Archives for November 2012

November 2012 - Page 14 of 20 - Money Morning - Only the News You Can Profit From

How the Election Just Killed Investing in Coal Stocks

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In the days following the re-election of President Obama, one particular stock sector seemed to suffer more than most: coal stocks.

The Market Vectors Coal ETF (NYSEARCA: KOL) was down 5% the day after the election and individual coal company stocks were hammered even more. The largest U.S. coal producer, Peabody Energy (NYSE: BTU), dropped by 9% while the second biggest U.S. producer of coal, Alpha Natural Resources (NYSE: ANR) fell by 12%.

The reason behind the declines is the perception in the market that President Obama's re-election will mean further onerous regulation for the beleaguered U.S. coal industry.

Lucas Pipes, an analyst at Brean Capital Carret & Co., told Bloomberg News, "The coal industry has seen increased regulatory oversight from the EPA on a number of issues under Obama's first term, such as stricter permitting requirements in Appalachia and new regulations for emission reductions at utilities."

Earlier this year, for instance, the EPA issued its Mercury and Air Toxics Standards Rule, which is set to go into effect Jan. 1, 2015. It sets strict emissions requirements on utilities.

According to a study from the consultancy Brattle Group, compliance with the rule would cost between $126 billion and $144 billion to retro-fit older coal-fired power plants. Brattle estimates this will lead to a shutdown by utilities of between 59 and 77 gigawatts of coal-fired electricity over the next five years.

This means that between 18.6% and 24.3% of U.S. power will no longer be generated by coal.

Basically, EPA regulations have made coal more expensive to burn. This will reduce coal demand even further as utilities switch to cheaper, cleaner-burning natural gas. Already the share of U.S. electricity supply coming from coal plants has fallen to its lowest level in almost 40 years.

At times this year, coal has lost its position as the country's biggest source of power, falling behind natural gas. Not surprising then that production from the U.S. coal industry has fallen 8% from 2008 to only 266 million tons in the first quarter of 2012.

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This Little-Known Investment Pays Double Rewards on Gold

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The gold bull market that started during the first quarter of 2001 has now been in play for approximately 11 1/2 years.

Since then gold is up over 565%. With the Fed and Central Bankers around the world now gearing up for even more money printing that means that gold prices will continue to strengthen.

In fact, given the average commodity cycle tends to run in a 13 year bull market, gold appears to be in the last 1-2 years of this ongoing uptrend.

Fortunately, for gold investors, this tends to be the most explosive part of the cycle.

Double Rewards on Gold

How high can gold prices go?…

According to precious metals expert, Peter Krauth, gold prices will reach $2200/ounce by the end of the year. That's 25% higher from here. Longer term, Peter believes gold will go as high as $5000/oz or more than double where the shiny metal trades today.

That has given one group of investors a lifetime opportunity to double their gains on gold with a unique trade that increases $2 in value every time gold gains a single dollar.

But first investors need to understand why calls for $2200 gold and even $5000 gold are well within the historical patterns.

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Three Ways to Invest in Silver Before Prices Take Off

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It's been a volatile week, but silver prices are expected to rise in U.S. President Barack Obama's second term.

Silver futures prices ended the week with a 5.7% gain. Silver for December delivery rose 36 cents, or 1.1%, on Friday to settle at $32.60 an ounce.

With the fiscal cliff the next major topic for Washington to tackle, investors are pushing into safe havens like silver and gold to balance market uncertainty.

Also with President Obama in office, U.S. Federal Reserve Chairman Ben Bernanke and his easy money policies will hurt U.S. dollar value for at least another year.

"Since Obama was elected in 2008, gold is up 116% and silver us up a whopping 198%," saidMoney MorningGlobal Resources Specialist Peter Krauth. "Honestly, I expect a similar performance could well be enjoyed over the next four years."

With that in mind, here are three ways to invest in silver with prices on the rise.

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Stock Market Today: Why the Sell-off Will Continue into 2013

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The stock market today is trying to end the week positive, but fears concerning the fiscal cliff and what a second term for U.S. President Barack Obama means for the markets continue to grow.

Friday, the third day of trading since President Obama was re-elected, looks to be a volatile ending to a scary post-election market. Since the election, the Dow Jones is down more than 3.5%, the S&P 500 is down 3.7% and much of Wall Street thinks this sell-off will continue.

Analysts and CEOs predict the next year to be a very rough one for stocks and the economy, and there might be nothing the president can do to stop the slide.

"Economic prospects might not have been much different if Mitt Romney had won, especially as Congress remains divided. But the subsequent weakness in equities makes sense too," Julian Jessop, chief global economist at Capital Economics, said in a note to clients. "As we had anticipated, the focus has quickly moved on to the uncertainty over the 'fiscal cliff,' and perhaps back to the unsolved crisis in the euro-zone as well."

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PerkinElmer, Inc. (PKI) - Bull of the Day

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We upgrade our recommendation on PerkinElmer, Inc. (PKI) to Outperform based on its third quarter results. Earnings per share of $0.45 surpassed the Zacks Consensus Estimate by a penny. PerkinElmer is a leader in several life science segments. It has added new related areas as part of its reorganization and divested unrelated businesses. As a […]

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The Dirty Little Secret Behind Wal-Mart's Bluebird Cards

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Here's something else that's got the potential to undermine our financial future…

It's about those prepaid cards, and the games that are being played with them that you may not know about.

Prepaid cards have lots of benefits, especially for the "unbanked."

These are the people who more or less may live paycheck to paycheck, or don't have jobs but need a "card" because both credit and debit cards are how we pay for most things these days.

A lot of people are rebelling, and rightfully so, against the higher and higher fees that banks are charging on checking accounts (and for all their other "services") and are turning to prepaid cards as an alternative means of paying for goods and services.

Now, American Express (NYSE: AXP) is partnering with Wal-Mart (NYSE: WMT) to offer Bluebird cards. The cards are being pushed through Wal-Mart stores and are ostensibly backed by American Express.

American Express? As if it's a bank. Wait a minute…

It is a bank.

That's because back on November 10, 2008, at the height of the credit crisis, American Express had to become a bank (actually a bank holding company) so it could take money from the Federal Reserve to stay alive.

You forgot that, didn't you?

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Will President Obama Be Able to Stand Up To China?

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While U.S. Presidential headlines dominate the airwaves this week, there is another "election" under way thousands of miles from our own shores that may be even more important when it comes to your money.

The 18th National Party Congress is now underway in Beijing. Attendees are girding for a week of symbolic posturing and speeches, the culmination of which will be a new set of Chinese leaders and a new Chinese President for the next 10 years.

While this is a complicated process when things are running smoothly, this particular Congress is really critical. China is a mess. Recent economic challenges and corruption on a scale that has boggled even the most jaded of insiders are at the top of the "fix it" list.

Outgoing Chinese President Hu Jintao's replacement and China's presumptive new leader looks to be a man named Xi Jinping.

At 59 years old, he's a power player with close ties to the People's Liberation Army (PLA).

While he's not a military man per se, as the son of a revolutionary general he currently holds several significant offices that give him wide-ranging and very significant exposure to both the State and Communist Party.

What's significant about this is that there are three parallel strands in Chinese government structure: the Communist Party, State, and Military.

The Party and State are deeply intertwined, but the military is less so, except at the top levels of leadership. Consequently, China's new leader is intimately familiar with the Chinese military and also the likely new head of China's Central Military Commission.

I'm not so sure we've ever seen this exact combination before and I think it's going to challenge President Barack Obama in ways that he hasn't thought through yet.

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Why the Dow Fell Yesterday

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Concerns over how politicians will handle the fiscal cliff was the biggest driver behind why the Dow fell yesterday, tumbling more than 300 points in its biggest loss this year.

Political worries were exacerbated by worse than expected monthly sales from McDonald's Corp. (NYSE: MCD) and fears that Apple Inc. (Nasdaq: AAPL) had entered a bear market.

The fiscal cliff continued to dominate investor sentiment today as both Republicans and Democrats expressed their intentions of working together to find a solution to the impending crisis but failed to offer any concrete evidence of their willingness to budge from long-held positions.

Afraid that Republicans and Democrats will not compromise, even when the stakes are high, investors are bailing out. It is too close to the end of the year-too close to bonus time-to be a hero now.

In his victory speech following his re-election on Tuesday, U.S. President Barack Obama said that he is "looking forward to reaching out and working with leaders of both parties to meet the challenges we can only solve together."

Senate minority leader Republican Mitch McConnell said, "To the extent [the President] wants to move to the political center, which is where the work gets done in a divided government, we'll be there to meet him halfway."

Jim Manley, a former aide to Senate majority leader Democrat Harry Reid, hoped that President Obama would become more personally involved in the negotiations on the resolution of the fiscal cliff.

"He's simply going to have to take a more active and forceful role," Manley told Bloomberg News. "He never got involved in the nitty-gritty of the legislative process. In light of the hyper-partisanship that still surrounds Capitol Hill, he's going to have to change, and he's going to have to take more of a lead in breaking the logjam."

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What an Obama Win Means for Gold Prices in 2013

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With a U.S. President Barack Obama win in Election 2012, look for gold prices to soar above $2,000 an ounce in 2013. Prior to the election's results, gold players had been on the sidelines but they jumped back in and took the precious metal back above $1,700 per ounce on Tuesday. On Wednesday, gold rose […]

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How Facebook (Nasdaq: FB) is Sapping the U.S. Economy

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Facebook (Nasdaq: FB) is a drain on the U.S. economy.

No, we're not talking about Facebook's IPO fiasco earlier this year and the subsequent stock price meltdown. It's bigger than that.

Facebook is worst offender among the many Internet distractions keeping workers from getting things done in the office.

Most workers stop what they are doing several times an hour to respond to messages from friends and co-workers on social media like Facebook and Twitter, browse the Internet, and check and respond to e-mail.

And once distracted, it takes time for a worker to get back to the task at hand – one study put the average disruption at 23 minutes.

All those interruptions add up to a massive expense for businesses and the U.S. economy.

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