Thursday, May 31, 2012

LISTEN NOW – Central Banks & Wealthy Are Now Big Buyers of Gold, Miners – John Hathaway

from KingWorldNews:

John Hathaway: Senior Managing Director & Portfolio Manager, Tocqueville Funds – John Hathaway has four decades of market experience and is known internationally for his writings about the U.S. economy, gold, silver, commodities and much more. John’s fund has been one of the top performing funds in the world for quite some time and was just awarded a 5-star rating by Morningstar. He is one of the most respected institutional minds in the world today regarding gold. Degrees from Harvard, University of Virginia and is a CFA charter holder.


Barton Biggs Spoke With A Well-Connected Businessman Who Says Saudi Arabia Has A Plan To Bankrupt Iraq And Iran

Barton Biggs, the storied hedge fund manager who runs Traxis Partners, recently had an interesting encounter recently over lunch with a Saudi businessman who explained to him the real motivations behind Saudi Arabia's ramp up in oil production and why oil prices will likely continue to fall as a result for an extended period of time.

It's all part of a plan hatched by the Saudi royal family, according to Biggs, who relays this conversation in a note just published by Itaú BBA. Biggs says he asked the man what his outlook for Saudi Arabia was in the medium and long term, and the man was particularly negative about this, even given the vast riches of Saudi Arabian oil wealth.

Here is what Biggs writes about his conversation with the Saudi man:

"You have to understand our geo-political equation and vulnerability,” he said calmly but intensely.
“Our two most dangerous enemies are Iraq and Iran. Both are Shia, and both are trying to destabilize the Arab world and our Sunni kingdom by funding terrorism. Our only weapons against them are our wealth and our oil. Their current vulnerability is their financial fragility. Their financial reserves are a fraction of ours, and they desperately need money to prop up their economies.

The ruling council has decided that over the next two years we have a brief window of opportunity to impoverish and weaken them by driving down the price of oil. Iraq and Iran need to produce and sell their oil at well over one hundred dollars a barrel. In the next twenty four months, we will gradually increase our production with the objective of breaking the price of crude down to sixty dollars a barrel.

The man also pointed out to Biggs the opportune timing of this plan from the Saudi standpoint:

"Don’t forget we have the wind at our backs because of Europe’s problems and the weak global economy. Under normal recessionary circumstances, we would be reducing production to maintain current prices. Instead, we will be flooding a weak market already suffering indigestion. You also should understand that Kuwait and the United Arab Emirates are with us. Royal families tend to stick together.

Biggs, when posing the question to himself whether or not he believes what he heard from the Saudi man, says "maybe." He described the man as "very rich and presumably well-connected" but "not part of the extended Saudi royal family." He also notes that the Saudi plan as described to him could hit a lot of snags along the way, given the political hotspot the region is, with many competing actors and a dynamic plot.

However, Biggs sees some light in all of this, saying that if the scenario were to play out as described, it would essentially amount to "a giant tax cut, which is just what this sickly old world needs." And he ends his story with another interesting note:

Meanwhile the Saudis, perfectly reasonably, are hedging their bets. Last week they signed a $3 billion
contract with British Aerospace to provide the training jets and combat management of the new fighter jets that The Saudi Royal Air Force has purchased. The best, high-performance jets don’t protect you from suicide bombers, but obviously they could be handy in preventing the bad guys’ aircraft from blitzing your oil lifting installations or in a shooting war in the Gulf.

Crude Oil Will Fall Below $80 a Barrel in June: Suttmeier

In case all the turmoil in Europe has distracted you, here's an important reminder as we wind down the month: Crude oil was at $105 a barrel at the start of May. Today it's trading below $90, more than $15 -- or 14% -- lower.

Crude oil is literally a tick away from printing what would be its sharpest single-month retreat since 2008, a horrendous period when the U.S. and global economies were imploding, and crude oil went from $140 to $40 over the course of six months.

Is it really that bad out there right now? Will crude really behave so poorly?

For Richard Suttmeier, Chief Market Strategist at, the answer is yes -- and then some.

"I think between now and the end of June we'll test $79.83," the renowned technician predicts in the attached video, adding that even at that level, tropical storms and hurricanes would be the only catalyst to send prices back on the rise.

If he's right, $79 crude would not only mark a 7-month low but would also complete a 30% plunge from the recent top of $110 in late February.

Of course, as any energy analyst or trader will tell you, the crude crisis is not just the result of slack demand and economics, but is also the biproduct of a resurgent dollar. Regardless of whom you ask, the greenback's role in this crash has also been substantial.

For those who read Suttmeier's comments on the death cross and gold, a glance at crude charts shows a similar moving average cross is getting closer by the day, where the 50-day average is now within $5. Suttmeier says the 200 day average at $96.46 has become the new resistance.

Near term tests include the May payroll report this Friday and the FOMC meeting in 3 weeks.

CommVault Systems, Inc. (NasdaqGS: CVLT)

CommVault Systems, Inc. is a provider of data and information management software applications and related services. The company develops, markets and sells a suite of software applications and services, primarily in North America, Europe, Australia and Asia, which provides its customers with data protection; data migration and archiving; snapshot management and replication of data; integrated source and target reduplication; e-discovery and compliance solutions; protection, recovery and discovery of data in virtual server environments; enterprise-wide search capabilities, and management and operational reports, remote services and troubleshooting tools. The company also provides its customers with a range of professional and customer support services. CommVault develops, markets and sells data and information management software applications under the Simpana brand.

To review CommVault's stock, please take a look at the 1-year chart of FL (CommVault System, Inc.) below with my added notations:

After breaking to a new high in February, CVLT has been consolidating within a sideways, Rectangle pattern over the last (4) months. Rectangle patterns form when a stock gets stuck bouncing between a horizontal support and resistance. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. For CVLT, the Rectangle pattern has formed a $55 resistance (red) and a $50 support area (black). Last week the stock broke its $50 support and should be moving lower overall from here.

The Tale of the Tape: CVLT formed a Rectangle pattern and broke that pattern's support. A short position should be entered on a rally back up to $50 with a stop placed above $50. A break back above $50 would negate the forecast for a move lower.

McAlvany Weekly Commentary

Loss of EU Billions Chump Change to US Trillions

A Look At This Week’s Show:
-Spanish Armada disaster redux–this time it’s bonds
-China and India buy 83% of all newly mined gold!
-”He who owns the gold, makes the rules”

Newmont CEO – China Doing Everything It Can to Get Gold

from KingWorldNews:

Today the CEO of Newmont Mining, one of the largest gold producing companies in the world, told King World News that China is doing, “everything they can to assemble a bigger gold portfolio.” Richard O’Brien, the CEO of $24 billion Newmont Mining, also said, “I believe inflation is going to rear its ugly head.” But first, when asked about China’s insatiable appetite for gold, O’Brien responded, “Obviously China is now both the world’s largest producer of gold, as well as the largest consumer of gold. Not one ounce shows up as legally leaving China. I think that’s a strong statement that the Chinese people and the Chinese government are looking to hold on to and expand their holdings of gold over time.”

Richard O’Brien continues @

SSYS is a prime candidate for short sellers or those who wish to nail down a profit

Stratasys Inc. (NASDAQ:SSYS) — This maker of 3D printers and production systems for office-based rapid prototyping and direct digital manufacturing markets has had several upgrades by analysts since reporting Q1 revenues that were up 30% from last year. It was an impressive first quarter, but only equal to Zacks’s estimates, and it was noted that the company’s high-cost business model could run into stiff competition.

The stock jumped close to $55 on the news, but it had traded at $55 late in April 2011 before descending to $18 in October.

The long-term chart of SSYS looks like it has double-topped at $55, and so it is a candidate for short sellers or those who wish to nail down a profit. Note the gap at $36 to $40, which could close rapidly on a move under $47. The stochastic sell signal and the decreasing volume are also technical negatives.

Check with your broker for special rules regarding short selling and always protect against an unlimited loss by entering a stop-loss order.

Trade of the Day – Stratasys Inc. (NASDAQ:SSYS)

Wednesday, May 30, 2012

Richard Russell - IMPORTANT - Major Bear Market Signal

Today Richard Russell issued a crucial warning regarding the stock market. Russell, the Godfather of newsletter writers, stated that markets have issued a major sell signal and we have now entered a “primary bear market.” Russell also warned, “I believe that the bear signal is telling us that Greece will default, to be followed by Spain, and the whole Eurozone may then fall apart.” Here is what Russell had to say: “IMPORTANT --- Dow Theory -- The D-J industrial Average recorded a high of 13,279.32 on May 1, 2012. This Dow high was not confirmed by the Transports. The two averages then turned down and broke below their April lows. This action confirmed that a primary bear market is in progress -- it was a textbook bear signal.” (more)

Canadian National Railway (NYSE: CNI)

Canadian National Railway (NYSE: CNI)

Christian Tharp, CMT

Canadian National Railway Company (CNR) is engaged in the rail and related transportation business. The company manages its rail operations in Canada and the United States. The company's network of approximately 20,000 route miles spans Canada and mid-America, connecting three coasts: the Atlantic, the Pacific and the Gulf of Mexico. CNR's network, and its co-production agreements, routing protocols, marketing alliances and interline agreements, provide CNR customer's access to all three North American Free Trade Agreement nations. In August 2011, the Company sold IC RailMarine Terminal Company to Raven Energy, LLC. In March 2011, Metrolinx acquired CNR's Kingston Subdivision rail line. Effective December 31, 2011, the company complete the merger of three of its the United States operating subsidiaries, which include Duluth, Missabe and Iron Range Railway Company, Duluth, Winnipeg and Pacific Railway Company, and Wisconsin Central Ltd.

To review Canadian National's stock, please take a look at the 1-year chart of CNI (Canadian National Railway Company) below with my added notations:

CNI has created a couple of important price levels to watch. First, CNI has formed a clear $80 (navy) level that spans the entire duration of this chart. That $80 level was the stock's 52-week high resistance before CNI broke above it. In addition, the stock has a previous, lower level of support (green) at $75. The stock currently appears to be pulling back to the breakout level of $80.

The Tale of the Tape: CNI has a key level to watch at $80. A long trade could be made on a pullback to that support with a stop placed under it. A break below $80 would be an opportunity to enter a short trade in expectation of a fall back down to $75 where another long position could be entered.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven't thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you'll be around for the next trade. Capital preservation is always key!

Jay Taylor: Turning Hard Times Into Good Times

Part 2
5/29/2012: Bill Tatro Predicts Dow 3500. Walker Todd on How Do We Get Out of This Mess?

Up Double-Digits in May... and This Stock Could Still Double‏

Have you ever grabbed a can of Monster Energy Drink and wished that you'd bought that stock when you discovered energy drinks? Probably not, but you should. Monster Beverage's (Nasdaq: MNST) stock has gained more than 26,000% since the beginning of 2003 -- a $1,000 investment would have grown to more than $260,000. Apple is a fantastic stock, but it has only gained about 6,800% over that same time.

The next big winner may be a tech stock, but simple consumer products like energy drinks offer less risk and take less specialized knowledge to understand.

The biggest winners also tend to start off as small stocks with low prices. MNST was less than $5 a share in early 2003 and had less than $200 million in sales when it began its big move. To find the next extraordinary winner, I like to look at small companies.

This week, I found the stock of a small company that doesn't seem to realize the market has been selling off lately. It's a small consumer products company with explosive growth in sales and earnings. Revenue is up 28% in the past twelve months, earnings are up 22% and this stock is up more than 55% over the last year. The stock is now more than 600% above the bear market lows that were reached less than four years ago. (more)

An Urgent Update on America's Energy Megatrend

In less than 10 years, every heavy-duty truck in the U.S. could be running on "alternate fuel."

Companies like Wal-Mart, Coca-Cola, AT&T, Pepsi, and Waste Management have already begun switching their diesel-engine trucking fleets. Today, small businesses with trucking fleets are looking to do the same.

I'm not talking about ethanol, hydrogen, or electricity. I'm talking about natural gas.

There's a fundamental shift taking place in the energy sector. We're in the early stages. And billions of dollars are at stake...

Like its energy cousin oil, natural gas has many uses. It's used as a building block to make chemicals, fertilizers, and plastics. It's also used to fire power plants and heat homes and factories. And it's becoming widely used as a motor fuel. (more)

Short-Term Indicators Hitting Overbought

The following is an excerpt from the May 29, 2012 blog for Decision Point subscribers.

The market opened higher and then fell apparently amid concerns about Spain this time. Prices did recuperate midday so stocks closed near the high for the day.

Stocks: Based upon a 05/15/2012 Thrust/Trend Model neutral signal, our current intermediate-term market posture for the S&P 500 is bullish. The long-term component of the Trend Model is on a buy signal as of 1/5/2012, so our long-term posture is bullish.

Looking at the daily bar chart we see that today’s top hit horizontal resistance before turning back down. Today’s positive price movement was enough to turn the PMO back up. The PMO bottom is in somewhat oversold territory, but not a place that gives me confidence that we have a solid price bottom. Volume was better than the holiday volume of Friday, but it is still weak.

Short-term indicators are now somewhat or mostly overbought.


Greyerz – $100 Trillion+ to be Printed, Expect Capital Controls

from KingWorldNews:

Today Egon von Greyerz told King World News, “The tens of trillions of dollars that needs to be printed is without derivatives. With derivatives we are talking about hundred of trillions of dollars that may need to be printed.” Egon von Greyerz is founder and managing partner at Matterhorn Asset Management out of Switzerland. Von Greyerz also said, “We will have exchange controls in virtually every country. I can see this coming to the US in the next year or two.” But first, here is what Greyerz had to say about what is happening in Europe: “The bail out for Spain’s Bankia is now up to $25 billion in refinancing requirements, but that’s just the beginning. We’re looking at country after country here where the dominos are falling. The refinancing requirements worldwide are getting astronomical, and they will escalate at a faster rate.”

Egon von Greyerz continues @

Chart of the Day - Sherwin-Williams (SHW)

The "Chart of the Day" is Sherwin-Williams (SHW), which showed up on Friday's Barchart "All-Time High" list. Sherwin-Williams on Friday posted a new all-time high of $126.43 and closed up 0.78%. TrendSpotter just turned long again last Thursday at $125.33. Sherwin-Williams was last featured by "Chart of the Day" as the close on Feb 14, 2012 of $99.80. In recent new on the stock, Sherwin-Williams on April 19 reported Q1 EPS of 95 cents, well above the consensus of 82 cents. BofA/Merrill on April 2 downgraded Sherwin-Williams to Neutral from Buy on higher input costs and valuation but nevertheless raised its target to $115 from $105. In a more prescient move, Nomura on March 12 added Sherwin-Williams to its Conviction Buy list with a target of $137. Sherwin-Williams, with a market cap of $13 billion, is one of the world's largest producers of paint, coatings and related products.


Tuesday, May 29, 2012

Marc Faber Revisits His 1987-Style Crash Scenario

In an interview with Bloomberg TV, Marc Faber discussed his previous warning of a potential crash on the scale of Black Monday, 1987.

I said that if the markets were not correcting by now meaningfully, and would continue to rise into July and August, then the likelihood of a crash in the fall was increasing. And a crash in the order of say 1987.

Now, we are in the midst of a very significant correction, not so much yet in terms of indices but many shares have already declined 20-40 percent from their highs.

As we posted earlier this month, Faber called for the potential of a 1987-style crash if the markets continued to rise through June. He was not necessarily calling a crash, but that the potential for one was there if the markets did not correct as they currently have.

That crash-risk now appears to have diminished.

The entire interview with Bloomberg can be seen below.

15 Quotes from Great Investors

Via Addicted2Success, here are a few awe­some invest­ment quotes by a few of the worlds great­est investors:

Insight­ful Invest­ment Quotes
warren-buffett quoteWar­ren Buf­fett (Net Worth $39 Bil­lion) – “‘Price is what you pay; value is what you get.’ Whether we’re talk­ing about socks or stocks, I like buy­ing qual­ity mer­chan­dise when it is marked down.”

george-soros quoteGeorge Soros (Net Worth $22 Bil­lion) — ”I’m only rich because I know when I’m wrong…I basi­cally have sur­vived by rec­og­niz­ing my mistakes.”

david-rubenstein-quoteDavid Ruben­stein (Net Worth $2.8 Bil­lion) – “Per­sist – don’t take no for an answer. If you’re happy to sit at your desk and not take any risk, you’ll be sit­ting at your desk for the next 20 years.”

ray-dalio quoteRay Dalio (Net Worth $6.5 Bil­lion) – “More than any­thing else, what dif­fer­en­ti­ates peo­ple who live up to their poten­tial from those who don’t is a will­ing­ness to look at them­selves and oth­ers objectively.”

edward-lampert quoteEddie Lam­pert (Net Worth $3 Bil­lion) – “This idea of antic­i­pa­tion is key to invest­ing and to busi­ness gen­er­ally. You can’t wait for an oppor­tu­nity to become obvi­ous. You have to think, “Here’s what other peo­ple and com­pa­nies have done under cer­tain cir­cum­stances. Now, under these new cir­cum­stances, how is this man­age­ment likely to behave?”

t boone pickens quoteT. Boone Pick­ens (Net Worth $1.4 Bil­lion) — “The older I get, the more I see a straight path where I want to go. If you’re going to hunt ele­phants, don’t get off the trail for a rabbit.”

Charlie Munger quoteChar­lie Munger (Net Worth $1 Bil­lion) – “If you took our top fif­teen deci­sions out, we’d have a pretty aver­age record. It wasn’t hyper­ac­tiv­ity, but a hell of a lot of patience. You stuck to your prin­ci­ples and when oppor­tu­ni­ties came along, you pounced on them with vigor.”

david-tepper quoteDavid Tep­per (Net Worth $5 Bil­lion) – “This com­pany looks cheap, that com­pany looks cheap, but the over­all econ­omy could com­pletely screw it up. The key is to wait. Some­times the hard­est thing to do is to do nothing.”

Benjamin Graham QuoteBen­jamin Gra­ham – “The indi­vid­ual investor should act con­sis­tently as an investor and not as a spec­u­la­tor. This means that he should be able to jus­tify every pur­chase he makes and each price he pays by imper­sonal, objec­tive rea­son­ing that sat­is­fies him that he is get­ting more than his money’s worth for his purchase.”

louis-bacon quoteLouis Bacon (Net Worth $1.4 Bil­lion) – “As a spec­u­la­tor you must embrace dis­or­der and chaos.”

paul-tudor-jones quotePaul Tudor Jones (Net Worth $3.2 Bil­lion) - “Were you want to be is always in con­trol, never wish­ing, always trad­ing, and always, first and fore­most pro­tect­ing your butt. After a while size means noth­ing. It gets back to whether you’re mak­ing 100% rate of return on $10,000 or $100 mil­lion dol­lars. It doesn’t make any difference.”

bruce-kovner quoteBruce Kovner (Net Worth $4.3 Bil­lion) - ” My expe­ri­ence with novice traders is that they trade three to five times too big. They are tak­ing 5 to 10 per­cent risks on a trade when they should be tak­ing 1 to 2 per­cent risks. The emo­tional bur­den of trad­ing is sub­stan­tial; on any given day, I could lose mil­lions of dol­lars. If you per­son­al­ize these losses, you can’t trade.”

rene-rivkin-quoteRene Rivkin (Net Worth $346 Mil­lion) — “When buy­ing shares, ask your­self, would you buy the whole company?”

peter lynch quotePeter Lynch (Net Worth $352 Mil­lion) – “I think you have to learn that there’s a com­pany behind every stock, and that there’s only one real rea­son why stocks go up. Com­pa­nies go from doing poorly to doing well or small com­pa­nies grow to large companies.”

John Templeton QuoteJohn Tem­ple­ton (Net Worth $20 Bil­lion)- “The time of max­i­mum pes­simism is the best time to buy and the time of max­i­mum opti­mism is the best time to sell.”

jack bogle quoteJohn (Jack) Bogle (Net Worth $4 Bil­lion) - “If you have trou­ble imag­in­ing a 20% loss in the stock mar­ket, you shouldn’t be in stocks.”

Jim Rogers Interview about Hard Assets, Oil, and Currency Diversification


Bad news for wine drinkers from BofA Merrill Lynch's "Spirits, Wines, and Ciders" coverage group: supplies around the world are tightening, which means prices are going up.

In a note to clients, the equity research analysts lay out three key reasons for their call:

1) Global supplies appear to be tightening simultaneously and thus have less of an impact on specific market supplies.

2) Global wine demand is pretty strong, with Asia having more of an impact than ever before.

3) Recent U.S. beer industry price increases and emerging signs of higher prices on Spirits creates a supportive competitive environment.

Moreover, the analysts project that we could just now be entering a "long duration up cycle" that could extend all the way through 2018:


BofA Merrill Lynch

The note explains that California, a major wine producing region globally, has been dealing with declining production for the past few years already. Typically, wine imports from Australia, Chile, and Spain have stepped in to fill the gap, but government policies aimed to reduce production in Australia and Europe coupled with bad weather for growers in South America means that those days are likely over, according to BofA.

Looking For Miners To Fall Next Week

Stocks in this sector that I’m looking to short.

Stocks for the Long Run?

While the below chart cherry picks one of the best per­form­ing fixed income sec­tors, it is still pretty amazing.
Bonds (defined in this exam­ple as the Bar­clays Cap­i­tal Long Gov­ern­ment / Credit index) have now out­per­formed stocks (defined as the S&P 500 index) going back to Novem­ber 1980 (10.7% annu­al­ized vs. 10.4% annu­al­ized) and has more than dou­bled the per­for­mance of stocks over the past 15 years (239% vs. 108%). Note the chart below is total returns includ­ing rein­vest­ment coupon pay­ments and dividends.
Is this likely to continue?
Unless cap­i­tal­ism as we know it ends, the answer is a sim­ple 'no' over the next 15 or 32 (or even 3–5) years. The gov­ern­ment / credit index shown above yielded a whop­ping 13.18% as of Novem­ber 1980 and the next 32 years were the great bond run that has resulted in the cur­rent pal­try yield of 3.89% (just 7 bps off its all-time low).
Source: Bar­clays Cap­i­tal / S&P
Copy­right © Econom­pic­Data

Behind the Scenes With Harry Schultz

by Jim Sinclair, JS Mineset

Dear CIGAs,

The following intel came from Harry Schultz this morning: Euro bears be warned. There is more, but this is all I dare post.

Harry remains the main man in gold, currency and economic intel. Bravo to you Harry.

Behind the scenes at the G-8 and NATO summit meetings, some significant decisions were made that will impact over the coming weeks.

The critical decision at the G-8 meeting and several of the bilateral meetings that took place on the sidelines of the Camp David gathering centered on the decision to plunge ahead with the bailout of the European banks in an effort to save the Euro system, with Greece still inside.

Read More @

Will the U.S. Dollar break this 10-year old falling resistance line?


U.S. Dollar is now facing a falling 10-year resistance line and Dollar bullish sentiment is almost reaching 80%.

Despite these high bullish readings, if the Dollar succeeds in a breakout, odds move up considerably that "Deflation/Falling prices" picks up speed.

Monday, May 28, 2012

Real federal deficit dwarfs official tally

The typical American household would have paid nearly all of its income in taxes last year to balance the budget if the government used standard accounting rules to compute the deficit, a USA TODAY analysis finds.

Under those accounting practices, the government ran red ink last year equal to $42,054 per household — nearly four times the official number reported under unique rules set by Congress.

A U.S. household's median income is $49,445, the Census reports.

The big difference between the official deficit and standard accounting: Congress exempts itself from including the cost of promised retirement benefits. Yet companies, states and local governments must include retirement commitments in financial statements, as required by federal law and private boards that set accounting rules. (more)

Are Investors Running Out of Safe Havens to Put Money?

Amid all the challenges facing the markets — Greece, Facebook, JPMorgan — investors face an even larger potential problem: They soon could be running out of traditional safe havens for their money.

Much has been made recently of how gold no longer offers its traditional buffer against financial turmoil, with the yellow metal in a sharp pullback since early March.

But some strategists are beginning to worry that other places where investors are stowing their money — high-grade bonds, Treasurys and defensive stocks in particular — also could be losing their protective shields.

"The problem is we're seeing safe-haven flows with shrinking instruments into which you can run," says Kim Rupert, managing director of global fixed income analysis at Action Economics in San Francisco. "Once the run for the exits gets started it's going to be an absolute stampede." (more)

Near A Bottom In Crude Oil?

Rick Rule: "Avoiding the Ugly in the Junior Resource Sector"

In this excerpt from a talk at the Casey Research Recovery Reality Check Summit, legendary resource speculator Rick Rule makes a strong case for careful, disciplined investing in the junior resource sector, despite the market turning truly ugly.

You can hear Rick's entire entire presentation, along with those by the 30 other experts at the Summit – including their stock tips and other recommendations. The full audio collection is available in CD or MP3 format. Get full details here.

Steve Quayle - Preparing For The Financial Collapse & The Enemies Within

Steve Quayle guests with Doug and Joe Hagmann in a fascinating discussion on the current state of National, International and Socio-Economic affairs; and how you can be ready Physically, Spiritually, Financially and Geographically.We have a creator, but organized religion and politics have completely raped us into becoming sheeple.... come on people. religions today use war, rape and torture to make themselves right! I believe that somehow the true meaning that god wants us to know, has been hijacked. FOLLOW THE MONEY, for it is the root of bad.. we are hypocrits,wanting more more more while not reaching out a hand, sharing and just being nice anymore! According to apocrypha old writings this world and our material existence was created to punish us, so actually all these wars, elites, banksters are divinely allowed to f us up. Just look at the history, same thing over and over again.

Tyler Durden's picture Retail Pulls Money Out Of Stocks For 13th Consecutive Week

Not like this will come as a surprise to anyone in the aftermath of last week's abysmal FaceBook IPO which pretty much killed all retail interest in equity markets, but in the last week, the "dumb" money pulled another $3.5 billion out of domestic stocks per ICI, bringing the total tally to 13 consecutive weeks of outflows, and 52 weeks of outflows in the past 56 weeks, with redemptions amounting to $46 billion in 2012, compared to just $6.5 billion for the same period in 2011. Algo-matic, the 20 remaining Primary Dealers and whatever hedge funds are left can pass hot grenades amongst each other: the retail money (RIP) has found other ways to amuse itself.

US Weekly Economic Calendar

time (et) report period Actual forecast previous
Memorial Day
None scheduled
9 am Case-Shiller home price index April -- -0.8% (nsa)
10 am Consumer confidence index May 70.0 69.2
10 am Pending home sales April -- 4.1%
8:15 am ADP employment May -- 119,000
8:30 am Weekly jobless claims 5-26 370,000 370,000
8:30 am GDP revision 1Q
1.8% 2.2%
9:45 am Chicago PMI May 56.5% 56.2%
8:30 am Nonfarm payrolls May
165,000 115,000
8:30 am Unemployment rate May 8.1% 8.1%
8:30 am Personal income April 0.3% 0.4%
8:30 am Consumer spending April 0.3% 0.3%
8:30 am Core PCE price index April 0.2% 0.2%
10 am ISM May 54.0% 54.8%
10 am Construction spending April 0.2% 0.1%
TBA Motor vehicle sales May 14.5 mln 14.4 mln

Saturday, May 26, 2012

Five trading lessons from the latest "Market Wizards"

Jack Schwager wrote the original Market Wizards books, two of the must read, seminal books for investors and traders.

His latest is Hedge Fund Market Wizards — it is a behind-the-scenes look at the world of hedge funds, from 15 traders who've consistently outperformed.

Schwager explores the differences between great traders and everyone else who thinks they can trade. Rare insights into the trading philosophy and methods employed by some of the most profitable individuals in the hedge fund business.

Mike Covel interviews Schwager, and its very interesting... (more)

The Outlook for Gold

The Outlook for Gold

click here to read in pdf

C2C:AM With George Noory *Financial Crisis Special*

Buy Gold Today

I don’t often make market calls or indicate when to buy or sell, but…if you have been waiting to buy gold, or have a dollar-cost averaging strategy in play, today served up a very compelling buy signal for gold.

For years, I tracked and traded the gold futures market very closely, and over time I discovered that charts alone were insufficient to provide a useful trading edge; I had to incorporate another set of market indicators, which I’ll get to below.

First a chart of gold:


By this view, gold has been tracing out a series of pennants, and each time, it busted out to make new highs. Where the prior pennants were relatively modest affairs, this most recent one is far larger and far longer lasting than any of the prior ones. Perhaps that’s because gold got ahead of itself back in 2011 and had to work off all of that exuberance, or perhaps someone drew a firmer line in the sand and said "no more."

The implication is that breaking up and out of a bigger flag implies a bigger run. Of course, gold could break down from here, but with everything going on in Europe and the likelihood of QE X, and maybe even a crash landing or two in Asia, the odds of that seem rather remote.

As a final point about the above chart, notice the intense support for gold that exists between 1500 and 1550. With gold currently trading right at 1550 (as of this writing), there’s quite a bit of price support not too far below.

Over time, I learned that charts such as these were helpful, but if I wanted to trade gold on a short or intermediate term basis, I had to be nimble. An indispensible tool in trading gold was tracking shares of gold mining stocks. I quickly learned that the price of gold shares would move up or down in advance of gold or silver moving in price.

We can speculate all we want about why that might be. Perhaps the big hedge funds that are capable of moving the prices of gold would make their first move in the gold shares, or perhaps there’s some other form of inside information about imminent gold sales/purchases that gets telegraphed to the major traders of mining stocks, but the signal of mining shares moving against the current of the price of gold was not to be ignored.

I would often have positions in gold and/or silver open, and then rapidly dump them if the gold mining shares suddenly moved against my positions, meaning if I was long gold and the mining shares suddenly started selling off, I would sell out my gold positions. I learned over time that it was much more profitable to sell first and ask questions later.


Tobacco Stocks: Smoke ‘Em If You Got ‘Em :PM, MO, NSRGY, VGR

Plenty of judgment can be passed on the habit of tobacco consumption and the reality is the habit has been proven to be toxic to one's health. Fortunately, one does not have to smoke to reap the rewards of tobacco stocks. Tobacco stocks are really the epitome of "sin stocks," though the infamy their products have gained for being so unhealthy is arguably unfair compared to the likes of McDonald's (NYSE: MCD) and Coca-Cola (NYSE: KO). Both of those companies hawk products that can lead to myriad serious health problems and both firms and their nearest rivals have certainly contributed to a serious obesity epidemic in the U.S. that costs the country billions of dollars in lost productivity every year. Still, tobacco stocks are seen as far more evil than hamburger or soda companies.

Well, tobacco stocks aren't evil for investors and an investor doesn't need to engage in the habit to profit from it. Think about tobacco stocks this way: Let someone else enjoy the habit while you enjoy your dividends and capital appreciation.

Philip Morris International (NYSE: PM):

Philip Morris International is the international version of the former Philip Morris. Altria (NYSE: MO) is the firm that's more focused on domestic tobacco markets. The returns offered by both stocks in 2012 are almost identical, but long-term investors, of which the tobacco sector attracts many, might want to consider PM over MO.

The reason for that is simple and it involves one key fundamental. PM's international exposure will be an important driver of growth in the coming years. Smoking is vilified here in the U.S., but in other countries, particularly fast-growing emerging markets, smoking is seen as a glamorous status symbol. (more)

Does Patriot’s Meltdown Signal ‘Blood in the Streets’ for Coal?

The trouble for coal stocks has gone from bad to worse following reports that Patriot Coal (NYSE:PCX) might be struggling to stave off bankruptcy. Although Patriot is a smaller player in the industry — with a market cap that now sits below $250 million — this latest episode has weighed heavily on investors’ already shaken confidence in the downtrodden coal sector.

Nevertheless, sentiment has weakened so much in the wake of this news that coal stocks might finally be nearing a bottom.

Why Has Patriot Melted Down?

Shares of PCX — one of the many companies victimized as soft demand for coal has led to severe price deterioration for the commodity — already were on the ropes prior to last week. Then on Monday, May 14, the company reported a surprisingly poor outlook after the bell, citing weak international demand and a possible default by a key customer. The stock fell 18% the next day, then proceeded to slide another 16.5% to close out the week.

Matters grew even worse on Tuesday when rumors that Patriot was preparing to file bankruptcy caused its shares to trade down to an intraday panic low of $1.36, versus $5.83 at the beginning of the month. The stock subsequently recovered on news that it was in talks to secure new financing, but PCX still closed Wednesday with a year-to-date loss of more than 68%. (more)

Poverty Increasing Among Retirees

Growing numbers of older Americans are spending their retirement years in poverty, according to a recent Employee Benefit Research Institute study. The proportion of older people living below the poverty line has been growing steadily since 2005, and many of those people are falling into poverty as they age and spend down their savings.

Poverty rates for people ages 65 to 74 climbed from 7.9 percent in 2005 to 9.4 percent in 2009, according to the EBRI analysis of University of Michigan health and retirement study data. For older retirees ages 75 to 84, there was an even steeper increase, from 7.6 percent to 10.7 percent over the same time period. But it's the oldest retirees who are the most likely to live in poverty: 14.6 percent did so in 2009.

Many older Americans are falling into poverty as they age. In 2009, the most recent year included in the study, 6 percent of those age 85 older were new entrants in poverty, up from 4.6 percent in 2005. And while 3.3 percent of people ages 75 to 84 fell newly into poverty in 2005, that number increased to 5.6 percent by 2009. (more)

Google Trends Shows Why The Status Quo "Powers That Be" Should Be Scared. Very Scared

The volume of searches for the phrase 'Bank Run' has just hit an all-time high - higher now than even during the peak of the Lehman Brothers 'moment'. While English dominates the language choices, the Europeans (Dutch, Germans, and French) are extremely 'interested' as are the Chinese...but it appears the Singaporeans are running the most scared (as we noted here) is perhaps not surprising, followed by the Irish and the Americans - with Germany a disappointing 10th - perhaps they really do not care as much as everyone's bluff-calling hopes. It seems the fears of real 'bank runs' are becoming virtually 'viral' - not a good sign for the stability of the fictional-reserve-banking-dependent status quo. (more)

LISTEN NOW – Calls for $3,000 Gold for the First Time Ever, Miners, Int’l Markets and More – Sean Boyd

from KingWorldNews:

Sean Boyd: President, Chief Executive Officer and a director of Agnico-Eagle – Mr. Boyd has been with the 6.5 billion Agnico-Eagle since 1985. Prior to his appointment as Chief Executive Officer in 1998, Mr. Boyd served as Vice-President and Chief Financial Officer from 1996 to 1998, Treasurer and Chief Financial Officer from 1990 to 1996 and Comptroller from 1985 to 1990. Prior to joining Agnico-Eagle in 1985, he was a staff accountant with Clarkson Gordon (Ernst & Young). Mr. Boyd is a graduate of the University of Toronto (B.Comm.).

Listen Now @

Friday, May 25, 2012

Richard Russell: We Are Entering Second Half of the Bear Market

from KingWorldNews:

With tremendous volatility in global markets, the Godfather of newsletter writers, Richard Russell, warned his readers that “something BIG is heading our way,” and “I wonder how much longer the decline will continue to be orderly.” Here is what Russell had to say: “As of today’s closing, Dow down 14 out of 16 sessions! This is one you can tell your kids about. And still no collapse in breadth, and still no crash. The only thing I can make out of it is that a lot of people are standing their ground.”

Richard Russell continues @

John Williams of ShadowStats Warns of US Hyperinflation By 2014


John Williams : I’ve been a consulting economist for 30 years. What I’ve found over the decades is that the government’s reporting has moved further and further away from common experience, and really, the average guy has got a pretty good sense of what’s going on. If you feel the economy is not as strong as the government is saying or that inflation might be higher than what they’re reporting, you’re most likely right because you’re dealing with the real world. The numbers use to deal much closer to real world experience. And with the unemployment number, if you, let’s say, went around the entire country and asked everyone whether he or she was unemployed, you’d get an immediate answer. Most people have a pretty strong opinion as to what’s up, they have a job; they know what’s going on. But if you put all those numbers together, you’d come up with a much higher unemployment rate than the government reports, or at least the headline government number to date. So that’s all due to definition. In order to be counted in the headline unemployment rate — and keep in mind, the government actually publishes six levels of unemployment. The third level they call U3 is the headline number — you have to obviously be out of work and willing and able to take a job, but you have to have actively looked for work in the last four weeks. There are people who’ve stopped looking for work after a period of time when there are just no jobs to be had, yet they’d take a job if it were available, and they otherwise consider themselves unemployed. They want a job; they are willing and able to work. And again, they’d take it as soon as it was offered. If you haven't been looking in the last four weeks, the government will count you as a discouraged worker so long as you've looked for work in the last year. If you haven't actively looked for work in the last year, they don’t count you at all. Before 1994, anybody who was a discouraged worker, irrespective of the period of time, was counted as a discouraged worker. So that where you have the U3 unemployment rate at, I believe it’s 8.2% in March, the government’s broadest number U6 (which includes what I call the short term discouraged workers, those who have given up looking for work, but not for more than a year) and also includes people who work part-time for economic reasons (they can’t get a full-time job, they want a full-time job but you know, no full-time job is available) that’s running up somewhat over 14%. And what I do is I add to that my estimate of the longer term discouraged workers — those who have been discouraged more than a year. That puts you up over 22%. What happens here is the people who are unemployed roll out of the U3 level; they become discouraged because there are no jobs to be had, and so they go into the U6 level. And after a year, they roll out of the U6 level in terms of going into another world that the government does not count. I still estimate them, so my number is broader than the government’s number. So when you see the unemployment rate dropping, yet the broader measures are rising or staying at near historic levels, you do not have an economic recovery and that’s what we’re showing. - in a recent interview with the Financial NewsHour

Dow Chemical Bullish Signs

Shares of Dow Chemical Company (NYSE:DOW) ended the trading session higher by $1.09 or 3.7% from its previous close. Dow's price action formed what is considered to be a bullish engulfing candle that could very well signal a continuation of trend or reversal of the ongoing weakness.

Dow Chemical Company (NYSE:DOW) is a diversified chemical company that provides chemical, plastic, and agricultural products and services to various essential consumer markets. The company sell its products to food, transportation, health and medicine, personal care, and construction markets.

Dow's recent stock range was formed by a trough where calculated support was defined at $31.58 and by a peak that established the resistance level at $36.08. This range could be used by traders managing their positions.

Traders wanting to establish a position in Dow or traders that are already holding the stock can use the bullish engulfing pattern to their advantage. The pattern provides a defined risk, as it shows where the bears were able to push the stock down, before the bulls step in with a bid. (more)

4 'amazingly cheap' gold stocks

by Adrian Day, editor Global Analyst

Adrian DayThe senior gold stocks are “amazingly cheap” and here we are looking at a package of four such stocks as a way to participate in the eventual share price recovery.

Here's a look at four favorites: Freeport Copper & Gold (FCX), Barrick Gold (ABX), Newmont Mining (NEM) and Yamana Gold (AUY).

The gap between bullion and the stocks of companies that produce the stuff has widened.

There are many reasons for this: costs have gone up; miners have lagged fiscal discipline (overpaying for acquisitions and issuing too many dilutive shares); investors are buying gold for protection not profit (and hence are drawn to bullion); and the gold ETFs make buying gold easy.

In the past nine month, the gap has widened, with gold stocks valuation relative to bullion falling almost 30%. (more)

Wheat Fields Parched by Drought From U.S. to Russia: Commodities

Droughts withering wheat crops from the U.S. to Russia to Australia will probably spur the biggest reduction in global supply estimates since 2003 and drive prices to the highest in almost a year.

Kansas, the top U.S. grower of winter wheat, is poised for its driest May on record, the state’s climatologist estimates. Ukraine and Russia, accounting for 11 percent of world output, have endured drought conditions for three months, University College London data show. The U.S. Department of Agriculture may cut its global crop estimate by 1.2 percent next month, the biggest drop in a June report since 2003, according to the average of 18 analyst estimates compiled by Bloomberg.

Wheat traded in Chicago rose as much as 18 percent in the 10 days through May 21 on concern that the market is returning to the droughts of 2010. Russia and Ukraine curbed exports that year and prices more than doubled to $9.1675 a bushel by February 2011, the month when world food costs tracked by the United Nations rose to a record. Analysts surveyed by Bloomberg expect futures to gain 13 percent to $7.51 by mid-July. (more)

QCOM appears to be on its way back up after profit-taking

Qualcomm (NASDAQ:QCOM) — This company is a leader in developing products and services based on its advanced wireless broadband technology. And its performance had been outstanding until it was hit with a shortage of chips fromJapan.

That and profit-taking drove the stock from its March high of over $68 to its bullish support line and 200-day moving average at $57.22.

Earnings are expected to increase to $3.25 in 2012 versus $2.70 in 2011, and analysts have a target of between $75 and $81 within 12 months.

Long-term buyers should add this premier tech stock to their portfolio now, and traders should expect a rebound to $63-$65.

Trade of the Day – Qualcomm (NASDAQ:QCOM)

Baker Hughes Incorporated (NYSE: BHI)

Baker Hughes Incorporated is engaged in the oilfield services industry. Baker Hughes is a supplier of oilfield services, products, technology and systems to the worldwide oil and natural gas industry. It also provides industrial and other products and services to the downstream refining, and the process and pipeline industries. The company may conduct its operations through subsidiaries, affiliates, ventures and alliances. It operates in more than 80 countries worldwide. The company operates in five segments. Four of these segments represent its oilfield operations and their geographic organization: North America, Latin America, Europe/Africa/Russia Caspian and Middle East/Asia Pacific. It's Industrial Services and other segment includes downstream chemicals, process and pipeline services, and the reservoir development services group.

To analyze Baker's stock for potential trading opportunities, please take a look at the 1-year chart of BHI (Baker Hughes, Inc.) below with my added notations:

Over the last 2-3 months, BHI has formed a strong support at $40 (black). Starting back in March, BHI has tested that $40 level on 5 or 6 occasions. In addition, BHI has created an important level at $45 (blue) as well, both as support (December and January) and resistance (April - May). The stock appears to be pulling back to the $40 support level again.

The Tale of the Tape: BHI is currently trading between its $40 and $45 price levels. A long position could be entered on a pullback to $40 or on a break above $45 with a stop placed below the level of entry. However, if you are bearish on the stock or overall market, a short trade could be made on a break below the $40 level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven't thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you'll be around for the next trade. Capital preservation is always key!

BOMBSHELL: Citigroup Boss Says ‘Greece WILL leave the eurozone on January 1, 2013′, Predicts ‘Massive wave of contagion across Europe’

from Daily Mail:

Greece will leave the single currency eurozone on January 1, 2013, a senior economist at the world’s second-largest currency trading bank has claimed.

Citigroup’s Michael Saunders said Greece’s new currency would fall in value immediately by 60 per cent – and unleash a massive, yet manageable, wave of contagion across Europe.

In a note to clients, he said the likelihood of Greece leaving the euro in the next 12 to 24 months was now between 50 to 75 per cent – and assumed there would be a ‘Grexit’ at the start of next year.

The firm based its case on the belief that Greece would fail to form a government capable of implementing austerity measures after its next set of elections on June 17. This would ‘accentuate’ the stalemate between the nation and its creditors.

Mr Saunders said: ‘We assume Grexit occurs on January 1, 2013, with Greece staying in the EU and receiving external loan support [to mitigate risks of social unrest and collapse of civil society].

‘We expect that Grexit will be followed by a series of policy responses aiming to prevent a domino-style collapse of the banking system and escalating economic disruption.’

Read More @

Thursday, May 24, 2012

Don Coxe - Most Incredible Opportunity Investors Will Ever See

With continued turmoil in global markets, today King World News interviewed 40 year veteran Don Coxe, Strategy Advisor to BMO, which has $538 billion in assets. Coxe told KWN this is “the greatest transformation to occur at one time in the entire history of the human race.” He also stated, “This period we are living through now will be written about for thousands of years.” But first, here is what Coxe had to say about the start of his career: “I read in the paper one morning (in 1972) that the anchovy crop had failed off Peru. Now I had previously been General Counsel at the Canadian Federation of Agriculture, so I knew at that time that anchovies were a major, high protein food supplement for livestock. (more)