Press Esc to close

Welcome to Money Morning - Only the News You Can Profit From.

Close

Two Safe Ways to Profit From the "Alibaba Shockwave Effect"

In the mid-1990s, I was fortunate to meet and start working with an Upstate New York money manager named Anthony M. Gallea.

The relationship began when I attended and wrote stories about some of the investment seminars he periodically held for prospective and existing clients. He then became a “source” for some of the investment stories I periodically wrote for Gannett Newspapers. And we ultimately collaborated on a pretty successful book about “Contrarian Investing” that was published by Prentice Hall.

Along the way, Tony shared some pretty important snippets of investing wisdom…

  • Gold Prices

  • How Helicopter Ben Helps Jobs and, Inadvertently, Gold Prices The world's central bank leaders continue to spike the monetary punch bowl, with investors imbibing on gold once again.

    This flurry of gold buying prompts many curious investors and doubting media to ask me two questions: 1) How can demand for gold and gold stocks continue; and 2) How high can gold prices go?

    To answer these questions, we need to look at the intentions behind the economic and political decision-making across several developed countries, analyze the causes, the effects, and the possible ramifications.

    For example, one of the most debated topics today is America's ongoing unemployment situation.

    Job loss has affected the lives and pocketbooks of millions of Americans and our friends and families, culminating to a center-stage position in the election this year. All eyes turn to President Barack Obama and Mitt Romney to explain how each intends to create jobs.

    During the two years following the Great Recession, Americans lost jobs at a similar rate to the employment losses during the Great Depression and in Finland after 1991. But two years after the crisis, U.S. employment losses stopped and reversed direction.

    Compare this to the situations in Norway, Spain, Finland and Sweden, each of which had prolonged unemployment.

    After Norway's financial crisis in 1987, it took 8.5 years to return to the country's employment peak. It took 13 years for Spain's employment to return to its 1997 peak. For Finland and Sweden, it took more than 17 years following their 1991 peaks.

    Although the job losses in the U.S. don't seem as dismal, "Helicopter" Ben Bernanke wants to avoid Europe's and Japan's catastrophic situations.

    To continue reading, please click here... Read More...
  • If You're Investing in Gold, Singapore Just Became More Important to You Singapore recently made a huge step forward in establishing itself as one of the biggest players in the global market for investing in gold.

    The Asian city's government repealed a 7% tax on gold and silver effective Oct.1. Now investors can store their gold in Singapore without costly value-added taxes.

    Singapore hopes the move will help the region morph into a precious metals trading market like London and Zurich.

    "It seems a little unfair to put a sales tax on what is essentially money. The removal of the GST on gold will allow Singapore to better compete with Hong Kong and other bullion trading centers in the region," Nick Trevethan, a senior commodity strategist at ANZ in Singapore told Reuters.

    Singapore currently controls roughly 2% of global gold demand and aims to grow that share to some 10% to 15% over the next five to 10 years.

    The market expansion is expected to increase global demand for gold and silver bars and coins in the fourth quarter of 2012. An influx of precious metal traders to Singapore is also expected, with more commodity offices and bullion storage facilities to follow.

    Anticipating the opportunity, JPMorgan Chase & Co. (NYSE: JPM) opened a precious metals vault in the city in 2010.

    "I think this is really going to change the landscape in Singapore," a gold dealer told Asia One Business. "A lot of companies will find the incentive to start operations in Singapore. This news is going to draw attention to Singapore as a safer place to park funds."

    To continue reading, please click here... Read More...
  • Bill Gross, the Ring of Fire, and Gold Prices Thank Bill Gross for adding some muscle this week to the already strong rally for gold prices.

    That's because Gross, the Pacific Investment Management Co. (PIMCO) founder and co-chief investment officer, released his October 2012 investment outlook Tuesday that came with a warning for the U.S. and investors.

    Gross said that U.S. fiscal problems have put the country in a "Ring of Fire" that'll burn investors if they aren't protected by gold and real assets.

    Gross warned that recent studies have concluded that "[T]he U.S. balance sheet, its deficit and its "fiscal gap' is in flames and that its fire department is apparently asleep at the station house."

    To continue reading, please click here... Read More...
  • Gold Prices Will Soar Past $2,500 As Central Banks Buy it Up With governments all over the planet buying up gold over the past five years, it's no wonder gold prices have risen 142% since 2008.

    Central banks bought 254.2 tons in the first half of 2012 and may add close to 500 tons for all of 2012, the World Gold Council said last month.

    According to the International Monetary Fund (IMF), Russia added 18.6 metric tons of gold in July. South Korea bought 16 tons -- a 30% increase. Kazakhstan increased their bullion reserves for a 12th consecutive month.

    Turkey, Ukraine and the Kyrgyz Republic also joined the party.

    And the buying continued in August, albeit at a more moderate pace, the IMF confirmed.

    "Gold prices continue to be underpinned by growing demand from central banks...we believe this trend is likely to ramp up once liquidity increases in global markets," Justin Harper, markets strategist at IG Markets, told MarketWatch.

    That means the cheap money policies by many of these same central banks, such as the Federal Reserve's recently announced QE3 program, will also help fuel the rise in gold prices.

    Combine that with skyrocketing demand from the private sector, and government hoarding could easily push the price of bullion as high as $2,500 in 2013.

    In fact, the rally could be similar to gold's big breakout move in 2007, when gold prices surged 60%, according to Citi FX Pro analyst Tom Fitzpatrick.

    To continue reading, please click here... Read More...
  • Gold Prices: Here's Why All the Hype Goes Beyond QE3 It was another bumpy week for gold prices that included two-week lows and a surge to seven-month highs.

    On Thursday, December gold futures increased $26.90 (1.5%) and settled at $1,780.50 an ounce on the COMEX.

    This represented gold's highest close since the end of the February.

    As the week comes to an end and traders waited for more news from Spain, December gold was down on Friday morning to $4.10 to $1,776.40 an ounce.

    Gold's price moves came from a number of factors this week including bargain hunters and weak U.S. macroeconomic data.

    The bottom line is that the QE3 rally might have fizzled, but the long-term gold outlook still shines brightly.

    Here's why.

    To continue reading, please click here... Read More...
  • Investing in Gold: Why the "Golden Cross" is a Big Deal Investing in gold and silver already offered staggering profit potential, and the opportunities just got even brighter.

    Gold this week reached a "golden cross" and silver is perched to traverse one in a matter a days, following successive weeks of bullish trends in both precious metals' markets.

    A golden cross occurs when the current price of a commodity (or an equity) and the shorter term moving averages "cross" or rise above the longer term 200-day moving average.

    After 18 months of tepid and sometimes lower price movement, gold and silver have formed a large foundational base while enjoying two of the longest and strongest bull markets in history, according to research from Business Insider.

    Now the golden cross has delivered technical support for higher moves for both metals.

    "We're going to see new highs in both gold and silver in the first half of the New Year," said Money Morning Global Resources Specialist Peter Krauth. "I don't see anything that will keep this from happening."

    Here's why Krauth is so bullish on gold and silver.

    Read More...
  • All Signs Now Point to Gold With another syringe of quantitative easing being injected into the U.S. economy's bloodstream, Ben Bernanke is giving the markets their liquidity fix.

    The Federal Reserve's action reaffirmed the stance I've reiterated on several occasions that the governments across developed markets have no fiscal discipline, opting for ultra-easy monetary policies to stimulate growth instead.
    The government's liquidity shot promptly boosted gold prices and gold stocks, as investors sought the protection of the precious metal as a real store of value.

    In fact, since the beginning of 1984, as money supply has risen, so has the price of gold.

    The dollar declined due to the Fed's easing, which isn't surprising, given the fact that gold and the greenback are often inversely correlated, and increasing money supply generally causes the currency to fall in value.

    What's interesting is that currency decline was what Richard Nixon sought to avoid when he ended the gold standard in 1971 and announced that the country would no longer redeem its currency in gold.

    During his televised speech to the American public, Nixon translated in simple terms the "bugaboo" of devaluation, saying, "if you are among the overwhelming majority of Americans who buy American-made products in America, your dollar will be worth just as much tomorrow as it is today."

    As you can see below, more than 40 years later, a dollar is worth only 17 cents.

    To continue reading, please click here... Read More...
  • Investing in Gold After QE3 It's been just four trading days since QE3 ended and gold prices are already up about $40 an ounce.

    Prior to the announcement, gold was trading at six-month highs, but dipped slightly before Thursday's anticipated news. Upon hearing the Fed's decision, gold prices shot up 2% that day.

    Here we are on Tuesday and gold prices have slightly dipped with Comex December futures declining $4.50 to $1,766.10 an ounce. Many investors have hit the sidelines to watch whether or not the Eurozone will dodge increasing doubts about its bailout agreements.

    But we're still a long way from the long-term price target for gold. Can this QE-fueled rise match ones for QE1 and QE2? History does have a way of repeating itself...

    To continue reading, please click here... Read More...
  • Investing in Gold ETFs: Don't Miss this Bull Market The gold bull market is alive and well, meaning now's the time for investing in gold exchange-traded funds (ETFs).

    Gold kicked off the week with December futures rising $6.80 (0.4%) to $1,738.60 an ounce Monday. This came on the heels of Friday's disappointing U.S. jobs report and the anticipation of a newsworthy week for the precious metal thanks to some possible central bank action.

    Gold futures again edged higher today (Tuesday) with December futures at $1,736 an ounce. The gold price rise continues thanks to an increasing euro and the anticipation of a German court ruling Wednesday on the Eurozone bailout fund's legality.

    Adding to the bullish sentiment on gold is the anticipation of this week's two-day Federal Open Market Committee (FOMC) meeting: Will they or won't they announce another round of additional easing on Thursday?

    While these events help price outlook for gold, they're also drawing investors to gold ETFs.

    On Monday, gold ETFs rose to a record high of 72.49 million ounces, reported Reuters.

    In 2012, total holdings have increased by almost 3.5 million ounces; in the last month 2.7 million ounces flowed into gold ETFs.

    The interest in investing in gold ETFs is another bullish signal for the yellow metal, erasing some worries over the sustainability of gold's price rise.

    "With a good portion of gold's recent strength accounted for by the sharp increase in spec positioning, this certainly raises concerns on the longevity of the [gold price] move, especially with fundamental buying virtually out of the picture," Edel Tully, a strategist at UBS, said to Reuters. "But the fact that the (ETF) camp - a relatively less-fickle group of buyers - has also been giving gold its vote of confidence offsets some of those worries."

    To continue reading, please click here... Read More...
  • Gold Bugs Love It, But a New Gold Standard is Just a Dream –For Now Thanks largely to Ron Paul, the Republicans have suddenly become enamored of gold.

    And why not?...It is real money.

    These newly-born gold bugs have even gone so far as to include a call for a commission to examine a return to the gold standard in the party platform.

    Needless to say, we've come a long way since President Richard Nixon "closed the gold window" in 1971. Forty-one years, and a few financial disasters later, the debate has begun anew.

    But it begs the question: How would the gold standard work?

    What's more, what would the economic implications be, and is it likely to happen or is it all just a gold bug's dream?

    In ancient and medieval times the answers were quite a bit more simple. Since there was no real banking system, there was also no argument.

    Kings coined money with gold, silver, or copper, and the people accepted the money at a price based on its metal content. The idea of taking paper instead would have been thought of as sheer madness.

    Only in China, an isolated and stable society, was paper money used during the Song Dynasty of the 10th through 13th centuries, but even there the Mongol invasion and fall of the Song regime caused the paper money system to collapse.

    Paper money backed by gold only became possible once modern banking got going in Europe in the 16th and 17th centuries.

    In fact, the British Gold Standard was devised in 1717 by no less than Isaac Newton, then Master of the Mint. Other countries soon joined Britain in linking their currencies to gold, including the United States from 1878 until its abandonment in 1933.

    Of course, countries claimed to be on a gold standard under the Bretton Woods Agreement from 1944-71, but gold was only exchangeable between governments. Indeed, holding gold was prohibited in the U.S. for private individuals.

    But inevitably, the Bretton Woods monetary system itself became manipulated and collapsed in inflation.

    That brings us to today....

    To continue reading, please click here...

    Read More...
  • Gold Prices Jump Above $1,700, but Hurdle Ahead Gold prices have made the most out of a short trading week, and today jumped $10.50 to $1,704.50 an ounce at the Comex division of the New York Mercantile Exchange.

    Gold, which one year ago today hit a historic high of $1,920 an ounce, came out roaring Tuesday after the Labor Day holiday. Gold closed up 2.55% to reach a more than five-month high of $1,700.

    This came from increased investor hopes that the U.S. Federal Reserve will deliver QE3 to give the slowly-recovering economy a much-needed lift.

    U.S. Fed Chairman Ben Bernanke's remarks from Friday's Jackson Hole, WY speech served as the gold price catalyst.

    "Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability," said Bernanke, giving enough of a hint that QE3 was on the way in 2012.

    Gold ETFs also started strong in September after a healthy performance in August.

    On Tuesday, SPDR Gold Trust (ETF) (NYSE: GLD) holdings, the world's largest gold-backed ETF, increased to 1,293.138 tons. This is the highest level since mid-March.

    GLD's price also jumped 1.77% to 163.36.

    To continue reading, please click here... Read More...
  • Gold Prices Await Big News from Bernanke Gold prices are desperately waiting for bullish news from the Federal Reserve this week after slipping from last week's gains.

    Last week, gold woke up from its sleepy August and increased 3.5%. It saw its greatest one-week jump since January and gold exchange-traded funds (ETFs) followed in its footsteps by reaching four-month highs and breaking 200-day moving averages.

    These jumps came in response to the Federal Open Market Committee (FOMC) meeting minutes that suggested the need for more stimulus and some sort of quantitative easing. The report release extended the recent precious metals rally initiated by European Central Bank President Mario Draghi, who pledged his commitment to keep the Eurozone in place.

    Gold prices on Monday fell from last week's high of $1,674.28 to $1,671.80, and have continued that decline this week. The most actively traded contract for December delivery was down Thursday morning by $1.10, or 0.1%, to $1,661.90 per ounce.

    So what happened to dampen last week's enthusiasm for gold?

    Europe, China Pound Gold Prices

    News from abroad knocked down some of the gold price optimism.

    Germany's Ifo Institute announced Monday that its business sentiment declined for a fourth consecutive month in August to 102.3; this came in lower than the 102.6 estimates and July's revised 103.2 figure.

    To continue reading, please click here...

    Read More...
  • Gold Prices Going Up Regardless of Jackson Hole Outcome Investors want to know if this week's Jackson Hole, WY meeting of central bankers will result in further stimulus measures and a rally in gold prices - but they don't have to wait to know gold is headed higher in 2012.

    Gold fought back from its Tuesday morning low of $1,659.10 an ounce after a read on consumer confidence showed sentiment dropped in August to its lowest level in nine months. Americans have become increasingly worried about their employment scenarios and the overall outlook on the sluggish U.S. economy.

    "Bad news is good news for gold again," Charles Nedoss of Kingsview Financial told CNBC.

    Gold for December deliverylost $5.90, or 0.4%, to end at $1,669.70 an ounce on the Comex division of the New York Mercantile Exchange - but the slip won't last.

    "Before you know it, gold is going to push for the next level, somewhere above $1,700 an ounce," Michael K. Smith, president of T & K Futures in Florida, told MarketWatch.

    Gold glistened last week on news of possible additional monetary intervention from the U.S. Federal Reserve.

    Following the release of the Federal Reserve's minutes last Wednesday, gold prices climbed to a 16-week high on hopes the central bank may engage in a fresh round of monetary stimulus to give life to the besieged U.S. economy.

    "Many members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery," according to the Federal Open Market Committee (FOMC) meeting minutes from July 31 - Aug 1.

    Gold futures for December delivery hit $1,655.90 an ounce Wednesday after the 2 p.m. announcement, marking a then four-month high.

    Gold prices continued the rally Thursday, gaining some $32.70 as the metal relished in renewed safe-haven buying. The precious metal was buoyed by an uninspiring manufacturing report from China revealing production fell to a nine-month low in August. The data suggested more action may be needed to boost the Asian nation's lackluster economy.

    Now analysts see even more upside potential as the gold-price trend slopes upward. Deutsche Bank AG (NYSE: DB) expects U.S. and Chinese policy measures to support gold's growth over the next quarter or so.

    Read More...
  • Republicans Support Return to Gold Standard Five years of liberal monetary policy have made the rarely considered notion of a return to the gold standard a genuine issue on the Republican platform.

    The Republican Party is set to announce a "gold commission" to its official policy platform in Tampa Bay this week. The move will mark the first time in three decades that the gold standard has returned to mainstream U.S. politics.

    A committee spokeswoman confirmed to CNNMoney that the new proposal to support "gold as money" will be officially decided upon at the RNC Convention.

    "Now, three decades later, as we face the task of cleaning up the wreckage of the current Administration's policies, we propose a similar commission to investigate possible ways to set a fixed value for the dollar," reads the proposal.

    Republicans' Gold Standard Proposal: A Nod to Ron Paul?

    The draft calls for an audit of Federal Reserve monetary policy and a commission to explore restoring the connection between the U.S. dollar and gold.

    Many credit the eyebrow-raising move to Texas Rep. Ron Paul, a longshot GOP presidential hopeful who has been a staunch advocate of returning to the gold standard. Paul, the token underdog in the race, does have a stream of loyal supporters who would support such a move.

    But Marsha Blackburn, a Republican congresswoman from Tennessee and co-chair of the committee, shrugs off any connection to Paul and his coveted delegates.

    "These were adopted because they are things that Republicans agree on. The House recently passed a bill on this, and this is something that we think needs to be done," Blackburn told the Financial Times.

    To continue reading, please click here...
    Read More...
  • Invest in Gold Mining Stocks While They're Still a Bargain With gold prices high and likely to go higher, this might be the best time to invest in gold mining stocks.

    Gold prices eked out a small gain Friday to close at $1,616.30 an ounce.

    Comments from German Chancellor Angela Merkel Thursday supporting European Central Bank President Mario Draghi's crisis strategy to do "whatever it takes" to save the euro helped push gold prices higher.

    More disappointing U.S. economic news in manufacturing and housing starts could also boost the yellow metal. The more the U.S. economy struggles, the more likely the U.S. Federal Reserve will launch another stimulus program that would favor higher gold prices.

    For some investors, this adds to their dilemma of whether to invest in physical gold or gold equities.

    History is on the side of physical gold. Citigroup Inc. (NYSE: C) has found that in the last five years, physical gold has outperformed global gold stocks by 120%.

    But because gold stocks - and gold mining stocks in particular - have lagged gold prices, they have a lot of upside potential.

    What's more, gold mining stocks offer something in return - dividends - in addition to benefiting from a continued rise in gold prices. Many commodities experts think gold prices could reach $2,000 an ounce or more within the next six months.

    While not quite in bull mode, gold mining stocks have begun to stir of late. Here are three gold mining stocks worth a look for gold equity investors.

    Read More...