Gold stocks gold stock guidance gold investments gold price etf gold stocks best gold stocks ...

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Lombardi: Expert Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986 Welcome to Profit Confidential • Wednesday, February 29, 2012 Gold Stocks Back in 2002 the editors of Profit Confidential started telling their readers it was time to jump into gold related investments, specifically gold stocks. This gold stocks guidance and analysis proved to be extremely timely. Yes, back in 2002 we started offering gold stocks analysis to our readers and we still do it today. We have been recognized as one of the first investment letters to tell its audience to jump into gold stocks, very early in the gold bull market. The gold analysis we provided resulted in many stocks we follow rising in price 100% or more in short periods of time. Today, you can regularly find our gold analysis in Profit Confidential . Each time gold prices moved higher, we told our readers to buy more gold related investments. See what we have to say about gold’s future dally in Profit Confidential . New Higher Margin Requirement for Gold an Investor Opportunity No Comments Posted by Michael Lombardi, MBA in gold stocks , how to invest in gold , investor confidence, price of gold bullion , stock market , Sto ck Market Advice , stock prices on August 11th, 20 11 After months of patient waiting, the gold stocks came to life yesterday. Right across the board, whether it was junior or senior gold producers, the stock prices of gold companies were up sharply Wednesday. SIGNUP FOR PROFIT CONFIDENTIAL AND RECEIVE A FREE COPY OF "A Golden Opportunity for Stock Market Investors" Our top analysts pick their number one stock for 2012. See why we think it could be the best stock to own right now for the biggest profits. And it's yours FREE when you sign-up to get Profit Confidential daily with our compliments! Ent er e-mail... SIGN UP We respect your privacy and will never share your e-mail address. PROFIT CONFIDENTIAL Forecasts Feb. 29, 2012 Immediate term outlook: The bear market rally in stocks that started March 9, 2009 remains intact. Since March of 2009 we have been and continue to be immediate term bullish on stocks. Gold bullion is up $1,300 an ounce since we first recommended it in 2002 and we are still bullish on the metal. Short-to-medium term outlook: National debt increasing at the rate of $125 billion per month will eventually debase the U.S. dollar. Our concern is future deterioration of the greenback, an expansive money supply and rising U.S. national debt will eventually push domestic inflation and interest rates higher, negatively impacting the American Home Our Company Editors Topics Expertise Resources

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Transcript of Gold stocks gold stock guidance gold investments gold price etf gold stocks best gold stocks ...

Page 1: Gold stocks  gold stock guidance  gold investments  gold price  etf gold stocks  best gold stocks  gold coins

Lombardi: Expert Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Welcome to Pro fit Confidential • Wednesday, February 29, 2012

Gold StocksBack in 2002 the editors o f Profit Confidential started telling their readers it was time tojump into go ld related investments, specifically go ld stocks. This go ld stocks guidance andanalysis proved to be extremely timely. Yes, back in 2002 we started o ffering go ld stocksanalysis to our readers and we still do it today. We have been recognized as one o f the firstinvestment letters to tell its audience to jump into go ld stocks, very early in the go ld bullmarket. The go ld analysis we provided resulted in many stocks we fo llow rising in price100% or more in short periods o f time. Today, you can regularly find our go ld analysis inProfit Confidential . Each time go ld prices moved higher, we to ld our readers to buy morego ld related investments. See what we have to say about go ld’s future dally in ProfitConfidential .

New Higher Margin Requirementfor Gold an Investor OpportunityNo Comments

Posted by Michael Lombardi, MBA in go ld stocks, how to invest in go ld , investorconfidence, price o f go ld bullion , stock market , Stock Market Advice , stock prices on August11th, 2011

After months o f patient waiting, the go ld stocks came tolife yesterday. Right across the board, whether it wasjunior or senior go ld producers, the stock prices o fgo ld companies were up sharply Wednesday.

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AND RECEIVE A FREE COPY OF"A Golden Opportunity for Stock Market Investors"

Our t o p analyst s pick t heir number o nest o ck f o r 2012. See why we t hink it co uldbe t he best st o ck t o o wn right no w f o r t hebiggest pro f it s. And it 's yo urs FREE whenyo u sign-up t o get Profit Confidential dailywit h o ur co mpliment s!

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PROFIT CONFIDENTIAL Forecasts Feb. 29, 2012

Immediate term outlook: The bear market rally in stocks that started March 9 , 2009remains intact. Since March o f 2009 we have been and continueto be immediate term bullish on stocks. Gold bullion is up$1,300 an ounce since we first recommended it in 2002 and weare still bullish on the metal.

Short-to-medium term outlook: National debt increasing at the rate o f $125 billion per month willeventually debase the U.S. do llar. Our concern is futuredeterio ration o f the greenback, an expansive money supply andrising U.S. national debt will eventually push domestic inflationand interest rates higher, negatively impacting the American

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Hopefully, my readers have been fo llowing myguidance and seeking refuge in the go ld-miningcompanies. Since the spring o f this year, go ld bullionprices have been rising sharply, while go ld stocksstood pat. I have been writing that the leaders o f thego ld bull market would shift from the actual bullion tothe go ld stocks, and that’s what started happeningWednesday.

Since the middle o f June, the Dow Jones U.S. GoldMining Index (an index comprised o f the largest U.S. go ld-mining companies) is up 12%,while the general stock market has gone down 11% in the same time period!

But, like all good things, as the price o f go ld bullion hits $1,800, there are forces that wantto put a wrench in the 10-year go ld bull market, as many believe go ld has become toospeculative. Hence, this morning, we learn that CME Group Inc. (CME), the world’s largestfutures market, changed the rules without advance warning and increased the minimumamount o f cash speculators and investors must deposit to trade a futures contract o f go ld.

In summary, margin requirements, with a flick-o f-a-switch, have increased by 22% thismorning. You may remember, the CME did the same thing to silver (increased the marginrequirements for trading silver a few months ago) and silver fell sharply in price.

Well, I have news for the market, and better news for my readers. The bull market in go ld istoo strong to have the metal fall in value by 30% as silver did after the CME increased themargin requirement fo r trading silver futures.

For my readers, any pullback on the price o f go ld bullion caused by the CME’s newlyimposed margin requirements would present a perfect buying opportunity fo r the junior andsenior go ld-producing stocks, once again. This is how to invest in go ld now.

Michael’s Perso nal No t es:

On Tuesday o f this week, the Federal Reserve made the unprecedented action o fspecifically saying how long it would keep short-term interest rates low. I’m sure you haveheard. The Fed will keep rates low through mid-2013.

On the news o f a pro longed period o f interest rates that are low, U.S. Treasuries rallied. Itdoesn’t matter if Standard & Poor’s has cut the credit rating o f the U.S. It doesn’t matter ifCongress has just given the Obama Administration another $2.1 trillion to spend. Investorswant U.S. Treasuries.

Yesterday’s auction o f $24.0 billion in 10-year U.S. Treasuries was the first o ffering o f U.S.debt since Standard & Poor’s cut the U.S.’s credit rating. There was a line up to buy thesebonds—and the buyers walked away with the lowest yields on record—2.14%.

and interest rates higher, negatively impacting the Americaneconomy and equities.

PROFIT CONFIDENTIAL Est imates Feb. 29, 2012

Total 2011 per share earnings for 30 stocks in the DowJones Industrial Average: $900

Dow Jones Industrial Average Price/earnings multiple: 13.4

Dow Jones Industrial Average Dividend Yield: 2.6%

3-month day U.S. T-bill Yield: 0.01%

10-year U.S. Treasury Yield: 2.0%

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Recent Articles

The Next Step for the Stock Market

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At 2.14%, the dividend yield o f the Dow Jones Industrial Average stocks o f 2.8% sure doeslook competitive.

Where t he Market St ands; Where it ’s Headed:

It’s up and down, down and up for the markets. My readers need to understand that, whenwe have huge multi-100 po int up and down days on the market, most o f that trading iscomputer-driven. Very little o f it has to do with individual investors buying or selling. Sincethe advent o f index-traded funds, computer/automatic trading has become a big part o f WallStreet.

What am I do ing? I’m sitting back and waiting. The current situation could go one o f twoways. The market could move from here to test its March 2009 lows or the first realcorrection o f 2011 could be close to ending, at which po int the bear market rally wouldresume its upward trend.

I’m in the camp that believes it is too early to test the March 2009 lows for a variety o freasons I have written about over the past two weeks. Some of those reasons: stocks area better investment alternative today to 10-year U.S. Treasuries; monetary po licy remainsaccommodative; the great majority o f investors are pessimistic; corporate pro fits are stillstrong; and corporate insiders are buying stock at a pace not seen since the spring o f2009.

What He Said:

“Consumer confidence does not change overnight. In the U.S., 70% of GDP is based onconsumer spending. And, in my life, all the recessions I have seen or studied have onlycome to an end when consumers started spending. With consumer sentiment gettingworse, and with the U.S.personal savings rate near record lows, it may take years forconsumers to start spending again.” Michael Lombardi in PROFIT CONFIDENTIAL ,February 25, 2008. By the end o f 2008, the rest o f the world was realizing that therecession would be much longer and deeper than most had imagined.

Trading Action Repeating Itself—Whatthe Stock Market’s Setting Itself up forNo Comments

Posted by Mitchell Clark, B.Comm. in corporate earnings, go ld stocks, price o f go ld , price o fsilver, S&P 500, silver stocks , stock market on July 29th, 2011

While the price o f go ld and price o f silver continue to be

By Michael Lombardi, MBA

For the benefit of my new readers, and as an update for mylong- time readers, today I want to talk about exactly where Ibelieve we are in the stock market. After a 25-year bullmarket in stocks, which was fueled by a 25-year decline ininterest rates and a period of great financial leveraging thataccompanied collapsing interest rates, a Phase I bear market(often referred to as the first down- leg) brought stock pricesdown sharply. From its high of 14,164 ...

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One of the Best Things Going in the Main Street Economy Today

By Mitchell Clark, B.Comm.

Precious metals and oil have proven that commodities are inan upward price cycle. If you believe in the commodity pricecycle like I do, you’ve got to have some exposure to thegroup as part of a balanced investment portfolio. Within thegroup, there are three main sectors for consideration: preciousmetals, energy, and agriculture. Precious metals and oil havealready been big winners. Like all commodities, they’veexperienced substantial price corrections, but their price cycleover the last ...

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High Oil Prices Mean Profiting From this Kindof Play

By George Leong, B.Comm.

With the outlook for the U.S. and global economies lookingmore encouraging, we have seen a corresponding upwardpush by oil prices on the chart. The April WTI Oil is advancinghigher at above $108.00 and north of its 50-day movingaverage (MA) of $100.35 and 200-day MA of $95.86. Abullish golden cross is holding, with the 50-day MA above the200-day MA. An issue for us is that a large part of oil prices

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very strong, a lo t o f go ld stocks and silver stocks havebeen pulling back in price. It’s a reflection o f the currentstate o f things, with investor sentiment seemingly stuckin a rut. We’re in a market with so much uncertainty thatany call is valid and all outcomes are plausible. Thestock market could completely fall apart, stay the same,or advance. A market malaise has set in and it’s almostentirely due to the sovereign debt situation.

Just last week, stocks were looking set fo r a decent run,as corporate earnings mostly impressed the Street. That rally fizzled pretty quickly and nowthe S&P 500 Index is back down at the 1,300 level, which I view as problematic in terms o fthe market’s overall health. What’s happening is that investors are beginning to ignore goodnews and event-driven trades don’t seem to have any legs. It’s a strong signal that themarket is tired and very unsure o f itself.

With this backdrop, there certainly is no rush to take action on the long side. Even if thesovereign debt issue were to be settled right now and the market were to make a bigadvance, there’s just as much probability that it would pull back a month from now onlackluster economic news. The equity market sure isn’t making it easy for traders.

The S&P 500 Index has basically been trading range-bound since the beginning o f the yearwith declining vo lume. Oddly, it’s fo llowing a very similar trading pattern to the beginning o flast year where stocks advanced and then didn’t do anything for about 10 months beforebreaking out. We could be in fo r a similar scenario this year where stocks might notexperience any material rally until sometime in the fourth quarter. That is my current figuring.

While corporate earnings are strong, economic data are not. Last year—and so far thisyear—the stock market was held together by good corporate earnings, as investors werewilling to wait fo r the economy to recover. The pace o f that recovery is most certainlyunclear and the marketplace is growing impatient. Couple this with all the problemsassociated with country debt and deficits, and you could easily make the case for an S&Pbelow 1,300.

I think we’re go ing to get continued range-bound trading for the next several months withthe potential fo r an end-of-year rally based on the expectation for good fourth-quarternumbers. Corporations are do ing their part; now it’s time for the economy andpolicymakers to do theirs.

Flush with Cash—Gold Shares Are the NewInternet Stocks

200-day MA. An issue for us is that a large part of oil pricescontinues to be largely dictated by ...

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Why McDonald’s Is Brilliant

By Sasha Cekerevac

Every year it seems we get some new investment strategythat assures us it is the “secret” to getting rich. Over a decadeago, it was the Internet and dot- com hype. Recently, it’s socialmedia, with Facebook and LinkedIn Corporation(NYSE/LNKD). For a long- term investment, the key is whatmanagement can do to constantly innovate and grow. Manypeople wouldn’t associate blue-chips with being highlyinnovative, but they’d be wrong. They might say that high- techblue-chips like Apple Inc. (NASDAQ/AAPL) can ...

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Extra

A Study You Should Know About

By Michael Lombardi, MBA

While most other economists tell us otherwise, I’ve beenwriting this year about how the numbers so far do not point toa U.S. economic recovery, but rather to a continued economicslowdown, with the threat of recession. I’ve been focused onthe average damaged consumer, who has lost value inhis/her home and has been restrained by no income growth…if he/she is lucky enough to have a job. With over 47 millionAmericans on food stamps, I’m at a loss ...

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No Comments

Posted by Mitchell Clark, B.Comm. in Stock Market Advice on July 14th, 2011

So, the price o f go ld is go ing up, and so are go ld stocks. Therereally isn’t much money to be made in this market except fo rspeculating in go ld shares. It’s the industry with the best near-and medium-term fundamentals as far as I’m concerned.

The big move in go ld has already taken place and equityinvestors should already have some exposure to thisimportant commodity. The thing about the global economy isthat we’re in a long period o f slow growth with inflationary

pressures. It’s the best o f both worlds for go ld. Add in sovereign debt worries (po liticianswould rather print money and create inflation than cut programs) and the emerging strengthof BRIC economies, and it’s quite arguable that the spot price o f go ld could hit $2,000 anounce.

There are actually very few investment-grade, large-cap go ld companies. Only a few pay adividend and, o f those, yields aren’t really more than one percent. Most o f the go ld minersout there would compare to medium- or small-cap companies and, because o f thevo latility inherent in commodities, should be considered speculative equity securities.Regardless, I wouldn’t have an equity portfo lio that didn’t have some exposure to go ld,especially giving current economic fundamentals.

Like most things now, investors can consider a go ld mutual fund or exchange-traded fund(ETF). There’s even publicly traded companies the so le purchase o f which is to own andsecure large numbers o f go ld bars. For the most part, all stocks related to go ld tradecommensurately with the spot price o f the commodity—and there lies the greatestinvestment risk for a go ld investor.

There was a bandwagon effect taking place in precious metals earlier in the year.Institutional investors piled into go ld, silver and copper and then jumped into agriculturalcommodities. Right now, large money managers are desperately hoping that second-quarter earnings and visibility will be strong enough to provide a catalyst to buy stocks.Investing in go ld isn’t on their minds to any great degree. But, the price o f go ld is creepinghigher. If it ticks past $1,650, then I think we’ll have a new rush on our hands. Percentage-wise, this price isn’t far away at all. It certainly is a great time to be in the go ld miningbusiness. It’s an industry that’s flush with cash.

A Growth Industry with a

What We Can’t Forget About in the StockMarket Today

By Mitchell Clark, B.Comm.

Street analysts are saying that, because of higher oil prices,the Dow Jones Transportation Average is showing a realdivergence from the rest of the stock market. According toDow Theory, confirmation from this index is required in orderto uphold the primary trend in the stock market. It’s kind of anold- fashioned way of predicting the stock market, but I dobelieve in it. Oil prices have been stronger lately because ofgeopolitical concerns, but a lot of the stocks ...

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The Thorn in the PC Market Leader’s Side

By George Leong, B.Comm.

My kid hardly ever works on his desktop personal computer(PC) anymore, instead favoring a laptop. In fact, I often seehim surfing the Internet and doing research using my “iPad” orhis “iTouch.” This market shift is not only with my kid, but withmillions who are also abandoning their computers in favor oftablets. The result of this is proving quite difficult for PCmakers, who are fighting to come up with a defense. Themarket leader in PCs, ...

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Platinum Surges 15% in Seven Weeks; Now Where Does it Go?

By Sasha Cekerevac

Some of the toughest decisions an investor has to makeoccur when you are up on a trade. I’ve highlighted some ofthe merits in investing in precious metals like platinum before,the last being on January 11, 2012, in the article Investors—Should You Consider Platinum? At the time I wrote the

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Great Fundamental BackdropNo Comments

Posted by Mitchell Clark, B.Comm. in go ld stocks, investing in go ld, precious metalcommodities, precious metal stocks, price o f go ld , sovereign debt, spot price o f silver onJuly 8 th, 2011

Precious metal commodities corrected with some fervor—especially silver. The price o f go ld moved somewhatlower in the recent correction, but it is still so lidly abovethe $1,500-per-ounce level. I think that $2,000 for anounce o f go ld is a real possibility over the next 12 to 18months and it will likely correspond to some sort o fcurrency instability related to sovereign debt. Withoutquestion, the sovereign debt issue is the gravestinvestment risk to your portfo lio and is even more

perilous than a double-dip recession.

Gold stocks actually corrected more than the spot price and I would be a new buyer o f go ldshares at this time. This presumes o f course that equity investors don’t already have someexposure to this important market sector. The resilience o f the spot price o f go ld in recentmonths is, in my mind, a strong signal fo r the future. The U.S. do llar doesn’t really have togo down relative to o ther currencies for go ld to keep ticking higher. The rate o f inflationdoesn’t have to be pronounced either. All that’s required is just a little bit o f everything—sovereign debt worries, a slightly weaker do llar, and two-percent to three-percentinflation—and the spot price o f go ld can easily break into new record territo ry.

Investing in go ld is a must these days and it’s been a fantastic trade for a number o f yearsalready. The spot price o f silver did get ahead o f itself, as speculators bid that commoditymore than any o ther in the hope o f global economic recovery. I wouldn’t be surprised at allto see silver move over the $40.00-per-ounce level in the near future, especially if second-quarter earnings come in so lid.

As I say, the go ld trade has made for good investing for several years now and my bestprediction is fo r this upward price trend to continue. Right now, there are large, medium andsmall producers o f go ld that are trading for reasonable prices on the stock market. A lo t o fthese companies have little to no debt and are sitting on large cash hoards, waiting to putthat money into new exploration. I hate to say it, but this decade is go ing to be a go lden agefor precious metal miners. It’s a great time to be in this industry, with spot prices high andbank accounts full.

Speculating in go ld mining stocks is a difficult business. What I think makes for an attractiveinvestment within this industry is finding a handful o f companies that each o ffer a “package”

—Should You Consider Platinum? At the time I wrote thearticle, platinum was trading approximately $1,497; as oftoday, the market for platinum is trading around $1,723, amove of approximately 15% in less than seven weeks. In fact,...

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of good business opportunities. This means that a go ld mining company should alreadybe producing and selling ounces o f go ld with detailed expectations for increasedproduction over the coming quarters. The company should have o ther properties that it’sexploring, even in conjunction with o ther, perhaps larger mining companies. There needs tobe a track record o f financial growth, along with lo ts o f cash in the bank for furtherexploration activities. Finally, a decent track record on the stock market always helps—thismeans that institutional investors know about the business and are willing to invest in/tradethe stock.

I believe in the commodity price cycle and a fundamental backdrop to support higher go ldprices. Accordingly, go ld stocks should continue to be some of the best equity ho ldingsover the next few years.

And the Next Country to Fallin Europe Will Be…No Comments

Posted by Michael Lombardi, MBA in european economy, global economy, go ld bullionprice, go ld stocks, government bonds , Greece, gross domestic product , Italy, sovereigndebt, Spain, Stock Market Advice on June 24th, 2011

I have to tell you, I thought it would be Spain. Mythinking o f the order in which the sovereign debt crisiswould engulf Europe was first Greece, then Spain, thenItaly.

But it looks like I was wrong. Italy, home of my favoriteItalian wine, is next.

It all started on June 18 when Moody’s InvestorServices said that it was weighing whether to cut Italy’scredit rating. Since then, government bond yields havebeen rising in Italy.

Italy has regained only a small fraction o f the grossdomestic product (GDP) growth it lost during the globalrecession (Italian GDP in the first quarter o f 2011 rose

only one-tenth o f one percent over first-quarter 2010 GDP). Unemployment is high.Interest rates are rising and a sex-scandal-plagued Silvio Berlusconi is occupied with tryingto maintain his position as Prime Minister as uncertainty over his capacity to govern rises.

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Here’s why I believe the sovereign debt infection is spreading to Italy.

Yesterday, the shares o f Italy’s fo rth largest bank, Unione di Banche Italiane, fell five percentto 3.63 euros—below what it had priced its shares in a one-billion euro rights o ffering itwas trying to close yesterday.

The stock price o f Italy’s largest bank, UniCredit, was down about nine percent yesterday.Intesa Sanpaolo , the country’s second largest bank, saw its stock price tumble sevenpercent yesterday.

When the stock prices o f major banks fall so quickly, investor panic usually sets in. And thatmay be the situation in Italy right now. Moody’s Investor Services said Thursday that it maydowngrade the credit rating o f 13 large Italian banks.

It looks like the bond vigilantes are closing in on their next target. Poor euro ; how will itever get a break?

Michael’s Perso nal No t es:

What a day for the stock market Thursday…

First we had the International Energy Agency (IEA) announce that it would release 60million barrels o f o il into the marketplace. That pushed stock and commodity pricesseverely lower. Then Greece announced that it has struck an austerity deal, which broughtstock prices back the o ther way.

Why the IEA is releasing so much o il is a mystery to me. I’ve read all the news reports lastnight and this morning, but I just don’t get it. This o il is being released from “emergency o ilsupplies.”

Some reports said the o il was being released to reduce the shortage o f o il caused by lossof production in Libya. But the market reacted as if this was an oversupply situation. Afterall, Saudi Arabia is increasing its o il production to near record daily levels.

There are obviously some po litical motives behind the scenes here…so I’ll just leave it atthat.

But fo r investors, I see opportunity. Gold bullion was down over $30.00 per ounceyesterday. I haven’t seen that kind o f downside movement on go ld for months.

But when I looked at my go ld stocks, I no ticed that they closed Thursday at the same levelthey closed Tuesday. Gold stocks ho lding steady while the yellow metal falls in price?

As I have been writing for a few weeks now, the share prices o f go ld exploration anddevelopment companies are forming a base here. Yesterday’s sharp pullback in go ldbullion’s price was a good indication that the go ld stock prices are near their bottom. If thiswas two months ago, and go ld was down $30.00 an ounce, go ld stock prices would have

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pivoted downward quickly.

Where t he Market St ands; Where it ’s Headed:

Let them release 60 million barrels o f o il, let Greece and Italy fall. It doesn’t matter to thisbear market rally. No matter how bad the news gets, the market continues to trade above its200-day moving average—a big technical positive for stocks.

Stocks love to climb a “wall o f worry.” And we seem to have plenty o f that around lately. I’msticking with my guns: The bear market rally that started in March 2009, although tired andlong-in-the-tooth, still has life left in it.

What He Said:

“What group o f stocks is next to fall in light o f the softening U.S. housing market? Thestocks o f companies that sell retail products to the American consumer, I believe, are nexton the hit list. Many retail stocks are already reporting soft sales. In my opinion, they haven’tseen anything yet in respect to weaker sales.” Michael Lombardi in PROFITCONFIDENTIAL, August 30, 2006. According to the Dow Jones Retail Index, retail stocksfell 42% from the fall o f 2006 through March 2009.

Gold: The Fundamentals KeepShaping up for this InvestmentNo Comments

Posted by Mitchell Clark, B.Comm. in go ld prices, go ld stocks, good trades, investing ingo ld, stock prices on June 20th, 2011

“Uncertainty” and “worry” are the words describe thecurrent state o f the equity market without corporateearnings and new visibility. Second-quarter earningsseason can’t come soon enough—it’s what themarket is desperately waiting for.

We have a situation where stock prices are bouncingaround on the news o f the day and an investingmarketplace that is hoping that the sovereign debtissue can be contained. This has given a short-term

boost to the do llar, but the longer-term trend is fo r a declining currency. This means that theoutlook for the price o f go ld remains strong.

Investing in go ld has proven to be a highly pro fitable endeavor over the last few years, but

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everything needs to take a break once in a while. Both silver and go ld got a little ahead o fthemselves, but they definitely were good trades. If I were to pick one precious metal tofocus on go ing forward, it would be go ld.

Here we have an industry that’s awash in cash, is highly pro fitable, and that has limitedprospects for large new discoveries (like o il). Go ld stocks trade commensurate with thespot price o f the commodity (with the exception o f major new discoveries) and, in the nextupward spike in go ld prices, I think we’ll see a wave o f conso lidation within the industry.Medium-tier producers will want to use their common shares as currency to bulk up onproduction before the next major leg up in the spot price. A lo t o f go ld mining companiesbelieve that the spot price o f go ld can hit over $1,750 per ounce this year.

I’d be a buyer o f new go ld shares in this market. Uncertainty is everywhere, but when a go ldmining company says that it expects to produce a certain amount o f go ld and o therbyproducts, as well as what the costs are go ing to be, it’s pretty easy to figure out the kindof cash this business is go ing to generate. Because the estimating process for mineralresources and extraction is regulated and the industry has high standards o f reporting,investors can have a good level o f confidence in drill results and business plans forproduction.

As always, you want to consider an existing producer that’s also drilling for more go ldaround existing properties. You want a business with lo ts o f cash in the bank, a highlyeducated and respected management team and, finally, a rising commodity priceenvironment fo r spot prices.

In the go ld mining universe, there are a lo t o f companies from which to choose, but therearen’t a lo t o f companies that are producing over 100,000 ounces a year. This makesstock picking within the industry that much easier.

Investing in go ld isn’t fo r everyone; but, in this economy, there’s not a lo t o f businessgrowth around. In terms o f financial success, outperformance is still with precious metalproducers and, while everything occurs in waves, the fundamentals, in my view, keepshaping up for go ld.

The Best Buys in the StockMarket Right NowNo Comments

Posted by Mitchell Clark, B.Comm. in fourth-quarter earnings , go ld stocks, investment risk ,large-cap stocks, major correction, o il prices, stock market , stock prices on June 9 th, 2011

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It looks like the o ld investor adage “go away in May” isgo ing to play itself out once again. It may not be until thefourth quarter that stocks can find a new uptrend, as theeconomy needs more time to find its footing. What’shappening now in the equity market is a reckoningamong investors’ expectations. It’s not really aboutshare prices. The time horizon for decent investmentreturns from stocks is expanding and the actual amounto f those expected returns in shrinking. The market right

now is about declining prospects for stocks and it’s reflected in the S&P 500 Index beingbelow the 1,300 mark.

The next major support level fo r this broad market index is 1,250. It seems likely to me thatstock prices will drift downward to create that level over the next three weeks. Stock marketmalaise could be with us for the entire third quarter, as expectations continue to be revised.

We still have to remember, however, that stocks have had a great run since 2009 and theyhaven’t really experienced any major correction since then. While investor expectations arebeing adjusted, it does make it easier fo r the broader market to accelerate when theeconomy and corporate earnings turn upward. My guess is that this won’t happen until thefourth quarter this year.

The best buys in this market right now continue to be with large-cap, dividend payingcompanies. At the very least, a decent handful o f these kinds o f stocks should be oninvestors’ radar screens. The market isn’t finished go ing down as yet, but barring anymajor shocks to the system (like a Greek debt default), I expect stock prices to tread waterfor a while. With all the current information, getting some large-cap, dividend equityinvestments before the fourth quarter seems to me like a decent strategy.

The price o f o il remains a good proxy for the short-term trading action in stocks. Longer-term, a weaker o il price will have a direct stimulative effect on the economy. As for go ld, thisis an investment theme with staying power; however, the near-term trading action seemsbent on go ing lower. This is natural, as investors want to unwind the trade after go ld (andsilver) has hit record price highs. There’s still lo ts o f room for go ld exposure in an equityportfo lio today. There’s too much investment risk and inflationary risk in the globaleconomy to do without it.

The next quarter or so should be a good time to consider a high-dividend-paying o il andgas investment. These stocks have corrected with the spot price o f o il and are quicklybecoming attractively priced. If OPEC increases its production like it says it wants to doover the near term, o il price softness will present a good entry po int before the economyaccelerates.

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Stock Market Action Déjà Vu:What’s Going on with TradingNo Comments

Posted by Mitchell Clark, B.Comm. in bear market , conso lidation, economy, equity market,go ld stocks, stock market action , Stock Market Advice , stock picking, trading action, U.S.economy on June 8 th, 2011

It looks like the current trading action in stocks is thecorrection/conso lidation that we should have had earlierin the year. Investor sentiment was perhaps toooptimistic and economic reality has now caught up tothe marketplace.

The only things that investors really care about are thenumbers, and in those numbers they want to seegrowth. Investors sell when businesses aren’t growingand they even sell when business remains the same.The reality o f a slow growth economy is now settling inand, no matter what the government or Fed does now,the economy is on its own.

We’re likely to get continued weakness in stocks until we get into second-quarter earningsseason. If those numbers are bad, then stocks would be in serious trouble. The good newsis that expectations for the second quarter remain quite so lid. Not all industries areexperiencing the same level o f economic activity, and that’s to be expected. With thisbackdrop, however, it’s pretty reasonable to conclude that the equity market won’t be takingoff anytime soon, which is a simple reflection o f the current state o f things.

As mentioned in this co lumn many times over the last several months, there’s no rush forinvestors to be taking on new positions, especially at the speculative end o f the market.Stock picking is much more difficult in a slow growth environment and the returns fromspeculating on corporate events are less robust in a bear market. From my perspective,we’re still in a bear market fo r stocks and the S&P 500 Index still hasn’t achieved the samelevel that it was trading at over 10 years ago.

Faster-growing economies like China and Brazil are what are keeping the earnings growingat large corporations. Without these emerging operations, the earnings results from S&P500 companies would be a lo t different. Because the world’s mature economies aregrowing slowly and the U.S. economy still has to work through the housing crisis, I think thestock market is experiencing the same kind o f pattern it did from the mid-1960s to 1980.We’ve already been into the current stock market conso lidation for a good 10 years now

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and there’s more to go. It’s one big trading range that, without dividends, would have meantnegative investment returns from stocks.

Since last September, most investable assets have gone up significantly in price. Stocks, o iland go ld have all been due for a correction because o f that run-up. What the market isgo ing through now is a reality check and a reminder that economic growth can’t bemanufactured or engineered. The economy is still in the process o f balancing itself outafter a bubble period in housing. Once this situation is fixed, the economy will start growingagain in a meaningful way.

Time to Go Big or Go Home—Large-capEarnings All That MattersNo Comments

Posted by Mitchell Clark, B.Comm. in corporate earnings, dividend-paying stocks, equitysecurities, go ld stocks, investment risk , large-cap stocks, sovereign debt, stock market onJune 3rd, 2011

The only thing that really matters to the stock market iscorporate earnings. The numbers are everything, andthat’s what equity investors need to be focused on.

I’d be a new buyer o f large-cap, dividend paying stocksright now. The market hasn’t pulled back much over thelast two years and, every time it has, it’s been a greatbuying opportunity. The stock market is reasonablyvalued at its current level and the expectation is fo r aso lid year o f corporate pro fit growth. Job numbers,housing prices, and ISM surveys are all important, but,as the owner o f a business, it’s always the bottom linethat counts.

Even though I’m advocating that investors with money tospend consider buying stocks right now, I’m not saying that investors should load up onspeculative issues. Far from it. Investment risk in the world remains very high. This ismostly due to the sovereign debt issue in Europe, which keeps flaring up every month orso. A lo t o f big investors over the years have contemplated the end o f the euro currency; ifit were to happen, the result would be disastrous for capital markets over the short term. Itwouldn’t be the end o f the world, o f course, but financial markets would likely take a hugehit. So, because this risk is present and real, equity investors need to be fairly conservativewith their ho ldings. And, if we are go ing to experience a period o f slow economic growth in

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the U.S. economy, then investors need to be awfully choosy about which companies theyinvest in. Ever wonder why a company like Caterpillar Inc. (NYSE/CAT) has been such apowerhouse wealth creator fo r shareho lders just over the last year? It’s because thecompany is well-diversified in the world’s fastest growing economies.

I think some individual investors have a tendency to forget just how risky stocks are. Puttingmoney into the stock market is taking a gamble—you’re betting on a company’s ability togenerate pro fits, while recognizing that the business cycle exists. Without question, equitysecurities (which are shares in a company that trade in a secondary market) are 100% risk-capital instruments. Therefore, it pays to have a healthy regard for risk, no matter what thebroader market is do ing.

Everybody likes a bandwagon. Take go ld, fo r example. The spot price o f the commodityhas been go ing up for years now, but it isn’t until the media headlines take ho ld that a lo t o fnew investors jump in and buy go ld or go ld stocks. As the o ld saying goes, once it’s in thenewspaper, the story is mostly over. This still rings true today.

Right now, it’s difficult to be a buyer o f stocks. The economic data is lackluster and we’re inbetween earnings seasons. But, it’s o ften this kind o f uncertainty that creates good entrypo ints fo r new positions. Now is a good time to be considering well-managed, large-cap,dividend-paying stocks. The right large-cap company can beat the best high flyer themarket has to o ffer.

Fighting Market Risk: Use Put OptionsNo Comments

Posted by George Leong, B.Comm. in best stock advice , defensive hedge, go ld stocks,pro tecting your investments , pro tective hedge, put options , risk management , silver stocks ,Stock Market Advice on May 20th, 2011

In Friday’s issue, I discussed the idea o f generatingsome cash through writing covered call options shouldthe market trade flat.

At this juncture, stock markets are pausing and showingsome uncertainty. And, while I do not pretend to have acrystal ball, I do firmly believe in adopting strong risk-management to pro tect your investments and hard-earned capital. This is my best stock market advice.

The last thing you want is to watch your gainsdisappear.

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One of my favorite strategies I like personally to pro tect investment gains is the use o f putoptions as a defensive hedge against market weakness. This strategy is called a ProtectiveHedge. Don’t be scared by the name or the fact it employs derivatives, as the strategy isstraightforward.

Under this scenario , investors may be somewhat bearish or uncertain and want to pro tectthe current gains against a downside move in the stock or the market with the use o f indexput options.

For those o f you not familiar with options, a buyer o f a put-option contract buys the right,but not the obligation, to sell a specific number o f the underlying instrument at the strike orexercise price for a specified length o f time until the expiry date o f the contract. After theexpiry date, the particular option expires worthless and any responsibility is eliminated.

The buyer o f the put option pays a premium to the writer o f the option, who getscompensated for assuming the risk o f exercise. The writer o f the put option is obligated tobuy the stock from the ho lder o f the put should it be exercised by the expiry date.

For the writer o f the put option, the amount o f premium received for assuming the risk isgenerally directly correlated to the vo latility o f the stock and market. The more vo latile thestock, the higher the premium paid for the option. And low vo latility translates into lowerpremiums.

You can buy puts for stocks and sectors. If your portfo lio is heavy in techno logy, you canbuy puts on the NASDAQ. Or let’s say you have benefited from the run-up in go ld and silverto record historical highs; in this case, a good strategy may be to buy put options on ThePhiladelphia Gold & Silver Index, which tracks 10 major go ld stocks and silver stocks.

If you are heavily weighted in techno logy, you can buy put options in PowerShares ETFs(NASDAQ/QQQ), fo r example, a heavily traded put used for defensive purposes.

It’s that easy. Just take a look at the various indices that closely reflect your ho ldings or putoptions on individual stocks that you may have a large position in.

In this market, safety is the key.

U.S. Debt Ceiling and Gold: MarketCloses One Eye, Other Wide OpenNo Comments

Posted by Michael Lombardi, MBA in bond market, go ld bullion price, go ld investment, go ld

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stocks, stock market , Stock Market Advice , stock prices , U.S. debt ceiling on May 18th, 2011

As we all know, the U.S. reached the maximum debtlevel at which it can borrow (its debt ceiling) earlier thisweek. The U.S. has borrowed $14.3 trillion and cannotborrow more unless Congress increases the debtceiling limit.

The government says that it has dipped into its federalpension funds to pay its bills. And what does the market

do? It closes an eye and yawns. The yield on the 10-year U.S. Treasury actually fellyesterday to 3.1%. The bond market is experiencing a “ little” rally despite the governmenthaving to dip into its pension funds to pay its bills.

Frankly, the bond and stock market doesn’t care at this po int. It’s keeping that eye closed. Itfeels, like we all feel, Congress will eventually give in and raise the amount the U.S.government can borrow like it always has in the past.

But the market has the o ther eye wide open on this one…

By the middle o f this May, the U.S. Mint had so ld 85,000 ounces o f American Eagle go ldco ins—on track to being their best sales month in about a year.

The last time sales o f go ld co ins reached that level, the price o f go ld bullion rose 21% inthe fo llowing year.

Gold, having hit a high o f $1,541 per ounce earlier this month, is back down to $1,491 thismorning, a drop o f 3.2%. But the go ld stocks were getting soft back in April and stayed softfo r most o f May…until yesterday.

I believe the share prices o f the go ld mining companies are starting to firm up again. In fact,over the last couple o f days, the go ld mining stocks have led bullion higher. The market hasone eye wide open on this one. A strong price base has been established for the go ldmining stocks…and the patient go ld investors are about to get rewarded.

The market closes one eye on the debt problem, and opens the o ther to the developingcommodities story.

Michael’s Perso nal No t es:

The same thing will happen here in North America…

Yesterday, the United Kingdom’s Office o f National Statistics reported that inflation in theU.K. jumped to 4.5% in April. Core inflation, which excludes the vo latile food and energyitems, came in at the fastest pace in 14 years—3.7%.

Bets that the Bank o f England will be raising interest rates sooner rather than later have

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increased substantially.

We will experience the same sequence o f events here. The inflation rate in America willeventually pop. The Fed will react by raising short-term interest rates. We will hear thepundits say that the Fed kept rates too low for too long.

As I have been writing for weeks now, inflation is becoming a problem throughout the worldfor several reasons. The United States will no t be immune to inflation woes.

In the U.K., two-year government bonds yield 1.02%. In the U.S., a two-year U.S. Treasuryyields only about half o f that—0.53%. Is the direction o f U.S. short-term interest rates notstaring us in the face?

Where t he Market St ands; Where it ’s Headed:

Very interesting to note…

The number o f stock advisors bullish on the market has fallen sharply, while the number o fstock advisors expecting a correction in the stock market has risen sharply (source:Investors Intelligence Advisors Sentiment , 5/18/11).

Traditionally, stock market advisors are wrong on their consensus opinion: if they expectthe market to rise, the opposite happens. If they expect the market to fall, it usually rises.The more there are o f them who expect a correction in stock prices, the less likely it is thatit will happen.

I’ve been writing that I expect a little more pop from this bear market rally; say another 10%on the upside. Given the bearishness starting to prevail amongst stock advisors, thechances o f the bear market rally continuing are now stronger.

The Dow Jones Industrial Average starts this morning up 7.8% for 2011.

What He Said:

“Prepare for the worst economic period ahead that we have seen in years, my dear reader,as that is what I see coming. I’ve written over the past three years how, in the late 1920s,real estate prices fell first before the stock market and how I felt the same would happenthis time. Home prices in the U.S. peaked in 2005 and started falling in 2006. The stockmarket is fo llowing suit here in 2008. Is a depression coming? No. How about a severedeflationary recession? Yes!” Michael Lombardi in PROFIT CONFIDENTIAL , January 21,2008. Michael started talking about and predicting the economic catastrophe we startedexperiencing in 2008 long before anyone else.

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the Men from the BoysNo Comments

Posted by Michael Lombardi, MBA in bear market rally , gas prices, go ld bull market, go ldinvestments, go ld stocks, inflation, Stock Market Advice on May 12th, 2011

The latecomers to the go ld bull market have been feeling theheat the last couple o f days.

After reaching a record high o f $1,540 an ounce only sevenbusiness days ago (on May 3), the price o f go ld bullion hasfallen $55.00 to $1,485.

But it’s not the price o f go ld bullion that has investors andspeculators worried. After all, the price o f bullion is up $252.70an ounce, or 20.5%, over the past 12 months. The fear and

concern lies with the price action o f the go ld stocks.

As a reader e-mailed us yesterday, “Michael, I enjoy reading PROFIT CONFIDENTIAL eachday and appreciate your wise advice. I have been invested in go ld stocks for the past fouryears and have done reasonably well…but am perplexed at the recent performance o fstocks in relation to the metal price. (Gold) stocks are standing pat when go ld is rising andselling o ff when go ld declines.”

I’m sure the majority o f my readers invested in go ld are noticing the same thing as theabove reader.

But, in a bull market, this is what separates the men from the boys. The latecomers to thego ld bull market (the “boys”) are dumping their go ld stocks as fear sets in over weaknessin the yellow metal. The seasoned go ld investors (the “men”) see go ld stocks forming aso lid base here. The men are buying the go ld stocks on dips, not selling them.

The go ld bull market is 10 years o ld. It’s not a market fo r trading. It is a market fo r seizingthe trend and staying with it. During this bull market, there have been times when go ld stockshave led the advance higher before go ld bullion and there have been times when go ldbullion has led go ld stocks higher (which is where we are now).

Nothing has changed in the world to change my view on go ld. The Fed hasn’t stopped theprinting press. The government hasn’t reined in its reckless spending. Long-term interestrates haven’t come down; neither has inflation.

Everyone has an opinion, a belief. Personally, I see the weakness in the price o f go ldstocks as an opportunity. And that’s why I’m buying more o f them today.

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Michael’s Perso nal No t es:

“Gas prices reach all-time high, commuters express need for gas cap locks,” read theheadline on the 680news.com web site. But have no fear, our government is telling us thatinflation is under contro l.

I believe that China is telling the truth about its inflation rate. And it’s dealing with it.

Yesterday, China announced inflation for April was running at 5.3%. The Chinesegovernment would like to see the rate at four percent and, in its attempt to reach that goal;China has been raising interest rates and the reserve requirement ratio fo r its commercialbanks.

I’ve been writing for months that the inflation “problem” in North America is much biggerthan the government or media acknowledges. I’m still o f the opinion that the FederalReserve will come out with another fo rm of QE1 and QE2 when QE2 ends next month. Thegreater the Fed’s efforts to expand the money supply, the greater the long-termhyperinflation risks.

Where t he Market St ands; Where it ’s Headed:

End of the bear market rally? After all, the Dow Jones Industrials was down 130 po intsyesterday. Not a chance.

You obviously read my co lumn for the reason that I have a different angle and view on whatis happening in the marketplace than most economists and analysts. Sure, the bear marketrally is tired and close to topping out.

But watching the ticker tape yesterday, I believe that the market downdraft had more to dowith a response to the guilty verdict o f Galleon Group LLC’s Raj Rajaratnam than anythingelse. The securities po lice are tightening the strings on Wall Street players and Wall Street’sresponse was, “We don’t like it.”

The bear market rally in stocks that started in March o f 2009, although very tired and long inthe tooth, continues.

What He Said:

“When I look around today, I see falling stock prices…I see falling house prices…and pricesfor retail goods stores declining. The media has it all wrong blaming (worrying about)inflation. In my opinion, the single biggest threat to the U.S. economy and to the Fed in2008 is deflation. You can bet the Fed will expand the money supply and drop interest ratesaggressively, as deflation starts to rear its ugly head.” Michael Lombardi in PROFITCONFIDENTIAL, December 17, 2007. Michael was one o f the first to warn o f deflation. Bylate 2008, world economies were embedded in their worst state o f deflation since theGreat Depression.

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Stock Picking for New Opportunities—WhatIt Might Take for Another Major AdvanceNo Comments

Posted by Mitchell Clark, B.Comm. in earnings season, economic analysis , go ld mining,go ld stocks, growth opportunities, share prices, small cap stocks, stock market , stockpicking on May 5th, 2011

Right now the broader market is taking a well-deservedbreak after a pretty successful first-quarter earningsseason. This market needs a new catalyst if shareprices are go ing to advance and there isn’t one presentjust yet, so stocks will trade on the economic news o fthe day. So far this month, the economic data aregenerally positive, but not overly so . I think we’re go ingto be in a slow growth environment fo r quite some time.

With this backdrop, it’s fair to say that there won’t be anymajor tailwinds for equity investors in the near future. It’sa stock pickers’ market that’s due for a correction. It iswell-deserved, however, and we have to ro ll with theaction.

In my economic analysis, there weren’t very much homeruns in the earnings department. The economy just isn’t robust enough to produce somemajor outperformance. I would say that, generally, large-cap results were decent in the firstquarter and the outlook for the second quarter is about the same. For smaller companies,which are still reporting their numbers right now, there hasn’t been much in the way o foutperformance either, although several mining stocks came out with excellent financialgrowth due to strong spot prices. This was expected by the marketplace and even the mostrobust miner is selling o ff right now.

The stock market’s been due for a break for quite a while and it’s natural fo r this to occurbetween earning seasons. As an investor, I would be in no rush to take on new positions inthis market, but I would be keeping a close eye on go ld positions. This is long-term trendthat’s not go ing away.

A number o f very so lid small-cap go ld mining stocks are retreating in this market and thisis a sector that’s ripe for some strong trading action later in the year. As I’ve been writing, Istill feel that the precious metal sector represents some of the most attractive growth

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opportunities for equity investors and that any major conso lidation or correction in thesector would be a great entry po int fo r new positions.

If there isn’t any new catalyst on the upside, there isn’t one on the downside either. This is astock market that will likely drift over the near term. It’s called stock market malaise and itreflects a certain wariness as to whether economic growth is sustainable this year.Institutional investors remain unsure.

Stock picking over the very near term is go ing to be difficult as the broader market drifts.There’s no need for any major action just yet. I don’t see the equity market advancing in anymeaningful way until we get to second-quarter earnings season. The current break hasdefinitely been earned.

Gold Burning up the Chart: My Gold AdviceNo Comments

Posted by George Leong, B.Comm. in go ld advice, go ld investment, go ld prices, go ldstocks, o il stocks, silver stocks on April 29 th, 2011

What a few months it has been for go ld. With warworries in Libya to debt concerns in Europe and theUnited States, along with rising demand out o f Chinaand India, it appears to be the perfect storm for drivinggo ld prices higher. In fact, the break at $1,500 was muchsooner than I had expected and, based on the chart,prices could go even higher, albeit the buying may besomewhat ahead o f itself and hence vulnerable tosome pro fit-taking.

The June go ld broke to a record high o f $1,535.10 onApril 28 and is looking to go higher. The chart showed abullish inverse head and shoulders formation in March.

Prior to this, there was a bullish V formation in January and early February. The June go ldmade a strong breakout at the $1,440 resistance that was in place since November 2010 inearly April.

Along with the upward push, the trading vo lume in the June go ld been surging during thebreakout and this is bullish. The contract is above its 50-day moving average (MA) o f$1,441. The bias remains bullish. The moving average convergence-divergence (MACD)has been flashing a buy signal since early April; but be careful, as we could be in store for areversal.

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Investing in go ld is a safe haven play when the market risk rises.

Gold has rallied in each o f the last 10 years and shows a beautiful bullish price chart. Mygold advice would be to accumulate go ld on weakness.

The situation in Libya could worsen and there are also tensions in Iran and o ther MiddleEast countries. This means added global risk. Oil is trading at over $112.00 per barrel onthe threat o f more disruption in o il from Libya and o ther o il-producing countries.

In my view, the key determinant o f how go ld will fare will depend on the direction o f stocksalong with the geopolitical tensions.

If the Middle East situation worsens, it would drive up o il prices, which would impacteconomic growth at a time when the economies continue to be at risk.

Also, don’t fo rget about the mounting debt and deficit in the United States. The country hasover $14.0 trillion in debt and is paying billions in interest daily. Many states are strugglingto make ends meet and are looking at severe cuts in the state budgets.

Silver has also fo llowed go ld higher, with the May silver futures contract above $48.00 anounce. It appears set to take a run at $50.00. The near-term picture with silver is alsoextremely bullish on strengthening Relative Strength, but at the same time overbought.Silver is a play on the economic recovery, as it’s found in electronics.

I also like copper as a play on the recovering global economies, especially in industrialapplications and housing.

My advice on playing the commodities is to buy go ld stocks, silver stocks, and o il stockson weakness.

Stock Prices and Corporate Profits:The Divergence ExplainedNo Comments

Posted by Michael Lombardi, MBA in bear market rally , corporate earnings, first-quarterearnings, go ld investment, go ld prices, go ld stocks, Stock Market Advice , stock marketopinion, stock prices on April 27th, 2011

The good o ld times must be back.

So far this month, 31 major companies have filed withthe U.S. Securities and Exchange Commission to go

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public, the highest number since the summer o f 2007.

Corporate earnings? They’re booming again, too. Justlook at some of these first-quarter earnings reports:

Ford Motor Company (NYSE/F), the second largest U.S.car maker, made $2.55 billion. Johnson & Johnson(NYSE/JNJ) made $3.48 billion. The Goldman SachsGroup, Inc. (NYSE/GS), fifth largest U.S. bank, posted a$2.74-billion pro fit. Wells Fargo & Company(NYSE/WFC) posted a $3.76-billion pro fit. JPMorganChase & Co. (NYSE/JPM) made a $5.56-billion pro fit.

Five companies; $18.0 billion in first-quarter pro fit.

Why did I choose these five? Because all o f them reported earnings substantially higherthan in the same period o f 2010! Corporate pro fits are back big-time and this is adding fuelto the bear market rally in stocks that investors have been so enjoying for 26 months now.

But when we look closer at the five companies I list above, all five, except fo r Ford MotorCo., have their stocks selling substantially below their five-year highs.

The stock market is a leading indicator, not a lagging indicator. By pricing the stocks on mylist above, except fo r Ford, well below their five-year price high, the stock market is tellingus that it does not believe that the better-than-expected earnings reports will continue.

As for Ford, the company’s stock is trading close to its highest level in 10 years. As we allremember, this is the only major car company that did not get a bailout from Washingtonduring the credit crisis.

Michael’s Perso nal No t es:

Gold investors are noticing that, while go ld bullion is rallying to new record highs ($1,509per ounce as I write this morning), the go ld stocks are lagging the rally in go ld bullion. Whyis this?

In my 10-year invo lvement in this go ld bull market, I’ve o ften noticed that either go ld stocksor go ld bullion lead the bull, but rarely both. We are in one o f those periods where go ldbullion is breaking to new price highs and the go ld stocks are failing to fo llow…it’s almostlike the go ld stocks do not believe that go ld prices are moving so high!

I believe that go ld stocks are forming a strong base from which to make their next advance.There’s no escaping it…higher go ld bullion prices lead to higher pro fits fo r go ld miningcompanies. Just this morning, Barrick Gold Corporation (NYSE/ABX), the world’s largestgo ld-producing company, reported that it made a $1.0-billion pro fit in the first quarter o f2011, up 22% from the same period o f 2010.

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There are many good buys in the junior and senior go ld stock sector right now.

Where t he Market St ands; Where it ’s Headed:

The Dow Jones Industrial Average has climbed 1,038 po ints so far this year, up 8 .9% for2011. The S&P 500 opens this morning at its highest level since June o f 2008.

I’ve been calling it a bear market rally since March o f 2009 and all I can say is that this bearhas failed to disappo int. As I have been saying for over two years…technically, you do nottrade against the trend, which has been upward. And, fundamentally, you do not “fight theFed.” We are living in the most accommodative monetary po licy period in history. Short-term interest rates are near zero . The Federal Reserve is taking actions we’ve never seenbefore.

Add to all this a strong corporate earnings quarter and, bang, the rally marches on. But thereare cracks in the lining, my dear reader. Long-term interest rates are rising, the U.S. do llar isunder immense pressure to devalue, inflation is becoming a problem, and memories o f theworst recession since the Great Depression are fading fast.

Enjoy the pro fits from this bear market rally while they last, because they will no t last muchlonger. Upside pro fit po tential in stocks (five percent to 10% higher) does not outweigh therisks.

What He Said:

“Overbuilt, over-speculated, over-financed and overdone. This is the Florida real estatemarket right now. For those looking to buy for personal use or investment, ho ld o ff! Thebest deals are yet to come. I continue with my prediction that the hard landing in the U.S.housing market, which is now affecting lenders, will have significant negative effects on theU.S. economy.” Michael Lombardi in PROFIT CONFIDENTIAL , April 3, 2007. Michael startedtalking about and predicting the financial catastrophe we started experiencing in 2008 longbefore anyone else.

Railroad Stocks & Gold—the Two BestSectors of the Equity MarketNo Comments

Posted by Mitchell Clark, B.Comm. in earnings season, go ld prices, go ld stocks, investingin go ld, railroad stocks, silver prices , Stock Market Advice on April 27th, 2011

There are a lo t o f bellwether companies to report over

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the next couple o f weeks and the trading action in stockswill be focused on that news. I still don’t think that thisearnings season has been anything to write homeabout. For a number o f large-cap companies, theearnings have been so lid, but there haven’t been anygrand slams. The fact is that this economy can’tproduce much in the way o f outperformance, with thepossible exception o f go ld stocks.

Railroad stocks are still looking great in this market and that’s always a good sign thatgeneral economic activity is getting better. The railroad companies operate like theaccounting concept: first in/first out. They see improved economic activity first and they seeit go just the same. The major railroad stocks are trading just o ff their price highs. CSXCorporation (NYSE/CSX) just reported a 30% improvement in earnings, as freight vo lumesincreased. Street analysts already raised their earnings guidance for the company’ssecond, third and fourth quarters, all o f 2011 and 2012. If you want to know where thebroader stock market is headed, just fo llow the railroad stocks.

Investing in go ld and o ther precious metals continues to pay o ff regardless o f what’shappening in o ther sectors o f the economy. The new $7.8-billion bid by Barrick GoldCorporation (NYSE/ABX) for copper producer Equinox Minerals Limited (TSX/EQN) is thelatest big acquisition in the mining business. Equinox Minerals has been a powerhousemoneymaker. The stock did very well over the last 10 months, and then pulled back withcopper prices. Then, a Chinese company made an unso licited bid for the company, but theStreet figured that another, friendlier bid would surface (and rightly so). The stock traded wellabove its original takeover price and now the trade is over.

You can bet that, with go ld prices and silver prices trading right at their all- time price highs,more mergers and acquisitions will be coming. This sector in my view remains perhaps themost attractive for equity speculators in the current environment. And this is knowing thatmost o f the good go ld stocks in that universe have already gone up. With miningcompanies almost drowning in cash, they have nowhere else to put this excess cash flowbut to purchase o ther miners. I can almost see the investment bankers droo ling over theprospects o f more deals coming down the pipeline.

I do feel that the equity market looks tired and that a correction or meaningful conso lidationis increasingly likely after first-quarter earnings season is over. As I’ve written recently,investors don’t need to be in a rush to take much action in this market. Things look likethey’re topping out.

The Key to Successful Speculationin Mining Stocks

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No Comments

Posted by Mitchell Clark, B.Comm. in earnings season, go ld stocks, investment strategy,mining stocks, Stock Market Advice , stock picking, stock prices on April 25th, 2011

I was beginning to get a little worried that this earningsseason was go ing to be a dud. Just like the economy,there is growth out there, but it isn’t unifo rm. Investorsentiment is still somewhat sideways about the state o fthings. I still see the main stock market averages asgetting close to topping out. It should happen within thenext two quarters.

The commodity price cycle remains in full fo rce and just about everything related toprecious metals, o il and agriculture is go ing up in value. It’s a unique time in capital markets,as we don’t get a fully fledged upward commodity price cycle all that o ften. In my view, it’s along-term trend that should be fully embraced.

Investing in go ld is a prio rity if you want to have exposure to the current cycle. As you know,most precious metals have already experienced significant price increases over the lastseveral years. The spot prices o f go ld and silver continue to hit new highs at this time. Forinvestors in this sector, established junior producers with strong exploration potential o ffersome of the most compelling opportunities for risk-capital equity speculators. The entireprecious metal industry is swimming in cash and there’s go ing to be a lo t o f buying andselling o f who le companies this year and next.

Interestingly, a lo t o f commodities have seen their prices move commensurately withstocks over the last while. It’s like the globalized economy (and speculators) are speakingwith one vo ice. I do think both stock prices and most commodities can experience furtherprice appreciation over the very near term, with the likelihood o f a correction happeningsoon. If this happens to both stocks and commodity spot prices, I’d definitely be a newbuyer o f go ld shares.

I prefer the buy-low/try-to-sell-high investment strategy as a general rule. There are alwaysmomentum trades in the stock market. There are always special situation opportunities. Butin the case o f go ld and silver, I’m a long-term bull, so I don’t have any problems withinvestors speculating in shares that have already experienced big price moves. The key tosuccessful go ld mining speculation as an equity investor is to buy a “package,” which is aknown miner with well-regarded management that’s growing production and earnings, andboasts excellent prospects for further mineral discoveries that can come into production.The investing universe for these kinds o f companies is actually quite small.

So far this year, I’ve seen some substantial capital gains among stocks o f precious metalproducers; not because o f strong spot prices, but because o f takeover bids. Mergers and

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acquisitions in this industry are ripe for acceleration and it’s a key component o f therisk/return ratio with mining companies.

For now, it’s time to enjoy the good financial results in large-caps. I’m confident that thegood news will continue, but not fo r every industry. I think we’ll get a correction soon andthis means a great opportunity to add to precious metal positions.

The Dilemma for Investors with Money toSpend on StocksNo Comments

Posted by Mitchell Clark, B.Comm. in first-quarter earnings , go ld stocks, investment risk ,Stock Market Advice , stock picking on April 20 th, 2011

It’s a tough market fo r equities right now becausethere’s no expectation for major growth. So far, bigcompanies haven’t said enough on the subject and, withother less-than-enthusiastic news, the stock market iswaffling. In fact, the main stock market indices couldexperience a to tal breakdown here if the numbers fromcorporations don’t start improving.

Investors bet big on strong first-quarter results andwhile, so far, big companies are reporting growth, they’renot reporting numbers that are beating consensus and

this means that share prices are very unlikely to advance. In this kind o f environment, newstock picking should go on the backburner. It’s a wait-and-see market and, like theeconomy, first-quarter earnings results aren’t go ing to be uniform at all.

Texas Instruments Incorporated (NYSE/TXN) just reported first-quarter financial results thatmissed consensus. This important benchmark company in the semiconductor industryreported growth, but nothing to write home about. Like many stocks in the techno logysector, this one looks like it’s ro lling over.

And the banking industry hasn’t reported numbers that have been up to snuff. Yes, there isgrowth, but, from my perspective, the numbers aren’t improving enough to warrant newpositions in the sector. This is the situation the broader stock market finds itself in rightnow. First-quarter numbers are generally better, but not by much.

I come back to the go ld mining industry as one o f the few sectors with any growth left inthem. Now that everyone is newly worried about debt and deficits (because Standard &

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Poor’s says so), upcoming currency wars are making the case for go ld that much betterevery day.

With the news we have right now, I have to say that investment risk in equities remains high.The broader market already went up so lidly in anticipation o f strong first-quarter earnings.Companies so far aren’t beating consensus and they aren’t guiding higher. This presents adilemma for investors with money to spend on stocks. Does the risk justify the potentialreturn? Should you be a buyer o f new positions in this kind o f market? I say no to bothquestions, and it isn’t that I don’t expect the economy to improve or that corporationswon’t keep growing their earnings. With the news we have right now, the growth isn’t strongenough to justify any bo ld new moves. We’re at a time now when a lo t o f previousexpectations are coming together. What develops next is anyone’s guess. One thing I knowis that I wouldn’t sell any go ld or silver. This is the only growth industry left and it might justbe the only store o f value go ing if the sovereign debt issue cascades.

Why the Biggest Profits in the GoldBull Market Are Still AheadNo Comments

Posted by Michael Lombardi, MBA in go ld advice, go ld bull market, go ld investment, go ldprices, go ld stocks, investment advice on April 18 th, 2011

“It’s too late, the easy money has been made,” is themost common response I get from investors when Iask them why they do not have exposure to the go ld bullmarket. Nothing could be further from the truth.

Yes, go ld’s had a phenomenal run-up in price, risingfrom under $300.00 an ounce in 2002 to $1,480 today—a gain o f 393%. I wro te these now famous words inPROFIT CONFIDENTIAL back on December 13, 2002:“I’ve been pushing go ld bullion and go ld shares for overa year now. Bank in January 2002, I personally startedbuying go ld-related investments.”

And, while many investors feel that it is too late to get into the go ld bull market, I continuebuying in. Actually, I’ve been buying go ld-related investments all the way along; mostrecently when go ld was trading at $1,400 an ounce.

Here are two reasons why I keep buying and why I believe the biggest gains for go ldinvestors lie ahead:

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Firstly, the shares o f quality go ld-producing companies are lagging the rise in the price o fthe metal. Look at the shares o f Barrick Gold Corporation (NYSE/ABX), one o f the world’slargest go ld-mining companies. Back in 2002, Barrick’s stock traded at $20.00. Today, ittrades at $53.00, a gain o f 175%, while go ld bullion is up 393% in the same time period.

Same thing with Newmont Mining Corporation (NYSE/NEM), another major go ld producer.Its stock traded at $25.00 in early 2002; today, it trades at $57.75, fo r a gain o f only 130%—gold bullion, over the same time period, beat the gain three-fo ld.

The stock market works on supply and demand. The more demand for a certain stock ortype o f stock, the higher the price goes. The great majority o f mutual funds in existencetoday are not investing in go ld stocks. As time passes and go ld prices continue to rise,investment pro fessionals will start to view go ld as a “must have” in their portfo lio . Demandfor quality go ld stocks will rise. Gold stocks will start to fare better than go ld bullion itself.

The second reason why the biggest gains for go ld investors lie ahead has to do with thebasic pro fitability o f the major go ld mining companies. Barrick, Newmont, and GoldcorpInc. (NYSE/GG) have fixed costs at their existing mines, so their pro fits rise sharply as go ldprices rise. Look at it this way: a go ld mining company has a cost o f production o f$800.00 an ounce. At $1,480 an ounce for go ld, the company is enjoying a gross pro fit o f85% on its cost o f go ld.

Now, if go ld prices went to $2,500 an ounce (which I expect go ld bullion to easily surpass),the go ld mining company producing go ld at $800.00 an ounce all o f a sudden sees itspro fit margin jump to 213% and, bang…the stock price takes o ff.

The biggest pro fits in go ld lie ahead, because we are still in that phase o f the go ld bullmarket where stocks are lagging the price advance o f the underlying commodity. Bottomline: investment pro fessionals still do not believe go ld is worth having in their clients’portfo lios and the great majority o f investors do not have exposure to go ld. As we enterphase three o f the go ld bull market, go ld stocks will start to lead, as opposed to lag, theadvance in go ld prices.

Michael’s Perso nal No t es:

It was bound to happen…

The big news this morning: New York-based Standard & Poor’s credit rating agencydowngraded the U.S. AAA credit rating from “stable” to “negative.”

I’ve been writing about this coming event fo r months. The quickly rising national debt o f theU.S., and lack o f any meaningful effo rt to reduce our annual deficit would sooner or latercause the security o f debt instruments to come under question.

How it usually works: first a country’s debt rating is cut (like the U.S. debt rating was cut

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today), then interest rates in that country rise to o ffset the new perceived risk in its debtsecurities (in this case, U.S. Treasuries).

First we had long-term interest rates rise, now short-term interest rates will come underpressure to rise. If the stock market goes down big-time today, which I expect it will, thereason will be the market’s increasing realization that higher interest rates in the U.S. arejust around the corner.

Where t he Market St ands; Where it ’s Headed:

The bear market rally that fo llowed the early 1930s stock market crash started in October1934 and lasted until August 1937—35 months—and took the Dow Jones IndustrialAverage from a level o f 90 to 185, a gain o f 106%.

The current bear market rally in stocks started back in March o f 2009 and is enjoying its26th month o f gains, having brought the Dow Jones Industrial Average up 93% so far. As Ihave been writing, the current bear market rally is not over yet. While upside potential islimited, there is another five percent to 14% left on the upside for this market.

The Dow Jones Industrial Average opens this week up 6 .6% for 2011.

What He Said:

“If I had to pick one stock exchange that would rank as the best performer o f 2007, it wouldbe the TSX (Canada’s equivalent o f the NYSE). Interest rates in Canada remain very lowand they are not expected to rise anytime soon. Americans looking to diversify theirportfo lios, both as a hedge against the U.S. do llar and a play on go ld bullion’s price rise,should consider the TSX. Most brokers in the U.S. can buy stock on this exchange.”Michael Lombardi in PROFIT CONFIDENTIAL , February 8 , 2007. The TSX was one o f thetop performing stock markets in 2007, up just under 20% for the year.

Three Major Financial TrendsInvestors Can Profit From TodayNo Comments

Posted by Michael Lombardi, MBA in financial trends, go ld prices, go ld stocks, interestrates, real estate market, Stock Market Advice , stock prices , U.S. Treasuries on April 8 th,2011

Three major trends in the financial markets, all fromwhich investors can make money, continue theirdevelopment this morning…

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Trend #1: Rising long-term interest rates. The 10-yearU.S. Treasury hit a yield o f 3.6% Friday morning. Myforecast calls fo r the bellwether 10-year Treasury toeasily sail past 4.0% this year.

I’ve been predicting that bond investors would take a hitsince the summer o f 2010, and that’s exactly what hasbeen happening. The yield on the 10-year Treasury sits

today at the same po int it did in January o f 2008—but short-term interest rates were a lo thigher back then. Pressure is now mounting for short-term rates to rise as well.

The writing is on the wall with this one: long-term interest rates are rising despite the Fed’sQE2 effort, which is omnibus. Investors shorting long-term bonds are booking, and willcontinue to reap serious pro fits this year.

Trend #2: Stock prices will continue to rise in the immediate term. We to ld our readers tojump into stocks in March o f 2009, and have kept them in stocks since then. The DowJones Industrial Average has risen 93% since March 9 , 2009. Yes, the easy money hasbeen made in the stock market, but there is another five percent to 10% upside pro fitpo tential.

Each passing day, more and more investors are becoming convinced that the worst is overfor the economy. They will be proven wrong, but, in the meantime, the cash on the sidelineswill push stock prices higher. The bear market rally o f the past two years has been a trueclassic, panning out just as I expected, with more upside left.

Investors can continue to reap immediate-term pro fits from the stock market (almostanything, except real estate stocks, has been go ing up over the past 25 months), but, aslong-term yields hit four percent and get closer to five percent, the market rally will bedeflated like one big balloon.

Trend #3: Gold prices are at about halfway in their bull market cycle . This morning, go ldbullion is up another $12.50 an ounce, closing in on $1,500 per ounce. Since 2002, I havebeen yelling, screaming, to anyone who would listen: Buy go ld related investments! Icontinue to believe that go ld is headed to $2,500 to $3,000 per ounce.

The U.S. do llar index chart ($USD) is about to break major support, the Fed is gettingnervous about long-term inflation, and the Chinese are on a buying spree trying to get theirhands on as many decent precious metal exploration and development companies theycan. There are plenty o f quality go ld stocks listed on senior stock exchanges that willdeliver serious pro fits to investors this year.

There you have it. My closing commentary for the week…three major financial trendsinvestor can still pro fit from today.

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Michael’s Perso nal No t es:

The widely expected move by the European Central Bank to raise interest rates yesterday,after keeping them artificially low for three years, marks the first time in 40 years that Europehas moved to raise interest rates before the U.S.

The European Central Bank (ECB) raised interest rates by one-quarter po int to 1.25%. Theequivalent bank rate in the U.S. is between zero and one-quarter percent. Germany’seconomy is booming, inflation risks are high, and the ECB is acting. Two more rateincreases o f one-quarter po int each are expected by the ECB this year.

The European Central Bank has now jo ined the ranks o f Canada, India, China, NewZealand, Australia, Po land, and Sweden in raising interest rates post-recession. The U.S.Fed, usually the global leader in setting interest rates po licies, will soon be the laggard injo ining the global trend o f rising short-term interest rates.

Where t he Market St ands; Where it ’s Headed:

A bear market in stocks still presides. Expect continued immediate-term rising stock prices.The short- to long-term picture continues to deterio rate.

What He Said:

“You’ve been reading my articles over the past few months and have seen how negativeI’ve become on the U.S. economy. Particularly, I believe it’s the ramifications o f the falteringhousing sector that are being underestimated by economists. A recession doesn’t takemuch to happen. It’s disappo inting more hasn’t been written on the popular financial sitesand in the newspapers about the real threat o f a recession happening in 2007. I want myreaders to be fully aware o f my economic opinion: I wouldn’t be surprised to see the U.S.economy in a recession sometime in 2007. In fact, I expect it.” Michael Lombardi in PROFITCONFIDENTIAL, November 13, 2006. Michael was one o f the first to predict a U.S.recession, long before Wall Street analysts and economists even thought it a possibility.

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