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Saturday
Jan222011

As Gold Falters, SK OptionTrader Banks Profits of 13%, 17% and 13%

Despite gold and silver undergoing a sizeable sell off in that past few weeks, our premium options trading service SK OptionTrader has just closed three trades and banked profits of 13%, 17% and 13% on each.

This brings our total number of closed trades to 64, with 62 of those being closed at a profit. Our average return per trade including losses is 42.40%, with our model portfolio being up 135.97% since inception, or an annualised return of 86.45% assuming profits are not reinvested.

SK OptionTrader Acc Profits 220111

With the reinvestment of profits $10,000 invested in accordance with SK OptionTrader signals and our model portfolio would now be worth $31,604.82.

On December 7th 2010 we sold out of all our GLD call option positions.

By mid December 2010, having taken huge profits on call options during the prior few months, (You can see some updates here: SK OptionTrader closes 5 trades for average profit of 94%, Yet More Profits Banked For SK OptionTrader and How have SK OptionTrade Recommendations faired after our Sell Signals) we decided that gold gains would be limited over the Christmas and New Year holiday period.

On the 12th December 2010 we wrote to our subscribers saying:

“... we are wary that we are entering the holiday season soon and trading will likely be thin, with big players not returning to the market until January. A large component of options trading is not only getting the direction of the underlying correct, but also the correctly timing when the move will happen. This is due to the decay of the time premium (Theta) that one is exposed to when purchasing an option... We are however in favor of taking out some bullish credit spread positions, where we would be short Theta, and holding them for a month or so. This allows us to benefit from an upwards or sideways move in gold over the coming weeks, with our position hopefully gaining value each day as the time premium decays, since we are of course short Theta. We are looking at taking these bullish credit spread positions in GLD January-2011 puts with strikes in the $129-$126...”


We then signalled for our subscribers to take a bullish vertical credit spread position on the 13th December, and to take two more on the 16th December. The following summaries how these trades played out:

Bullish Credit Spread - 13th December 2010
Sold GLD Jan 22 '11 $128 Puts for $0.68 and Bought GLD Jan 22 '11 $127 Puts at $0.55.
Both expired worthless on 22nd January 2011
13% Profit in 40 days

Bullish Credit Spread - 16th December 2010
Sold GLD Jan 22 '11 $128 Put @ $0.92 and Bought GLD Jan 22 '11 $127 Put @ $0.75.
Both expired worthless on 22nd January 2011
17% Profit in 37 days

Bullish Credit Spread - 16th December 2010
Sold GLD Jan 22 '11 $127 Put @ $0.73 and Bought GLD Jan 22 '11 $126 Put @ $0.60.
Both expired worthless on 22nd January 2011
13% Profit in 37 days

Essentially what these trades boiled down to is receiving a modest premium if GLD was above $128 on January 22nd, equivalent to a gold price of roughly $1315.

Since we were correct in our prediction, we gained $0.13, $0.17 and $0.13 for every dollar risked in each of the trades, profits of 13%, 17% and 13%.

If our view was incorrect, our losses were limited at $1.00 for every $1.00 risked in the trade, i.e. our losses were limited. So if GLD had been at $125 upon expiration we would have lost our $1.00, but if it was a $100 or $75 then we would have still only lost $1.00.

The reason we liked this type of trade at the time was that we had the view that gold was either going to go sideways, upwards or slightly down, but it would not fall dramatically. Usually such an ambiguous and unsure view cannot be profitable in trading stocks or futures, however with options trades they can be structured to reward the investor for such a view, as they rewarded us and our subscribers who decided to put on similar trades.

Options are one of the few instruments that can be used when one has a non-directional view. Whilst we would all love to be able to pick which way gold or another asset is going to go, the reality is that often we may not have a strong view, if any at all.

If you would like to add this type of versatility to your trading then we recommend that you consider options trading. There are many misconceptions that all options trading involves unlimited risk, but in fact although some positions do expose the holder to unlimited risks, if trades are structured in the right way one can limit the risk in any trade.

At SK OptionTrader we only recommend limited risk strategies, always telling our subscribers the maximum downside in a worst case scenario.

If this sounds like something you are interest in then feel free to check out our full trading record or contact us if you have any questions.

Alternatively you can subscribe below, for just $199 per 6 months or $349 for a year.

Subscribe for 6 months - $499

 

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Wednesday
Jan192011

Gold, Silver and Unhedged Producers

HUI Chart 19 Jan 2011.JPG

The run up in gold prices attracted investors to the gold and silver mining sector and for those investors looking for significant exposure, producers who do not forward sell their production provide the vehicle to take advantage of the improvement in gold prices.

However during the recent pull back in both silver and gold prices these stocks naturally experienced some profit taking, particularly by speculators who have recently taken an interest in this small sector of the market.

Taking a quick look at the above chart, which compares the progress of the HUI with that of gold prices we can see the HUI has been tracking gold closely until this recent down turn when the HUI has moved considerably lower. This is a disappointment to us as the stocks appear to head lower faster than the metals but they also appear to move higher slower than the metals.

The HUI is The AMEX Gold BUGS Basket of Unhedged Gold Stocks Index and 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.)


The attraction of investing in stocks is that the stocks should offer leverage by as much as 3:1, 4:1 or 5:1 to the metals, otherwise investors cannot see the point in taking the many and varied risks that are inherent in the mining industry, if the returns are mediocre. The phase we are in right shows that the stocks are struggling to manage a 1:1 ratio with the metals.

The chart below compares Gold to the HUI and as we can see since 2006 the stocks have struggled to keep pace with gold and the divergence appears to getting wider. So, is this a buying opportunity or have indeed things changed suggesting that the stocks may not be the best way to play this Golden Bull, after all this is not 1980 and there are other vehicles available which are consuming a fair amount of investors cash. There are a variety of Exchange Traded Funds that specialize in gold itself and everyday now we see the launch of a new vehicle offering a slightly different slant on the way to play this market. These vehicles offer exposure to gold, ease of access and liquidity along with a price that moves almost in lock step with gold.

Gold and HUI 5 Year Comparison chart 20 Jan 2011.JPG

There is no doubt in our minds that the gold producers are in for a good time but this is not a monopolistic environment so they now need to become more creative in order to attract and maintain their customers. A half decent dividend would be a starting point, offering existing share holders the opportunity of participation in the next stock offering, offer the product they mine for purchase by their own the investors, etc. Some companies are in the process of doing some of these things but not all. The businesses that cannot keep up with gold prices need to find an olive branch and come up with something revolutionary that secures their market share, otherwise funds will move to a safer and more profitable place. Miners, You have been warned so get your skates on.

As our readers know we have been and are still firmly ensconced in the inflationary camp and apart from the massive price increases that have hit the commodities market in general there are signs that inflation is pushing through, such as the UK have just announced. Oil prices took the blame as the annual CPI growth moved up in December to an eight-month high of 3.7 percent, well above the 2.0 percent target, giving the Bank of England a new headache. Also note that these figures do not include the latest rise in VAT (Value Added Tax) in the UK which will no doubt boost this figure even higher next time around.

For what its worth our strategy remains unchanged with the purchase and holding of physical gold first, followed by a small number of stocks and then a few options trades to in an attempt to get the leverage that the stocks are not delivering at the moment. In fact we are so confident that gold prices will rise that we have offered to refund the fee paid to our premium options trading service should gold prices not hit $1500/oz this year.




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

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.

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.

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