Shop update and Nutcracker Market excitement!

I shopped the Nutcracker Market, and made it out alive.

Shop update and Nutcracker Market excitement!

Three new rings in the Notes from the Republic shop today!

Up for grabs we have....

This lovely floral fabric rosette ring...

                                                         this miniature coffee (or tea) cup ring....

   

and this miniature vinyl ring.

Yaaayy new things!

Happiest Friday everyone! Any big plans for the weekend? After work today Ryan and I are going to look at more lofts (exciting!!)

Tomorrow is the much anticipated 30th annual Nutcracker Market. If you live in Houston and have never been, GO. ohmygod GO. It's fantastic!! So much to see, buy, taste, smell, and oh... you can drink champagne while you peruse aisle and aisle of wonderful goods from national and international vendors. It's so inspiring, too! One of my favorites is a Russian shop, they have such pretty handmade wooden ornaments, hand painted brooches, nesting dolls...there's also a vintage glass ornament shop that I go nuts over.  I can't wait. I didn't take many photos last year but I promise I will this year.

 

I shopped the Nutcracker Market, and made it out alive.

I’m moving into a new house next year, and I’ve been trying to save money for travel next year anyway, so I can’t spend a ton of money for the holidays.  I’ve mentioned this before: I LOVE picking out Christmas presents.  I know plenty of women like me; there’s a thrill when you find the perfect gift, especially if you don’t have to spend a lot of money on it.  I love wrapping something up that I know will make someone happy, especially if it took some amount of cleverness or insight on my part.
Of course buying something expensive (like a flatscreen tv or a Playstation) is guaranteed to make someone happy, and so that doesn’t count.  An extravagant present can’t replace the warm satisfaction of thinking about, seeking out, and getting a good deal on the right gift.  This year, I will be buying presents for my parents, my sister (who I drew in the sibling/significant other gift exchange), my boyfriend, the white elephant and ornament exchange at work, and then a few small things for my friends.  I had one of those moments this weekend when I stumbled across a present I know my friend will love.
My mother and I attended the Nutcracker Market at Reliant Stadium.  Normally, my mother and I are the world’s least enthusiastic leisure shoppers, preferring to employ the “surgical strike” technique: go to a particular store to get the one thing needed, locate and purchase said item, and leave.  Spare very few glances for the other merchandise.  The Nutcracker Market is not a surgical strike maneuver.  They discourage you from leaving by charging a fee to park, an entrance fee (which benefits the Houston Ballet, so that’s a plus), and creating a rabbit’s warren of booths from which it can be daunting to extricate oneself.  It is in this labyrinth my mother and I willing consigned ourselves to wander, along with thousands of other women, a few harassed-looking men and children, and several hundred metric tons of cheesy merchandise.
Our friends have a booth every year, so we went to support them and also to burn a few calories walking the miles of aisles.  There are about 5 categories of goods for sale: Christmas decorations, clothing, gourmet foods, decorative arts, and crap covered in animal print and hot pink feathers.  Stressed out sales clerks, often the relatives and children of the proprietor, attempt to keep standing upright amongst the pressing crowds of browsing women.  Exclamations of surprise and declarations of love rise up above the buzzing of women’s voices and the local high school choir’s caroling.
Despite pawing through approximately 1,397 items, I only found the aforementioned item that I liked for a friend (the perfect gift!  I wish I could show you, but she might actually read this!) and a simple gold necklace for myself.  I did see some good craft ideas, but nothing I would want to pay someone else for.  We got caught up in the moment and almost bought some Christmas morning pajamas (a Hurst family tradition), but the woman working the booth took out her stress and frustration on me by snapping at me when I picked up a package.  She apologized right away, but it was so startling that we just put down the things we’d picked out and walked away.  I hope her chosen career path isn’t in sales, as she was struggling pretty early in the game to hold on to her composure.
After about 3 hours, when we’d covered nearly every booth, we left and went straight to Target, where we employed our “surgical strike” technique to end the day of shopping on a satisfying note.  I took a few pictures to try to capture the madness.

The theme this year was something about dogs, hence the giant centerpieces filled with dog bones. Was the theme "Dog Eats Dog Shopping Experience"?

Full body fake tattoos. No, really. Sorry the picture's so unfocused; I kept getting run over by slowly moving, bag laden browsers.

This made me sad - the vendor's accessories featured on the cover of LIFE from 20+ years ago, now featured in a booth at a craft market. Also funny, because his stuff is still pretty eighties-looking. And not in a good way. Notice the howling coyote hammered silver earrings?

Out of control. (For a 3 day market!)

Here are some of the ideas I liked for crafts:

Cute gift for kids of both genders, and super easy. Buy a box with a sliding lid from a craft store, and spray chalkboard paint on it. Decorate and personalize. I thought these were a little plain; I would paint the whole thing and maybe add a more interesting handle...

I loved these - and I think they would be easy and cheap to make. That could be a fun project to actually do with your kids, even down to picking out the fabric. Plus, you can make it a smaller size that can easily be stored in a closet when not in use.

Despite my snarky comments, we DID have fun (especially making fun of people – I tell you, we are just not nice.)  I’m looking forward to my next holiday market, which represents a much different (and more to my tastes) set of goods.  The Winter Holiday Art Market (WHAM) at Winter Street Studios will feature tons of local artists and craftsmen selling homemade, local paintings, sculpture, jewelry, accessories, clothing, and soaps.  I’ll be bartending with Andrew on Saturday night, so I hope everyone reading will come if they can!  It’s free, and there will be lots to see and do (and drink).  Click on the picture below to go to the website.

French mint manager tours Taj Mahal gold coin

Manager of France's mint Thomas Jeunet has taken a limited edition gold coin depicting the Taj Mahal to Canada, following stops in the US and Paris.
The professional visited West Edmonton Mall to show off the La Monnais de Paris's third yearly instalment of its new Seven Wonders of the World series – supported by Unesco, the local Journal newspaper reports.
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

Gold handlebars auctioned for Movember

A set of gold handlebars is being put up for auction in an effort to raise awareness for Movember – a moustache-growing charity event held this month every year.
The 24-carat lot was the result of a collaboration between Tweed Run, online auctioneering site Going Going Bike and the prostate cancer not-for-profit organisation Movember.
The news feeds on this site are independently provided by Adfero Limited © and do not represent the views or opinions of the World Gold Council.

Has the Gulf Spill Opened Pandora’s Box for Obama?

By Marin Katusa, Chief Energy Strategist, Casey’s Energy Report

The White House might be gaping in shock that the U.S. federal court overturned the six-month drilling moratorium, but it really isn’t all that surprising. Amid the finger pointing and political posturing, the Obama administration seems to have missed a vital detail – the U.S. oil industry is in a spot of bother.
It’s not just America’s oil supply and energy security that’s in danger after the BP oil spill and the subsequent drilling ban. The Gulf economy is hanging by a thread, and it won’t take much to send it over the edge.
Thousands upon thousands of rig workers were effectively laid off when the 33 rigs operating in the Gulf stopped drilling. The full economic impact of the ban is still unrealized, with the layoffs just starting, but estimates put the figure for lost wages as high as US$330 million per month.
Given the potential economic losses, BP’s US$100 million compensation fund for rig workers starts to look rather paltry. It doesn’t end there either. There’s a domino effect in play as well – each rig job supports up to four additional jobs for cooks, supply-ship operators, and those servicing the industry.
And should the drilling ban become permanent, the consequences could be dire. Just like the towns that died in the Upper Midwest after the demise of the auto plants and steel mills, the entire Gulf Coast – where deepwater drilling is crucial to the economy – could fade away.
All in all, not the best news for a country whose economy can be best described as fragile at the moment.
There’s also the question of America’s energy security. The Gulf accounts for up to 30% of all the oil produced in the country. Should the Gulf be put off limits, that shortfall has to be made up from somewhere. Obama’s renewable energy might be the future, but it’s not up to the challenge of meeting the needs of the present.
And attractive, viable options are far and few in between. Russia may be a friend now, but its tap-twisting history with gas in Europe does not strike up a positive note. The Middle East is hardly America’s best friend, not to mention its royalty structures, which leave much to be desired. And in Venezuela, Hugo Chavez just recently nationalized 11 oil rigs belonging to a U.S. company.
In the end, only two real options are left in the hands of the U.S. – the oil sands of Canada or rethinking the drilling ban.
A revised drilling ban would still see higher taxes on each barrel produced and tighter regulations for companies coming to the Gulf. Any lease application would come under intense scrutiny and face higher insurance rates. For smaller companies interested in the Gulf, the rising production costs mean that the death knell has been sounded.
Option two is the friendly neighbor to the north, Canada. The country already plays a big role in U.S energy. One in every six barrels of oil consumed daily in the U.S. comes from the oil sands in Alberta, Canada. The oil sands are pretty controversial stuff, however, associated with derelict, broken landscapes and carbon emissions.
But this is an image that’s going to change very soon. The future of oil sands is here: they are cost effective and their face is green. Steam Assisted Gravity Drainage (SAGD) pumps steam into the ground to liquefy the bitumen and stiff crude oil, making it thin enough to be pulled out of the ground. No giant holes or toxic tail-ponds – just two horizontal pipes, one above the other, puffing away efficiently.
That the Gulf spill is a game-changer for the U.S. oil industry is yesterday’s news. For now, it’s about making ends meet. And while we expect the U.S. to shift towards renewable energy, and maybe even rethink its energy use, for now there’s an unmet demand that’s not going anywhere.

As far as an investment portfolio goes, both options bring with them opportunities. If the U.S. federal court allows a somewhat watered-down version of the drilling ban, the long delay means that there’s potential to pick up some great stocks at a cheap price. On the Canadian side of things, there are some well-run companies perfectly combining cash-flow and SAGD technology. The Gulf spill might be Obama’s Waterloo, but for the careful investor, the winds of change could just blow in a fortune.
—-
Marin Katusa is the editor of Casey’s Energy Report, your single best source for ongoing coverage and profitable recommendations in the energy sector. Learn more here.
Have a good one.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:
On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.
On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.
Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

INSIDE JOB The Movie

Having a day out in the big city of Auckland with an old Buddie who is an accountant, we decided to paint the town red and so we went to the Auckland Film Festival to catch a couple of movies one of which is entitled ‘Inside Job‘
Its an all star cast which includes, Presidents Clinton, Bush and Obama along with the usual suspects Bernanke and Geithner, some eminent Professors of Colombia and Harvard University who did not cover themselves in glory and the rating agencies who failed miserably in their assessments of the banking industry.
A synopsis of the this film is as follows:
From Academy Award® nominated filmmaker, Charles Ferguson, comes INSIDE JOB, the first film to expose the shocking truth behind the economic crisis of 2008. The global financial meltdown, at a cost of over $20 trillion, resulted in millions of people losing their homes and jobs. Through extensive research and interviews with major financial insiders, politicians and journalists, INSIDE JOB traces the rise of a rogue industry and unveils the corrosive relationships which have corrupted politics, regulation and academia. Narrated by Academy Award® winner Matt Damon, INSIDE JOB was made on location in the United States, Iceland, England, France, Singapore, and China.
This is a quote from the writer and director of the film, Charles Ferguson of The Wall Street Journal:
“Deregulation, which began in the 1980s ….. has without any exaggeration, given rise to a criminal industry.”
If you enjoyed the Sopranos then you will enjoy this film, the sad thing though is that the wrong doers are still in power and the main stream media still hangs on every word they utter. The pre-election promises of President Obama to bring change to the banking sector fizzled into oblivion as he has re-appointed pretty much the same team that he once so ardently criticized.
One of the reasons for the bank bail outs during the financial crises was that they were too big to fail and the solution has been to create even bigger banks than we had before the crisis, so we appear to have learned nothing.
The ratings agencies had a AAA status for the Icelandic banks that were a model of perfection for the rest to look up to, just days before they went bankrupt. When questioned as to why they had got it so badly wrong they said in their defence that the ratings were ‘only opinions’
We should note here that the Chinese have down graded the US sovereign debt:
Dubbed as the world’s first “non-Western” sovereign credit rating agency, in its debut international report, Dagone (means Big Justice in Chinese) down shifted the US to AA with a negative outlook, while UK and France were given AA-; Belgium, Spain, Italy with A-. Zerohedge.
The times are certainly changing.
The film also shows a Harvard university professor who produced a report supporting the stability of the three banks in Iceland singing their praises and he also got it badly wrong. However he omitted the fact that he was paid handsomely by the bank for its compilation and when questioned about his integrity got a tad uncomfortable. Any aspirations a parent might have about sending ones children to such learning institutions might want to see this film and re-think their strategy in respect to further education, in our humble opinion.
And finally a quote from Rob Nelson, Variety:
“Inside Job is the definitive screen investigation of the global economic crisis, proving hard evidence of flagrant amorality – and of a new non fiction master at work…. It points an incriminating finger at not only the financial services executives who got filthy rich on working peoples pain (and who remain in power) but also government officials and business school toppers irrefutably revealed to be in Wall Streets pockets… Ferguson aims to arm audiences with information and infuriate them into action.”
If you can get to see this film its well worth it in our view, it’ll make you laugh and cry!
Have a good one.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:
On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.
On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.
Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Gold Prices Holding Up Well

Gold Chart 15 July 2010
Despite Portugal’s sovereign debt being down graded the eurocrats have managed to calm the waters and keep the euro reasonably steady. Austerity is the word for the Europeans, real or imagined, whereas stimulus is the word for the United States. Interestingly the euro is steady but the dollar has lost 6.8% of its value in just over a month as the spot light once again is focused on the fundamentals of the dollar. Throw in a down grade from the Chinese and things don’t look to bright for the US sovereign debt.
Taking a quick look at the above chart we can see that apart from one bad day at the office, when gold was sold down about $40.00/oz, gold prices are holding up pretty well especially for this time of the year when the summer doldrums usually kick in and volumes drop off significantly. We can also see that the STO is heading north and the MACD looks as though it is also ending its downward slide, which all bodes well for gold prices. If gold can maintain these levels through until September then the stage will be set for a major advance and the forming of a few new all time highs.

USD Chart 15 July 2010
Turning to the chart for the USD we can see that it has resumed its trek south, all as we suggested on 09 June 2010 when the USD looked a tad overbought and has since lost about 6.8% in little over a month. The technical indicators have been floored so some consolidation may be on the cards, however we expect it be short lived as the economic recovery in the United States continues to fade and the general mistrust of paper currencies compels investors to re-think their strategies.
The days of a rating agency duopoly in the United States whereby Moody’s and Standard and Poors could issue triple A status to companies on the verge of bankruptcy are now over. Making their debut is this area is the world’s first “non-Western” sovereign credit rating agency, a Chinese company named Dagone (means Big Justice in Chinese) who have down graded the US to AA with a negative outlook. This agency would appear to concentrate more on the ability to pay than the ability to borrow. The dragon has stirred from its slumbers and its influence on world affairs will be felt in every corner of the planet. However, a no nonsense, practical assessment of the state of play will be welcomed by many, especially gold bugs who are contrarian by nature and tire of big government influence in these matters.
Below is the chart we posted of USD which we posted on 09 June 2010 accompanied with a snippet of our commentary.

We could well be too early in making this call but it appears to us that the dollar may now have run its course and will now look to take a breather. As we can glean from the chart, over the last two months the Euro has been under the gun, resulting in a rally for the USD as the preferred currency. Also note the gap that is opening up between the dollar at ‘88′ and the 200dma, which stands at ‘79′. The RSI, MACD and the STO are bouncing along at the top of their respective ranges and sooner or later they will return to somewhere more in the middle of their ranges. So the dollar now appears to be a tad overbought, in our humble opinion.
For now we will be keeping a tight grip on our precious metals but will be taking a serious look at our portfolio of stocks with the view to pruning some of the poorer performers and reinvesting in quality stocks which look to have a brighter future and have responded to the movements in gold prices.
Stay on your toes and have a good one.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:
On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.
On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.
Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Is the Gold Trade “Crowded”?

Jeff Clark, Senior Editor, Casey’s Gold & Resource Report

It’s true that GLD’s assets just passed the $50 billion mark, and that it’s the second largest U.S. ETF. Yes, mints had difficulty filling orders when the Greek crisis broke. And yes, the gold price is up nine years in a row.

But those who look at statistics like these are missing the other side of the equation. I think it’s less about how much money is already invested in gold and more about what’s available to invest. After all, one could be impressed that China, for example, invested $14.6 billion in gold over the past few years – until you realize they have $2.45 trillion sitting in reserves.

So, how much is invested in gold, and how much is available?


According to hedge fund Paulson & Co, if you added up all the money invested in gold ETFs, it would total $78.3 billion (at $1,200 gold). The amount of money currently sitting in U.S. money market funds, on the other hand, comes to $2.849 trillion.

In other words, all the money invested in gold ETFs represents just 2.7% of what is sitting in cash. Put another way, if just 5% of available money market funds ($142.4 billion) were to move into the gold ETFs, it would almost triple the current value.

But what if it’s 10%? And what if Doug Casey’s call for a modern-day gold rush comes to pass?

Those who claim the gold market is crowded will also point to Paulson’s extraordinary high percentage of funds sitting in yellow metal investments. Yes, he’s got a $3.4 billion stake in GLD – but the critics didn’t look under the hood. Most of those holdings are from the fund’s employees (including John himself), not outside investors. Not exactly an overheated trade.

To some, the amount of money invested in gold may “feel” high, but it’s a relative pittance compared to what’s sitting idly on the sidelines, waiting for a reason to move and a place to go. And when you consider that the vast majority of U.S. citizens don’t own any form of gold, this is a market that is the opposite of crowded. There is a lot of money that could hit our sector.

And it’s not just precious metal funds. I interviewed Andy Schectman of bullion dealer Miles Franklin, and Kevin Brekke, our Switzerland-based editor, told me it was the most informative interview we’ve published this year. Why? Because based on what Andy sees week after week regarding supply, he’s come to the conclusion that we’ll see a serious drought of bullion when the average citizen begins to buy gold. Meaning, if you wait to buy until everyone else does, you may find yourself out of luck. And the data I present this month backs up that claim; in fact, you may be surprised at some of the findings.

If you’re not a subscriber to Casey’s Gold & Resource Report, you may want to pony up the $39 to check out the current issue. Not only does it contain Andy’s insightful – and scary – interview, but I’ve arranged for huge discounts on the premiums of two bullion coins. The amount of money you’ll save from buying one of each coin is more than the cost of a one-year subscription. And you can’t get these prices anywhere else.
—-
We’re “Calling All Gold Virgins” in the July issue. So if you don’t own any gold, or don’t have enough, well, I’ve made it very easy for you to lose your virginity. Click here to sign up for a risk-free 3-month trial.
Stay on your toes and have a good one.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:
On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.
On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.
Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Kinross Gold Corporation Hits the Wall

The stock price of Kinross Gold Corporation (KGC) has been hammered recently with a loss of around 20% to close today at $15.46, on the back of gold prices softening during this holiday period to trade at $1184.20 as we write.
We have plotted gold prices on the above chart so that we can see just how Kinross Gold has performed relative to them. As we can see this stock was heading south while gold was heading north and as gold prices peaked and fell the stock price of Kinross got hammered.
This is a disappointing performance by Kinross, however, they are not alone as many of the other quality stocks have also failed, or at least been sluggish in their reaction to golds advance. Kinross Gold will release its financial statements and operating results for the second quarter of 2010 on Wednesday, August 4, 2010, after market close. These results may add some cheer, however, the last set of results fell a tad short of analysts expectations and so the stock fell accordingly.
On the positive side if the stock drops a little further then it could well present us with a wonderful pre-fall bargain, when, from Labour Day onwards we expect precious metals prices to zoom. This aberration in KGCs stock price could also give us an options trading opportunity, once we have established that this downward trend is over. We will continue to monitor the situation and as usual we will post as soon as we see a trade with a good possibility of generating a profit.
Kinross Gold Corporation trades on the TSX under the symbol of K, and on the NYSE under the symbol of KGC. Kinross has a market capitalization of $10.86 billion, with average turnover of around five million shares, a P/E of 31.66 and closed today at $15.46.
In response to our readers requests we recently launched an options trading service which has recorded sixteen consecutive winning trades, a performance that puts our core holdings in the shade. We had intended to use it to give our portfolio a small boost, however, it does raise questions about the strategy of holding mining stocks on the basis that they will perform as they did in the last gold bull market. This is not 1980 and things are most certainly different and the overall outcome could also be different, a question we will tackle shortly.
Have a good one.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:
On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.
On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.
Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

The Gold Backed Dinar

There are those who believe that the economy will function best on a return to the gold standard. Whether you agree or disagree with that idea, you will find this article interesting.


Imagine a world trading solely in gold and silver coins. Imagine the size of your wallet.
Yet this is the ideal world envisaged by some of Malaysia’s activists championing the Islamic gold dinar and silver dirham as a new form of legal tender to replace paper money – a utopia that could see the light of day as early as the middle of next month.
This is when one such group, Muamalah Council, plans to implement the dinar system in Malaysia’s northern state of Kelantan. If information on its website is to be believed, the council has the blessing of the state’s Islamist government, Parti Islam SeMalaysia (Pas), to kickstart the dinar in three moves.
First, the state will pay a quarter of its public servants’ salaries using the dinar. Second, all state companies will accept dinar payments. Lastly, some 600 commercial enterprises will also embrace this currency.
Inspired by selective religious sources and backed by historical precedents within the annals of Islamic history, the gold dinar system is touted by certain fiercely proud Muslims as the Islamic answer to thwart capitalism’s woes.
The idea was first mooted by Malaysia’s former prime minister, Mahathir Mohamad, in the aftermath of the 1997 Asian financial crisis. He argued that the coins would never hang their possessor out to dry in the same way that paper money had. As precious metals with intrinsic value, gold and silver are more resistant to market fluctuations and devaluation compared to the US dollar – an argument he took to the Organisation of the Islamic Conference as a tool to battle western hegemony.
Today, Islamic gold dinar advocates would cite the recent credit crunch as proof. Indeed, the rocketing price of gold – possibly transcending a record high of $2,000 an ounce – can only strengthen their pitch.
While Mahathir’s grand plan for Malaysia to implement the dinar system by 2003 may have been unceremoniously scrapped by his successor, Abdullah Badawi, the idea has since gained currency beyond Malaysia’s shores.
In neighbouring Indonesia, for instance, an outfit known as Wakala Induk Nusantara (WIN) had begun minting Islamic gold coins for use in Australia, Malaysia and Singapore. Its spokesman, Riki Rokhman Azis, claims that the number of dinars used in the world’s most populous Muslim nation has more than doubled in 2009 to 25,000 pieces.
What is perhaps more striking is the UK connection to the increasingly globalised Islamic gold dinar movement. The Indonesian grouping is adhering to a fatwa issued by the South African-based cleric Sheikh Abdalqadir as-Sufi, a Muslim convert in Cape Town formerly known as Ian Dallas of Scotland.
Then there is Dinar Exchange, the British equivalent of Indonesia’s WIN. As the “official certified supplier of Islamic gold dinar and silver dirham in the United Kingdom”, the company had just concluded a month-long series of roadshows in May that saw it promoting the gold dinar to Muslims in key UK cities such as London, Birmingham and Edinburgh. The group is inviting more to spread this Islamic vision as dinar agents. For a fee, of course.
To read the article in full please click here.
Do you recall when Ireland guaranteed the deposits in their banks, what followed was mad panic to follow suit as money was moving with some speed into Irish banks. Well, is this the ignition that will set us on the road to a gold standard, stranger things have happened!
Have a good one.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:
On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.
On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.
Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Is Now a Good Time to Buy Gold?

By Jeff Clark, Senior Editor, Casey’s Gold & Resource Report
While we’re convinced gold and gold stocks are destined for much higher levels, buying when prices are low can mean the difference between a double or triple and a ten-bagger… a week in Malibu vs. a week in Milan.
There’s no secret formula to buying low, and we aren’t holding the right hand of Midas, but there are periods when prices tend to be lower than others. And if those tendencies play out, it can give us the opportunity to snag a high-quality asset at a bargain price.
So, how do you get a bargain price? You cheat.
I think the secret to getting a low-cost basis on all your gold and gold stocks is this: only buy on significant price pullbacks.
And this can be done without trading or using technical analysis.
I think there’s a good chance we can cheat this summer. For example, here are the average monthly increases in gold since our bull market began in 2001.

In our current 9-year bull market, June and August have seen the lowest average return for gold, representing one of the best times to buy.
You’ll see that in the bull market of the 1970s, summer was also a good time to buy gold.

What about gold stocks? Since 2001, June and July have been among the weakest months and thus one of the best times to buy.

Obviously, these are price tendencies and not certainties. There were Junes when gold was up, and some Julys when gold stocks were up. Meaning, we’d avoid using these charts for trading purposes or in anticipation of an immediate gain. Instead, use these “trendencies” to look for possible price weakness. And if it arrives, use the opportunity to add to your holdings and position yourself for the next leg up in the bull market.
What are the odds of a correction in gold and gold stocks this summer?
►Since 2001, almost every precious metal stock, in every summer, has moved lower from its May high. This includes gold and silver. There’s no guarantee this won’t be the summer of galloping unicorn herds, but the record is hard to argue with.
Here are the buy zones I identified for gold and silver, based on a tally of how far they’ve corrected from their May high to their summer low, in each year of the current bull market.

You’ll see that the average price of all pullbacks in gold, from the May highs to the summer lows, is 8.9%, and would take the price to $1,126.98. That’s not to say this price will be hit, but it tips you off that a fall to that level would not be out of the ordinary – and would also be an invitation to buy. You can also see the smallest summer decline, which we’ve already exceeded. We wouldn’t wait for the largest drop to materialize; there’s a good chance you’d be left empty-handed and chasing the stock higher.

Silver is naturally more volatile, allowing us perhaps a better opportunity to buy low. The average summer decline for silver is 16.6%, which would take the price to $16.39. However, the furthest its fallen so far this summer is $17.36, meaning strictly on a historical price basis, a 10% correction from current levels would be perfectly normal. And again, an invitation to buy.
Whatever price (or prices) you select, I’d only use the charts to add to current positions, not for trading. The currency crisis Casey Research believes is inevitable could strike suddenly again and will eventually hit the U.S. dollar, and the last thing you want is to be left standing on the sidelines if gold and gold stocks surge higher. In our opinion, being completely out of precious metals in the middle of a once-in-a-generation bull market would be a mistake. Instead, keep adding to your savings every month and buy when it feels like you’re cheating.
See you in Milan?
—-
Want to see the buy zones for all our recommended gold and silver stocks? Our Summer Buying Guide is an invaluable resource for buying low. And check out our just-released July issue, where a respected bullion seller tells you why in the near future you may not be able to buy gold, at ANY price. Try a risk-free subscription for only $39 per year. Details here.
Have a good one.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:
On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.
On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.
Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Agnico-Eagle Mines Limited: Record Quarterly Revenue

The general consensus for the quarterly income for Agnico-Eagle Mines Limited (AEM) was in the order of $0.40 per share, however, news just out has the figure higher at $0.64 per share for the second quarter, compared with a penny per share for the same period last year. The effect of their new mines construction programme going into production is starting to produce the results that we have been waiting for.
Sean Boyd, Vice-Chairman and Chief Executive Officer, who will be appearing on BNN tomorrow and always worth listening to had this to say:
“Our record quarterly financial results were driven by record gold production as all six of our mines operated throughout the quarter for the first time. Four of the mines are now operating at steady state with the other two in the late stages of optimization. Further increases in gold production and lower cash operating costs are expected in the second half of 2010 as we continue to optimize all our mines and focus on driving down the unit costs at our Kittila and Meadowbank mines,”
Agnico-Eagle also expects that its full year total cash cost per ounce is likely to be in the range of $425 to $450 which is no mean achievement, along with quarterly gold production of 257,728 ounces and revenue of $353.9 million resulting in net earnings of $100.4 million. Going forward the company anticipates that gold production will be in line with previous guidance of between 1.0 and 1.1 million ounces. Agnico’s current Cash and cash equivalents stands at $152.8 million as of 30 June 2010, largely due to the increase in gold production.
This stock forms part of our core portfolio so its fingers crossed as we struggle through the summer doldrums.
Turning to the above chart we can see that the 50dma has crossed over the 200dma in a downward motion which does not bode well for any stock, hopefully, now that Agnico is the the ‘optimization’ phase of production we will see a quick bounce back. The technical indicators suggest Agnico is oversold somewhat at the moment however the stock price could still fall a little further before we get to Labour Day which this year is on the 6th September 2010. Should there be a spike down then that would be the time that we will look to add a few more shares to out portfolio.
Agnico-Eagle Mines Limited trades on the NYSE under the ticker symbol of AEM and on the Toronto Stock Exchange under the symbol of AEM.TO.
Agnico-Eagle has a market capitalization of $8.64 billion, a 52 week trading range of $49.64 - $74.00, a rather high P/E ratio of 162.49 on volume of 1-2 million shares traded per day.
Stay on your toes and have a good one.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:
On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.
On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.
Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Dollar Down, Gold Up, not Today!

The inverse relationship between the dollar and gold prices started to decouple recently with the dollar rising and gold rising concurrently. The dollar has since peaked and resumed its trek south with gold also down but holding steady at the moment. Today, however, we saw the dollar fall out bed as the chart shows, and gold almost followed it lower but was saved by the rapid fall of the dollar. The summer doldrums brings with it a certain amount of wishy washy market movements without any obvious direction. So we need to think of it as white noise and concentrate on the bigger picture.

Today was one of those days, as evidenced by silver prices which jumped up to $18.35/oz with little effect on the price of silver stocks and the HUI managed to lose a couple of points.
In a way its a day to forget, however, from what we can glean there is more quantitative easing in the pipeline, which, when we consider just how many dollars are already in the system begs the question of where and when will all this printing of money end. History tells us that it does not end well as evidenced in Germany not so ago and Zimbabwe today.
The new finance bill does nothing to encourage us, as we understand it the SEC will be protected from the Freedom of Information Act, so in future it would not need to answer questions about the Madoff fiasco for instance. There is also a provision that every trade over $600.00 will need to be filed, a cost that the smaller stock brokers and you, could well do without.
As per usual we are hanging on to our physical metal and our core position in the producing stocks. However, we are looking to prune some of the laggards and re-deploy the cash into better performing stocks without being out of the market. Not to be in at this stage is the wrong thing to do in our very humble opinion, but a little refining and re-balancing can help to increase profits and thats what it is all about. We expect this month of August to be one of positioning ourselves for the coming rally in the precious metals sector which may begin gently over the next two to three weeks but start to gather some speed come the 6th September, Labour Day, when the heavyweights return from their holidays looking for some action.
We will also know more about the economy and its recovery and whether or not it needs some help of the stimulus type. The dollar, which has dropped from 88 to 81 on the US Dollar Index registering a lose of 8.64% since early June, once again appears to be friendless. On the 10th June 2010 we did suggest that it was overbought when we wrote “a gap that is opening up between the dollar at ‘88′ and the 200dma, which stands at ‘79′. The RSI, MACD and the STO are bouncing along at the top of their respective ranges and sooner or later they will return to somewhere more in the middle of their ranges” The fall has been faster than we anticipated and must now be giving the holders of dollars one or two sleepless nights. The Chinese for instance have seen their dollar reserves drop almost 9% in less than two months, thats one big hit to take and questions the strategy of holding dollars for the foreseeable future.
More money needed to prop up a jobless recovery, it just doesn’t sound right or bode well for the future.
Over on the good news counter we spotted an article by John Embry on the Sprott Asset Management site entitled: Golds on the cusp of a parabolic move up which is well worth the read so try and find the time.
Stay on your toes and have a good one.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:
On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.
On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.
Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Kinross Gold Corporation Investors not impressed

Kinross Gold Corporation (KGC) has announced a $7.1 billion takeover of Red Back Mining Incorporated (RBI) which may turn out to be very good business, however, the initial reaction by the investment community was less than enthusiastic as turnover hit 22 million shares traded and the stock price fell 5.45% to close at $15.45.
As with most takeovers the target company, Red Back will receive a premium of 21% to their share price and the predator tends to see their stock go lower. The deal still needs to be sold to the shareholders which should get approval however the price paid may well be seen as expensive.
The highlights are as follows:
The combination will create a pure gold senior producer with an exceptional growth profile, matching Kinross’ strong base of high-quality mines, growth projects and proven track record, with Red Back’s early-stage operating mines and outstanding exploration and expansion potential.
Red Back shareholders will receive 1.778 Kinross common shares, plus 0.110 of a Kinross common share purchase warrant for each Red Back common share held. Pursuant to the transaction, Kinross expects to issue approximately 425 million1 Kinross common shares and approximately 26 million Kinross common share purchase warrants. Following completion of the transaction, the current Kinross shareholders will hold approximately 63%1 of the combined company, while current shareholders of Red Back will hold approximately 37%.
The value of the offer is C$30.50 per Red Back common share, representing a premium of approximately 21%, based on the preceding 20-day volume-weighted average price of Red Back common shares traded on the TSX and the July 30, 2010 closing price of Kinross common shares traded on the TSX. The warrants are expected to be listed on the TSX and be exercisable for a four-year term at an exercise price of US$21.30, representing an approximate 30% premium to the July 30, 2010 closing price of US$16.39 for Kinross common shares.
Based on analyst consensus production estimates for Kinross and Red Back, forecast pro forma gold production for the combined company would be approximately 3.9 million ounces in 2015. Kinross believes there is significant upside potential for Red Back’s assets beyond this estimate, based on its evaluations and the potential for exploration and production expansion.
The combination gives Kinross a strong position in West Africa, one of the world’s fastest-growing and most prospective gold regions, as well as a management team experienced in the region.
Lukas Lundin, Chairman of the Red Back Board of Directors, and Richard Clark, CEO of Red Back, are expected to join the Kinross Board of Directors following closing of the transaction.
Red Back shareholders will benefit from Kinross’ strong operating and development experience and from diversification through exposure to Kinross’ balanced portfolio of eight operating mines and future growth projects.
The transaction provides a capital gains tax-deferred roll-over option for taxable Canadian holders of Red Back shares.
To read this article in full please click here.
Kinross Gold Corporation trades on the TSX under the symbol of K, and on the NYSE under the symbol of KGC. Kinross has a market capitalization of $10.86 billion, with average turnover of around five million shares, a P/E of 31.64 and closed today at $15.45.
Stay on your toes and have a good one.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:
On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.
On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.
Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Who’s Scoffing Now?

by David Galland, Managing Editor, The Casey Report
A couple weeks ago, the family and I watched Dirty Jobs, an altogether entertaining show from the Discovery Channel. In the episode we watched the host, Mike Rowe, serve as a mechanic in the military. There were a couple of things that caught my eye.
The first was that, using nothing more than a cleverly arranged array of blocks and tackle, five members of the mechanics group were able to easily muscle a well-stuck 5-ton Humvee from deep sand. We humans are, indeed, a creative and intelligent species (read more…)

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Reduced Exposure to Yamana Gold Incorporated

As we have discussed a number of times on this site and in such posts as Are Silver Stocks worth the effort? today we commenced a revamp of our portfolio of gold stocks. We sold 80% of our stake in Yamana Gold Incorporated (AUY) for an average price of $9.53 and moved the proceeds onto the sidelines for redeployment at a later date.
Despite managing their operations very well their efforts are not reflected in the stock price as the price today is as it was 2006 having been up and down a lot since then. Again we have decided not to fight the market and have decided to reduce our exposure to this stock for now.
We will be watching AUY’s progress with a keen eye with the view to returning to it should we detect a more favorable market sentiment and signs of an improved share price.
This week we intend to continue with our strategy of reducing our exposure to those gold stocks that we view as not performing adequately enough and again we will probably return the funds to the sidelines as we work on opportunities that will benefit from the ‘fall’ rally. However there are a number of options trades coming onto our radar so some of the cash may be utilized via other trading vehicle, www.skoptionstrading.com.
Also for consideration is the possibility of a double dip recession which could well effect all stocks including those in the precious metals sector, a conundrum that we are still wrestling with.
Stay on your toes these are treacherous waters and have a good one.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:
On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.
On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.
Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.
Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

If Deflation Wins, What Will Gold Stocks Do?

By Jeff Clark, Senior Editor, Casey’s Gold & Resource Report
The talk of a possible double dip is now common banter on TV investment programs. And indeed, deflationary forces seem to have the stronger grip right now than inflationary ones. So if deflation is the next reality we have to face, what happens to our favorite stock investments?
There’s lots of data about what gold does during periods of high inflation, but less so with deflation, partly because we don’t see a true deflation all that often. But of course we’ve got the biggie we can look at, and the seriousness of the Great Depression can give us a big clue as to how gold stocks behave in a true deflationary environment.
First, we know what happened to the stock market in 1929, and in that initial shock, gold stocks crashed too. A rally ensued in most equities until the following April, including gold stocks. Then the Dow took a one-way elevator ride down for the next two and a half years.
What did gold stocks do?

From 1929 until January 1933, the stock of Homestake Mining, the largest gold producer in the U.S., rose 474%. Dome Mines, the largest Canadian producer, advanced 558%. In spite of the gold price being fixed at the time, gold stocks rose dramatically.
At the same time, the DJIA lost 73% of its value.
And the chart doesn’t show that you could have bought both stocks at half their 1929 price five years earlier, which would have led to gains of around 1,000%. That’s not all: both companies paid healthy and rising dividends as the depression wore on; Homestake’s dividend went from $7 to $15 per share, and Dome’s from $1 to $1.80.
Yes, volatility was high in the gold stocks throughout the depression, with occasional wild price swings. But after the 1929 crash, much of the volatility was to the upside.
The bottom line is that the two largest gold producers – during a time of soup lines and falling standards of living – handed investors five and six times their money in four years.
What about gold itself? On April 5, 1933, President Roosevelt issued an executive order forcing delivery (i.e., confiscation) of gold owned by private citizens to the government in exchange for compensation at the fixed price of $20.67/oz (you can read the original order here). And less than nine months later, he raised the gold price to $35, effectively diluting every dollar 41% overnight and swindling everyone who had turned in his gold.
We don’t know exactly what an untethered gold price would have done during the depression, but given its distinction in history as a store of value, we believe it would retain its purchasing power in a deflationary setting regardless of its nominal price. In other words, while the price of gold might not rise, or could even fall, your best protection is still gold.
But with all this said, the overriding concern isn’t deflation. Yes, economic growth will likely be flat for years, and many Americans will see some hard times ahead. But deflation won’t win; in a fiat money system, any deflation will be met with an inflationary overreaction (as we’ve seen). And the worse the deflation, the more extreme the overreaction will be.
In fact, I think there’s another round of money printing before this year is over. And sooner or later, that extra money is going to dilute every dollar you own, giving us an inflationary hit as bad as the deflationary one we got during the Great Depression.
It’s for this reason that I continue to urge you to own physical gold, in your possession and under your control, given its reliability as a store of value in both inflationary and deflationary environments. If you don’t have a meaningful portion of your investments in physical gold, I think you’re playing with fire. And those who play with fire eventually get burnt.
Want an easy way to start buying physical gold? I arranged for some seriously discounted bullion in the current issue of Casey’s Gold & Resource Report, which you can check out risk-free here…
Stay on your toes these are treacherous waters and have a good one.
Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.
The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:
On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.
On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.
Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.
Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.
For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Florida – Much Worse Problems Than the Oil Spill

By Doug Hornig, Senior Editor, Casey Research
Media coverage of the oil spill’s effect on the Gulf focusing on tourist income lost by the waterfront towns – with footage of empty beaches, restaurants and T-shirt shops – dominates the news. Interviews with devastated business owners are heart rending. But they always end with references to somehow hanging on until “things get back to normal.”
Trouble is, things are not going to “normalize.” Not for the Panhandle of Florida, and probably not for the rest of the state, either.
Projections suggest that Florida can expect oil all along its west coast, and possibly throughout the Keys and up the east coast as well. Yet even before BP’s well began spewing crude, pressures within the state’s economy were building. It was an explosive situation awaiting a match.
Oily beaches and dying wildlife are likely that match.
Take unemployment. Statewide, it ballooned from 3% in 2006 to a peak of 12.3% in February 2010. Though it’s backed off, it remains in double-digit territory at 11.2%. ”Officially” – though official numbers understate the problem. Illegal immigrants, some 4.5% of Florida’s population, aren’t counted; the long-term unemployed and aging workers are regularly purged, even if they’re still looking for work.
This in a state already confronted with the worst of the coming healthcare/taxation crunch. It has the second oldest population in the nation, and as its citizens retire, their earnings fall off, causing tax revenues to drop. At the same time, healthcare bills rise, stressing social service budgets.
Florida is ground zero for Baby Boomer demographics. With 600 seniors for every 1,000 workers now, and the number trending inexorably higher, soon every employed person in the state will essentially have to adopt one senior to care for out of his or her paycheck.
Housing? Naturally, rising unemployment amplifies the difficulties of maintaining homeownership. With further negative effects from the oil, we can only expect the situation to worsen. A tsunami of defaults and foreclosures – and bank failures – would not be a surprise.
Florida is mortgaged to the hilt. It ranks second only to California in total securitized non-agency mortgage loans, 10% of the national total. Of those, half are 60 days or more delinquent, or 16% of all such mortgage delinquencies in the country, the highest ratio anywhere.
The state is full of retirees trying to live on modest incomes while hanging on to their homes. Unsurprisingly, this has led to a disproportionate amount of at-risk loans. 85% of the statewide pool is rated Alt-A or Subprime.
Nor has the crash in prices bypassed the Sunshine State. Nationally, fewer than 30% of houses sold for a loss in the past year, compared to nearly 50% in Miami and 65% in Orlando.
Many would-be sellers are clinging to the cliff edge by their fingernails. Overall, 81% of all Florida loans are under water, with the average mark-to-market loan-to-value ratio standing at 138%. Almost 40% of borrowers are crushed beneath debt of more than 150% of the value of their homes.
State government is no better off.
As the oil cuts into employment prospects, tax revenues will nosedive – and even before the blowout, the state was broke. The projected budget shortfall for fiscal year 2011 was $4.7 billion. What it will actually be is anyone’s guess – a bigger number is baked in the cake – but at $4.7 billion, it already represented more than 22% of the FY10 budget.
Both tax hikes and service cuts are political suicide. And desperately raising taxes in a depressed economy tends to decrease revenue, anyway. Yet a balanced budget is mandated by law. Where will the additional money and/or savings come from?
Then there’s Florida’s $113.8 billion public pension fund. It must generate earnings of 7.75% per year to meet its commitments to the nearly one million public employees and retirees who depend on it.
What investment safely yields 7.75% today? Nothing. So the fund’s administrators are asking for permission to try some “riskier” investments. Maybe they’ll succeed. Or maybe they’ll wind up staring down the barrel of a pensioners riot.
Florida’s coming problems are intractable, at best; the least bit of bad luck and they may become utterly irresolvable.
Expect bailouts. Washington will not be able to ignore what happens to this beleaguered state. The federal government will be forced to spend yet more vast sums of money that it doesn’t have, on a recovery that will take years, if it ever happens.
And that makes Florida’s plight a looming horror for us all.
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[Florida is just one small gear in the United States’ broken economic machinery. The Casey Report regularly analyzes where the economy is going and how savvy investors can protect themselves from the inevitable fallout. One of the editors’ favorite investments for 2010 (and beyond) is betting on rising interest rates – a true no-brainer. Read more here.]
Stay on your toes these are treacherous waters and have a good one.
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