Daily Gains Letter

precious metals


Top Metal for Profits Right Now

By for Daily Gains Letter | Sep 12, 2014

How to Get In On the Bullish Move in ZincA look at precious metals shows gold and silver are devoid of any momentum at this time, while copper has been steadily retrenching from its recent highs.

Copper is playing off of the global economic growth, but a metal that is surging on the charts and catching the imagination of metal traders on the London Metal Exchange is zinc.

Zinc is used in numerous industrial and consumer applications. Steel companies use zinc as a rust inhibitor, so it’s quite important to manufacturing. The United States Mint also uses zinc to make pennies.

The problem is that the world supply of zinc is contracting.

However, zinc is currently around a three-year high and looks good as an investment opportunity at this time.

An intriguing small-cap zinc play that has been sizzling on the chart and is an investment opportunity in the global economic renewal and supply issues is Horsehead Holding Corp. (NASDAQ/ZINC). The company’s share price is up 62% from its 52-week low and has easily outperformed the S&P 500 over the past year with a 45% advance. But despite the company’s advance, Horsehead seems to still have upside potential, which suggests the company could offer a good investment opportunity.

Operating via its Horsehead Corp. subsidiary, the company produces specialty zinc and zinc-based products that are made from recycled materials.

The company closed an old plant and replaced it with a newer, more advanced facility that will produce better fabricated steel products along with raw materials found in the manufacturing of rubber tires, alkaline batteries, paint, chemicals, pharmaceuticals, and stainless steel.

Products include zinc metal used as a protective coating to … Read More


Three Silver Plays That Can Weather a Short-Term Downturn

By for Daily Gains Letter | Mar 27, 2014

Three Silver PlaysTechnically, the Federal Reserve’s job is to oversee the monetary policy (short-term interest rates) of the world’s biggest economy. Obviously, it does, but it’s also important to remember that its opinion and carefully chosen words also have a major impact on the global markets and world economies.

If the Federal Reserve says the U.S. economy is doing well, investors flood the markets. If, on the other hand, the Federal Reserve says the U.S. economy is having difficulty gaining traction, investors turn their attention to precious metals to hedge against a weak U.S. and global economy and inflation.

It’s worked like clockwork since the Federal Reserve stepped in to help kick-start the U.S. economy with its generous monetary policy after the markets crashed. During the first round of quantitative easing (November 25, 2008 to March 31, 2010), silver climbed 65%.

Sensing the economy was still unstable, the Federal Reserve initiated its second round of quantitative easing (November 3, 2010 to June 30, 2011), during which time silver climbed an additional 39%. In September 2012, the Federal Reserve commenced its third, open-ended round of quantitative easing. If history is any indicator, the third round of quantitative easing should have been a boon for silver—but it wasn’t.

Silver prices edged steadily lower over the ensuing months. In April 2013, The Goldman Sachs Group, Inc. famously trimmed its outlook for gold to $1,450 an ounce by the end of 2013 and $1,270 at the end of 2014. The company noted that the banking crisis in Cyprus didn’t have the expected positive effect on the price of gold.

Silver and gold prices fell lower in … Read More


Two Underlying Factors You Need to Consider Before Buying Stocks

By Sasha Cekerevac for Daily Gains Letter | Mar 21, 2014

Don't Invest in McDonald'sWhen many investors think of blue chip stocks, a common name that pops up is McDonalds Corporation (NYSE/MCD).

A blue chip stock is traditionally a well-established company generating stable corporate earnings and usually paying out an attractive dividend yield. McDonald’s certainly hits the bull’s-eye on these blue chip metrics, which is especially attractive in today’s low-interest-rates world with its forward dividend yield of approximately 3.3%.

The real question to ask is what is McDonald’s potential for corporate earnings growth over the next few years?

There are two underlying factors that I would like to bring to your attention for consideration: 1) the financial health of the company’s primary customers, and 2) the cost of inputs.

While McDonald’s may keep its blue chip status, the growth of corporate earnings remains in doubt. As we all know, both the U.S. and global economy are becoming increasingly split between higher income and lower income people. As we know, neither the U.S. nor the global economy is firing on all cylinders, as seen by the still significantly high unemployment levels.

Wages remain stagnant, and while companies can increase corporate earnings through share buybacks, at some point, revenues must accelerate.

The problem for McDonald’s that could really impact corporate earnings growth is that the costs of inputs, specifically for beef, are rising substantially. The price of beef in February had the largest monthly increase since November of 2003. (Source: “CPI – Item Beef,” United States Department of Labor web site, last accessed March 19, 2014.)

McDonald’s is already struggling with its one-dollar menu. The company has begun shifting its marketing strategy away from the “McDouble” … Read More


What to Consider Before Investing in These Two Lesser-Known Precious Metals

By Sasha Cekerevac for Daily Gains Letter | Feb 19, 2014

Precious MetalsI have been in this business a long time, and I believe that the best tactic is to combine as many positive factors as possible in order to have the highest probability of success.

There are essentially three main methods to look at; this includes fundamental analysis, technical analysis, and quantitative models. You don’t need every single category of analysis to be completed; you just need enough evidence from all to indicate whether or not a stock or index will move up or down. Obviously, there is no 100% guarantee, only a level of probability.

Taking a look at the precious metals market, over the past couple of months, there has been an increasing number of signals leading me to conclude that there is a good probability that precious metals will move up in price in 2014.

Two of these precious metals that have gotten me interested are platinum and palladium. The fundamental analysis in these precious metals includes determining the level of demand and supply globally.

The fundamental analysis of supply for these precious metals is quite interesting and sad, as protests and violence are escalating in South Africa. For those unaware, platinum and palladium are primarily extracted from South Africa and Russia. Any disruption in the supply from these regions will cause an adverse price reaction.

So far this year, there are more than 70,000 South African miners on strike who are looking for higher wages. There have been 10 deaths this year by protests demanding better living conditions. With the South African currency continuing to drop, inflation is rising, causing instability in their economy and the political … Read More


How the Trend Is Changing for Silver

By Sasha Cekerevac for Daily Gains Letter | Feb 12, 2014

Trend Is Changing for SilverOne of the interesting things about investors is how so many become complacent over time. When precious metals like silver were rising steadily, more and more people jumped on the bandwagon. But times have changed.

With few people in the media talking about precious metals, I think it’s a good time to take a look at silver, as 2014 could potentially be a very strong year for the metal.

Obviously, we know that 2013 was a tough year for most of the precious metals, as investors began to believe that economic growth was going to accelerate globally. Over the last couple of months, it is clear that global economic growth is far from certain.

Uncertainty is an important component for the precious metals market, and we have seen silver react much more sharply than the other commodities, both to the upside and the downside.

As people become more uncertain, they look to assets that they believe can help protect their wealth. The emerging markets are getting hit badly, including Turkey hiking rates massively in one day, Argentina and Venezuela having serious issues, the Ukraine experiencing riots, and China now exhibiting signs of a slowdown in economic growth. Considering all of this, it’s no surprise that many people in nations around the world continue to accumulate precious metals, including silver.

An interesting note from last week made by the European Central Bank (ECB) president, Mario Draghi, in his comments following the central bank meeting is the possibility that there could be additional monetary stimulus (money printing) coming shortly.

With economic growth nowhere in sight in Europe, to have yet another central … Read More


Could Gold Surprise Investors in 2014?

By for Daily Gains Letter | Jan 31, 2014

Could Gold Surprise Investors in 2014?The demand for gold bullion is increasing. Each day there’s more evidence that suggests this phenomenon will continue. We see consumers buying gold bullion across the global economy. As a result, mints are working in overdrive mode to meet this demand and gold storage facilities are looking to add more vaults.

The Brinks Company (NYSE/BCO), UBS AG (NYSE/UBS), and Deutsche Bank Aktiengesellschaft (NYSE/DB) are opening new vaults in Asia. What’s their reasoning for taking this step? The demand for gold, especially from China, has increased.

Regarding vaults, the general manager of Brink’s in Singapore, Baskaran Narayanan, said, “We need additional capacity, so we have to take further space.” He added, “There’s a surge in demand for precious metals in Asia, and one can see the focus and movement from the west to the east.” (Source: Larkin, N., et al., “Gold Flows East as Bars Recast for Chinese Defying Slump,” Bloomberg, January 28, 2014.)

Mints cannot meet the demand. The Austrian Mint, for example, was forced to hire more employees and add more time to the daily shifts worked. This wasn’t enough. Even while operating 24 hours a day to meet the gold bullion demand, the mint is failing. (Source: Roy, D., “Gold Mint Runs Overtime in Race to Meet World Coin Demand,” Bloomberg, January 27, 2014.)

But there’s something else happening that could cause a further increase in the demand for gold bullion, and that’s a currency crisis in the emerging markets. Currencies in countries like Turkey, Russia, South Africa, and Argentina have seen massive declines. The central banks look worried. The central banks of Turkey and South Africa have … Read More


This Cheap Sector Set to Outperform in 2014

By Sasha Cekerevac for Daily Gains Letter | Jan 7, 2014

Outperform in 2014With the new year just beginning, many investors will begin looking at their portfolio and trying to figure out how to shift their investment strategy to include sectors that should outperform in 2014.

One investment strategy I like to use during the beginning of the year is to look for a situation where fundamentals are improving, but market sentiment remains weak.

At year-end, many times you will see tax loss selling occurring. Essentially, investors are selling those holdings that have gone down the most to crystallize the losses for tax purposes. This also presents an opportunity—if the long-term investment strategy is sound.

One sector that has been hit hard is the precious metals sector. This should be no surprise to many readers, as the sell-off in precious metals has gotten a lot of negative media attention. However, I would like to bring to your attention an investment strategy of looking to add industrial precious metals, such as platinum and palladium, to your portfolio.

The vast majority of demand for both platinum and palladium is for industrial purposes, especially for catalytic converters in the automobile industry. These precious metals are crucial for the production of vehicles, and demand in this sector continues to rise.

While total vehicle sales for the full year of 2013 aren’t in yet, it is expected that U.S. auto sales will be the highest in six years, with an approximately 50% jump from the lows experienced in 2009. In 2014, U.S. auto sales will continue to be strong, with an estimated total number of over 16 million units sold.

The investment strategy in these industrial metals is … Read More


This $27.0-Billion Niche Industry a Lucrative Opportunity for Retail Investors

By for Daily Gains Letter | Dec 19, 2013

Opportunity for Retail InvestorsIt might not be as flashy as precious metals or the biotech industry, but the $27.0-billion U.S. yoga industry has some pretty strong numbers and corresponding retail stocks.

Over the last year, 15 million people regularly participated in yoga here in the United States, spending more than $27.0 billion on yoga products. Over the last five years, spending on yoga products has soared 87%. And the average annual increase of the number of people who practice yoga is expanding at a rate of 20%. (Source: “Yoga Statistics,” StatisticBrain.com, July 27, 2013.)

Furthermore, almost three-quarters (72.2%) of yoga participants are women and 68% earn at least $75,000 a year. On top of that, more than 40% of participants are in the lucrative 18–34 age demographic, and 41% are between the ages of 35 and 54.

While a number of publicly traded retail stocks operate in the yoga apparel industry, none are quite as well-known, for better or worse, as lululemon athletica inc. (NASDAQ/LULU).

Of course, the “for worse” part refers to the barrage of negative public relations (PR) that has helped to drop this retail stock’s share price down 24% so far this year. Lululemon has been under severe PR pressure since March, when the retail stock recalled its popular black yoga pants for being too see-through. Company CEO Christine Day stepped down in June; and in July, the company was dealing with another PR nightmare after insiders said the company shuns plus-sized shoppers. To make matters worse, company founder Chip Wilson blamed quality control concerns regarding the yoga pants on “women’s bodies” (more specifically, thick thighs).

Clearly, the bad PR … Read More


The “For Sale” Sign on Precious Metals

By Sasha Cekerevac for Daily Gains Letter | Dec 13, 2013

Sign on Precious MetalsDo you feel wealthier today compared to last year?

According to the Federal Reserve, you should, as the household net worth of Americans rose 2.5% between the second and third quarters of 2013 for a total of $77.3 trillion. (Source: “Financial Accounts of the United States,” Federal Reserve, December 9, 2013.)

The Federal Reserve calculates household net worth by looking at the value of stocks, homes, and other assets, minus mortgages and debts.

In fact, the nominal total wealth is at a record high. Adjusted for inflation, the current level of net worth is approximately one percent below the peak prior to the Great Recession. On paper, it appears as though economic growth is booming thanks to the Federal Reserve.

But if you’re like most Americans, you’re probably skeptical of this so-called economic “growth,” and rightfully so, since the underlying fundamentals of economic growth really are missing.

While we are seeing some jobs growth, it’s obvious that the current situation is far from ideal. Millions of people remain unemployed, and the jobs being created are of poor quality.

However, because of the Federal Reserve’s easy money printing, asset prices have been boosted upward, creating a significant amount of wealth for the top portion of America’s society.

Over the long term, we cannot have sustainable economic growth if only the top five to 10% of Americans participate. While the Federal Reserve has tried to create economic growth for everyone, the policies are quite clearly tilted toward the very wealthy.

What does this say about the current level in the stock market?

Many people in the mainstream media are stating that the … Read More


Three Indicators to Turn Your Trust Back to Precious Metals

By for Daily Gains Letter | Dec 12, 2013

Trust Back to Precious MetalsDespite the wintry Arctic chill, the economic recovery is in full bloom. Or is it? Wages are stagnant, unemployment remains stubbornly high at seven percent, and consumer confidence remains tepid at best. The average American investor clearly isn’t enjoying the Wall Street perpetual momentum machine.

Are stocks fairly valued (i.e. cheap), and is the current momentum sustainable? If you consider the charts, it looks like well-heeled investors think the market is inexpensive; how else can you explain the current bull market marathon? This is after an increasingly larger number of companies on the S&P 500 warned about revenues and earnings.

In the third quarter, a record 83% of all S&P 500 companies revised their third-quarter earnings guidance lower. So far, 92 of the S&P 500 companies, or 89%, have already issued negative earnings guidance for the fourth quarter. In spite of the warnings, the markets continue to tread higher.

I’m not the first person to say you can’t beat the Fed; but this market proves it every day. Thanks to the Federal Reserve’s $85.0-billion-per-month easy money policy, the markets just go higher and higher.

So, are the markets fairly valued? Not if you think S&P 500 revenues and earnings are important. Over the last few years, companies have been doing a good job at cutting costs; in fact, corporate profits are at an all-time record high at 70% of GDP. (Source: “Corporate Profits Are At An All-Time Record Peak At 70% Of GDP,” Forbes web site, November 30, 2013.)

S&P 500 earnings are also being artificially inflated due to low corporate tax rates. While the top corporate tax rate is … Read More


Fundamentals & Technicals Pointing to Silver as the Next Big Trade

By for Daily Gains Letter | Oct 10, 2013

Silver as the Next Big TradeI have been a very big advocate of using both fundamental analysis and technical analysis together to get a better idea of what to expect next when it comes to prices, be it for stocks, precious metals, currencies, or other investment instruments. But when I use this strategy to look at silver, I can’t help but be bullish.

First, let’s look at the technical side:

As you can see in the chart below, silver hasn’t performed well since the beginning of the year—it’s down roughly 30% from its peaks in February—but few things have changed since it had sell-offs in April and June. The prices found support at the $19.00 level, and have not seen those levels again; as a matter of fact, the precious metal’s prices have been trending higher since then.

In addition to this, the moving average convergence/divergence (MACD), a momentum indicator, is suggesting that bulls are coming in slowly. Furthermore, silver prices recently crossed above their 50-day moving average, a move considered to be significant and in favor of the bulls.

Silver Spot Price(EOD) Chart

Chart courtesy of www.StockCharts.com

On the fundamental side, there’s a significant amount of information that suggests the price of the white precious metal may increase going forward.

First and foremost is the relationship between gold and silver. I have mentioned in these pages before that we are seeing the fundamentals of gold prices getting better. The central banks are continuously printing, keeping easy monetary policies low, and those in the emerging markets are buying the precious metal. As the gold prices go up, silver prices will follow the same direction.

Secondly, the demand for the … Read More


Save Money and Profit By Taking Your Portfolio into Your Own Hands

By for Daily Gains Letter | Aug 23, 2013

Save Money and Profit By Taking Your Portfolio into Your Own HandsThe common belief among investors is that you need a significant amount of money to have a portfolio that provides exposure to different asset classes. As a result of this misconception, they may end up taking speculative trades, causing their portfolio to face wild swings.

The fact is that investors don’t really need a lot of money to have a portfolio that’s balanced and exposed to different asset classes. They can do this for a much smaller amount than they think, all thanks to financial innovation in the past few years.

The following are a few means investors can use to make a portfolio that holds different asset classes.

Equities

To get exposure to the stock market, instead of buying individual stocks, investors may look into buying exchange-traded funds (ETFs), like SPDR S&P 500 (NYSEArca/SPY). With this ETF, investors can get exposure to the S&P 500. Buying this ETF is like buying the entire 500 stocks on the S&P 500; when the index goes up one percent, the fund does the same. It also has low costs and can be traded during market hours.

Owning individual stocks can be expensive; investors may incur higher transaction costs. For example, buying 10 different companies in the portfolio would result in 10 transactions. Buying the SPDR S&P 500 ETF, on the other hand, is only one transaction and it gives you exposure to 500 companies. Remember, too, that individual stocks have their own risk.

Commodities

To expose their portfolio to commodities, investors have many different options. One example would be United States Copper (NYSEArca/CPER). This ETF lets investors track the performance of copper … Read More


Our Top Three Defensive Plays for Falling Commodities Prices

By for Daily Gains Letter | Aug 8, 2013

Top Three DefensiveWhile investors with balanced portfolios have enjoyed great returns provided by the key stock indices thus far, those who were heavily focused on commodities and the basic material sector most likely beg to differ. Commodities prices have come down across the board: precious metals like gold and silver have been trending downward, copper prices are edging lower, and agricultural products like corn and soybeans are outright facing selling pressures.

With these happenings comes a question: what should an investor do in situations like these, when the commodities prices are sliding lower?

One action investors might want to take before falling commodities prices take a further toll on their portfolio is to cut their losses and change their allocation, selling what has gone down significantly. Simple math would suggest this: if a stock has fallen 50% in value, it has to increase 100% for an investor to just break even.

If investors continue to be persistent with a belief that commodities prices have a great future ahead, but are witnessing a minor sell-off now, they may want to look at companies that are involved in making, exploring, or doing business with those commodities and have some sort of income attributes to them.

The idea behind this investment strategy is simple: until the commodities prices settle down, companies can provide investors with income in the form of dividends. For example, if a stock price goes down 10%, but over the year it provides a six-percent dividend, then, in essence, their loss is only four percent for the year.

The following are a few ways investors can be exposed to certain commodities and … Read More


Underlying Economic Indicators Dim, but Gold ETFs Retain Their Shine

By for Daily Gains Letter | Mar 28, 2013

Gold egg in the gold nest, isolated on whiteAmericans save for retirement by building wealth through a number of different ways. In addition to personal savings accounts, we build wealth through home equity, pension plans, retirement accounts, and Social Security.

Unfortunately, since 2008, the underlying values of our tried and true wealth management techniques have come under attack. Housing prices are still down 41.0% from their peak in 2007. In fact, 10.5 million homes in the U.S. are in negative equity territory, meaning 21.5% of all residential homes in the U.S. are worth less than their mortgages. (Source: Panchuk, K.A., “CoreLogic: 10.4 million mortgages still in negative equity,” Housing Wire, March 19, 2013.)

At roughly 52.4%, Nevada has the highest percentage of properties with mortgages in negative equity; Florida follows with 40.2% in negative equity, and the housing rebound–rich state of Arizona comes in third, with 34.9% of all properties underwater.

Social Security amounts to $1,237 a month, less than $15,000 a year; that’s not a lot to rely on. And there’s really nowhere to park your extra cash, either. Bank interest rates are a measly 0.5%, bonds are near 3.1%, and jumbo five-year certificates of deposit (CDs) only return around 1.5%.

The downturns in home values, interest rates, and retirement accounts have significantly reduced the amount of wealth available to finance retirement for the average American.

Yes, the Dow Jones is in record-high territory, but the underlying economics can’t support the gains for much longer. Eventually, Wall Street has to reflect Main Street, and right now, it isn’t. Unemployment is hovering near eight percent, as is household debt. Gross domestic product (GDP) is flat. And the economic … Read More