amount of gold and silver. How much? When the next announcement of quantitative easing doesn't make you flinch, you're getting close.

Yes, the government says inflation is low, but the full effects of all the money the Fed has printed have not yet hit the system. They will. As the saying goes, it wasn't raining when Noah built the ark. 

Resolution #2: I will purchase gold coins for personal storage. 

Even if you buy precious metal ETFs, pool accounts, or other "paper" forms of gold, keep some coins under your direct physical control, because sometime in the next few years you may need them to buy Cheerios or gasoline or fix your roof or have your appendix removed. I suggest Eagles, Maple Leafs, Philharmonics, Krugerrands, and Buffalos because they are the most widely recognized and hence easier to trade than even small gold bars. You don't want a potential buyer questioning the authenticity of your gold if you need quick cash. 

How much should you put into coins? There's no magic number, but don't stop until you have at least three months of living expenses stored away. And then continue adding as your assets increase. If you don't have any, start by buying at least one. Today. 

Resolution #3: I will not get emotional about gold's volatility.

News flash: gold will have a correction in 2011, probably more than one, and maybe a big one. Consider these facts: Gold's average decline in the current bull market is 12.8%; there have been at least two corrections greater than 5% every year since 2001; and we've had two 27.7% sell-offs just since 2006. How you react to the next pullback could mean the difference between taking a loss and doubling your gain. Will you panic and sell, or hold tight and perhaps even buy more?

No one adds to his success by fretting about daily ups and downs. This leads to too much trading and the self-defeating costs of commissions and bid-ask spreads. Watch your investments, of course, but with some emotional distance. 

I believe we're in the middle of a long-term trend for precious metals. So give it time to deliver the profits you're seeking. Your precious metal investments are like a cake in the oven; you'll ruin them if you keep opening the door.

Resolution #4: I will learn to buy on the dips and average down.

Are you happy when gold or silver fall in price? If not, why? Unless you're already fully invested, treat the decline as a gift that lets you buy more at a better price. The most profitable way to add to a position is to "buy on the dips" when you'll get more for your money. This means you'll be buying on days when the price is dropping. By averaging down, you lower your overall cost and increase your profit when you eventually sell. For me, the bigger the sell-off, the bigger the buying opportunity. 

Resolution #5: I will not continually buy and sell, or try to time the market. 

How are traders and male college freshmen alike? They chase tops and bottoms, and they don't always get what they want. 

This is how most people lose money during a bull market – by attempting to time tops and bottoms. This rarely leads to success over the long run. Just buy on pullbacks and hold until the reasons for the bull market go away. This is exactly how Doug Casey made a fortune in this industry. 

Resolution #6: I will save every month.

You want savings not just for an emergency – lost job, major repair, unexpected surgery – but also for bargain hunting. As the troubles in the world mount, the market will become littered with bargains of all kinds. Only habitual savers will have the wherewithal to take advantage of the opportunity.

Keep in mind that it isn't just about how high gold and silver prices go, but the economic and monetary climate that accompanies the rise. In my opinion, your portfolio must be able to withstand the following:
 
worldwide rejection of the U.S. dollar
high inflation or possibly hyperinflation
another recession or, worse, a depression
a vulnerable stock market
ongoing real estate woes
a large swath of municipal defaults
lackluster profits for most businesses
government attempts to "fix" the economy by printing more and more money

Is your portfolio ready for all that? Maybe so, but by following these New Year's resolutions, you can be assured that you not only avoid the inevitable consequences, but maybe earn life-changing profits as well. 

Milan anyone? 
----
[As Jeff says, it’s imperative for any savvy investor to have gold and silver in their portfolio now… including the best medium- to large-cap producers. With this strategy, BIG GOLD subscribers have seen gains of 43.1%... 56.8%... even 187.9%. Find out how you, too, can make similar profits – click here.]

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

Over in the options trading pit, we now have 59 winners out of 61 trades, or a 96.72% success rate. If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.


sk chart 10 Dec 2010.JPG

The above progress chart is being updated constantly. 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, before we decide to cap membership.

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.


Saturday
Jan082011

Your Money Back If Gold Doesn’t Trade Above $1500 in 2011


We think gold prices are heading higher, much higher in 2011.


Subscribers to our premium options trading service SK OptionTrader know this and are in the perfect position to benefit from our trading signals.


So confident are we of this that we are offering a special deal on our premium options trading service, OptionTrader, which reflects our bullishness.


If you sign up to a 12 month OptionTrader subscription from now until the end of January 2011, we will refund your $179 fee if gold prices do not trade above $1500 in 2011.


Look at is this way, if we are wrong this costs you nothing as your fee is fully refunded.


If we are right, then you have paid for a service that has correctly forecast the movement of the market, something that is well worth paying for.


Our fully trading record can be viewed here and see some example of our trades here


We have closed 61 trades, with 59 winners and just two losses. Our average gain per trade is 43.78% including losses, with the average trade being held for 42.31 days. Our annualised return on investment is 86.98% and our return on capital since inception is 131.67% based on our model portfolio, without reinvestment of profits.


With reinvesting profits $10,000 invested in accordance with SK OptionTrader signals and our model portfolio would now be worth $30,301.84.


You can sign up now by clicking the button below.


Subscribe for 12 months - $179.00



 


Alternatively you may sign up for 6 months, however to be included in this special offer you will need to take out the 12 month subscription.

Thursday
Jan062011

Agnico-Eagle Mines Limited: Range Trading

AEM Chart 07 Jan 2011.JPG


We kick off with a quick look at the chart and as we can see it is not a pretty picture as Agnico-Eagle Mines Limited (AEM) is trading at the same price as it was in April 2008 despite golds advance. Having been one of our favourite gold producing stocks for some time we are disappointed to see it languishing at $69.76. Back in April 2008 Agnico was trading in the $70-$80 range and gold was trading sub $1000.00/oz and here we are with gold prices at $1367.50 as we write and Agnico cant manage $70!

Sp lets recap, Its Board of Directors has recently approved the payment of a quarterly cash dividend for 2011 of $0.16 per common share ($0.64 per year).  The first of these dividends will be paid on March 15, 2011 to shareholders of record as of March 1, 2011.  Agnico-Eagle has now declared a cash dividend to its shareholders for 29 consecutive years – Taken from a news release on 15th December 2010



Sean Boyd, Vice Chairman and CEO commented as follows:

"We are pleased to announce a 256% increase to our longstanding dividend.  As we continue to  grow our gold output and increase cash flows over the next several years, our goal is to further increase our dividend yield, "Furthermore, we expect our operations to generate sufficient cash flows to fund our internal mine expansions, the development of the new Meliadine mine project and investments in other growth and exploration initiatives,"

So it would appear that things are going really well at Agnico-Eagle as they are indeed going well with a number of other gold producers who are also not reflecting their success via their stock price. It could be just a question of timing and a number of commentators are calling for a dramatic rise in stock prices based on the simple fact that they are now generating fabulous profits.

However, this is not 1980 and there are other vehicles available these days that investors can use in order to participate in this precious metals bull market such as the Exchange Traded Funds etc. We have raised this question in the past through articles such as “Are Gold Stocks worth the effort: update 30th August 2010” we wont repeat the argument again but we do remain somewhat irritated by the lack action in the mining sector.

The HUI Index (The AMEX Gold BUGS (Basket of Unhedged Gold Stocks) Index represents a portfolio of 14 major gold mining companies. The Index is designed to give investors significant exposure to near term movements in gold prices - by including companies that do not hedge their gold production beyond 1 1/2 years.) which currently stands at 531 is being touted to go much higher. Well we certainly hope that it does, however, the trek north needs to start in earnest and soon.

We will continue to hold our gold and silver producing stocks, including Agnico-Eagle, in the hope that they will gain the recognition that they deserve. But we are also aware that the past may not necessarily be repeated in terms of returns from the mining industry.




Agnico-Eagle is a Canadian-based gold producer with operations in Canada, Finland and Mexico, and exploration and development activities in Canada, Finland, Mexico and the U.S. Our LaRonde mine is Canada’s largest operating gold mine in terms of reserves. Agnico-Eagle has full exposure to higher gold prices consistent with its policy of no-forward gold sales. It has paid a cash dividend for 28 consecutive years.

Agnico-Eagle Mines Limited trades on the NYSE under the ticker symbol of AEM and on the Toronto Stock Exchange under the symbol of AEM.TO.

Agnico-Eagle has a market capitalization of $11.70 billion, a 52 week trading range of $49.64 - $88.20, a rather high P/E ratio of 39.21 on volume of 2-3 million shares traded per day.


Over in the options trading pit, we now have 59 winners out of 61 trades, or a 96.72% success rate and we have 3 open positions which have reached their targets or thereabouts and will be closed shortly, taking www.skoptionstrading.com back into a 100% cash position. If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.


sk chart 10 Dec 2010.JPG

The above progress chart is being updated constantly. 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, before we decide to cap membership.

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
Jan052011

How High Will Gold Go in 2011?

By Jeff Clark, BIG GOLD


After stellar years for both gold and silver, what prices will precious metals hit in 2011? Here's an analysis based strictly on their price behavior in the current bull market.
 
First, take a look at the annual percentage gains that gold has registered since 2001 (based on London PM Fix closings):
  

Excluding 2001, the average gain is 20.4%. Tossing out the additional weak years of '04 and '08, the average advance is 24.8%. 
 
So we can make some projections based on what it's done over the past 10 years. From the 12-31-10 closing price of $1,421.60, if gold matched
 
The average rise this decade, the price would hit $1,711.60 
 
The average rise excluding the three weak years = $1,774.15
 
Last year's gain = $1,858.03
 
The largest advance to date (2007) = $1,875.09

But what if global economic circumstances continue to deteriorate? What if worldwide price inflation kicks in? And what if government efforts at currency debasement get more abusive? If Doug Casey is right, a mania in all things gold lies ahead – what if that begins in 2011? Here's what price levels could be reached based on the following percentage gains.
 
35% = $1,919.16
 
40% = $1,990.24
 
45% = $2,061.32
 
50% = $2,132.40
 
1979's gain of 125.7% = $3,208.55

It thus seems reasonable to expect gold to surpass $1,800 this year, as well as reach a potentially higher level since the factors pushing on the price could become more pronounced.

Here's a look at silver. 

 
As you can see, silver had its biggest advance in 2010. The average of the decade, again excluding 2001, was 27.5%. And also tossing out the '08 decline, the average gain is 34.3%. So, from the 12-31-10 closing price of $30.91, if silver matched...
 
The average rise this decade, the price would hit $39.41
 
The average gain excluding 2008 = $41.51
 
Last year's advance = $56.22
 
The 1979 gain of 267.5% = $113.59

So, $50 silver seems perfectly attainable this year. And that's without monetary conditions worsening.

It's titillating to ponder these advances for gold and silver, especially when you consider we might be getting close to the mania. And if we are, that should do wonderful things to our gold and silver stocks, too.

I would add one caution: the odds are high that there will be a significant correction before gold begins its march to these price levels. In every year but two ('02 and '06), gold fell below its prior-year close before heading higher. And here's something to watch for: in every year but one ('08), those lows occurred by May.

In other words, a buying opportunity may be dead ahead. And if you buy on the next correction, your gains on the year could be higher than the annual advance.
----
Are you satisfied with the amount of bullion you own if monetary and fiscal circumstances deteriorate? Are you prepared to profit from the mania in precious metals that Doug Casey projects is ahead? If not, start the year right with a risk-free trial to BIG GOLD, where we list the safest dealers to buy physical metal and the best stocks to profit from the ongoing bull market. Check it out here.



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


Over in the options trading pit, we now have 59 winners out of 61 trades, or a 96.72% success rate and we have 3 open positions which have reached their targets or thereabouts and will be closed shortly, taking www.skoptionstrading.com back into a 100% cash position. If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.


sk chart 10 Dec 2010.JPG

The above progress chart is being updated constantly. 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, before we decide to cap membership.

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
Jan042011

Results versus Rhetoric: A Key Consideration

The ability to produce successful results and successful rhetoric are two very sought after and useful skills, but despite their stark differences the two are often confused. In this article we outline what we believe are the differences between the two and what you should do to ensure that you never confuse rhetoric for results, a skill that we believe is paramount to success in the financial markets.

Consider a modern financial institution where there will be employees hired for their skills in rhetoric and those employed to produce results. Those specialising in rhetoric have been chosen for their abilities in smooth talking clients into deals, sounding well informed and educated in financial markets but with no real focus on the results their well crafted speeches or reports would have produced if followed. Those specialising in results have been selected for their ability to make money and produce results with all their focus on their bottom line rather than how eloquently they explain their trades.

There is a huge difference in these two sets of people, and confusing them can be very costly. Consider reading a report by Person A, someone who is well educated in finance and puts forward a well formatted and detailed argument for their point of view on the market. They make many good points for their view, complete with in depth research, dazzling charts and pages of expert analysis. Another report by Person B is simply a one pager listing their open positions and some brief notes regarding any associated stops, limit orders and what they are trying to achieve with their trading. Sadly many investors will make the mistake of judging that Person A will be more successful in predicting which way the market will go, and therefore they position their portfolio in line with the view presented in the report from Person A. That investor has just confused rhetoric and results. They have followed the better sounding advice in pursuit of profitable trades; they have chosen the report with the better rhetoric mistakenly thinking that this will produce better results.

Instead of choosing the suggestions of the better sounding report, the investor should be looking at how the picks of these people have performance in the past. Whilst not perfect, a complete track record is a much better tool for judging the abilities of Person A and Person B rather than how elegantly they have structured their reasoning for their opinions of the market.

This problem is particularly prevalent in the financial newsletter industry, where subscribers pay a fee in return for receiving the market commentary and trading/investment recommendations of the writer. In order to avoid falling simply for a good sales pitch regardless of performance, to ensure that you do not confuse rhetoric with results, here are some questions we think all investors and traders should ask the newsletter provider before handing over your hard earned dollars. Since we run a service which falls into this industry, our premium options trading service SK OptionTrader, we have provided our answers to these questions below too.

Please could you provide your full trading record?
This should be a complete and detailed record of every recommendation the service has ever provided for its subscribers, winners and losers, with buy and sell dates and prices. Do not settle for a list of “Our Recent Trades”, “Top Ten Trades of 2010” or “Some Examples of Trades we have recommended”. You want the full record of every trade. The full trading record of SK OptionTrader can be found on our website, and it is updated whenever we close another trade.

What is your annualised return on investment?
This is the most fundamental statistic a service can provide. You are signing up as you are hoping the service will help you make money, so if you had invested in accordance with their recommendations what return would you have got on each $1 per year. The annualised return on investment of SK OptionTrader is published on the front page of our website and is currently 86.98% without reinvestment of profits.

Do you run a model portfolio? If so how does it work?
Any service that simply offers “picks” is not worth a lot of money in our opinion. What to buy or sell is only part of the equation, you need to know roughly how much should be placed into each trade. If the service does not run a model portfolio with suggested weightings to each trade, then they cannot produce a figure for their annualised return on investment and you cannot make a decision on the quality of their investing or trading skills. SK OptionTrader runs a model portfolio with clear weightings for each trade and the remainder in cash.

Do you give clear and specific buy and sell signals?
If a newsletter wishes to claim the credit for making a good recommendation then they should have stated clearly when to buy and at what price, then when to sell and at what price. Only then can they be congratulated for any profit subscribers could have made on the recommendation. A casual mentioning of a stock and noting that it may have good fundamentals is not a buy signal and the author should not be overly congratulated if it rises. A comment regarding how a certain commodity looks overbought is not a sell signal and the author cannot claim to have called a top if it falls. At SK OptionTrader we give clear and detailed buy and sell signals on specific options, having briefly outlined out reasoning for such a trade in an emailed update prior to the signal.

If a service you are thinking of subscribing to cannot provide answers to these questions, then we would suggest you save your hard earned money for another opportunity.

Of course this all presumes that you are looking for a service to assist you in making a profit in your investment and trading. If you are simply looking for something to inform you about what’s going on in the markets, and give you some good points to make during a conversation at the next dinner party, then by all means pay for the newsletter which offers the best rhetoric, regardless of how poor their actual performance may be.

However if you are looking for a service that focuses on results, banking profitable trades and providing clear and detailed trading recommendations then you may wish to take a look at our premium options trading service SK OptionTrader. We focus on results, not rhetoric, and as our track record shows our results are there for all to see and compare with others.

Our annualised return on investment is 86.98% and we are averaging a profit of 43.78% per trade, that includes the two losing trades on our record along with 59 winners, or a 96.72% success rate.

sk chart 10 Dec 2010.JPG

We are open with everything we do, so if you have any questions on our services then please contact us by clicking here.

Subscribe for 6 months - $499

 

Subscribe for 12 months - $799

 

Sunday
Dec262010

Profiting from Policy

by David Galland, Managing Director, Casey Research

These days, it’s hard to draw any conclusion other than that the train is gaining speed on wobbly tracks perched over a rickety bridge.

Most notably, unemployment has again risen – to 9.8% from 9.6% – very much not the direction things should be headed given the amount of money the government has pumped into the economy. The latest data shows that this nation of 310 million souls managed to add just 39,000 jobs in November. That, unfortunately, falls short of even keeping up with a population growth of about 1% – doing just that requires generating a net of about 250,000 jobs a month. As for eating away at the millions of unemployed and the many millions more who are underemployed… oh, well.

Of course, the mainstream financial media wastes no time in pointing to this latest dismalia as proof positive that the Fed’s recent decision to energetically restoke the money machine with upwards of $100 billion a month was the right decision. This despite the clear evidence that adding debt to debt is having no real effect, except begetting more debt.

This is a lesson that, so far, appears to be making no headway in the cognitions of Washington’s policy makers, even with the latest election results delivering a sharp rap across the knuckles to the power elite.

Evidence of that truth came to me during a recent drive to do sundry errands. After flipping through the stations, I ended up listening to a program on National Public Radio with a moderator quizzing a couple of congresspersons – one still in power and the other dismissed by voters in the midterm elections.

In conversing with the latter, the reporter asked if the Democrat congressman’s loss wasn’t a clear sign of voter frustration. To which the ex-official blathered on about the number of filibusters threatened by the Republicans over the last couple of years as a reason why the Obama Congress was unable to get its business done.

But, interjected the reporter, the Democrat-controlled Congress passed all manner of legislation – healthcare, financial reform, environmental bills, etc., etc – so isn’t it more a case of voters being upset about the quality and scale of the legislation passed, and not the dearth of it?

Whereupon the ex-Con began to illustrate his point by spouting off about some wastewater bill that was turned back by the Republicans, even though it would have unleashed another $15 billion in federal spending “so important to putting Americans back to work.”

But wait, again interjected the reporter, wouldn’t many people listening to this program say to themselves, this guy just doesn’t get it? That we don’t want the federal government to keep spending billions of taxpayer money on these make-work projects?

Without missing a beat, the ex-Con flipped like a freshly landed mackerel and argued against his position of just seconds before, saying, “This isn’t about the money! It’s about clean water for all Americans!”

At which point the reporter cleared his throat and ended the interview.

Next up was an angry Democrat of some influence. The congresswoman’s anger was directed first at the findings of the Deficit Reduction Commission that the spending cuts must be widespread if they are to be sufficient, and then at the administration for even thinking about extending the Bush tax cuts for people earning over $250K.

Oh, how I wish I was able to do proper justice to her diatribe here – I can’t, but I will do my best.

In her world view, the poor huddled masses of America – being defined as anyone with an income of under $250,000 a year – had nothing to do with the financial crisis, and so why should they be held even a little bit responsible for helping to foot the bill? No, no – it was the greedy fat cats that brought this fresh hell upon us, and so it is they, and they alone, who should be made to pay… and pay.

Of course, nowhere in the discussion was there mention of the role that the many-tentacled government  played in all of this… of the loose money, the looser spending, the wars, the unbridled enthusiasm for a steady diet of pork, and… and...

If there were some mega-computer capable of fairly allocating the financial pain based on the contribution each of us has made to this mess, and then assess taxes accordingly, I suspect the end result would leave past and present members of the Fed living in cardboard boxes, and 97% of past and present members of Congress shuffling in gutters looking for cigarette stubs… at least when they weren’t fighting over discarded clothes with executives of the big financial institutions, NGOs, and the Treasury Department.

Having wiped all of those individuals out to the bone, the burden could then shift to the military-industrial complex that has so effectively pursued its symbiotic and very, very costly “Don’t Ask (where the money went), Don’t Tell (the truth)” policy for decades now.

It could then lay the hooks into anyone who ever took a government-backed loan – big or small – without first taking the time to do a serious calculation as to their ability to repay it, or the unscrupulous lenders who knew that the loans they were originating were going to end up in default with the tab ultimately being dropped on the government.

In fact, were such a mega-computer able to do the calculation, I strongly suggest it would only be after many further layers that the pain, fairly allocated, would reach the rank and file business community, the sole real engine of growth in this economy.

I refer, of course, to the very same individuals so steadily derided by the vote-seeking politicos, despite the fact that it is these long-suffering entrepreneurs who wake up every new day to risk everything in their efforts to create new jobs, despite the heavy glop of bureaucracy on their backs every step of the way. 

Yet it is the few that succeed, against all odds and a constant battering of taxes and regulations, that this particular congressperson sees as the villains. In other words, she has pretty much reversed the proper order of accountability – as one would expect in a system where all that matters is vote gaining.

When the talk turned to the administration’s apparent willingness to accept an across-the-board extension of the Bush tax reductions as part of a compromise to also extend unemployment benefits (at 42%, the situation of the long-term unemployed is becoming a serious problem), the congresswoman was almost apoplectic. In addition to the views just exposed, about the wealthy needing to pay for their many sins, she was astounded that anyone could hold up the unemployment extension, given the poor shape of the economy.

How can anyone argue against the direct benefits to our struggling economy of putting money in the pockets of people who most need it, she asked with dismay in her voice. Adding in support of her view that it should be obvious to all that the recipients of the money will turn right around and spend it on the necessities and that will give the economy just the boost it needs.

Hmm, I thought as I drove down the road. All we need to improve the economy is to give people money.

Why, it’s simplicity itself! And now that I get it, I think people should just quit their whining about fiscal probity and all of that, and just let ‘er rip. Don’t stop with small change, encourage the Treasury to start cranking out checks in princely sums to everyone!
Thousands, millions, even! In no time at all, America’s salad days will be back.

Of course I’m being cynical. But the point I’m trying to make is important, because while I am exaggerating, the economic concept so ardently championed by the congresswoman is accepted at face value by most of the government and all of the administration’s favorite economists.

More than that, because it is accepted, it is policy.

In this construct money is, at best, an abstraction: it has reached the point that the government, and most people, actually believe the stuff falls from the proverbial tree. Money is no longer a medium for saving or transacting with the fruits of one’s labor, but instead is a commodity – albeit unique in that it has unlimited supply.

It does not, however, enjoy unlimited demand. For now, the demand is certainly there. But as the supply increases, individuals and institutions are correctly wary of the effects of dilution… debasement… inflation, pick your term.

The alternative forms of money – the sound kind – are getting a lot of attention because more and more people actually “get it.” They are beginning to recognize the fictions that the politicians and bureaucrats believe in and are taking measures to protect themselves and to profit.

Before moving on, I would mention that I know someone who works as a manager in the Department of Motor Vehicles. A few days ago she told me that, other than a relatively brief flurry during the Cash for Clunkers program, the pace of car registrations has been slow ever since the crisis began and has shown absolutely no improvement since that program ended.

In fact, the only increase in the DMV’s workload has come from the processing of suspended driver’s licenses.

As the latest unemployment figures show and my friend’s first-hand observations confirm, this economy is not recovering. And, per the rise in license suspensions, the government is becoming increasingly aggressive in fine-generating enforcement actions. 
In relationship to the second of those data points, if you’re going to imbibe this holiday season, don’t drive.

Finally, please don’t misunderstand my comments above as being insensitive to the plight of the unemployed. I personally know far too many people in that situation whose prospects of ever regaining their prior lifestyles is now almost non-existent to be cavalier about the topic.

The only realistic way I can help – because I can’t and won’t put my own family’s future at risk by trying to help everyone – is doing my part to build and maintain a business that, by offering a tangible value to clients, is able to keep a lot of people productively employed.

Therefore, it angers me to no end to listen as the morons maintained in power by the equally moronic masses make rude noises about the entrepreneurial class and otherwise meddle in matters about which they have no actual understanding and, as a consequence, continue doing great damage to the economy.

Something has got to change… and will, before this is over.
----

[Though you can’t change the out-of-control spending habits of the government or the currency debasement they’re causing, what youcan do is protect yourself… with alternative forms of money, “the sound kind,” as David says. BIG GOLD is the go-to advisory for all things gold, silver, large-cap gold stocks and top-performing funds. Try it for only $79 per year – with 3-month money-back guarantee. Details here.]

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

Over in the options trading pit, we now have 59 winners out of 61 trades, or a 96.72% success rate and have opened 3 new positions.


sk chart 10 Dec 2010.JPG

The above progress chart is being updated constantly. 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, before we decide to cap membership.

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.
Friday
Dec172010

Gold Stocks in a Failing Fiat Currency

The dollar since 1774 18 Dec 2010.JPG

By David Galland, Managing Director, Casey Research

As the U.S. dollar takes a nosedive and precious metals gain more and more attention from individual investors, the number of questions and concerns is increasing as well. The following reader email addressed to Casey Research is representative of so many inquiries that we decided to provide an in-depth response that may prove instructional to others as well.

I have been agonizing about getting metal after dumping paper metal I held and was reading the Daily Dispatch looking for investment clues. I was pondering the ratios of thirds that you mentioned in a recent Dispatch and the pursuing of metal stocks when an issue occurred to me that was not mentioned.

On the one hand, you discuss the dollar trap of investors running from one currency to another, away from the dollar and back to it. I fear that the dollar is doomed as are other fiat currencies, and time is getting short. So the question that came to mind is, what happens if one is invested in metal stocks or any vehicle that is denominated in a fiat currency, and that currency goes bust, blotto?

What value does that investment retain? Does it become a total loss? Redefined into the currency of the locality that operations are in? Converted into some other New World Order monetary unit, SDR's or nationalization of any regional assets by the locals? Is this impossible to plan for?

I realize I am probably speculating on a subject that can only be determined by psychics and crystal balls, or those with a sixth sense on the subject, but it is an issue I have not heard anyone ponder, except those who only beat the drum for physical metals.

 If I allocate away from physical into speculative investments denominated in fiat in the ratios you suggest, it might provide an additional boost if one’s timing is impeccable. But weighing that against being trapped in a depreciating currency unit, along with the possibility of physical metal becoming unobtainium, it does not seem to be a prudent decision.

 I would appreciate a further explanation for your ratios, and does the ratio vary with total personal asset amount? Is your ratio determined by finances or politics?

Chet

Here at Casey Research, our current rule of thumb suggests a portfolio allocation of approximately one-third in precious metals and related investments; one-third in cash (spread among several currencies), and one-third in “other” – namely deep-value stocks, energy, emerging market investments, etc. These ratios are meant entirely as a general guideline, as everyone’s circumstances will be different.

The concept is that the one-third dedicated to a mix of physical precious metals and stocks (the mix determined by risk tolerance) will offer you “insurance” against further currency debasement as well as some very attractive upside potential… with the amount of the upside determined by the amount of risk you are willing to take on

Which is to say, with the true Mania Phase of the precious metals markets still ahead of us, the micro-cap junior resource explorers still hold the potential for explosive profits. But they require being able to hang in there through periods of extreme volatility. Moving down the risk/reward scale, the larger producers will provide very handsome upside, but without the risk of being “trapped” in a thinly traded junior. And finally, for the precious metals component of the portfolio, the amount you hold in physical metals should be viewed as a core holding of “good” money.

The one-third dedicated to cash reduces overall volatility and gives you ammo to jump on new opportunities. By spreading the money across a number of better-managed currencies, as well as your native currency for general expenses and liquidity, your currency portfolio can preserve value better than a “red or black” bet on a single currency such as the U.S. dollar or euro.

Our subscribers have done well with the “resource” currencies of the Canadian dollar and the Norwegian krone. In time, as the purchasing power of the fiat currencies begin to decline, we’ll be looking to reduce this segment of the portfolio.

The final one-third is something of a catch-all, where we opportunistically follow some key themes such as energy, food, inverse interest rates, foreign real estate, and so forth.

Again, that particular allocation is necessarily general – with some focusing more heavily on the precious metals, others on the cash component, and others on more traditional stocks.

Now, as to the part of Chet’s question dealing with “what happens if one is invested in metal stocks or any vehicle that is denominated in a fiat currency, and that currency goes bust, blotto?”

To answer that, I adroitly hand the baton over to Terry Coxon, one of our Casey economists and editors.

Here’s Terry…

Not to worry.  You may be confusing “denominated in” with “quoted in.”

Every bond and every CD is denominated in a particular currency, which means that what it promises to pay you is a certain number of units of the currency. A U.S. Treasury bond, for example, promises you a certain number of U.S. dollars. An investment’s denomination is part of the investment’s character.

In most cases, an investment is quoted in a particular currency. Prices of U.S. Treasury bonds, to use the same example, are customarily quoted in U.S. dollars. But that is only a matter of customary practice. You could, if you found it convenient, quote the price of a U.S. Treasury bond in Swiss francs. For all I know, there are people in Zurich who do just that.

That’s the difference between denominated in and quoted in. The denomination is inherent in the investment. The currency used for price quotes is a matter of convention and can change.

By convention, stocks trading in New York are quoted in U.S. dollars, stocks trading in London are quoted in pence, and stocks trading in Tokyo are quoted in yen. Notably, some stocks are quoted in more than one currency, such as Canadian stocks that trade both in Canada and in the U.S. – a demonstration that the currency used for quoting a stock’s price is a matter of choice and not something inherent in the investment.

So in what currency is a common stock denominated? No currency at all. A share of common stock doesn’t promise to pay you a certain number of units of a particular currency. Instead, it promises to pay you a pro-rata portion of whatever money or other property the company distributes as a dividend. If all paper currencies lose all value, successful gold mining companies will still own their properties and can still operate profitably. But when they pay dividends, they won’t be paying out dollars or any other paper currency. They will be paying out whatever has replaced the paper currencies – perhaps gold itself.

Carefully chosen gold stocks won’t evaporate when paper currencies do. They will rise in value.
----
And no one chooses gold stocks more carefully than BIG GOLD editor Jeff Clark. Picked for asset protection as well as outstanding profit potential, his medium- to large-cap gold and silver producers are generating steady returns of 56.8%... 46%... even 187.9% for subscribers. And right now, if you give it a try, you can kill two resource birds with one stone: Pay just $79 per year for BIG GOLD, plus receive 12 monthly issues of Casey’s Energy Opportunities FREE. More here.

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

Over in the options trading pit, we now have 59 winners out of 61 trades, or a 96.72% success rate and have opened 3 new positions.


sk chart 10 Dec 2010.JPG

The above progress chart is being updated constantly. 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, before we decide to cap membership.

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.