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Monday
May302011

Sun Zhaoxue “The future of gold looks very promising,”

Sun Zhaoxue.JPG


The future demand from China bodes well for gold prices as over the years China has no longer is an exporter and her internal requirements for gold are set to outstrip domestic gold production.
Sun Zhaoxue



SHANGHAI (MarketWatch) -- Gold prices may stay at high levels in the coming months as investors seek a safe store of value amid slowing global economic recovery, a weaker dollar and geopolitical uncertainties, China National Gold Group Corp. General Manager Sun Zhaoxue said Thursday.

"The future of gold looks very promising," especially in view of rising investment and physical demand in China, said Sun, who is also president of China Gold Association.

China's annual gold demand will likely exceed 700 metric tons in the next several years, while annual output may reach 400 tons in the next three years, Sun said.

Chinese demand rose 21% to 571.5 tons last year, with gold jewelry demand totaling CNY270 billion in value, he said.

A Chinese person now owns about 4 grams on average, from a little over one gram a few years ago, but it is still well below the world average, he said, without elaborating.

"There is a gold investment rush among Chinese investors as they consider it a hedging tool."

Investment in gold bars increased 94% to 141.9 tons in 2010, while investment in gold coins was up 55% at 16.6 tons.
China's investment demand in the first three months of the year more than doubled to 90.9 tons, outpacing India's 85.6 tons, the World Gold Council said in a quarterly report.

China's gold reserves account for about 6% of total global reserves and its proven gold reserves reached 6,327 tons in 2009.

China's gold mineral reserves account for about 6% of the world's total, but the quality is lower than those found in South Africa, Russia and Australia.

We draw your attention to the increased investment demand for both bars and coins, if this rate of demand continues to increase at these rates then there just wont be enough gold to go around, so hang on to yours eh!


Regarding www.skoptionstrading.com, we are pleased to report that we closed last week with two more profitable trades. The stats and the charts have been updated accordingly.


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.






Friday
May272011

SK OptionTrader Outperforms S&P Eight Times Over

Last week our premium options trading service, SK OptionTrader closed a trade on SPY, the S&P 500 ETF.

The trade made a profit of 18% in 54 days, but during that period the S&P only gained 2.25%, meaning our trade outperformed the S&P 8 times over.

SK OptionsTrader Outperforms S&P Eight Times Over

The trade was essentially a bullish position, so we are very pleased that we were able to outperform the underlying Index by such a large margin. This is after all one of the goals of our service.

However what really gets us going is not banking sizeable profits, but maximising our return relative to risk. The way we structured this trade enabled us to optimize our risk-reward dynamics.

Making 18% when the underlying Index only moves 2.25% is great, but what we really liked about the trade is how it would have performed had a different scenario unfolded. The best part about the trade is that we would have still made 18% had the S&P risen 2.25%, 1%, stayed flat or even lost 1%, 2% or 3%.

So the basic view expressed by the trade was that the S&P would rise, but if it did fall it would not fall more than 3%, which translates to a SPY price of $126. Only if SPY was below $126 upon expiration would we make a loss. We did not just pick $126 out of nowhere; it was the low that SPY made after the Japanese earthquake. We did not think equities would fall below that level as the panic was subsiding and the nuclear situation looked to be under control.

As a side note, we also executed a US treasuries trade as a direct response to the Japanese earthquake, which you can read more about here.

However, now for some more details on why we placed the trade. Firstly, we were getting a strong bullish technical signal from the MACD on SPY. We had been watching this indicator for some time, looking for a bullish crossover under zero. As the chart below shows this signal has worked well in the past. The blue lines mark crossovers below zero and the green are other crossovers, with the gains that SPY made post the MACD cross noted in blue too. The dotted line shows when we placed the trade, this was the exact chart that we were looking at prior to signalling the trade.

SPY MACD

Secondly, on the fundamental side, we felt markets had sold off too hard after the tragedy in Japan and we were starting to see signs of strength.

In an update entitled “US Equities Set To Rally” which was sent to subscribers on March 27th 2011 we said:

“Trading in US equities last week produced some positive technical signals in our opinion and therefore we intend to take a long position on the S&P 500 this week. We are not being very aggressive with this trade, looking to sell vertical put spreads on SPY, either in May with strikes of $126/$125 or in April with strikes of $128/$127; we will of course send out full details when we confirm the trade. We will try and sell these spreads at attractive prices, however if that is not possible we will not chase the market and be content to let this opportunity pass if we cannot find suitable trades that fit our risk/reward criteria.

On the fundamental side the stock market continues to rally on good news and often even on not so good news. There is a lot of momentum behind this rally which to us indicates that the S&P should be able to challenge 1350 in the short term [the S&P hit 1350 20 trading days later, and topped out at 1370 three days after that]. Whereas the start of this move was mainly driven by QE2, now the stock market is still managing to rally despite there not being much chance of a QE3. This shows core strength in the market which is backed by the continually strong economic data we are seeing from the US.”


We then sent the trading signal to subscribers during market hours quoting prices that were live in the market saying:

“Following from our recent update, we are taking a long position in US equities and hereby signal to Sell the SPY May 21 '11 $126/$125 Vertical Put Spread at $0.18 with 10% of our capital allocated to this trade.

This involves selling the $126 puts (which we sold at $1.61) and buying the $125 puts (which we bought at $1.43), resulting in a net credit of $0.18.”


For more information on how this type of options trade works, please click here.

The aim of this article was to give those who are not subscribers to SK OptionTrader an idea of how we operate and the kind of trading opportunities we strive to identify. We are always looking to optimize the risk-reward dynamics of every trade we place. We did so with this trade and we were able to outperform the S&P eight times over, without taking excessive risk.

Recently we also banked gains of 116% and 108% on GLD call options before the gold correction, but for a full list of all our closed trades you can view our trading record on our website.

Our current focus is on gold and silver, but we have also successfully traded the S&P, Treasuries and other markets.

Our model portfolio is up 338.11% since inception which is an annualized return of 128.07%.

Our average return is 40.41% per trade and the average trade open for 46.27 days.

We have closed 81 closed trades with 78 closed at a profit, success rate of 96.3%


If this sounds like something you might be interested then, feel free to give us a go by clicking on one of the subscribe buttons below.

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

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

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>SKOT PORTFOLIO
Thursday
May262011

Why Gold Is Going Higher

China GDP 27 May 2011.JPG


By David Galland, Casey Research
While there are many reasons that gold and silver are going to keep moving higher as the fiat currencies trend lower, at our recent Casey Research Summit in Boca Raton, faculty member Mike Maloney pointed out a fact that, while obvious in hindsight, I had never heard mentioned previously.

Namely that during the last major precious metals bull market in the 1970s, only about 10% of the world could own gold – either due to legal restrictions or a lack of liquid capital.

Today, few countries prohibit gold ownership, and a far higher percentage of the world’s population has transitioned out of poverty.
China provides the most germane example, having legalized gold and silver ownership for private citizens in 2004, and through the explosive growth in national GDP that has caused Chinese gold purchases to skyrocket.

Confirming the point, the following is an excerpt from a recent Wall Street Journal article:

Chinese investors are snapping up gold bars and coins, buying more than ever before in the first quarter of 2011 and overtaking Indian buyers as the world's biggest purchasers of the metal.

A growing middle-class in China is raising the appetite for gold there.

China's investment demand for gold more than doubled to 90.9 metric tons in the first three months of the year, outpacing India's modest rise to 85.6 tons, the World Gold Council said in its quarterly report on Thursday. China now accounts for 25% of gold investment demand, compared with India's 23%.

The report underscores the rising appetite for gold among the growing middle-class in China. Fears of the country's soaring inflation, as well as a search for new investments, is luring investors to gold, and marketing of the precious metal has also increased in recent months.

"I think people will be surprised by the strength in the Chinese demand, but we think this is a trend that is set to continue," said Eily Ong, an investment research manager at the gold council.

Notoriously active savers, stashing away on the order of 50% of their income, the Chinese are increasingly opting for gold over the renminbi to stash their wealth.

For those wondering just how big a development this is, consider that in 2007, just before investing in gold became “the thing to do,” gold demand in India was 61% of the world’s total while China’s gold demand was only 9%.

In other words, India is no longer the only elephant in the gold vault. And they are not alone – investors around the world are now able, and willing, to buy gold as a way of protecting their wealth from the inevitable decline of the fading fiat currencies.

I still don’t think we are out of the woods on a commodities correction, but there are so many black swans floating overhead that literally anything can happen, at any time. Thus buying in tranches on pullbacks over the next four to six months still makes a lot of sense.
But in the longer term, gold has almost nowhere to go but up.

[The current edition of BIG GOLD tells you how to take full advantage of corrections in gold and silver – and how to get the most bang for your buck. Try it now for only $79 per year… for 3 months with 100% money-back guarantee.]





Regarding www.skoptionstrading.com, we are pleased to report that we closed last week with two more profitable trades. The stats and the charts have been updated accordingly.


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
May252011

Randgold Resources Limited: An African Gold Play

Randgold chart 26 May 2011.JPG



Randgold Resources Limited (GOLD) is an African focused gold play engaged in gold mining, exploration and related activities in Africa with the company listing on both the London Stock Exchange and NASDAQ. Major discoveries to date include the 7.5 million ounce Morila deposit in southern Mali, the 7 million ounce Yalea deposit and the 5 million ounce Gounkoto deposit, both in western Mali, the 4 million ounce Tongon deposit in the Côte d’Ivoire and the 3 million ounce Massawa deposit in eastern Senegal.


Mark Bristow has been the Chief executive since the incorporation of Randgold Resources, which was founded on his pioneering exploration work in West Africa. Has subsequently led the company’s growth through the discovery and development of world-class assets into a major gold mining business with a market capitalization of more than US$7 billion. He as also played a major part in promoting the emergence of a sustainable mining industry in West Africa. A qualified geologist with a PhD from Natal University, South Africa, Mark has held board positions at a number of global mining companies and is currently a non-executive director of Rockwell Resources International.

Mark Britow 25 May 2011.JPG
Mark Bristow

Mark was recently involved in a motor cycle accident while riding near the Massawa project, however, we understand that he will leave hospital this week and that he is still commanding operations as per usual.

Randgold Resources financed and built the Morila mine which since October 2000 has produced approximately 5.8 million ounces of gold and distributed more than US$1.6 billion to stakeholders. It also financed and built the Loulo operation which started as two open pit mines in November 2005. Since then, an underground mine has been developed at the Yalea deposit and construction of a second underground operation is underway at the Gara deposit. The company’s new Tongon mine poured its first gold on 8 November 2010. The company also has an extensive portfolio of organic growth prospects, which is constantly replenished by intensive exploration programmes in Burkina Faso, Côte d’Ivoire, DRC, Mali and Senegal.



More recently, Randgold Resources Limited has declared and shareholders have approved an annual dividend for the year ended 31 December 2010 of US$0.20 per share.  The dividend payment will be made on 27 May 2011 to shareholders on the register on 13 May 2011.  The ex-dividend date will be 11 May 2011. Having overcome a number of political problems in Côte d’Ivoire and the underground re-engineering of its flagship Loulo complex, Randgold Resources again posted substantial profit and production gains for the first quarter of 2011.

A profit of US$45.9 million was up 43% quarter on quarter and 92% on the corresponding quarter of 2010 while gold production of 139 403 ounces showed a 6% increase on the previous quarter and was 24% higher than the corresponding 2010 quarter.  In the light of 2010’s good financial results, the board had recommended an increased dividend of 20 US cents per share (2009: 17c) and its proposal was endorsed by shareholders at the annual general meeting earlier this week.


Taking a quick look at the chart we can see that Randgold appears to have turned the corner and is heading higher. Also note that the 50dma is moving higher and could crossover the 200dma shortly which would be positive for this stock. The MACD now looks set to experience a crossover which bodes well for future progress. The RSI and the STO are also heading north from fairly low levels so we would expect Randgold to trade higher in the short term.

Although we do not own this stock at the moment we have made good profits trading it in the past and continue to monitor its progress with the view to snapping up a bargain or finding a suitable options trade.

Randgold logo.JPG

Randgold Resources Limited has a market capitalization of $7.18 billion with the volume of shares traded ranging between 250,000 to 650,000 per day. This stock has a 52 week high of $106.04 and a 52 week low of $70.18, a P/E Ratio of 83 and an EPS of 1.39.


Randgold Resources Limited trades on the NASDAQ under the symbol of GOLD and on the London Stock Exchange under the symbol of RRS.

Regarding www.skoptionstrading.com, we are pleased to report that we closed last week with two more profitable trades. The stats and the charts have been updated accordingly.


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.






Monday
May232011

The Last Tango of the Currencies will end in Golds favour

Euro Chart 23 May 2011.JPG

The debt problems now weighing on the Euro have inflicted a devaluation of around 6% this month with no recovery in sight for the PIIGS, Portugal, Ireland, Italy, Greece and Spain. The harder the ECB tries to badger and cajole the PIIGS into accepting a serious dose of austerity, the more the people, who will have to carry this burden, revolt.

We have seen riots in the streets in Athens, demonstrations in Madrid, marches in London, all expressing their dissatisfaction with the status quo. Heavy defeats in regional elections have been inflicted on the ruling party in Germany, which must be of grave concern to Angela Merkel, the Chancellor of Germany, assuming that she wants to stay in office. The same goes for Spain where regional elections have gone against the current incumbents.

In the mean time European Union officials are running hither and dither with arm fulls of newly printed euros in an attempt to support the latest basket case. However, Standard & Poors cut its outlook for Italy to "negative" from "stable" on Saturday, following a downgrade by Fitch on Friday for Greek debt. So we have a situation where there could be very well be political changes at the top, however, the debt, just like a rotten smell, remains.

This slippage, experienced by the Euro has had the effect of boosting the dollar as these two currencies are the main constituents of this basket of currencies. As the chart above shows a fall in the value of the euro, the chart below shows a rise in the value of the US Dollar. This race to the bottom between the currencies will continue as each sovereign state believes that a weaker currency will boost exports and ultimately will get them out of this mess. The fact that each currency devaluation negates the previous one would appear to have gone unnoticed, by those involved.

USD Chart 23 May 2011.JPG

The chart above shows the dollar rallying this month as its inverse relationship with the Euro continues. The demise of the euro hides the fact that the dollar is not well, so this rally may be short lived.

So what does this tango of the currencies mean for gold? Well, sooner or later the investment community will realize that a flight to safety will be a flight from anything paper, no matter who’s portrait is printed on it.

Gold Chart 23 May 2011.JPG

So now you are thinking; will the summer doldrums cap the progress of the gold prices as interest wanes and trading becomes lackluster, could be. However, there are a few factors to be considered here, a civil war in Libya, general unrest in the desert, Al Qaeda, a leaderless International Monetary Fund, the US debt ceiling, a wobbling coalition government in the UK, supply side difficulties in the mining sector and the specter of inflation. All in all we expect the summer to be choppy with the real fireworks for gold and silver beginning mid August and continuing through to January 2012.

Having acquired a certain amount of gold and silver our strategy will be to look for bargains amongst the quality producers as they have production and cash flow. The junior/exploration sector still appears to us, to be an outside punt and so we will allocate only a small amount of our capital to them. To add a little spice to the mix we will look to the options sector with the view to turbo charging our trading account.

Go gently, but do prepare and get into position as this gold bull has a long way to run.


Regarding www.skoptionstrading.com, we are pleased to report that we closed last week with two more profitable trades. The stats and the charts have been updated accordingly.


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.






Sunday
May222011

Shanghai Gold Exchange Planning to Start ETF

Shanghai Gold Exchange 23 May 2011.JPG

Another gold ETF needing to be fed with copious amounts of physical gold bodes well for the demand side of the gold equation. With $483 million raised in January the Chinese have signaled their support for such a product, so coupled with increasing demand for the metal of Kings, it will be worth watching how this one performs. The rise of the ETF as a investment/trading vehicle has been phenomenal and if the Chinese get the 'bug' then there is telling just how large this ETF could become.


The Shanghai Gold Exchange is planning to start exchange-traded funds, tapping rising demand in China, the biggest investment market for the precious metal.

There are some complexities, as the central bank is in charge of gold management, while we still need to go through the procedures for launching new exchange products,” Wang Zhe, chairman of the bourse, said at a Shanghai forum. There is no timetable and the exchange is working with regulators on the plan, Wang said. China is the world’s largest gold producer and second-largest in overall consumption.

Gold investment demand by China more than doubled in the first quarter, overtaking India to become the largest market for gold coins and bars, the World Gold Council said May 19. Bullion jumped to a record $1,577.57 an ounce this month as investors sought a store of value amid rising inflation and concerns about the strength of the global recovery.

China doesn’t have gold ETFs and investors usually choose to buy physical gold, or invest through contracts traded on the Shanghai Gold Exchange, the Shanghai Futures Exchange or through banks. Lion Fund Management Co. in January said it raised more than 3.2 billion yuan ($483 million) for China’s first gold fund to be invested in overseas exchange-traded products.

Demand Jumps

Investment demand in China jumped 123 percent to 90.9 metric tons in the first three months. Total consumption including jewelry gained 47 percent from a year ago to 233.8 tons, the council said. That still lags behind India’s 291.8 tons. China demand may double before 2020, the council said.

Global investment increased 26 percent to 310.5 tons in the quarter. While bar and coin purchases climbed 52 percent to 366.4 tons, holdings in exchange-traded products backed by the metal declined. ETP assets dropped 69.9 tons from December through March, according to data compiled by Bloomberg, after reaching a record 2,114.6 tons.

Billionaire investor George Soros sold 99 percent of his bullion-backed SPDR Gold Trust assets and all 5 million shares in the iShares Gold Trust in the first quarter, a government filing showed this week. John Paulson, the biggest investor in the SPDR Gold Trust, maintained his positions.



Regardingwww.skoptionstrading.com, we are pleased to report that we closed last week with two more profitable trades. The stats and the charts have been updated accordingly.


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
May182011

The White House: No Plan ‘B’

Timmy Geithner 19 May 2011.JPG
A tad higher please chaps!

Treasury Secretary Timothy Geithner apparently does not have a plan 'B' should the proposed lifting of the debt ceiling not come to pass. Maybe he is a good poker player, going full tilt for his solution and offering no alternative for consideration. A last minute compromise could be reached whereby both sides give a little, however, if there is no plan 'B' then things could become calamitous.

This piece found on The Huffington Post sums up the situation.






WASHINGTON -- The White House said on Wednesday that there is no “Plan B” if Congress does not vote to increase the debt limit by August.

The debt limit, which is currently set at $14.29 trillion, was reached on Monday, but Treasury Secretary Timothy Geithner told Congress the government can continue to pay its debts until about Aug. 2 by using "extraordinary measures."

If Congress does not raise the debt ceiling by then, there is no plan in place for dealing with the resulting defaults, a senior administration official said in a briefing with reporters.

“There is no alternative to raising the debt limit. It has to be raised,” the official, who spoke to the reporters on background, said. “There’s really no way around it.”

The White House is pushing back against a few Republicans -- including Sen. Pat Toomey (R-Penn.) and Rep. Paul Ryan (R-Wisc.) -- who hinted this week the government could default on its debts for a short time in pursuit of a broader deal to cut the deficit.

Republicans have overall agreed that the debt ceiling needs to be raised but have said they will not vote to raise the ceiling unless it is paired with major spending cuts and long-term debt reduction.

But some fear that talks to reach that deal, which are being facilitated by Vice President Joe Biden, will last beyond the Aug. 2 deadline for increasing the debt limit.

A few Republicans have said extending talks beyond that deadline could be done without serious harm to the markets as long as a deal was eventually reached to raise the debt ceiling. Toomey,speaking on Wednesday at the conservative American Enterprise Institute, pointed to a weekend interview in the Wall Street Journal with investor Stanley Druckenmiller, who said he would accept late payments on U.S. debts if it meant overall progress on the long-term deficit. Sen. Jon Kyl (R-Ariz.), who is representing Senate Republicans in the White House debt limit talks, also referenced the editorial when speaking with reporters on Tuesday.

Ryan made a similar remark Tuesday, telling CNBC the investors he speaks to would be willing to accept late payments “for a day or two or three or four.”

The White House firmly rejected such an idea in the Wednesday briefing, saying even short-term default would harm the government’s credit and its reputation in the markets.

“That’s not a plan; that’s default,” the official said.

As lawmakers continue to push for a deal on the debt, the Treasury will continue to function by taking steps to “buy head room” within the current deficit, said a senior administration official.
Earlier this month, the Treasury stopped providing State and Local Government Series Treasury securities, which help state and local governments to manage their debt.

After reaching the debt limit Monday, the Treasury began using additional measures to avoid default. Geithner declared a “debt issuance suspension period” on Monday to borrow from the Civil Service Retirement and Disability Fund. The fund will be made whole after the debt limit increase is enacted, according to law.

The Treasury will continue some business as usual, including maintaining its auction schedule to issue new bonds.

The administration rejected the idea of selling off assets to buy time for the debt ceiling deal, arguing it would amount to a “fire sale” where assets would likely be sold for less than their true value.

The idea of dumping gold on the market would be extremely damaging,” a senior official said, while another official added that most assets do not have enough value to buy the government much time.

Despite rhetoric over raising the debt ceiling by some lawmakers, Geithner is confident the debt limit will eventually be increased, an official said.

Click here to see the US Debt Clock.


Regarding www.skoptionstrading.com, please note that our winning streak of 59 profitable trades in a row came to an end last week when we closed a trade for a loss of 34%. The stats and the charts have been updated accordingly.


Our model portfolio is up 325.87% with an annualized return of 126.47% and has achieved an average return of 40.99% per trade, 79 closed trades, 76 closed at a profit, or a 96.20% success rate. Average trade open for 46.28days.

sk chart 16 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
May182011

Market Vectors Junior Gold Miners ETF: How Junior?

GDXJ Chart 18 May 2011.JPG


A number of our readers are fans of the junior section of the precious metals mining sector with the Market Vectors Junior Gold Miners ETF (GDXJ) forming part of their investment strategy. The mantra of juniors, juniors, is also alive and well in cyberspace, so we thought that it might be prudent to touch base with this ETF.

We will start with a quick look at the chart where we can see that having dropped below its 200dma GDXJ may be presenting us with a buying opportunity shortly. The technical indicators have been floored, the RSI is currently standing at 32.67 and the MACD and the STO have almost bottomed, suggesting a rally might be on the cards.

Since inception about eighteen months ago this ETF has grown considerably and now has a market capitalization of $1.99 billion. Its 52 week trading range has oscillated between $24.25 - $44.86 on a good trading volume of around 3.0 million shares per day.

What follows is a brief description of the fund and their interpretation of what constitutes, roughly, a junior mining company.


The Junior Gold Miners ETF seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Market Vectors Junior Gold Miners Index.

The Index provides exposure to a global universe of publicly traded small- and medium capitalization companies that generate at least 50% of their revenues from gold and/or silver mining, hold real property that has the potential to produce at least 50% of the company’s revenue from gold or silver mining when developed, or primarily invest in gold or silver. The Fund will normally invest at least 80% of its total assets in companies that are involved in the gold mining industry. As such, the Fund is subject to, among others the risks of investing in international equities and small- and mid-cap mining companies. Many companies may not have begun to generate material revenues and operate at a loss, contributing to greater volatility, lower trading volume and less liquidity than larger companies.

A Dynamic Industry Segment

A dynamic and important subset of the global gold mining industry is a group of companies known as “juniors”. These are small- to medium-size market capitalization companies that are generally actively engaged in the development of new sources of gold either through green fields exploration or the use of new geologic models to prospect for gold in overlooked or abandoned properties. For investors, juniors may offer characteristics similar to an investment in venture capital—early stage, high risk, but with a potential for high growth.

While there is no strict definition of what constitutes a junior, they generally have market capitalization of up to $1.5 billion and/or production levels of less than 300,000 oz/yr. Juniors can be at different stages of development—some operate small-scale mines; some are developing large-scale operations, while others are in the process of defining gold or silver ore bodies through drilling. Many may not even be in the production phase yet. They tend to not have the operating track record of the larger producers and there are often uncertainties surrounding the size and potential of their properties. These features increase the risk associated with these companies and the sensitivity of a junior’s business to gold and equity markets.

We draw your attention to the size of a company they regard as juniors, 'market capitalization of up to $1.5 billion' which appears to us to be rather large for a junior, however, they have made it clear.

So now lets take a look at their list of juniors, as we can see the first four companies all exceeded the $1.5 billion mark and have a market capitalization of over $2.0 billion.

Allied Nevada Gold Corp. 
(Public, AMEX:ANV) 
Mkt cap 2.96B

Alacer Gold Corp 
(Public, TSE:ASR)
Mkt cap 2.27B

Silver Standard Resources Inc. (USA) 
(Public, NASDAQ:SSRI) 
Mkt cap 2.21B

Detour Gold Corporation 
(Public, TSE:DGC) 
Mkt cap 2.33B


We would have expected to see juniors with a much smaller market capitalization than those mentioned above and so we struggle with the concept that this ETF truly represents the junior gold mining sector, but that's just our opinion.

In our search to ascertain just who they have invested in we came across this list on their web site, however it does reference another list which we have placed below the first one. We believe this to be the true list as it has a date on it of 05/16/2011. However, it is a tad irritating that an organization of this size has conflicting data on its web site.

GLDX Table of shares 18 May 2011.JPG

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GDXJ Detail Table of shares 18 May 2011.JPG

In conclusion, as an investment vehicle for exposure to the junior sector it is not for us at the moment. However, if the investment community perceives this ETF to replicate the junior sector then it could get some real traction once the junior sector takes off. For those who are more cavalier in their approach to investment, there is a fair amount of liquidity in this ETFs options market so a nimble trader should be able to get in and out of positions without too much hassle.

We will observe for now, with the view to snapping up a real bargain on a dip.



Regarding www.skoptionstrading.com, please note that our winning streak of 59 profitable trades in a row came to an end last week when we closed a trade for a loss of 34%. The stats and the charts have been updated accordingly.


Our model portfolio is up 325.87% with an annualized return of 126.47% and has achieved an average return of 40.99% per trade, 79 closed trades, 76 closed at a profit, or a 96.20% success rate. Average trade open for 46.28days.

sk chart 16 May 2011.JPG


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

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

Stay on your toes and have a good one.

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


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

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

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






Tuesday
May172011

Affluence is our Down fall

gold chart 18 May 2011.JPG

Many moons ago during our back packing phase, we were snorkeling off a lovely beach in Bali, Indonesia, when we turned a corner to find ourselves opposite a private beach belonging to a rather posh hotel. The high paying guests were somewhat surprised to see us bobbing around in the surf. There was one particular gent who was all the way up to his ankles in sea water, holding a cigar in one hand and large glass of what looked like whiskey in the other hand. He had neatly combed hair, was the colour of an unwashed milk bottle and rather portly, to be polite. Success in life had brought him to this place, a five star hotel, cigars and whiskey, why, because he could afford it. We observed each other and no doubt we thought the same thing of each other, what a weird way for someone to live.

The point is that the western world managed to get itself into a position where it was fat, happy and affluent and so enjoyed, rightly or wrongly, the excesses that accompanies success. Fast forward many moons and here we are still fat, not so happy, with affluence draining down the gurgler all the way to the eastern world. The policies of easy credit and a 'print and hope' currency have seduced us into a false sense of security, as we can always rely on a financial bailout for the large enterprises and a social security handout for individual households.

This state of semi-sedation and a 'devil may care' attitude is about to hit the wall. The game is up. The future is going to very hard indeed. Every job that you can imagine is now the subject of intense competition from a fitter, faster, cheaper and more determined aggressive competitor. Its not just the activities of the occasional call center that is now being carried out in a foreign land, its everything from major medical operations to the production of high tech gadgetry. As the influence and dominance of the east rises, the importance on the world stage of the western world will decrease.

This decade will see some us become tenants in our own countries with the ownership of companies, utilities and land being transferred to those with the cash. And that's not us, is it?

For an individual, self preservation is now high on the agenda, where possible find other avenues of income to supplement your main wage. Any part time or evening occupation that adds a few more bucks to your income will become more and more important as things unfold.

Commodities have already rocketed and are now in a roller coaster phase, however, the underlying trend is up as the worlds biggest ever industrial revolution continues unabated providing relentless demand. This will inevitably lead to rampant inflation scoring a direct hit to our wallets.

As you are well aware we are seeking refuge in the gold and silver space, however, just about any hard asset that you can trade at a later date will prove to be far more valuable then any paper currency, once disposal goes up a notch and the holders start a fire sale.

As we see it, the short term will be choppy with rallies and sell offs happening at the drop of a hat as investors run from one side of a sinking boat to the other, looking for safety. Come July we will know whether or not there more stimulus is to be injected into the system, which just may help to hold the fort for a little longer. However, by August we will see the continuation of the demise of the dollar with some speed and an upward trend form in gold prices resulting in a run to $2000/oz by the year end.

So, we could have two months or so to formulate a plan and then execute it.

If you have not started down this road then try and set up a monthly purchase plan to acquire both physical gold and silver and take possession. Secondly, look to acquire a few quality producers and finally, if you have the nerves for it, a few well thought out options trades.


The chart above compares gold with both the US Dollar and the Dow Jones Industrial Average and as we can see the gold has outperformed in spectacular fashion. Further more it is screaming a warning message to us all, in that fiat currency and the market in general are not to be trusted. Unless you a super stock picker and managed to identify a few real winners an investment in the stock market has robbed you of your spending power. Holding dollars has also diluted your wealth considerably when you look at what you could purchase with a dollar ten years ago compared with what it will buy nowadays.

We have waited a long time for this situation to develop and we believe that we are at the start of some exponential moves in this sector. There is no time lose, so get into position with some solid holdings before prices run away from us. Avoid the daily chatter that surrounds minor events and focus on the big picture where is the economy is not well and the dollar is heading for oblivion, along with all the other paper that promises to pay the bearer nothing.





Regarding www.skoptionstrading.com, please note that our winning streak of 59 profitable trades in a row came to an end last week when we closed a trade for a loss of 34%. The stats and the charts have been updated accordingly.


Our model portfolio is up 325.87% with an annualized return of 126.47% and has achieved an average return of 40.99% per trade, 79 closed trades, 76 closed at a profit, or a 96.20% success rate. Average trade open for 46.28days.

sk chart 16 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.






Sunday
May152011

Glass Earth Gold Limited: Promising Drill Results

GEL Logo 16 May 2011.JPG

It is often said that the best place to build a gold mine is next to an existing gold mine, which leads us to looking at this countries history of mining. It can be soon ascertained that New Zealand has a rich history in gold mining with the Martha gold mine on its own yielding over 7 million ounces of gold and about 50 million ounces of silver since the 1880s.

GLASS EARTH LIMITED is a gold exploration company in New Zealand. It trades on the New Zealand stock exchange as NZAX: GEL and on the TSX.V as GEL and has just released some promising drill results.

Glass Earth holds the Waihi West exploration permit adjacent to the 10 million ounce Martha Gold Mine. Exploration is being undertaken by Glass Earth’s Joint Venture partner and Martha mine operator, Newmont Waihi Gold, in order to determine the strike extensions of the gold vein systems, which are interpreted as extending into Glass Earth’s permit. Glass Earth and Newmont are also advancing exploration on GEL's prospects in the wider Hauraki the Martha Gold Mine at Waihi Region, also under JV with Newmont.

Here is a snippet from their latest news release.

Simon Henderson, President and CEO commented that

“The success of the 2010 drilling results on holes WKP 24, 25 and 26 demanded further drilling examination. Both Newmont and Glass Earth have been very keen to press forward with additional drilling and we are confident that this exploration phase will provide further substantial insight into the characteristics of WKP West and the overall WKP prospect."


Wellington, New Zealand, Thursday, 12 May 2011
GLASS EARTH GOLD ANNOUNCES SIGNIFICANT HIGH GRADE GOLD
RESULTS FROM ‘WKP-WEST’, WAIHI, NEW ZEALAND.

DDH WKP 27 intersected 1.4 m @ 30.7 g/t Au and 77.7 g/t Ag within
152.4m @ 1.16 g/t Au and 2.22 g/t Ag.


Glass Earth Gold Limited reports completion of a further two drill holes on the WKP West gold – silver project near Waihi, New Zealand.

Results from the first hole (WKP27) are tabled below with the results from diamond drill hole (“DDH”) WKP 28 pending. Drill testing is planned on other targets during the course of 2011 as influenced by successive results (the WKP Gold-Silver Prospect is a joint venture with Newmont Mining - Newmont 65%, Glass Earth 35%).

DDH WKP 27, a two hundred metre step-out southwest confirms the previous significant intersections of gold mineralisation consistently greater than 150m, with narrow high-grade zones in the one ounce to two ounce gold range (see 25th August 2010 news release).

GEL Photo 16 May 2011.JPG



To read the report in full please click here.


Glass Earth Gold Limited a small exploration company with market capitalization of $14.10 million with a 52 week trading range of $0.17 to $0.44, volume is thin at the moment varying between 10,000 to 52,000 shares traded. However, we will see how the market reacts when it opens later today.

GEL Map 16 May 2011.JPG



Regarding www.skoptionstrading.com, please note that our winning streak of 59 profitable trades in a row came to an end last week when we closed a trade for a loss of 34%. The stats and the charts have been updated accordingly.


Our model portfolio is up 325.87% with an annualized return of 126.47% and has achieved an average return of 40.99% per trade, 79 closed trades, 76 closed at a profit, or a 96.20% success rate. Average trade open for 46.28days.

sk chart 16 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.