Tuesday, May 22, 2012

John Embry and James Turk on why the Gold Bull Market isn’t Over

This video was shot Friday 18 May 2012 in Jersey, Channel Islands. James Turk and John Embry discuss recent volatility and panic in the gold and silver markets. According to John Embry markets are now highly oversold. He mentions the “leap day slaughter” and the counterintuitive situation in which gold and silver prices went down on the backdrop of negative economic news and money printing. Natural selling followed forced selling.

Embry thinks the bottom is being tested right now and that there’s a lot of upward potential with limited risk. He notes that if you’re negative on gold, you must be bullish on currencies, which doesn’t make sense in the current environment.

James notes the media’s negative sentiment towards gold lately, which has scared people away from the metals. He also notes that the banking system is falling apart in Europe, which should boost gold’s status as a safe haven asset.

Go Bottom-Fishing for Gold Scoop up Yamana Gold for cheap

Yamana Gold (NYSE:AUY) — The Trade of the Day has recommended this large-cap Canadian gold miner several times. And early this year, fundamental analysts, like Credit Suisse, raised their target from $18 to $21 because of the company’s increase in gold reserves and its ability to meet estimates and increase its dividend. Yet AUY’s stock price slipped along with the other miners.

Yesterday, gold was recommended as a “buy” by Goldman Sachs, and on Tuesday, AUY’s price action triggered a “buy” from our internal indicator, the Collins-Bollinger Reversal (CBR) — and did it on high volume.

Furthermore, USAA was quoted as saying that AUY was one of their “top 10” holdings and “They’re becoming a poster child if you want to get good returns.”

For bottom-fishers, this is a good opportunity to own one of the best mining stocks. Buy AUY as a long-term hold with a price target north of $20.

Trade of the Day – Yamana Gold (NYSE:AUY)

BNN: 3 Precious Metal Warrants to Buy

Dudley Pierce Baker, founder and editor of Precious Metals Warrants joins Andy Bell to talk about opportunities in the gold and silver markets.

click here for video

Will the FHA require a bailout? – 12,000,000 underwater mortgages 3,000,000 are FHA insured loans

FHA insured loans have stepped in to fill the giant void left by the collapse in low to nothing down mortgage products. A low down payment is problematic for a variety of reasons and as we will show in data presented below, is a creature of the housing bubble and nothing standard to a healthy housing market. Low down payments through FHA insured loans are financing a tremendous amount of current home purchasing but this is not necessarily a positive given that default rates are surging for FHA insured loans. For example, in California of the active FHA loans over 9 percent are delinquent. This is not exactly a positive figure. Yet this is the number one mortgage product for first time home buyers. A bailout for the FHA is very likely given the ongoing issues with low down payment mortgage options. Contrary to what some will say, FHA insured loans have become a big player in the market because of stagnant household wages and the difficulty for households to scour up any savings.

FHA steps in to fill in hunger for low down payments

The trend towards low down payment products accelerated in the late 1990s on par with the repeal of Glass-Steagall:

down payment loans

Source: Ed Pinto

Initially the low down (and eventually the nothing down products) were financially dubious inventions from the financial sector. When the mortgage market imploded and the financial sector was melting down, FHA insured loans stepped in to finance the weak balance sheets of households: (more)

Rick Rule and Alasdair Macleod on why gold bullion is insurance

Rick Rule, of Sprott Asset Management, and Alasdair Macleod of the GoldMoney Foundation, talk about the role of gold bullion as a financial insurance and how to invest in gold mining stocks. They also discuss the current state of the global financial system.

With regards to the current fall in precious metal prices, Rule points out that even extreme cyclical variations are to be expected in a secular bull market. He illustrates this point by bringing to mind how the gold price declined by 50% in 1975 before making its greatest gains soon thereafter. Both men agree that gold bullion should not be bought to make money, but as insurance as part of a long-term wealth preservation strategy. When investing in mining equities Rule points out that he makes his decisions on a net present value foundation, and not based on expectations of future metal prices.

Rule explains that he views global macro questions from a credit analyst’s point of view, and contrasts assets and income streams against liabilities in countries just like he would with companies. By his analysis, most countries do not have sustainable business models. He also does not believe official inflation statistics and points out that things like food, fuel and taxes are very much underrepresented in official price indices.

Rick and Alasdair also talk about the deleterious effects of artificially low interest rates that discourage savings and therefore impede economic progress. Rule believes that citizens’ confidence in governments and central banks will deteriorate sharply. The distortions caused by these institutions’ policies will lead to an even bigger crisis down the road.

Rule would not lend the US government money, given the horrific state of its balance sheet, and cannot see why the run to the US dollar and treasury bonds is considered a “risk-off” trade. That said, a liquidity crisis in the banking system can cause big volatility in the gold market, as we have in small-part witnessed in recent weeks and months.

Short This Social Media Stock For a Potential 28% Gain

The S&P has nose-dived to below 1300, down roughly 90 points or 6% from two weeks ago, and it looks like it could fall further. Because of overall market weakness I have looked for richly valued stocks showing technical vulnerability. One is LinkedIn (NYSE: LNKD), which has broken an important uptrend line and is also selling at lofty multiples.

Thought of as "Facebook for the business world," LinkedIn caters to connecting business professionals, rather than friends.

The site is used for expanding career networks, making it a resource for job seekers and people collaborating within an industry.

Currently, over 150 million people across 200 countries are members. And, according to TechCrunch.com, approximately two new members join the site every second. (more)

Chart of the Day - Verizon Communications (VZ)

The "Chart of the Day" is Verizon Communications (VZ), which showed up on Friday's Barchart "52-week High" list. Verizon on Friday posted a new 2-year high and closed up 0.39%. TrendSpotter has been long since April 25 at 39.48. In recent news on the stock, Credit Suisse on May 11 upgraded Verizon to Outperform from Neutral and raised its price target to $45 on expectations for margin expansion. Verizon Communications, with a market cap of $117 billion, in the largest provider of wireline and wireless communications in the United States and is also the world's largest provider of print and on-line directory information.


The Mortgage Crisis Hits France Front And Center: Are French Bank Nationalizations Imminent?


Name the plunging bond below:

If you said some sovereign or corporate issue based out of Spain, Italy, Ireland, Portugal, or even Greece you would be close... but no cigar. No - the bond in question is an issue of Caisse Centrale du Credit Immobilier de France (3CIF), which together with its sister entity CIF Euromortgage (CIFE), is a 100% subsidiary of Credit Immobilier de France Development (CIFD), which as Fitch describes it, is a French "housing loans specialist, with business exclusively directed to France." CIFD is in turn owned by Procivis Group, which just happens to be France's second largest full-service real estate group.

In other words, CIFD, together with its subsidiaries 3CIF and CIFE represent a critical glance into the functioning (or lack thereof) of the French mortgage market. The various CIF mortgage entities are related as per the following Org Chart: (more)