Where did all the housing inventory go?

doctorhousingbubble.com / By Dr. Housing Bubble / January 30, 2013
This might sound like the start of a riddle but really, where did all the housing inventory go?  In the latest piece of data we find that listed inventory is now at levels last seen in January of 2001.  That is right, today we have the same number of homes listed for sale that we did 12 years ago.  This continues to be the biggest underreported story in the housing market.  A large part of this has to do with the external forces interacting with housing.  One has to do with banks holding on selectively to distressed properties while another is the dragging out of the foreclosure process.  Next, you still have roughly 10 million Americans that are underwater on their mortgages.  Think of that when you realize that only about 1.8 million homes are listed for sale.  Those 5 million homes in distress either because of foreclosure or missing payments sure would relieve some of the pressure current buyers are facing.
Inventory keeps moving lower
The reason we have yet to see a massive boom in building similar to what we saw in the 2000s with the first housing bubble is that builders realize these underlying dynamics.  In fact, about one third of new building projects are going to multi-family units to meet market demands for a less affluent young generation.  Remember those 2 million younger Americans living at home because of the recession?  Their first step is likely to be a rental before buying a home.
The fact that roughly 1.8 million homes are listed today, nearly the same as we had in January of 2001 is stunning.  We’ve added over 33 million people in that time to the country.  The inventory pressures are larger in certain markets like California where some areas have seen inventory decline year-over-year by 50, 60, and even 70 percent:

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3 Ways to Play the Coming European Rebound

Walk around virtually any city in Europe, and you'll get a glimpse of deep economic strains.

 

Many store fronts are boarding up, people are walking the streets with hopes of finding employment and landlords are evicting tenants who are far behind in rent.

Yet, economists increasingly expect the gloom to lift slowly. And if history is any guide, then you want to invest in troubled Europe before the region's economy is back in full force.

This notion hasn't been lost on some investors who are already profiting from increased exposure to Europe. But these investors were mostly focused on the riskiest stocks that appeared to be the most distressed. Many Italian bank stocks, for example, have risen 50% or even 100% since bottoming out last summer.

But for investors looking to commit fresh funds to European investments, it may be wiser to take a different tack.
Focus on stocks and funds that remain near lows, but have a high degree of economic sensitivity. Once investors have become convinced that Europe will indeed exit a recession in coming quarters, then it's the deeply-cyclical (often industrial) stocks that will likely greatly benefit.

Here are three examples...

ArcelorMittal (NYSE: MT)   This Luxembourg-based steel maker derives more than half of its sales from Europe. The deep recession has dealt a double-barreled blow to the company as European auto sales plunge to new depths and commercial building construction grinds to a halt. These two industries are huge consumers of steel.   From a peak of $117 billion in sales in 2008, sales are expected to come in at just $84 billion in 2012. Analysts expect only modest improvements, perhaps to $86.5 billion in sales in 2013. Yet, the tepid top line masks a vastly streamlined cost structure that should start to bear fruit this year.    ArcelorMittal generated a $3 billion free cash flow loss in 2011, and likely a small free cash flow loss in 2012 as well. But analysts at Merrill Lynch say that recent cost cuts and constrained capital spending should enable free cash flow to rebound to $2 billion this year, and perhaps $4 billion in 2014. By the time the European economy is back on its feet in subsequent years, free cash flow could really take off. After all, the company averaged $7.8 billion in annual free cash flow in 2007 and 2008, the last time the cycle was at its peak. (more)

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Warren Buffett "Guarantees" These 2 Bank Stocks

Imagine having the opportunity to invest into companies that are "guaranteed" by one of the world's wealthiest men -- Warren Buffett. Most investors would jump at the chance to know they are on the same side as successful investors like him.

Does this seem like pie-in-the-sky thinking? Well, it's not.
Buffett has just issued a personal guarantee on the controversial bank sector.

In mid-January, the Oracle of Omaha appeared on Bloomberg and surprised Wall Street, personally guaranteeing the safety of the U.S. banking segment.
"The banks will not get this country in trouble, I guarantee it," he said.

"The capital ratios are huge, the excesses on the asset side have been largely cleared out... we own bank shares and I personally own stock in banks... I do not see problems in these things."
Clearly, Buffett's commitment to the banking sector goes beyond just his words. More than 37% of his $75 billion-plus portfolio is dedicated to this sector, according to our friends at GuruFocus.com. In fact, out of this 37%, nearly 23% is focused on three U.S. banks -- Wells Fargo (NYSE: WFC), M&T Bank (NYSE: MTB) and U.S. Bancorp (NYSE: USB).

Here's a closer look at two stocks the billionaire investor has large stakes in.

1. M&T Bank
After dumping nearly 1.5 million shares of this bank in early 2010, Buffett is back on the "buy" side, with a purchase of more than 18,000 shares during the third quarter of 2011. There has been no activity since then, yet Buffett is sitting on nearly 5.5 million shares, representing a little more than 4% of shares outstanding, valued at nearly half a billion dollars. (more)


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Are Corn Prices Ready to Soar?

We’re watching these Corn futures very closely right here around 730. There’s a lot going on in this space and I think the daily chart for $ZC_F breaks it down nicely.
The first thing we notice is this giant symmetrical triangle that formed off the July lows and August highs. Prices in December were approaching the apex of these two converging trendlines and broke down pretty hard. The sell-off took prices below a rising 200 day moving average and down to last year’s former resistance. This level turned into new found support and Corn was able to recapture its 200 day Moving Average a couple of weeks ago.

The reason this chart is exciting is the fact that we’re back up towards this 5 month downtrend line and have been hanging out here for two weeks. This is now the 4th (5th?) attempt to breakout. And the catalyst that may allow for that may just be the false breakdown that took place between December & January.
The number to watch here has to 735. A solid close above that could set the stage for a nice move to the upside. Until we see that, I don’t think there’s anything to talk about. But when something like this sets up, we have to stalk it.
Meanwhile, we’re watching the Powershares DB Agriculture Fund $DBA. Corn represents over 12% of it. Last week this ETF briefly broke below January support, only to reverse much higher on Monday. This level also represents the 61.8% Fibonacci Retracement from the June-August move. This along with the bullish divergence in its Relative Strength Index confirms some of what we’re seeing from Corn.

Obviously a rollover in $DBA and/or lack of breakout in Corn above 735 and there’s no trade to be had here on the long side.

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The Cheapest Energy Stocks on the Market

With every passing month, we read another report about our nation's fast-track path to energy independence. Our domestic production of oil and gas is growing so rapidly, that we may just be a half-decade away from ending our long addiction to imported energy. And this would be great news for our nation's trade deficit, employment picture and national security.

Despite the ever-brightening energy picture, it's still quite easy to find value-priced stocks in this sector. Dozens of stocks trade at reasonable levels in relation to their cash flow, asset base and long-term growth prospects. I ran a series of screens to help bring a sharper focus to these industry value plays.

By triangulating the results of several screens, it's possible to see the deepest values in this steadily-growing sector.

Single-digit multiples abound

While stocks in many other industries are often assessed by their price-to-earnings (P/E) multiples, this metric isn't quite as useful for energy-exploration firms. They have such intense capital requirements and high levels of depreciation and amortization to write down their capital expenses, that net profits can be misleading. Instead, cash flow is the more salient metric.

I looked at all of the oil and gas drillers that are either headquartered in the United States, or trade on U.S. stock exchanges through American depositary receipts, with a market value of at least $500 million. I found 60 that trade for less than six times trailing cash flow.

To narrow down the list, I only focused on companies that trade for less than 1.25 times book value. This means these companies have solid underlying support, trading near or below the value of their base of assets. The list was narrowed down to 16 stocks, as you can see below.

The Cheapest Energy Stocks I've Found 

A pair of energy producers that have exposure to Argentina (YPF S.A. (NYSE: YPF) and Petrobras Argentina (NYSE: PZE)) have been eliminated from this group because these companies now face a risky operating environment thanks to recent government policy changes. Still, it's noteworthy that some of the energy producers (in terms of price) hail from countries such as Russia (Lukoil), Italy (Eni), France (TOTAL) and the U.K. (BP). Sometimes, as Elliott Gue, chief strategist of StreetAuthority's High-Yield International newsletter, can attest, you need to venture abroad to find an industry's top bargains.  (more)


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Bonds Will Be Under Pressure For Awhile

It would seem that bonds are on a lot of traders minds as TLT makes multi-month lows today and if you’re wondering how much lower this could go then I have 3 targets for you on the monthly chart below.
1. I would say there is a 90% chance this is at the very minimum heading to the $105 region as that seems like a shallow enough area to target and if you’re short maybe take some profits there by trimming.
2. I would say there is a 50% that we just go down to $100/share because that’s a nice round number that may act as a magnet.
3. The pullback that has the lesser percentage chance of happening but wouldn’t be outside the realm of impossible would be a pullback to the major trendline that started all the way back to 2007.  That would mean a retest of the $95-97 level which would qualify for the “end of the bond bull market” easily and could provide a good buying opportunity. I don’t think that would happen for many months, maybe not until summer, but it wouldn’t surprise me in the least.
Where do I think we’ll end up? My thinking is we head down to the $101-103 level and then find support, base, and head back to old highs. Expect this market to be under pressure until then and any rallies to be sold. A good level to get short would be anything north of $119.50 with a stop at this year’s highs.





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MUST READ: Peak Silver?

I spent a decade as an Energy analyst; or, more specifically, oilfield equipment, services, and drilling.  Thus, I was exposed to a tremendous amount of research on “peak oil;” which – shale oil notwithstanding – is yet to be proven either way.  Unfortunately, “peak” commodity studies cannot possibly incorporate ALL moving parts; nor foresee unexpected changes in demand, population, and technology trends.
That said, such studies can be extremely valuable – pointing out key hurdles to future production growth, and/or production cost.  That is, not only is “peak oil” a valid research topic, but “peak cheap oil.”
Heck, from the time I commenced my Energy career on the buy side in January 1996, until I left Salomon Smith Barney as a sell-side analyst in February 2005; the marginal cost of oil production stair-stepped higher; from levels to NEVER again be seen.  For nearly the entire duration of my 1996-2005 energy career, WTI Crude traded between $10/bbl and $35/bbl; not exceeding that high until late 2004; as compared to today’s recessionary price of nearly $100/bbl – and the 2008 peak of $150/bbl.  Thus, if anyone tells you “peak cheap oil” is not real, they are delusional.
Oh, by the way; when I left Salomon in February 2005, the Wall Street consensus for the “long-term” (3-5 years) oil price was… drum roll please… $18/bbl.  Why so low, you might ask?  TAR SANDS – which were hailed as a “sure thing” to swamp the market…

The reason I bring up “peak oil” is because “peak silver” is starting to be seriously debated; kicked off by the U.S. Geological Service’s ADMISSION (in the late 2000s) that silver is likely to be the first extinct element on the periodic table…(more)

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McAlvany Weekly Commentary

The Best of MWC: Part III

Posted on 30 January 2013.

A Look at this Week’s Show:
-Richard Duncan: The New Depression
-Michael Pettis: Asia Woes
-Richard Taylor & Russell Napier

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NetGear, Inc. (NASDAQ: NTGR)

NETGEAR, Inc. engages in the design, development, marketing, and sale of networking products. The company offers home networking, storage, and digital media products to connect users with the Internet and their content and devices; networking, storage, and security solutions to commercial businesses; and whole home networking solutions to service providers for sale to their customers. Its products include commercial business networking products consisting of Ethernet switches, wireless controllers, Internet security appliances, and network attached storage devices; broadband access products, such as routers, gateways, IP telephony products, and media servers; and network connectivity products comprising wireless access points, wireless network interface cards and adapters, Ethernet network interface cards and adapters, media adapters, powerline adapters and bridges, and multimedia over coax alliance standard adapters and bridges. The company produces its products through third-party manufacturers.
Please take a look at the 1-year chart of NTGR (NETGEAR, Inc.) below with my added notations:
The trade to watch for on NTGR is relatively straightforward. The stock has been hitting a very important level of resistance at $40 (navy) for the entire year. No matter what the market has or has not done over that period of time, NTGR has not been able to break through that area of resistance. If the market rallies much higher NTGR would probably break above that resistance and move overall higher from there.
The Tale of the Tape: NTGR has a key level of resistance at $40. If the stock were to break through that resistance, a long position would be recommended with a stop loss placed below $40.

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The 12 Rules to Follow for Buying Dividend Stocks

Many of you have probably filled out one of the "retirement planner" forms available online. Plenty of tax and accounting programs also have "Lifetime Planner" sections for folks to determine if they can afford to retire.

These sorts of programs plug certain assumptions into a formula, such as projected inflation rate, retirement income, anticipated spending levels, and portfolio growth rate. After you add your personal information, it projects how much money you'll be able to produce annually during retirement, and how long it will last.

The first time I ran these numbers, the program said I was good until 116 years of age. At the time, I believed that if we followed the plan as outlined, my wife and I would never have any real money worries. We'd be set for the rest of our lives and could proudly leave some to our children to help with their retirement. How naïve of me!


Things have sure changed a lot since then.

At the time, I'd estimated inflation at 2% and a minimum yield on our portfolio of 6%. In those days, that was conservative. Inflation was lower than 2%, and you could always earn 6% on a top-rated bond or CD.  (more)


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NYSE Margin Debt Rises To Fresh Five Year High As Short Interest Slide Continues

Submitted by Tyler Durden on 01/29/2013 - 14:59

With the Fed no longer even pretending it is not all about the stock market, where some mysterious trickle down force is supposed to boost the economy the second the S&P hits new all time highs, and injecting billions into stocks via Primary Dealers courtesy of the daily now-unseterilized POMO (today's edition saw another $3.4 billion enter risk assets), there is apparently no reason to worry about anything. Sure enough, institutions don't need a second invitation to BTFD especially if they can do so on margin. According to the latest NYSE margin debt data, the December of margin debt used for various leveraging activities rose for the fifth consecutive month, reaching $331 billion - the highest since February 2008, when the market was declining, and back to the levels from May 2007 when the market was ramping ever higher to its all time highs which would be hit 3 short months later, and just as the subprime bubble popped. (more)


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Buyer Beware: The Fed Won't Be Buying Bonds Forever

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The Latest Major Energy Discovery Could "Dwarf North Dakota"

The American Energy Renaissance has gotten a lot of press. And it should. The prediction that the United States will surpass Saudi Arabia as the world's largest oil and gas producer by 2020 is big news.
But what's truly amazing about this story is that the headlines just keep coming.

Regular readers of StreetAuthority are by now probably familiar with the enormous and expanding reserves of oil and gas that have been discovered in the Bakken Shale of North Dakota, the Marcellus Shale in the Mid-Atlantic region and the Eagle Ford Shale in Texas.
In fact, Scarcity and Real Wealth Editor Nathan Slaughter just gave his subscribers an in-depth analysis of a new discovery in his home state of Louisiana: the Tuscaloosa Shale Formation.
And now another play is ramping up in the West Texas region, a find with so much potential that John Breyer, a geologist and technical consultant for Marathon Oil Corp. (NYSE: MRO), has said it could "dwarf" the reserves already discovered in North Dakota.
"It's like the Eagle Ford on steroids. They haven't even begun. We're just in the toe of this thing," Ken Morgan, director of the Texas Christian University Energy Institute, has said.
It may be hard to imagine that new discoveries are still being made in Texas. After all, the state is practically synonymous with oil barons and energy riches. Companies like ConocoPhillips (NYSE: COP) and Exxon Mobil (NYSE: XOM) are based in Texas, and the first Texas oil well was drilled in 1866.
But with new hydraulic fracturing (fracking) technology, reserves once deemed unreachable are now being recovered.   (more)


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Penske Automotive Group, Inc. (NYSE: PAG)

Penske Automotive Group, Inc. operates as an automotive retailer. It sells new and used vehicles of approximately 40 vehicle brands; offers vehicle maintenance and repair services; and engages in the sale and placement of third-party finance and insurance products, third-party extended service contracts, and replacement and aftermarket automotive products. As of December 31, 2011, the company operated 320 retail automotive franchises, of which 166 franchises were located in the United States and 154 franchises are located outside of the United States primarily in the United Kingdom. It also has operations in Puerto Rico and Germany. Penske Automotive Group, Inc. was founded in 1990 and is headquartered in Bloomfield Hills, Michigan.
To review Penske's stock, please take a look at the 1-year chart of PAG (Penske Automotive Group, Inc.) below with my added notations:
PAG has formed a clear resistance at $32 (red), which would also be a 52-week high breakout if the stock could manage to break above it. In addition, the stock has been climbing the $2 increments (blue) over the last (3) months. Starting from November you can see the bounce on $26, then $28 after that, and now $30. PAG appears to find each increment of $2 as important.
The Tale of the Tape: PAG is stepping higher on the 2's towards its 52-week resistance at $32. A long trade could be made on a breakout above the $32 resistance or on a pullback down to the $30 level. A break below the $30 would be an opportunity to enter a short trade.


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Energy Stocks & Oil Special Trend Analysis Report

Crude oil has been trading ways for the past year between the 2011 high and low. The trading range through 2012 has been contracting with a series of lower highs and higher lows. This pennant formation because it is taking place after an uptrend is a bullish pattern with $110 and possibly even $140+ per barrel in the next 6-18 months.
If you look at the weekly investing chart of crude oil the key support and resistance levels area clearly marked. A breakout of the white pennant will trigger a move to the next support or resistance level. And judging from the positive economic numbers not only form the USA but globally the odds are increased for the $110+ price target to be reached sooner than later.

Crude Oil Price Chart – Weekly Investing

Crude Oil Price Chart – Daily short term Analysis & Target

If we zoom into the daily chart and analyze price and volume you will notice the $100 per barrel level is potentially only 2-3 days way… But keep in mind whole numbers (decade & Century Numbers) naturally act as support and resistance levels. So when the $100 century price is reached there will be a wave of sellers with fat thumbs who will slam the price back down to the $96 and possibly back down to the $92 level before oil continues higher.

Utility Stocks – XLU – Weekly Investing Chart

The utility sector has done well and continues to look very bullish for 2013. This high dividend paying sector is liked by many and the price action speaks for its self

Energy Sector Weekly Investing Chart

Energy stocks which can be followed using the XLE exchange traded fund (ETF) typically leads the price of oil. Looking at energy stocks we can see that they are outperforming the price of crude oil and on the verge of breaking out of a large Cup & Handle pattern. If so then $90 is the next stop but prices may go much higher in the long run.

Energy Stocks and Crude Oil Conclusion:

Once a breakout takes place on either the white or yellow lines on the first crude oil weekly chart we should see oil, energy and utility stocks start making some big moves. Depending on the direction of the breakout (Up or Down) it must be played in that direction to generate substantial profits obviously.


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May 2013-End of the Road-John Williams

Greg Hunter’s USAWatchdog.com  
Anybody who thinks the U.S. is in a so-called recovery isn’t listening to economist John Williams.  He contends, “We haven’t had a recovery and we’re not about to have one, and it’s getting worse.”  Williams says it’s because, “The consumer is in very serious trouble. . . . The average guy is not making it.  His income is not keeping up with inflation.”  As far as Congress getting the budget and debt ceiling under control, Williams says, “Both sides are faced with devil’s choices.”  If Congress does not get its financial house in order by the new deadline in mid-May 2013, Williams predicts, “It will be the end of the road . . . . They are not going to have another opportunity . . . they are pushing the limit as it is now.”  Williams says he expects, “. . . a negative reaction in the next 3 or 4 months to the dollar.” Williams adamantly calls for hyperinflation to the U.S. dollar by the end of 2014.  Join Greg Hunter as he goes One-on-One with John Williams of Shadowstats.com.

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Park Avenue, Money, Power and the American Dream

Park Avenue, Money, Power and the American Dream by totalinvestor

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Labor Minister Says France Is “Totally Bankrupt”

zerohedge.com / By Tyler Durden / January 28, 2013, 16:47
Things in France must not be very serious, because the French labor minister accidentally let the truth come out a little earlier today. As the Telegraph reports, France’s labour minister sent the country into a state of shock on Monday after he described the nation as “totally bankrupt.”
Remember: France is one of the supposedly stable countries in Europe.

“Michel Sapin made the gaffe in a radio interview, which left French President Francois Hollande battling to undo the potential reputational damage. “There is a state but it is a totally bankrupt state,” Mr Sapin said. “That is why we had to put a deficit reduction plan in place, and nothing should make us turn away from that objective.” It appears that once one wipes out the propaganda and the smooth politico talk, things are bad and getting worse at Europe’s core. “Data from Banque de France showed earlier this month that a flight of capital has already left the country amid concerns that France’s Socialist leader intends to soak the rich and businesses. The actor Gérard Depardieu has renounced his French citizenship and decamped to Russia in protest, while David Cameron said Britain will “roll out the red carpet” to attract wealthy individuals. Pierre Moscovici, the finance minister, said the comments by Mr Sapin were “inappropriate”.”

At least France can hike the tax on the millionaires to 75% to generate more money. Oh wait, no it can’t.
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Silicosis suit could crush S.Africa’s gold mining sector

Thousands of ex-gold miners suffering from silicosis have launched a class action suit in South Africa, in what could prove the final nail in the coffin of the country’s battered but vital mining sector.

Already buckling under huge operational costs and seemingly endless labour unrest, some 30 gold mine operators were last month slapped with litigation by thousands of their former employees.
The plaintiffs - mostly black migrant labourers from nearby countries and South Africa’s far flung mountainous villages of the Eastern Cape region - allegedly contracted the lung disease while drilling gold bearing rocks.

Already theirs is the biggest class action in South Africa’s legal history, involving more than 17,000 complainants.

And the list is growing by around 500 people each month, according to lead attorney Richard Spoor.
That stream could very well become a torrent.

Academic calculations estimate some 280,000 people have worked in gold mines for a minimum of 10 years, long enough to inhale dangerous levels of silica dust. (more)

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Finding The Best Broker For You: What Every Investor Must Know

Q: How do you pick the right broker? I know I should invest, but I just really don't trust myself to do it right. There's just so much to think about, so I think I'd like to go with a broker. But I'm not sure how to pick one of those either. Help!!
-- Todd, Akron, Ohio

A. Hi, Todd. By the nature of your question, it's clear that you are just starting out as an investor. So you should be spending time learning as much as you can about investing before deciding alone which stocks and funds are best for you. In fact, you may never have the time and energy to do all the homework necessary to stay informed about investing moves.

That's why a full-service broker is surely a good option for you. Note these are different brokers than the "online brokers" such as E-Trade (Nasdaq: ETFC) or TD Ameritrade (NYSE: AMTD), which allow you to trade stocks for rock-bottom fees, but offer minimal investing advice or counsel.
You've probably heard of all of the leading full-service brokers, as they likely have a branch office right in your town. The top six full-service brokers (ordered by the number of brokers they employ) are:

• Morgan Stanley
• Merrill Lynch
• Wells Fargo Advisors
• Edward Jones
• UBS
• Raymond James

There are many other good options, though some firms don't have the same armada of brokers operating out of retail offices and instead rely on telephone and Web-based customer support. For example, Fidelity Investments (NYSE: FNF) and Charles Schwab (NYSE: SCHW) handle as many accounts as the firms noted above, but they may not have an office near you.

Another distinction: The full-service brokers noted above, such as Morgan Stanley (NYSE: MS) and Merrill Lynch, offer a suite of financial planning services -- which can include estate planning and long-term wealth management strategies that may be better tailored to your needs.

If you think that sounds like what a financial planner can do, you're right. Today's full-service broker is expected to know much more than just investments. They should be reasonably knowledgeable about taxes, insurance, family trusts and other topics, and will advise you on how to structure your portfolio in the context of your long-term financial goals.

Every year, ratings firm J.D. Power & Associates polls several thousand investors to see which firms deserve high marks and which ones are to be avoided. You can read about the 2012 rankings here.

Since these brokers are expected to take a good deal of time to get to know your financial needs, they won't work with just anyone. They aim to charge hundreds of dollars a year -- in fees and/or commissions -- which is obviously not a realistic expense burden if you only have $5,000 or $10,000 to invest. If you are thinking about starting off with just a few stocks, and have less than $50,000 to invest, then you may be steered to an online customer service agent who can do little more than open an account for you. (more)


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Could This Small-Cap Biotech Could be Your Ticket to 91% Profits?

Biotech stocks have a history of volatile moves, but the swings in this issue could make the calmest trader seasick. Between April 2009 and April 2010, biotech stock Dendreon (NASDAQ: DNDN) surged nearly 2,000%, from a low near $2.60, to a peak near $54.

By July 2011, as management cut sales estimates of its flagship product, the stock had given up 80% of its value and fell to a low near $10.40. There was a countertrend rally to the mid-teens, but after falling to the mid-$3 range, shares can now be picked up in the low $6 range.

Here's what makes me excited now about the stock technically... (more)

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Jim Sinclair: QE is the Only Tool to Feign Solvency, Gold is the Only Tool to Accomplish Solvency!

Legendary gold trader Jim Sinclair sent another email alert to subscribers over the weekend, continuing his in-depth series on the monetary crisis in progress, and the fundamental reasons the dollar will hyperinflate and result in $3,500 + gold.
Sinclair stated that the dollar is re-entering a decade long major bear market, and that this is the foundation set in steel that will launch the next major bull phase in the gold price very soon.
While Sinclair has long urged readers to take physical gold positions without margin, with gold mining shares near historic lows compared to gold bullion, Sinclair states that condemning gold shares is total nonsense utilized by PM scoundrels.
Sinclair concludes by stating that Every problem we have from national to private is a balance sheet problem. As QE is the only tool to feign solvency, Gold is the only tool to accomplish solvency.
Read More @ Silver Doctors


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Palladium reserves in Russia, the world’s largest producer, are “pretty much exhausted”

Palladium in USD, 2 Years – (Bloomberg)
Tightness in the platinum and palladium markets has begun to see prices move higher.
Palladium reserves in Russia, the world’s largest producer of the metal, are “pretty much exhausted” and sales this year may be only 3 metric tons, according to Johnson Matthey Plc.
Russian inventory sales dropped 68 percent to 250,000 ounces last year from 775,000 ounces in 2011, according to Johnson Matthey.
Shrinking Russian stockpiles at a time when output is falling helped send the metal into the biggest shortage in 12 years.
Output in South Africa, the second-biggest producer, was disrupted by labor disputes and strikes, while lower grades contributed to a decline in Russia.
Palladium for immediate delivery has risen again today and is trading at $741/oz. Palladium, last quarter’s best-performing precious metal, has risen 5.4% this year after advancing 7.5% in 2012.
Palladium supply declined 12% in 2012 to 6.48 million ounces on the South African disruptions.

Platinum in USD, 2 Years – (Bloomberg)
Platinum supply dropped 10% to 5.68 million ounces because of declines in top producer South Africa, coming to less than the 5.84 million ounces forecast in November, according to Johnson Matthey.
Zimbabwe was the only major producing nation to increase output, Duncan said.
Platinum supply probably will be curbed further because of difficulties in South Africa, while auto catalyst demand is expected to stay “flat” this year, before a “much stronger” 2014, according to JM.



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Bank of America issues `bond crash' alert on Fed tightening fears

The return of confidence and healthy growth in the US risks setting off a “bond crash” comparable to 1994 and triggering a string of upsets across the world, Bank of America has warned.

The US lender said investors face a treacherous moment as central banks start fretting about inflation and shift gears, threatening a surge in bond yields.

This happened in 1994 under Federal Reserve chief Alan Greenspan when yields on US 30-year Treasuries jumped 240 basis points over a nine-month span, setting off a “savage reversal of fortune in leveraged areas of fixed income markets”.

A similar shock this year is “likely” if the US economy continues to gather strength. “The moment we hear the first rhetorical talk of exit strategies by central banks this could turn,” said chief investment strategist, Michael Hartnett. There was already a whiff of this in the most recent Fed minutes.

“The period of Maximum Liquidity is close to an end. Yes, the Japanese reflation is gaining steam in 2013 but we regard this as the last of the great reflations. The big picture is a transition from deflation to normal growth and rates,” he said.

The 1994 bond shock - and seared in the memories of bond-holders - ricocheted through global markets. It bankrupted Orange Country, California, which was caught flat-footed with large bond positions. It set off the Tequila Crisis in Mexico as the cost of rolling over `tesobonos’ linked to the US dollar suddenly jumped.   (more)

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Withdrawn: $114 Billion From Big U.S. Banks

More than $114 billion exited the biggest U.S. banks this month, and nobody’s quite sure why.

The Federal Reserve releases data on the assets and liabilities of commercial banks every Friday. The most current figures, covering the first full week of 2013, show the largest one-week withdrawals since the Sept. 11, 2001, attacks. Even when seasonally adjusted, the level drops to $52.8 billion—still the third-highest amount on record, and one for which bank experts and analysts were reluctant to give a definitive explanation.

The most obvious culprit is the expiration of the Transaction Account Guarantee program, the extraordinary federal effort to shore up the country’s non-gigantic banks during the 2008 financial crisis. Big banks were considered “too big to fail,” while smaller ones were vulnerable to runs. The TAG program backstopped their deposit bases by temporarily offering unlimited insurance on money kept in non-interest-bearing accounts. That guarantee ended on Dec. 31, so a decrease in deposits would be expected first thing in January.

But hold on: The Fed data show $114 billion leaving the 25 biggest banks—about 2 percent of their deposit base. Only $26.9 billion left all the others, equivalent to 0.9 percent of their deposit base. Experts had predicted that the end of TAG would hurt the nation’s small banks because the big ones are still considered too big to fail. “I think [customers] are going to go back to the mega banks,” the head of a regional bank in Bethesda, Md., told The Washington Post in December. “They’ve been assured by the government that mega banks are too big to fail. It’s a horrible, bad, poorly-thought-out situation.” Small banks fearfully lobbied the Senate to extend TAG, with analysts telling the New York Times that they expected $200 million to $300 million—yes, with an m—to move from affected accounts into money market funds or elsewhere.  (more)


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Marc Faber on Investment Strategy, Markets

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Portrait of the fiscal cliff

I included this chart of the US dollar index against a basket of global currencies in a presentation I did in Vancouver on the weekend. It helps put some big picture perspective on the US dollar and how its movements as the benchmark currency have impacted asset prices over the past 20 years.




First of all, we can see the surge in strength during the 1990′s tech bubble where the US could do no wrong and the world fell in love with their technological innovation in computers and the internet. The US dollar strengthened 50% during this period peaking with global stock markets in 2000. During this period, commodities were under-loved, under-invested, and under-priced (given their inverse price moves to the Greenback). After the tech bubble burst, people came to experience the financial trauma of their over-optimism, and over-investment began to flow back out of US dollars. Then came the 2001 downturn and the Greenspan led Fed began its epic and misguided efforts to re-inflate risk appetite by slashing interest rates from 5.5% to 1% by 2002. Next came 9/11 and the Bush administration opted to slash tax rates and commit to 2 massive military initiatives in Iraq and then Afghanistan while at the same time increasing spending in other areas. This was the real fiscal cliff, when spending went parabolic while tax revenues plummeted thanks to the weaker economy and lower tax collection. These were also the catalysts which drove the over-valued US dollar from its over-exuberant peak in 2000 through a 40% decline by 2008. Not surprisingly, commodities soared through this period, as prices moved from deeply under-valued in 2000 to deeply over-valued by 2008.

As the US dollar bounced off the depths of negative sentiment in 2008, over-valued stock and commodity prices tanked in sequence. Waves of government and Central Bank stimulus managed to force a cyclical bounce for risk markets from 2009 to 2011, and then the US dollar turned back up just as very few people expected it.

The precious metals and commodities crowd that had been decimated in 2008 found renewed hope in the speculative resurgence in liquidity fueled trading and stockpiling into 2011. They naturally believed they had been given reprieve and went back to over-confident bets just as the world economy turned back down. Since then the resource and mining sector has been hammered afresh as captured in this next chart of the Canadian Venture Exchange.




Now down some 63% from the 2008 bubble and some 50% from the 2011 rebound, the good news is that the resource sector has been through a large correction and while a further 20%+ downside is needed to retest its secular support, the space is surely moving closer to reasonable value now than it was in recent peaks. The bad news, is that as in other bubble aftermaths, it is likely that some 70%+ of companies in the sector are likely to go out of business and disappear in one way and another over the next couple of years. Investment success as always, will depend on one’s ability to determine who will be left standing and what price to pay for the new lower growth environment. As massive, reckless leverage continues to move out of this sector, investors may well do best to let the players settle a little further before stepping in.


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Bonds 101: Why Yields Move Inversely to Prices

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Precious Metals & Miners Making Waves and New Trends

The precious metals sector has been dormant since both gold and silver topped in 2011. But the long term bull market remains intact. As long as we do not have the price of gold close below the lower yellow box on the monthly chart then technical speaking precious metals should continue much higher.
Large consolidation periods (yellow boxes) provide investors with great insight for investments looking forward 6-18 months upon a breakout in either direction (up or down). The issue with investing during these times is the passage of time. One can hold a position for months and sometimes years having their investments fluctuate adding extra stress to their life when they really do not need to.
Once a breakout takes place a powerful rally or decline will start putting an investors’ money to work within days of committing to that particular investment compared to money invested waiting months for the breakout and new capital gains to occur.

Gold Price Chart – Monthly

Gold Price Chart – Daily

The chart of gold continues to form a large bull flag pattern with a potential 3 or 5 wave correction. If price reverses this week and breaks above the upper resistance trend line then it will be a 3 (ABC)  wave correction which is very bullish. But there is potential for a full 5 wave correction which is still bullish, but it just means we have another month or two before metals bottom.

Gold Miner Stocks – GDX ETF Chart – Daily

Gold miners do not have the sexiest looking chart. It was formed a strong looking bull flag but has continues to correct and is not nearing a key support level. This level could act as a triple bottom (bullish) or if price breaks below then it would be breaking then neckline of a massive head and shoulders pattern which points to 50% decline. I remain bullish with the longer term gold trend until proven wrong.

Silver Price Chart – Daily

Silver remains in a long term bull market much like the monthly chart of gold shown earlier in this report. Silver continues to work its way through a large bull flag pattern with a positive outlook at this time.

Silver Miner Stocks – SIL ETF – Daily Chart

Reviewing the precious metals sector it seems that silver miners have the sexiest looking chart. All price patterns are showing strength and are in proportion to one other. If this chart plays out to what technical analysis is pointing to then we could see the precious metals sector put in a bottom and rally within the next week or two. And if this is the case then silver miner stocks should provide the most opportunity going forward. 

Precious Metals Trading Conclusion:

In short, what you need to focus on is the yellow consolidation box on the monthly gold chart. A breaking in either direction will trigger a massive move that should last 6-18 months. Until then long term investors can simply sit back and watch the sector while they put their money to work in other active sectors.
From a short term traders point of view, that f mine. I am looking for a signs of a bottom on the daily chart to get my money working earlier to play the bounce/rally that takes place and actively managing the position until a breakout occurs. The charts overall are not that clear as to when a breakout will take place. Metals could start to rally next week or in a few months and all we can do is wait for a reversal to the upside before we get active.
Knowing the big picture trends and patterns at play along with major support and resistance levels (breakout levels) is crucial for success and piece of mind.

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The Short Ratio as a Stock Sentiment Indicator

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US Weekly Economic Calendar

THIS WEEK'S U.S. economic reports
time (et)	report	period	Actual	CONSENSUS forecast	previous
MONDAY, JAN. 28
8:30 am	Durable goods orders	Dec.		2.3%	0.8%
10 am	Pending home sales	Dec.		--	1.7%
TUESDAY, JAN. 29
9 am	Case-Shiller home price index	Nov.		--	4.3% (yoy)
10 am	Consumer confidence	Jan.		64.3	65.1
WEDNESDAY, JAN. 30
8:15 am	ADP employment	Jan.		165,000	215,000
8:30 am	GDP	4Q		1.0%	3.1%
2:15 pm	FOMC announcement	--		--	--
THURSDAY, JAN. 31
8:30 am	Weekly jobless claims	1/26		355,000	330,000
8:30 am	Employment cost index	4Q		0.5%	0.4%
8:30 am	Personal income	Dec.		0.9%	0.6%
8:30 am	Consumer spending	Dec.		0.2%	0.4%
9:45 am	Chicago PMI	Jan.		50.0	48.9
FRIDAY, FEB. 1
8:30 am	Nonfarm payrolls	Jan.		160,000	155,000
8:30 am	Unemployment rate	Jan.		7.8%	7.8%
9 am	Market PMI	Jan.		56.0	56.1
9:55 am	UMich consumer sentiment	Jan.		71.5	71.3
10 am	ISM	Jan.		50.7	50.7
10 am	Construction spending	Dec.		0.7%	-0.3%
TBA	Motor vehicle sales	Jan.		15.2 mln	15.3 mln

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Dr. Frackenstein – The Truth About Fracking And Nearly Unlimited Oil Supply

from FinancialSurvivalNet
Finally, we were able to get Dr. Frackenstin on the show. He’s a 25 year veteran Petroleum Engineer. He’s drilled 10′s of thousands of wells, without a blow out. He does it safely and efficiently. He can regularly be found in the North Dakota tundra. He thinks that fracking has gotten a bad wrap and he’s not afraid to say so. In addition, he’s blowing the lid off the peak oil theory. Oil fields that were considered fully depleted 30-40 years ago have literally gotten a new lease on life, through horizontal drilling and other enhanced recovery techniques. Hopefully, this will mean that we won’t be on gas lines soon anytime soon.
Click Here to Listen to the Audio

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Richard Russell – Will Germany Shock The World?

from King World News
With gold near $1,670 and silver close to $32, the Godfather of newsletter writers, Richard Russell, discussed a couple of global indexes, highlighted gold and the mining sector with some fascinating charts, and asks, what about Germany? Here is what Russell had to say: “Will Germany shock the world by pulling out of the eurozone? Germany’s stock index has been consolidating, but I don’t like the look of MACD. Germans are dreaming of getting back their beloved Deutsche mark — I think they’ve had enough of the euro.”
Continue Reading at KingWorldNews.com…


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How To Analyze $SPX Wedges!

Here is the link for the Wednesday january 23rd Webinar.

Webinar

I covered off all of the major wedges in the $SPX. I think this will help most people with what history has shown about major 2 year wedges and how you may want to trade around the prcie action relative to the wedge.

I received a lot of posts for people who saw the webinar and found it very enlightening.

Let me know what was valuable for you!

Good Trading,
Greg Schnell, CMT


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Opening Range Breakout: A System That Offers Signals for Quick Profits

The opening range breakout strategy is one of the first day trading strategies explained in detail for individual traders. In 1990, Toby Crabel wrote a book called Day Trading With Short Term Price Patterns and Opening Range Breakout.
This book has been out of print for years and it is rumored that Crabel would not give permission for a second printing because he was profitably managing money with the strategies. Copies are occasionally available for prices starting at several hundred dollars on Internet auction sites.
The book describes very specific rules for trading several markets, rather than a general but practical overview like this article offers.

Traders using the opening range breakout strategy calculate the opening range, which is the difference between the highest price and the lowest price in the first few minutes of trading. Common time frames are the first 15 minutes or the first 30 minutes of the trading day, although longer or shorter periods can be used.If price moves significantly above or below that range, traders expect to see follow through and will place orders to enter trades near the high and low of the opening range.
How Traders Use It
An example of the opening range breakout strategy can be described with a few rules:
1. Calculate the opening range. For example, if the high is $102 and the low is $98 in the first 15 minutes of the trading day, the opening range would be equal to $4.
2. The size of the range is added to the high and a buy order is placed at that price. In this example, $4 is added to $102 and a buy order is placed at $106.
3. Subtracting the range from the low provides the short entry point. In this case the trader would enter an order to go short at $94, which is $4 below the low of the opening range at $98.
4. If prices fall back to the middle of the range, then the trader would close their position with a loss. In this example, a long trade entered at $106 would be closed at $100 and a short trade entered at $94 would be closed with a loss at $100.
5. All trades are closed at the end of the day.
There are many possible variants of these ideas. The time frame could be changed in step 1. A multiple of the range could be changed in steps 2 and 3. For example, aggressive traders might use a multiple less than 1 (like 0.5) to generate more trades while more conservative traders might use a larger multiple (like 2) to trade only the strongest trends. Stop-loss levels can be varied in step 4 and profit targets could be added as exits in step 5.
Why It Matters To Traders
The opening range breakout strategy has been widely used by traders to profit from intraday moves.
This is also an ideal trading system for day traders with full-time jobs. All of the required data is known shortly after the market opens, 15 minutes after the open in the example shown. Orders can quickly be calculated and entered with a broker so that traders can profit from intraday trends without having to monitor the market all day.

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Gold Market Manipulation – GATA Update

Cambridge House, Published on Jan 23, 2013

For years the Gold Anti Trust Action Committee has been on the front lines pushing for an audit of the Federal Reserve. Headway is being made and GATA is here to give an official update.

Featuring Chris Powell, Bill Murphy & Ed Steer.
http://www.gata.org/
Filmed January 20th, 2013

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Find Bargain Stocks Like Buffett With These 4 Value Ratios

"Price is what you pay. Value is what you get." -- Warren Buffett

Putting his finger on this difference between price and value in stock investing is essentially what made Warren Buffett the third-richest person on Earth, according to Forbes. Today he's worth more than $44 billion.

 

What Buffett means is simply this: Every stock on the market trades for a certain price, but it's more important to know how much you're actually getting in return for paying that price. That's value.
To better explain, let's scale stocks down to lemonade stands. Say you want to make some money and you're deciding between buying one of two different lemonade stands to do it. Both stands are being sold by their owners for the same price -- $100.

If you're thinking, "What's the difference between the two stands?" then you're already thinking like a smart investor. Let's say one stand earned $20 profit last year, while the second stand earned $100 profit last year. Which stand gives you more value (i.e. more in return) for your $100 investment?

Let's look at your two investment choices: If you invested $100 into the first stand, then you could earn $20 each year and make back your original investment in five years. But if you instead invested $100 into the second stand, then you could make back your money in one year and start earning profit after that. That's a 20% annual return versus a 100% annual return on investment. It's clear that the second lemonade stand is a much better value.  (more)


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Get Far Away From USA… Its Collapse Will Be Messy – Jeff Berwick

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Riding The Silver Wave

Lenic Rodriguez, CEO, Aurcana discusses why silver is gaining popularity among investors. He explains how that is helping his company’s business.
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Eveillard: Wall Street Is A Den Of Thieves, I’m Not Selling Gold

kingworldnews.com / January 25, 2013
Today legendary value investor Jean-Marie Eveillard, who oversees $73 billion, told King World News, “I say to myself when I’m in a good mood, ‘Wall Street is nothing but a vast promotion machine.’  When I’m not in a good mood I tend to think, Wall Street may be, after all, a den of thieves.”  Eveillard also tore into Goldman Sachs for their bearish call on gold, and went on to emphatically state, “I’m not selling any of the gold I own.”

Here is what Eveillard had to say:  “What’s catching my eye is the Fed is printing enormous amounts of money.  Meanwhile the Bank of Japan, which up until recently had been quite reluctant to print money, Mr. Abe has now indicated without any ambiguity they will print very freely. ”
Jean-Marie Eveillard continues:

“To the extent that the central banks continue to print, and at some point the European Central Bank will print again, I think we have the conditions for the pure paper money system, which has been in place now for more than 40 years, to continue to fray at the edges.

So what I’m saying is that I have no idea where the price of gold will go over the short-term, but I think from a medium-to-long-term standpoint the conditions continue to be quite ripe for the price of gold to go up again.  Now I understand that Goldman Sachs has recently produced a paper which is negative towards the price of gold….
READ MORE

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Over 1.4 million American borrowers pull out of negative equity in 2012.

doctorhousingbubble.com / By Dr. Housing Bubble / January 24, 2013
The big story of 2012 was the incredible decline in available housing inventory for sale.  This trend appears to be continuing and is adding a tremendous amount of pressure on the current market especially for those looking to buy.  Ironically, the increase of real estate values will also revive many home owners from their zombie slumber in negative equity.  Over 1.4 million borrowers came out of a negative equity position in 2012.  This is a large number given the limited amount of inventory on the market.  How many of these people will be looking to sell as their homes turn into positive territory?  The quest for inventory might come from a very familiar place with regular people selling their homes for a variety of reasons including moving to another place, cashing in, marriage, divorce, new job, or any other factors that cause people to sell.  In other words, a more normal housing market.  Will these former negative equity borrowers push inventory levels up?
The underwater nation
Even with 1.4 million borrowers exiting out of negative equity, we still have 10.7 million American underwater.  In many cases, some are severely underwater:

Nearly 10 percent of borrowers are still in deep trouble with loan-to-value ratios above 125 percent.  22 percent of properties with a mortgage are still underwater and this is a sizable amount.  The drastic drop in inventory is uncharacteristic but does make sense.  Banks are controlling the flow of distressed properties onto the market.  We currently have over 5 million homes in some sort of distress (foreclosure or with at least one missed payment).  This has been going on since the housing bubble popped.  The total completed foreclosure count is somewhere around 5 million.
READ MORE

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PBS Frontline: The Untouchables

Watch The Untouchables on PBS. See more from FRONTLINE.

FRONTLINE investigates why Wall Street’s leaders have escaped prosecution for any fraud related to the sale of bad mortgages. Well before the 2008 financial meltdown, mortgage industry insiders discovered a ticking time-bomb that they say went up to the very top of Wall Street. What did they find? Who did they warn? And what happened to their warnings? Below is Part 1. Here is a direct link to all 4 parts.

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the Ultimate "Doomsday Portfolio"

We've managed to avoid the great Mayan prediction of the end of the world in 2012, along with countless doomsday prognostications before it. But while we shrug off the continued calls that some people still predict about the end of the world, it's undeniable there are good reasons investors should have a "doomsday portfolio" to protect them from catastrophic losses.

 

I'm not talking about the end of times, though. In the event of runaway asteroids or "the second coming," saving for your golden years will be the least of your worries.  

 

But I'm also not talking about simply a global malaise in economic growth or the gradual loss of purchasing power in the U.S. dollar, either.

 

I'm talking about a quick collapse of order -- a collapse of faith in our institutions and a resulting widespread loss in financial assets.

 

And if you think this could never happen, then think again.

 

Hurricane Katrina destroyed more than $60 billion in economic value and led to massive looting and a surge in energy prices. The "once-in-a-century" disaster was followed just seven years later by Hurricane Sandy, which caused damage that may cost up to $50 billion. 

Officials in Japan have found radioactive material in produce up to 200 miles from the Fukushima nuclear disaster.  (more)


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Jim Sinclair: US Hyperinflation to Start Mid 2013, Run Through 2017!

from Silver Doctors:
Legendary gold trader Jim Sinclair sent subscribers a shocking and MUST READ email alert last night regarding the possibility that the dollar as reserve currency will enter the initial stages of hyperinflation by mid-year, and the effects the debasement of the dollar will have on gold.
Sinclair states that by midyear of 2013 the US Federal Reserve will have to make a decision in order to keep the US bond market which is US interest rates at the low levels that have been promised until employment has made a sustained recovery and that The Fed’s defense of the US bond market is demanded by the huge pile of original and old OTC derivatives that still haunt the monetary system as specific performance contracts with any financing floating in cyber space. This could drop the US dollar below .7200 to .5600 on the USDX in a short period of time.
Read More @ Silver Doctors

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