This action might not be possible to undo. Are you sure you want to continue?
Jan. 6, 2012
Tip For 2012:
2 3 4 4 5
Raging Bull Lurks In Stocks
Iran's Real Weapon Of Mass Destruction Is Oil Prices With AAA Rating In Jeopardy French Borrowing Inch Higher, Stocks Sink
Market Watch Cerus Corporation The Biggest And Baddest Bubble Ever
Buy Gold In Euros
euros on a dollar cost average basis.
hat is most important to know as we hit year end, is that while the S&P 500, SDPR S&P 500 (SPY), ended the year unchanged, gold and SPDR Gold Shares (GLD), prices are still up 10% for all of 2011 even after the recent 20% decline. Gold vs the euro is up about 12% 13% for the year. In other words, while the U.S. stock market hung in there in U.S. dollar terms, compared with gold, the U.S. market is down 10%. As 1982 ended, which was right before the Dow Jones Industrial Average first broke through 1,000, there were no more than 100 hedge funds and all of several hundred mutual funds. The market cap of all stocks was just above $1 trillion. Today, four years after the Dow topped out at 14,279 and at a $22+ trillion market cap, there are more than 4,000 equity mutual funds and at least 10,000 hedge funds and large size private investors. Even though the overall market cap is down to $17 trillion, or about a 25% drop from the top, the creation of what is still a $15 trillion increase in the value of all U.S. stocks has generated thousands of portfolio managers hoping that equity prices will resume rising so that they can keep making the huge incomes they firmly believe they fully deserve. Repeating what I said on Thursday my best investment advice for 2012 is to go long gold and go short an equivalent amount of
The U.S. keeps printing close to $100 billion of new money every month to pay our bills. Wouldn’t you like to be able to create money out of thin air to pay your bills? I would. Many emerging market central bankers, seeing that the worlds reserve currency is being depreciating via the printing press, have been buying gold bullion steadily. If it is good enough for the emerging market central bankers, gold is good enough for me. But instead of buying gold in U.S. dollars, I recommend, as many others already have, buying gold in euros. Europe is engaged in a slow motion train wreck. There is no sign that there is even a slight chance of economic growth anywhere in Europe other than Germany and maybe one or two of the fringe countries. Therefore the euro undoubtedly will weaken given not only a slumping economy but also that the European Central Bank has recently begun engaging in a stealth quantitative ease and has been expanding its balance sheet by trillions of Euros. There are two ways of buying gold in euros. The first is using futures, go long and short the same dollar amount of gold and euros. The second is by using exchange-traded funds; go long 100% GLD and short 50% the leveraged short ProShares UltraShort Euro (EUO). Charles Biderman is president & CEO of TrimTabs Investment Research.
Hard on the heels of the collapse of the housing bubble. Bank of America and their ilk still have major mortgage headaches to work through. 14 note.” Levkovich says. manufacturing base as being in permanent decline. the first of which is a possible recovery in housing. 6. and banks like Citigroup. Levkovich also touts the return of American manufacturing. finishing the year essentially unchanged from where it started and still staring down the barrel of uncertainty both foreign and domestic. There are subtle shifts occurring below the market’s surface though. and recent reports on home sales and new construction suggest that the deflating of the housing bubble may be entering its latter stages.S. Home prices will not come back immediately.” he S&P 500 put up a goose egg in 2011. signals keep cropping up suggesting that better days are ahead for the market after several rocky years. presidential election make it all but certain that 2012 will see its share of turbulence. there are indications of a turn taking place.S. There are subtle shifts occurring below the market’s surface though. Citigroup’s chief U. and banks like Citigroup. equity strategist Tobias Levkovich detailed a number of those signals in a Dec. making a huge comeback off the March 2009 bottom. making a huge comeback off the March 2009 bottom. signals keep cropping up suggesting that better days are ahead for the market after several rocky years. “Current stock prices assume a coming collapse in earnings by virtue of the present value of no earnings growth being well above the current S&P 500 level as we have witnessed in the past just before major stock price rallies. “While many have perceived the U. “While many have perceived the U. Hard on the heels of the collapse of the housing bubble. but even a nascent recovery could start a positive cycle.S. Bank of America and their ilk still have major mortgage headaches to work through. but there are indications that “excess home supply is dwindling. Levkovich argues. arguing that after a lost decade for the domestic stock market investors have lost their confidence and could be in danger of missing the start of a big comeback. the first of which is a possible recovery in housing. While the ongoing European debt crisis and the uncertainty around the U.” Levkovich says. and the start of a new bull market may be closer than it appears. has become less competitive and lacks the ability to regain its edge is reminiscent of “the dominant mindset during much of the 1970s and the very early 1980s. and the start of a new bull market may be closer than it appears. To be sure.S. but even a nascent recovery could start a positive cycle.” The prevailing belief that the U. the market has been struggling to find a new base from which to rally.” The S&P 500 put up a goose egg in 2011. “Current stock prices assume a coming collapse in earnings by virtue of the present value of no earnings growth being well above the current S&P 500 level as we have witnessed in the past just before major stock price rallies. arguing that after a lost decade for the domestic stock market investors have lost their confidence and could be in danger of missing the start of a big comeback. there are six major developments that argue for a new bull market starting over the next 12-18 months. the excess in the housing market before the bubble burst will take a number of years to work off. and recent reports on home sales and new construction suggest that the deflating of the housing bubble may be entering its latter stages. the excess in the housing market before the bubble burst will take GTR 2 . presidential election make it all but certain that 2012 will see its share of turbulence. Levkovich also touts the return of American manufacturing.S. the market has been struggling to find a new base from which to rally. Yet. rallying through 2010 but stalling in 2011. there are indications of a turn taking place.S. there are six major developments that argue for a new bull market starting over the next 12-18 months.S. finishing the year essentially unchanged from where it started and still staring down the barrel of uncertainty both foreign and domestic. but there are indications that “excess home supply is dwindling. equity strategist Tobias Levkovich detailed a number of those signals in a Dec.” Levkovich says.” Levkovich says. Home prices will not come back immediately. That may be changing though.S. has become less competitive and lacks the ability to regain its edge is reminiscent of “the dominant mindset during much of the 1970s and the very early 1980s. That may be changing though. To be sure. 2012 T Raging Bull Lurks In Stocks a number of years to work off. rallying through 2010 but stalling in 2011. While the ongoing European debt crisis and the uncertainty around the U.Global Trend Report Jan. Levkovich argues. manufacturing base as being in permanent decline.” The prevailing belief that the U. 14 note. Yet. Citigroup’s chief U.
And that kind of shock is enough to blast the U. The surprising thing. Not only would attacking shipping in the Strait be military suicide. was a larger 0. consumers. with its diplomats agreeing in principle to halt Iranian imports. found that a model of the impact of oil prices on gross domestic product he created in 2003 predicted. but the regime needs the hard currency it gets from exporting 2.25% over the first four years.3%. 55% jump in oil prices that preceded it as a big contributor to the subsequent decline in economic activity. “If it’s large enough. contributed to tipping the scales from an economic slowdown into a self-feeding dynamic of falling output and employment. nine of the past 10 recessions in the U. and some of that might have been due to consumers resisting buying homes in far-flung suburbs because they were worried about the rising cost of commuting. for example. There are lots of practical reasons to suspect Iran is bluffing. a 21-mile-wide passage the EIA calls “the world’s most important oil transit chokepoint. it can cause people to adjust their future path of spending. since the “option value” of waiting to see what happens next exceeds the expected return on investment. Today.S. But the impact on the U. As my friend and economist Ed Hirs pointed out in a paper in 2010. Reuters reports the European Union will do just that.” Kliesen said.1 million barrels a day. A 2000 study by the International Monetary Fund found that a $5 permanent increase in oil prices cuts world GDP growth by 0. Plunging residential investment only accounted for about half the shrinkage in GDP in the first three quarters of 2008. Kliesen has found. Louis Fed also believes high oil prices had a lot more to do with the recent recession than many people Iran's Real Weapon Of il prices jumped 8% last week after Iranian Vice-President Mohamad Reza Rahimi threatened to close the Strait of Hormuz if the rest of the world slapped an embargo on his country’s oil exports. think. in a more general way).” Kliesen of the St. Economist James D.S. reflecting this country’s high per-capita energy use. and 90% after three years. Iran is playing a powerful hand when it threatens to disrupt shipping through the narrow Strait and choke off what the Energy Information Administration estimates is 20% of the world’s traded crude. were preceded by sharp increases in oil prices. 2012 O Mass Destruction Is Oil Prices “Something else. is that oil caused so much economic damage given other problems at the time. Hamilton told Congress in 2009.S. the loss of 10 million barrels a day of Middle East production could drive short-run oil prices to $413 a barrel. Economist Kevin Kliesen with the Federal Reserve Bank of St. 6.2%. in addition to the pre-existing problems in the housing sector. Still.” Kliesen has written. Economists re-examining the 2008 financial meltdown are increasingly identifying the sudden. the actual decline in GDP in the third quarter of 2008. “I see little basis for doubting that a key aspect of that new drag on the economy resulted from the effects of the oil price shock. “Clearly we had some different shocks in that period that really hammered the economy but oil was one of those shocks that was lost in all the reporting about the financial crisis and housing downturn. with an error of less than 0. Hamilton of the University of California at San Diego.” Sudden changes in oil prices hit the capital-goods market particularly hard. wrote that unexpected new information like jumping oil prices can cause businesses to delay capital spending. given the inability of consumers to rapidly shift to other fuels.S. Louis said that sudden and sustained increases in oil prices increase the odds of recession by 50% in the first year. for example.Global Trend Report Jan. “It was a key event that really helped slow things down. “If you look at the historical data. Higher oil prices also drive investors to shift money toward sectors of the economy that are less affected “and such reallocation is costly. According to the EIA.” GTR 3 . since businesses simply stop investing until they get a better sense of where prices are going (that was Bernanke’s thesis. economy back into recession.” Kliesen told me. And none less than Federal Reserve Chairman Ben Bernanke.” A 50-cent increase in gasoline prices sucks $70 billion a year out of the pockets of U.” Hamilton told Congress. earlier in his career. 14 crude tankers a day pass through the Strait of Hormuz.
Hollister additionally has an estimated 4. Macroeconomic factors such as rising sovereign debt. J. and rival Macy’s reported a 6. GTR 4 . economist Ian Shepherdson warned that the holidays make December labor reports tricky. and analysts have assigned a mean share price target of $4.40 per share.18% and 3. High Frequency Economics chief U.000. Just over an hour into the session the Dow Jones industrial average was down 108 points to 12.1 million Measured & Indicated resources. November’s tally was revised slightly lower to show as gain of 204. This favors the junior miners who should cash in on the higher gold and silver prices at market. 3.4 million Measured and Indicated resources at a mining cost of $527 per ounce.TO) owns a producing mine located in South Africa. While the companies that are mining these two precious metals have not caught up to the commodity prices. With AAA Rating In Jeopardy Market French Borrowing Inch Higher.2 billion) in 10. and increasing inflation in food.000 jobs. is under review for downgrade at Standard & Poor’s. Stocks Sink Watch G France’s government sold €7. and commodity sectors are very bullish for the price of gold and silver. better than the 0. Concerns remain that a downgrade of France could have a cascading affect. Great Basin Gold has been trading under both its 50 and 200 day moving averages. part of the Carlin Trend. and the 30-year bonds. 3.81 per gold resource ounce. Great Basin has an investor cost of $64. The slightly higher yields may help soothe concerns about France’s funding capacity. but unfortunately most stocks in gold and silver miners have not followed. retailers issued December sales reports Thursday.5% decline expected.9 million Proven and Probable and 1. low-cost mine located in one of the most prolific gold fields of the Witwatersrand Basin. Barnes & Noble. Hollister neighbors properties owned by Newmont and Barrick. It was not all good news though. Meanwhile. compared with a consensus Wall Street estimate of 63 cents.000 jobs in the last month of 2011. Another retailer. producing mines. ADP’s December measure of employment found that private sector payrolls added 325.C. On this side of the Atlantic. a bit lower than expected though the prior week’s figure was revised higher by 6. signaling a strong buying opportunity for value investors. the S&P 500 lost 9 points to 1. With a solid management team and two solid. Hollister has 0. with the DAX essentially flat.97%. Burnstone has 6. GBG is developing the Hollister mine.6 million M&I silver resources. GBG is a junior miner in the initial phase of the miner growth curve and I expect the price to rise substantially over time as rising production from the two mines finally begins to pay off for the patient investor.96 billion ($10. The Hollister property also includes the Esmeralda Mill.36 million Proven and Probable and 12. with some highlights and lowlights. and cut its fourth-quarter guidance.5% expected) and doubled its dividend to 20 cents a share.and 30-year bonds. with Italy’s benchmark index. off more than 3% and France’s CAC40 down nearly 1%. The bookseller expects to lose $1. Great Basin Gold is a solid stock to consider. German markets were resilient.10-$1. as Target said December same-store sales were up just 1. The stock dove more than 30% before the opening bell.000 in 2012.Global Trend Report Jan.268 and the Nasdaq fell 9 points to 2. in Nevada.6%. old and silver have been soaring amidst general market uncertainty. impacting the ratings of the European Financial Stability Facility.2% gain (4. 6. Penney said sales inched up 0.000. and bidders placed offers for nearly double that amount. after warning that it expects a far worse full-year loss than analysts anticipate.639. and the ability of the eurozone to stay afloat. which is relatively cheap.3%. were slightly above their levels at a Dec.5% expected. the region’s bailout mechanism.000. The yield on both the 10-years. 3. which will improve recovery rates.000 to 387. 2012 T he European bond market has been walking on eggshells of late and an auction of longterm French debt Thursday drew plenty of demand. the major indexes were heading south right from the open. but revised his forecast for Friday’s nonfarm payrolls report higher by 50. Weekly jobless claims fell to 372. 1 auction. saw its shares plummet in pre-market trading.310. energy.94% respectively. Burnstone is a shallow.000 to show a gain of 175. Great Basin Gold’s management has projected 220.S. along with those of Germany and others. European stocks traded to the downside Friday. On the corporate front.29%. the MIB. compared with the 3. albeit at slightly steeper interest rates than the last time around.000 ounces of gold production in 2011 and an increase to 350. In addition. this gives the astute investor an opportunity to make an above average return on investment Great Basin Gold (GBG.9 million P&P and 11. popular uprisings. Mining costs are estimated at $450 per ounce. the best reading in a year. at a time when the country’s AAA rating.23.
S. It’s the only thing they can count on. Deaf people will complain about the noise. they know they can depend on Ben Bernanke and his central banker friends to give them more. may be going broke. pushing longer-maturity Treasuries to their best performance since 1995 in a sign that President Barack Obama may have little difficulty financing a fourth consecutive year of $1 trillion budget deficits. Does that mean you can safely buy US bonds in 2012? Not at all! Stay away. the most since the government began releasing the data in 1992 during the George H. with the highest prices and lowest yields in more than a century. Remember. Then. But in 2007 it turned out that investors were already satiated. If the feds ever run out. debt. helping to contain borrowing costs and making it cheaper as a percentage of gross domestic product to finance deficits than when the nation last had budget surpluses. What choice did they have? They had to buy stocks. But bubbles do not necessarily blow up right away. Bush administration. far away.Global Trend Report and Baddest Bubble Ever The Biggest Jan. Market is a pretty cunning old fellow. The spreading sovereign debt crisis in Europe and slower global growth are driving investors to the safety of US assets. Bubbles are always dangerous and a bubble in the world’s reserve asset — U. They had enough housing and housing debt. And the shock wave will knock down a large part of the entire world’s capital structure. Now U. Everyone wanted to get on the housing ‘escalator’ before it was too late. In real terms. According to Bloomberg. remember the insatiable demand for housing? More immigrants. right? Wrong. When it blows…penguins at the South Pole will have to cover their ears. stocks went down in January 2000. and Mr.” The boom in government debt is obvious from a glance at the chart of the iShares Barclays 20+ Year Treasury Bond (TLT) ETF.S.S. “The U.07 for $30 billion of four-week bills it auctioned on Dec. More families getting richer.S. It can take time for the pin to approach. but perversely. 20 even though they pay zero percent interest. Our guess is that he will want to draw more of the world’s wealth into the U. 6. depending on how you adjust for inflation. they’re considerably lower now. up 33% in the past year. The Treasury Department attracted $3.135 trillion in notes and bonds sold.S. Heard that one before? In 1999 there was an insatiable demand for stocks. It would seem that there is insatiable demand for U. bond market…before blowing it up. The US drew an alltime high bid-to-cover ratio of 9.S. 2012 T he U.S.04 for each dollar of the $2. Treasury debt. government received record demand for its bonds in 2011. government bonds are in a bubble. GTR 5 . people want dollars and U. in 2005. dollar-denominated debt — is the most dangerous ever. there were 70 million baby boomers preparing for retirement. W.
to others who you believe share the values of the Global Trend Report. The Global Trend Report Research Department unites the stock-picking talents of several analysts and editors. You are welcome to distribute this message. 2012 Copyright© 2012 by Global Trend Report. Global Trend Report is intended specifically for mature investors with a strong sense of individual responsibility who want to arbitrage different viewpoints to optimize their personal investment strategy. NOTE TO OUR READERS: Global Trend Report Newsletter and Global Trend Report Monthly do not act as a financial advisor or advocate the purchase or sale of any security or investment. all other employees and agents of Global Trend Report and its affiliate companies must wait 24 hours before following an initial recommendation published on the Internet. Investments recommended in this publication should be made only after consulting with your Financial Advisor and only after reviewing the prospectus or financial statements of the company in question. GTR 6 . at your discretion. All rights reserved. Each of the services is based on individual trading/financial philosophies or vehicles and specific investment approaches. Furthermore. 6.Global Trend Report Jan. Global Trend Report expressly forbids its writers from having a financial interest in any security that they recommend to their readers. or 72 hours after a printed publication is mailed. We reserve the right to remove readers we believe do not meet these criteria from our distribution list without prior notice.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.