The Greek bailout has turned gold into a "must have" investment. But the new gold rally will be different from gold rallies of the past. This time around, gold isn't serving as protection from inflation… it's become more speculative. Read this report to find out exactly how to play gold now.
Category
Precious Metals
Gold Prices Surge and Will Keep Climbing as Investors Protect Against European Debt Crisis
Gold prices yesterday (Wednesday) broke through to a record high, as investors feared the Eurozone bailout plan would debase the euro and escalate inflation.
Gold for June delivery continued its record-breaking Tuesday climb to hit $1,243.10 an ounce Wednesday. The contract reached an intraday high of $1,249.20 an ounce. Spot gold prices hit $1,244.45 an ounce, up almost 20% in the past three months.
Gold's reputation as a "safe haven" investment causes the metal's price to move inversely to investor confidence, which has been rattled by the Greece debt crisis and last week's 1000-point plunge in the Dow Jones Industrial Average.
How the Greece Bailout Turned Gold Into a 'Must-Have' Investment
With so much uncertainty in the U.S. stock market – not to mention the debt-contagion concerns emanating from Greece and other European Union (EU) countries – it's more important than ever for investors to hold "hard assets," such as gold and other commodities.
In my view, what's happening in Europe is particularly important for investors to be aware of and understand. The so-called " shock-and-awe" bailout strategy undertaken by the EU and the International Monetary Fund (IMF) – which establishes a $1 trillion rescue package for member-countries facing financial crisis – will not be the answer.
To see how gold and other hard assets are becoming "must-have" investments, please read on…
To see how gold and other hard assets are becoming "must-have" investments, please read on...
Ride Wall Street's "Great Global Commodities Grab" for Potential 10-Bagger Returns
Virtually every investor has heard about how the emergence of China and India promise to send commodity prices skyward in the months and years to come. The promised run-up has yet to begin in earnest, but prognosticators say it's merely a matter of time and just the "right" catalyst.
Money Morning Contributing Editor Peter Krauth – a noted commodities expert and editor of the Global Resource Alert advisory service – says he's found that "just right" catalyst. He's calling it the "Great Global Commodities Grab," and says it's being engineered by some of Wall Street's biggest investment banks.
But here's the key point: Because Wall Street is essentially "gaming" the system, this commodities grab is a chance for investors to reap bigger returns than they would get with the leverage afforded through options and futures – but without the risk.
Investors have reached the point where this physical commodities grab "gets really interesting," Krauth said in an interview with Money Morning. "JPMorgan Chase & Co. (NYSE: JPM) now owns ships overseas and storage tanks in Canada, Asia and Europe [that hold] millions of barrels of oil. And it's far from being the only one. Back in December, one report stated that if all the tankers being used as offshore storage tanks were placed end to end, that string of ships would stretch 26 miles."
Added Krauth: "We're talking about oil supplies being physically taken off the market… that can't help but affect market prices. And that's just with oil – Wall Street investment banks are taking major physical stakes in such commodities as gold and other precious metals, too."
Krauth – a highly regarded market analyst and expert in metals, mining and energy stocks – recently sat down with Money Morning Executive Editor William Patalon III to talk about how the "Great Global Commodities Grab" is going to ignite a rally in the prices of oil, gold, other precious metals and even agricultural commodities. During the question-and-answer session, Krauth also:
- Detailed how two leading investment banks just spent more than $2 billion to buy precious-metals-storage companies.
- Talked about how gold, throughout history, always ends up taking over for fiat (paper) currencies.
- Explained how the aggressive price forecasts Wall Street investment banks have made for both oil and gold are certain to become self-fulfilling prophecies.
- And described two companies – one an energy player and the other a junior miner – that he recently recommended to his advisory service, using them as illustrations to underscore his commodity-price predictions.
EADS Gets a Shot at Boeing's Market Share After Europe Accuses United States of Protectionism
Airbus SAS parent the European Aeronautic Defense and Space Company (EADS) said yesterday (Tuesday) that it intends to compete against The Boeing Co. (NYSE: BA) for a $35 billion U.S. military refueling tanker contract, continuing a ten-year battle recently plagued by protectionism claims.
This is the third act in a drama that Boeing Commercial Airplane CEO Jim Albaugh refers to as "the longest-running soap opera since 'Days of Our Lives.'"
EADS dropped out of the bidding six weeks ago when its partner in the deal, Northrop Grumman Corp. (NYSE: NOC), claimed the Pentagon's contract proposal had been drawn up to favor Boeing. But the Pentagon agreed to extend the bidding deadline from May 10 to July 9 after European officials claimed the situation reeked of trade protectionism.
EADS tried to find another U.S. company to pair with, but instead was forced to enter a solo bid with the help of American subcontractors. EADS said it felt compelled not to give up because its A330-based tanker is a better fit for the job than Boeing's 767-based tanker.
How to Profit from the New Iranian Sanction
Growing up in Massachusetts, my mother used to say, "Live long enough, and you'll see just about anything happen in politics."
And she was right.
A wrestler, a standup comic, several movie actors, and former sports figures have been elected to office; tea parties are back as a way of challenging leadership; even a disgraced former governor makes it onto "Celebrity Apprentice."
But she never saw this one coming – a U.S. sanctions move against Iran that may actually work… and make you some money in the process.
Here's What a Veteran Trader Sees for Gold Prices...
Gold has made some dramatic moves in the last 18 months and we expect it will undergo some equally dramatic moves in the future.
But not right now.
While I recognize that gold is one of the few "commodity" markets that people are really passionate about, the purpose of this article is not to take sides either with the gold bugs or those who reject the argument that gold is "forever." Rather, I want to discuss my interpretation of the market's cycle.
After spot gold made an all-time high against the dollar at $1,226.37 on Dec. 2, gold has been in "retreat" mode. For the past several months, gold has been in a broad trading range, seemingly unable to move one way or another. This process has created frustration among bulls and bears alike.
Here is the dirty little secret about the gold market: It can be a horrible investment and here's why…
Will Copper Become the "New Gold?"
The Statue of Liberty is one of the most recognizable American icons in the world.
And as she towers 305 feet above Ellis Island, what's Lady Liberty wearing? Copper – 60,000 pounds of it.
Clearly, copper's big in art. It's also a key metal that keeps the world economy humming. Copper consumption has grown at an average annual rate of 4% since 1900. China and India – which some analysts describe as the combined market of "Chindia" – where one of every three human beings resides, needs loads of this element to meet its modernization requirements for electricity and infrastructure.
Copper is also used in today's currency, where most U.S. coins are actually 92% copper, and 8% nickel.
But there's no denying that, given the choice, nearly everyone prefers gold. It's valuable, it's seductive and it's mystical.
Ancient kings fought wars to amass it. Yet, for thousands of years, its most enduring role has arguably been in the form of money – as a store of value.
That's because fiat-paper-currency experiments have never lasted, and always ended badly.
Increasingly, followers of the Austrian School of Economics are nostalgic for gold to regain its former glory, perhaps "backing" a new international currency.
But despite gold's much longer history as true money, some believe that copper – the much humbler metal – could be positioning itself to upstage gold.
To find out more about the forces that will transform copper into the "New Gold," read on...
With This Options Strategy, Investors Can Snap Up Global Stocks at Discount Prices
Everyone likes getting a bargain, especially on high-quality products. But when it comes to the stock market, that search for bargains can be a long one. That's especially true right now – after the rally that started in mid-March has propelled so many stocks to new yearly highs.
But here's what most investors don't realize: While it may be hard to find truly undervalued stocks, there is a way to buy perfectly valued shares at a substantial discount to their market price.
At times, that discount can equal 20% or more.
What's more, this strategy can be utilized in virtually any market environment: It doesn't matter whether the bulls are running the show, as they have been recently, or if the market is suffering from a "fiscal hangover," as it was in early 2009.
The technique is known as "selling cash-secured put options" – and, while trading options is viewed as complex and scary by many investors, this particular play is both simple in execution and relatively low in terms of risk.
Here's how it works.
Why Gold Beats the Market Manipulators
There's one investment that Wall Street manipulators can't touch – and neither can the Fed or the U.S. government. Right now, that investment is gold. Taking a stake in a hard asset like gold may well be the surest way to make some money for yourself despite the shenanigans on Wall Street.