Dollar collapsing, gold flying as Washington dithers! What to do …

April 20th, 2011
Mike Larson

The fallout from Standard & Poor’s landmark warning on America’s creditworthiness is bad — and getting worse. Just today …

* Gold exploded higher, powering through $1,500 an ounce for the first time in world history!

* Silver shot up another 80 cents, closing in on $45 an ounce for the first time in more than three decades!

* Crude oil rallied more than a dollar a barrel, putting even more upward pressure on gas prices. It now costs an average of $3.84 a gallon for gas, the highest in 31 months!

* The Dollar Index is collapsing to a fresh 17-month low of 74.30. As you can see in this chart, we’re just a few ticks from the lowest level for the dollar EVER!

Just take a look …

U.S. Dollar Index

In other words — just as we’ve been predicting — global investors are fleeing our currency. And they’re flocking to something, ANYTHING that will hold its value.

Yet Washington continues to dither … to fiddle while the dollar burns! Democrats and Republicans keep talking past each other, and the deficit commission’s landmark report on how to tame the explosion in red ink has been all but left to the dustbin of history.

Nobody in a position of power wants to step forward and take the necessary steps to rein in our national debt, at $14,309,159,097,877.65 and counting!

Look, the dollar is already collapsing … precious metals are already soaring … and your cost of living is already exploding … just as we’ve been warning.

Next up? Far MORE DIRE consequences for your wealth and well-being!

That’s why I urge you to view Dr. Weiss’ landmark “American Apocalypse” video immediately.

In it, you’ll learn precisely how to protect yourself — and also how to turn the great power of these dangers into tremendous profit opportunities.

Until next time,

Mike

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Dollar collapsing, gold flying as Washington dithers! What to do …

Commodities, ETF, Mutual Fund, Uncategorized

If You Don’t Know About This Income Investing Oddity, Pay Attention

April 20th, 2011

If You Don't Know About This Income Investing Oddity, Pay Attention

I know what income investors like.

If I put a double-digit yield in the headline of an article, it will see thousands more reads than an article without a big headline yield.

I can put “safety” in the headline. I can put in enormous capital gains. But yield is what really excites income investors.

That's one of the reasons I have a “10%-Plus” Portfolio in my High-Yield Investing advisory. To be included in the portfolio, a security has to pay double-digits at the time it's added. No exceptions.

But there's a secret to those high yields I'd guess most income investors don't know.

Take a look below. I've shown the performance of my current holdings in the “10%-Plus” Portfolio (to be fair to High-Yield Investing subscribers I've redacted the ticker symbols).

Why are the yields you see here below 10%? Nearly all the holdings in the portfolio have risen since I added them. That lowers the current yield, but those who bought when I highlighted the play are still earning 10% or more on the initial investment.

Sure, I have a losing position. No one can pick 100% winners. But I have one more list I want you to see.

It's the performance of my lower-yielding “Dividend Optimizer” Portfolio. These are investments you can count on to deliver above-average income year-in and year-out, but they don't pay out the juicy double-digit yields.

That performance is very good. But with the average returns between the two portfolios, there's something odd happening.

The “10%-Plus” Portfolio is showing an average gain of about four times the average yield. But the lower-yielding “Dividend Optimizer” Portfolio shows an average gain of more than five times the yield. Just a few weeks ago, the average return was actually six times the yield.

So despite one portfolio boasting double-digit yields (which should make the securities more attractive to investors), the performance of the two portfolios is roughly the same.

My colleague Daniel Moser attributes this phenomenon to the “sweet spot” for yields — those in the 5-8% range.

It's the area where yields are not so low that they're trivial and not so high that they make it tough for management to pay steadily increasing dividends.

Action to Take–> Most importantly, this little quirk shows you don't want to always pass up lower-yielding securities simply because you've found something paying more. You can be rewarded just as handsomely by those sitting in the “sweet spot.”


– Carla Pasternak

P.S. — If you're looking for quality stocks with high yields, you should take a look at this one. It pays a 19.2% dividend yield. It borrows cheap, gets paid handsomely and then pockets the spread. You'll get the full story on this cash machine and others like it in this video.

Disclosure: Neither Carla Pasternak nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

This article originally appeared on StreetAuthority
Author: Carla Pasternak
If You Don't Know About This Income Investing Oddity, Pay Attention

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If You Don’t Know About This Income Investing Oddity, Pay Attention

Uncategorized

If You Don’t Know About This Income Investing Oddity, Pay Attention

April 20th, 2011

If You Don't Know About This Income Investing Oddity, Pay Attention

I know what income investors like.

If I put a double-digit yield in the headline of an article, it will see thousands more reads than an article without a big headline yield.

I can put “safety” in the headline. I can put in enormous capital gains. But yield is what really excites income investors.

That's one of the reasons I have a “10%-Plus” Portfolio in my High-Yield Investing advisory. To be included in the portfolio, a security has to pay double-digits at the time it's added. No exceptions.

But there's a secret to those high yields I'd guess most income investors don't know.

Take a look below. I've shown the performance of my current holdings in the “10%-Plus” Portfolio (to be fair to High-Yield Investing subscribers I've redacted the ticker symbols).

Why are the yields you see here below 10%? Nearly all the holdings in the portfolio have risen since I added them. That lowers the current yield, but those who bought when I highlighted the play are still earning 10% or more on the initial investment.

Sure, I have a losing position. No one can pick 100% winners. But I have one more list I want you to see.

It's the performance of my lower-yielding “Dividend Optimizer” Portfolio. These are investments you can count on to deliver above-average income year-in and year-out, but they don't pay out the juicy double-digit yields.

That performance is very good. But with the average returns between the two portfolios, there's something odd happening.

The “10%-Plus” Portfolio is showing an average gain of about four times the average yield. But the lower-yielding “Dividend Optimizer” Portfolio shows an average gain of more than five times the yield. Just a few weeks ago, the average return was actually six times the yield.

So despite one portfolio boasting double-digit yields (which should make the securities more attractive to investors), the performance of the two portfolios is roughly the same.

My colleague Daniel Moser attributes this phenomenon to the “sweet spot” for yields — those in the 5-8% range.

It's the area where yields are not so low that they're trivial and not so high that they make it tough for management to pay steadily increasing dividends.

Action to Take–> Most importantly, this little quirk shows you don't want to always pass up lower-yielding securities simply because you've found something paying more. You can be rewarded just as handsomely by those sitting in the “sweet spot.”


– Carla Pasternak

P.S. — If you're looking for quality stocks with high yields, you should take a look at this one. It pays a 19.2% dividend yield. It borrows cheap, gets paid handsomely and then pockets the spread. You'll get the full story on this cash machine and others like it in this video.

Disclosure: Neither Carla Pasternak nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

This article originally appeared on StreetAuthority
Author: Carla Pasternak
If You Don't Know About This Income Investing Oddity, Pay Attention

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If You Don’t Know About This Income Investing Oddity, Pay Attention

Uncategorized

3 Small Caps That Could Double This Year

April 20th, 2011

3 Small Caps That Could Double This Year

In the past few years, we've discussed the importance of catalyst investing. This involves clearly identifiable events that, if they come to pass, the they'll propel a stock sharply higher.

Here are a handful of stocks that could strongly benefit from possible catalysts in 2011. Each stock could double if they receive just a few good breaks.

1. Broadwind Energy (Nasdaq: BWEN)
This stock caught my eye after a recent upward move. Shares had fallen from the 52-week high of $4 to just $1.21 in early March. Now that they're back up above $1.50 — gaining more than 20% in just three recent trading sessions, I've been giving the company a fresh look. And I like what I see…

Broadwind, which makes components for the wind-turbine industry, had been rumored to be on the cusp of a buyout last fall. Shares moved up on word that GE (NYSE: GE) or a foreign suitor would soon make a bid. No such bid ever materialized, prompting shares to hit new lows. I'm not ruling out that such a bid may still emerge, but I like this stock for other potential catalysts.

For starters, business appears to be rebounding. Sales had fallen from $207 million in 2008 to just $137 million in 2010 as U.S. spending on wind farms slumped. Fourth-quarter sales of $47 million marked a turn, posting the first year-over-year quarterly increase in nearly three years. Bookings for new orders surged to $60 million, the highest rate in more than a year. Backlog rebounded sequentially by $16 million, to $226 million.

Yet it's the macro picture that I see as the big catalyst. As the cost of wind power keeps dropping, major players are making big investments. For example, Google (Nasdaq: GOOG) and a pair of Japanese firms are investing about $500 million in a wind farm GE is developing in Oregon. Notably, the consortium has predicted that the wind power generated will be competitive with other fuels and won't require utility-level subsidies. The fact that the wind farm will have zero emissions is just an added kicker.

Management has noted a positive change in industry tone from the first half of 2010 to the second half. And they expect 2011 results to show continued strengthening. The key is to at least move back to break-even, as the company only has $25 million left between its cash balance and an undrawn credit line. If that happens, investors will re-embrace this fallen stock that trades for just 0.7 times projected 2011 revenue. I would expect that multiple to double if the sales rebound is sustained, implying similar upside for the stock.

2. Winnebago (NYSE: WGO)
Talk about an ugly stock chart. Every time oil prices rise to new highs, this maker of gas-guzzling recreational vehicles (RVs) falls further. The stock has fallen in seven of the last eight sessions (going into trading on April 19) as investors assume that demand for RVs will dry up while gasoline is at $4 a gallon.

Well, the catalyst for this stock should be pretty clear. If oil prices finally pull back, then shares are likely to see a decent rebound. The more serious rebound is likely to come if the employment picture continues to strengthen. In the middle of the past decade, when employment trends were last on the upswing, Winnebago typically generated roughly $1 billion in annual sales. The recent economic weakness has altered that trend. Sales plunged to just $211 million in fiscal (August) 2009 and only rebounded to $450 million in 2010, less than half the level of the previous peak.

Analysts think sales will rebound 20% in fiscal 2011 and 2012. The key is the economic variables — falling oil prices and rising employment. If those two catalysts come into play, then long-term investors are likely to note just how cheap this stock now is, trading at roughly six times peak earnings from the last cycle. The stock has come down from $30 in 2007 to a recent $12, but if the economy appears increasingly healthier later this year, then look for shares to move back up smartly into the $20s.

3. A123 Systems (Nasdaq: AONE)
This lithium-ion battery maker is now a “show-me” stock. After missing sales forecasts for a number of quarters, shares have slipped from more than $25 in late 2009 to less than $6. Those weak sales results led to higher-than-expected losses, which led to fast-sinking cash levels. As a result, investors began to realize A123 would need to keep selling more stock to stay afloat.

That vicious cycle now looks to be at end. The company just raised another $250 million and analysts increasingly think the era of big cash losses will wind down. By the time the cash from this latest capital infusion has been spent, A123 may actually be a profitable company.

Here's why…

A123 possesses strong engineering capabilities in its lithium-based batteries that are aimed at the transportation and electrical grid markets. This enabled the company to sign up an impressive roster of major clients. Trouble is, those clients have been slow to get going with their own cutting-edge programs. For example, Fisker Automotive, a rival of Tesla Motors (Nasdaq: TSLA), has been dogged by delays in launching a new electric luxury sedan, but the sedan should finally reach customers this summer.

A123 has also announced that a major unnamed automaker has signed up as a customer. Investors await more details about this mystery customer and to what type of deal both parties have agreed. But this news could help clarify why analysts think that after several years of disappointment, A123 is likely to see sales more than double in 2011 to around $200 million and double again in 2012. If that comes to pass, then A123 will be close to break-even and won't need to raise any more cash.

With the stock now more than 75% from its late 2009 peak, these catalysts highlight that shares now hold more reward than risk.

Action to Take –>
When you swing for the fences, you can also miss. Each of these stocks may prove to be dead money if these catalysts fail to develop. Yet they do appear to have found a floor at these levels, so investors aren't absorbing the usual amount of risk when looking at swing-for-the-fences-type stocks.


– David Sterman

P.S. — We've just identified six surprising events that could break your portfolio wide open in 2011. Knowing these pivot points in advance lets you focus your investing strategy like a beam of light in the dark… and make a lot of money in a hurry. Get them free by simply watching this video presentation.

Disclosure: Neither David Sterman nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

This article originally appeared on StreetAuthority
Author: David Sterman
3 Small Caps That Could Double This Year

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3 Small Caps That Could Double This Year

Uncategorized

Two Collapse Scenarios

April 20th, 2011

Claus VogtNever before has the government’s manipulation of financial markets created greater dangers — and opportunities — for investors!

How do we know? Because lesser manipulations in recent years have already proven to be disastrous.

They led to a stock market bubble and bust in 2000 … to an even larger housing bubble and bust in 2007 … and then the greatest banking crisis of our lifetime in 2008.

Nothing Learned

What’s most ironic is that, despite those obvious failures, now those very same policies — even larger in scope than ever before — have led to still another massive bubble, this time in the one asset that, until now, had been considered above the fray: U.S. government debt.

We know how disastrous the sovereign debt crisis has been in Europe. We know that the United States government’s finances are definitely not in better shape. And we also can anticipate that a bust in U.S. debt could make the housing and banking crisis of 2008 look mild by comparison.

The only remaining question is not if, but HOW a debt crisis will hit the U.S. as well. I see two possible scenarios …

Bond collapse scenario. Mass psychology in global bond and currency markets drive the action.

One night, you go to bed thinking that the majority of market participants retain confidence in government debt, more than enough to prop up bond markets forever.

Then, the next morning you wake up to discover that the global confidence in the U.S. has been shattered by a singular event, and all hell is breaking loose.

Borrowing becomes next to impossible or prohibitively expensive. Banks fail. The financial system as we know it unravels. The economy plunges into another recession.

A video replay of 2008? No. Because this time governments do not have the will or the means to fight it.

Recession scenario. We wind up essentially falling off the same cliff as in the bond collapse scenario, but we get there via a different pathway.

This scenario begins where the first scenario ends — with a double-dip recession.

The recession guts government tax revenues, bloating the federal deficit even further.

And this is what leads to a government funding crisis, much as it has for many cities and states around the U.S.

Advertisement

Which Scenario Will it Be?

Still too soon to say. But we already have some evidence that BOTH are in process.

S&P’s warning on Monday, putting the U.S. government’s debt outlook on “negative” status, was just one more reminder of the unfolding debt crisis scenario.

Meanwhile, we also see abundant new signs of the double-dip recession scenario:

  • Inflation: Historically rapid rises in inflation have consistently triggered a recession, or at a minimum, severe bear markets or crashes. Since inflationary pressures are clearly on the rise, this indicator is a clear warning sign.
  • Severely rising crude oil prices have also been associated with recessions in the past. Increases of more than 150% in two years rarely happen. But when they do, a recession isn’t far off. So this indicator is currently also in “recession warning” mode.
  • The U.S. housing market has started to fall again. And the mortgage credit reset schedule seems to assure much more downward pressure during the next 12 to 15 months. This doesn’t bode well for the housing market itself, the banking sector, or the economy. Indeed, a sustainable economic recovery with an ongoing price slump in housing is highly improbable.
  • Then we have rising interest rates. In both the U.S. and in Europe the bond market is driving longer term rates up. And in emerging markets, central banks have long started with restrictive monetary measures, hiking interest rates and reserve requirements. Needless to say, rising interest rates can trigger bear markets and recessions.

These are four strong reasons for another economic downturn in the not-too-distant future.

With governments already massively over-indebted …

With inflation expectations on the rise, and …

With central banks starting to jack up interest rates …

I doubt the governments of Europe or the U.S. can pull another rabbit out of the hat. Soon the stock market will feel the pressure, and the economy would likely follow.

My recommendation: If you’re overloaded with stocks, use inverse ETFs like the ProShares UltraShort Financials ETF (symbol: SKF). They’re easy to buy. You can never lose more than you invest. And they’re a very good hedge.

Best wishes,

Claus

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Two Collapse Scenarios

Commodities, ETF, Mutual Fund, Uncategorized

A New Economic Paradigm

April 20th, 2011

Since the 1980s, a culture of debt has arisen in the United States. That change was the consequence of a misguided trade policy that gave rise to a current account deficit of unprecedented size. Between 1982 and 2008, the United States imported $7.4 trillion more than it exported. It financed the shortfall on credit. That credit transformed the structure of the US economy.

Every country’s balance of payments must balance. Thus, between 1982 and 2008, $7.4 trillion in foreign capital entered the United States to finance that deficit. That amount was considerably more than the entire amount of US government debt held by the public at the end of 2008, $5.8 trillion. As the money flowed in, it created a credit-fueled economic bubble—just as foreign capital inflows blew Latin America into an economic bubble in the 1970s and the Asian crisis countries into economic bubbles in the 1990s.

In the process, the structure of the US economy changed. The manufacturing sector was decimated when exposed to ultra-low-wage foreign competition, while the service sector came to dominate the economy and employment as credit-driven asset price inflation created the wealth that made many of those services profitable.

Consequently, over less than three decades, as the US trade deficit grew to previously unimaginable levels, the country’s economic growth model became one of credit-financed consumption that depended on ever-increasing amounts of credit each year to sustain it. In 2008, when the private sector could no longer bear the burden of so much debt, that economic paradigm collapsed.

That paradigm of debt-fueled consumption can never be resuscitated. The US economy is now on government-funded life support that cannot be paid for over the long run. The limited nature of government resources makes it inevitable that a new economic paradigm will emerge over the next five to ten years. The future of the United States—and the rest of the world—will be determined by the form that new paradigm takes.

Regards,

Richard Duncan
for The Daily Reckoning

P.S. For additional details, please see The Corruption of Capitalism, Chapter 10: “America Doesn’t Work.”

A New Economic Paradigm originally appeared in the Daily Reckoning. The Daily Reckoning recently featured articles on stagflation, best libertarian books, and QE2

.

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A New Economic Paradigm




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

How I Hedged Summer Gas Prices with ETFs

April 20th, 2011

gas-pump

With oil prices hovering over $100 per barrel again and the summer driving season approaching, Americans are rightfully fretting over what they’re going to be paying at the pump as tensions continue to flare in the Middle East and the nuclear accident continues to unfold in Japan.  Gas prices tend to rise annually during the summer driving season anyway, so it shouldn’t come as a surprise if prices continue to rise from the current levels of close to $4 in many states.

There are various ways to hedge your own energy costs which I penned a while back, but since I just did a transaction last week, I thought I’d share the actual details.  Of the various ways to hedge energy costs, I chose to focus directly on gasoline prices since there isn’t always a direct correlation to oil prices given the refining situation in the US.  Maybe it’s just me, but it always seems like gas prices are quick to rise when oil rises, but slow to fall when oil declines.  Additionally, if refining capacity were to become constrained again, gas prices could remain high while oil prices dropped.

Therefore, I used the best proxy for gas prices out there, the gas price ETF with ticker symbol UGA.  While one approach would be to buy shares of UGA, I chose to sell a put option.

Transaction:

  • I sold 2 UGA Jul 16 2011 50.0 Put Options for 1.90 each
  • UGA was trading at around $53 per share at the time of the trade and 52.45 as of Tuesday’s close
  • Income = $380 net of commissions

Outcomes

I know, this isn’t a big trade, this is more of a personal finance balancing act.  Our family only consumes a few hundred dollars in gas a month, so if gas prices spike, the $380 will help blunt the increase.  Should they decline, then I’m paying less out of pocket even though I may lose money on the trade.  In order to lose money on the trade actually, at expiry in July, UGA would have to be trading at (50-1.9 = 48.1) $48.1 per share or less.  So, if UGA closes at $49, which would mean gas prices declined almost 10% from today’s price, you’d get to keep the full premium.

This method is essentially what businesses and municipalities do on a larger scale though.  If you’re running a business that relies heavily on gas prices, you may want to hedge in this fashion (airlines do).  If your input costs are heavily dependent upon any other raw material, if you can hedge it, you may want to do so to smooth out operational risks.  There are numerous commodity ETFs to choose from to see where else you can hedge costs that impact you – food, coffee, oil, you name it!

Do You Hedge Anything?

ETF, OPTIONS

Expiring Monthly April 2011 Issue Recap

April 19th, 2011

The April edition of Expiring Monthly: The Option Traders Journal was published yesterday (in keeping with our practice of publishing on the Monday following options expiration) and is available for subscribers to download.

In this month’s issue I author the feature article, Exploring Put to Call Ratios. This is somewhat of a departure from the bulk of the content of the magazine, which continues to focus on options as trading vehicles. For many of us, however, options are not only highly flexible trading vehicles, but also the source of quite a few slices of data that can serve as indicators, most notably the VIX and put to call ratios.

Some of my favorite articles in the current issue of Expiring Monthly include a Mark Sebastian interview noted options guru Larry McMillan; a guest article on the CBOE PutWrite Index (PUT) from Jason Ungar; and a thought-provoking piece from Jared Woodard on three volatility plays for the European sovereign debt crisis.

Mark Sebastian also interviews Ping Zhou, a co-author of Trading on Corporate Earnings News and pens the monthly Follow That Trade column, which focuses on position management for an OEX butterfly. Mark Wolfinger continues to be a prolific contributor, speaking out on options brokers are putting limits on customer trading on the last trading day of the expiration cycle, debating the role of options as speculative vehicles and offering some thoughts to the new options trader around risk, timing and money.

All in all I am delighted by the quality of our fourteenth issue, thrilled by the positive feedback I have received from readers, and excited by some of the articles that are currently taking shape for the coming months.

In keeping with tradition, I have reproduced a copy of the Table of Contents for the April issue below for those who may be interested in learning more about the magazine. Thanks to all who have already subscribed. For those who are interested in subscription information and additional details about the magazine, you can find all that and more at (the newly redesigned) http://www.expiringmonthly.com/.

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How to Keep Your Silver Safe

April 19th, 2011

Today I want to give you a street-smart playbook on how to buy and sell physical silver. This is the real stuff, for those of you who like to sleep at night knowing you’ve got the shiny metal in your possession.

Without further ado, I give you the top 4 ways to hold your physical silver…

#No. 1 Safely Keep Your Silver Under Switzerland’s Largest Airport

Gold Switzerland gives you the ability to buy and hold silver while safely storing your personal bullion under Zurich airport in Switzerland. But don’t let the name fool you, these guys are experts in both gold and silver. In fact, their tagline says it best: “The safest way to buy and own gold and silver.”

With an initial purchase of at least 6,000 ounces, you can buy silver and have Gold Switzerland keep an eye on it. Here’s what their 1-2% management fee covers:

  • Vault storage of the silver/gold
  • Insurance of the silver/gold
  • All administrative matters in connection with the buying and storage of the silver/gold
  • Early warning alerts and pre-launch reports on the world economy and precious metals
  • Quarterly statement of the investor’s silver/gold holdings
  • Private investment advice and consultation relating to your investment

Everything is clear-cut with this dealer. You can purchase silver at competitive rates and store it in possibly the safest geographic and political region in the world. Plus, if you’d like to have your personal silver transferred closer to home, Gold Switzerland can organize a secure transport of your bullion.

It’s a one-stop shop for holding silver.

#No. 2 Buy and Sell Coins and Bars with EverBank

EverBank has some of the most innovative accounts the banking world has to offer, and their physical silver options maintain the same high standard.

In an EverBank Metals Select Allocated Account you can buy and sell silver bars and coins. So you can even hold market-friendly, and potentially valuable, coins like American Silver Eagles.

In an allocated account you’ll receive monthly statements describing your personal holdings. Plus, if you’d ever want to take physical delivery of your bars or coins, EverBank offers delivery services.

A key factor to this allocated account is the low opening balance, a mere $7,500. Compared to Gold Switzerland’s 6,000-ounce buy, you’re looking at quite a difference. So this may be the poor man’s way to hold the poor man’s gold.

The last factor that makes EverBank’s offering even more special is that you can hold your silver in an IRA. This is one simple way to help protect and save your retirement nest egg.

Add it all up and EverBank has a very strong offering. You have the option of holding coins instead of plain bullion, you can have your silver delivered AND they offer the IRA option – all for a low initial outlay!

#No. 3 Local Storage in Your Bank’s Safety Deposit Box

The third option I’m sure you’ve heard: simply storing your bullion in a safety deposit box at a bank.

This option has some distinct pros and cons, so let’s take a look….

First, unlike the other two options I’ve mentioned, a local safety deposit box is, well, local. If proximity is a main factor for you in storing your silver then a safety deposit box may be the key.

Heck, I know that I’d like to look at my silver from time to time – maybe even bite a coin or two.

With a safety deposit box you can do that. You can check on your silver with a short trip to your bank – so instead of a monthly statement, you can simply stop in and take a gander. Plus, if you ever have an emergency where you’d need to get a hold of your bullion, it’s as simple as a trip to the grocery store.

Clearly, safety deposit boxes have a few distinct advantages over other remote storage options, but there are also some drawbacks – the main one being that the bank will not insure your physical bullion. You’ll need to have separate insurance on it, which could be pricey.

#No. 4 Making the Markets Work (And Hold Silver) for You

The final option that I’ll share with you comes directly from the commodities market.

You’ve probably heard people say “take delivery” of your silver. This expression comes straight from the commodities markets, which are now run by the Chicago Mercantile Exchange (CME) Group.

The same commodities markets that offer gold and crude oil also offer silver – but this doesn’t have to all be “paper trading.” Instead, you could take delivery of the silver you purchase.

As I mentioned above, one silver bar is 1,000 troy ounces, and the standard CME silver futures contract controls five bars. (If you’d like to see the specs for yourself click here.)

Buying and taking delivery of CME futures contract has several advantages.

First, the contracts are extremely liquid, so you can rest assured that you’re getting a fair price on the silver you’re buying. And second they have storage options if you want to take physical delivery.

For example: you can go directly to the commodities market and buy a silver futures contract for, say, December 2011 (currently trading around $37.70 – a small premium to the current silver price). After purchasing the contract, which by the way would run you $188,500, you can take delivery in December 2011 and have a depository from the CME hold the bullion for you. This option comes with a small storage fee, ranging from $35-$42.50 a month, per contract.

Your personal silver can be held at a few different locations, two of which are HBSC Bank in New York and Delaware Depository Service Company in Delaware. Your bars have serial numbers and can easily be resold – incase you want to hold for a limited period of time.

Another benefit, depending on how you look at it, is that you can initially purchase your silver on margin. So instead of putting up the $200k to purchase your December silver you can put up closer to $10k now, and pay the rest come delivery. Think of it as “lay away” for metals!

Truly, the CME contract and storage may be the lowest percentage cost option for you. But, remember, it requires you to buy 5,000 ounces at a time – a $188,000 investment. I guess it all depends how much of the shiny stuff you want to buy.

So there you have it, four of the best ways to purchase physical silver without the risk of holding it at your house.

Regards,

Matt Insley,
for The Daily Reckoning

How to Keep Your Silver Safe originally appeared in the Daily Reckoning. The Daily Reckoning recently featured articles on stagflation, best libertarian books, and QE2

.

Read more here:
How to Keep Your Silver Safe




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Commodities, OPTIONS, Uncategorized

Who Will Win Latin American Communications?

April 19th, 2011

Rudy Martin

The telecom and media sectors in Latin America are in a titanic power struggle — deserving of its own soap opera series.

The end prize here is an estimated 400 million or more Latin Americans using computers, smart phones, tablet devices and similar hardware over the next five years. The key players are a pair of outsized billionaire Mexican personalities and the public companies they steer.

America Movil SAB de CV (NYSE:AMX), the Mexican-based wireless telecom behemoth is controlled by Carlos Slim. It’s the leading provider of communication services in Latin America and one of the five largest in the world in terms of equity subscribers and market capitalization. Slim’s biggest advantage is having a near monopoly with 70% of the Mexican wireless market and substantial access to capital.

In the other corner is Emilio Azcarraga, who owns Grupo Televisa SA (NYSE:TV) which is best known as the premier television broadcaster. He wants to offer a suite of voice, broadband and television services and is already developing plans to do so.

Grupo Televisa recently acquired a 50% stake in the wireless services provider, Grupo Iusacell for $1.6 billion. The acquisition will enable Grupo Televisa to promote its content to the Grupo Iusacell subscribers (4% of the Mexican mobile market). Grupo Televisa also recently bought the 41.7% stake that it does not currently own in cable television company, Cablemas for MXN 4.7 billion (US$397 million). These deals underscore the urgency to build critical mass for competing effectively against a market dominating rival such as America Movil.

But it’s not just a business for two.

Playing the role of antagonists are the Mexican regulators. They denied America Movil’s entry into the television business on its home turf in Mexico, after it outlined aggressive plans to double its pay television customer base to 22 million by 2013. Mexico wants to see more competition to keep costs down.

But don’t count anyone out yet. Given the limited penetration for pay television in lucrative Latin American markets, such as a mere 10% for Brazil, there is enough business to go around for these and more vendors in this market.

So, where are other opportunities in this growing area other than these mega television and telecommunications companies?

One company that has been quietly going about its business is Argentina-based e-commerce portal, MercadoLibre, Inc. (NASDAQ:MELI). I feel that MercadoLibre should be a natural beneficiary of the explosive growth anticipated in the Latin American online advertising market (expected to be $4.2 billion in 2014 from $2 billion in 2010). Plus, the company has been able to leverage its strong brand and gain acceptance in markets outside its domestic shores such as Brazil, Mexico and Venezuela. But there are risks in competing directly with the “Titans” for Latin American entertainment dollars.

The risks in broadband include gigantic capital commitments, unanticipated technological developments and changing consumer preferences that can result in quick obsolescence for major industry initiatives. Hopefully these are more than offset by the rewards of capturing the monthly entertainment, communications and information fees from hundreds of millions of new clients.

An interesting sidebar in this general area comes from recent information from the 2010 U.S. census that Hispanic-Americans accounted primarily for the growth in the nation’s population over the past decade. At the end of last year, the Hispanic population constituted 50 million people (16% of the total population) in the United States.

Now, that proportion is set to balloon to an incredible 29% by 2050, a huge market opportunity in my view.

Other U.S.-based broadcasters agree, such as the NBC Universal division of Comcast Corp. (NASDAQ:CMCSK) and the Fox unit of News Corp. (NASDAQ:NWSA). They have moved quickly to attract eyeballs by launching channels that specifically produce content for the Hispanic population.

Consider what would happen if you could combine an attractive Latin American market with the growing U.S. Hispanic market. That’s exactly the dream behind the 2010 Televisa and Univision deal.

Finally, just imagine what happens when MercadoLibre one day announces it can and will stream videos and movies via the internet. Or that it has a market-dominating online game in Spanish or Portuguese like QuePasa (QPSA). Stay tuned.

Rudy Martin, editor of Emerging Market Winners, is widely recognized as an authority on stock and ETF investing. With more than 25 years of investing experience, Rudy started his investment career by co-managing a $2 billion private equity portfolio for Transamerica. He also served as an analyst for DeanWitter and Fidelity Investments, and research director of a quantitative research firm that is now part of TheStreet.com. Recently he has been providing his investment ideas directly to a select list of global hedge funds as Managing Director of Latin Capital Management, an institutional money management firm with more than $180 million in assets under management. For more information on Emerging Market Winners, click here.

Read more here:
Who Will Win Latin American Communications?

Commodities, ETF, Mutual Fund, Uncategorized

Discovering Gold’s Utility Behind America’s Triple-A Façade

April 19th, 2011

Yesterday’s big news wasn’t really news at all. Standard and Poor’s finally found the nerve to state openly what the rest of the world already knew: the Emperor is naked.

The esteemed ratings service announced that America risks losing its triple-A credit rating. “We believe,” said S&P, “there is at least a one-in-three likelihood that we could lower our long-term rating on the US within two years.”

Officially, America remains the world’s preeminent triple-A credit. Unofficially, America’s triple-A credit is a financial Potemkin Village. It is all façade. The US lost its triple-A credentials years ago, but the rating keeps hanging around – a function of tradition, decorum, politics and complacency.

Behind America’s triple-A façade, its creditworthiness steadily deteriorates.

The budget surpluses of the second Clinton Administration yielded to the $300 billion deficits of the Bush Administration, which gave way to the mind-blowing $1 trillion deficits of the Obama Administration. In the process, America has amassed debts that approach 100% of GDP, while also piling up future obligations that would amount to about 500% of GDP. Both of these debt numbers are only a rounding error away from Greece’s debt-to-GDP levels.

Greece, as you may recall, is the non-triple-A rated country on the verge of declaring bankruptcy. S&P considers Greece a “junk” credit – branding the debt-strapped nation with a BB- rating. Greece, with a debt-to-GDP of about 150%, clearly deserves its BB- rating. But that’s why the US, with debt-to-GDP approaching 100%, does not deserve its triple-A rating.

Why are the heavily indebted Greeks a junk credit while the heavily indebted Americans remain a triple-A credit?

Hard to say exactly. But one very important difference comes to mind. The Greeks cannot print the euros they need to repay their debts, but Americans can, and do, print the dollars they need to repay their debts. A second important difference also comes to mind: Standard & Poor’s is not a Greek company; it is an American one.

As such, S&P’s announcement yesterday began patriotically:

“Our ratings on the US rest on its high-income, highly diversified, and flexible economy, backed by a strong track record of prudent and credible monetary policy. The ratings also reflect our view of the unique advantages stemming from the dollar’s preeminent place among world currencies.”

After saluting the stars and stripes, however, S&P continued:

“Although we believe these strengths currently outweigh what we consider to be the US’s meaningful economic and fiscal risks and large external debtor position, we now believe that they might not fully offset the credit risks over the next two years at the ‘AAA’ level.”

Translation: America is broke.

But you don’t have to rely on S&P’s judgment to realize America’s finances are on a slippery slope. The precious metals markets have been rendering this verdict for several years already. Gold touched another new all-time high yesterday. The dollar’s feeble price trajectory has also been telling the world that America’s finances are broken.

While the dollar remains the world’s reserve currency, it is not acting like it. The dollar’s value has been dropping against just about everything. Really. Everything. Would you believe that the top-performing currency of 2011 is the Paraguayan Guarani? And that’s not all; the next best performing currencies are the Mauritian Rupee, Hungarian Florint, Czech Koruna, Russian Ruble and Colombian Peso.

This is not a joke. Not only are these currencies atop the leader board for 2011, but each of them has also appreciated at least 25% against the US dollar during the last two years. The Colombian peso is up 44%!

To be sure, the Colombian Peso is not about to become the world’s reserve currency. But in a world in which the actual reserve currency has become as reliable as Scottish sunshine, even the Paraguayan Guarani becomes a plausible store of value. Nothing against the Guarani, but if the dollar’s descent gathers steam, we’d rather be holding gold and silver.

In an earlier era, when a dollar bill still commanded respect around the globe, Warren Buffett scorned gold as an investment of “no utility.”

“Gold,” he said, “gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

The Martians are not scratching their heads any longer. Gold’s utility becomes evident every time a government becomes profligate. Therefore, now that gold is rising briskly in value – and Berkshire Hathaway’s stock isn’t – deciding where to bury one’s gold is becoming an increasingly important question.

Eric Fry
for The Daily Reckoning

Discovering Gold’s Utility Behind America’s Triple-A Façade originally appeared in the Daily Reckoning. The Daily Reckoning recently featured articles on stagflation, best libertarian books, and QE2

.

Read more here:
Discovering Gold’s Utility Behind America’s Triple-A Façade




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

4 Simple Moves I’m Making Before the Fed’s Next Big Decision

April 19th, 2011

4 Simple Moves I'm Making Before the Fed's Next Big Decision

The Federal Reserve is normally between a rock and a hard place. That's the nature of its job.

On one hand, it has to keep inflation in check and prevent the economy from overheating. On the other hand, it can't let the economy cool down to the extent that unemployment gets to be a problem. But the Fed now finds itself in an even tighter squeeze than normal.

Signs point to a stronger U.S. economy. March retail sales rose for the ninth consecutive month — to an all-time high. The economy has added jobs every month for the past six months. Manufacturing activity has expanded for 20 straight months.

The Fed gets some credit for the improvement in the economy. It has kept interest rates near zero. It also instituted a policy of quantitative easing, buying U.S. Treasuries to ensure rates stay low.

But at some point this cheap money party has to end. The question is: When is the Fed going to take away the punch bowl? And what do investors do then?

Commodity prices have been steadily rising. Inflation has begun to be a problem for many of the world's economies. And the United States is now one of the only countries that hasn't raised interest rates since the financial crisis.

Even the European Central Bank (ECB), which has some European Union members still struggling with debt problems and sluggish economies, raised its main interest rate a couple of weeks ago.

Uncategorized

Ten Year Note Yield and the Yield Curve April 19

April 19th, 2011

With the recent talk of US debt, traders have been discussing Treasury Yields and the potential for skyrocketing yields if the AAA Rating of the United States should ever be reduced a rank.

Nevertheless, let’s take an updated look at the current 10-Year Treasury Note Yield and then pull the perspective back to what the current “Yield Curve” says about the state of affairs at this moment.

First, the 10-Year Treasury Note Yield Chart:

First things first, the 10-Year Treasury Yield is strongly positively correlated with US Equities (stocks) in terms of chart structure (shape) and index movement.  That’s the first thing to keep in mind.

Second, Yields – like stocks – have been in a sideways “holding” or consolidation pattern starting in December, with current boundaries at 3.60% and 3.30%.

This corresponds with the critical short-term boundaries in the S&P 500 of 1,340 and 1,300 – again, similar in structure.

Also like stocks, Yields peaked so far in February with a clear negative momentum divergence ahead of a sharp decline (the “Japan situation”), which takes us currently back to the 3.60% area as resistance has taken yield back down to the 3.30% support line (just like our recent stock pullback to 1,300).

For the moment, “All is Well” in the Yield/Stock Relationship with no surprises.

The monkey wrench in the process that would strongly disrupt this relationship would happen if serious fears of actual US defaulting on debt obligations, which would likely send both stocks and bond prices plunging (and thus Bond/Note Yields surging).

Despite the negative news from the S&P agency, a surge UP in bond yields yesterday or today has NOT happened yet – despite the early morning volatility on Monday.

So as long as yields and stocks continue to move together – and by proxy stocks and bond prices move in opposing directions – all is well.

The big deal will be how the US Congress compromises/sacrifices on extending the debt ceiling in late May or June, but that’s a future bridge to cross when the debate actually begins.

Carefully watch the positive relationship between Treasury Yields and Stock Prices for any major disruption.

Moving on, here is the current “Steep” Yield Curve as viewed from StockCharts.com:

Two quick facts:

1.  Short-Term Yields are significantly below Long-Term Yields which tends to bode well for a continuing economic recovery.

2.  Yields of all maturities have declined slightly over the last month.

The green shadow lines reflect where yields WERE over the last few weeks and that they have all moved slightly down.  The rising black line is the current “Yield Curve” and is deemed officially “Steep.”

The Yield Curve tends to “Invert” at stock market peaks just ahead of recessions – meaning short-term yields are equal to, or greater than, long-term yields (in a tight monetary policy).

So for the meantime, the relationship between stocks and bond/note yield remains strongly positive, and the Yield Curve remains clearly “steep.”

It takes many months to change the Yield Curve, and the Federal Reserve has signaled no interest whatsoever in raising short-term rates any time soon, so expect the Yield Curve to remain the same unless serious fears of a US Default take-hold across the markets.

Otherwise, keep watching the positive relationship (what happens to one happens to the other) in the Stock Market and Treasury Yields for any sign of breaking.

Absent any significant change in the relationship (or Yield Curve), things should continue ‘as normal.’

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available!

Read more here:
Ten Year Note Yield and the Yield Curve April 19

Uncategorized

Ten Year Note Yield and the Yield Curve April 19

April 19th, 2011

With the recent talk of US debt, traders have been discussing Treasury Yields and the potential for skyrocketing yields if the AAA Rating of the United States should ever be reduced a rank.

Nevertheless, let’s take an updated look at the current 10-Year Treasury Note Yield and then pull the perspective back to what the current “Yield Curve” says about the state of affairs at this moment.

First, the 10-Year Treasury Note Yield Chart:

First things first, the 10-Year Treasury Yield is strongly positively correlated with US Equities (stocks) in terms of chart structure (shape) and index movement.  That’s the first thing to keep in mind.

Second, Yields – like stocks – have been in a sideways “holding” or consolidation pattern starting in December, with current boundaries at 3.60% and 3.30%.

This corresponds with the critical short-term boundaries in the S&P 500 of 1,340 and 1,300 – again, similar in structure.

Also like stocks, Yields peaked so far in February with a clear negative momentum divergence ahead of a sharp decline (the “Japan situation”), which takes us currently back to the 3.60% area as resistance has taken yield back down to the 3.30% support line (just like our recent stock pullback to 1,300).

For the moment, “All is Well” in the Yield/Stock Relationship with no surprises.

The monkey wrench in the process that would strongly disrupt this relationship would happen if serious fears of actual US defaulting on debt obligations, which would likely send both stocks and bond prices plunging (and thus Bond/Note Yields surging).

Despite the negative news from the S&P agency, a surge UP in bond yields yesterday or today has NOT happened yet – despite the early morning volatility on Monday.

So as long as yields and stocks continue to move together – and by proxy stocks and bond prices move in opposing directions – all is well.

The big deal will be how the US Congress compromises/sacrifices on extending the debt ceiling in late May or June, but that’s a future bridge to cross when the debate actually begins.

Carefully watch the positive relationship between Treasury Yields and Stock Prices for any major disruption.

Moving on, here is the current “Steep” Yield Curve as viewed from StockCharts.com:

Two quick facts:

1.  Short-Term Yields are significantly below Long-Term Yields which tends to bode well for a continuing economic recovery.

2.  Yields of all maturities have declined slightly over the last month.

The green shadow lines reflect where yields WERE over the last few weeks and that they have all moved slightly down.  The rising black line is the current “Yield Curve” and is deemed officially “Steep.”

The Yield Curve tends to “Invert” at stock market peaks just ahead of recessions – meaning short-term yields are equal to, or greater than, long-term yields (in a tight monetary policy).

So for the meantime, the relationship between stocks and bond/note yield remains strongly positive, and the Yield Curve remains clearly “steep.”

It takes many months to change the Yield Curve, and the Federal Reserve has signaled no interest whatsoever in raising short-term rates any time soon, so expect the Yield Curve to remain the same unless serious fears of a US Default take-hold across the markets.

Otherwise, keep watching the positive relationship (what happens to one happens to the other) in the Stock Market and Treasury Yields for any sign of breaking.

Absent any significant change in the relationship (or Yield Curve), things should continue ‘as normal.’

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available!

Read more here:
Ten Year Note Yield and the Yield Curve April 19

Uncategorized

Gold and Silver Rally on S&P Announcement

April 19th, 2011

Well… There was BIG news yesterday (sort of) from Standard & Poor’s (S&P). The risk assets sold off, initially after the S&P announcement, but rallied late in the day. And gold and silver thought the announcement was like manna from heaven for their values… So, what was this announcement? Oh, come on, unless you’re like that guy in the GEICO commercial who climbs out from under a rock, you heard it…

Yes… S&P finally found the intestinal fortitude to address the US deficit problem, and threw a cat among the pigeons when they cut their outlook on the US to negative, warning that the US fiscal profile may become “meaningfully weaker” than that of other major countries if policymakers can’t tame the budget deficit and increasing the likelihood of a potential downgrade from its triple-A rating.

Treasuries sold off on the news, along with stocks and currencies… At one point in the day, I asked the question… “Where is all the money flowing?” Usually when you see the risk aversion trade come on the scene, Treasuries and the dollar, yen (JPY) and franc (CHF) all rally… But not yesterday… The knee-jerk reaction was to sell everything… Ahhh, but not everything… Gold and silver were the destinations of many a dollar yesterday…

But then as the day went along, everyone decided that the selling was too harsh, for S&P didn’t exactly cut the AAA rating, and most likely they won’t… Not because it shouldn’t be cut, but because I just don’t see any rating agency doing that… Can you hear the call to the rating agency that would cut the US’s AAA rating? Hello? Yes, this the White House calling, and we want you to know that your rating agency has been shut down by the White House… But why? Well, we’re not sure why you’re being shut down, but we’re sure we have a Czar to deal with that!

Seriously though… One has to wonder, why now? Ahhh, grasshopper… Aren’t we in the middle of a debate on the deficit? Aren’t we less than a month away from reaching the current debt limit? Could this be a political statement by S&P? Don’t know, but, from the timing of this, it sure smells like one… Oh, and again, let me repeat, the AAA rating was not cut! Just the outlook was downgraded to “negative”… And we carry on my wayward son!

So, like I said above… Gold and silver were the destinations of many a dollar yesterday… And why not? Isn’t this the type of stuff that, for years, I’ve told you would happen, and that gold and silver would be the thing to have in your investment portfolio to protect your wealth? Well, gold is within spittin’ distance of $1,500, and silver traded past $43! The fun is just about to get started, folks, with all the debate on the debt ceiling being lifted… If I were king… I would say, no debt limit raising… Bring the budget deficit to a surplus or at least balanced, and you won’t have to raise the debt limit… Then, let’s go down the roster of government agencies, and see which ones we “really don’t need”… Of course, the defense bill is quite high, but you can’t go cutting it, when you’re fighting three wars… Hopefully, we’re ready to turn those countries over to the people, and get out military out of there!

But, until we balance the budget, all we’ll do is continue to add to the national debt… Do you know what they want to raise the limit to? $20 trillion… Let’s see… In 2008 the national debt was, $9,669,000,000 and today, three years later, it is $14,307,992,000… That’s an increase of $4,639,000,000 in three short years… Which means that if we don’t do something to stop this debt spiral, then in a very short time, we’ll be debating over whether to raise the debt ceiling limit from $20 trillion!!!

OK… I’m beginning to get a rash talking about this debt stuff, so I’m going to move along now… OK… Nothing like the old kiss of death from Chuck, right? I mean, yesterday, I tell you about the strong move the New Zealand dollar/kiwi (NZD) had made in the past month… And then New Zealand posts a really weak inflation report, and kiwi gets sold off by more than 1-cent! UGH! Now, a weak inflation report is a good thing for a country, right? But, when the outlook is for higher inflation so that interest rates can get back to rising, and traders make bets to this scenario, and it all falls through, that’s not a good thing for kiwi…

Hey! Did you hear that the head of China’s Central Bank, Zhou, said that the $3 trillion in reserves “have exceeded reasonable levels and the management and diversification of the holdings should be improved.” No? Didn’t hear that? Well, he said it… And it all sounds like central bank parlance for: We own too many dollars, and need to find a way to get rid of them!”

Remember a couple of years ago, when the “global imbalances” were pointed to as one of the reasons for the problems in the markets? Well, guess what? They’re BAAACCKK! And, this time, let’s hope that China realizes what their role here is, and that is to strike the right balance, with their policies, and to diversify… Again, if Chuck ran their finances, I would be ditching those dollars for gold and silver… Especially now that S&P has downgraded the US debt outlook to negative!

The euro (EUR) is rallying while I type my fat fingers to the bone here this morning… So let’s look at what’s going on today in the Eurozone… Greece sold some T-Bills this morning, at a decent yield, but they were only 3-month bills… Dag nab it… When is Europe going to restructure the Greek debt once and for all? Rather than have these problems continue to come back and bite them in the rear every time it looks like the Eurozone is ready to move forward… Again, I’m feeling quite regal this morning, and once again, if Chuck were king… Look, most of the Greek debt is either held by the ECB or Greek Banks… So take the hit on a maturity extension and get it over with! Greece has this maturity schedule: 2011: 39.7 billion, 2012: 45.2 billion, 2013: 40.6 billion…

Hey! Even the Chinese renminbi (CNY) lost ground to the dollar yesterday, after the S&P announcement! But, don’t read this as some reason to sell renminbi! Just yesterday, a Chinese Central Bank advisor got the markets all lathered up when the advisor said that, “China will not rule out a one-off revaluation of the currency”… I’ve said this quite a few times before, so for those of you who want to be reminded or are new to class… I really don’t see the Chinese going for some “home run” revaluation… I look back to July of 2005, when the Chinese dropped the peg to the dollar, and revalued the renminbi about 2%… I look for that same kind of revalue, if… The Chinese feel that the appreciation of the renminbi is going too slow…

Well… the data cupboard is pretty thin here in the US, today… But what we do get to see will be important, and that is March Housing Starts, which is forecast to improve on February’s very ugly print of -22%… March Housing Starts are forecast to rise 8.6%… I have to wonder what the building is all about… An excess of inventory is the main problem for home prices now… And the foreclosures continue to mount…

Then there was this… Well, remember yesterday, I told you about the BRICS meeting? Well, here’s another piece of information from the BRICS meeting, that should have been all over the TV, radio, newspaper, etc. but wasn’t… I think when you read this, you’ll know why…

“Our designated banks have signed a framework agreement on financial cooperation which envisages grant of credit in local currencies and cooperation in capital markets and other financial services,” Manmohan Singh told reporters at a news conference with other BRICS leaders. Thus the death certificate for the USD has been signed. It will take some time for Rigor Mortis to set in.

Look, basically, the BRICS are going to be trading amongst themselves, and exchanging currencies in the trade, and removing dollars from the equation… That’s a pretty grim statement from them, eh?

To recap… S&P threw a cat among the pigeons yesterday when they downgraded the US credit rating to a negative outlook… They did not touch the US’s AAA rating…and probably won’t… This announcement sent bonds, stocks, and currencies to the woodshed for most of the day in a knee-jerk reaction to the announcement. Gold and silver took the news as manna from heaven, and rallied to near $1,500 and $43 for gold and silver respectively.

Chuck Butler
for The Daily Reckoning

Gold and Silver Rally on S&P Announcement originally appeared in the Daily Reckoning. The Daily Reckoning recently featured articles on stagflation, best libertarian books, and QE2

.

Read more here:
Gold and Silver Rally on S&P Announcement




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Uncategorized

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