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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Gold, oil & 44 Bars per Minute
“Girls love to spin.” — Wayne, Dance Instructor, Howard County Parks and Rec. I’m taking dance classes at the local Parks & Rec. with a stunning brunette, which is why I’m shuffling my feet around on Sunday nights at eight. The crowd is mixed; twenty-something hipster couples and old guys who have difficulty with their gig lines. The instructor is a cross between Wayne Newton and Telly Savalas: a black silk shirt, shaved head, and a nose like an organic potato. He sucks his microphone like a lollipop and spits out a steady stream of advice: “One, two, hook the toe, slide back, twirl…” Chick magnet The chicks love him, of course. And heck, I was even having a good time�— right up until Wayne Savalas swished over during the break. My H1 was in the parking lot. It’s shiny, yellow, and chews diesel like a Mongolian wrestler at a yak roast. Wayne obviously saw me pull up and feels he should enlighten me about his new Chevy Volt getting 60 miles per gallon… And why would I drive something that sucks up so much gas and destroys the environment? I told him that I was fully invested in oil explorers. And with the trouble in the Middle East launching my shares, I could drive a Semi for life… Brent Crude ETF (BNO) Yes, he said, but is this more of a trade on the Arab revolutions, or does it have more to do with the destruction of the dollar? Wayne pointed out that the dollar/euro has hit a four-month low and seems to be heading lower. Down she goes What is most concerning is that during this particular period of global uncertainty, the
Market Week Wrap-up
– Leading global equity indices continued floating upwards this week while the inflation drumbeat just kept getting louder. In the US, the January y/y CPI figure hit +1.6%, its highest level since last spring, and some analysts were alarmed by higher food prices creeping into CPI data sooner than expected. China’s January CPI report was lower than expected at +4.9% y/y, but markets panned the figures as heavily massaged by basket revisions. In the UK, the BoE said CPI would likely continue growing at a 4-5% clip over the short term. The World Bank released a report indicating that food prices were up 15% since October 2010 and are now only 3% away from record highs hit in 2008. Commodities moves complicated the story somewhat. While silver has pushed out to 30-year highs, there were signs that inflated soft commodity prices were beginning to unwind, with cotton and grain prices both below recent highs. Crude and gold prices have been impacted by reports that Iran is sending warships through the Suez Canal and bloody protests in Bahrain (next door to Saudi Arabia), although WTI futures were well below recent highs seen in early February. The Obama Administration unveiled its $3.73T budget proposal for 2012, including an all-time high deficit of $1.65T, reflecting the tax-cut agreement reached with Republicans in December. For 2012, the administration sees the imbalance declining to $1.1T, giving the country a record four straight years of one trillion-plus deficits. Bond prices held steady after the details were released, and Congress sharpened its knives for a budget fight. The Feb Empire Manufacturing survey hit its highest level since last June, indicating that the US manufacturing expansion seen over the last several months is continuing. On Friday there was plenty of commentary out of the G20 conference, where leaders tried mightily to achieve some concrete steps in reforming the global monetary system. Fed Chairman Bernanke took a swipe at the Chinese in his policy address to the G20, warning that nations which keep currency values low create imbalances, while the PBoC’s Zhou continued to push for a higher profile for the IMF’s Special Drawing Rights (SDRs). For the week, the DJIA rose 1.0%, the Nasdaq gained 0.9% and the S&P500 was up 1.0%. – John Deere crushed earnings and revenue targets in its Q1 report and nearly doubled its guidance for FY11 equipment sales. The firm hiked its sales guidance for its key agriculture and construction units as well, and said its Q2 revenue would blow out consensus estimates. Later in the week Caterpillar released very favorable dealer metrics for the month of January, with North America machinery sales up a whopping 58% y/y in the month. – Iron ore miner Cliffs Natural Resources reported very strong Q4 profits on a big y/y gain in iron ore pricing. The company expects global steel production to continue to grow in 2011, although it warned that spot iron ore prices are unsustainably high. Reliance Steel also blew out earnings estimates, and said pricing would remain strong at least through the first quarter of 2011. – In tech, Dell’s profit was way ahead of the consensus in its Q4 report, thanks to a big improvement in margins. The company said it believes the corporate IT…
How to Buy Yukon Gold Stocks
For the past few weeks, I’ve been urging investors to take a close look at a quality gold exploration companies working in Canada’s Yukon Territory… But with so many Yukon gold stocks to choose from, it can be difficult for investors to determine which companies deserve the most attention. And that’s exactly why I put this article together for you today. For the first time ever, I’ll be publishing some of the guidelines I’ve been personally using to buy Yukon gold stocks. The very first thing investors should know is that the Yukon gold story is just getting started. Last year, nearly 80,000 new gold claims were staked in the Yukon. But this represents only 4% of the Yukon’s total land mass. There is still plenty of staking potential. In 2011, however, it’s very likely we’ll see several companies make big gold discoveries. In an average year, only about $20 or $30 million is spent exploring for gold in the Yukon. Now that the price of gold is breaking record highs, about $100 million is spent in an average year. But in 2011, the Yukon Geological Survey estimates almost $330 million will be spent for work programs and drilling this summer in the Yukon. With so much exploration going on, someone will no doubt find gold. Almost 20 million ounces of placer gold have been taken out of the Yukon Territory over the century. The Yukon overall has the biggest placer gold signatures in the world — meaning there are very large sources of gold in the Yukon from whence this gold sprang. Geologists generally agree that the source of the placer deposits is typically 10 times larger than the amount of placer gold discovered in an area. In the case of …
The Miracle of Regenerative Medicine
Tall, dark, and handsome… Dr. Anthony Atala is not a guy you could easily mistake for Dr. Frankenstein. Yet, in his white lab coat, Atala is doing exactly what author Mary Shelley wrote about so long ago. A mad scientist in his own right, he is busy growing body parts in his Wake Forest lab. A finger here, a bladder there, Atala is currently growing dozens of different tissues. And from heart valves to muscles to ears, his Institute for Regenerative Medicine is literally about to turn the world on its head. Working at one of the world’s largest research facilities dedicated to regenerative medicine, the modern Dr. Frankenstein is adamant that his research will one day replace diseased or damaged tissue using homegrown replacement parts. After all, as Dr. Atala often pondered, “A salamander can grow back its leg, why can’t a human do the same?” Now, some twenty-four years later, that notion is no longer just a wild hypothetical; it’s a feat of modern science, stripped from the pages of a 194-year-old novel. Today, regenerative medicine stocks are the companies to watch as this amazing new technology unfolds. The promise of regenerative medicine Take the story of Claudia Castillo, for instance. In 2008, this 30-year-old mother of two became the first patient to receive a whole organ transplant without the need for powerful anti-rejection drugs. Damaged by a bout of tuberculosis, her entire windpipe was repaired with a replacement part created with the help of her own stem cells. And given the choice between losing a lung or becoming a guinea pig for a radical new medical technique, Castillo chose the latter — becoming one of the pioneers for future regenerative surgeries. Her life these days is not only back to normal… She recently called her doctors from a nightclub to tell them she had been out dancing all night. Before the ground-breaking surgery, Castillo could barely climb the stairs. Claudia’s story is just the beginning… In fact Dr. Atala’s team is currently working on re-growing over 23 different organs including the liver, heart, kidney, and bladder. Along the way, they have conquered a number of milestones in the field. From the website , these firsts include: Developing biological strategies to enable certain human cell types that were previously thought not to be expandable outside the body to be grown in…
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
Celgene (CELG): A Biotech Takeover Target?
Filed under: Newsletters , Stocks to Buy “As tradition holds, Celgene ( CELG ) gave the first presentation at the recent 29th JP Morgan Healthcare Conference, where CEO Bog Hugin focused on Celgene’s ongoing plans to become a world-wide company and expansion into global markets,” reports John McCamant . The biotech specialist and editor of The Medical Technology Stock Letter explains, “They expect 2011 to be the first year where the company earns a majority of sales outside the U.S. The company is currently conducting 25 Phase III trials on its various drugs. “Celgene also announced 4th quarter 2010 earnings last week, and revenue was down 16%, mostly based on costs incurred due to the Abraxis acquisition. Continue reading Celgene (CELG): A Biotech Takeover Target? Celgene (CELG): A Biotech Takeover Target? originally appeared on BloggingStocks on Tue, 15 Feb 2011 13:00:00 EST. Please see our terms for use of feeds . Permalink | Email this | Comments
The 10 Year $1.5 Trillion Tax Hike
While our goal with this blog isn’t to bash the government, we do want to point out what’s likely to impact the markets, small businesses, and families across the country. The US government plays a substantial role in what happens on Wall Street… every single day. ————— The new Obama budget basically shoves a 10 year, $1.5 trillion tax hike down our throats. So much for that “No family making less than $250,000 a year will see any form of tax increase” promise . As pointed out by Americans for Tax Reform, here’s what we can look forward to: “President Obama released his budget this morning. Rather than focusing on Washington’s over-spending problem, the budget calls for higher taxes on families and small businesses to pay for even more government spending. Under the Obama budget, tax revenues will grow from 14.4% of GDP in 2011 to 20% of GDP in 2021. By comparison, the historical average is only 18% of GDP. Tax hike lowlights include: Raising the top marginal income tax rate (at which a majority of small business profits face taxation) from 35% to 39.6%. This is a $709 billion/10 year tax hike Raising the capital gains and dividends rate from 15% to 20% Raising the death tax rate from 35% to 45% and lowering the death tax exemption amount from $5 million ($10 million for couples) to $3.5 million. This is a $98 billion/ten year tax hike Capping the value of itemized deductions at the 28% bracket rate. This will effectively cut tax deductions for mortgage interest, charitable contributions, property taxes, state and local income or sales taxes, out-of-pocket medical expenses, and unreimbursed employee business expenses. A new means-tested phaseout of itemized deductions limits them even more. This is a $321 billion/ten year tax hike New bank taxes totaling $33 billion over ten years New international corporate tax hikes totaling $129 billion over ten years New life insurance company taxes totaling $14 billion over ten years Massive new taxes on energy, including LIFO repeal, Superfund, domestic energy manufacturing, and many others totaling $120 billion over ten years Increasing unemployment payroll taxes by $15 billion over ten years Taxing management capital gains in an investment partnership (“carried interest”) as ordinary income. This is a tax hike of $15 billion over ten years A giveaway to the trial lawyers—not letting companies deduct the cost of punitive damages from a lawsuit settlement. This is a tax hike of $300 million over ten years Increasing tax penalties, information reporting, and IRS information sharing. This is a ten-year tax hike of $20 billion. You can read more here. The 10 Year $1.5 Trillion Tax Hike originally appeared in Wealth Daily . Wealth Daily is a free daily newsletter featuring contrarian investment insights and commentary.
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
How Savings and Investment Increase an Economy’s Output
Everyone who has held a job and a bank account understands the potential benefit of postponing consumption today in order to enjoy greater consumption in the future. However, many people — if pressed — would explain this increase in saver’s income by an offsetting reduction in the income of a borrower in the economy. This is certainly a possibility. For example, if Bill (the borrower) forgets his lunch money on Monday, he might ask his coworker Sally (the saver), “Can you lend me $10 and I’ll pay you back $11 tomorrow?â€Â If Sally agrees, then it is clear that her $1 in interest on the personal loan was paid out of Bill’s reduced income for that month. In other words, if Bill’s take-home pay that month were $5,000, then he would actually only have $4,999 to work with, because of his $1 expenditure in “buying a loan†from Sally. At the same time, if Sally’s normal paycheck were also $5,000, then this particular month she would actually have $5,001 to work with, after earning $1 in providing “lending services†to Bill. In the scenario above, what basically happened is that Bill financed his consumption with an “advance†made by Sally. On the Monday morning is question, …
