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Wednesday
Jun152011

Greek debt crisis deepens

Guardian 16 June 2011.JPG

As Greece teeters on the brink of bankruptcy, protesters blockade parliament while EU ministers seek to stem panic

Greek Debt.JPG

The debt drama engulfing Greece deepened as Euro group finance ministers met in emergency session to discuss ways of resuscitating the country's ailing economy and protesters in Athens threatened to thwart passage of further austerity measures by blockading parliament on the eve of a mass general strike.

Tensions escalated as George Papandreou's socialist government confronted negative polls and a relentless stream of demonstrations initially inspired by Spain's peaceful indignados three weeks ago began showing signs of becoming increasingly explosive.

"All it will take is one mistake and the joviality that has marked the protests so far will end in a second," said veteran photographer Spyros Tsakiris, sitting in the heart of the tent city that has formed in central Syntagma Square, site of the Greek parliament.

"The mood has changed noticeably. I watch these people and honestly, I am afraid. At any moment things could go wrong and Greece could go up."

Greek Riots 16 June 2011.JPG

With Europe's debt crisis intensifying by the day, fear appears to be the single biggest factor motivating those in charge of policy on the common currency. But as finance ministers from the 17 euro countries debated how to bail out Greece for a second time in a year, before an EU summit on 25 June, the signs are not promising.

In Athens, a day after Standard and Poor's gave Greece the lowest rating of any country it covers – lower even than Pakistan and Ecuador – the omens appeared to be particularly poor.

Differences over involvement of private investors in the rescue package – which is seen as the key to getting Europe's paymaster, Germany, to agree to it at all – this week pushed the cost of insuring Greek government debt against default up to 1,600 basis points, a record high even by the standards set so far.

More than ever, Papandreou appears stuck between a rock and a hard place. Faced with a €340bn (£300bn) debt projected to hit 160% of GDP by 2012, Greece is teetering on the brink of bankruptcy.

Although his government last year slashed the deficit by €12bn – through wage and pension cuts, tax increases and benefit losses – the steps have only exacerbated Greece's economic plight.

In a country plagued by a shadow economy that accounts for almost 30% of GDP, the medicine prescribed by the EU, IMF and ECB in exchange for €110bn of emergency loans last May, has resulted in a deeper than expected recession with further cost-cutting measures now seen as crucial if Greece is not only to rein in its debt but make it sustainable.

For many – including Papandreou's MPs – the prospect of more austerity is the tipping point. Tax increases announced last week – on everything from property to restaurant bills – in addition to the sale of state assets and closure of public utilities, have sparked outrage at a time when seven out of 10 pensioners are forced to live on €700 a month and civil servants, the bulk of the Greek labour force, have had a 20% pay cut.

With unemployment at 16%, 42% of whom are aged between 20 and 35, the measures have sent thousands of Greeks who would normally never protest converging on city squares.

"The biggest challenge facing the ruling party is to convince Greeks that these measures are necessary, because there is no guarantee. A year ago people were told the same thing and look what happened," said political commentator Manolis Kapsis, of the nightly news show Mega TV. "The bailout failed."

But while Greeks say they are not prepared to bankrupt themselves to save their country from insolvency, Athens has been told that without further austerity there can be no more aid – not even a fifth instalment drawn down from the country's original bailout, which is vital to paying state pensions and wages this month.

Tomorrow's general strike by workers and civil servants will, say unionists, be the first step in a relentless wave of industrial action against the measures parliament is poised to debate. Next week, the country's biggest electric power company will begin rolling strikes.
Protesters say they will form a human chain around the parliament to prevent deputies from debating the measures and threatening legal action against those who vote in favour.

But Greece is also attracting help from unlikely places. On Tuesday, scores of Chinese business leaders, financiers, entrepreneurs and academics piled into a hotel in Athens for a "premier conference" aimed at increasing Chinese investment in Greece, where foreign direct investment remains among the lowest in Europe.

After taking over day-to-day running of Piraeus, the biggest harbour in the Med, China has signalled it wants to buy the loss-making railway company OSE, as well as other infrastructure projects.

Chinese officials admit they see Greece as the perfect gateway to markets in the Balkans and Europe beyond.

"One of the good things about this economic crisis," said Lefteris Anastassakis, a manager with the Greek cement giant Titan, who is learning Chinese, "is that it has made China's entry easier and also easier for us to accept. Ten years ago it would have seemed a science fiction that the Chinese would be the people who would help save Greece from economic collapse."

Some of the world's wealthiest financiers, bankers and real estate tycoons of Greek descent also arrived for a "power summit" aimed at exploring business opportunities. "There are a lot of people of Greek descent out there who would love to help this country," said Nikos Gitsis, a Greek American who co-founded South East Asia Airlines in the Philippines.

"Greece is virgin territory for investment," he said. "If it could guarantee fair play, rules and the eradication of corruption and bribery, we would be here helping it get out of this drama."

As we see it its time for the Greeks to cut and run, pouring austerity on unemployed youth is a very dangerous game to play.



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




Tuesday
Jun142011

EU split over plan for second bailout of Greece

Irish Times logo.JPG





THE GREEK financial crisis is stoking fresh divisions among European finance ministers as the EU authorities struggle to develop a second bailout plan for the heavily-indebted country.

As the authorities push to strike a new rescue deal at an EU summit tomorrow week, there is concern in Dublin the Greek turmoil could undermine the Government’s effort to regain entry to private debt markets next year.

Finance ministers gathered in Brussels for emergency talks last night amid a deepening rift over Greek debt restructuring between Germany and the European Central Bank. The country, already the beneficiary of a €110 billion EU-International Monetary Fund bailout, may need as much as €80 billion in a new rescue.

Ministers are discussing a German plan for a voluntary seven-year extension on the maturity of existing Greek bonds, something the ECB is resisting because it would alter debt contracts and trigger a “credit event”. Berlin wants a significant private sector contribution to reduce the call on German loans and ensure parliamentary support for a new plan, but the ECB fears any Greek default would prompt a new wave of contagion in financial markets.

With France backing the ECB, German chancellor Angela Merkel and French president Nicolas Sarkozy will attempt to reconcile their positions at a private meeting in Berlin on Friday night.

On American television yesterday on a visit to the US, Minister for Finance Michael Noonan said he did not agree with Germany.

“When we were faced with a similar situation after coming into government, we agreed with the ECB and we held back from burden sharing with senior bond holders and we didn’t proceed down that road,” Mr Noonan told CNBC. “We don’t want a credit event that has a contagion event for Ireland.”

Minister of State for Finance Brian Hayes, who represented the Government in Brussels, said the markets were not distinguishing between any of the “peripheral” euro zone countries at the moment. “We’ve got to bring to a conclusion the issues concerning Greece. Obviously Ireland has an interest in this given our own position,” he said.

“We’ve got to resolve this not only from our own perspective but from the perspective of Greece. But particularly the perspective of the euro, having stability and confidence in the euro because that’s important for Ireland.”

The ministers’ meeting broke up at about 10pm last night without any agreement. Euro zone ministers will gather for an additional round of talks in Luxembourg on Sunday night in advance of a scheduled day-long meeting on Monday.

Although German finance minister Wolfgang Schäuble said Berlin “has to insist” on private sector participation in the rescue, the ECB is resisting anything other than a voluntary initiative.

Luxembourg’s finance minister Luc Frieden said as he left Brussels last night that the issues were “difficult” and that Germany and the bank had not resolved their differences.

“It’s not only Germany and the ECB. We were listening to each other and we are moving ahead. So I’m optimistic even if I’m not sure that we find a solution next week. But within the next two weeks I think the solution should be there.”

Mr Frieden said only “limited” private sector participation which did not risk contagion was under examination.

“We have to have to be very careful that this is not considered to be a credit event. We have to be very careful that this does not lead to a rating downgrading and it’s only under these strict limitations that we can move towards private sector involvement.”

The talks come amid renewed tension in Greece, where premier George Papandreou presents an austerity plan to parliament today. His party has six-seat majority but two MPs will not vote for the plan.

It looks to us that the financial jitters are spreading........



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



Thursday
Jun092011

How I Know Another Correction Is Coming

Gold Pullbacks casey 10 June 2011.JPG





By Jeff Clark, BIG GOLD

The gold price has been rising steadily for almost a year now, with nary a correction. It fell only 4% last month, and the biggest decline since last July was January’s 6.2% drop. These barely register as “corrections” when one considers that we’ve had 18 of them greater than 5% since the bull market began in 2001.

We’re getting used to a persistently rising gold price. Any decline is met with more buying, pushing the price to new highs. But how long can we realistically expect this pattern to continue?

The answer will ultimately be determined by the fundamental factors pushing on the price – more Greece, more money printing, and more economic bad news will all drive gold higher. But even then, have we really said goodbye to big corrections?

History can provide a clue. If we could find a time period within a gold bull market where the price sidestepped major falls, then it might be reasonable to think we’ve entered a period where it will continue steadily climbing. On the other hand, if gold saw big corrections even during, say, a mania, we might need to be on the lookout for them no matter how bullish the factors are today.

Here’s a chart of the corrections that occurred during the final two years of the 1970s mania – one of gold’s biggest parabolic runs in history.

During this historic run, there were seven significant corrections. On average, that’s one every 3½ months and a 10.1% decline. You’ll also see that they were very sharp; four lasted less than ten trading days and all were less than a month. This all occurred in the middle of the mania.

If history is any guide, our correction in January was small, and will be the first of many.

In fact, historical precedent shows that volatility is the norm, even during the Mania Phase of a gold bull market. Big moves, both up and down, are common. I can’t point to a date on the calendar, but sooner or later we’re going to have another downturn, and it won’t be the only one.

This means that great buying opportunities will present themselves regularly. And not just for gold but also for silver. To find out how and when to buy, and what forms of silver you should own, read our FREE 2011 Silver Investing Guide.


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




Wednesday
Jun082011

3 Ways to Shelter Your Cash from Inflation








By Terry Coxon, The Casey Report

The high rate of inflation most of us believe is waiting not too far down the road will be an earthquake for investment markets. The likely winners (gold, silver, precious metals stocks) and the likely losers (long-term bonds and most stocks) aren’t too hard to identify. But separating the sheep from the goats is only one element for financial success in an environment of rapidly rising consumer prices.

Higher rates of price inflation will bring greater volatility to all financial markets. The higher you expect inflation and hence gold to go, the more volatility you should expect to see for assets of every type. Even if in fact the dollar is on the road to perdition, there will be detours and backtracking along the way.

Inflation doesn't operate smoothly; it is a disrupter for both the economy and for the political system. From time to time over the next five to ten years, the Federal Reserve will come to see inflation as its most urgent problem. And every time that happens, the Fed will slow the creation of fresh dollars or even put up a big INTERMISSION sign and stop printing altogether for a while.

Such seizures of monetary virtue won’t last long, but while they do last, they will hammer most investment markets, including the market for the yellow stuff and for stocks of companies that produce or look for it. You could be absolutely correct about where the dollar is headed in the long run and still have a scary ride.

2008 was just a preview of the downdrafts you will need to survive. There will be even uglier smash-ups, and you don’t want to be among the hard-money investors who get carried off on a stretcher. To avoid being one of them, you’ll need to include cash as a constant, permanent element of your portfolio. Cash is a courage booster. Having a substantial cash reserve makes it easier to hold on to your other investments when they are getting battered and you are tempted to bail out. And cash gives you the wherewithal to buy on dips – and on the big dumps.

The Twins

Of course, cash will be the asset whose value is shrinking. But the rate at which the purchasing power of your cash declines will depend very much on how you hold it.

Interest rates on money market instruments, such as Treasury bills and large CDs, track the rate of inflation fairly closely. By creating money fast enough, the Federal Reserve can keep rates on money market instruments one or two percentage points below the inflation rate, but not indefinitely. And any such effort to suppress short-term interest rates succeeds at the cost of producing even higher inflation later. Similarly, the Fed can keep money market rates one or two points above the inflation rate for a while, with the likely eventual result of a slowing in inflation. But over long periods, the average yield on money market instruments about matches the average rate of inflation.

Given that money market yields travel the same path as inflation rates, holding cash doesn’t seem to be terribly painful. The loss in purchasing power about gets made up for by the yield. That’s a nice thought – until you think about taxes. Even though the yield is merely replacing the purchasing power being lost, the yield is subject to income tax, unless you do something about it.
Doing nothing about it is, in a subtle way, risky for your portfolio. When price inflation gets to, say, 10% and money market yields are near the same level, if you are in a 40% tax bracket, you’ll be losing purchasing power on your cash at a rate of 4% per year. The situation will get worse as inflation moves higher, and you’ll be tempted to cut back on cash in order to cut back on the leakage. And that will leave you dangerously ill-prepared for the next INTERMISSION sign.

Logically, then, to make holding cash cheap or even free, you need to hold the cash in an environment where the yield is protected from taxes. Let’s look at the possibilities, some of which, you should be warned, may make you say “Yuk.”

Deferred Annuities

A straight annuity is a contract with an insurance company that pays you a certain amount per year for the rest of your life. A deferred annuity begins with an accumulation period, during which the contract earns interest or some other investment return. You can end the accumulation period whenever you want and then either start receiving a lifetime of payments or simply withdraw the contract's accumulated value.

Earnings in a deferred annuity are tax-deferred until they are withdrawn. So if the return on a deferred annuity tracks money market yields, then the real value of the annuity will hold approximately steady, even at high rates of inflation.

Deferred annuities are now an almost forgotten topic. They were, for the first time ever, a very big topic in the high-inflation years of the 1970s and 1980s. The reason was simple – sky-high interest rates. But in more recent experience, interest rates have been so low that the advantage of tax-deferred compounding has hardly been worth the trouble. It's when interest rates are high that tax-deferred compounding brings a big payoff.

When price inflation heats up and puts money market rates on a boil, expect to see ads for deferred annuities on every financial street corner. The right annuity contract will certainly be better than leaving cash in a bank account, but it still won't be the most attractive medium for holding cash through a period of rapid inflation. There are one, or perhaps two, limitations on an annuity's appeal. 

The first is that the protection from being taxed on a fictitious return only goes so far. Even though the money inside the annuity may be holding its purchasing power (with interest continuously replacing what is being lost to inflation), eventually you'll cash the annuity in. At that point, all the interest will be taxable. After, say, a decade of high inflation, most of what comes out of the annuity will be accumulated interest – which will be taxable as ordinary income. So you'd have a one-time loss of nearly 40% of your purchasing power, assuming you're in a 40% tax bracket. (I know that sounds awful, but it would be a far better result than paying tax on interest income year by year during a decade of rapid inflation.)

The second limitation is that, so far as I have been able to determine, no insurance company offers a program that would let you switch the value of an annuity between money investments and something related to precious metals. That may change as inflation and the public's interest in gold picks up. But until it does, there would be no tax-efficient way to tap the purchasing power your annuity had been protecting to buy something gold-related during the downdrafts we're trying to prepare for.

Cash Value Life Insurance

As with a deferred annuity, the earnings on a cash value life insurance policy can accumulate and compound free of current tax. But that’s where the similarity ends.

Unlike the earnings on a deferred annuity, the earnings on cash value life insurance can come out of the policy tax free. The tidiest way is for you to die at just the moment that is most convenient for your financial plan. An alternative, if you don’t have such an accommodating attitude, is to borrow the earnings from the policy. You can do so tax free if the policy satisfies the “7-pay” rule: pay for the  policy no more rapidly than with seven equal annual premiums. 

Being able to borrow from the policy tax free would allow you to tap its value whenever gold and other hard investments have had a sizeable setback. Convenient. But, depending on your circumstances, that convenience may or may not be available to you for free.
Between the Internal Revenue Code's requirements for a contract to qualify as “life insurance” and the perversely characterized “consumer protection” rules of the various states, it is not possible to buy a life insurance policy in the U.S. that does not have a face value far above the amount you’ve invested in the policy. The difference represents the insurance company’s risk – mortality risk – that you may stop breathing ahead of schedule. The insurance company, of course, will charge for that risk. There are a lot of variables, but think of the charge as amounting to something on the order of 1% per year of the capital you want to wrap inside the policy to protect the return from taxes.

Whether a cash value insurance policy (a 7-pay policy, so that you can borrow tax free) is a good place to shelter cash from the winds of inflation depends in large part on whether paying for mortality risk is or is not a wasted cost for you. If you now have a reason to own term life insurance, you are paying purely for mortality risk. In that case, it would make sense for you to convert to a cash value policy that could be invested in money market instruments as a way to prepare for high inflation. There wouldn’t be any additional mortality cost, and you would get the tax advantages of life insurance.

On the other hand, if you have no use for pure life insurance coverage, using a cash value policy for its tax advantages would require you to become a regular bettor in the actuarial casino, which you probably would not want to do.

Retirement Accounts

If it is available to you, by far the best way to hold cash through an inflationary storm is in an Individual Retirement Account. Without any of the costs that come with a deferred annuity or a life insurance policy, you can invest in T-bills, insured jumbo CDs and other money market instruments and in near-cash assets such as very short-term bonds. You can have a free hand to tap the cash at opportune times to purchase precious metals and precious metal stocks. The whole arrangement is protected from current taxes, and with a Roth IRA the proceeds eventually can come out tax free.

You can do exactly the same with a solo 401(k) plan. And if you have a 401(k) plan that's sponsored by your employer, you may be able to do about the same, depending on the investment options the plan allows.

A retirement plan would be the ideal vehicle, but there is a size constraint. While the size of a deferred annuity or of a cash value life insurance policy is limited only by the size of your checkbook, IRAs are not so easily scalable. However, if you have a traditional IRA and would like to move a chunk of non-IRA money into it, there is a way to effectively do so.

Take a close look at your traditional IRA. How much of it is building tax-deferred wealth foryou? Less than meets the eye. 

If you are in, say, a 40% tax bracket, then no matter how large your IRA gets to be, when it comes time to take a distribution, 40% will go to the government. Your ability to postpone that event won't change the nature of it. In effect, the government now owns 40% of your IRA, and you own only 60%. If there is, for the sake of round numbers, $100,000 in your IRA, only $60,000 is working for you. 

Fortunately, there is a way to buy out the government's share. It's a Roth conversion. You pay the tax now, so that eventually your withdrawals will be tax free. The result: the assets you own directly decline by $40,000 (the money you spend to pay the tax bill on the conversion); and the amount in the IRA that is working exclusively for you increases by $40,000.

That's a big improvement, because the net effect is to move capital out of a tax-paying environment and into a tax-free environment where all of the earnings get reinvested. To continue the example, the effective size of your IRA increases by two-thirds ($40,000/$60,000). That's two-thirds more money doing the happy work of tax-free compounding for your benefit.

You can do the same with a solo 401(k) – effectively plump it up through a Roth conversion.

The financial logic of a Roth conversion is compelling. The case is even stronger if you first restructure your IRA as an Open Opportunity IRA. The Open Opportunity structure starts out as a big idea – radically greater investment freedom – and then gets bigger.

Instead of being restricted to the menu of investments allowed by your existing IRA custodian, your IRA would own a single asset – a limited liability company that you manage. Then you would roll over the investments from your existing IRA into the new IRA and then into the LLC. As Manager of the LLC, you would have the choice of keeping the existing investments or switching to real estate, gold coins, equipment leasing or almost anything else.

That's the investment freedom. In addition, by designing the LLC appropriately, significant savings on the cost of your Roth conversion may be possible..

You can learn more about the Open Opportunity IRA in "The Year of the Roth," in the June 2010 edition of The Casey Report. 

Time to Plan

Deferred annuities, cash value life insurance and retirement plans – these are the ready vehicles for protecting the purchasing power of the cash you need for portfolio safety during times of rapid inflation. They do the job by reinvesting money market yields, which tend strongly to track inflation rates, without loss to current tax.
 
Of course, the three alternatives aren't exclusive; you can use more than one. Which of them would be best for you depends not just on their characteristics but on your individual circumstances. Now, before CPI inflation starts making double-digit headlines, is a good time to start weighing your choices. Even if you don't like any of the choices, any of them will be better than letting your cash rot.

Contributing Editor Terry Coxon is president of Passport Financial, Inc., and for over 30 years has advised clients on legal ways to internationalize their assets to optimize tax, wealth protection and estate planning goals.

[For a very limited time, you can now profit from the investment advice of both the Casey Research team and 35 big-name experts… like ShadowStats’ John Williams, James G. Rickards, Chris Whalen, Mike Maloney and many others. Get your Double-Dip Crisis Bundle today – for one low price. More info 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.






Wednesday
Jun082011

Gold, Stocks and Options

INDU Chart 08 June 2011.JPG

A question that we constantly wrestle with is are gold producers correlated to gold prices as gold is their underlying asset, or are they correlated with the stock market as they stocks? Is there safety in gold producers should the stock market in general experience a pull back? If so, why are the gold producers lagging behind the steady progress being made by gold prices at the moment?

We start with a quick look at the DOW Jones Industrial Average Index, the INDU, where we can see that it fallen by around 6% since the start of May.

Also note that the RSI, currently sitting at 33.27 suggests that the Index is now oversold and could be due for a re-bound. As we see it all eyes are focused on the possibility of a QE3 or further governmental stimulus, without it the stock market would crumble and investors would lose whatever shreds of confidence that they may have in the administrations ability to manage in a proper and professional manner.

The second chart is more commonly known as the golds bugs index or the HUI and it to has fallen by around 17% since mid April 2011, suggesting that it is following the INDU and not gold prices. This is micro analysis and can easily wrong foot us, however, when the financial crash came gold fared reasonable well, but the gold producers were hammered with no stock spared as deleveraging gathered pace.

HUI Chart 08 June 2011.JPG

Now compare the HUI to the chart for gold, where we can see that apart from a sharp, but shallow correction in early May, gold prices continue to make steady progress. There now appears to be a disconnect between physical gold and the gold producing miners.

Gold chart 08 June 2011.JPG

However, the inverse relationship between gold and the USD appears to be intact as the rally by the USD in May has spluttered to a halt and is now heading south, hence golds steady progression. We had expected the USD to rise a little further but it doesn't appear to the legs this time, so we now anticipate another test of the '72' level. If it breaks through '72' then things will turn ugly quickly. Fortunately the troubled Euro is struggling with a number member states who are incapable of putting their houses into order and are in need of constant financial support in the form of bailouts.

USD Chart 08 June 2011.JPG

If like us, you are of the opinion that the real financial crash still lies ahead of us, then the flight to safety, should we need one, points to the precious metals themselves and not the producers. A repeat of the Lehman Brothers type of event could see our core holdings of quality stocks take a major haircut. So, what should we do about it.



Going forward we expect the next eight weeks to be characterized by sideways consolidation. For the precious metals sector this is historically a lackluster period of low demand. The holiday season in the western world sees many of the big players leave their trading desks and head for the beach. If we do trade sideways then there may be the opportunity to sell a few covered calls with the expectation that they expire worthless and we would collect the premium.
 
However, for those who have the patience it may be worth waiting until around mid-August which is when we expect both gold and silver prices to gain some traction as QE2 will have ended and we should know just what is taking its place. We anticipate a QE3, albeit in a hard to spot disguise. Should a further stimulus package materialize then gold and silver prices will take off.

That being the case then our core holdings should recover in rapid fashion and head north. However, acquiring both physical gold and silver and having it in your very own hands is still a good way to be involved in this bull market.


During this summer period we will be looking to acquire a few of our favourite quality gold and silver producers along with the implementation of a number of options plays that could be prove to be very rewarding.

Now, don’t go to sleep, because you think that you have plenty of time to spare, you haven’t. We all need to start developing our strategy right now by selecting a model portfolio for these trades. Then we need to observe their behavior over the coming weeks, noting those stocks that mirror the movements of the underlying asset. If the behavior of the chosen stock is odd and does not mirror the movement of the underlying asset, then don’t try and reconcile it, drop it and move on to your next choice. When you are happy that you have a vehicle that suits your selection criteria, formulate your plan by deciding before hand the following:
 
1. How much of your hard earned cash are you willing to risk?

2. At what price will you buy?

3. At what price will you sell?


In terms of options trading, our plan is to look primarily at the January 2012 series in most cases, as we anticipate that the lions share of the action will take place between September 2011 and January 2012. The possible vehicles for these trades will be the larger ETFs and a selection of what we perceive to be undervalued stocks. Its important to adopt a spread of positions with exposure to the next up-leg by this bull market, as it is both disappointing and expensive to identify a major move and then make the wrong choice within the market sector and finish up empty handed. 

A good test in deciding on the amount of money that you are prepared to put at risk is to ask yourself just how you will feel if you wake up one morning and you have lost the lot. If that feeling hurts then you know that you are placing too much cash into that trade. And don't get carried away with what if it goes to the moon fantasizes – it seldom does. Having decided on the price that you are prepared to pay for a tranche of options contracts, go ahead a place your order with your price stated as the 'Limit' that you are prepared to pay. Now be patient and wait for your order to get filled, do not chase it by upping your bid as your emotions will come into play and you wont be as rational as you were in the cold light of day. Lets assume that your order gets filled and you are now the proud owner of a few options contracts. The next step is to put them up for sale at your per-determined price, again your order should be a limit order and again you should be realistic and patient. If there is a rally and your selling price is triggered be happy, don’t beat yourself up about the amount of money that you think you have missed. A smaller profit in your very own hands is better than a larger one that may or may not materialize.
 
So chop-chop, it is due diligence time for you and time is of the essence. Also remember to keep some 'opportunity cash' on the sidelines as none of us really know just when a bargain might present itself.








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.






Saturday
Jun042011

Gold prices may hit $1,800 by year-end - Firoz G. Merchant

Firoz G. Merchant.JPG
Firoz G. Merchant



DUBAI — Gold prices will continue to rise in the foreseeable future and may hit $1,800 an ounce by the end of this year due to its strong demand in India, China and other emerging markets, a top official of Pure Gold Jewellers said.

Pure Gold Jewellers chairman and founder Firoz G. Merchant said investors’ appetite for the yellow metal is on the rise due to its better rate of investment returns in the past couple of years.

He said high oil prices, economic instability in major global economies and a fear of a double-dip recession in Europe and the United States also played a key role in attracting investment in gold that keep its outlook bright in the near future.

‘Asia will be engine of growth in days to come and Middle East countries will lead the recovery in global economies as the higher crude prices will help the regional governments to spend the surplus funds on development and infrastructure projects,’ Merchant told Khaleej Times in an interview.

Pure Gold Jewellers, established in 1989, is one of the fastest-growing jewellery houses in the UAE and GCC countries. The group, which counts a jewellery and accessories line in its portfolio, operates 52 outlets in the UAE and has massive expansion plans in GCC and India.
‘Major European countries are facing difficulties to overcome inflation and debt crisis, Japan is hit by a natural disaster and the United States is also not yet come out of the recession,’ he said, adding that tougher days are still ahead for the US and other Western countries.

He said oil prices maintained an upward trend but its volatile trade has shaken investors’ trust in black gold, leaving no other option for them to invest in the yellow metal.

‘I believe oil prices are going to be out of control and will be stable at $200 a barrel during the next couple of years.’

By late Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in July rose to $115.12 a barrel from $114.67 the previous week. On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for July eased to $99.75 a barrel from $100.35.

‘Amid considering all these situations, investors consider investment in gold a safe bet with a confidence of getting higher profit returns,’ Merchant said. He said gold prices would continue to maintain an upward trend due to higher demand in India, China and emerging markets.

‘Gold prices will be ranging between $1,700 to $1,800 an ounce by the end of this year,’ he said, adding that the prices may be touching the $3,000 mark in three to five years due to strong demand and investors’ faith in the yellow metal.

Gold rose to $1,540 an ounce by late Friday on the London Bullion Market Gold. The metal enjoyed solid gains in recent times garnering support from its status as a safe haven in uncertain economic outlook in major economies of the world.

Business unusual

Merchant said higher gold prices are affecting jewellery demand in the region and encouraging people to invest in diamond jewellery. ‘Gold sales have dropped by an average of 20 per cent while diamond sales have increased by an average of 30 per cent in the first five months of this year,’ Merchant said.

He said the bright outlook for gold boosts demand for diamond jewellery.’ Merchant added that diamond prices are also likely to increase by 25 per cent in 2011. ‘Diamond sales are on the rise as customers are diversifying from gold into diamonds due to its rising prices,’ Merchant said.

In reply to another question about Pure Gold’s business growth in second half, Merchant said, ‘We are expecting better sales and growth in the coming months, as tourism will increase and many holiday seasons are upcoming as well.’

About the expectations from the forthcoming Dubai Summer Surprises, or DSS, he said: ‘We believe it’s too early to say, as we are waiting to hear what the Government of Dubai has planned for the upcoming DSS, only then we will be able to make our predictions.’

Expansion plans

Merchant said Pure Gold’s expansion plan in GCC countries and India is ‘on track,  and expanding our business in the Gulf and India [are] according to the plan.’

The Dubai-based group plans a massive expansion drive in India and across the Gulf states. Under a $200 million investment plan in India to open 200 outlets over a period of five years, the group has so far inaugurated 18 outlets while another seven will be operational in the next three months.

‘We have signed agreements for 25 outlets and these all will be operational in three months.’

About the forthcoming outlets in India, he said the new stores are covering the entire western zone, including Maharashtra and Gujarat. ‘The northern zone is also a part of the expansion plan for India in the near future.’

GCC roadmap

On expansion in GCC countries, the Pure Gold founder said the group plans to explore the Qatar and Saudi Arabia markets. ‘Our first showroom in Qatar will be launched in June. We have a plan to open six outlets by the end of the year,’ he said, adding that the group plans to open five more outlets in the country this year due to the promising economic outlook of the country.

‘Qatar is an important market for us in the region and we are making timely entry in the country where huge investment is being made in infrastructure and development projects.’ He said 15 to 20 new malls are under construction in Qatar and Pure Gold will open 15 outlets in the country during the next three years to tap business opportunities.

In reply to a question about the group’s plan to make a Saudi foray, Merchant said: ‘We are looking for a local partner and have plans to open 25 outlets by 2015.’

‘Saudi Arabia is on the cards for next year,’ he added.

He said Pure Gold has no plan to expand in Kuwait, Oman and Bahrain.

In reply to a question about the group’s plan to expand in the home market, he said Pure Gold has put on hold expansion plans in the UAE.

‘We currently have 52 shops in the UAE and have no plans to open any more in the near future. We want to wait and watch the market conditions before making any moves,’ he concluded.

Pure Gold Group 05 June 2011.JPG





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.

khaleej Times.JPG




Thursday
Jun022011

You Better Man the Life Boats

Mike Maloney.JPG
Mike Maloney



Mike Maloney, renowned author of Rich Dad’s Advisors: Guide to Investing in Gold and Silver, riled up an audience of investors with his alarming speech at the Casey Research Spring Summit. “This is an emergency. There’s something going wrong here. And now they’re talking about will they continue quantitative easing? Will they end quantitative easing? If they end it, there’s a huge deflation. If they continue it, the dollar continues losing value and we go into a crisis of confidence, which I do believe any way this turns out the dollar is going to go into a crisis of confidence. There’s just no escaping that. You can’t do what they’ve done and not have it come back to haunt you someday.” 

Watch more of Maloney’s must-see musings in the video below.

Please click here.

The Next Few Years was among the best received Casey Summits ever. Even if you missed getting a spot for yourself, you still have a chance to listen in on what our world-class faculty had to say.

We’ve put the entire collection of audio recordings on CD - over 20 hours of information from 35 of the world’s top minds in economics, investing, and the natural resource business – for you to listen to at your leisure in the comfort of your home, car, or office.

To find more information or to order the complete CD set from Casey Research's spring summit, The Next Few Years CLICK HERE.  Just one smart investment from what you hear will pay for the CDs many times over.



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.






Wednesday
Jun012011

The US has no gold?

Dominique Strauss-Kahn 01 June 2011.JPG
Dominique Strauss-Kahn

When the news broke that Dominique Strauss-Kahn, head of the IMF, had been arrested in New York and charged with a sex crime, we thought that there might be more to it than that. It had been rumored that he would challenge Nicolas Sarkozy in the next presidential election in France and so this incident, should it be true, would effectively eliminate him from the presidential race. We don't really pay any attention to conspiracy stories, but this piece carried in The European Union Times is an interesting read.



A new report prepared for Prime Minister Putin by the FederalSecurity Service (FSB) says that former International Monetary Fund (IMF) Chief Dominique Strauss-Kahn was charged and jailed in the US for sex crimes on May 14th after his discovery that all of the gold held in the United States Bullion Depositorylocated at Fort Knox was ‘missing and/or unaccounted’ for.

According to this FSB secret report, Strauss-Kahn had become “increasingly concerned” earlier this month after the United States began “stalling” its pledged delivery to the IMF of 191.3 tons of gold agreed to under the Second Amendment of the Articles of Agreement signed by the Executive Board in April 1978 that were to be sold to fund what are called Special Drawing Rights (SDRs) as an alternative to what are called reserve currencies.

This FSB report further states that upon Strauss-Kahn raising his concerns with American government officials close to President Obama he was ‘contacted’ by ‘rogue elements’ within the Central Intelligence Agency (CIA) who provided him ‘firm evidence’ that all of the gold reported to be held by the US ‘was gone’.

Upon Strauss-Kahn receiving the CIA evidence, this report continues, he made immediate arrangements to leave the US for Paris, but when contacted by agents working for France’s General Directorate for External Security (DGSE) that American authorities were seeking his capture he fled to New York City’s JFK airport following these agents directive not to take his cell-phone because US police could track his exact location.

Once Strauss-Kahn was safely boarded on an Air France flightto Paris, however, this FSB report says he made a ‘fatal mistake’ by calling the hotel from a phone on the plane and asking them to forwarded the cell-phone he had been told to leave behind to his French residence, after which US agents were able to track and apprehend him.

Within the past fortnight, this report continues, Strauss-Kahn reached out to his close friend and top Egyptian banker Mahmoud Abdel Salam Omar to retrieve from the US the evidence given to him by the CIA. Omar, however, and exactly like Strauss-Kahn before him, was charged yesterday by the US with a sex crime against a luxury hotel maid, a charge the FSB labels as ‘beyond belief’ due to Omar being 74-years-old and a devout Muslim.

In an astounding move puzzling many in Moscow, Putin after reading this secret FSB report today ordered posted to the Kremlin’s official website a defense of Strauss-Khan becoming the first world leader to state that the former IMF chief was a victim of a US conspiracy. Putin further stated, “It’s hard for me to evaluate the hidden political motives but I cannot believe that it looks the way it was initially introduced. It doesn’t sit right in my head.”

Interesting to note about all of these events is that one of the United States top Congressman, and 2012 Presidential candidate, Ron Paul [photo bottom left] has long stated his belief that the US government has lied about its gold reserves held at Fort Knox. So concerned had Congressman Paul become about the US government and the Federal Reserve hiding the truth about American gold reserves he put forward a bill in late 2010 to force an audit of them, but which was subsequently defeated by Obama regime forces.

When directly asked by reporters if he believed there was no gold in Fort Knox or the Federal Reserve, Congressman Paul gave the incredible reply, “I think it is a possibility.”

Also interesting to note is that barely 3 days after the arrest of Strauss-Kahn, Congressman Paul made a new call for the US to sell its gold reserves by stating, “Given the high price it is now, and the tremendous debt problem we now have, by all means, sell at the peak.”
Bizarre reports emanating from the US for years, however, suggest there is no gold to sell, and as we can read as posted in 2009 on the ViewZone.Com news site:

“In October of 2009 the Chinese received a shipment of gold bars. Gold is regularly exchanges between countries to pay debts and to settle the so-called balance of trade. Most gold is exchanged and stored in vaults under the supervision of a special organization based in London, the London Bullion Market Association (or LBMA). When the shipment was received, the Chinese government asked that special tests be performed to guarantee the purity and weight of the gold bars. In this test, four small holed are drilled into the gold bars and the metal is then analyzed.

Officials were shocked to learn that the bars were fake. They contained cores of tungsten with only a outer coating of real gold. What’s more, these gold bars, containing serial numbers for tracking, originated in the US and had been stored inFort Knox for years. There were reportedly between 5,600 to 5,700 bars, weighing 400 oz. each, in the shipment!”

To the final fate of Strauss-Kahn it is not in our knowing, but new reports coming from the United States show his determination not to go down without a fight as he has hired what is described as a ‘crack team’ of former CIA spies, private investigators and media advisers to defend him.

To the practical effects on the global economy should it be proved that the US, indeed, has been lying about its gold reserves, Russia’s Central Bank yesterday ordered the interest rate raised from 0.25 to 3.5 percent and Putin ordered the export ban on wheat and grain crops lifted by July 1st in a move designed to fill the Motherlands coffers with money that normally would have flowed to the US.

The American peoples ability to know the truth of these things, and as always, has been shouted out by their propaganda media organs leaving them in danger of not being prepared for the horrific economic collapse of their nation now believed will much sooner than later.

Do you think that there is something in this? The US, no gold!


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.






Wednesday
Jun012011

Soldiering on: Why Our Military Adventures Matter to Investors

By David Galland, The Casey Report

Recently, I read a book titled The Good Soldiers that also serves as an object lesson in the disconnect between what’s going on in Washington D.C. and reality. It was written by David Finkel, a Pulitzer-winning author, and it came to me via a friend who is going through a stage where she feels drawn to books about war, mostly about World War II. Showing flexibility, her interest has expanded to the ongoing conflict in Iraq – the theater of operations that serves as backdrop for The Good Soldiers.

Despite it going solidly against my literary preferences, I dragged the book along during a quick trip to Florida – a spur-of-the-moment thing to attend a golf school (I figured it was either that or get thrown off the local course for energetic exclamations of elaborate expletives resulting from my golf shots constantly flying off in unexpected and unwelcomed directions). Out of courtesy if nothing else, I figured I’d read a few pages of the book before putting it down – and so was surprised when it sucked me in, and kept me in, pretty much until I was finished.

The background story is that the author of the book traveled to Iraq with a battalion of U.S. soldiers sent as part of the “surge,” then lived with them for the 14 months of their deployment. As far as I can tell, he approached his topic with no overt political intentions – rather, he just wanted to document the war as experienced by a battalion operating from a small base in one of the worst corners of Baghdad.

As one might expect, as they departed from the United States for Baghdad, the soldiers and their brigade commander, Col. Ralph Kauzlarich, were full of fight, patriotism, and the confidence that only a chosen people can possess. It was, in their view, a just war and they deeply believed that in no time at all they'd use their superior war-making capabilities – supported by the sure knowledge that they held the moral high ground – to clean the bad guys out of Dodge and get the whole mess straightened out pronto.

Reality, however, turned out to be significantly different, starting with the fact that rather than being welcoming, the population was overtly hostile – so much so that almost every time the soldiers drove off the base (which was part of the daily routine), the locals would try to maim and kill them. And they had considerable success at it.

In addition to trying to kill them, the community’s leaders seemed uninterested in the outreach efforts the colonel was instructed to make, including an initiative to rebuild the sewers and fix the power and water delivery systems in the area around his command. Of course, it didn’t help that it was the blunt-force approach used by the U.S. military in capturing Baghdad that destroyed so much of the infrastructure in the first place. Regardless, all attempts at doing “good works” were stalled and disappointed at every turn, with billions of dollars wasted in the process.

As the book progresses, the author juxtaposes President Bush's and General Petraeus' rosy comments about how well the surge is working with the on-the-ground realities. And those realities are presented as raw and graphic as they are – with the tops of soldiers’ heads being taken off by IEDs, or burning to death in Humvees while friends watch helplessly.

So successful was the military and political leadership in convincing Congress and the media that the surge was a winning strategy that, to this day, its acceptance as a fact has become a meme throughout the body politic. Back on the ground in Iraq, however, the daily grinding down of the front-line forces continues apace.

During the period of time covered in The Good Soldiers, the Iraqi insurgent attacks lightened up only slightly – but only because the ruling mullah in the battalion’s area of operation unilaterally called a cease-fire. The resulting dialing-back of attacks on U.S. forces was immediately pounced upon by the military leadership and the Bush administration as proof that the surge was working.

That that wasn’t the case became clear the day the same mullah called off his cease-fire and hell opened up. One minute the area was relatively quiet – the next, the streets were filled with armed gunmen and snipers, and bombs were going off on what seemed like every corner.

One of the more remarkable aspects of the war, an aspect that largely goes unreported, was just how sophisticated the Iraqi opposition became in their attacks against the occupying forces. Not only did their roadside bombs become murderously powerful – so powerful that they could almost evaporate a fully armored Humvee – but the Iraqis began attacking the U.S. bases using everything from mortars to rockets and even homemade missiles.

The lob bomb, for example, was created out of propane tanks, filled with ball bearings and shrapnel, with a triggering device welded to the nose, and a rocket on the rear. In one instance, two large dump trucks drove near the base; after tilting up their backs to drop their loads, they revealed rails which were then used to guide a barrage of lob bombs, resulting in millions of dollars of damage to the American base.

By the end of the battalion’s stay, the soldiers were mentally and, in many cases, physically ruined. One chapter near the end of the book, which recounted Col. Kauzlarich’s visits to some of his wounded soldiers back in the States – soldiers who suffered truly catastrophic injuries – I had to skip after just a couple of pages. It was just too painful to read.

Lessons from The Good Soldiers…

There are a number of important lessons that can be derived from The Good Soldiers, including:

The on-the-ground commanders and soldiers being sent into places like Iraq and Afghanistan have only the best of intentions. Though their reasons for joining up may vary, as they head off for war, most believe their leaders wouldn’t deploy them unless there was good reason to do so. Thus when it becomes clear to them just how ill-used they have been – that they have lost friends and limbs for no discernable purpose – it creates a deep sense of disillusionment. The odds of another Timothy McVeigh emerging from the crowd of returning vets are very high.
 
Despite the U.S. government spending tens of millions of dollars a day in Iraq – with the total spent now approaching $1 trillion – the mission has accomplished nothing other than antagonizing the Iraqis whose doors the U.S. troops kick down regularly. When I say “accomplished nothing,” that is actually an overstatement. In fact, other than toppling Saddam, the outcome of the mission has been to create an everlasting antipathy between many Iraqis and the United States, blowing wind into the sails of the most radical elements of Iraqi society. What a mess.
 
The U.S. occupation has turned into a very effective laboratory for the insurgents. At the beginning of the conflict, the resistance fighters were relatively weak – but as time has gone by, the natural ability of humans to adapt and improvise has led to the development of an array of inexpensive but seriously lethal antipersonnel weaponry. That these technologies are now spreading throughout the region can be seen in the recent death of eight U.S. soldiers in Afghanistan, in a single blast.
 
Short of staging a scorched-earth form of warfare – turning these cities into parking lots – the U.S. cannot possibly ever win one of these conflicts. There is no fixed enemy that the U.S. can target with its superior weapons. And it’s unrealistic that the military can hunt down all of the opposition by going door to door.
 
The U.S. political and military leadership is straight out lying to its troops and to the public at large. It is hard to comprehend why, but I dare you to read The Good Soldiers and come away with any other conclusion. Maybe they continue the tragic farce because to cut and run – as we ultimately did in Vietnam – is just too embarrassing. Maybe it’s because they are so effectively lobbied by the war profiteers – may they eventually rot in the hottest corner of hell. Maybe it’s because they are allowed to wage war from a safe distance (no politicians visited the forward operating base where Kauzlarich and his battalion were based during their stay there, and Petraeus only made a single, quick stopover).

Meanwhile, the U.S. continues to bleed billions in these misguided wars, while the soldiers just bleed.

Someone, and probably a lot of people, should be held accountable for this travesty – as in being brought up on serious charges and, if found to have propagated lies resulting in the loss of lives and the wasting of hundreds of billions of dollars, sent to jail for a very, very long time. Or, better still, turned over to the Iraqis to punish. I’m sure they’d figure out something appropriately medieval.

Why This Is Important to Us as Investors

Given the urgency of addressing the U.S. debt and deficits, the bloated U.S. military budget is clearly the most obvious place to start making cuts that will actually matter. Yet Congress made no such cuts when passing the $690 billion budget requested by the Defense Department – doing so last week by an overwhelming margin.

That budget includes another $119 billion to flush down the toilets of Iraq and Afghanistan. Showing that it has learned no lessons, the Obama administration – encouraged no doubt by new friends in the military-industrial complex – has already managed to spend $750 million in the undeclared war on Libya.

There is a way to use this understanding that the bankrupt U.S. and its allies are doing little more than breaking furniture and making enemies in the Middle East to one’s advantage. Simply, unless and until the U.S. politicians muster enough spine to pull out of Iraq and Afghanistan and slash the military budget, the government’s massive budget deficits will continue.

And if the budget deficits continue, then the trend for the U.S. dollar is sharply downward (though I remain convinced we’ll see a rally in the near term, a topic we’ll be tackling in greater detail in the upcoming edition of The Casey Report).

That is not conjecture, but the unavoidable conclusion uncovered by a number of objective analyses done on past sovereign debt crises by folks such as Kenneth Rogoff and Casey’s Chief Economist Bud Conrad.

To those readers who think that cutting the military budget, or pulling out wholesale from the Middle East, will increase threats to the continental United States, we will have to agree to disagree. In my view, destroying our economy to wage war – in the process squandering the huge commercial advantage of providing the world its reserve currency – is far more destabilizing. As is making yet more enemies by continuing to lob bombs and kick in doors here, there, and everywhere.

Unfortunately, the U.S. leadership and, I guess, some significant swath of the voting public who supports that leadership are suffering from some sort of mass psychosis (or maybe it’s paranoia), that actually has them thinking that it is somehow in the country’s interest to continue flinging billions of dollars and the lives of its good soldiers into lost causes overseas.

But don’t take my word on the topic – do yourself a favor and pick up a copy of The Good Soldiers today. As I can’t know where you stand on these wars, I can’t say whether or not reading the book will change your mind. But I can guarantee you that its on-the-ground perspective will enlighten you as to the true and disturbing nature of what’s really going on, and the futility of it all. It is anything but entertaining, but is very well written and very illuminating.

Meanwhile, use the military budget as a proxy for the seriousness (or lack thereof) of the government’s intent to reduce its spending by any significant amount. And, absent any serious cuts in that spending, continue to take measures to protect yourself against wholesale debasement of the currency.

Every month, David Galland and his co-editors – among them Doug Casey – of The Casey Report research and analyze significant events in the U.S. and global economy, as well as in politics and the markets. Their goal is to recognize the trends in the making that will directly or indirectly affect investors… and to provide the best profit opportunities, even in a time of crisis. Learn how you can outpace rampant inflation by crisis-investing like the pros in this free report.



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.






Wednesday
Jun012011

John Embry discusses gold and silver with James Turk

John Embry on Goldmoney 01 June 2011.JPGJames Turk on Goldmoney 01 June 2011.JPG
John Embry and ..........................................................James Turk



In this video, John Embry – Chief Investment Strategist at the Canadian firm of Sprott Asset Management – discusses the recent correction in silver, why you should own gold and silver, the gold/silver ratio, the dollar crisis, etc.

This video is approximately 30 minutes long, but we feel it is most certainly worth a listen. As long with the above topics they also discuss mining shares, exchange rates and Canada's future.

Please click this link to listen to it in full: Goldmoney


Goldmoney is a site that you might want to bookmark for future reference as it is a valuable source of information, in our humble opinion. Their mission is to provide the best way to buy physical gold, silver, platinum and palladium online and to ensure secure storage for these precious metals

"We make this possible by offering competitive and transparent pricing, and state-of-the-art technology and security procedures. This is exemplified by the highly regarded GoldMoney Standard, which includes regular independent audits and the recently introduced gold bar testing. Simply put, we have gone to great lengths to make it easy for you to build trust in us."

That's it Folks!



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.

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