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Wednesday
Apr282010

Agnico-Eagle Mines Limited Call Options Update 29 April 2010

AEM Chart 29 April 2010.jpg


Just a quick note to update the team on the purchase of the MAY 2010 series Call Options at a strike price of $60.00 on Agnico-Eagle Mines Limited, for which we paid a price of $4.64 per contract. These contracts closed today at $4.89, for a rise of 4.82%.

We made the purchase on the 11th February 2010 when Agnico-Eagle was trading at around $58.00 area. The stock has rallied a little and then fell back and rallied again to close at $63.62 today so these contracts are now ‘in the money’

As we can see from the above chart a 4% jump in the stock price today helped to place are Call Options in positive territory, if gold prices can show a little more strength over the coming two weeks or so, then Agnico should move higher in a convincing fashion with the resulting boost for the Call Options.

The following is snippet from Market Intellisearch

NEW YORK (Market Intellisearch) -- AEM options saw interesting call activity today. A total of 3,997 put and 15,668 call contracts were traded raising a low Put/Call volume alert. Today's traded Put/Call ratio is 0.26. There were 3.92 calls traded for each put contract.

Unusual volume provides reliable clues that the stock is expected to make a move. Investors can use the Put/Call ratio statistics to measure trader sentiment. A high Put/Call ratio suggests that the overall investment sentiment is bearish and that investors expect the underlying stock to decrease in value. Conversely, a low Put/Call ratio implies that the overall investor sentiment is bullish based on the large amount of call options.


These are interesting statistics but do not bet the ranch on any one indicator just add it to the pot of things to think about when evaluating your next move. For instance, it could be argued that the investors who sold the Call Options are as convinced that Agnico is going down as the purchasers are that it is going up, just a thought.

Over on the silver prices site we have two options positions in Silver Wheaton Corporation that are doing very well at the moment and closed today showing paper profits of 88.25% and 81.52% respectively, click here to take a peek.



As a suggestion for those who do want leverage to the precious metals bull, the gold and silver funds together with the careful application of options trades could be a possible solution for you. This way we are exposed to any movement in gold prices which in turn is magnified by the effect of the option. Do remember that loses are also magnified in the same way so its not a strategy for the faint hearted. On the other hand the quality stocks are not performing as anticipated and a non-producing junior stock is a shot in the dark, however, its your money and its your call.

Got a comment then please add it to this article, all opinions are welcome and appreciated.


If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


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.

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
Apr282010

High River Gold Update 29 April 2010

HRG Logo 31 July 2009.jpg

Chris Charlwood has very kindly sent us this missive updating us on the current state of play over at High River Gold Mines Limited (HRG) which we hope that you find interesting and informative.


The Olma Investment report has been amended with a lower price target of $1.76. Therefore, I am re-sending this communication edited for the change. 
 
HRG’s 2009 audited financial results (linked below) show cash flow from operations of $125M.  This is comprised of approx. $29M in cash flow for Q1, $22M for Q2, $33M for Q3 and $41M for Q4. HRG had EPS of almost $.05 in Q4. The company ended the year with 81.2M in cash and equivalents -  almost matching its $84M of debt. In addition, HRG’s third party investments currently stand at $65.5M.  At the current market cap of $631M, HRG is trading at 3.9 times annualized Q4 cash flow. The Olma Investment report (linked below) shows a new target price of $1.76/share – an upside potential of 120%. Nicolai Zelensky, CEO of the gold division, recently stated in a Bloomberg article that Severstal Gold is worth a similar value to OAO Polymetal. Polymetal’s market cap is $4.2B. Since HRG makes up 57% of total Severstal Gold production, this could suggest that HRG’s value is $2.4B or $2.99/share.
 
Investors are waiting to see if Severstal will buy back Troika’s 150M shares. Severstal had leaked to the media that  they may  buy back these shares at double the investment price or  $.76.  If Severstal Gold does intend to do an IPO, it makes sense for them to move to 70% ownership of HRG by buying these shares back. However, as we have not had any updates, perhaps Troika has decided to hold long term due to HRG's financial success. Either way, investors are eagerly waiting for a statement on this topic as the uncertainty of the potential transfer price could be holding the share price down.
 
Once investors see a strong signal that HRG and Severstal management will promote this story, there should be strong demand for the shares with few sellers. This statement below extracted from the HRG 2009 MD&A is management's most positive statement yet:
 
``Outlook
At the end of the year, the restructuring is mostly complete. The Company has cash in the bank and debt has been reduced to manageable levels, resulting in a stronger balance sheet. After making some necessary and sometimes painful adjustments, management believe that the restructuring was a success and that High River is positioned to benefit in 2010.`` 
 
Good news soon?  
1.    Q1 results should be reported on May 15th with significant cash flow and a net profit.
2.    News on the production tests for the Royal Gold loan should be out soon. If HRG passes the tests, then the third party investments of $65.5M are released as collateral.
3.    The Bissa feasibility study (Burkina Faso) is due prior to June 30th  -  with multi million ounce potential.
 
Disclosure: I own 5.5M shares of HRG
 
HRG’s 2009 Financials:
 http://finance.yahoo.com/news/High-River-Gold-Reports-2009-ccn-330669406.html?x=0&.v=1
 
Olma Invesment Research Report:
http://freepdfhosting.com/c2578fb7a1.pdf
 
Chris Charlwood
Retail Investor
604-718-2668
Rainerc7@gmail.com        
 

Got a comment then please add it to this article, all opinions are welcome and appreciated.



As a suggestion for those who do want leverage to the precious metals bull, the gold and silver funds together with the careful application of options trades could be a possible solution for you. This way we are exposed to any movement in gold prices which in turn is magnified by the effect of the option. Do remember that loses are also magnified in the same way so its not a strategy for the faint hearted. On the other hand the quality stocks are not performing as anticipated and a non-producing junior stock is a shot in the dark, however, its your money and its your call.


If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


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.

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
Apr272010

Greek debt downgraded to junk

USD Chart 28 April 2010.jpg



Its been coming for some time now and today it arrived, the S&P has downgraded Greek debt to Junk and took Portugal down two notches to A minus. This news, although expected, hit the Euro and promptly sent the dollar and gold prices higher, nice to see them both going up together.

The broader markets also suffered with the DOW losing 213 points, the NASDAQ lost 51 points and the S&P lost 28 points.

As the market came to a close the Kitco Gold Index was showing gold down $15 due to dollar strength but up $33 due to gold buying, pushing gold prices through $1170.00/oz at one time.

A few snippets from the Wall Street Journal summarise the situation as follows:

"The downgrade of both Greek and Portuguese government debt by S&P is another indication that the eurozone's fiscal crisis is continuing to deepen ," Ben May, an economist with Capital Economics in London, said.

"In all, a stark warning that a Greek rescue package, if and when it finally appears, will not be the end of the crisis."

S&P slapped Portugal with a two-notch downgrade to A minus, with the ratings agency saying it expects the nation's government to struggle to stabilise its relatively high debt ratio until 2013.

S&P said that Portugal's deep budget deficit -- at 9.4 per cent of gross domestic product -- and its dependence on scarce foreign financing will make it necessary to introduce more budget cuts.


To read the article in full please click this link.

The Euro is down about 8% so far this year and the way things are shaping up we wouldn't be surprised to see it drop from today's one Euro to 1.32 dollars to around 1.20 dollars as the year unfolds.

Angela Merkel.jpg


The white knight in this pantomime is Angel Merkel, the German Chancellor, however, there are regional elections in Germany on the 9th April 2010 so an expensive bailout for Greece is not flavour of the month for German voters. So until they are out of the way, a certain amount of brinkmanship can be expected. The next date to make a note of is the 19th May 2010 when Greece has a large bond maturity and subsequent roll-over, who will buy it now its been rated as junk. The heat is on the European Union and the IMF to sort through the issues and put together a rescue package that satisfies many requirements and individual players.

As we see it the austerity to be shouldered by the Greeks will be crippling and the alternative of leaving the European Union and starting again with an albeit devalued currency might be a better way to go.

HUI Chart 28 April 2010.jpg

As we can see from the above chart the jump in gold prices hardly effected the stocks, maybe they were held back by the general sell off in the broader markets. This is something that we have eluded to in the past, in that the precious metals stocks are failing to keep pace with the metals progress. We hold the mining stocks in order to gain exposure to the metals on a leveraged basis. Without the leverage there is very little point in holding mining stocks as they carry numerous risks so we really need to see a risk to reward ratio of about 3:1 to make it worth while. We will continue to monitor the investment landscape and hopefully position ourselves correctly in order to maximise our returns in this bull market, the only game in town.



As a suggestion for those who do want leverage to the precious metals bull, the gold and silver funds together with the careful application of options trades could be a possible solution for you. This way we are exposed to any movement in gold prices which in turn is magnified by the effect of the option. Do remember that loses are also magnified in the same way so its not a strategy for the faint hearted. On the other hand the quality stocks are not performing as anticipated and a non-producing junior stock is a shot in the dark, however, its your money and its your call.

Got a comment then please add it to this article, all opinions are welcome and appreciated.


If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


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.

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
Apr262010

Gold-prices.biz portfolio Update 27 April 2010

Gold Chart 27 April 2010


Gold prices are currently standing at $1153.90/oz having been through a period of consolidation despite the US Dollar making good ground. We have warned in the past that this is a volatile sector and the first few months of this year have been turbulent, however the trend is still up so we are sticking with it.

As the above chart shows gold prices are making steady progress with both the 50dma and 200dma rising in parallel to add support, with the technical indicators more or less in the neutral zone.

The cast of performers who have featured in our articles over the past few months has included Ben Bernanke, Grandich, Soros, Nadler, Casey, Rule, Embry, Rogers, Yellen, all adding to the rich tapestry of the precious metals landscape. We have also looked at a few companies that we don't have an investment in but are taking an interest in, such as Lihir Gold, Centerra, Oceanagold Corporation, Iamgold Gold Corporation, etc. And, in response to requests from our readership we have started a premium options trading service which has been well received with new investors signing up everyday. The cost for this service is $99.00, however, the last 8 trades have all generated a good profit giving our subscribers reason to smile. The attrition rate, the number of investors who terminate their subscription, is less than 2% which tells us that they are happy to stay with us. Many thanks to those of you who have joined us on this little adventure we really do appreciate your support.


Our portfolio as been updated as follows:

Randgold Resources Limited (GOLD) On the 18th of June 2008 we bought Randgold Resources Limited for $37.65. This stock quickly rallied to $55.00 before being caught in the ensuing sector sell off to trade as low as $27.70, on the 28th May 2009 we sold our entire holding for an average price of $68.69 for a return of 82.44%. This is a quality gold producer so we waited patiently for a suitable entry point at cheaper price levels as per our post “ Randgold: As Good as it gets” when Randgold traded at $58.71 and we wrote the following:

If you made a purchase at this point then well done, however we held out too long and missed the buying opportunity by being too tight, rats! Randgold is now at $81.41.

Agnico Eagle Mines (AEM) we originally paid $30.88 and it now stands at $61.16. On 31st January 2008 we reduced our exposure to this stock and sold about 50% of our holding for an average price of $63.27, locking in a profit of 104.8%. On the 24th July 2008 we bought again at $59.17 doubling our position with the average cost now standing at $45.03. Due to mine commissioning/start up problems the stock was aggressively sold off and closed recently at $57.02, having suffered through dramatic oscillations, however, the old buzzard has started on the road to recovery and last traded at $61.16.

On the 25th January we bought some stock at $53.24 with the intention of making a short term trade, this move is currently up 15% but we had hoped for better. We may have to settle for a small profit shortly, but we are under no pressure to sell and we are expecting gold prices to move to higher ground.

Kinross Gold (KGC) we originally acquired Kinross at $10.08, Kinross then went through a bit of a pull back so we signaled to our readers to “Add To Holdings” at those discounted levels of around $11.66. We also gave another ‘Kinross Gold BUY’ signal when we purchased more of this stock on the 20th August 2007 for $11.48. On 31st January 2008 we reduced our exposure to this stock when we sold about 50% of our holding for an average price of $21.96 locking in a profit of about 93.60%. On the 24th July 2008 we doubled our holding with a purchase at $18.28 giving us a new average purchase price of $14.50. Kinross closed on at $18.13 yesterday, we had expected a better performance.

Silverado Gold Mines (SLGLF) We have a token amount of this stock in the event that one day they do find the elusive mother load but we are not holding our breath. The stock dilution is such that there are now 1.5 billion shares in the company, just a tad too many in our opinion.

Yamana Gold Incorporated (AUY: NYSE) we paid $9.37 on 27 September 2006, and we bought again at $12.89 on the 7th December 2007 and so our average price moved up to $11.13. On 31st January 2008 we reduced our exposure to this stock and sold about 50% of our holding for an average price of $16.50 locking in a profit of about 49.41%. Then on the 3rd April 2008 we bought our Yamana position back at $14.43 in expectation of a bounce, which arrived on the 23rd May 2008, and we sold for $16.00. On the 11th July 2008 we bought again at a price of $14.95 taking our average purchase price up to $13.04. This stock closed at $10.38 yesterday, so we are still looking for a significant increase in performance by Yamana.

High River Gold Mines: (HRG: TSX) We bought this at $2.49 and we increased our position in the company on December 7th, 2007 and we are still holding on to it despite the wrangle of attempted take overs by others. HRG closed at $0.81 yesterday, so we are still making progress, albeit slowly.

Fronteer Developments Group (FRG) Fronteer was originally bought as both a uranium and gold play as FRG owned the lion’s share of Aurora Energy Resources making it a gold/uranium play. On the 24th September 2007 we sold 50% of this stock for an average price of $10.44, banking a profit of 122%. Fronteer is currently trading at US$5.97 so we are now in positive territory with this portion of the purchase as our our original purchase was made on the 15 July 2006 at around the $4.70 level, so we are sitting on a small gain at the moment. Still expect this group to do a lot better and it is getting there slowly.

Fronteer Development Group Inc., acquired all of the remaining common shares of Aurora Energy Resources Inc. So this investment is well and truly a two pronged attack via both gold and uranium.

Options Trades:

We attempted two options trades since September (independent of the our premium options trading service) and they are as follows:

The first trade was with Randgold:

On the 9th February we purchased the June $75.00 Call Options for $5.50 per contract. On the 4th March these contracts were trading at $8.60 per contract for a paper profit of 55% so we placed a stop at $6.50 to protect our position. On the 10th March 2010 the stop was triggered so we were evicted with a small profit.

The second trade was with Agnico-Eagle:

On the 25th January 2010 we purchased the May 2010, $60.00 Call Options and again we were stopped out on the 11th February 2010 for a small profit. So we re-purchased them for $4.64 per contract. We are still holding these contracts and AEM is trading above $60.00 ($61.16 to be precise) however the time element is deteriorating fast so we will need to dispose of them during AEMs next rally.



Trading decisions belong entirely to you as your circumstances are different from ours and we trade to suit our investment criteria and cash position.

Have a sparkling week and please feel free to share your comments with our readership.

Conventional wisdom suggests having 5% or so of your portfolio in precious metals with some commentators upping this figure to around the 15% mark. We however are far more cavalier in our approach to investment and only invest in the precious metals sector such is our enthusiasm for it. We are currently 85% invested and have about15% in cash.


As a suggestion for those who do want leverage to the precious metals bull, the gold and silver funds together with the careful application of options trades could be a possible solution for you. This way we are exposed to any movement in gold prices which in turn is magnified by the effect of the option. Do remember that loses are also magnified in the same way so its not a strategy for the faint hearted. On the other hand the quality stocks are not performing as anticipated and a non-producing junior stock is a shot in the dark, however, its your money and its your call.

Got a comment then please add it to this article, all opinions are welcome and appreciated.


If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


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.

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
Apr242010

We’re All Comrades Now

US Government Spending 25 April 2010.jpg


By David Galland, Managing Editor, The Casey Report

To ascertain what move the government is most likely to take next, we must first assess the probabilities.

In order to do that, we start by restating the central question, “How does the U.S. government spend, spend, spend (a minimum of $10 trillion in red ink over the next decade) and yet maintain today’s historically low interest rates?”

Not to get all Freudian here, but we begin to answer that question by understanding that, despite evidence to the contrary, government officials are actually human beings. And so it is that, just as babies reflexively learn that a return trip to mother’s breast results in a reliable reward, politicians reflexively repeat actions that have previously produced the desired results.
So, how does a government spend like a drunken casino jackpot winner, without actually winning the jackpot?

And do so, while simultaneously having interest rates fall to the lowest level in 50 years?

10 Year Treas 25 April 2010.jpg


The answer?

China 21 April 2010.jpg

It was only due to the willingness of our foreign trading partners, most notably China, to recycle the dollars they earned selling us flat-screen televisions and disposable diapers into Treasury instruments that allowed the government to keep rates down while simultaneously spending up a storm. With artificially low rates, the U.S. consumer was able to buy pretty much any shiny thing his or her eyes came to rest on.

Given how well the symbiotic relationship between the U.S. government and its trading partners worked for all parties concerned, it should be no surprise to expect the bureaucrats to sign on for the sequel.

In that regard, I don’t think it’s a coincidence that there has been a sea change in the tenor of the diplomatic exchanges between the Obama administration and the Chinese in recent weeks. One minute it was all bared teeth and cracking knuckles, and the next we hear that the Treasury Department’s semi-annual report on global currencies, which was expected to condemn the Chinese as currency manipulators, may be toned down.

Doing their part to reduce the heat, the Chinese have said they’ll adopt a more flexible currency regime and even follow the U.S. lead on sanctions on Iran. Meanwhile Timmy Geithner has been hopping on a plane for Beijing ahead of a meeting between that country’s president and The One.

It’s enough to make the head spin.

Unless, of course, you take a moment to understand that, as hedge fund manager James Chanos so succinctly put it, that China is on a “treadmill to hell.” (It’s the treadmill right next to the one that the U.S. is now laboring on.)

Or, to quote Ben Franklin’s oft-quoted remark to the continental congress, “We must, indeed, all hang together, or most assuredly we shall all hang separately."

One might imagine that the conversation now going on between Timmy and the Chinese is running along the following lines.

“Okay, what do you guys want?” Timmy asks nervously.

“We need access to U.S. markets, because if we can’t get all these empty factories humming, we’re going to get strung up by our collective heels. “

“And so you want us to do what?”

“For starters, pretty boy, tell your most esteemed party members to stop yapping like diseased dogs about our currency. And stop all this talk about tariffs. We got business to do, and that business is selling your peasants cheap stuff. ”

“We can do that. But in exchange, you have keep showing up at our Treasury auctions. Use that big pile of foreign reserves to buy a ton of Treasuries over the next couple of years. That way we can try to buy our way out of this damn recession while keeping rates low. That works out well for you guys, too, because it will mean that our peasants will still be able to afford the stuff made by your peasants. That’s what we Americans like to call a ‘win-win.’”

“But then we’ll end up with even more Treasury paper. Already it’s getting hard to find a place to stash all of it.  And if you keep cranking the stuff out like a noodle shop, then in time it will be worthless.”

“I hate to break it to you, but it’s already pretty much worthless. We’re so broke that I had to pass on the lobster last night. Your only hope is to keep the shell game going a little longer – you know, buy us some time to work this thing out.“

“Can’t you just invade Canada? They got lots of resources, but they don’t have no nukes. Kind of like Tibet.”

“Let’s just say that all options are on the table. But for now, all that’s required is that you just keep showing up at the Treasury auctions.”

“We are going to want some special considerations, starting with losing that whole currency manipulator thing. “

“Well make it go away. After all, we’re all comrades now.”

And it won’t be only the Chinese that the U.S. will begin rolling over for. The Russians, the oil sheikdoms, the Japanese – all are going to get calls, if they haven’t already. Given that the U.S. currently holds the title “Global Empire,” we have a lot to trade with.

(Of course, if your country doesn’t currently hold that title, or otherwise is lacking in trading chits, then your sovereign debt problems are very likely to go “Greek” in the near future. As the leaders of Thailand and Kyrgyzstan are now finding out, it’s a dog-eat-dog world; get used to it.)

How will we know if this scenario is coming to pass? First and foremost, watch foreign government participation in the U.S. Treasury auctions. If they show up in droves and keep buying at today’s low rates, you know the fix is in. And watch the language as it relates to China’s currency manipulation in the soon-to-be-released Treasury report.

Also, watch the level of China-bashing emanating from Democrats. Today it is high, but I suspect it will begin to moderate following Geithner’s trip, as China puts its financial reserves to the task of saving the U.S. economy while talking the talk (if not walking the walk) about letting its currency rise.  

Beyond that, watch as the concessions to other important Treasury buyers start to roll out. The long-term consequences of those concessions will be of no concern to the current administration, because at this point they are in full panic mode – panicked because they know if they can’t keep interest rates down, it’s game over – and not just for their political fortunes.
So, what’s the second move the government is most likely to make in its attempt to head off a debt-driven death spiral?

They’ll have to raise some revenue. However, once the Bush tax cuts expire next year (or are repealed this year), then further raising taxes on the affluent will be difficult – especially given that the top ten percent currently pay 73% of the nation’s income taxes, while the bottom 46% pay none.

Today’s economy and markets are as politicized as never before. That’s why David and the other editors of The Casey Report are keeping a close eye on the actions of the movers and shakers in Washington – analyzing budding trends and finding investment opportunities that arise from them. To learn more about their accurate predictions and how you can profit from them, click here.







As a suggestion for those who do want leverage to the precious metals bull, the gold and silver funds together with the careful application of options trades could be a possible solution for you. This way we are exposed to any movement in gold prices which in turn is magnified by the effect of the option. Do remember that loses are also magnified in the same way so its not a strategy for the faint hearted. On the other hand the quality stocks are not performing as anticipated and a non-producing junior stock is a shot in the dark, however, its your money and its your call.

Got a comment then please add it to this article, all opinions are welcome and appreciated.


If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


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.

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
Apr192010

Gold-Prices.Biz: Tops One Million Views

One Million Views Gold Prices 20 April 2010.jpg


According to Feed Burner our site, www.gold-prices.biz has just racked up one million views as the above chart shows.

So from all the team here please accept a huge thank you for your support it is very much appreciated.

It was only a short time back that we managed to attract 5 subscribers to our site and today the figure is 9,383, with many more visiting on a casual basis from all corners of this wonderful world.

Our ranking world wide, as depicted by alexa is as the following chart shows:


gold-prices.biz alexa ranking 20 April 2010.jpg

Finally a search for gold prices on Google brings up 61,000,000 results so its pleasing to see that we rank first page, above such eminent sites as GATA, Business week, etc. Although these positions are re-calculated on a regular basis.



A million thanks once again and have a great week.

Thank You 20 April 2010.jpg


As a suggestion for those who do want leverage to the precious metals bull, the gold and silver funds together with the careful application of options trades could be a possible solution for you. This way we are exposed to any movement in gold prices which in turn is magnified by the effect of the option. Do remember that loses are also magnified in the same way so its not a strategy for the faint hearted. On the other hand the quality stocks are not performing as anticipated and a non-producing junior stock is a shot in the dark, however, its your money and its your call.


If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


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.

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.


Got a comment then please add it to this article, all opinions are welcome and appreciated.




Monday
Apr192010

Goldman Sachs News Mask Silver and Gold Prices Take Down

GS Chart 19 April 2010.jpg



Its been said that you should never waste a bad news article, use it to cover or hide behind what you really want to do, its an opportunity. So, of all the days to release the Goldman Sachs fraud investigation news they chose Friday 17th April 2010. Ring any bells, yes thats right it was the option expiry date for the month of April.

MarketWatch led with this article:

A golden mystery.
By MarketWatch

ANNANDALE, Va. (MarketWatch) -- There very well may be a rational explanation for why today's fraud charges against Goldman Sachs Group Inc. should cause gold to fall.

But it's not immediately obvious what that explanation would be, since gold would have been expected to rise in the face of such news. Anything like this that shakes confidence in the integrity of the financial system should, other things being equal, be good for gold -- a store of value that is not dependent on any government or financial market.

We agree both silver and gold prices should have headed north on this type of news, however they took a battering as the last day of trading for the April series unfolded.

Gold Chart 19 April 2010.jpg

On the 30th March 2010 we posted an article entitled: An Interview with the Whistle Blower Andrew Maguire whereby Andrew Maguire & Adrian Douglas Discuss What Could Be the Largest Fraud in History - Andrew is an independent metals trader turned whistle blower at the center of a storm for exposing what could be the largest fraud in history involving countries, banks and government leaders




Also on the 29th March 2010 we posted an article entitled: CFTC whistle blower injured in London hit-and-run: Coincidence?


There a couple of youtube clips here of Bill Murphy of GATA (Gold Anti-Trust Action committee) Speaking to CFTC about manipulation in the precious metals market to a sadly dis-interested panel. Bill produces a rabbit out of the hat in the form of a whistle blower who strangely enough is the victim of a hit and run accident the following day





Having been put under the spot light we expected this series of options trading to draw to a close in a steady fashion, but we were wrong, instead we got wallop, take that, as gold prices were taken down.

The point to be heeded, if you do trade options, is to steer well clear of the expiry date with your trades. If necessary close your position and acquire a similar position further out in time to allow your strategy to develop and meet with your objectives. Options trading is a tricky and dangerous business as once you have purchased a contract the race against time is on and as we know time waits for no-one.


To close, a snippet from the latest missive from Jim Sinclair:

“Stay the course.” “We are a few days from a stratospheric takeoff in the price of gold.”
 
Regards,
Jim


Well there we have it, this coming week could be one to remember so stay tuned and remain calm the best you can.

Got a comment then please add it to this article, all opinions are welcome and appreciated.


If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


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.

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

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Friday
Apr162010

The Tax Window of Opportunity

TAX.jpg




By Vedran Vuk, Casey Research

The biggest danger to your wealth isn’t a bubble in China or Europe – it’s the IRS. Since 1987, top earners have been taxed between 28 percent and 39.6 percent, a relatively low range compared to the 50-percent-and-above rates for most of the century. However, with enormous annual deficits and Social Security lurking around the corner like a mugger, the future promises a return to old tax norms.

Historical income tax rates reveal grim days ahead for U.S. taxpayers. The federal income tax began innocently enough, in 1913, by imposing a 7 percent levy on the top bracket. But immediately with the start of WWI, rates exploded to 77 percent and continued at 73 percent even three years after the conflict. Then, taxes began slowly easing from 56 percent in 1922 to 24 percent just before the 1929 market crash.

The lower rates didn’t last long, though. By 1932, three years into the Great Depression, rates rose to 63 percent, peaking at 94 percent in 1945. Even now, more than 80 years later, the income tax has never returned to the 1929 level.

Capital gains taxes aren’t historically immune either. During the 1970s, the maximum rate on long-term gains reached almost 40 percent, according to the Tax Foundation. For the past 50 years, rates have hovered between 20 and 30 percent.

In the early years of the Great Depression, the U.S. government spent extravagantly without anyone paying the bill – just like today. Naturally, this situation could not last forever then, and it will not last forever now. Someone will have to pay the piper, and it won’t be the bottom 50 percent of the population.

With the Bush tax cuts expiring this year, income taxes will rise from 35 to 39.6 percent for the top bracket. Though less likely, the expiration also threatens to raise capital gains taxes to 20 percent, with increased dividend taxes following suit. Next there are the new health care bill taxes, which will require an additional 16,000 IRS agents to enforce. Further, cap-and-trade won’t make life any easier.

On the horizon, the outlook is even darker with the proposition of value-added taxes (VAT). VAT works like a backdoor sales tax. Essentially, every time a producer of goods purchases raw materials, he must pay a percentage tax. When the producer sells his goods to a wholesaler, the wholesaler pays another percentage.

It sounds bad already, but here’s the worst part. Each company down the supply chain gets a tax discount based on the next company’s tax payment. Through this method, every firm in the chain has an incentive to make sure that the next one pays the full amount. If they don’t, then your company is left holding the bag.

In other words, the VAT makes every businessman an agent of the IRS. In the end, the higher cost of goods is passed down to consumers. However, unlike sales taxes, consumers will never see the bill directly on their receipts. This makes VAT far more politically efficient and insidious.
At this point, high taxes are the only way out of the long-term debt crisis – unless the Federal Reserve wants to see double-digit inflation. Mild Clinton-era taxes expected by most won’t solve the problem. A 4 percent income tax hike is not going to repay trillions of dollars in debt. Betting on the bull market isn’t a good plan either. America would need decades of unprecedented growth to escape unharmed. The U.S. needs more than a bull market – it needs a miracle.

If taxes are hiked to the stratosphere, a market recovery will do little for the wealthy. The fruits of a bull market will be difficult to enjoy with exorbitant taxes. For what does it profit a man to gain the whole world and be taxed on 80 percent of it? Even if market conditions become more favorable, the tax environment will drastically change soon.

In a sense, there is more opportunity in the middle of a low-tax recession than in a boom with cutthroat rates. Waiting for a stock market recovery is a losing decision tax-wise. The best way to grow your wealth is to earn it sooner rather than later.

Now is the moment to utilize excess funds wisely and invest to fill the gap for future shortfalls. While taxes are still low, a window of opportunity is open. There’s no better time to find top-notch investments and make a profit while the going is good.

There’s no doubt taxes are rising – whether it’s through straightforward increases or stealthily through a VAT. The Casey Report keeps investors up to date on the big economic and market trends, so you can keep more of your hard-earned money. Try it now risk-free – with our deeply discounted Tax Day Deduction Deal and 3 full months to decide if it’s for you. Plus, as a bonus gift, get two of our most popular precious metals and energy advisories… FREE for 1 year! Click here to learn more.




Got a comment then please add it to this article, all opinions are welcome and appreciated.

If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


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.

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Thursday
Apr152010

Sell Now, Buy Later – the ABCs of Short Selling

By Jake Weber, Editor, The Casey Report

The catch phrases “Buy low, sell high” and “The market fluctuates” are probably the two most frequently used clichés of the investment world. The latter statement is hardly astute, and the former far easier said than done. What both of these simplistic ideas overlook is a third concept largely ignored by the investing public, “Sell now, buy later.”

The idea of selling something that you don’t yet own is a foreign concept to many. However, in a powerful bear market, it’s an important strategy to understand and utilize, though for reasons I’ll discuss below, only as a relatively small and closely watched speculative portion of your portfolio. The concept I’m referring to, of course, is short selling.

The basic mechanics of selling short a stock are not complicated, but, as with any investment, there are risks involved, and it requires discipline to execute these trades successfully.
What Is Short Selling?

If, after carefully scrutinizing a security, you conclude that there is nowhere for the stock to go but down and want to put your money where your brain is, there are a couple of different alternatives. One way to go is the options route, selling calls or buying puts on the stock. This is certainly a viable route with plenty of opportunity to profit; however, with options, not only do you have to be right about the direction, you also have to be correct about the timing and strike price.

The other alternative is to open up a margin account and sell the stock short. That requires posting a margin – cash or securities – in your account. With that condition met, your broker will undertake to borrow the stock from someone that owns it. Once your broker has acquired it, either from another client or another brokerage firm, he or she will sell the stock and deposit the proceeds into your account. What you own now is a liability to purchase back, or “cover,” those same shares at some point in the future, hopefully at a lower price. Because there’s a loan involved with this transaction, you’ll be charged an interest rate on the amount borrowed, likely in the area of about 4.5% annualized these days.

With a short sale, your maximum gain is capped at 100%, which you would only collect if the stock goes to zero – but your loss is technically unlimited because stocks have no cap on the upside. Of course, there are ways to limit your losses, which we’ll discuss in a moment, but first let’s look at what could happen to your account should the stock fall, as you hope it will… or rise, as you hope it won’t.

For the purpose of this example, let’s say you came to the conclusion that XYZ stock is overvalued at $25 a share and so you sell short 100 shares. Here are the implications of two different scenarios subsequently unfolding:

XYZ Falls to $10.00

XYZ Rises to $40.jpg


Your maximum profit of the XYZ short sale is $2,500, but the sky is the limit for your losses and will be magnified, should you use margin. This potential for open-ended loss is enough to deter most investors from shorting, and is the reason we recommend you do so only with the speculative corner of your portfolio.

Minimizing Risk

Short selling is an aggressive strategy to pursue. There are, however, measures you can take to help mitigate risk.

Limit Your Margin

One of the ways to avoid large losses is by limiting the amount of margin used to borrow the shares. To sell short in the U.S., regulations require that the stock be “marginable,” and an initial deposit is required – 50% for stocks above $5 per share and 100% margin for stocks below $5 per share. After you borrow the shares, the rules require you maintain equity in the account worth at least 25% of the total market value of the security.

These are the regulatory minimums; individual brokerages may have additional rules and limitations for margin accounts, so be sure to carefully review your margin agreement. Even so, to avoid being “chased out” of a trade, you may want to deposit more cash than required by your broker in order to further cushion your position.

Keep in mind that the interest paid on the borrowed money will eat into your returns, reducing your potential upside, the longer you hold open a position. Also, any dividends issued while you are borrowing the stocks will be transferred from your account to the original buyer. We highly recommend that you actively monitor your account to avoid any margin calls and minimize your risk by reducing the use of margin.

Use Stop-Loss Orders

If you aren’t able to actively manage your investment accounts, then stop-loss orders can help soften the blow if the trade quickly turns against you. When the general market or sector gains upward momentum, even the fundamentally weakest stocks can catch a free ride. In order to limit your loss, consider placing orders to “buy to cover” at a price above your initial short sale price and remember to review your stop-loss orders periodically to assure you are covered.

A Few Key Terms:

Short Interest: This is the aggregate number of short sale positions on each security. This information is published monthly by the exchanges and also offered through many other websites such as Barron’s and Yahoo Finance. It’s important to monitor how many shares have been borrowed because they will eventually have to be bought back (see Short Squeeze, below). Generally, the lower the short interest, the better.

Days to Cover: This is another important data point to track, because it’s an estimate for how many days it will take to unwind all the outstanding short positions. It’s calculated by dividing the current short interest by the average daily trading volume of the stock. The fewer days to cover, the better.

Short Squeeze: Should a stock appreciate by a substantial amount, it is entirely to be expected that some number of short-sellers will decide to cover their short or be forced to it by margin calls. Of course, that requires closing their positions by buying the stock back, which gives the stock further upward momentum. This may in turn force other short-sellers to cover, thus creating a rush to cover known as a short squeeze. Using stop-loss orders will help prevent getting caught on the wrong end of a short squeeze.

Called Away: This refers to being forced to cover your short position because the lender requires delivery of the stocks. While this technically could happen at any time, it is exceedingly rare and would typically occur only if a clearing house couldn’t find shares to borrow for exchange-traded funds. This is something certainly to be aware of, but it’s not a cause for great concern, in our opinion.

Proceed with Caution…

If short selling fits within your scope of risk tolerance, it can be very profitable. Even so, it’s important you avoid being overleveraged in any position and never, ever “bet the farm” with a short position. Rather, only invest with money that you can afford to lose and consider using stop-losses.

As Jake says, short-selling can be very lucrative – if you correctly assess the broad market trends. That’s what The Casey Report does: analyzing budding trends and finding the best opportunities to profit from them. And as a special Tax Day offer – for 2 days only – you can now get The Casey Report for $150 less… PLUS one free year of our two most popular precious metals and energy advisories. Click here to learn more.



Got a comment then please add it to this article, all opinions are welcome and appreciated.


If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


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.

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
Apr142010

Gold in Perspective

Gold, Inflation Adjusted.jpg


By David Galland, Managing Director, Casey Research

As the price of gold rises and the inevitable quacking begins again about the “barbaric” metal being overvalued, I thought a quick check-in with the historical perspective might prove useful.

The first of two charts that follow shows the long-term picture of gold from 1970 to the present, correctly adjusted for inflation.

In the second chart, we overlay the inflation-adjusted price of gold from the last secular gold bull market in the 1970s, with the secular bull market we’re now in.


Gold Still Looks Cheap When Adjusted for Inflation.jpg

As you can see, if the current bull ends with the sort of grand finale we saw at the end of the last big blow-off, then prices have a long way to go from here. That said, a credible case can be made that this time around, the price could go much higher.


Percentage of the Population Unemployed 27 Weeks and Over.jpg

For starters, in the 1970s, though not good by any means, the economy was in much better shape than it is today. The chart here uses long-term unemployment as a proxy for that contention.

As you can see, at the end of the 1970s, the employment picture was quite healthy. 
Today, in addition to wildly out-of-control debt on both the private and public levels, we have a massive problem with unemployment and the consequences of a burst housing bubble. Thus, Paul Volcker’s somewhat simplistic solution to inflation – and the trigger for the end of the last gold bull market – seriously ratcheting up interest rates, is off the table. (Since we’re trying to gain perspective, I’ll remind you that at the beginning of the 1980s, mortgage rates topped 18%.)

But wait, I heard someone in the back shout, “There is no inflation today!” Wrong, there is unprecedented inflation – properly defined as an increase in the monetary base. What’s missing, so far, is the inevitable consequence of the inflation – steadily rising prices.


That will come, and when it does, the government will find it is going into a gunfight with a (dull) knife – because raising interest rates in the Kingdom of Debt will lead to a predictable outcome.  

Unfortunately, thanks to the inflation, interest rates are going up no matter what the government would prefer to happen, a contention of ours that is now gaining traction in the mainstream.

And, yes, up to a point, history shows gold and interest rates moving upwards in concert.

Don’t go crazy about buying gold, but by all means, if you don’t own some, begin a monthly program of purchases.

While it would be perfectly natural to see the gold stocks give back some of the big gains they have offered since last year’s correction, any further corrections should be viewed as opportunities. But again, don’t go overboard. If you have an investment portfolio with 20% to 30% in a combination of precious metals bullion, large-cap and small-cap stocks, you’ll be well positioned – and protected – for what’s coming. 

To learn where to buy physical gold and where to store it… and which major gold stocks, mutual funds, and ETFs are the safest while giving you handsome upside… read Casey’s Gold & Resource Report. At $39 per year, it’s a steal for the value you get out of it. Click here for more.




Got a comment then please add it to this article, all opinions are welcome and appreciated.


If you would like to get a bit more bang out of your buck, then check out our Options Trading Service please click here.

For the analysis of a recent options trade that we have just closed please click this link.


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.

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.