Wednesday, October 17, 2012

How to profit from real estate without the stress and expense of being a landlord

A multitude of self-made millionaires (and billionaires) made their fortunes in real estate, often through the development of large-scale projects such as shopping centers or planned communities. On a smaller scale, there are many landlords with one or more rental properties earning them a monthly income.

If you want to profit from real estate but don't have the initial investment for a large-scale development and don't want to deal with the daily hassles of being a landlord, then this investment is for you...

In 1960 Congress created a special investment vehicle called a Real Estate Investment Trust (REIT) as a way to make investment in large-scale, income-producing real estate accessible to all investors. REITs are bought and sold just like stocks and have become quite popular with individual investors.

According to, as of Jan. 1, 2012, there were 166 REITs registered with the Securities and Exchange Commission in the United States that trade on one of the major stock exchanges – the majority on the New York Stock Exchange. These REITs have a combined equity market capitalization of $579 billion.  (more)

James Turk’s New Estimate of World Gold Stocks / by Alasdair Macleod /
An exhaustive study of global physical gold stocks, authored by James Turk with the assistance of Juan CasteƱeda of the University of Buckingham is published this morning, and is available in PDF form, here.
The study concludes that the commonly accepted figure of 171,300 tonnes (end-2011) overstates gold stocks by 16,056 tonnes.
In my opinion the principal implications are as follows:
  • The level of global physical gold stocks is important in the context of remonetization of gold, which is likely to become increasingly discussed in time, given the accelerating pace of monetary creation by central banks.
  • There is an as-yet unappreciated transfer of wealth in the form of bullion from the West to the East. This transfer has been going on for decades, starting: a) with the Middle East OPEC members in the 1970s onwards; b) to the  Indian sub-continent through the eighties and nineties and to the present day; and c) to the Chinese population in the last decade (and less obviously the citizens of other populous SE Asian states). Therefore the West has already ceded control of the world’s gold, leaving a significantly smaller balance in the West than commonly believed.
  • The study finds that gold stocks are over-estimated by 10.3%. Given the bulk of the world’s gold bullion is no longer in the possession of the advanced Western economies, the shortage of bullion backing Western physical and futures markets is considerably more acute than commonly realized.
I hope this excellent paper sparks a debate about the consequences for the West of having driven gold out of circulation as a monetary asset, at a time when paper currencies are firmly on the path to their own destruction.

Must-see: How the rich keep getting richer

Video: ‘The rich get richer explained,’ featuring Warren Buff-ay and ‘The Bernank’


Peter Grandich – When Will The Rodney Dangerfield Of Investments Get Some Respect?

from FinancialSurvivalNet
Precious Metals raids are common place. But has anything occurred to make a reasonable investor think that the long term prospects of gold and silver has turned negative? Rather, the opposite have happened. Central banks are engaged in unlimited money printing, central banks are buying and precious metals ETF ownership is increasing. Until the general fundamental picture changes, this bull market remains very much alive, regardless what any of the so-called experts proclaim. Rumors of the death of this bull market are greatly exaggerated.
Click Here to Listen to the Audio

US Households Are Not “Deleveraging” – They Are Simply Defaulting In Bulk

from Zero Hedge
Lately there has been an amusing and very spurious, not to mention wrong, argument among both the “serious media” and the various tabloids, that US households have delevered to the tune of $1 trillion, primarily as a result of mortgage debt reductions (not to be confused with total consumer debt which month after month hits new record highs, primarily due to soaring student and GM auto loans). The implication here is that unlike in year past, US households are finally doing the responsible thing and are actively deleveraging of their own free will. This couldn’t be further from the truth, and to put baseless rumors of this nature to rest once and for all, below we have compiled a simple chart using the NY Fed’s own data, showing the total change in mortgage debt, and what portion of it is due to discharges (aka defaults) of 1st and 2nd lien debt. In a nutshell: based on NYFed calculations, there has been $800 billion in mortgage debt deleveraging since the end of 2007. This has been due to $1.2 trillion in discharges (the amount is greater than the total first lien mortgages, due to the increasing use of HELOCs and 2nd lien mortgages before the housing bubble popped).
Continue Reading at…

Walter Energy, Inc. (NYSE: WLT)

A Head and Shoulders (H&S) pattern is a reversal pattern that forms after an uptrend. A textbook H&S pattern starts to form when a stock rallies to a point and then pulls back to a particular level (left shoulder). Next, the stock will rally again, but this time to a higher peak (head) than the previous one. After forming the head, the stock will pull back to the same support that the first shoulder did. Finally, the stock rallies a 3rd time, but not as high as the head (right shoulder). The level that has been created by all 3 of the pullbacks is simply a support level referred to as the "neckline". The formation of an H&S pattern warns of a potential reversal of the uptrend into a possible downtrend.

H&S patterns can also form upside-down after a downtrend as well. This pattern would be called an Inverse Head and Shoulders pattern. It too would be considered a reversal pattern and the neckline would be a resistance rather than a support.

To see such a pattern potentially being formed, please take a look at the 1-year chart of WLT (Walter Energy, Inc.) below with my added notations:

1-year chart of WLT (Walter Energy, Inc.)

After moving lower for the entire year, WLT has almost formed what appears to be an Inverse H&S (blue). I have noted the head (H) and the shoulders (s) to make the pattern more visible. (For future reference, if you imagine this pattern flipped upside down you would have a regular H&S pattern.) WLT's "neckline" is at the $40 level (red). WLT would confirm the pattern by breaking up through the $40 resistance, and if it does, the stock should be moving higher from there.

Keep in mind that simple is usually better. Had I never pointed out this Inverse H&S pattern, one would still think this stock is moving higher simply if it broke through the $40 resistance level. In short, whether you noticed the pattern or not, the trade would still be the same: On the break above the key $40 level.

Here Is What To Look For Next On Gold, Silver & Oil

from KingWorldNews:
Tom Fitzpatrick has just released an update on both the gold and crude oil markets. Fitzpatrick has been astonishingly accurate in forecasting the movements of gold and silver. Keep in mind that Fitzpatrick had been calling for gold to correct after hitting the $1,791 level that he predicted would act as resistance. Now he lets KWN readers globally know what to expect next since gold has weakened. Remember, silver should trade with gold.
Here is what top Citi analyst Fitzpatrick had to say in his latest report, along with some powerful charts: Gold saw three weeks of indecision just below the important double bottom neckline at $1,790. These indecision weeks were followed by a down week last week suggesting short term losses now. Weekly momentum is also stretched and crossing back down.
A correction down to $1,661-$1,669 could be the danger in the near term before renewed gains later. This is where the 55 week moving average and 50% retracement of the last rally converge. Short term support is at $1,736 and it should be noted that the 200 day moving average comes in at $1,660, i.e. it converges with the 55 week moving average so should provide good support if/when tested.
Dan Norcini continues @

Marc Faber: Obama, Romney & the US Fiscal ‘Grand Canyon’