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- By Shah Gilani, Capital Wave Strategist, Money Morning
- February 8, 2013
If there's one single, indispensable key to successful investing, it's to go with the flow.
That's my distillation of well-worn market mantras that you're probably familiar with.
They include:
The trend is your friend;
Don't fight the tape;
Trade the market you are given, not the one you want;
And don't fight the Fed.
Go with the flow.
You can do all the homework and analysis you want - and be right - and yet still lose money. That happens when you own stocks you love, but the market isn't loving any stocks. It can happen when you try to pick bottoms, and you get in before the market heads a lot lower.
And while you won't lose any money by not being in the market, you're not going to make any money in it either.
That brings us to today. We've had a furious up-move in the market since March 2009. We're scratching at new all-time highs, and global markets are dancing to the same tune.
But the world hasn't changed since last May - or the May before, when markets swooned on fears about Europe, America's fiscal fiasco, a slowing China, or any of the other dark clouds that, at any time, can rain on the markets.
So, are we going higher? Are we going to get a wicked correction? Is the sun rising or setting?
We don't know if the market is going higher from here or if it's headed down. But, we do know that the sun rises and the sun sets... every day.
That's why, even if you could distill all of the unknowns that you don't know into a plan of action, the only sensible plan is to not guess, but simply to go with the flow.
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Why Bill Gross Says You Should Be Investing in Gold
- By Diane Alter, Contributing Writer, Money Morning
- February 4, 2013
Renowned bond investor Bill Gross, the manager of PIMCO's Total Return Fund, the world's largest bond fund, just shared his top investment picks with Barron's. Leading the savvy investor's short and selective list was gold.
Why is a bond bull keen on investing in gold?
It's because Gross sees gold as a stellar inflationary hedge as global central banks attempt to reflate their economies.
Gross explained that while it looks like loose monetary policies and the deluge of dollars will continue for a while, at some point both will have to stop and "when all this money printing by central banks ends, it won't be pretty."
Gross sees trouble brewing in the artificially-priced U.S. Treasury market.
"The Fed is buying 80% of the Treasury market today. It is remarkable to think that when the Treasury issues debt in the trillion-dollar-plus category, the Fed ends up buying most of it. The Treasury sells it to banks and primary dealers, who sell it back to the Fed at a higher bid," Gross explained.
"This is very different from the free-market capitalism we've come to know. And it will continue until inflation exceeds the upper end of the central bank's target of 2.5% or, by some miracle, we get real economic growth," Gross continued.
The artificially priced bonds leave investors to question if investing in them is worth the slender reward, given the paltry yields from a bevy of bonds except high-risk junk bonds.
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Two Ways to Go Big on Gold Stocks Right Now
- By Don Miller, Contributing Writer, Money Morning
- January 29, 2013
There are plenty of reasons for you to have some gold stocks in your portfolio.
Governments are stockpiling record amounts of the shiny metal. Mints are pumping out new coins as fast as they can. And the Fed under "Helicopter" Ben Bernanke is wallpapering the world with greenbacks, pumping out $85 billion a month until...well, who knows when?
But there's more.
The Europeans have joined the party by bailing out their weak sisters with hundreds of billions of euros.
And the Bank of Japan just announced a $1.2 trillion bond purchase program for 2013 and $150 billion per month after that - almost twice the size of the Fed's folly.
Now the yahoos in Washington are threatening to spill more blood over the debt ceiling.
All this spells big upside for gold prices in 2013...and the companies that produce gold.
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Why Germany Wants its Gold Back
After spending more than 50 years in foreign hands, Germany's gold is finally going home.
In a recent watershed decision the Bundesbank, Germany's central bank, has decided at least half of its gold should be held in its own vaults.
Since the Bundesbank is the second-largest gold holder in the world, that's going to mean moving 54,000 bars of the shiny metal.
So why does Germany want its gold back, and why now?
Part of it has to do with pressure from a grassroots group led by a group of economists, business executives, and lawyers, along with the German Precious Metals Association, who have put together a "Repatriate our Gold!" campaign.
But that's only part of the story...
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Investing in Gold: Don't Ignore this Central Bank Buying Frenzy
- By Tony Daltorio, Contributing Writer, Money Morning
- January 25, 2013
Anyone investing in gold should recall that before the financial crisis in 2008 central banks were dumping the yellow metal - when it was trading for less than half of where gold prices are today.
But that certainly has changed in recent years.
In 2012, the world's central banks added the most gold to their reserves since 1964. Net official gold purchases added up to 536 metric tons, a gain of 17.4% from the previous year according to a report from Thomson Reuters GFMS. The estimate from the World Gold Council for such purchases is similar at 500 metric tons.
Central banks are forecast by GFMS to purchase 280 metric tons in the first half of 2013 alone.
That's good news for anyone investing in gold.
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Four Sensational Facts About Gold Investing That You Might Not Know
- By Frank Holmes, Guest Writer
Our ever-popular Periodic Table of Commodity Returns has been updated through 2012.
Investor Alert readers love this chart as it shows a decade of results across 14 different commodities, providing strikingly rich information in a very familiar format.
Last year, 11 commodities rose in value, with wheat rising as the top crop after seeing a significant decline in 2011. It was a similar rags-to-riches story for the next few leaders, including lead, zinc, natural gas and platinum, which all climbed double digits in 2012 after falling in 2011.
Only three commodities declined over the year: Crude oil fell by 7% after rising 8% the previous year. Nickel declined for the second year in a row. In 2012, the metal lost 9% and in 2011, nickel fell another 24%.
Coal was the worst-performing commodity in 2012, falling nearly 17%. Coal's been going through a rough spell lately; in fact, the commodity has not been king for five years (although it did record a 31 % increase in 2010).
As you can see from the table, commodities often have wide price fluctuations from year to year given the many factors affecting supply and demand, such as government policies, union strikes, and currency volatility.
That's why when it comes to commodities and commodity producers, many investors "leave the driving" to active money managers who understand these specialized assets and the global trends affecting them.
Take gold and gold companies, for example. After investing in the mining industry for decades, we've taken note of several facts about gold that continue to surprise our investors. Here are four of the latest:
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How Will the Debt Ceiling Debate Affect Gold Prices?
- By Diane Alter, Contributing Writer, Money Morning
- January 22, 2013
If you're wondering how the debt ceiling debate will affect gold prices, you need to check out a new report from Goldman Sachs Group Inc. (NYSE: GS).
Investment powerhouse Goldman believes gold prices will log impressive gains over the next three months as the debt ceiling debate takes center stage on Capitol Hill. The bank is advising investors to position portfolios ahead of upward moves in the precious metal.
"We see current prices as a good entry point to re-establish fresh longs," Goldman analysts Damien Courvalin and Alec Phillips wrote in a Jan. 18 report.
The bank reaffirmed its three-month price target for gold of $1,825 an ounce. (Gold was trading at $1,695.20 in New York Tuesday.)
"The uncertainty associated with these (debt-ceiling) issues, combined with our economists' forecast for weak U.S. GDP growth in the first half of 2013 following the negative impact of higher taxes, will push gold" to the three-month target, the report stated.
The Goldman strategists pointed out six instances between 1996 and 2007 when the country hit the debt ceiling and the Treasury responded by using its muscle to execute "extraordinary measures" to keep the country afloat and running.
Gold prices rallied some 10% in half of these instances in the month prior to the debt-limit increase.
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Gold Prices: Have We Reached "Peak Gold"?
- By Diane Alter, Contributing Writer, Money Morning
- January 21, 2013
Expectations for gold prices just grew brighter due to a recent outlook on production numbers.
Gold producer Iamgold Corp. (NYSE: IMG), which has mines in Canada and Mali, forecasts gold prices will soar to a record $2,500 an ounce as global output peaks and ore grades decline.
Grade is the relationship between quality, tons, geometry and depth that indicates if a gold find can be extracted at a cost that makes doing so profitable. High grade is key in a gold deposit.
Iamgold CEO Steve Letwin told Bloomberg News in a Jan. 10 interview that the industry has exploited its best-quality gold reserves and as a result is tapping lower-grade and higher-cost deposits.
In fact, he sees this as a sign of "peak gold" - when the maximum rate of global gold extraction is reached.
"I really think we are at Peak Gold. Nobody has seen the kind of production profiles they thought they were going to see," Letwin explained.
What is Peak Gold?
After peak gold is reached, there's a terminal decline in the rate of production.
The "peak gold" theory mirrors the "peak oil" theory, which maintains the earth holds a finite amount of crude, and production will eventually outstrip supply.
The peak gold phenomenon was actually spotted several years back.
Barrick Gold (NYSE: ABX) CEO Aaron Regent told The Daily Telegraph in 2009 at the Royal Bank of Canada's annual gold conference "there is a strong case to be made that we are already at peak gold."
"Production peaked around 2000 and it has been a decline ever since, and we forecast that decline to continue. It is increasingly difficult to find ore," Regent said.
In 2001, the world saw what was believed to be record global gold production of 2,649 tons.
And what has happened since then in gold production supports the peak gold theory...
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Gold Prices: Don’t Let Faber Scare You
- By Deborah Baratz, Contributing Writer, Money Morning
- January 11, 2013
After hitting its 12th straight year of new highs, gold prices got off to a bumpy start in 2013.
"Dr. Doom" Marc Faber even came out Tuesday with a reduced price prediction for gold.
In a CNBC "Squawk Box" interview, Faber said, "I don't think [gold] will go up right away, and we maybe have a correction of 10 percent or so on the downside."
Faber had also estimated a gold price range in his JanuaryMarket Commentary of "... perhaps down to between $1550 and $1600."
But any gold price correction would be a short-term move. Even Faber admitted central bank action is a reason to bet on higher gold prices for the long term.
That's why investors should look at any price correction in gold as an opportunity to stock up.
By Thursday, the yellow metal jumped 1% after the European Central Bank left interest rates the same and the euro rose against the dollar. The February gold contract jumped $20.90 (1.3%) to $1,676.40 per troy ounce.
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Seven Ways to Tell if Your Gold is Counterfeit
- By Peter Krauth, Resource Specialist, Money Morning
- January 2, 2013
I had just finished a walking tour of the Royal Canadian Mint when I saw it. Right there, out in the open, was a 400-ounce bar of pure gold.
It was chained to a display table and kept safe by an armed guard. At the time, in 2005, the bar was worth $220,000.
Today, the same bar is worth $667,700. In just seven years, gold prices have jumped by 203%.
But it's not the eternal fascination with gold that has boosted the price. With growing levels of worldwide uncertainties, mounting inflation risks and government distrust, people are clamoring for gold primarily as insurance.
According to the World Gold Council, 2011 saw gold bars and coins reach nearly $77 billion in sales, versus 2002's $3.5 billion. And in November alone, the U.S. Mint's sales of the popular American Eagle coins jumped 131% in the wake of the election.
With the market for gold growing at a feverish pace, it's now more important than ever to know that your gold is the real deal-especially with gold prices looking to break through the $2,000 mark in the new year.
Here's why...
Gold counterfeiting is nothing new. In fact, just recently there were reports of fake gold bars from China turning up in New York. Instead of gold, their centers were stuffed with tungsten.
But rest assured there are a number of methods you can use to mitigate the risks of ending up with counterfeit gold. Some are simple, quick and inexpensive. Others are more elaborate, detailed, and not so readily accessible.
Here are seven ways to find out if the gold you own is real:
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