Wednesday, October 26, 2011

Golden ETFs To Add To Your Portfolio : GDX, GDXJ, GGGG, GLDX

As a multitude of macroeconomic problems continue to persist, investors have flocked to a variety of safe haven asset classes over the last year. Perhaps none has captured investor's fascinations more than gold. Holdings in the precious metal have steadily risen, and funds like the ETFS Asian Gold Trust (NASDAQ:AGOL) have exploded in popularity. So far, prices for the yellow metal are up about 20% in 2011, and many analysts are calling for higher gold prices to continue. To that end, some investors have sought to add extra gold exposure via the mining firms within the sector. However, much of that focus is set squarely on a few funds. For those looking for gold miner exposure, two exchange-traded funds (ETFs) from an upstart firm could be better choices.

Alternative Access to Gold
With the continuing pressures facing the global economic situation, investors may want to look at the gold miners. Generally, commodity-based equities show a positive correlation to the spot price of the underlying resources they harvest. For the gold miners, a 1% increase in the price of gold will often equal a greater than 1% increase in operating income. Due to the miners' production cost structure, often with considerable fixed expenses, these companies can act as a leveraged play on gold prices, and these nuances give the gold miners a unique risk-return profile relative to physical gold prices. In addition, gold mining stocks are typically more volatile than the physical metal. This increased volatility can mean higher profits for investors in up markets.

With these benefits in mind, investors have flocked in spades to a pair of Van Eck ETFs. Both the Market Vectors Gold Miners ETF (NYSE:GDX) and Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) have nearly $11 billion in assets under management split between the two, and have trade volumes in the millions of shares. However, a discussion of gold mining equity funds doesn't need to stop with these two behemoths. Smaller ETF issuer Global X has put forth two competing funds that have the potential to provide investors with some good alternatives in the sector.

Pure and Extra Small
One of the major criticisms of the two Van Eck ETFs is that they are not "pure" gold-based mining funds. Many of the firms, in the funds, receive a portion of their earnings from other metals such as silver or copper. For example, the Market Vectors Gold Miners ETF counts royalty firm Silver Wheaton (NYSE:SLW) as its 12th largest holding. In 2010, silver sales for the firm accounted for nearly $400 million in revenue. Gold, however, accounted for just $30 million. Other holdings include Silver Standard Resources (NASDAQ:SSRI) and Pan American Silver (NASDAQ:PAAS). The ETF is more of generalized precious metals mining fund, which in itself isn't necessarily a bad thing. But, for investors thinking they are just getting a gold only play could be in for shock.

The Global X Pure Gold Miners ETF (NASDAQ:GGGG) hopes to circumvent this. The fund's mandate and index tracks miners who receive over 95% of their total revenues from strictly gold mining. This creates a different overall portfolio of 30 miners, with only three of the same top 10 holdings. While the fund has dropped, along with the general stock market, the long-term picture for the Global X fund could be rosier, as it should offer more targeted exposure to rising gold prices.

Since the industry's supply peak in the late 1990s, gold production has been on a downward trend as discoveries of large, multi-million ounce deposits have decreased. The job of finding new sources of supply has been given to the junior miners. As a source of future mergers and acquisitions for the larger firms, these smaller firms are vital to the gold supply chain. The Global X Gold Explorers ETF (NASDAQ:GLDX) takes the small approach, and bets on 28 different micro- and small-cap gold-based miners such as Rubicon Minerals Corporation (NYSE:RBY) and Chesapeake Gold (OTCBB:CHPGF). Ultimately, the ETF provides the ability to bet on the "Venture Capital Of Gold," and could be a great addition to an investors gold arsenal.

The Bottom Line
With macroeconomic problems still persisting, investors continue to see gold as a safe haven. However, many place their focus on just a few investing options. The previous two Global X ETFs offer portfolios a chance to take advantage of other opportunities in the sector, and could be great long-term additions.

Quick Charting the Levels to Watch in Copper and JJC

We’ve been seeing copper in the news lately, mainly with its recent breakdown and consolidation off a key support level.

Let’s take a look at the weekly frame then drill-down to daily chart levels to watch in both Copper and the related ETF JJC.

First, the Weekly Chart of Copper:

A quick glance of the current chart shows the simple $3.0 level as a longer-term key level. It’s not magical, it’s just a ’round number’ level where price has reversed in the past – including September and October 2011.

In addition to a pure price level, the 200 week SMA resides at $3.22 which is a level to watch in conjunction with $3.0.

The other quick thing to note on the Weekly chart is the bearish cross of the 20/50 EMAs which cluster about the $3.8 level, which happens to be another key price level to watch, as price has bounced three times from the $3.8 support (it may prove to be resistance in the future).

With the Weekly Chart structure above, let’s now drop to the Daily Chart to see the current levels to watch:

The Daily Chart gives us a bit more clarity about the key simple price levels to watch – it’s $3.0 for confluence support and the $3.9 area for upper resistance.

The immediate level for traders – especially those looking for a confirmation breakout trade to the upside – is the loose cluster from $3.5 (prior price swing highs along with the Upper Bollinger Band) to $3.6 (the falling 50d EMA).

A firm power-breakout above these resistance levels will likely be seen as a BUY signal, along with a “cover-shorts” signal.

Those will be key level to watch immediately – the confluence overhead resistance at $3.5 to $3.6 (which, if broken, targets $3.9) and the long-term critical support at $3.0.

Here are the corresponding price levels in the related Copper ETF – JJC:

A quick check-up shows us a similar structure:

Immediate resistance exists at $45 (price and upper Bollinger Band) and $46.50 (falling 50d EMA).

Above the $45/$46 resistance is the upper key target $51 level (a potential target to play for on a closing breakout above the $45 then $46.50 level) and beneath the current ‘range’ resistance is the critical support at $39.00 per share (double bottom).

Keep watching these levels along with any follow-through on any breakout that occurs… otherwise, without a breakthrough here, it would suggest the lower support may be re-tested.

Jay Taylor: Turning Hard Times Into Good Times

Fascist Warnings from Eisenhower & Kennedy. Nixon Relen. Ron Paul Offers Solutions

FT Reports Italian Government On Brink Of Collapse

Certainly not helping European sentiment is the report from the FT that "Silvio Berlusconi’s centre-right coalition government in Italy appears in danger of collapsing over European Union demands for a demonstration of concrete action on economic reform by Wednesday’s summit of eurozone leaders. The EU ultimatum delivered to Mr Berlusconi in Brussels on Sunday risks breaking his coalition instead of giving it an external impetus to move ahead on measures to cut Italy’s debt and promote economic growth." So you mean that extending the retirement age by a few hours is not credible reform? That surely is news to Bunga Bunga. And after all, remember the dedication with which Italy promised it would promptly enforce austerity after it was admitted to the SMP bond monetization program, only to completely forget all promises 48 hours later? It seems Europe, which has had enough of being humiliated by the corrupt pederast, has remembered: "The ultimatum was delivered as part of efforts to resolve the eurozone sovereign debt crisis, but the Italians’ failure to reach agreement on reform threatens EU leaders’ stated goal of finalising at Wednesday’s summit a comprehensive solution to the crisis." So the question is: how long before The Guardian refutes all FT speculation that Italy is scuttled with a well-timed rumor at 3:45pm?


Talks on Tuesday morning between Mr Berlusconi and his Northern League coalition partners failed to resolve the deadlock – centred on proposed pension reforms – after negotiations into Monday night made little progress.

“The government is at risk,” Umberto Bossi, leader of the fiercely eurosceptic and federalist Northern League, told reporters in Rome. “The situation is difficult, very dangerous. This is a dramatic moment,” he was quoted as saying.

Commentators said the crisis was the most serious facing Mr Berlusconi since his election victory in 2008, recalling memories of 1994 when the Northern League brought down his first government after just a few months.

The prime minister’s People of Liberty party has proposed that the pension age be raised to 67 years from 65 in line with increasing life expectancy, and that the system of length-of-service pensions also be modified. The Northern League is opposed and La Padania, its party newspaper, on Tuesday attacked what it called “euro-tyranny”.

Altero Matteoli, a PDL minister, said a collapse of the government was a “hypothesis”. He also noted that talks were continuing and that a compromise with the Northern League was still possible.

In other news, it appears that the spin which is so far keeping the Euro from collapsing on tomorrow's now disclosed EcoFin meeting cancellation is that even though Europe's finance ministers can not agree, 24 hours ahead of the deadline, on the formulation of the most complex SPV ever conceived, somehow the Eurozone leaders will succeed...

Just wow.

Argentina Is A Resource Investors Dream : AGRO, ARGT, CRESY, GTE, TGS, YPF

When it comes to investing in Latin America, the focus for many portfolios is Brazil. After all, as the B in Brazil, Russia, India and China, the nation is poised to be one of the next major global super powers. Broad-based Latin American funds like the SPDR S&P Emerging Latin America (NYSE:GML) often have heavy allocations to the LatAm leader. The SPDR holds nearly 63% of its assets in Brazil. Abundant natural resources, growing middle class and strong robust trade agreements drives the overall investment thesis. While Brazil will play a major role in the region's future growth going forward, investors may be sacrificing gains if they ignore some of the other smaller opportunities in the region. One such ignored opportunity exists in Argentina.
No Investor Love
Despite being the second largest economy in South America, Argentina gets zero investor attention, and that could be a good thing for those willing to tread off the beaten path. While technically classified as a frontier market, the nation features many of the same catalysts that are propelling other LatAm countries like Chile into the stratosphere. Already possessing a relatively high quality of life and literacy rates, the government has begun the task of upgrading Argentina's infrastructure through increased investment. The nation's railways, energy production and telecommunication capabilities will all see improvements. Overall, the Argentinian economy expanded by more than 8% in 2010, a monumental increase over the 0.8% growth rate during 2009. (For related reading, see Forging Frontier Markets.)

Perhaps the real reason to be bullish of the ignored nation, is its wealth of natural resources. Argentina is already an agricultural powerhouse, and is currently one of the largest exporters of beef, citrus, corn, soybeans and wheat. The nation stands to benefit from the growing worldwide need for increased food. In addition, Argentina has the potential to be one of the biggest natural gas producers in the world. According to the U.S. Energy Information Administration, Argentina has 774 trillion cubic feet (Tcf) of technically recoverable shale gas resources, and is ranked third in the world in reserves. The nation's new Oil Plus and Gas Plus Programs have attracted major oil producers such as Apache (NYSE:APA) and ExxonMobil (NYSE:XOM), and should help get gas production moving very soon. Finally, the Andes Mountain Range provide Argentina with rich mineral deposits including copper, tin, lead, zinc, gold, silver and uranium.

Taking a Trip to Buenos Aires
While investing in Argentina may not be a slam dunk due to inflationary pressures, the nation's future roles as a natural gas and food exporter are worth a bet. The Global X FTSE Argentina 20 ETF (Arca:ARGT) tracks 20 of the most liquid stocks within the nation including MercadoLibre (NASDAQ:MELI) and Macro Bank (NYSE:BMA). However, the fund has yet to catch on with investors. Individual stocks could be a better choice for investors. (For further insight into utilizing foreign financial instruments, read Finding Fortune In Foreign-Stock ETFs.)

Farming giant Cresud SA (Nasdaq:CRESY) can be used as a play on the growth in Argentina's agricultural sector. The firm owns 18 farms in Argentina, and is a major producer of livestock, soybeans, corn and wheat. In addition, Cresud owns 9 farms in Brazil and several other countries across South America. Investors can also use Adecoagro SA (NYSE:AGRO) which has significant acreage in Argentina as well.

For those interested in the shale side, Argentinian energy producer, YPF SA (NYSE:YPF) has been recently active in the shale gas rich Neuquén basin and has found nearly 4.5 Tcf of natural gas. The major producer can be used as a direct play. Mid cap Gran Tierra Energy (AMEX:GTE) could also be a stealth play. The company recently acquired Petrolifera Petroleum which included vast acreage in the Neuquén. Finally, moving that gas around will be the job of pipeline firm Transportadora de Gas Del Sur (NYSE:TGS).

The Bottom Line
While Brazil gets all the attention, Argentina could be a commodities investor's dream. The nation is already a major agricultural and mineral powerhouse, and now could be a natural gas leader. For investors, the previous firms along with Pampa Energia (NYSE:PAM) make interesting plays.

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7 Bad Habits Fueling Your Debt Addiction

If mood-boosting shopping sprees and racking up credit card rewards are a part of your lifestyle, you could be fueling a dangerous debt addiction. Results of Card Hub's latest credit card debt study show that Americans accumulated $18.4 billion in credit card debt in the second quarter of 2011 alone. Credit card debt continues to be a major financial problem for the average American consumer, yet many are still living a lifestyle that supports a costly debt habit.

Here are seven bad habits that could be fueling your debt addiction:

1. Always a Borrower. Are you always borrowing clothes, household items, and even money from friends and family? If you always seem to be indebted to others in some way-and fail to repay your debts regularly-you could be addicted to debt. Find ways to make your own ends meet and stop relying on others to get by. The borrower mentality can leave you in a perpetual debt cycle and quickly turn into an addiction.

2. Making Impulsive Purchases. Whether you're a Groupon junkie or just can't resist a sale, impulsive shopping habits could be fueling a debt addiction. Few people work with a budget for last-minute purchases and if you don't have funds available, you're likely to use a credit card to get what you want. Curb those urges to shop deal sites and other last-minute offers so you don't end up drowning in debt.

3. Spending to Boost Your Mood. If retail therapy is something you indulge in regularly, make sure you're supporting the effort on a cash-only basis. When you rely on credit cards to get your shopping fix, it can be very difficult to cover the costs of an emotional shopping spree without going into debt. Climbing out of debt will be that much more difficult when you've been racking up huge balances just to get your fix. Avoid shopping when emotions are running high so you can make a more rational decision with that next purchase.

4. Depending on Cash-Back Credit Cards. The concept of earning money for spending can be very seductive. If you tend to pay with credit just because you know you are "earning" a portion of it back in the form of cash or rewards points, you could be fueling a dangerous addiction to credit card spending. Cash back credit cards typically pay you back a very small percentage of your charges-think $1 for every $100 you charge. Unless you're very disciplined about paying off your entire balance by month's end, the money you earn back will barely cover the interest charges you acquired on that spending spree.

5. Transferring Balances More than Once per Year. While it's smart to transfer high-interest balances to a low-interest credit card when you can, it's also too easy to get caught in a game of "round robin" with your credit cards. When you find yourself paying off one credit card with another card, you could be setting yourself up on for an endless debt loop. Pay off your balances with cold hard cash and stop using the cards to get off this dangerous cycle.

6. Living on Interest-Free Financing Plans. Zero-percent interest for the next 18 months and interest-free financing plans are great marketing strategies to prompt a purchase you might otherwise not make with cash. Big-ticket items that can be financed with a no-interest offer seem like a great deal on the day of the purchase, but you could end up spending much more than you would have if you were paying with cash. The lure of having it now, paying for it later can be too hard to resist-and will more than likely leave you with a pile of debt. Remember that a delayed debt is still a debt. Save your money for larger purchases so you don't end up carrying extra debt-interest -free or not - over the next couple of years.

7. Keeping Up with the Joneses. If you're constantly comparing your life with others and trying to outdo the neighbors with material goods, you could be fueling a debt addiction. One-upping friends and family by purchasing luxuries on credit can turn into a competitive sport - and a costly one at that. Avoid some serious financial problems by living within your means and only buying things you can honestly afford. Trying to keep up with the Joneses can be the fast track to debt problems or even bankruptcy.

Case-Shiller Home Price Indices

The latest Case-Shiller Home Price Index was released today, covering the period through through August 2011.

Modest improvement was seen from July to August 2011, with gains of +0.2% for the 10- and 20-City Composites. Year over year, however, saw falling prices of -3.5% and -3.8% versus August 2010, respectively.

Click to enlarge charts:


Both 10- and 20-City indices are back to their mid-2003 levels

Silver Market Update

by Clive Maund via

Over the past week silver has behaved as predicted in the last update, breaking down from its potential Pennant pattern and dropping gently back towards support in the $29 – $30 area, to enter our “accumulation zone” shown on its 4-month chart which turned it higher on Friday, and while the pattern could still be a bear Pennant with an amended lower boundary this is looking considerably less likely – it looks like the Pennant has aborted. It is thus thought that we are late in the base building process.

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6 Secrets of Early Retirees

There are some people who want to work well into their 70s. Then, there are the rest of us. Those of us who can't wait to get rid of the boss lady, hit the golf course and just plain chill out for a few decades — maybe with a smattering of part-time or volunteer work and some new hobbies thrown in. If you're in this camp, a new study reveals how you can make it happen.

The Transamerica Center for Retirement Studies released a study showing what those who realistically plan to retire before age 65 are doing to reach their goals. "These aren't trust fund babies," says Catherine Collinson, president of the center. "These are everyday people with extraordinary habits."

Below are the defining success factors of these soon-to-be "early retirees." They are more likely than the average person to:

1. Save for retirement outside of just their workplace plan: 69% of early retirees do this vs. 60% of those who plan to retire after 65 and 49% of those who say they'll never retire.

2. Defer a high percentage of their salary into a retirement plan: Early retirees defer a median of 10% vs. 6% for those who plan to retire after 65 or don't plan to retire.

3. Start saving at a younger age: The median age early retirees begin saving is 25 vs. 30 for those who will retire after 65 and 31 for those who never plan to retire.

4. Have a thought-out retirement savings strategy: 71% of early retirees have either a written plan (16%) or a non-written plan (55%), while just over half of those who plan to retire after 65 do and just one-third of those who will never retire do.

5. Be very involved in managing and monitoring their retirement accounts: 71% of early retirees say they are very involved vs. 58% of those who will retire after 65 and just 45% of those who say they will never retire.

6. Have saved the same amount or more since the recession began: 71% of early retirees are doing this compared to 61% of those who will retire after 65 and just over half of those who never plan to retire.

Stocks fall as hopes for Europe debt deal falter

Stocks closed with steep losses Tuesday after disappointing corporate earnings and reports that a key meeting of European financial ministers had been canceled. Assets that tend to hold their value in a weak economy like U.S. government debt and gold rose.

The Dow Jones industrial average lost 207 points. It had gained 409 points over the previous three days.

Manufacturing conglomerate 3M cut its 2011 earnings forecast, and U.S. Steel warned that demand for its products could slow. Netflix Inc. plunged 35 percent after the company cut its profit forecast and said it is losing subscribers following a price increase in July. After the market closed, Amazon Inc. plunged 17 percent after its earnings came in far below Wall Street's forecasts.

The market was also pulled lower by a report that consumer confidence plunged in October to the lowest level since March 2009. The Conference Board index measures how shoppers feel about business conditions, the job market and their outlook for the next six months.

"It's hard to parse this data and find any way that you can glean something positive about it," said Tim Speiss, vice president at EisnerAmper Wealth Planning.

The Dow fell 207 points, or 1.7 percent, to close at 11,706.62. 3M fell 6.3 percent, the largest drop among the 30 stocks that make up the Dow average.

The Standard & Poor's 500 index fell 25.14, or 2 percent, to 1,229.05. The Nasdaq dropped 61.02, or 2.3 percent, to 2,638.42. The losses turned the Nasdaq negative for the year once again. A rally Monday left the index up 1.8 percent for 2011.

Small company stocks fell far more than the broader market, a sign that investors were shunning assets perceived as being risky. The Russell 2000, an index of small companies, plunged 3 percent, reversing a gain of 3.3 percent Monday.

Prices for assets seen as stable stores of value rose. The yield on 10-year Treasury notes fell to 2.14 percent from 2.23 percent late Monday. Bond yields fall when investors send their prices higher. Gold rose 2.9 percent.

The latest headlines from Europe cast doubt over whether leaders there can agree on a comprehensive solution for the region's debt crisis in time for a summit Wednesday. Europe's ongoing debt crisis has been behind much of the market's big moves lately.

European officials are working to patch together a plan that will prevent banks from taking huge losses if the Greek government defaults on its bonds. A messy default could lead to a credit freeze-up similar to the one in 2008 following the fall of Lehman Brothers.

Anticipation of a solution to Europe's debt mess and strong profit reports from Caterpillar Inc., McDonald's Inc. and other major U.S. companies helped the S&P 500 surge 14.1 percent from Oct. 3, when it slumped to its lowest point of the year, through Monday's close. Traders warn that if European leaders fail to come up with a credible solution it could sent markets sharply lower.

United States Steel Corp. dropped 9.6 percent after the nation's largest steelmaker warned that demand for some of its products could decline in the final three months of the year if the economy slows down more.

Delta Air Lines Inc. slumped 5.2 percent after the airline reported results that missed Wall Street's expectations. Delta cut its flights 1 percent in the most recent quarter and said it would cut as much as another 5 percent during the last three months of this year.

United Parcel Service fell 2.1 percent after the company said its growth in Asia was slowing. First Solar Inc. plunged 25 percent after the company said its chief executive had stepped down.

Five stocks fell for every one that rose on the New York Stock Exchange. Volume was average at 4.3 billion shares.