Filed under: Major Movement , Competitive Strategy , Barrick Gold (ABX) , Commodities , Federal Reserve Back in the late 1970s, the Hunt brothers from Texas tried to corner the silver market . That drove prices to $48 an ounce. Now, 31 years later, silver is shooting higher again. The March silver futures contract closed at $32.296 per ounce , up 72 cents. Since gold is expensive, investors are turning to silver to hedge against inflation. Many fear that the Federal Reserve will not be able to control the spike in commodity prices. The Fed is buying $600 billion of treasuries and keeping interest rates near zero. Continue reading Silver Near a 31-Year High Silver Near a 31-Year High originally appeared on BloggingStocks on Sat, 19 Feb 2011 12:50:00 EST. Please see our terms for use of feeds . Permalink | Email this | Comments
Archive for January, 2011
Buying Blood in the Streets: A How-To Guide
There’s no cash in the ATMs, there’s something like 5,000 prisoners roaming the streets and there’s no security. — May Sadek, man on the street, Cairo In my financial trading service Crisis & Opportunity , I seek maximum returns by buying stocks when fear is the highest, and selling them when the panic dissipates. It might sound crude and insensitive to buy stocks in places where people are literally dying, but it works; and by supporting the stock market when everyone is fleeing, you are reducing the panic — which is a positive for financial stability. Baron Von Rothschild is credited with saying, “The time to buy is when blood is running in the streets.” He’s been re-quoted by everyone from Mobius to Rockefeller. But through extensive research, I uncovered this bit from The New York Times circa 1931… It has been reported during the aftermath of the Franco-Prussian War, when the French had been defeated and the mob was looting Paris, a friend of his asked, “What are you going to do to protect your interests in this dreadful hour?” The Baron said to him, “Can you keep a secret?” He replied, “Yes.” The Baron said, “Well, if the truth must be told, I am protecting myself by buying real estate.” His friend responded, “Do you mean to say you are buying real estate with the gutters of Paris running with blood and the city in the hands of a mob?” Rothschild said, “Yes, my friend, I mean that very thing, and that is the only time, when the gutters are running with blood, that you can buy real estate at 50 cents on the dollar.” Istanbul to Constantinople Buying blood in the streets has become a hoary Wall Street platitude because it is extremely profitable. The thing about revolutions is that the countries don’t disappear… Sure, governments come and go, the names and lines on maps change and are redrawn — but the people and resources remain. I can name a number of countries off the top of my head that had post-revolution stock market booms: South Korea, Indonesia, Malaysia, Sri Lanka, Russia, South Africa… the list goes on. When you invest in foreign markets that are in crisis, you get a bounce-back on both the equity side and the currency side. Here is an example: In 1998, the people of Indonesia took to the streets and threw off long-term dictator Suharto. The market crashed, and the currency went from 350 to the dollar to over 15,000 before it stopped trading altogether. One of the Indonesian blue chips — P.T. Telecom — fell from the low $30s to $1.50. The currency now trades at 9,047 rupiah to the dollar. If you put $10,000 in TLK at $1.50 and held it to the top, you would have made $366,000 on the share price — plus another 30% or so on the currency…
Why Paul Krugman Is Wrong on the Austrians
The Austrians on Capital In contrast to mainstream macro models, which either do not possess capital at all or at best denote it as a homogenous stock of size “K,” Austrian theory explicitly treats the capital structure of the economy as a complex assortment of different tools, equipment, machinery, inventories, and other goods in process. Much of the Austrian perspective is dependent on this rich view of the economy’s capital structure, and mainstream economists miss out on many of the Austrian insights when they make the “convenient” assumption that the economy has one good. (Krugman will be glad to know that yes, I can spell all this out in a formal model — and one that referee Paul Samuelson grudgingly signed off on.) Krugman and other Keynesians stress the primacy of demand: they keep pointing out that the owner of an electronics store, say, won’t have the incentive to hire more workers, and buy more inventory, if he doesn’t expect consumers will show up with money to spend on new TVs or laptops. But Austrians point out that demand per se is hardly the whole story: Regardless of how many green pieces of paper the customers have, or how much credit the store can get from the bank, it will be physically impossible for the electronics store to fill the shelves with new TVs and laptops unless the manufacturers of those items have already produced them. And in turn, the manufacturers can’t magically create TVs and laptops merely because the demand for their products picks up; they rely on other sectors in the economy having done the prior preparation as well, such as mining the necessary metals, assembling the proper amount of tractor trailers needed to ship the goods from the factory, and so on. These observations may strike some as trivial, not worthy of the consideration of serious economists. But that’s only because normally, a market economy “spontaneously” solves this tremendous coordination problem through prices and the corresponding signals of profit and loss. If someone had to centrally plan an entire economy from scratch, there would be all sorts of bottlenecks and waste — as actual experience has shown. Without the guidance of market prices, we wouldn’t observe a smoothly functioning economy, where natural resources move down the chain of production — from mining to processing to manufacturing to wholesale to retail — as neatly depicted in macro textbooks. Instead, we would see a chaotic muddle where the various interlocking processes didn’t dovetail. There would be too many hammers and not enough nails, too much perishable food and not enough refrigerated railroad cars to deliver it, and so on. The Austrians on Interest When it comes to explaining the coordinating function of market prices, Austrians assign a very important role to interest rates, for they steer …
AT&T’s Estimates Cut at Morgan Stanley (T)
Telecom giant AT&T Inc. ( T ) on Monday saw its earnings estimates lowered by analysts at Morgan Stanley. The firm said it cut its estimates for T 2012, citing negative effects of higher smartphone subsidies. Wireless carriers often pony up substantial sums to subsidize the cost of expensive smartphones in order to lure in customers. Still, Morgan Stanley left its “Overweight” rating and $32 price target on T unchanged. That target implies a 12% upside to the stock’s Friday closing price of $27.49. AT&T shares were mostly flat in premarket trading Monday. The Bottom Line We have been recommending shares of AT&T ( T ) since Mar.12, 2009, when the stock was trading at $23.35. The company has a 6.26% dividend yield, based on Friday’s closing stock price of $27.49. AT&T Inc. ( T ) is a “Recommended” dividend stock, holding a Dividend.com DARS™ Rating of 3.5 out of 5 stars. Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .
Queensland bracing for monster tropical cyclone Yasi
Flood ravaged Queensland is preparing for a monstrous South Pacific Ocean Tropical Cyclone Yasi. Forecast to reach Category 4+ strength on the familiar Saffir-Simpson scale, there really is nothing inhibiting this storm from explosively intensifying and reaching 135 knots+ in … Continue reading →
