Archives for October 2010

October 2010 - Page 5 of 9 - Money Morning - Only the News You Can Profit From

Buy, Sell or Hold: A Rebound is Sprouting for Monsanto Co. (NYSE: MON)

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The explosive move up in prices among most crops futures over the past several months has been nothing short of spectacular. The market today is reminiscent of the 1970s with a weak U.S. dollar is playing havoc with world exports.

Indeed, the drop in the dollar's value has investors and speculators seeking physical commodities to park their funds in. This has caused the prices to expand in the grains sector, and when next year rolls around, you can expect that seed manufacturers will have priced next year's crop accordingly. So while the trading pits and the farmers are all banking money now, the next round of inflation is already being calculated into next year's margins.

And we can use those inflationary expectations to grow some profits of our own by investing in Monsanto Co. (NYSE: MON) – one of the world's largest seed producers.

Think of it as a "picks-and-shovels" play to capitalize on all of the farmers rushing to cash in on surging commodities prices.

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Money Morning Mailbag: Tobin Tax the Only Solution to Problems Posed by High Frequency Trading

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An episode of the television news program "60 Minutes" that aired Oct. 10 highlighted investors' fears over the growing trend of high frequency trading (HFT) run by a world of "supercomputers."

The "60 Minutes" piece prompted this letter from a reader wondering if the technological shift means it's time to readjust investment strategy.

Sunday night on "60 Minutes" they had a story about high-speed computers that are out-trading humans. Is it time to refocus on the world stage and find tangible rather than paper investments to put your money in? A partnership in a retail or manufacturing venue surely is more transparent than the stock market.

–Roman

Money Morning has been examining the effects of high frequency trading for years. In August 2009 Contributing Editor Martin Hutchinson said high frequency trading systems were front-running the market.

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What You Don't Know about "Mortgagegate" Could Crush the U.S. Banking System

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What most Americans don't know about " Mortgagegate" is that "robo-signing" of foreclosure documents is the tip of the iceberg.

The breadth and depth of this newest mortgage crisis is so dangerous that the U.S. Federal Reserve last month pre-announced another potential round of quantitative easing (pundits are calling it "QE2") to address "potential negative shocks."

In fact, the fallout potential is so numbing and the actions that birthed it so scandalous that commentators have given the crisis the Watergate-esque title of " Mortgagegate" (or, as some prefer, "Mortgage Gate").

Here's what the news-story headlines aren't telling you.

For an investment strategy that will protect your portfolio from "Mortgagegate," please read on...

Federal Reserve Policy Pushes the Dollar Ever Closer to Collapse

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Much of the content of the latest U.S. Federal Reserve statement, released on Sept. 21, echoes the central bank's previous post-credit-crunch pronouncements: There is still too much slack in the economy, interest rates are still going to be near-zero for an "extended period," and the Fed will continue to use payments from its Treasury purchases to buy yet more Treasuries.

But this recent statement uses a new turn of phrase that should have Americans very upset. The Fed says "measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate." Though the wording treads lightly, it should not be taken lightly. It may signal the final push toward dollar collapse.

The Fed's dual mandate, since an amendment in 1977, has been to promote "price stability" and "maximum employment." While often discussed as if both goals are complementary facets of one mandate, they tend to have been at odds during every recession since the Great Depression.

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The Jobs Market May Look Bleak, But Your Investments Don't Have To

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There's no getting around the fact that the U.S. jobs market is bleak. Ultimately, though, it's a stark reminder that as investors, we should be looking abroad for maximum profits.

Indeed, investors must turn to countries where the number of people working is rising along with standards of living and consumption.
But that's not all.

There are a few companies that have been performing exceptionally well and are poised to bring investors some joy this holiday season. Before we get to those, though, let's take a quick look at the job market.

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Currency War: China Stands Firm on Yuan as Global Criticism Escalates

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Germany and Japan are joining the U.S. in pressuring Beijing to let the yuan appreciate to prevent an international currency war from spiraling out of control. Still, China remains firm that a gradual rate change is all it will allow.

German Economy Minister Rainer Bruederle warned yesterday (Wednesday) that a trade war could erupt if China didn't float its currency for a more fair value. As the China-U.S. currency tensions have heated up, other countries are saying China's unfair trade advantage is threatening export-driven recoveries around the globe.

"We have to take care that the currency war doesn't become a trade war," Bruederle told German business paper Handelsblatt. "China bears a lot of responsibility for ensuring that it doesn't come to an escalation."

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Despite Record Gold Prices, Your Holdings May be Worth Less Than You Think

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Record gold prices are becoming an almost-daily headline, with the "yellow metal" making a run at $1,400 an ounce. And while this is great for the investors who are along for the ride, there is an important caveat – your gold may not be worth as much as you think it is.

Moreover, because of the tax consequences of ownership, chances are it'll never add up to what those guys hawking gold coins on late night TV lead you to believe.

But that doesn't mean you shouldn't invest. With an estimated $202 trillion in unfunded pension liabilities and the global public debt clock ticking higher, I believe gold and other precious metals should be a part of every investor's portfolio.

To find out why your gold may not be worth as much as you think, read on...

Three Ways to Play the Silver Rally - While Limiting Your Risks with Options

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With the global economy struggling to sustain even a modest recovery, the U.S. Federal Reserve pledging further quantitative easing if needed, and the dollar and several other leading currencies showing unrelenting weakness, there have been plenty of reasons for precious metals to rally of late – and gold and silver have done just that.

Gold has set a series of all-time record highs over the past five weeks, topping $1,350 an ounce for the first time ever as the dollar slipped to its lowest level since early January. Silver, while still well short of the $50-plus-per-ounce record it set when the Hunt brothers tried to corner the market in 1979, spiked to its highest price in 30 years and almost five times the sub-$5.00 levels it traded at from late 2000 to 2003.

The combination of bullish fundamentals, strong technical patterns and the persistent price advance has pushed coverage of gold and silver from the pages of specialty metals newsletters and Web sites to headline status in the mainstream media, stoking soaring investor interest in the process.

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Question of the Week: Investors Seek Metals To Soften Blow of Global Currency War

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The housing market remains in the dumper. U.S. stocks – despite a rally – are still 22% below their record highs of two years ago. And the "official" unemployment rate remains at a heart-stopping 9.6%.

With their knees almost ready to buckle under such burdens already, how will American consumers respond when clothes, computer accessories and other key consumer staples at their neighborhood Wal-Mart Stores Inc. (NYSE: WMT) undergo an overnight price hike of 30% to 60%?

As the United States aims to increase exports by debasing the dollar, a global currency war is underway that could swallow consumers and investors if they don't prepare for the likelihood of a weaker dollar.

The United States, China, Switzerland, Brazil, South Korea, Australia, Japan have all entered the war, trying to bring down their currencies to boost exports and fuel growth. Countries are vying to win the "race to the bottom," as it's been called by Money Morning Contributing Writer Peter Schiff.

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