Friday, February 4, 2011

Top 10 Small Cap Stocks with Highest Upside: PZG, SA, XRA, AVNR, AUMN, CKXE, ANO, XNY, PCYC, ALTH

Below are the top 10 Small Cap stocks with highest upside potential, based on the difference between current price and Wall Street analysts' average target price.

Paramount Gold and Silver Corp. (AMEX:PZG)
has the 1st highest upside potential in this segment of the market. Its upside is 242.0%. Its consensus target price is $11.39 based on the average of all estimates.

Seabridge Gold, Inc. (USA) (AMEX:SA) has the 2nd highest upside potential in this segment of the market. Its upside is 196.0%. Its consensus target price is $84.99 based on the average of all estimates.

Exeter Resource Corp. (AMEX:XRA) has the 3rd highest upside potential in this segment of the market. Its upside is 193.3%. Its consensus target price is $14.87 based on the average of all estimates.

AVANIR Pharmaceuticals (NASDAQ:AVNR) has the 4th highest upside potential in this segment of the market. Its upside is 192.0%. Its consensus target price is $12.00 based on the average of all estimates.

Golden Minerals Co (AMEX:AUMN) has the 5th highest upside potential in this segment of the market. Its upside is 163.0%. Its consensus target price is $55.09 based on the average of all estimates.

CKX Inc. (NASDAQ:CKXE) has the 6th highest upside potential in this segment of the market. Its upside is 144.6%. Its consensus target price is $8.00 based on the average of all estimates.

Anooraq Resources Corporation (USA) (AMEX:ANO) has the 7th highest upside potential in this segment of the market. Its upside is 130.9%. Its consensus target price is $3.51 based on the average of all estimates.

China Xiniya Fashion Ltd (NYSE:XNY) has the 8th highest upside potential in this segment of the market. Its upside is 121.7%. Its consensus target price is $13.50 based on the average of all estimates.

Pharmacyclics, Inc. (NASDAQ:PCYC) has the 9th highest upside potential in this segment of the market. Its upside is 120.5%. Its consensus target price is $11.60 based on the average of all estimates.

Allos Therapeutics, Inc. (NASDAQ:ALTH) has the 10th highest upside potential in this segment of the market. Its upside is 117.2%. Its consensus target price is $7.17 based on the average of all estimates.

CHART OF THE DAY: If You Think Wheat Prices Have Gotten Expensive...

The buck stops here? Virginia eyes switching off dollar Cites 'inevitable destruction of the Federal Reserve System's currency'

Virginia state Delegate Robert G. Marshall has introduced legislation to study whether the Commonwealth should make the preparations now to switch suddenly to an alternative currency in the event of an implosion of the Federal Reserve System and the destruction of the dollar.

House Joint Resolution 557 is another piece of a growing movement among state legislators who are concerned about the dollar's demise. Ten states have considered similar bills, recommending a return to some form of a commodity-based currency, using either silver or gold.

How to fight socialism? The prescription is Joseph Farah's "Taking America Back"

Marshall's Resolution 557 offers a list of worst-case scenarios to support the need for such a study, including:

  • "Many widely recognized experts predict the inevitable destruction of the Federal Reserve System's currency through hyperinflation in the foreseeable future.

  • "In the event of hyperinflation, depression, or other economic calamity related to the breakdown of the Federal Reserve System, for which the Commonwealth is not prepared, the Commonwealth's governmental finances and Virginia's private economy will be thrown into chaos…"

  • To avoid economic, social and political shocks Virginia can adopt an "alternative sound currency that the Commonwealth's government and citizens may employ without delay in the event of the destruction of the Federal Reserve System's currency." (more)

Tracing the Fed’s Vital Role in the Decline of the US Dollar

In 2013, we Americans will commemorate a century of wealth destruction in the United States – the Federal Reserve will be 100 years old.

In 1913, the Federal Reserve Act became law – granting sole authority to the Federal Reserve to “issue legal tender.” Armed with its new power and its good intentions, the Fed embarked on a 98-year process of currency debasement. That’s not what the Fed set out to do; it’s just what it did do.

In the early days of the Federal Reserve, this monetary authority enjoyed the support of a gold standard. Few Americans doubted that the Fed’s new greenbacks would be as good as gold. As such, gold coinage and paper dollars intermingled effortlessly in the US economy for most of the Fed’s first two decades.

But as the wheels of progress roared ahead, America’s “hard money” coinage disappeared and soft promises took its place – soft promises and lots of chatter about hard money. As it turns out, chattering about hard money does not preserve wealth as well as hard money itself.

The purchasing power of a one dollar bill has plummeted more than 95% since the Federal Reserve first began printing its legal tender in 1914. Although the dollar’s epic decline began glacially, it has gathered luge-like momentum. (more)

Chinese Gold Demand Stuns London & Hong Kong Traders

KWN has reported on this for months, “Precious metals traders in London and Hong Kong said on Wednesday they were stunned by the strength of Chinese buying in the past month. ‘The demand is unbelievable. The size of the orders is enormous,’ said one senior banker, who estimated that China had imported about 200 tonnes in three months.” That quote was from the Financial Times. King World News today interviewed Dan Norcini to get his take on this situation.

When asked about Chinese demand Norcini stated, “Your sources have been reporting for months that demand from Asia, particularly China has been staggering, especially as the market has moved lower. This FT story has simply confirmed what King World News has been reporting for months, and that your sources have been accurate.

It’s apparent to me that there has been a very large buyer in the gold market, particularly on moves down towards the low $1,300’s on gold. It is obvious now that China has in fact had an insatiable appetite for gold. This explains why we have had such a huge drop in open interest in the gold market, while gold has only fallen a mere 6%.

Open interest has fallen almost 30%, but as I said gold has only dropped 6%. Normally if you are a short in a market and you start to have an asset correct because of significant liquidation, you will see a precipitous drop in price. Given the sheer volume of contracts that has been liquidated, we should have seen a massive correction in gold. Instead it has stayed incredibly strong. You can see the footprints of the Chinese buyers, it is becoming very obvious to all of the players in the gold market, and this is causing the shorts to have to cover prematurely.

I think the key here Eric is that inflation is roaring out of control in Asia, particularly in China. While the western monetary authorities are doing their best to convince their citizens that inflation is not a serious problem, the reality is quite different. To quote Bernanke, ‘Fear of inflation is overstated.’ The citizens of Asia and other regions are not impressed with such statements. Those people have been buying gold and they will continue buying gold as long as inflation is alive and well and I see no end to that in the foreseeable future.”

As Dan Norcini said, King World News has reported on the massive Asian buying, particularly from China for many months. Norcini knows these markets well, having traded them for over two decades. He is now making note that there has been a significant change in the trading pattern of both the gold and silver markets.

Eric King

Newmont Ceo: Gold Is Going To $1,500 This Year

Newmont CEO Richard O’Brien comments on where he thinks the price of gold is head:

“For me this is a year where we see gold trade between $1300 – $1500 trading range. It will be volatile, but I see continued upside from there over the next couple years. This super cycle mentality, creating a middle class in China, demand for gold as an investment….The worry point for us would be if the economy really slows down and we don’t see growth, particularly in China and India. If that forecast is wrong, then gold goes down. Otherwise we’re in a great spot. I think there’s a lot of shine in this metal.”

When is it Time to Buy Gold?

When corporations are more creditworthy than their governments!

Gold is a strange animal, it can move for a plethora of reasons and no one ever knows which variable will carry the greatest weight in its movement. Is gold moving because of inflation expectations, trends in real interest rates, money supply growth rates in major world currencies, moves in the USD, or supply and demand? What appears to have been weighing on gold the most in the last few months was a spike in real interest rates, however, what may play an equal or even greater role in the next year or so is the creditworthiness of sovereign governments. As I show later in this article, individual corporations are now more financially sound than the government they operate in.

First Europe, then the U.S.?

While world markets have recovered significantly from their dramatic decline in 2008 and early 2009, it's good to ask: Has anything really changed? The massive debts that were accumulated over the decades were never dealt with, but rather just changed hands. Debt burdens moved from the private sector to the public sector as governments bailed out their banking institutions and simply kicked the can down the road. At some point the pied piper will have to be paid through bone-crushing austerity measures, default, or money printing...or some combination of all three.

Since the debt burdens of the world have never been dealt with and are actually building, is it any wonder that gold has been the only asset class that has had a positive performance record for the past 10 years? Government bonds, corporate bonds, currencies, stocks, real estate—no asset class but gold can claim positive returns over the past decade.

As mentioned above, the debt situation was never dealt with and was simply moved from corporations to sovereign governments. Thus, it is not surprising to see the creditworthiness of corporations relative to sovereign governments improve, but what is surprising is the degree with which this change has occurred. We are now witnessing sovereign governments display greater credit risk than the corporations within their own borders! (more)

BNN: Top Picks

Michael Decter, president and CEO, LDIC shares his top picks.

click here for video

Top Food Inflation ETF to Buy Higher food prices should translate to higher prices for DBA

PowerShares DB Agriculture Fund (NYSE: DBA) – This exchange traded fund (ETF) seeks to track the price and performance of the Deutsche Bank Liquid Commodity Index.

On Dec. 28, at $30, the Trade of the Day said: “Food shortages and higher prices for commodities like wheat, corn, soybeans and sugar are being forecast by economists worldwide. And the recent move by China to raise interest rates is evidence that the country’s central planners are concerned about possible inflation in food prices that could cripple their economy.

“As for agriculture ETF DBA, note the impressive pickup in volume on the chart, as well as the golden cross and the recent breakout from a double-top following a bounce from its 50-day moving average.”

Rising food costs, or food inflation, are at the forefront of investors’ minds as storms in the United States and Australia helped drive up grain and livestock prices. And sugar futures jumped to their highest levels in more than three decades.

I’m raising the near-term target for DBA from $36 to $40. Long-term investors may want to hold this ETF as a cornerstone investment with a price objective north of $50.

Trade of the Day - DBA Chart

Copper reaches $10,000 a Ton

Copper fell from a record after the dollar climbed, reducing the appeal of industrial metals as a hedge against inflation, and Chinese demand remained subdued.

The greenback rose as much as 0.9 percent against a six- currency basket, which would be the most in a month, as the mounting conflict in Egypt boosted demand for a haven. Tin, nickel, lead and zinc dropped. Markets in China, the world’s biggest metals consumer, are closed for the weeklong Lunar New Year holiday until Feb. 9.

“The sharp move of the dollar is the major driver in base metals,” said Daniel Major, an analyst at RBS Global Banking & Markets in London.

Copper for three-month delivery fell $15, or 0.2 percent, to $9,930 a ton ($4.50 a pound) at 6:10 p.m. on the London Metal Exchange. Earlier, the metal climbed to $10,000, the highest ever. (more)

Jim Rogers: Commodities to Surge as Unrest Spreads Read more: Jim Rogers: Commodities to Surge as Unrest Spreads

More social unrest in Egypt and elsewhere is on the way, which is bullish for commodities, says investor guru Jim Rogers.

Currencies, meanwhile, will stay in turmoil, which should also bring out the commodities bulls, Rogers tells CNBC.

"I don't own very many equities," says Rogers, who co-founded the Quantum Fund with billionaire George Soros in the 1970s.

"I don't know what's going to happen but I expect more currencies turmoil, more social unrest, more governments collapsing so I invest more in currencies and commodities than stock," he said.

Food shortages meanwhile will make agricultural commodities rise even more.

"You don't just snap your fingers and have palm oil, all this takes time."

Popular uprisings have toppled governments in Tunisia and Egypt in part due to high food prices. (more)

Take a look at how many ounces of silver have been needed to buy a median-priced home in the US:

For most people, there are some surefire luxuries that signify wealth, a few pearls of conspicuous consumption that say "you've made it!" For me, it's always been a second home. My grandparents owned a vacation home in Arizona and then Florida when I was a kid, and it was an annual highlight to travel there every year.

But something happened on the way to my generation's iteration of the American dream. Of all the people I know that have second homes, only one acquired it through his own hard work and success. The rest inherited them.

With high unemployment, shaky business conditions, desperate governments, weak real estate demand, and a suspect stock market, owning a vacation home is not even on the radar these days for most Americans. Paying their existing mortgage is the primary concern, something millions of homeowners still aren't able to do. So, how is it that I can suggest a way to buy a vacation home in this market?

Because there are two trends in motion that I believe will continue working in our favor. And it likely won't take long for them to reach a culmination point, allowing those of us with such a goal to see it realized.

First, real estate. For those of you who have a glass-half-full prognosis for the near future of real estate, I'd like to challenge an assumption you may be making; namely, that real estate prices rise in an inflationary environment. While the massive amount of quantitative easing and buying of mortgage-backed securities will likely put a floor under prices, it's the black swan of rising interest rates that could derail any significant recovery. Once rates start climbing, home-buying will become more unaffordable, keeping demand low, especially when the starting point is a million-plus hangover of vacant houses. And, if mortgage rates return to the 12-14% levels we saw in the last big inflationary period, the early '80s (they peaked at 18% in 1982), real estate prices aren't going anywhere but down in real terms. They may rise in nominal dollars, but after accounting for inflation, they'll still lose ground. Your half-full glass might not get filled for a long time.

Second, hard assets. The amount of money being created from nothing and thrown at our problems right now is unprecedented in history, so inflation is a when question, not an if. This process can and will result in a devalued dollar, and a direct beneficiary of that is rising precious metal prices.

In real terms, real estate will go down, precious metals will go up.

It's interesting to look at this trend with gold, but it's absolutely fascinating when you plug in the numbers for silver. Not only may silver outperform gold before this is all over, but silver is more "affordable" to the masses.

Take a look at how many ounces of silver have been needed to buy a median-priced home in the US:

Casey Chart

In 1970, it took 14,067 ounces of silver to buy a median-priced US home ($23,000). By January 1980, it had dropped all the way to 1,603 ounces, based on silver's average price that month of $38.80. The ratio bottomed at 1,258 at silver's record high of $49.45 (London PM Fix) on January 21.

The ratio peaked in 1990 at 22,616 due to silver's average price that year of only $4.06, and was still at 18,365 in July 2006, the pinnacle of the real estate boom. However, look what happened to the ratio in the four years and three months since: it's dropped 66.1%, to 6,213.

You may think the ratio won't fall further since it's already declined 69.2% in the last ten years. To counter, I would point out that it collapsed 88.6% during the 1970s - and that was amid a 170% rise in home values! Only economists on government-laced Kool-Aid could fathom home prices rising that much over the next decade.

All this adds up to one thing: the number of ounces to buy a median-priced home at some point in the near future will likely fall below 2,000. And given the unrelenting abuse to fiat currencies, it's very possible it could hit a measly 1,000 ounces. Now that's affordable!

The fine print, of course, is that you actually sell when the silver price is high, and that you pay the tax on the gain from another source. But I would argue that even a modest budget could come up with a few extra ounces to offset the tax bill.

Think silver is too volatile to use as a savings vehicle? The price fluctuates, no doubt, but ask yourself this: if you were to put ten grand into a savings account and another ten into silver, which asset would have more purchasing power five years from now? Even with the savings account earning interest, you'd be able to purchase much more with the stash of silver when you went to spend the proceeds.

Peter Schiff wrote in the Wall Street Journal last month that home prices would have to fall another 20% just to revert to the mean. Doug Casey is insistent real estate hasn't bottomed because we're on the cusp of a depression. They both think the silver price won't be stopping when it hits $50. If they and other voices in the wilderness are right about these trends, that million-dollar property you spotted on Nag's Head a few years back could be had for less than 2,000 ounces of silver.

Vacation home, here I come!