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Double Down on Gold

posted Sep 1, 2012, 11:59 AM by HigherAlpha Ideas   [ updated Sep 1, 2012, 12:16 PM ]


On July 31, just a little over three weeks ago, I put out a Wealth Dailyarticle with the headline, “Buy Gold Before Thursday.”

The technical chart was clearly saying gold was going much higher.




We are now up more than 110 points since that date.

My call has been vindicated, my trading system is correct.

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I made the same call for silver...




Readers of my trading service Crisis and Opportunity are up 19.79% after buying the 3x Gold Miners EFT (NYSE: NUGT) two weeks ago.

We are up 11% in the Silver ETF (NYSE: SLV).

I have also been adding other commodities to our portfolio, including uranium and platinum.

You should pay particular attention to the undervalued miners.


Blood in the Streets Platinum

In fact, I made readers like you 83% returns in a day from platinum in my options service, Options Trading Pit.

You may have heard about the crisis in the South Africa platinum mines after police killed striking mine workers last week...

Here is my buy alert, word for word, that I put out that morning August 17:

Shares of Lonmin (LMIA) dropped yesterday after police killed more than 30 strikers at Lonmin's platinum mine. This tragedy has shocked South Africa and the world.

The company announced it would close all mines across South Africa. Lonmin is the world's number three platinum producer.

South Africa produces 77% of the world's platinum.

Physical platinum has been trading below the price of gold. This is an historical anomaly and suggests that platinum is vastly undervalued. The shutdown of mines is the catalyst that fixes this disparity.

The safe bet is to buy PPL, the physical platinum ETF. This is the low-risk way to get 15% to 30% off the next move. However, there are no options on this.

The high-risk, high-reward bet is to buy the UBSE- TRACS Long Platinum TR ETN (PTM). Buy the November 17. They last traded at $0.60 with 47 contracts out (PTM121117C00017000).

This ETN re-balances every month, so we are looking for a fast pop and then we are out, with any luck we will be out this afternoon.

If not, plan on selling before next Friday.

That afternoon my readers sold at $1.10, banking an 83% one-day gain.

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Big Gains, Fast

Here is how it looked:




The chart follows the same winning pattern with a breakout, volume spike, and MACD crossover.


Hedge Fund Buying

I'm not the only one who's stocking up on commodities in what might be the next commodity supercycle...

According to Bloomberg:

Hedge funds boosted bets on rising commodities to the highest in 15 months, driving prices into a bull market as the U.S. drought worsened and the Federal Reserve signaled it may take more steps to spur economic growth.

Money managers’ net-long position across 18 U.S. raw materials rose 10 percent to 1.32 million futures and options in the week ended Aug. 21, U.S. Commodity Futures Trading Commission data show. Holdings doubled in two months to the highest since May 2011.

Money has been flowing out of equity mutual funds and into hard assets.

Investors added $1.47 billion in commodity funds for the week ending August 22. This is the third inflow in the last four weeks.

The number of gold futures and options contracts jumped 35% the last week. Platinum option contracts more than doubled, and the number of oil contracts was up 18%.

It looks like the money managers are back from the beach and are placing their bets for the fall quarter.  

It's time to load up on commodities. They have a long way to run.


Good hunting,


Christian DeHaemer


Article written by Christian DeHaemer in Wealth Daily Newsletter - August 28, 2012


All Roads Lead to Gold

posted Aug 24, 2012, 7:14 PM by HigherAlpha Ideas   [ updated Aug 24, 2012, 7:18 PM ]


No wonder zombies are so popular...

We've turned into a nation of them.

Rail against “the Man” all you want (and I often do), but complacency is certainly an ingredient in tyrannical soup.

Almost 15% of the country — 46.5 million Americans — lived off food stamps in May, a quarter-million increase from the month before.


The number of people on food stamps is growing three times as fast as the number of people finding jobs.

But it doesn't stop there...

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The U.S. population has grown 6% since 2005 — from 296 million to 314 million.

But the number of people on disability has grown nearly six times as fast: from 6.5 million to 8.75 million — or 34% — in the same time.


Surely the number of disabled workers isn't growing six times faster than the total population.

What gives?

I'll tell you what gives: our mentality as a nation.


Nanny, Nanny, You-You

The government has the populace addicted to the entitlement teat. And neither wants to wean.

As long as the handouts keep coming, “they” will stay in power.

“Who's going to vote against free lunch?” the thinking goes.

Meanwhile, the other side is thinking: “I'm gaming the system, getting my groceries for free.”

Ahhh, but they aren't “free,” are they?

For example, here in the Free State, Governor O'Malley frequently touts there are “hundreds of sites around Maryland where kids can receive a free meal.”

What he touts less often is his plan to raise taxes on hard workers who bust their tails to make $100,000 a year, which isn't all that much with two kids, two pets, and two cars. But that's ok in the minds of politicians.

There are fewer and fewer people pulling themselves up by their bootstraps to make a respectful living while the zombies are multiplying faster than ever.

And guess what?

Their votes are equal. The more zombies created, the more zombie votes, the more votes for more of the same.

This is true of both parties in all states.

“They” throw the masses a few scraps while handing out bones to their largest donors in the form of beneficial policy, tax advantages, and lax regulation — which only furthers the zombification of the hundreds of millions in the middle.

That's how you end up with charts like this, showing 108 million people receive some form of federal welfare:


And that DOES NOT include those only benefiting from Social Security (Ponzi) and/or Medicare.

Over one-third (34%) of the people in this country are getting handouts.

It's only natural that resentment is growing among those working hard for what they earn toward both those giving and receiving handouts...

Not a day goes by anymore that I don't see or hear a comment like this one:

I volunteer at a charity that pays bills and gives out food, and you see it all the time: After saying they have no food in the fridge, the "poor person" whips out an iPhone to check on their manicure appointment without an ounce of shame or even awareness of the incongruity of their actions. 

Our stack of "cheap healthy recipes" goes untouched as does the "library."  Saddest was a young girl thrilled with books, but "mom" cursed, "Where the f— you gonna put those things?"

Holding your tongue is the hardest part of the job. 

Many are desperate, but they really need financial management and stability. Growing up in moving households with rotating strangers and no steady job ensures more of the same. They get "the aid," work odd jobs, bum on street corners ($20/hour — more with a kid) and have no plans for the future except some good lovin' and fat food. 

And it's not the right or left that's to blame...

It's the pacified population that's traded true individualism and liberty (you know, the American Dream) for dependence on the State.

“The State” (or the collective “they”) love it because they get to stay in power and get expensive dinners on lobbyists' dimes and only work a few weeks a year and start businesses that take advantage of loopholes they've created and profit from deals they know are coming and... and... and...

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And the zombies like it because they can pay for their necessities with other people's money, while using the little they do have to get new phones and manicures and sneakers.

So the 110 million people in the country on federal welfare are happy. The couple million I've dubbed the collective “they” are happy.

What about the remaining 200 or so million of us?


You're Seeing It Now

Those making it on their own are starting to fight back. And the incumbents don't like it.

We talked last week about the National Weather Service and Social Security Administration buying hundreds of thousands of hollow point bullets, and about the purchase of bulletproof checkpoint booths for Homeland Security.

“They” are planning their contingency for when the majority wakes up to the ruse.

“They” are also starting to crack down on people like you and me, who are starting to speak out against rampant corporatism and the loss of individual liberties...

Consider former Marine Brandon Raub, who was arrested last week for posting anti-government messages on Facebook — clearly within his First Amendment rights.

Police (which have been militarized, dumbed down, and are “their” enforcement arm) used an obscure Virginia law that allows “emergency, temporary psychiatric commitments upon the recommendation of a mental health professional.”

In non-BS speak, “they” can and will detain you if “they” don't like what you're saying.

But that's just one person. Collectively, we're speaking out, too.

There's a survivalist movement afoot.

Expatriation is up...

Congress had just a 12% approval rating in the latest WSJ/NBC poll. Gallup says it's 10%.

A Pew Research study out last week found 44% of people don't believe major news organizations. That's up from 30% in 2002.

The credibility of newspapers, cable, and network news is spiraling downward...

While engagement in unconventional news and commentary, like this rag, is climbing higher.

People are seeking an alternative — and not just to where they get their (dis)information...

They're seeking an alternative to the entire system that's created the state we find ourselves in today — including investments. (If you hadn't noticed, no one is finding financial independence with mutual funds.)

Money continues to flow away from equities.

Investment Company Institute data show investors yanked $6.3 billion out of mutual funds in June. That was after taking $9.8 billion out in May. Money has flowed out each of the last four months.

Indeed, Morgan Stanley says about $200 billion has been taken out of equities since January 2010.


Where's it going?

I think we all know the answer...

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George Soros — who, in 2010, said gold was “the ultimate asset bubble” and that it was “certainly not safe” — more than doubled his position in gold in the second quarter.

SEC filings show Soros Fund Management more than doubled its stake in the SPDR Gold Shares (NYSE: GLD) from 319,550 shares to 884,400 shares. That's $143.4 million worth of gold.

Hedge fund manager John Paulson, who made billions betting against subprime mortgages during the crash, is also increasing his stake in gold.

His Paulson & Co. fund purchased an additional 4.53 million shares of SPDR Gold in the second quarter, bringing his total to 21.8 million shares. He now owns $3.53 billion worth of gold, or about 44% of the company's assets.

You think they think it's going higher?

I bought precious metals this week, too.

You can do the same right here, where Wealth Daily has arranged for special pricing.

Of course, gold isn't the be-all and end-all...

There are numerous ways you can grow and protect your wealth while remaining outside the system.

I'll continue to cover why that's necessary — and how you can do it every week — in these pages.

Call it like you see it,


Nick Hodge


Article written by Nick Hodge in Wealth Daily Newsletter - August 24, 2012


Combining Fundamentals and Technicals to Produce Superior Results

posted Aug 19, 2012, 1:50 PM by HigherAlpha Ideas   [ updated Aug 23, 2012, 11:45 AM ]


My background is in public accounting and while my first choice is always to believe the technicals, it's difficult to stray from solid fundamentals.  Accordingly, each quarter I search through hundreds of earnings reports and charts to find that rare combination of "out of the park" earnings results and just the right amount of uncontrollable buying interest.  Generally speaking, here's my formula:

Beat on revenues, beat on EPS, raise guidance and print a marubozu candle (or at least a very strong candle) on MASSIVE volume.

Ok, so you might be asking what is a "marubozu" candle?  A bullish marubozu candle shows buying interest the entire trading day.  There are either no tails (shadows) or very small tails on the candle.  It opens with a gap up and the buying interest never slows, trending higher all session long and finishing at or very near its high of the day.  Normally, gaps get filled.  As everyone jumps on board at the opening bell, market makers provide liquidity and complete the other side of the trade.  This explains why so many gaps fill.  Market makers generally make their money one way or the other.  But a marubozu candle in essence paints a picture of unrelenting demand - even after a HUGE gap up.  Even the market makers can't slow demand.

In the last two quarters, I've been able to find a couple stocks where demand swamps supply and I'll highlight them both below:

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First, check out Multimedia Games (MGAM):



Next, take a look at Mellanox Technologies (MLNX):



There are differences in how the two traded shortly after their blowout earnings reports, but ultimately both stocks soared much, much higher.  Identifying these stocks when "game-changing" candles print can make a big difference in your trading success.

Unfortunately, marubozu candles are not particularly common.  But I do still look for gaps to the upside after solid earnings where momentum continues on the long side after the gap higher. I have one such stock that appears poised to me to move much higher over the next quarter:



Article written by Tom Bowley in ChartWatchers, the StockCharts.com Newsletter - August 19, 2012; adapted with content from his website (www.investedcentral.com).


Fast 200% Gains Possible: Gold Stocks Are Record-Cheap

posted Aug 14, 2012, 12:52 PM by HigherAlpha Ideas   [ updated Aug 23, 2012, 11:40 AM ]


The last time gold stocks were this cheap, they soared 172% in eight months…

Today, by my favorite measure, gold stocks are record-cheap again…

They have only been this cheap once in the last decade – and that was in late 2008, when gold stocks (as measured by GDX, the main gold-stock fund) bottomed out at $17.  

Just over two years later, shares of GDX reached $60 a share, for a phenomenal profit.

The stage is set for similar gains today…

Take a look at the following chart. It shows the performance of gold versus gold stocks: 




You can see how gold stocks crashed in the financial crisis in late 2008. That drove them to their biggest discount to the price of gold in the last 10 years – until now.

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The astounding part today is, it is NOT late 2008. People are NOT selling all their investments like they were back then. Instead, investors today have simply given up on gold stocks.  


Gold stocks recently hit the same discount to gold as we saw back in 2008, according to my favorite measure of gold-stock value. That is what I like to see.

My favorite measure of gold stock value was created by John Doody – the founder of the Gold Stock Analyst newsletter. John tracks dozens of gold producers in his newsletter. His measure of value takes two things into account. He sizes up: 

1. The stock market value versus the dollar value of the company's reserves in the ground.
2. The stock market value versus the dollar value of the company's annual production.

In my mind, this analysis makes total sense. It is like the traditional value metrics (price-to-book value and price-to-earnings), but it specifically applies to gold-producing companies.

Importantly, this "value" number John comes up with for gold stocks in general has proven to be remarkably accurate. When it says gold stocks are overvalued, they go nowhere. And when gold stocks are undervalued, you can make incredible returns.

John only crunches this number monthly. As of August 1, gold stocks were 35% undervalued.

So right now, gold stocks have all three things in an investment idea… I like to see it CHEAP, HATED, and IN AN UPTREND.

Gold stocks were undervalued on August 1. Investors have given up on them. And it looks like an uptrend is in place… GDX is up about 10% since July 23.

This is an exciting opportunity to set up a trade with incredible risk-versus-reward characteristics.

You can set a stop loss at the recent low of $40.70. (If it falls below that, we are likely wrong on this idea for now.) That way, your potential loss is less than 10% from today's price.

Meanwhile, your upside potential is dramatic. If history repeats and we see a rally like 2008-2009 in gold stocks, you could more than double your money in just eight months.

Remember… the last time gold stocks were this cheap, they soared 172% in eight months… and made investors a few times their money in two years.


Gold stocks are coming off record-cheap levels. An uptrend is in place. And you can set up an excellent trade, with limited downside and large upside potential.

It's finally time to trade gold stocks again… And this is the way to do it…



Good investing, 

Steve


Article written by Dr. Steve Sjuggerud in Daily Wealth Newsletter - August 14, 2012


At All-Time Highs… and It's Time to Buy

posted Aug 9, 2012, 6:48 PM by HigherAlpha Ideas   [ updated Aug 23, 2012, 11:47 AM ]



"But Steve… Coke and Wal-Mart are at 12-month highs… I don't want to buy them at new highs!"


Why not?


What is your evidence that says they'll go down once they hit new highs? History actually says the opposite…


Today I'll show you that, in the past, buying these stocks at new highs would have made you a LOT of money. And I'll also show you why buying at a high would have worked back then – and will today… 

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In yesterday's DailyWealth, Brian Hunt told you how to make money in stocks like Coke and Wal-Mart. But readers don't want to buy these stocks at new highs. Let's take a look at the historical record, based on data from our True Wealth Systems databases…

Shares of Coca-Cola are fast-approaching 14-year highs now. Importantly, Coke shares soared over 1,000% – twice – AFTER hitting new, long-term highs in the past.


The chart here shows what I mean…





Coke peaked in 1946. It took 14 years until it hit a new high in 1960. Then, shares of Coke soared over 1,000%.

The same thing happened again in 1985… After 13 years without a new high, Coke shares hit a new high in 1985, then soared over 1,000% again.

Neither of these 1,000% gains happened overnight, of course. But as the chart shows, the rise was fairly steady.

Now – 14 years later – Coke is knocking on the door of a new high again. Should you sell Coke (like most investors would) if it hits an all-time high? Or should you buy? History says you should buy…

Wal-Mart's shares are in an even better spot than Coke's…

It took the discount retailer 13 years to hit an all-time high. But now, it's happened. So should you sell like most people would? Or should you buy?






Again, it's time to buy.

But why? WHY does this "new high" thing work?

The reason is simple…

It works because the share price has gone nowhere for a long period of time… Meanwhile, the company's sales and earnings have continued to grow. The company's stock price is just starting to catch up to the company's business.

It's simple… When a company's sales and earnings soar but the stock price "goes nowhere," the natural result is the stock gets cheaper relative to its sales and earnings.

And that's exactly what has happened.

Right now, Wal-Mart is as cheap as it's been at any time in the last in 30 years. It's coming off a near-record-cheap valuation from last fall. Take a look…




The last time it was this cheap, its future was uncertain… Wal-Mart was competing with Kmart, Sears, Montgomery Ward, JC Penney, and tens of thousands of "mom and pop" retailers. Now (outside of Target), Wal-Mart is the last man standing. 

Yes, Wal-Mart has run up this year. And yes, it is at a new 12-year high. (Heck, it's at an all-time high.) But that does NOT mean it is time to sell. On the contrary… Based on history, you want to OWN it.

And you want to own Coke, too… for the same reasons.




It's not just Coke and Wal-Mart. They just help illustrate the point.

The point is, right now, you have the opportunity to buy into theworld's greatest brands at near-record-low valuations. Meanwhile, we're getting them when they're in solid uptrends, busting out to newmulti-year highs. Sure, if you buy now, you aren't in as early as some investors… but you're still getting these stocks at great values. Plus, this trend will last for YEARS. There's plenty of room left to run.

These have been good for hundreds of percent returns (even 1,000%-plus over longer periods).

And the situation today is no different (growing sales and earnings coupled with a flat share price for a long time) than it was in the past.

Take advantage of it. Buy the world's greatest brands, at low valuations. Don't be concerned that they're near their highs. You're getting great businesses at great values. Don't miss out…



Good investing,

Steve


Article written by Dr. Steve Sjuggerud in Daily Wealth Newsletter - August 9, 2012



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