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
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What’s Really Wrong With America
Here’s a wonderful video I came across visiting Washington’s Blog this morning. It’s a great read if you haven’t discovered it already. As the video reminds us…. “The Funders” are not “The People”. You have to act to get it back. There is a reason everything is so screwed up. The further you stray from our beginnings the worse everything becomes. Related Article: NEWSFLASH: The Meltdown Didn’t Have to Happen Bill Black: Fire Holder, Geithner and Bernanke The No Spin Zone: Bill Black Calls BS Epic Fail: Brooksley Born Demolishes Alan Greenspan Matt Taibbi: Goldman is “Re-creating the conditions for another crash” To learn more about Wealth Daily click here Advertisement 21st Century Medicine … Is exactly what you thought it would be. An AIDS vaccine has been tested. New organs are being grown. Limbs are being created from scratch. But humanity isn’t the sole motivator… Serious cash stands to be made by curing diseases. One small biotech firm — featured on 60 Minutes — is on the path to even wilder medical breakthroughs. To see what I mean and learn about this company, watch this brief presentation . What’s Really Wrong With America originally appeared in Wealth Daily . Wealth Daily is a free daily newsletter featuring contrarian investment insights and commentary.
Gallup: The Unemployment Rate is 10%
Jobs…jobs…jobs… I’m beginning to sound like a broken record but it’s true: This economy is going nowhere unless we start creating some jobs. As for the recent drop in the unemployment rate to 9.0%, I’m not buying it since it comes from Uncle Sam. The real figure is likely closer to what Gallup is reporting today… From by Dennis Jacobe entitled: Gallup Finds U.S. Unemployment Up to 10% in Mid-February “Unemployment, as measured by Gallup without seasonal adjustment, hit 10.0% in mid-February — up from 9.8% at the end of January. Underemployment, in which Gallup combines part-time workers wanting full-time work with the U.S. unemployment rate, surged in mid-February to 19.6% — mostly as a result of the sharp increase in those working part time but wanting full-time work. Underemployment now stands at basically the same place as it did a year ago (19.8%). The unemployment rate in mid-February is 0.8 percentage points lower than it was at this time a year ago, compared with a 1.1-point improvement at the end of January. This suggests that jobs are less available now than they were in January. More troubling, however, is the surge in underemployment. On this broader basis, current job conditions are barely improved from what they were at this time last year. Essentially, what has happened over the past year is that some people who were unemployed got part-time jobs but are still looking for full-time work. This is not much to show for a year in which many macro-economic indicators showed improvement. This is likely why Gallup’s self-reported spending
The Incredible Shrinking Middle Class
Here’s a copy of the chart of the day.As you might have suspected, the rich get richer while everyone else basically gets to tread water. The article that follows once again drives home a point I have been harping on for years now: The Middle Class in a state of terminal decline. And when it vanishes for good, America will be a very different place. If you ask me, in a lot of ways it already is…. From CNNMONEY by Annalyn Censky entitled: How the middle class became the underclass “ Are you better off than your parents? Probably not if you’re in the middle class. Incomes for 90% of Americans have been stuck in neutral, and it’s not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed. In 1988, the income of an average American taxpayer was $33,400, adjusted for inflation. Fast forward 20 years, and not much had changed: The average income was still just $33,000 in 2008, according to IRS data. Experts point to some of the usual suspects — like technology and globalization — to explain the widening gap between the haves and have-nots. One major pull on the working man was the decline of unions and other labor protections, said Bill Rodgers, a former chief economist for the Labor Department, now a professor at Rutgers University. International competition is another factor. While globalization has lifted millions out of poverty in developing nations, it hasn’t exactly been a win for middle class workers in the U.S. Factory workers have seen many of their jobs shipped to other countries where labor is cheaper, putting more downward pressure on American wages. “As we became more connected to China, that poses the question of whether our wages are being set in Beijing,” Rodgers said. Finding it harder to compete with cheaper manufacturing costs abroad, the U.S. has emerged as primarily a services-producing economy. That trend has created a cultural shift in the job skills American employers are looking for. As a result, the disparity between the wages for college educated workers versus high school grads has widened significantly since the 1980s. In 1980, workers …
Inflation in (Mostly) the Wrong Places
It is often claimed that inflation is a benign, even positive, force. People assume that prices, wages, and assets will all rise together… In the real world, inflationary episodes don’t play out that way. Wages don’t keep up, and bubbles form in unexpected (and unwanted) places. In America, compensation is clearly stagnant. And the outlook for future pay raises is not good, as this chart from David Rosenberg shows: Contrast that with this next chart, which shows the percentage of companies planning to raise prices: Combine stagnant wages and slow growth with high unemployment and rising prices, and you get a recipe for stagflation. This scenario is being played out around the world. In the UK, consumer prices rose 4% in 2010. As noted by the Financial Times , wages aren’t keeping up: The prices of everyday goods and services are rising about twice as rapidly as average wages, Tuesday’s inflation figures confirmed — which means that the standard of living of many Britons is already falling. According to the Bank of England, average pay at the end of this year will be able to buy no more than it could in 2005. It is the first time that the purchasing power of earnings has fallen so far since the 1920s. I expect this trend to continue as long as the Fed’s mad experiment is ongoing. The thing about Central Bank “easing” is you never know where inflation will pop up… Easy money will always fuel speculators, who have little skin in the game, to find another bubble to “invest” in. Silver, gold, oil With printing presses switched “on” for the foreseeable future, we remain bullish on precious metals. Silver is holding above $30 today and could hit $37.50 on the next leg up. Coal, oil, and natural gas investments should continue to do well. And as my colleague Nick Hodge of Energy and Capital says, “Buy it if it burns.” If you’re not yet convinced that Fed printing is directly related to rising commodity prices, examine the following chart. (The solid blue line represents the Austrian Money Supply (AMS), and the solid teal line represents commodity prices ( IMF Commodity Index )): Note: The version of money supply shown
Is Warren Buffett Heading for the Exits?
Nobody ever rings a bell at the top. That’s why sometimes it is instructive to keep an eye on so-called “smart-money”—especially when they make a move towards the door. All of which, strikes me as curious since just a few months ago the grandfatherly Buffett said, “I am a huge bull on this country. We are not going to have a double-dip recession at all. I see our businesses coming back across the board.” Hmmmm…I wonder if he has changed his mind on this one. From Bloomberg by Andrew Frye entitled: Berkshire Exits BofA ‘a Loser’ on Three-Year Holding. “Warren Buffett’s Berkshire Hathaway Inc. sold its stake in Bank of America Corp., ending an investment that spanned three and a half years in which the lender’s stock lost more than two-thirds of its value Buffett’s firm had no shares in the Charlotte, North Carolina-based bank at the end of 2010, compared with 5 million shares three months earlier, Berkshire said late yesterday in a regulatory filing that lists the company’s U.S. stockholdings. Berkshire, where Buffett serves as chief executive officer and head of investments, entered the Bank of America stake with the purchase of 8.7 million shares in the second quarter of 2007. The lender’s CEO at the time, Kenneth Lewis, was expanding through acquisitions and telling investors that the U.S. housing slump would be over within months. “He’s closing out a loser,” said Jeff Matthews, author of “Pilgrimage to Warren Buffett’s Omaha,” whose Ram Partners LP invests in Berkshire and Bank of America. “We bought it during the crisis. But its earnings power coming out the crisis has been reduced.” Berkshire also eliminated its stakes in Nike Inc., Comcast Corp., Nalco Holding Co., Fiserv Inc., Lowe’s Cos. and Becton, Dickinson & Co. in the fourth quarter. In November, Berkshire disclosed that it had sold holdings of Home Depot Inc., trash hauler Republic Services Inc. and Iron Mounta”in Inc., a provider of records management. Buffett’s U.S. portfolio had 25 stocks and a value of about $52.6 billion at the end of December.” Maybe there is nothing to see here, but I don’t think so. You just can’t trust a guy that plays a ukulele. Related Articles: Warren Buffett’s Dividend Stock Strategy The Good Works of Bill Gates and Warren Buffett Ben Graham’s Winning Investment Advice Warren Buffett: The Investor of the Year To learn more about Wealth Daily click here. Advertisement Samurai Super Alloy It was the secret ingredient that turned an ordinary sword into the legendary Samurai Katana — the deadliest weapon before the arrival of modern rifles. Today, it’s crucial to the $987billion/
Three Garbage Stocks
The market goes up everyday… This two-year chart represents the thirty varsity players on the U.S. economic court. You might look at this 100% gain in two years and think that this bull market is overdue for a correction. But don’t worry. Uncle Ben, our fair Chairman over at the United States Federal Reserve, has it all in hand. This is not the time to fret over debt, inflation, taxes, or unemployment… Don’t fight the Fed This market is simple. The Fed is pumping liquidity into the market at an unprecedented rate. There is an old Wall Street platitude that says “Don’t Fight the Fed.” It means you buy stocks when interest rates are dropping and sell when they are going up. The current Fed fund rate is at 0.25%. It can’t get much lower, and no one expects them to hike rates in the near future. What are you waiting for… zero percent? People heed the Bernanke It looks like folks just like you and me are putting the hard times behind them… The adjusted retail numbers for December showed $380.9 billion in sales, an increase of 0.6 percent from the previous month, and 7.9 percent above December 2009. Total sales for 2010 were up 6.6 percent. For the fourth quarter, they were up 7.8 percent. Car sales jumped 14.7 percent over last year. For non-store retailers like Amazon, sales jumped 15 percent. The unofficial numbers for January show a 4.1 percent gain from a year ago. This is great stuff. Amazon investors liked it so much that the company now trades at twice the price it did during the dot-com bubble in 1999. Amazing. ~~SIGNUP_WD~~ The screen It’s a good idea to screen for stocks at least once a week. I generally screen for low P/E, small market capitalization, and good dividend. From there, I go through the list and look for red flags and growth potential. I like the companies that are under $250 million in market value, with high future growth and fat margins. I also look at debt ratios. I call these “garbage stocks” because they ain’t for widows and orphans, but they tend to run under the right circumstances. Today, three companies in the retail sector popped up on my screen. All three shared my garbage stock credentials. And they have something else in common: They cater to the petite bourgeois. They are Books-A-Million (NASDAQ: BAMM), Collectors Universe (NASDAQ: CLCT), and CPI Corp. (NYSE: CPY). The merchant of Wal-Mart All of these companies sell products to the middle class, but none of their products are necessities… Books-A-Million runs 223 discount bookstores in the Southeastern United States. Collectors Universe provides third-party authentication, grading, and related services for rare collectibles like coins, trading cards, and sports memorabilia. CPI runs Wal-Mart Portrait Studios and PictureMe Portrait Studios. BAMM has a market cap of $92 million and a trailing P/E of 6.62. The company had a negative revenue growth of 5.5% year over year, but it does pay a fat 5.2% dividend. (They could also be a beneficiary of Barnes and Noble going bankrupt.) CLCT has a market cap of $109.34 million, a P/E of 6.6, gross margins of 60%, quarterly revenue growth of 8%, and a dividend yield of 9%. CPY has a market cap of $152 million, a P/E of 8.06, 8% margins, a flat quarterly revenue growth, and a 5.10% dividend yield. …
Raising Our Target Price on Netflix
When Netflix hit a high of $145, we knew $200 wouldn’t be far behind, telling readers: “It looks like Netflix just broke above the channel… and could be headed higher. Considering future growth, an $8 billion market cap is nothing. We could see $10… even $20 billion when all is said and done with this stock. Plus, with the momentum crowd jumping in, and quickly churning that float, there’s no telling how high this can run.” But the NFLX run, we believed, was just getting started. And we were right… as the stock just hit $245. But, as The Wall Street Journal reports: “Not to be a stick in the mud, but it’s worth thinking about how far Netflix has climbed. The stock is up 287% over the last 52 weeks. In 2011 alone, the shares are up 39%. That enthusiasm has translated into nosebleedingly high valuations. The stock is trading 83 times the last twelve month’s earnings and 52 times the consensus expectations for the next 12 months, according to FactSet. Valuations like that entail a really high amount of risk. If the growth rate of the company starts to deviate even modestly from the sizzling rate Wall Street has priced in, the stock could get hammered. Of course, with the amount of momentum there is behind this stock, it could very well keep rising for quite some time. Just do yourself a favor and don’t bet the kid’s college fund on it, alright?” While we agree that NFLX is extremely overbought… it’s all about the blind momentum at this point. And it could push the stock to our new target of $300 by September. An outrageous call? Sure. But we were the same people that called for NFLX $200 when the stock traded at just $145. Raising Our Target Price on Netflix originally appeared
Weekend: The Fool Proof Retirement Plan
Welcome to the Wealth Daily Weekend Edition — our insights from the week in investing and links to our most-read Wealth Daily and sister publication articles. As I wrote earlier in the week, dividend reinvestment plans — or DRIPs — are a great way to secure your financial future. All you need is the time and patience to stick to the blueprint… The best part is these plans are offered by more than 1,100 companies and are available to investors of all stripes, making it possible to purchase shares of stock without using a broker. This allows investors to buy stock directly from the company in very small amounts — something that can be more difficult and costly when compared to buying shares through your broker. In fact most companies don’t charge a fee, and the minimum investment can be as low as $10. Advertisement 60 Minutes Reports on Growing Body Parts Call it what you want: biotechnology, tissue engineering, cell therapy, regenerative medicine. The famous newsmagazine has reported on one doctor about to make multiple medical problems disappear forever. Lucky for you, that same doctor sits on the board of a $3.00 company that will bring these solutions to market — making shareholders rich in the process. Check out the 60 Minutes clip to learn the name. The plans also reinvest all or partial dividends paid into more stock, thus the name “Dividend Reinvestment Plan.” And in this case — since the investment is based on dollar amounts — you can purchase fractional shares. In addition, investors can choose to add a monthly contribution to the plan, boosting the amount of wealth the DRIP can create. That means you can start out with as little…
Zillow: Home Values Lose Another $2 Trillion
Anybody that thinks housing has reached a bottom needs to have their head examined. If you doubt that just ask the fine folks at Beazer Homes (NYSE:BZH) who reported a loss of $48.8 million, or 66 cents a share, down more than 200% from a $48 million, or $1.17 per share, income a year earlier. That dismal effort came on revenue that plummeted 48% to $110.3 million from $213.1 million just a year earlier. Meanwhile the spring is really not looking that much better. Beazer reported a total of 527 home closings and 540 new orders during the period, down 43.6% and down 23.9% respectively. Of course, that what happens Uncle Sam steps out of the mix with tax goodies and rebates—the market falls apart. Because the truth is despite historically low interest rates, the demand for homes of all types remains at exceptionally low levels. That’s true no matter what Lawrence Yun says. The end result is falling prices and more borrowers left underwater…. From Bloomberg by John Gittleson entitled: Home-Price Drop Leaves 27% of U.S. Owners Underwater on Loans “ The number of U.S. homes worth less than their outstanding mortgage jumped in the fourth quarter as prices fell and lenders seized fewer properties from delinquent borrowers, according to Zillow Inc. About 15.7 million homeowners had negative equity, also known as being underwater, at the end of the year, up from 13.9 million in the previous three months, the Seattle-based real estate information company said in a report today. The total represented 27 percent of mortgaged single-family homes, the highest in Zillow data dating to the first quarter of 2009. Home prices are declining as foreclosed properties sell at discounts and unemployment at 9 percent limits buyer demand. Values will fall as much as 5 percent this year, putting more homeowners underwater, before finding a floor as the economy improves, said Stan Humphries, Zillow’s chief economist. “ These seem like fairly grim numbers,” Humphries said in a telephone interview. “We’re still expecting a bottom in home values later this year. And this, if anything, makes me a bit more confident because I’m seeing very large corrections now, which means the market can start to repair itself.” The median value for a U.S. single-family home was $175,200 in the fourth quarter, down 2.6 percent from the end of September and 5.9 percent from a year earlier, according to Zillow. Values have fallen 27 percent from the June 2006 peak. Las Vegas led the nation in …
Load up on Food ETFs…
It’s time to load up on more food ETFs, like the Market Vectors Agribusiness ETF (MOO). The USDA just reported even more inventory cuts for agriculture commodities, including corn, wheat, soybeans, sugar and rice. Couple that with last week’s Food and Agriculture (FAO) of the UN Food Index report, and food-related ETFs are likely to rocket even more, according to Briefing.com. Just last week, the FAO reported that the food price index nailed new all-time highs for January. According to Briefing.com, “ The Index rose 3.4% from December, averaging 231 points in January. This is the highest level (both in real and nominal terms) since FAO started measuring food prices in 1990. Overall, prices of all monitored commodity groups registered strong gains in January, except for meat, which remained unchanged.” Even better… “Unusual weather in 2010 hit many areas of the world, including Russia, the U.S. and many parts of Europe, which has cut inventory levels in many agriculture commodities around the world to multi-year lows. Overall, many commodities have seen notable inventory reductions including corn, wheat, soybeans, soybean meal, soybean oil, sugar, rice and coffee. Palm oil and cooking oil inventories have also fallen notably. Overall, there are both supply and demand factors driving
