Thursday, December 5, 2013

The Last Two Times This Happened, Things Didn’t End Well

With the almost extinction of ‘bears’ we noted last week, the bull-bear index has now crossed the Rubicon into a euphoria mode that marked the turning point before the last 2 major corrections in the US equity market. Of course, we are sure, this time is different; but hasn’t the Fed ‘always’ had our back? Perhaps, as GenRe’s CIO notes, “gravity will win,”after all?
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Four big reasons to stay away from gold: Strategists

News flash: Gold is down.

Okay, that's not news. But, the 27% fall of gold been one of the biggest stories of 2013.
How sad is gold? Were it a component of the S&P 500, it would rank as the fifth-worst performing stock in the index in 2013. That means if you picked any random stock in the S&P 500 out of a hat back on January 1, you had a 99.2% chance of beating gold.

Three of the S&P 500 stocks doing worse than gold in 2013 are Terradata (down 27%), Peabody Energy (down 31%), and JC Penney (down 46%). But, to add insult to injury for gold bugs, the one stock at the very bottom of the barrel this year is a gold miner. Newmont Mining is down 50% year-to-date.  (more)

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Here’s Why Cheap Oil & Gas Could Soon Disappear

Much to the delight of consumers and economists, oil and gasoline prices have been steadily falling for the past five months.  In fact, both petroleum products are currently showing double-digit decreases from their recent highs.  It’s an occurrence that is not only being credited with helping confidence, but also with saving the holidays, since shoppers can spend money on gifts instead of gasoline.

But that could all change, says Bill Baruch, senior market strategist at, who’s in the midst of a year-end strategy he says works 8 out of 10 times.

“We like gasoline (RBZ13.NYM). We’re getting our clients in,” Baruch says in the attached video. 

“If you buy (gasoline) in December and hold it through (first week of January), it’s successful 82.6% of the time. For us it’s no brainer with the seasonal play here,” he adds.

There are other factors that are keeping this Chicago-based trader, and others like him, on edge right now. Rising inventory data continues to reflect weak overall demand, which is due in part to a sluggish economy and simple efficiencies like smaller, more efficient cars.

And then there’s a logistical aspect to his trade too.

“There’s also a big issue with getting the oil to the refineries,” he says.  “There’s not enough refineries. We haven't had a new refinery in 30 years. Refining the crude is the problem.”

And finally, Baruch says, most investors are celebrating a party that doesn’t even really exist by looking at the 13% slide in WTI or NYMEX crude (CLF14.NYM), instead of the 5% dip in the price of the more globally watched Brent crude (BZF14.NYM), which is still above $110.

“The reality is, everybody is focused on WTI (West Texas Intermediate).  You have to focus on Brent. Our government even uses Brent as a benchmark. What’s really moving (things) is the Brent.”

As he sees it, even if OPEC holds off on trimming its output quotas tomorrow, high domestic production, and backlogged refineries will serve as a floor in the price of petroleum prices.Please share this article

Stunning Event Is About To Completely Alter The War On Gold

from King World News
One of the most highly respected fund managers in Singapore spoke with King World News about a stunning event that is about to completely alter the war on gold. Grant Williams, who is portfolio manager of the Vulpes Precious Metals Fund, also discussed how this war will ultimately end as well as what all of this means for investors in gold. Below is what Williams had to say in his powerful interview below.
Williams: “You have 5 banks that set the price of gold every day in London. They literally do it over the telephone. And this process takes anywhere from a few minutes to over an hour. Amazingly enough, in this day and age, during that ‘fixing’ time the participants on that call are allowed to trade the metal (gold) and they are allowed to trade derivatives on that metal during the phone call….
Continue Reading at…
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McAlvany Weekly Commentary

Shanghai: Enter the Gold Dragon

About this week’s show:
  • McAlvany clan meets with Shanghai Gold Exchange
  • As Chinese income grows, so grows it’s gold demand
  • The China Dragon accumulates gold at record pace
Read | Subscribe@iTunes
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Arcos Dorados (NYSE: ARCO): This Low-Priced Stock Could Soar 50% in the Next 6 Months

For many folks in Latin America, 2011 seems like an awfully long time ago. Just two years ago, regional economies were booming, and growth in middle-class consumption was off the charts.
That proved to be a fortuitous time for Arcos Dorados (NYSE: ARCO) to go public. At the time, the company operated more than 1,700 McDonalds (NYSE: MCD) franchises in 19 countries across Latin America and the Caribbean, and in many respects was firing on all cylinders. Sales, EBITDA and net income were all rising at an impressive clip, and analysts expected more of the same in the years to come.
And then the wheels fell off.
Many Latin American economies eventually hit an air pocket, most notably in Brazil, which accounts for more than half of this company's sales and EBITDA. And as these economies have slowed, analysts have repeatedly lowered their profit forecasts.
Shares, which surged after the April 2011 IPO, now remain in a deep funk.
ARCO Stock Chart
How badly has the economic slump affected financial results? (more)
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