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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

  • Why Are Gold Prices Down? Gold prices plunged Thursday, hitting lows not seen since August, after the U.S. Commerce Department reported an unexpectedly robust reading on third quarter U.S. gross domestic product (GDP).

    After the surprising strong report, February gold tumbled $14.50 an ounce to $1,653.50 and spot gold sank $22.80 to $1,643.10.

    Silver prices fell as well, losing $1.13 to $29.95 shortly before noon. Prior to the report, the yellow and white metals were little changed.

    The fresh report revealed GDP in the third quarter expanded at an annual rate of 3.1%, the fastest growth since late 2011. That was up from the 2.7% pace logged last month, and better than economists' expected 2.8% rate.

    Phil Streible, a senior commodity broker at R.J. O'Brien & Associates in Chicago told Bloomberg News, "The GDP number was better than forecast, so the thinking is that improving conditions in the economy might mean a light at the end of the tunnel on when the Fed will end QE3."

    Gold and silver have been big beneficiaries of the FOMC's generous QE3 programs.

    But there's more than the end of QE measures as to why gold prices are down.

    To continue reading, please click here... Read More...
  • Gold Prices: What Happened to the Rise? One of the more confusing things for investors right now is why gold prices aren't going through the roof.

    As the Fed, European banks, China and Japan pump massive amounts of money into global markets, investors are scratching their heads when they look at the price of gold.

    Since reaching the $1,800 an ounce level shortly after QE3 was announced, gold has treaded down to its current level of around $1,650.

    Money Morning's Shah Gilani appeared on FOX Business Network's "Varney and... Read More...
  • Gold Prices: Where to Now After the Sell Off After the final Federal Open Market Committee (FOMC) meeting decision of the year Wednesday, gold prices got good news: the Fed will institute a new bond-buying program.

    February Comex gold increased $8.30 (0.5%) Wednesday and settled at $1,717.90 an ounce.

    And then the sell-off started.

    Gold fell 1.2% in the next session to $1,696.80, for a $21.10 drop. The fall was mostly due to profit taking.

    But analysts see Fed action as bullish for the precious... Read More...
  • How Gold Miners Can Effectively Leverage Gold Prices Gazing into their crystal balls last week, Wall Street firms interpreted differing futures for gold next year.

    Morgan Stanley awarded gold the "best commodity for 2013" while Goldman Sachs called the end of the metal's hot streak.

    After seeing 11 consecutive years of positive performance from gold price, one needs to be wary of research analysts' price forecasts, as they have consistently underestimated the shifting dynamics driving the precious metal higher.

    Take a look at analysts' annual predictions of gold prices, which is "a telling picture," CEO Nick Holland of Gold Fields told the crowd at a mining conference last summer.

    From 2006 through 2011, Bloomberg's contributing analysts have forecasted that future gold prices would be lower. "The analysts who keep telling us the gold price is going down have been wrong seven years out of seven. That's a remarkable track record!" says Holland.

    Take a look at the chart...

    To continue reading, please click here...

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  • Will the Government Confiscate Your Gold? The Roosevelt Administration Executive Order of 1933 required U.S. citizens to turn over most of their gold coins, gold bullion and gold certificates in return for paper currency. Is the government eyeing your gold again? Read More...
  • Investing in Gold: What to Expect from Prices Before 2013 It's been a down week for gold prices, reaching one-month lows, but on Thursday, things began to turn around for the precious metal.

    Due to short-covering in anticipation of Friday's employment numbers and comments from European Central Bank (ECB) President Mario Draghi raising expectations for an interest rate cut, Comex February gold rose $8 an ounce to $1,701.80.

    Gold exchange-traded funds (ETFs) also had a good day on Thursday as they hit record highs of 76.133 million ounces.

    Peter Spina, president of Goldseek.com said to Investor's Business Daily of Thursday's levels, "If gold does remain around these levels for the near term (several months), this remains a very healthy gold market, which will set the tone for the next move up."

    After the November U.S. jobs report, which had been expected to be skewed from Superstorm Sandy, came out better-than-expected on Friday, gold went above $1,700 again. Expectations for Federal Open Market Committee (FOMC) easing fell a bit.

    Until the Dec. 10 and Dec. 11 FOMC meeting ends, investors are expected to hit the sidelines.

    At next week's meeting, FOMC members will decide what to do with "Operation Twist" as it comes to an end. Many think they will extend it, plus implement a "QE4."

    This would be good for the precious metals markets. But gold prices are affected by much more than the FOMC.

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  • How to Buy Gold: Don't Miss the Yellow Metal's Next Move Up With experts predicting rising gold prices for at least the next year, it's no surprise that more and more investors want to know how to buy gold.

    According to the facts and figures cited last week by Money Morning Global Resources Specialist Peter Krauth, 2013 should be a banner year for gold. Krauth projects prices for the primary precious metal could easily climb from the current $1,704 an ounce to $2,200 - or even more - a one-year gain in excess of 25%.

    That means every serious investor should have at least some gold in their portfolio.

    That raises two immediate questions:
    1) What are the best vehicles for investing in gold; and,
    2) What are the best ways to buy the yellow metal?

    For each investor, the best approach to how to buy gold depends on your goals and expectations.

    How to Buy Gold

    If you're worried global political and economic tensions will intensify, then holding the actual physical metal is your best choice.

    Possible flash points include strife in the Middle East, a meltdown in the Eurozone debt crisis, a continued slowing of China's growth rate and, of course, the U.S. fiscal cliff crisis, which could plunge America and perhaps the world economy back into recession - or worse.

    Under such conditions, purists feel holding physical gold provides the only truly effective hedge against almost certain declines in the value of the dollar and other fiat currencies - declines that could be amplified by sharp reversals in global financial markets.

    For smaller investors, how to buy gold in physical form typically means buying gold bullion bars, rounds (unadorned coin-shaped pieces) or minted gold bullion coins.

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  • Why Gold Prices Will Soar After the Dec. 12 FOMC Meeting Gold prices will start another epic run beginning Dec. 12 - the day the Federal Reserve will double down on QE3 at its Federal Open Market Committee (FOMC) meeting.

    Decisions made at the Dec. 12 FOMC meeting could add as much as $2.2 trillion to the Fed's balance sheet over the next two years, which will turbocharge gold prices, silver prices and oil prices.

    The FOMC is the select group within the Fed that sets monetary policy, such as interest rates and the bond-buying programs known as quantitative easing, or QE.

    That the Fed will dramatically increase QE3, which launched in September with the monthly purchase of $40 billion in mortgage-backed securities (MBS), at the Dec. 12 FOMC meeting is almost a given; it practically has no choice. QE3.

    But the real issue at the Dec. 12 FOMC meeting will be what to do about the Dec. 31 expiration of the Operation Twist program. In Operation Twist, the Fed sells about $45 billion of short-term Treasuries each month and uses the proceeds to buy long-term Treasuries.

    The Fed probably would opt to extend Operation Twist - which has not added to the Fed's balance sheet as QE1, QE2 and QE3 have -- except that it is starting to run low on short-term securities to sell.

    Yet the Fed committed in October to extending its easing policies as long as necessary to bring down unemployment and aid the U.S. economy. Its only option is to convert Operation Twist to a conventional bond-buying program - effectively doubling its QE3 money-printing.

    "Our baseline expectation is a continuation of the current pace of asset purchases of $85 billion per month on an open-ended basis, which would imply that the current $45 billion per month in [Operation] Twist-financed Treasury purchases is replaced by $45 billion per month in QE-financed Treasury purchases," Jan Hatzius of Goldman Sachs (NYSE: GS) said of the likely actions at the Dec. 12 FOMC meeting.

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  • Will Fiscal Cliff Talks Push Gold Prices to $1,800? Washington appears closer to making a deal to avert the looming fiscal cliff. But the longer investors have to wait for a deal, the more likely gold prices will rise. Read More...
  • Why Brazil Will Keep Buying Gold – and Driving Up the Price Money Morning Global Resources Specialist Peter Krauth stated in his 2013 gold price forecast that the yellow metal was headed to $2,200 an ounce next year, with one of the main price drivers being the increased rate at which central banks are buying gold.

    As a group, central banks will have bought about 500 tons of gold this year, the most in more than 40 years. More large purchases are expected in 2013.

    Foremost amongst the gold buyers are the central banks of emerging economies around the globe. Recent years have seen purchases by Russia, South Korea, Mexico, India and, as most believe, China.

    Another country joining the party, or in this case the carnival, is Brazil.

    According to the International Monetary Fund, Brazil raised its gold reserves for the second month in a row in October. Brazil made its first significant gold purchase in more than a decade in September. It expanded its gold holdings by a hefty 17.2 tons last month to 52.5 tons.

    This is the largest amount of gold Brazil has held in more than 11 years, since January 2001.

    So why is Brazil jumping aboard the bandwagon now and buying gold at a record pace?

    To continue reading, please click here... Read More...
  • 2013 Gold Price Forecast: Expect Gold to Deliver Another Record-Setting Year No two bull markets are ever the same, and gold is no exception.

    During the last secular gold bull market in the 1970s, gold rose from $35 in 1968 all the way to $200 by late 1974.

    Then the unthinkable happened. Between late 1974 and mid-1976, gold prices were cut in half, dropping from about $200 to $100.

    At the time, many gold investors sold out in disgust, never to return.

    But then a funny thing occurred. Gold prices started to climb again, rising from $100 in mid-1976 all the way to $800 by January 1980.

    And anyone who was fortunate enough to own gold at $35 earned better than 20 times their investment in just 12 years.

    Twenty-one years later, a new bull market began. Since 2001, gold has consistently performed in what now appears to be a record-setting run.

    2013 gold price forecast

    In fact, since 2001 the average return on gold is now just shy of 18% annually over the last 11 years.

    I know of no other major asset that has turned in this kind of performance -- ever. This rise in gold prices is simply unmatched.

    This is what a stealth bull market looks like, one that I fully expect will keep powering on.

    Now, let's have a look at where gold prices might be headed in 2013...

    To continue reading, please click here... Read More...
  • The Ultimate Gift for Your Gold Lover and 5 Other Amazing Consumer Trends Package gift small Last weekend marked the official start of the holiday shopping season in the U.S., so for the next month, consumers will be enticed with daily deals on the latest fads, such as one-cup coffee makers, tablets, flat screens and cashmere sweaters.

    According to the latest survey from the Consumer Electronic Association, about 60 percent of adults plan to shop in stores or online during the holiday weekend, with the average person indicating they'll fork over $218 for gifts and merchandise from Thanksgiving through Cyber Monday.

    This is a sharp increase from 2011, where shoppers said they'd spend $159.



    For the ultimate gold lover on your shopping list, one amazing purchase you can nab is a Christmas tree complete with Disney characters and gold leaf ribbons made of 88 pounds of pure gold from a jewelry store in Tokyo, according to Reuters.

    The ornamental tree will set you back $4.2 million, but there's also a smaller version available for $243,000.

    But that's not the only thing that has grabbed my attention this holiday season. Here are 5 other amazing consumer trends that are happening around the world.

    To continue reading, please click here... Read More...
  • Billionaires Buying Gold Bullish for the Yellow Metal When billionaire investors are buying gold, it probably means prices for the yellow metal are headed higher.

    Three well-known billionaire investors - George Soros, John Paulsen and Julian Robertson - have been adding heavily to their gold holdings this year.

    Gold buying by some of the world's most successful investors is a strong argument that gold prices, despite their impressive rise over the past several years, still have a long way to go.

    The precious metal is expected to enjoy its 12th straight year of increases in 2013. So far this year, gold prices are up about 10%.

    Forecasters see gold rising each quarter in 2013, ending at $1,925 an ounce in the last quarter, or 11% higher than current prices, according to Bloomberg.

    While gold prices haven't moved much lately, investors need to stay focused on the long term.

    On Tuesday, December gold futures on the Comex fell $8.50 (0.5%) to $1,725.9 an ounce. This came after remarks by Fed Chairman Ben Bernanke that the looming fiscal cliff could threaten the U.S. economy.

    Of course, such minor bumps haven't kept the smart money - billionaire investors -- from buying gold.

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  • Why China's Buying Gold With gold prices on track to log a 12th consecutive annual gain, China is beginning to take a fresh shine to the yellow metal.

    Now China's buying gold in an attempt to play catch up with the United States and other influential nations, the London Bullion Market Association reports.

    At a recent conference in Hong Kong, Chairman David Gornall told the association's conference, "When comparing China to the U.S., it would seem that in China, gold asset allocation can only go in one direction. The country has only 2% of its reserves in the form of gold compared with the U.S. at 75%."

    Other developed countries, including Germany, Italy and France, maintain a gold reserve in excess of 70%. Meanwhile, China's share lags, data from the World Gold Council reveals, trailing at a paltry 2%.

    Since 2009, The People's Bank of China has not disclosed any changes to its gold holdings. At that time, the bank noted its stash had risen by 76% to some 1,054 tons. Its cache is set to swell again as the country, facing an economic slowdown from a plethora of lethargic international markets, gets defensive.

    The spike in gold imports to China, via Hong Kong, reveals new significant accumulations of the commodity. Chinese imports of the precious metal totaled 69.7 metric tons in September, a striking 22% increase from a year ago.

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  • Why Obama's Victory Means Higher Gold Prices Our recent story on the secret return to the gold standard drew an interesting response from Money Morning reader John B., which I've paraphrased below.

    In response to the article, John wrote:

    "All this talk about buying gold. Where is the gold going to come from? No one seems to be selling. And what about all the scamming that's going on in the gold market these days?"

    Here's the thing: John essentially agrees with the case we made for gold - he just doesn't realize it.

    And with President Barack Obama's successful re-election, the case for higher gold prices got even stronger - overnight.

    Let me give you seven reasons that gold prices are destined to head much higher in the next several years. Let's call it the Obama "baker's half-dozen" case for gold:

    1. The Central Banker Effect: Official statistics, which some observers dispute (I'll get to that in a minute), say that the world's central banks have become net buyers of gold for the first time in nearly a quarter century. If that's the case, that's clearly bullish for gold. At the very least, we're not going to see any big selling.
    2. The Central Banker Effect (Part Deux): Although we referred to the "Secret Gold Standard" to underscore the point that central banks were returning to the gold market, we made clear this wasn't a literal return to a Bretton Woods-style "gold standard." There's not enough gold in the world to support such a move - which is why Capital Economics Chief Economist Julian Jessop recently estimated that a return to the gold standard would cause the price of the yellow metal to spike to $10,000 an ounce. There's an important lesson here: If central banks are hoarding gold, prices can't help but go higher - gold standard or not.
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