Tuesday, March 24, 2015

Protecting Yourself with Gold, Oil and Index ETF’s.....Our Three Part Series

In 2009 I shared my big picture analysis, investment forecast and strategy in a book called “New World Order Economics – What you can do to protect yourself” [Buy it Here on Amazon]. In January 2009 I forecasted that the Dow Jones Industrial Average was going to make a bottom within a couple months which it did. I also predicted the price of gold to start another major rally, and for crude oil to bottom and rally for years, which were also correct.

You can call it luck, skill or a mix of both… but the truth is that the markets cannot be predicted with 100% certainty. With that said, the US stock market, gold and oil look to be setting up for their NEXT BIG multiyear moves.

THE NEXT FINANCIAL CRISIS – Part I "U.S. Equities Bull Market is About to End"

2014 was a tough year for small cap stocks. The Russell 2000 index which is a great barometer of what speculative money is doing as a whole. History has shown that small capitalization stocks are the first group to show weakness after a multi-year bull market.

For all of 2014 this group of stocks has been struggling to hold up. Each time it nears a previous high, sellers come out of the woodwork and unload shares in large volume. This was the first tell tale sign that institutions are starting to rotate their positions out of these high beta stocks.....Click here to read the entire article


THE NEXT FINANCIAL CRISIS – Part II "Gold Bear Market is About to End"

Gold and silver have a little trickier of a situation to navigate and invest for maximum returns over the next 2+ years. The most important thing to realize is that when a full blown bear market starts virtually all stocks and commodities drop including gold, silver and oil. Knowing that, investors must be aware that when the stock market starts its bear market the fear will rise and investors will inevitably sell their holdings and this means we could see gold and oil continue to fall much further from these levels before a true bottom is in place.

Is this time different than the 2008/09 bear market? Yes, this time we have possible wars starting, oil pipelines overseas being cut off, counties and currencies failing and even negative bond yields in some parts of the world – it’s a mess to say the least. There are a lot of things unfolding, most seem to be negative for the economy.....Click here to read the entire article


NEXT FINANCIAL CRISIS – Part III – OIL "The Oil Bear Market is About to End"

Crude oil and energy stocks are tricky to navigate in a situation like this where the equities market is nearing a bull market top. It is critical to remember that when the US stock market turns down and starts a bear market virtually all stocks and commodities will fall in value including oil and energy stocks. Investors need to understand that even though the price of crude oil is nearing a bottom it could and will likely stay low for a considerable amount of time “IF” the stock market turns down.

Over the last 100 years we have seen nearly 30 bear markets. The average length of a bear market is 18 months and has an average decline of 30%.....Click here to read the entire article



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Bears Run For Cover!

From our trading partner Phil Flynn....

Ultra bears are starting to change their tune on oil as weak Chinese manufacturing data and strong manufacturing data in Germany both point to better demand. China's demand may rise as the Chinese government will be forced to act swiftly to reach their growth target and should soon add stimulus increasing oil demand. Factory activity in China fell to 49.2, according to HSBC, a number that should force the Chinese government's hand.

In Germany, we are already seeing the QE impact on oil demand. The Purchasing Managers Index for the manufacturing and services industries across the region rose to a much stronger than expected 54.1 ked by a 0.4 percent expansion in Germany. Germany is the beneficiary of being the strongest economy in the Eurozone at a time when the ECB central bank has launched unprecedented stimulus. On top of that you see the U.K. inflation rate come in at the lowest rate in history. The inflation rate fell below zero for the first time in history and all of a sudden this QE madness is likely to continue.

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Now one might think that might be bearish as the dollar might continue its historic upward move as the rate differential outlook could cause continued safe haven buying. But now it seems that the Fed may be influenced into not rating rates quickly as the dollar strength is causing more problems. We saw in the FOMC that Fed Chair Janet Yellen warned that the Fed will not be impatient in raising rates. The Fed's Stanley Fischer suggested that the Fed will be data, and perhaps dollar dependent on raising rates and warned that there would not be a "smooth upward path" for interest rates hikes.

Oil bears are also counting on another big inventory increase. Yet data from Genscape, the private forecaster, is suggesting that the build might be much less than the 4 million barrel builds that is being bandied about. Genscape reports that the increase of less than 2 million barrels are around 1.6 million. That should reduce fears of storage over flowing. In fact the Energy Information Administration reported that although inventory levels at Cushing are at their record high, storage utilization (inventories as a percent of working storage capacity) are not at record levels. Capacity utilization at Cushing is now 77%, a large increase from a recent low of 27% in October 2014. However, utilization reached 91% in March 2011, soon after EIA began surveying storage capacity twice a year, starting in September 2010."

See Phil on the Fox Business Network and follow him on Twitter @energyphilflynn!

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Saturday, March 21, 2015

Mike Seerys Weekly Crude Oil, Gold and Silver Market Summary

We've asked our trading partner Michael Seery to give our readers a weekly recap of the futures market. He has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.

Here's Mikes call on crude oil, gold and silver. Read more of his calls for this week by visiting here.

Crude oil futures in the May contract are up $1.20 a barrel currently trading at 46.70 as I've been recommending a short position when prices broke out to contract lows earlier last week and if you took that trade continue to place your stop loss at the 10 day high which currently stands at 52.00 risking around $7 dollars or $3,500 per mini contract plus slippage and commission as the chart structure remains poor, however it will start to tighten up on a daily basis next week.

Crude oil futures rallied today because of the fact that the U.S dollar is down 160 points pushing up many commodity prices, however as the trend follower I continue to think lower prices are ahead so make sure you place the proper amount of contracts on risking 2% of your account balance as oversupply issues are currently keeping a lid on prices.

The precious metals, grain market, stock markets, and the energy complex were all higher today as it seems to me that we had a relief rally taking place due to the fact that of the FOMC minutes which were construed bullish as interest rates are not going higher in the short term . As a trader I believe you must follow the trend and the short term trend is to the downside so don’t let a 1 or 2 day rally bother you as you must stick to the rules and that sometimes means giving back profits.
Trend: Lower
Chart Structure: Poor

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Gold futures in the April contract are higher for the 3rd consecutive trading session hitting a 2 week high as I have been recommending a short position getting stopped out in today's trade licking my wounds as I'm a little disappointed as it was all based on the FOMC minutes as they are not going to raise interest rates anytime soon pushing up many of the commodity markets especially the precious metals.

Gold futures are still trading below their 20 and 100 day moving average, however as an exit strategy when I'm short and prices hit a two week high it’s time to move on and sit on the sidelines as prices settled last Friday at 1,152 while currently trading at 1,187 up over $30 in an impressive week especially considering the fact that the NASDAQ 100 has crossed 5000 once again as everything is basically higher across the board this afternoon.

I've been recommending a short position from around 1,160 getting stopped out at 1,177 as it was a losing trade but nothing horrific but disappointing as always when you're on the wrong side of a trade, however I do think we will be sitting on the sidelines in this market for quite some time waiting for better chart structure to develop as I think prices will chop around trading off of the U.S dollar which has turned very volatile at the current time.
Trend: Mixed
Chart Structure: Poor

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Silver futures in the May contract are sharply higher this Friday afternoon trading up $.75 in New York hitting a four week high as I’ve been recommending a short position in silver prices getting stopped out around the 16.20 level as prices have skyrocketed off the FOMC minutes stating that they will not raise interest rates sending many commodities sharply higher on short covering alone. Silver futures are trading above their 20 but still below their 100 day moving average as I’m now advising clients to sit on the sidelines and wait for better chart structure to develop as prices settled last Friday at 15.50 finishing up almost $1.40 for the trading week having one of its best weeks in months as the U.S dollar is down 160 points pushing up the precious metals in today’s action.

I’ve been recommending a short position from around the 15.60 level losing around $.60 on the trade or $600 per mini contract and I’m disappointed but it’s time to move on and look at another market that is currently trending as many of the commodities may have experienced a short term bounce as it looks like interest rates flat out are not going higher. The chart structure in silver at the current time is terrible as prices have skyrocketed in the last three days as volatility is high once again so look at a different market with less risk at the current time as the 15.50 breakout to the downside was false and that happens so you have to deal with it and risk as little amount of money as possible.
Trend: Mixed
Chart Structure: Poor


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Wednesday, March 18, 2015

The Crazy Man’s Guide to the Bond Market

By John Mauldin


I invite you to inspect the following chart of 10 year interest rates in the US. If you don’t have a lot of experience with these things, let me clue you in: This is a very scary looking chart. It’s a classic head and shoulders bottom in yields.


If you’re one of those people who’s scornful of technical analysis, don’t be. Now, I don’t pay much attention to complicated stuff like Elliott Wave or Gann Angles, but there are some very basic technical formations that work reliably most of the time.

I had the good fortune of taking out a mortgage when 10-year rates were at 1.9%, which goes to show that the only time you get to top-tick stuff is by accident.

Now, this is actually not the low in yields. 10 year yields got to 1.4% a few years ago.


Of course, interest rates are even lower in Europe. Take Germany, for example:


I think that these interest rates (which are at 700 year lows in Europe) signify a bubble. Other people don’t, though—they point to x, y, and z as signs of deflation.

I’m very weary of the inflation/deflation argument. A lot of people lost a lot of money betting on inflation when there were obvious signs of inflation (QE). And I fear that a lot of people will lose a lot of money betting on deflation when there are obvious signs of deflation.

I’m a trader at heart, and I try not to get too attached to my views. I pay attention to price. And right now, the price action is telling me that the bond market might be in trouble.

Central Banks Buy High and Sell Low


The first thing you need to know about central banks is that they are the worst traders in the world. The worst. Probably the most famous example in the modern era was the Bank of England under Gordon Brown’s leadership puking its gold holdings—on the absolute lows, between 1999 and 2002. The idea was they had this gold sitting there not generating any yield, so why not sell the gold and buy paper that would generate some yield?

Whoops…..


A less famous example of bad trading by public officials would be the US Treasury’s decision to issue floating rate debt. Now, if the government has floating-rate liabilities, it should want interest rates to stay low, right?.......Whoops!


The all-time lows in rates. To the exact day.

So with all this in mind, don’t you think it’s interesting that the ECB is going to buy European debt—at 700-year low yields? At negative yields, in some cases? Central banks do not buy things on the lows. They buy things on the highs.

Of course, the ECB is not trying to make money on these transactions. Which is the whole point!

The Worst Investors in US History Strike Again


Betting on the end of what is a 30 year interest rate cycle is not a productive use of our time. This bond market has claimed the careers of many investors. It reportedly hastened the retirement of Stan Druckenmiller, arguably the greatest investor of all time, who bet against bonds heavily, thinking yields could not go any lower. They did.

Let me impart some wisdom here: The first rule of finance is that there are no rules in finance. Nothing works all the time. My favorite dumb rule of finance is the one that says your percentage allocation in bonds should be equal to your age. So if you are 60, you should be 60% in bonds.

My guess is that if interest rates rise 2%-3%, people won’t be saying that anymore.

You know what I worry about? I worry about the baby boomers. I worry about this generation, the worst investors in US history, who got carried out in the tech bear market in 2000 and got caned in the financial crisis of 2008, and after having been hammered twice in the span of 10 years in the stock market, went all-in on bonds.

Why? Bonds are safe. Everyone knows stocks are not safe.

Now, in retirement, none of these people expect their bond mutual funds to get cut in half, which would happen if interest rates went up about 3% - 5%.

Imagine if they did!

The disclaimer to all of this is that I’ve been a bond bear for many years, and I’ve been wrong. But for the first time, I think we have something approaching consensus that yields will stay low forever. People who think interest rates are going up are starting to sound crazy. I am starting to sound crazy. That probably means I’m close to being right.

If 10 year rates get above 3%, the previous high, we will know for sure. If that happens, pick up the Batphone, call the White House, sell everything. Why?

If you are still ignoring charts when they are making higher lows and higher highs, God help you.

Jared Dillian
Jared Dillian


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Saturday, March 14, 2015

Mike Seerys Weekly Crude Oil, Gold and Silver Market Summary

We've asked our trading partner Michael Seery to give our readers a weekly recap of the futures market. He has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.

Here's Mikes call on crude oil, gold and silver. Read more of his calls for this week by visiting here.

Crude oil futures in the April contract are trading lower for the 4th consecutive trading session hitting new contract lows at 44.98 a barrel as I’ve been recommending a short position in yesterday trade around the $48 level & if you took that trade continue place your stop loss above the 10 day high which currently stands at 52.40 risking around $7 dollars or $3,500 per mini contract plus slippage and commission.

Prices in my opinion are headed sharply lower as prices are trading below their 20 and 100 day moving as prices were consolidating over the last six weeks but you’re going to have to be patient in this trade as the 10 day high will not be lowered for another five days so continue to play this to the downside taking advantage of any rallies maintaining the proper amount of contracts risking 2% of your account balance on any given trade.

The U.S dollar is sharply higher again this week pushing many of the commodity markets including the S&P 500 lower which has been very resilient until recently as there seems to be a worldwide slowdown occurring as the commodity markets all look weak so continue to trade with the trend as I don’t know how low prices can go but I do think in my opinion prices are headed lower as whenever a commodity makes a new contract low that’s not a good sign if you are in a bullish position.
Trend: Lower
Chart Structure: Poor

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Gold futures in the April contract settled in New York last Friday at $1,164 an ounce while currently trading at 1,156 down about 8 dollars for the trading week in a relatively nonvolatile trading session still trading below its 20 and 100 day moving average telling you that the trend is to the downside as I have been recommending a short position as of last Friday and if you took that trade place your stop loss above the 10 day high which currently stands at 1,214 risking around $2,400 per mini contract, however the chart structure will start to improve dramatically next week lowering the stop loss.

The problem with gold at current time is the fact that the U.S dollar is sharply higher this week once again continuing to put pressure on the commodity markets as I don't see that trend stopping anytime soon as the next level of support is 1,130 – 1,140 & if that level is broken you would have to think that gold prices will trade below 1,100 and if you look at platinum prices they are hitting another contract low so I think gold will catch up to platinum to the downside.

Many of the commodity markets continue to go lower as well with crude oil prices retesting contract lows once again also pressuring the precious metals as the trend is your friend and I continue to think that there is no reason to own gold at this time so continue to sell as well as maintaining the proper amount of contracts risking 2% of your account balance on any given trade.
Trend: Lower
Chart Structure: Improving

Silver futures in the May contract settled last Friday at 15.80 while currently trading in New York at 15.50 down about $.30 for the trading week hitting a four month low while breaking critical support at 15.55 an ounce as I’m recommending a short position in this market & if you took this trade place your stop loss above the 10 day high which was lowered to 16.58 risking around $1,100 per mini contract plus slippage and commission, however the chart structure will tighten up considerably next week.

I sound like a broken record as I’m pessimistic the entire commodity market due to the fact that the U.S dollar hit a 12 year high once again as I do think prices can retest the December 1st 2014 low of 14.70 an ounce as I see no reason to own the precious metals at this time especially with higher interest rates on the horizon and an incredibly strong U.S dollar both very pessimistic fundamental indicator towards the precious metals and silver prices as a whole.

Silver futures are trading below their 20 and 100 day moving average telling you that the trend is to the downside and if 14.70 is broken you can see a freefall in prices possibly down around the 12.50 level in the next 6 to 8 weeks as the trend is getting stronger on a weekly basis.
Trend: Lower
Chart Structure: Improving


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Friday, March 13, 2015

Will Warren Buffett Really Let This Deep Value Slip By?

By Jeff Clark, Senior Precious Metals Analyst

Right now, even the staunchest gold investors are weary of the years-long drubbing the gold price has taken since its $1,921 peak in August 2011. Whether the frustrating experience is the work of a market rigging conspiracy, government manipulation of data to hide inflation, those blindingly loyal Keynesians who keep pounding us with messages that gold is nothing but a “shiny bitcoin,” or the gullibility of mainstream investors who tell themselves that, gee, since Warren Buffett is a billionaire, his “gold has no utility” mantra must be right, it hasn’t been fun. The nasty downcycle has offered no respite.

That’s all about to change.

If there’s one constant in the resource sector, it’s the boom-bust-repeat cycle that over the past 40 years has been almost predictable. This is particularly the case with gold stocks.

We charted every major cycle for gold stocks (producers) from 1975—when gold again became legal to own in the US—to the present. You can easily see that not only do gold stocks cycle up and down repeatedly, but the percentage gains for buyers at a cycle bottom can be downright mouthwatering.


What’s interesting about where we sit today in early 2015 is that gold stocks have now logged the second-deepest bear market since 1975—rougher even than the selloff following the 1980 mania.

This history teaches three “how to get rich” lessons.
  1. For the recent bear market, the bottom for gold stocks is almost certainly in.
  1. The next major cycle in gold stocks will be up.
  1. The profits could be spectacular, because as the patterns show, triple-digit gains have been common.
Gold stocks have finished the bust that tormented investors for more than three years and are now preparing for another boom. All you have to do is hold on and wait for the next cycle to begin. No timing required.

The only thing we don’t know is if Mr. Buffett will see this chart and jump on the in-your-face deep value that gold stocks are showing right now.

Gold stocks will soon go vertical again—just as they have many times in the past—and investors with just a smidgen of patience will see their gold portfolios driven by a hurricane-force bull market. Virtually all gold stocks will go much higher. As in the past, gains for the strongest juniors will be 10-to-1, and you can expect a few superstars to return 100-to-1.

I talk about this rich opportunity with some of the most successful investors in the gold sector—Pierre Lassaonde, Frank Holmes, Rick Rule, Bob Quartermain, Ron Netolitzky, Doug Casey, and Louis James. Check out our free webcast, Going Vertical, a can’t miss one hour event that will show you the life-changing profits waiting just ahead.

And yes, we extend our invitation to Warren Buffett.



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Wednesday, March 11, 2015

Crude Oil, Divorce, and Bear Markets

By Tony Sagami


Everybody loves a parade. I sure did when I was a child, but I’m paying attention to a very different type of parade today. The parade that I’m talking about is the long, long parade of businesses in the oil industry that are cutting jobs, laying off staff, and digging deep into economic survival mode. The list of companies chopping staff is long, but two more major players in the oil industry joined the parade last week.

Pink Slip #1: Houston-based Dresser-Rand isn’t a household name, but it is a very important part of the energy food chain. Dresser-Rand makes diesel engines and gas turbines that are used to drill for oil.
Dresser-Rand announced that it's laying off 8% of its 8,100 global workers. Many Wall Street experts were quick to point the blame at German industrial giant Siemens, which is in the process of buying Dresser-Rand for $7.6 billion.

Fat chance! Dresser-Rand was crystal clear that the cutbacks are in response to oil market conditions and not because of the merger with Siemens. The reason Dresser-Rand cited for the workforce reduction was not only lower oil prices but also the strength of the US dollar.

If you’re a regular reader of this column, you know that I believe the strengthening US dollar is the most important economic (and profit-killing) trend of 2015.

Pink Slip #2: Oil exploration company Apache Corporation reported its Q4 results last week, and they were awful. Apache lost a whopping $4.8 billion in the last 90 days of 2014.

No matter how you cut it, losing $4.8 billion in just three months is a monumental feat.

Of course, the “dramatic and almost unprecedented” drop in oil prices was responsible for the gigantic loss, but what really matters is the outlook going forward.


CEO John Christmann, to his credit, is taking tough steps to stem the financial bleeding, and that means:
  • Shutting down 70% of the company's drilling rigs.
  • Slashing it's 2015 capital budget to between $3.6 and $5.0 billion, down from $8.5 billion in 2014.
Those aren’t the actions of an industry insider who expects things to get better anytime soon.

I don’t mean to bag on Dresser-Rand and Apache, because they’re far from alone. Schlumberger, Baker Hughes, Halliburton, Weatherford International, and ConocoPhillips have also announced major layoffs. And don’t make the mistake of thinking that the only people getting laid off are blue-collar roughnecks. These layoffs affect everyone from secretaries to roughnecks to IT professionals.

In fact, according to staffing expert Swift Worldwide Resources, the number of energy jobs lost this year has climbed to well above 100,000 around the world.

From Global to Local


Sometimes it helps to put a local, personal perspective to the big-picture national news.

In my home state of northwest Montana, a huge number of men moved to North Dakota to work in the Bakken gas fields. Montana is a big state; it takes about 14 hours to drive from my corner of northwest Montana to the North Dakota oil fields, so that means those gas workers don’t make it back to their western Montana homes for months.

Moreover, the work was six, sometimes seven days a week and 12 hours a day, so once there, they couldn’t drive back home even if they wanted to. This meant long absences… and a good friend of mine who is a marriage counselor told me that the local divorce rate was spiking because of them.

Now the northwest Montana workers are returning home because the once-lucrative oil/gas jobs are disappearing. That news won’t make the New York Times, but it’s as real as it gets on Main Street USA.

From Local to National


Of course, the oil industry's woes aren’t a carefully guarded Wall Street secret. However, I do think that Wall Street—and perhaps even you—are underestimating the impact that low oil prices are going to have on economic growth and GDP numbers going forward.

Let me explain.

Industrial production for the month of January, which measures the output of US manufacturers, miners, and utilities, came in at a “seasonally adjusted" 0.2%.


A 0.2% gain isn’t much to shout about, but the real key was the impact the mining component (which includes oil/gas producers) had on the industrial-production calculation.

The mining industry is the second-largest component of industrial production, and its output fell by 1.0% in January. It was the biggest drag on the overall index.

However, the Federal Reserve Bank said, “The decline [was] more than accounted for by a substantial drop in the index for oil and gas well drilling and related support activities.”

How much did it account for? The oil and gas component fell by 10.0% in January.

Yup, a double-digit drop in output in just one month. Moreover, it was the fourth monthly decline in a row.
Last week’s weak GDP caught Wall Street off guard, but there are a lot more GDP disappointments to come as the energy industry layoffs percolate through the economy. Here’s how my Rational Bear readers are getting ready for GDP and corporate-earnings disappointments that are sure to rattle the markets.
Can your portfolio, as currently composed, handle a slowing economy and falling corporate profits? For most investors, the answer is “no.” Click above to find out how to protect yourself.

Tony Sagami

Tony Sagami

30 year market expert Tony Sagami leads the Yield Shark and Rational Bear advisories at Mauldin Economics. To learn more about Yield Shark and how it helps you maximize dividend income, click here.

To learn more about Rational Bear and how you can use it to benefit from falling stocks and sectors, click here.




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Sunday, March 8, 2015

He's Back....Mike Seerys Weekly Crude Oil and Gold Market Summary

We've asked our trading partner Michael Seery to give our readers a weekly recap of the futures market. He has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.

Here's Mikes call on crude oil and gold. Read more of his calls for this week by visiting here.

Crude oil futures in the April contract are trading below their 20 and 100 day moving average telling you that the short term trend is to the downside however I have been recommending investors to sit on the sidelines in this market as prices have been in a tight consolidation trading between $48 – $55 for the last five weeks as I’m waiting for another trend to develop.

Crude oil futures settled last Friday at 49.76 a barrel while currently trading at 49.70 basically unchanged but currently down $1.00 this Friday as the U.S dollar is up 130 points putting pressure on many of the commodity markets. At the current time there is a struggle between the bulls and bears as deflation is a worldwide concern, however the U.S monthly unemployment number came in very strong which could increase demand especially when you’re starting to enter a strong driving season which can push prices higher however sit on the sidelines and wait for a trend to occur making sure that you risk 2% of your account balance on any given trade as the chart structure currently is outstanding so a breakout is looming in my opinion.

Oil prices are consolidating over the last month or so after falling from around $90 and that is understandable as prices could go sideways for several more months but as a trader I want to follow the trend and this trend is mixed at the current time so look at other markets.
Trend: Mixed
Chart Structure: Excellent

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Gold futures in the April contract are trading far below their 20 and 100 day moving average telling you that the trend is to the downside after settling last Friday at 1,213 while trading at 1,172 down $22 this Friday afternoon as the monthly unemployment report was construed as bullish sending gold to a 9 week low.

The U.S dollar is hitting another contract high up 110 points putting pressure on the precious metals as I'm currently recommending a short position in the mini contract which is $33 for every dollar move while placing your stop above the 10 day high which currently stands 1,223 risking around 50 points or $1800 per contract plus slippage and commission.

In my opinion I believe the U.S dollar will continue its bullish trend and therefore should continue putting bearish pressure on gold and silver prices here in the short term as the next level of support is at 1,165 and if that is breached I think that we test the contract low around 1,130 so continue to play this to the downside as the chart structure will start to improve later next week tightening the stop and reducing monetary risk.

Many of the commodity and stock markets were lower today due to the fact that United States treasury bonds plummeted this afternoon sending yields higher as now the speculation is that the Federal Reserve will start to raise rates in June which is another pessimistic fundamental indicator towards gold prices.
Trend: Lower
Chart Structure: Solid

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Thursday, March 5, 2015

Going Vertical.....Our Next Online Event

There are again signs on the horizon that the next gold bull market may not be far off.

On February 11, Bloomberg reported, “Gold producers with cash on hand are on the hunt for cheap mining assets as rising prices drive shares higher.” $2.7 billion in deals have already been announced or completed year to date—compared to a total of $10.5 billion in 2014.

Private equity firms (the “smart money”) are circling the mining industry for great deals. GDX, the Market Vectors Gold Miners ETF, currently has an aggregate price to book ratio of 1.06, while its little brother, the Market Vectors Junior Gold Miners ETF (GDXJ), trades at 76% of book value.

A stronger US dollar and falling oil prices are presenting two deflationary forces that are good for gold. The last two times oil dropped more than 50% in one year—1986 and 2008—gold rallied over 25% the following year.

Here's our video primer for this weeks event "Are you Going to Buy Low and Sell High this Time Around"

Investors are waking up to the fact that gold is rallying. Among the top 10 non leveraged ETFs are five gold miners ETFs. As of early February, investors had already poured $885.4 million in new assets into GDX—one of the best results among sector ETFs—and GDXJ attracted nearly $226 million.

No one can say for sure if this is the beginning of the next gold bull market. However, what is clear is that once the bull market does get started, the best of the best gold stocks will go vertical.

Successful gold producers may go up 150-200%. But the top ranked junior miners—the companies with quality management and great assets will take a moonshot. 500%, 1,000%, and more is not out of the question.

Casey Research’s free online event GOING VERTICAL aims to help investors understand where we are in the gold cycle, what to expect, and how to prepare their portfolio so they have a real shot at the jackpot when gold rises again.

Just Click Here to Reserve Your Spot

Eight industry stars discuss the most pressing issues of the day......

Pierre Lassonde, cofounder and chairman of Franco-Nevada
Rick Rule, founder and chairman of Sprott Global Resource Investments
Ron Netolitzky, chairman and director of Aben Resources
Doug Casey, chairman of Casey Research
Frank Holmes, CEO and CIO of U.S. Global Investors
Bob Quartermain, president, CEO, and director of Pretium Resources
and Casey Research precious metals experts Louis James and Jeff Clark.

Topics they will talk about in GOING VERTICAL include: 2015 outlook on the gold market; up, down, or sideways?—What to expect from gold’s next leg up, and how even stocks that have dropped 75% or more can come back with a vengeance—How to make money on junior miners even in the midst of a downturn—Which country may end up controlling the price of gold and what that means for investors—4 signs that a bear market is turning into a bull market—Which types of companies institutional investors will flock to first when gold goes up, and how to “front run” them—3 reasons why the best gold producers might double when the gold sector recovers—and much more.

Also, some of the experts talk about their favorite gold and silver companies, naming names—and Louis James reveals one of his favorite junior mining stock with vertical potential.

Register now to watch the event on Tuesday, March 10, 2:00 p.m. EDT. Even if you know you can’t make it at that time, register anyway that way you’ll get an email with a link to the video recording after the event and can watch it at your leisure.

Click Here to Learn More and Register

See you on Tuesday,
Ray C. Parrish
aka the Crude Oil Trader

Get our latest FREE eBook "Understanding Options"....Just Click Here!

Wednesday, March 4, 2015

What Top Hedge Fund Managers Really Think About Gold

By Jeff Clark, Senior Precious Metals Analyst

In the January BIG GOLD, I interviewed a plethora of experts on their views about gold for this year. The issue was so popular that we decided to republish a portion of the edition here.

Given their level of success, these fund managers are worth listening to: James Rickards, Chris Martenson, Steve Henningsen, Grant Williams, and Brent Johnson. Some questions are the same, while others were tailored to their particular expertise.

I hope you find their comments as insightful and useful as I did…...

James Rickards is chief global strategist at the West Shore Funds, editor of Strategic Intelligence, a monthly newsletter, and director of the James Rickards Project, an inquiry into the complex dynamics of geopolitics and global capital. He is the author of the New York Times best  seller The Death of Money and the national best seller Currency Wars.

He’s a portfolio manager, lawyer, and economist, and has held senior positions at Citibank, Long Term Capital Management (LTCM), and Caxton Associates. In 1998, he was the principal negotiator of the rescue of LTCM sponsored by the Federal Reserve. He’s an op-ed contributor to the Financial Times, Evening Standard, New York Times, and Washington Post, and has been interviewed by the BBC, CNN, NPR, C-SPAN, CNBC, Bloomberg, Fox, and the Wall Street Journal.

Jeff: Your book The Death of Money does not paint an optimistic economic picture. What will the average citizen experience if events play out as you expect?

James: The end result of current developments in the international monetary system will almost certainly be high inflation or borderline hyperinflation in US dollars, but this process will take a few years to play out, and we may experience mild deflation first. Right now, global markets want to deflate, yet central banks must achieve inflation in order to make sovereign debt loads sustainable. The result is an unstable balance between natural deflation and policy inflation. The more deflation persists in the form of lower prices for oil and other commodities, the more central banks must persist in monetary easing. Eventually inflation will prevail, but it will be through a volatile and unstable process.

Jeff: The gold price has been in a downtrend for three years. Is the case for gold over? If not, what do you think kick-starts a new bull market?

James: The case for gold is not over—in fact, things are just getting interesting. I seldom think about the “price” of gold. I think of gold as money and everything else as a price measured in gold units. When the dollar price of gold is said to be “down,” I think of gold as a constant store of value and that the dollar is simply “up” in the sense that it takes more units of gold to buy one dollar. This perspective is helpful, because gold can be “down” in dollars but “up” in yen at the same time, and often is when the yen is collapsing against the dollar.

The reason gold is thought to be “down” is because the dollar is strong. However, a strong dollar is deflationary at a time when the Fed’s declared policy is to get inflation. Therefore, I expect the Fed will not raise interest rates in 2015 due to US economic weakness and because they do not want a stronger dollar. When that realization sinks in, the dollar should move lower and gold higher when measured in dollar terms.

The looming global shortage of physical gold relative to demand also presages a short squeeze on the paper gold edifice of futures, options, unallocated forward sales, and ETFs. The new bull market will be kick started when markets realize the Fed cannot raise rates in 2015 and when the Fed finds it necessary to do more quantitative easing, probably in early 2016.

Jeff: Given what you see coming, how should the average retail investor position his or her portfolio?

James: Since risks are balanced between deflation and inflation in the short run, a sound portfolio should be prepared for both. Investors should have gold, silver, land, fine art, and other hard assets as an inflation hedge. They should have cash and US Treasury 10-year notes as a deflation hedge. They should also include some carefully selected alternatives, including global macro hedge funds and venture capital investments for alpha. Investors should avoid emerging markets, junk bonds, and tech stocks.

Steve Henningsen is chief investment strategist and partner at The Wealth Conservancy in Boulder, CO, a firm that specializes in wealth coaching, planning, and investment management for inheritors focused on preservation of capital. He is a lifetime student, traveler, fiduciary, and skeptic.

Jeff: The Fed and other central banks have kept the economy and markets propped up longer than some thought they could. How much longer do you envision them being able to do so? Or has the Fed really staved off crisis?

Steve: I do not believe we are under a new economic paradigm whereupon a nation can resolve its solvency problem via increasing debt. As to how long the central banks’ plate spinning can defer the consequences of the past 30-plus years of excess credit growth, I hesitate to answer, as I never thought they would get this far without breaking a plate. However incorrect my timing has been over the past two years, though, I am beginning to doubt that they can last another 12 months. Twice in the last few months the stock market plates began to wobble, only to have Fed performers step in to steady the display.

With the end of QE, a slowing global economy, a strengthening dollar, and the recent sharp drop in oil prices, deflationary winds are picking up going into 2015, making their balancing act yet more difficult. (Not to mention increasing tension from poking a stick at the Russian bear.)

Jeff: Gold has been in decline for over three years now. What changes that? Should we expect gold to remain weak for several more years?

Steve: I cannot remember an asset more maligned than gold is currently, as to even admit one owns it receives a reflexive look of pity. While most have left our shiny friend bloodied, lying in the ditch by the side of the road, there are signs of resurrection. While I’m doubtful gold will do much in the first half of 2015 due to deflationary winds and could even get dragged down with stocks should global liquidity once again dissipate, I am confident that our central banks would again step in (QE4?) and gold should regain its luster as investors finally realize the Fed is out of bullets.

The wildcard I’m watching is the massive accumulation of gold (and silver) bullion by Russia, China, and India, and the speculation behind it. Should gold be announced as part of a new monetary system via global currency or gold-backed sovereign bond issuance, then gold’s renaissance begins.

Jeff: Given what you see coming, how should the average investor position her or his portfolio?

Steve: Obviously I am holding on to our gold bullion positions, as painful as this has been. I would also maintain equity exposure via investment managers with the flexibility to go long and short. I believe this strategy will finally show its merits vs. long-only passive investments in the years ahead. I believe that for the next 6-12 months, long-term Treasuries will help balance out deflationary risks, but they are definitely not a long-term hold. Maintaining an above average level of cash will allow investors to take advantage of any equity downturns, and I would stay away from industrial commodities until the deflationary winds subside.
Precious metals equities could not be hated more and therefore represent the best value if an investor can stomach their volatility.

Grant Williams is the author of the financial newsletter Things That Make You Go Hmmm and cofounder of Real Vision Television. He has spent the last 30 years in financial markets in London, Tokyo, Hong Kong, New York, Sydney, and Singapore, and is the portfolio and strategy advisor to Vulpes Investment Management in Singapore.

Jeff: The Fed and other central banks have kept the economy and markets propped up longer than some thought possible. How much longer do you envision them being able to do so? Or has the Fed really staved off crisis?

Grant: I have repeatedly referred to a singular phenomenon over the past several years and it bears repeating as we head into 2015: for a long time, things can seem to matter to nobody until the one day when they suddenly matter to everybody. It feels as though we have never been closer to a series of such moments, any one of which has the potential to derail the narrative that central bankers and politicians have been working so hard to drive.

Whether it be Russia, Greece, the plummeting crude oil price, or a loss of control in Japan, there are a seemingly never-ending series of situations, any one (or more) of which could suddenly erupt and matter to a lot of people at the same time. Throw in the possibility that a Black Swan comes out of nowhere that nobody has thought about (even something as seemingly trivial as the recent hack of Sony Pictures by the North Koreans could set in motion events which can cascade very quickly in a geopolitical world which has so many fissures running through it), and you have the possibility that fear will replace greed overnight in the market’s collective psyche. When that happens, people will want gold.

The issue then becomes where they are going to get it from. Physical gold has been moving steadily from West to East despite the weak paper prices we have seen for the last couple of years, and this can continue until there is a sudden wider need for gold as insurance or as a currency. When that day comes, the price will move sharply from being set in the paper market—where there is essentially infinite supply—to being set in the physical markets where there is very inelastic supply and the existing stock has been moving into strong hands for several years. Materially higher prices will be the only way to resolve the imbalance.

Jeff: You’ve written a lot about the gold market over the past few years. In your view, what are the most important factors gold investors should keep in mind right now?

Grant: I think the key focus should be on two things: first, the difference between paper and physical gold; and second, on the continuing drive by national banks to repatriate gold supplies. The former is something many people who are keen followers of the gold markets understand, but it is the latter which could potentially spark what would, in effect, be a run on the gold “bank.” Because of the mass leasing and rehypothecation programs by central banks, there are multiple claims on thousands of bars of gold. The movement to repatriate gold supplies runs the risk of causing a panic by central banks.

We have already seen the beginnings of monetary policy divergence as each central bank begins to realize it is every man for himself, but if that sentiment spreads further into the gold markets, it could cause mayhem.
Keep a close eye on stories of further central bank repatriation—there is a tipping point somewhere that, once reached, will light a fire under the physical gold market the likes of which we haven’t seen before, and that tipping point could well come in 2015.

Jeff: Given what you see coming, how should the average investor position his or her portfolio?

Grant: Right now I think there are two essentials in any portfolio: cash and gold. The risk/reward skew of being in equity markets in most places around the world is just not attractive at these levels. With such anemic growth everywhere we turn, and while it looks for all the world that bond yields are set to continue falling, I think the chances of equities continuing their stellar run are remote enough to make me want out of equity markets altogether.

There are pockets of value, but they are in countries where the average investor is either disadvantaged due to a lack of local knowledge and a lack of liquidity, or there is a requirement for deep due diligence of the kind not always available to the average investor.

The other problem is the ETF phenomenon. The thirst for ETFs in order to simplify complex investing decisions, as well as to throw a blanket over an idea in order to be sure to get the “winner” within a specific theme or sector, is not a problem in a rising market (though it does tend to cause severe value dislocations amongst stocks that are included in ETFs versus those that are not). In a falling market, however, when liquidity is paramount, any sudden upsurge of selling in the ETF space will require the underlying equities be sold into what may very well be a very thin market.

In a rising market, there is always an offer. In a falling market, bids can be hard to come by and in many cases, nonexistent, so anybody expecting to divest themselves of ETF positions in a 2008 like market could well find themselves with their own personal Flash Crash on their hands.

Unlevered physical gold has no counterparty risk and has sustained a bid for 6,000 straight years (and counting). Though sometimes, in the wee small hours, those bids can be both a little sparse and yet strangely attractive to certain sellers of size.

Meanwhile, a healthy allocation to cash offers a supply of dry powder that can be used to gain entry points which will hugely amplify both the chances of outperformance and the level of that performance in the coming years.

Remember, you make your money when you buy an asset, not when you sell it.

Caveat emptor.

Chris Martenson, PhD (Duke), MBA (Cornell), is an economic researcher and futurist who specializes in energy and resource depletion, and is cofounder of Peak Prosperity. As one of the early econobloggers who forecasted the housing market collapse and stock market correction years in advance, Chris rose to prominence with the launch of his seminal video seminar, The Crash Course, which has also been published in book form.

Jeff: The Fed and other central banks have kept the economy and markets propped up longer than some thought possible. How much longer do you envision them being able to do so? Or has the Fed really staved off crisis?

Chris: Well, if people were being rational, all of this would have stopped a very long time ago. There’s no possibility of paying off current debts, let alone liabilities, and yet “investors” are snapping up Italian 10 year debt at 2.0%! Or Japanese government bonds at nearly 0% when the total debt load in Japan is already around $1 million per rapidly aging person and growing. I cannot say how much longer so called investors are willing to remain irrational, but if pressed I would be very surprised if we make it past 2016 without a major financial crisis happening.

Of course, this bubble is really a bubble of faith, and its main derivative is faith based currency. And it’s global. Bubbles take time to burst roughly proportional to their size, and these nested bubbles the Fed and other central banks have engineered are by far the largest ever in human history.

As always, bubbles are always in search of a pin, and we cannot know exactly when that will be or what will finally be blamed. All we can do is be prepared.

Jeff: If deflationary forces pick up, how do you expect gold to perform?

Chris: Badly at first, and then spectacularly well. It’s like why the dollar is rising right now. Not because it’s a vastly superior currency, but because it’s the mathematical outcome of trillions of dollars’ worth of US dollar carry trades being unwound. So the first act in a global deflation is for the dollar to rise. Similarly, the first act is for gold to get sold by all of the speculators that are long and need to raise cash to unwind other parts of their trade books.

But the second act is for people to realize that the institutions and even whole nation states involved in the deflationary mess are not to be trusted. With opaque accounting and massive derivative positions, nobody will really know who is solvent and who isn’t. This is when gold gets “rediscovered” by everyone as the monetary asset that is free of counterparty risk—assuming you own and possess physical bullion, of course, not paper claims that purport to be the same thing but are not.

Jeff: Given what you see coming, how should the average investor position her or his portfolio?

Chris: Away from paper and toward real things. If the outstanding claims are too large, or too pricey, or both, then history is clear; the perceived value of those paper claims will fall.

My preferences are for land, precious metals, select real estate, and solid enterprises that produce real things. Our view at Peak Prosperity is that deflation is now winning the game, despite everything the central banks have attempted, and that the very last place you want to be is simply long a bunch of paper claims.

However, before the destruction of the currency systems involved, there will be a final act of desperation by the central banks that will involve printing money that goes directly to consumers. Perhaps it will be tax breaks or even rebates for prior years, or even the direct deposit of money into bank accounts.

When this last act of desperation arrives, you’ll want to be out of anything that looks or smells like currency and into anything you can get your hot little hands on. This may include equities and other forms of paper wealth—just not the currency itself. You’ll want to run, not walk, with a well-curated list of things to buy and spend all your currency on before the next guy does.

We’re not there yet, but we’re on our way. Expect the big deflation to happen first and then be alert for the inevitable central bank print a thon response.

Because of this view, we believe that having a very well balanced portfolio is key, with the idea that now is the time to either begin navigating toward real things, or to at least have that plan in place so that after the deflationary impulse works its destructive magic, you are ready to pounce.

Brent Johnson is CEO of Santiago Capital, a gold fund for accredited investors to gain exposure to gold and silver bullion stored outside the United States and outside of the banking system, in addition to precious metals mining equities. Brent is also a managing director at Baker Avenue Asset Management, where he specializes in creating comprehensive wealth management strategies for the individual portfolios of high-net-worth clients. He’s also worked at Credit Suisse as vice president in its private client group, and at Donaldson, Lufkin & Jenrette (DLJ) in New York City.

Jeff: The Fed and other central banks have kept the economy and markets propped up longer than some thought possible. How much longer do you envision them being able to do so? Or has the Fed really staved off crisis?

Brent: As much as I dislike the central planners, from a Machiavellian perspective you really have to give them credit for extending their influence for as long as they have. I wasn’t surprised they could engineer a short-term recovery, and that’s why, even though I manage a precious metals fund, I don’t recommend clients put all their money in gold. But I must admit that I have been surprised by the duration of the bull market in equities and the bear market in gold. And while I probably shouldn’t be, I’m continually surprised by the willingness of the investing public to just accept as fact everything the central planners tell them. The recovery is by no means permanent and is ultimately going to end very, very badly.

But I don’t have a crystal ball that tells me how much longer this movie will last. My guess is that we are much closer to the end than the beginning. So while they could potentially draw this out another year, it wouldn’t surprise me at all to see it all blow up tomorrow, because this is all very much contrived. That’s why I continue to hold gold. It is the ultimate form of payment and cannot be destroyed by either inflation, deflation, central bank arrogance, or whatever other shock exerts itself into the markets.

Jeff: As a gold fund manager, you’ve watched gold decline for over three years now. What changes that? And when? Should we expect gold to remain weak for several more years?

Gold has been in one of its longest bear markets in history. Many of us in the gold world must face up to this. We have been wrong on the direction of gold for three years now. Is this due to bullion banks trying to maximize their quarterly bonuses by fleecing the retail investor? Is it due to coordination at the central bank level to prolong the life of fiat currency? Is it due to the Western world not truly understanding the power of gold and surrendering our bullion to the East? I don’t know… maybe it’s a combination of all three. Or maybe it’s something else altogether.

What I do know is that gold is still down. Now the good news is… that’s okay. It’s okay because it isn’t going to stay down. The whole point of investing is to arbitrage the difference between price and value. And right now there remains a huge arbitrage to exploit. As Jim Grant said, “Investing is about having people agree with you… later.”

Now all that said, I realize it hasn’t been a fun three years. This isn’t a game for little boys, and I’ve felt as much pain as anyone. I think the trend is likely to change when the public’s belief in the central banks starts coming into question. We are starting to see the cracks in their omnipotence. For the most part, however, investors still believe that not only will the central banks try to bail out the markets if it comes to that, but they also still believe the central banks will be successful when they try. In my opinion, they are wrong.

And there are several catalysts that could spark this change—oil, Russia, other emerging markets, or the ECB and Japan monetizing the debt. This “recovery” has gone on for a long time. But from a mathematical perspective, it simply can’t go on forever. So as I’ve said before, if you believe in math, buy gold.

Jeff: Given what you see coming, how should the average investor position her or his portfolio?

Brent: The answer to this depends on several factors. It depends on the investor’s age, asset level, income level, goals, tolerance for volatility, etc. But in general, I’m a big believer in the idea of the “permanent portfolio.” If you held equal parts fixed income, equities, real estate, and gold over the last 40 years, your return is equal to that of the S&P 500 with substantially less volatility. And this portfolio will perform through inflation, deflation, hyperinflation, collapse, etc.

So if you are someone who is looking to protect your wealth without a lot of volatility, this is a very strong solution. If you are younger, are trying to create wealth, and have some years to ride out potential volatility, I would skew this more toward a higher allocation to gold and gold shares and less on fixed income, for example.

Because while I generally view gold as insurance, this space also has the ability to generate phenomenal returns and not just protect wealth, but create it. But whatever the case, regardless of your age, level of wealth, or world view, the correct allocation to gold in your portfolio is absolutely not zero. Gold will do phenomenally well in the years ahead, and those investors who are willing to take a contrarian stance stand to benefit not only from gold’s safety, but also its ability to generate wealth.

One other thing to remember about gold is that while it may be volatile, it’s not risky. Volatility is the fluctuation in an asset’s daily/weekly price. Risk is the likelihood of a permanent loss of capital. And with gold (in bullion form), there is essentially no chance of a permanent loss of capital. It is the one asset that has held its value not just over the years, but over the centuries. I for one do not hold myself out as being smarter than thousands of years of collective global wisdom. If you do, I wish you the best of luck!

Of course, bullish signs for gold have been mounting, which begs the question: could the breakthrough for the gold market be near?

Well, no one knows for sure. But what we do know is that when the market recovers, the handful of superb mining stocks that have survived the slaughter won’t just go up—they’ll go vertical.

Which is why we're hosting a free online event called, GOING VERTICAL, headlined by a panel of eight top players in the precious metals sector, names you'll no doubt recognize. Each of our guests give their assessment on where the gold market is right now, how long it will take to recovery, and what practical steps you need to take to prepare including - which stocks you should own now.

This free video event will air March 10th, 2pm Eastern time. To make sure you don't miss it, click here to register now.



Get our latest FREE eBook "Understanding Options"....Just Click Here!

Friday, February 27, 2015

Are you a Brain Dead Trader or Just Lucky?

Were you one of the lucky ones? Were you one of 8,909 traders that registered for this weeks fantastic free webinar from John Carter? If not, not to worry. John has made the webinar available as a replay and of course it's still free to watch. This was another game changer as John found a way to make trading options on premium decay understandable by anyone no matter their trading skill level.

Watch the Free Webinar Replay Here

Why did so many traders fight for a spot at this webinar? I think it has a lot to do with the video primer John send us earlier in the week giving us just a taste of what John would show us in more detail at the webinar.

Watch that Free Video Here

In this video John shows us a simple and effective strategy for using premium decay, but he also shows us his strategy to make money on a stock if it's going up or down.

In this webinar John will discuss....

  *  Why trading options are perfect for newbies, retirees, part time traders, and full time traders

  *  Why options are safer than trading stocks, futures or forex while holding on for bigger winners

  *  One strategy he uses for consistent trading results that you can use the next trading day

  *  The brain dead rules to follow so you can know exactly how to trade this one set up for consistency

  *  How traders get sucked into buying the wrong stocks at the wrong price so you never get suckered into a trade again

       And much more….

And John doesn't stop there.....

Get his latest FREE eBook "Understanding Options"....Just Click Here!

Nobody did more in 2014 to change the way traders, investors and fund managers looks at trading options than John did with this one eBook. Get yours right now while it's still available.

See you in the markets!
Ray C. Parrish
aka the Crude Oil Trader


Wednesday, February 25, 2015

A Math Free Guide to Higher and Safer Returns

By Andrey Dashkov

I can make you instantly richer, and safely, by explaining a finance concept with a story about a dog.

There’s a hole in your pocket you probably don’t know about. You may feel instinctively that something is wrong, but unless you look in the right place, you won’t find the problem. The money you’re losing doesn’t appear in the minus column on your account statements, but you’re losing it nevertheless.

Frustrated? Don’t be. I’m going to tell you where to look and how to stop the drainage.

Volatility is every investor’s worst enemy. Over time, it poisons your returns. Unlike a 2008 style market drop, though, volatility poisons them slowly. There’s no obvious ailment to discuss with friends or hear about on CNBC. You only see it when you compare how much you lost to how much you could have earned—and looking back at your own mistakes is not a pleasant thing to do.

Here's the Replay of Last Nights Free Webinar....."Options and Premium Decay"

So instead let’s imagine two fictional companies: X-Cite, Inc., an amusement park operator with a volatile stock price that adventurous investors love; and Glacial Corp., a dull, defensive sloth of a corporation whose stock returns are consistent but often lower than those of its more glamorous counterpart.

Average return on both companies’ stocks was 5% for the past five years, but Glacial’s was less volatile. Safety is comfortable, but doesn’t higher volatility mean higher potential returns? Sometimes, but not always. When you accept high volatility, your returns might be higher at times, but they also might be lower. In other words, higher volatility generally means greater risk.

Nothing new so far, but the oft-overlooked point is that boring stocks make you richer over time.
The chart below shows each stock’s annual return over a five year period.


At first glance, Glacial Corp. appears to be the loser. It underperformed X-Cite in four out of five years. Both stocks returned 5% on average during these years, and X-Cite was almost always voted the prettiest girl in town. But for Year 3, it would be easy to persuade investors to buy X-Cite stock. Few would give Glacial a second glance.

Hold for the punchline: X-Cite, the stock your broker would have a much easier time selling you (before you read this article), would actually make you poorer. Let me explain.

I won’t get into any supercharged math here. Glacial is better because it makes you richer eventually. After five years, the total return on X-Cite is 25%. Not bad. Glacial? 27%. If you invested $10,000 in both (assuming no brokerage fees or taxes), at the end of Year 5 you would have earned $2,507 on X-Cite or $2,701 on Glacial.

Year-End Account Balance
X-Cite, Inc.
Glacial Corp.
Year 1
$10,500
$10,300
Year 2
$11,550
$11,021
Year 3
$10,164
$10,801
Year 4
$10,875
$11,341
Year 5
$12,507
$12,701
Total return
25%
27%


Where does the extra $194 come from? It comes from lower volatility. Although X-Cite looks like a winner most of the time, it has a higher standard deviation of returns. Note that X-Cite’s stock price dropped 12% in Year 3. The following year it increased 7%, while Glacial Corp.’s stock price only increased 5%—yet Glacial is still worth more from Year 3 onward. Why? X-Cite’s 7% jump is based on the previous year’s low.

But I promised to keep this note math-free, so imagine a person walking a dog instead. The shorter the leash, the less space the dog has to run around. The longer the leash, the more erratic the dog’s path will be. Standard deviation measures how much data tend to scatter around its mean—the path. As we just saw, low standard deviation also pays you money.

I could stop right here and hope that you take this lesson to heart, but I won’t. As much as I love describing finance concepts using clever company names and dogs, I want you to start making money right now.

I said this advice could make you instantly richer, and “instantly” doesn’t mean “maybe sometime in the future.” In the latest issue of Money Forever, we shared an opportunity to invest into a vehicle built to outperform the market by managing volatility. I was extremely excited to present it to our paid subscribers because I knew they’d love to earn more by risking less. Who wouldn’t?

So please pardon my blatant self-promotion. I work in an industry where 80% of the time the market is obsessed with the wrong stock, and the noise drowns out the right idea. I can silence the cacophony for you, though, and show you where to find the right ideas. And that goes beyond our most recent pick, although you do need it in your portfolio. Money Forever’s mission is to make your money last—plain and simple.

We think this pick will go a long way toward doing just that.

You can check it out and access our full portfolio immediately by subscribing risk free to Money Forever.

It’s about the price of Netflix, but unlike Netflix we won’t bother you if you decide to cancel. In fact, we’re so confident that the Money Forever portfolio can help you “earn more by risking less” that we’ll refund 100% of the cost if you decide to cancel within the first three months.

And we’ll even prorate your refund after that—it’s a no lose proposition. Click here to start earning more by risking less now.

The article A Math-Free Guide to Higher and Safer Returns was originally published at millersmoney.com.


Get our latest FREE eBook "Understanding Options"....Just Click Here!

Sunday, February 22, 2015

Free Webinar: How You Generate Consistent Trading Results in Today's Markets

Our trading partner John Carter is back with another one of his wildly popular free trading webinars. This time John will be covering his trading strategy using "premium decay".

If you have attended one of John's free webinars you know that he has a unique ability to give traders that "over his shoulder" view of how he performs these trades making it very easy to understand.

Best thing of all though, he shows us how this can be done in any size account. Limiting brokerage fees so we can make money even in small accounts.

Watch the Free Replay of this Webinar now....Just Click Here

In this free webinar John will discuss....

  *  Why trading options are perfect for newbies, retirees, part time traders, and full time traders

  *  Why options are safer than trading stocks, futures or forex while holding on for bigger winners

  *  One strategy he uses for consistent trading results that you can use the next trading day

  *  The brain dead rules to follow so you can know exactly how to trade this one set up for consistency

  *  How traders get sucked into buying the wrong stocks at the wrong price so you never get suckered into a trade again

      And much more….

We had 8,909 traders register for this webinar on the Tuesday evening that it was live and we did not have room for everyone. Here’s the replay and of course it’s still free. John did another game changer for sure.....

Follow this link to watch this webinar at your convenience.....Sign Up Now

John has provided a great free video primer for this webinar.....Watch it Now

See you in the markets!
Ray C Parrish
aka the Crude Oil Trader



Get our latest FREE eBook "Understanding Options"....Just Click Here!


Saturday, February 21, 2015

Mike Seerys Weekly Crude Oil and Gold Market Summary

We've asked our trading partner Michael Seery to give our readers a weekly recap of the futures market. He has been a senior analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.

Here's Mikes call on crude oil and gold. Read more of his calls for this week by visiting here.

Crude oil futures are trading above their 20 but still below their 100 day moving average telling you that the trend is mixed as I have been advising clients to sit on the sidelines until volatility slows down which could take some time. Crude oil futures settled last Friday at 53.67 a barrel while currently trading around 51.20 in the April contract down around $2.50 for the trading week.

The chart structure is starting to improve as prices have been trading between 50-55 in the last 2 weeks looking to breakout soon so keep a close eye on this market as a breakout above $55 could be in the cards but be patient as the trend is still choppy with no short term trend which does not meet my criteria to enter.

The API report came out yesterday stating that we had 14 million barrels in storage versus the 3 million estimate sending prices down over $2 as the fundamentals still remain bearish as currently there is still an oversupply issue in the short term.
Trend: Mixed
Chart Structure: OK

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Gold futures in the April contract settled last Friday at 1,227 while currently at 1,207 down about $20 for the trading week still trading below their 20 & 100 moving average telling you that the trend is to the downside as prices have hit a 6 week low. I am currently sitting on the sidelines awaiting better chart structure to develop as investors continue to put money into the equity market as gold seems to be entering into a bearish trend once again in my opinion.

The next level of major support is around the 1,180 level and if that level is broken I would have think that a retest of the contract low which was hit in early November 2014 could be in the cards so keep a close eye on this trade because a trade could be coming if chart structure improves and that could happen next week.

Problems around the world seem to be out of the lime light at the current time as I don’t see any real reason to own gold as I remain bullish the S&P 500 as the U.S dollar continues to hover around 11 year highs as I think the dollar is in a secular bull market for some time to come as Europe’s economy is not as strong as the United States as that’s also a negative fundamental influence on gold prices.
Trend: Lower
Chart Structure: Poor

Watch this weeks new video "Why I Trade Options for Consistent Account Growth".....Just Click Here!



Wednesday, February 18, 2015

Simple Strategy Alert: Premium Decay

We all think we know what premium decay is right? Well, I thought I knew how it worked until I watched this new video from our trading partner John Carter of Simpler Options. I never knew just how powerful and simple it was to apply knowledge of the decay principal to trading options.

Basically it's a way to insure the health of your portfolio even in an unhealthy market.

In this free video John shows us a simple and effective strategy for using premium decay, but he also shows you his strategy to make money on a stock whether it's going up or down.


Here's a sample of what John will share with us.....

  *  How to “control” stocks for a fraction of the price so you don’t risk all your capital - How you can
      generate consistent returns being dead wrong

  *  What “premium decay” is and how you can use to it to give yourself an edge in trading

  *  How you can set up occasional home run trades while generating consistent returns

  *  A handful of the key stocks I look at every day so you don’t go bug eyed looking for stocks to trade


Don't miss the game changing video "Simple Strategy Alert: Premium Decay"....Watch Video Now


John Carter has become well known for his wildly popular free options trading webinars and his free options trading eBook that changed the way traders looked at options trading in 2014.

Download the free eBook HereWhile you still can!

Chris' New Video Reveals Why 2015 is Going to be Big

The S&P 500 stock market has been under heavy rotation since mid 2014. Rotation in the stock market is when the trend sharply changes direction from an uptrend to a downtrend or vice versa. Depending how the price moves during these rotations this algorithmic trading system which Chris Vermeulen runs can generate large profits if the price action is favorable for the trading algorithm.

Unfortunately the second half of 2014 the stock market rotation moved in a way that was very difficult for the trading algorithm to generate trades but no trades are better than losing trades so its not the end of the world. But what Chris wants to show you in this video is how the current price action we have experienced since mid-2014 till now is the same price action and has similar characteristics that we saw in 2010 and again in 2011.

2015 is going to be a stellar year for his trading system!

This price pattern has led to substantial rallies in the stock market of 20% to 35% gains over a six-month period and its looks like it may happen again.

Chris' AlgoTrades algorithmic trading system does struggles during these rotational periods but so do CTA's and other money managers. There is not doubt that it has been hard to profit with the swings in the market because of the way they happened. When this phase of the market completes and a new trend emerges the trading algorithm will excel and pull substantial gains out of the stock market on autopilot just like it did in the first half of 2014.

Both times the stock market has formed these formations the algorithmic trading system pulled 64% ROI in 2010 and pulled 78% ROI 2012. 


Watch the video to learn more.....

Algorithmic Trading System


Visit Chris Vermeulen's Website to Learn more Algo Trades


Sincerely,
Ray C. Parrish
The Crude Oil Trader


Get our latest FREE eBook "Understanding Options"....Just Click Here!

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