Daily Gains Letter

U.S. dollar


How to Position Yourself as China Becomes World’s Biggest Economy

By for Daily Gains Letter | Sep 10, 2014

How to Play the Rally in Chinese StocksI’m not sure how many of my Daily Gains Letter readers realize that Chinese stocks, as reflected by the Shanghai Composite Index (SCI), have outperformed the S&P 500 so far this year. After offering up underwhelming performances since 2009, the SCI has rallied 9.98% this year, compared to 8.44% for the S&P 500 and 3.23% for the Dow Jones Industrial Average as of Monday.

We’re not talking about resurgence in Chinese stocks and a return to the glory days more than five years ago; instead, I’m simply saying there’s finally some buying in an oversold Chinese stock market.

Shangai Stock Exchange Composite Index Chart

Chart courtesy of www.StockCharts.com

Of course, there’s the high anticipation of China-based Alibaba (NYSE/BABA) joining the U.S. capital markets on September 19; this move will likely stroke the enthusiasm of investors here. The Internet services company is massive and will give U.S. companies a run for their money, further opening the U.S. market to consumers and businesses worldwide. You can wait and pick up shares of Alibaba or you can play the company via Yahoo! Inc. (NASDAQ/YHOO), which holds a 23% stake in Alibaba.

Now, if you’re a regular reader, you may know that I have been, and continue to be, bullish on the Chinese economy and China. Yes, the economy is stalling, but we are still talking about growth of around 7.5% this year, which is far greater than the rest of the G7 countries.

Just like Facebook, Inc. (NASDAQ/FB) in the social media market with its more than one billion users and enormous potential, I feel the same towards China and its 1.3 billion people. When you have a market … Read More


How You Could Still Profit from Gold Despite Weakness

By for Daily Gains Letter | Jun 4, 2014

Why You Still Stand to Gain from GoldWith money continuing to flow into the equities market and stocks, the gold market has seen an outflow of capital. The Ukraine situation appears to be under control, and with minimal geopolitical influences, the yellow metal has failed to gain any catalyst to move higher.

The prices paid for goods and services, as measured by the Consumer Price Index, are under wraps, despite rising food and energy prices. The headline reading, including these two volatile items, jumped two percent in April in urban areas, which was the highest reading in 2014, matching the highest readings in 2013. Right now, inflation is not a major issue, but it could become more of a factor as we move forward.

Moreover, we all know that the Federal Reserve is expected to eliminate its entire bond purchases by the year’s end, which will likely drive bond yields, interest rates, and the U.S. dollar higher. The result would be a stronger U.S. dollar and pressure on gold prices.

And as I previously mentioned, there’s still broad interest in the stock market, which will impact the buying in the yellow metal. Investors are continuing to look for returns, and at this time, that isn’t gold.

The gold story is a non-factor at this moment, and I think the best gains are behind us for the time being, as the precious metal traded at around $300.00 in 2002 and reached its highs in 2011. The long-term chart below shows the yellow metal in a decline.

Gold - Spot Price (EOD) Chart Chart courtesy of www.StockCharts.com

The reality is that there’s simply no attraction in buying the yellow metal at this point, in spite … Read More


Three Variables to Consider Before Investing in Gold

By for Daily Gains Letter | Apr 16, 2014

Three Reasons I Believe Gold Is Only for Traders Right NowWhile there continue to be many gold bugs out there, I’m not one of them—but I do see gold as a trading opportunity.

Given what we have seen so far and looking ahead, I just don’t see gold as a buy-and-hold strategy at this time. Yes, there’s money to be made, but it’s going to be for traders only.

The recent break below $1,300 an ounce and the subsequent rally to the current $1,325 level is an example of such a trade, not a new trend that’s developing on the charts, based on my technical analysis. The chart below shows the potential declines in the metal towards $1,200 and $1,100 an ounce.

Gold Spot Price ChartChart courtesy of www.StockCharts.com

Many gold supporters will counter that China is hoarding gold and India will soon pick up its buying. While I don’t argue against this, I just don’t see the yellow metal retaining its luster at this point unless a war breaks out in Ukraine and Russia intensifies its threat. If this should happen, it would drive Russia’s gross domestic product (GDP) growth lower and could result in the fragile eurozone and European economies retrenching back into a recession that just ended.

I wrote about gold several weeks back as a trading opportunity on dips below $1,300. I continue to hold on to that belief, but longer-term, the yellow metal could fade and fall back towards $1,200 or less.

My thinking is that inflation is nowhere to be seen in the United States, China, or Europe. (In fact, deflation may be more of a concern here.) And unless inflation picks up, the yellow metal isn’t … Read More


How to Protect Your Portfolio and Profit as Interest Rates Rise

By for Daily Gains Letter | Apr 9, 2014

Interest RatesAccording to data released by the U.S. Bureau of Labor Statistics (BLS) last Friday, the unemployment rate stood at 6.7% in March, which is similar to the unemployment rate in February. A total of 192,000 jobs were added, of which food and drinking places added more than 30,000 and “temporary” help services in the professional and business industry added more than 29,000 jobs. The labor market fell slightly short of expectations as analysts had forecasted the unemployment rate to be 6.6% for March. (Source: “The Employment Situation — March 2014,” Bureau of Labor Statistics web site, April 4, 2014.)

The Fed announced it would start to scale back its monetary stimulus last December, after jobs numbers started to show signs of a recovering economy. The unemployment rate initially dropped, only to settle at levels that have remained unchanged for the greater part of the winter season. Simultaneously, initial jobless claims increased by 5.16% during the week ended March 28, 2014, raising eyebrows toward the ability of the Fed’s policies to carry the string of economic recovery further. (Source: Federal Reserve Bank of St. Louis web site, last accessed April 7, 2014.)

While most economic challenges faced by the Fed for the last four months have been blamed on cold weather, a rigid unemployment rate and increasing jobless claims point towards a weaker-than-expected recovery. Amidst this, the Fed chair, Janet Yellen, while speaking at a press conference on March 19, confirmed that the Fed plans to go ahead with the tapering program in its bid to elevate interest rates up from their near-zero levels. (Source: Risen, T., “Janet Yellen Continues Tapering … Read More


Double-Digit Gain or 30% Crash: How to Profit from S&P 500 No Matter Where It Goes

By for Daily Gains Letter | Apr 1, 2014

Profit from S&P 500After a miserable winter of weak economic indicators (which were mostly blamed on the weather), the warmer spring weather will be a godsend for Wall Street. Unless, of course, there’s more holding the U.S. economy back than cold winds and snow.

That riddle will be answered in the coming weeks, but the long-term prognosis for the U.S. economy is a little murkier. While the S&P 500 is trading at record-highs, there is mounting evidence to suggest the U.S. economy could slow down, putting the brakes on the bull market.

Naturally, it depends on who you ask and what their time frame is. Despite mounting risks, such as ongoing troubles in Ukraine, slower growth in China, and the threat of increasing rates, some predict the S&P 500 will hit 2,075 by the end of the summer. That would represent an 11.5% gain from where it currently trades and a 12.5% gain for the first half of the year. (Source: Levisohn, B., “Don’t Call It a Comeback: Dow Jones Industrials Gain 120 Points, More to Come?” Barron’s, January 7, 2014.)

The double-digit growth is expected to come as a result of increased investor sentiment in the U.S. economy. For starters, investors have experienced a relatively easy ride over the last year. And over the last two years, any corrections on the S&P 500 have been shallow, short, and sweet. It’s the perfect recipe for ongoing enthusiasm and confidence for investors to pour more equity into the S&P 500.

It doesn’t matter if the S&P 500 is overvalued, some investors only care that it keeps going up. And should first-quarter earnings of S&P … Read More


How to Profit from ECB’s Attempts to End Economic Slowdown

By for Daily Gains Letter | Mar 31, 2014

Economic SlowdownRemember what happened in the U.S. economy when the financial system was about to collapse? The banks weren’t lending to each other, businesses, or even consumers. The U.S. economy was in a deep economic slowdown. Investment banks like the Lehman Brothers had already collapsed and more would follow. Something had to be done or else it would be a disaster situation.

When all of this was happening, the Federal Reserve stepped in to save the U.S. economy. It started to use a monetary policy tool called quantitative easing. The idea was simple: print money out of thin air and then buy back bad debt from the banks. As a result of this, the banks would have liquidity, which would eventually create more lending, moving the U.S. economy towards the path of economic growth.

You can look at Japan as another example of this. In order to fight the economic slowdown in that country, the Bank of Japan took similar actions to those of the Federal Reserve—I must say, the central bank of Japan has been involved with quantitative easing for a while.

The central bank of Japan wanted economic growth, which was what the Federal Reserve had hoped for in the U.S. economy. Japan’s central bank believed that by introducing quantitative easing, the value of the currency would go down and exports from the country would increase. The Bank of Japan also hoped that the quantitative easing would take the country away from the deflationary period it has been experiencing for some time.

With this in mind, you will come across various arguments. Some will say that quantitative easing has … Read More


Why Canadian Oil Plays Are More Attractive Than Their U.S. Counterparts Right Now

By for Daily Gains Letter | Feb 25, 2014

Canadian Oil StocksWhile the U.S. economy is hardly on solid footing, the fact remains that as the world’s biggest and most influential economy, the U.S. doesn’t have to be running optimally to keep the global economy chugging along. Though, it would be nice if the U.S. economy would gain sustainable traction. Until then, we will have to be content with its glacial pace of recovery.

And it is slow. In 2012, gross domestic product (GDP) growth was 2.8% and in 2013, it slowed to just 1.9%. Things are expected to get better over the next two years. U.S. GDP growth is forecast to hit 2.8% in 2014 and an even three percent in 2015.

The rest of the world will be playing catch-up. Well, save for the Chinese economy, which has a 2014 growth forecast of 7.5%. GDP growth in the eurozone picked up 0.3% in the fourth quarter of 2013—the third quarter of growth since the end of an 18-month recession. (Source: “Eurozone GDP growth gathers speed,” BBC News web site, February 14, 2014.)

The International Monetary Fund (IMF) forecasts that India’s GDP growth will hit 4.6% this year and climb to 5.4% in 2015. Brazil recently revised its 2014 GDP growth rate from 3.8% to 2.5%—which is still higher than analysts’ GDP growth forecasts of 1.79%. (Sources: Mishra, A.R., “IMF says India needs more rate hikes to bring inflation down,” Livemint.com, The Wall Street Journal, February 20, 2014; “Brazil cuts 2014 budget, GDP estimate,” Buenos Aires Herald web site, February 21, 2014.)

For investors who have been waiting for a broadly based global recovery, these are encouraging signs. It also … 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


Bitcoin: The New Gold?

By for Daily Gains Letter | Dec 9, 2013

Bitcoin The New GoldBack in March, a Canadian man listed his house for sale in exchange for Bitcoins—5,362 of them. At the time, the digital currency was exchanging hands at US$73.00, which means the house was available for about $395,000. (Source: “Canadian house first on sale for Bitcoin currency,” RT.com, March 25, 2013.)

The listing was considered a risky (and bizarre) idea; after all, the digital currency is experimental, decentralized, and can be transferred to anyone, anywhere in the world. Until recently, it was debatable as to whether or not this currency would even gain traction.

Because it is digital, the currency does not exist in a physical sense. It also isn’t issued by any central bank, and that might be part of the appeal; without a central bank, accounts cannot be seized or frozen. (That’s an attractive point for those in Cyprus who had 10% of all savings and deposits seized by the government.)

The lack of an intervening central bank also means the currency cannot be manipulated. While the digital currency is regularly being “minted,” there is a limit to how much can be created; this is to prevent inflation. There are currently around 12 million Bitcoins in circulation. After the year 2140, no more will be minted, and the total amount available will stand at a maximum 21 million.

Still, the price of a Bitcoin can fluctuate wildly. First introduced in early 2009, the digital currency floundered, coming in at about US$14.00 earlier this year. Now, the digital currency is “worth” around $1,080. Had the above-mentioned house sold for 5,362 Bitcoins, and had the owner held onto those coins, his … Read More


Why It “Won’t Be Different” This Time Around

By for Daily Gains Letter | Nov 26, 2013

U.S. Dollar Trade ContinueBuy the U.S. dollar, because it’s going to gain strength going forward, or so say the mainstream. The reasoning behind this investment strategy is very simple: the central banks of major economic hubs are working to devalue their currencies. As a result, there will be a rush to buy the U.S. dollar—it’s proven to be safe in the past. Just look at Japan, for example; it continues to be in favor of printing, which is why you should sell the Japanese yen. The European Central Bank (ECB) has hinted it might go ahead with quantitative easing—sell the euro. Others, like Australia, have already lowered their interest rates, and while they haven’t started printing yet, but say they are open to it—sell the Australian dollar.

In the short run, these investment strategies may be viable. In fact, since late October, we have been seeing the U.S. dollar gain strength compared to other major currencies. Please look at the chart below of the U.S. dollar index.

US Dollar Index Chart

Chart courtesy of www.StockCharts.com

I question if this strategy of buying the U.S. dollar is going to be profitable in the long run. Those who are looking at the fundamentals of the U.S. dollar from a long-term perceptive will agree with me that they are looking very bleak.

First, the printing continues. We heard from the Federal Reserve that it will continue to print U.S. dollars in exchange for government bonds and mortgage-backed securities (MBS). Sadly, what many don’t realize is that even if the central bank says it will taper, it simply means it will be printing, just at a slower pace. What this printing … Read More


How Long Until the U.S. Dollar Loses Its Reserve Currency Status?

By for Daily Gains Letter | Oct 22, 2013

U.S. Dollar LosesAs Congress has come to a decision about the debt ceiling and kicked the can a few months down the road, I hear a significant amount of noise about the U.S. dollar losing its reserve currency status.

With this, I ask: could this really happen anytime soon?

Before coming to any conclusions, let’s dive into the basics. A reserve currency is the currency that is commonly used in the global economy; central banks keep it in their foreign exchange reserves and businesses do international transactions with it. One of the other characteristics of the reserve currency is that it is thought to be able to remain strong and stable over time. Currently, the U.S. dollar holds reserve currency status.

So what’s next?

You see, over the past few years, and especially since the financial crisis, the fundamentals of the U.S. dollar have gone downhill. The U.S. dollar is losing its stability and strength; for example, look at the long-term chart below of the U.S. dollar compared to other currencies in the global economy. You will see there’s a clear downtrend.

US Dollar Index Chart

 Chart courtesy of www.StockCharts.com

But this is just the picture of what has happened in the past. Going forward, the fundamentals are deteriorating further, and the speed at which it’s happening is picking up the pace as well.

To begin with, we have increasing national debt. It’s not very commonly said in the mainstream, but the U.S. government has the most debt, in nominal terms, than any other country in the global economy. And after Congress came to a consensus, it pretty much promised it would increase further—we will probably … Read More


Debt Ceiling Debates Pushing Central Banks Toward Financial Independence

By for Daily Gains Letter | Oct 10, 2013

Financial IndependenceI realize gold is out of favor right now, but there are just too many technical and fundamental indicators pointing to the upside. With the yellow precious metal currently trading near a three-year-plus low, one has to wonder if now is a good time to get involved.

While gold prices recently dipped below the 50-day moving average, they have been finding support on the back of the U.S. government shutdown and impending debt ceiling showdown.

Gold prices were up earlier this week as the U.S. government shutdown barreled into its second week with no end in sight. Astute investors have turned their backs on the U.S. dollar in favor of the yellow precious metal, a global, borderless currency that acts as a store of value.

Granted, Federal Reserve chairman Ben Bernanke claims he doesn’t understand gold prices. But that hasn’t prevented other central banks around the world from adding it to their coffers.

Central banks, which own roughly 18% of the world’s gold supply, are expected to increase their reserves of the precious metal in 2013 by as much as 350 tons, valued at about $15.0 billion. In 2012, central banks from around the world purchased 535 tons of the yellow precious metal, the most since 1964.

Gold may be trading down more than 20% year-to-date, but between July and September, it posted its strongest quarterly gains in a year. Why is the precious metal re-emerging? Oddly enough, it has nothing to do with the Federal Reserve’s $85.0-billion-per -month monetary policy; rather, it’s the idea that the world’s strongest economy and holder of the reserve currency could default on its … Read More


Why I Remain Bullish on Gold

By for Daily Gains Letter | Oct 3, 2013

Bullish on GoldI am bullish on gold bullion. My convictions are very simple: central banks in the global economy are going to buy more of it. Their perspective towards the yellow shiny metal seems to be changing. As a result, the demand will increase, and with prices remaining suppressed, the supply will decline.

What we have seen is that central banks around the global economy have become buyers of gold bullion. In the recent past, we have seen central banks from countries like Russia, Turkey, and Kazakhstan add the yellow precious metal to their reserves. In the second quarter of this year, central banks throughout the global economy added 71 tonnes of gold bullion to their reserves. (Source: “Consumer demand for gold up 53% in Q2 2013 led by strong growth in China and India,” World Gold Council web site, August 15, 2013.)

Those who already hold gold bullion in their reserves are holding onto it. For example, there were rumors about the Italian central bank selling its gold bullion for the sake of economic growth in the country. It turns out that the bank is staying firm on its take on the precious metal.

At the London Bullion Market Association’s annual conference, the director general of the Italian central bank, Salvatore Rossi, said that “Not only does it have the vital characteristic of allowing diversification, in particular when financial markets are highly integrated, in addition it is unique among assets in that it is not issued by any government or central bank, so its value cannot be influenced by political decisions or by the solvency of any institution.” (Source: Harvey, J. … Read More


The Fed’s Change of Heart: What It Means for Investors

By for Daily Gains Letter | Sep 20, 2013

Fed’s Change of HeartAt 2:00 p.m. on Wednesday, Federal Reserve chairman Ben Bernanke said the central bank would, in the eternal quest for job creation and economic growth, continue to buy $85.0 billion a month in bonds. In other words, its third round of quantitative easing (QE III) is charging ahead unabated.

A few minutes later, The New York Times declared, “In Surprise, Fed Decides Not to Curtail Stimulus Effort.” USA Today proclaimed, “Fed delays taper, surprising markets,” while The Guardian said, “Federal Reserve maintains bond-buying stimulus in surprise move.”

Are economic analysts looking at different data than the rest of us? Back on August 29, I predicted the Federal Reserve wouldn’t begin to taper its quantitative easing until early 2014 at the earliest. That was because all of the economic indicators steering the data dependent on quantitative easing policies were nowhere close to being achieved.

For starters, the Federal Reserve said the unemployment rate “remains elevated.” For the Federal Reserve to begin tapering its QE policy, unemployment would have to fall to 6.5%. In August, the unemployment rate held stubbornly high at 7.3%.

The Federal Reserve also wants the U.S. rate of inflation to rise to two percent; after eight months, it’s stuck at one percent. For the Fed to consider tapering, the rate needs to at least double in just a few months—which isn’t going to happen, especially when you look at stagnant wages. Lastly, a new Federal Reserve chairman will be taking the helm in early 2014; Bernanke isn’t going to want to tarnish his reputation or disrupt the U.S. economy before then.

If the Federal Reserve is as good … 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


How the Ongoing Trade Deficit Affects Your Investment Strategy

By for Daily Gains Letter | Jul 5, 2013

As U.S. Trade Deficit Deepens, Appeal of Foreign Currencies GrowsThe U.S. Department of Commerce reported that in the month of May, exports from the U.S. economy accounted for $187.1 billion, and imports from the global economy were $232.1 billion.

This situation of more imports than exports caused a trade deficit of $45.0 billion in May. Compared to the previous month, the trade deficit increased almost 11% from April. (Source: “U.S. International Trade in Goods and Services – May 2013,” U.S. Bureau of Economic Analysis web site, July 3, 2013.)

On the surface, the trade deficit may not sound like a big deal, but it has a profound affect on the currency and the gross domestic product (GDP) of a country. Here’s what you need to know: the U.S. economy has been registering a trade deficit since at least January 1992. (Source: “Trade Balance: Goods and Services, Balance of Payments Basis,” Federal Reserve Bank of St. Louis web site, last accessed July 3, 2013.)

A short-term trade deficit isn’t something to worry about—it can happen for many reasons, and can be easily absorbed by a strong economy—but a long-term, continuous trade deficit can be alarming. It can jeopardize the value of a currency and inhibit economic growth.

Essentially, what happens is that the country with a trade deficit is seeing its currency leave its borders. Right now, that means that other countries hold a significant amount of U.S. dollars. If they decide to sell their holdings on the market, it would create a huge increase in the supply of U.S. currency, leading to a lower dollar.

Similarly, GDP is calculated by adding the consumption, investments, government spending, and net exports … Read More


Why May 22 Was So Important for the Key Stock Indices

By for Daily Gains Letter | May 28, 2013

Why May 22 Was So Important for the Key Stock IndicesOne of the biggest mistakes an investor can make is trying to predict where the stock market will make a top or a bottom. This can cause severe damage to their portfolio, because they might be faced with losses if things don’t turn out as they had anticipated.

On Wednesday, May 22, the key stock indices showed interesting price action, to say the very least. Look at the chart of the Dow Jones Industrial Average below, paying close attention to the circled area.

Dow Jones Industrial Average

Chart courtesy of www.StockCharts.com

While testifying in front of the Joint Economic Committee to provide insight on monetary policy and the outlook of the U.S. economy, Federal Reserve chairman Ben Bernanke suggested that the central bank will continue with its quantitative easing—printing $85.0 billion a month and buying long-term government bonds and mortgage-backed securities (MBS). (Source: Chairman Bernanke, B.S., “The Economic Outlook,” Board of Governors of the Federal Reserve System web site, May 22, 2013, last accessed May 27, 2013.) As a result, the key stock indices rallied; the Dow Jones Industrial Average reached a new record-high of 15,542. The reason for this increase is that more money printed means a higher stock market due to the decline in value of the U.S. dollar.

Sadly, later that same day, the meeting minutes of the Federal Open Market Committee (FOMC) were released, with some of the members of the committee suggesting that quantitative easing should start to taper off as early as the next meeting, which is scheduled for June. (Source: Fontevecchia, A., “A Divided Fed: FOMC Minutes Reveal Hawks Calling For QE Taper In June,” Forbes, May … Read More


Top Three Places for Bears and Bulls to Invest in Gold

By for Daily Gains Letter | May 24, 2013

Top Three Places for Bears and Bulls to Invest in GoldAfter a decade of consecutive gains, it looks like gold’s reign as the precious metal darling could be in jeopardy. Between early 2002 and September 2011, the price of gold soared over 590% to an all-time high of $1,923.70. Since then, gold has lost some of its luster, down almost 18% since the beginning of the year and more than 28% since the record-highs posted in September 2011.

During the first quarter of 2013, demand for gold slipped 13% year-over-year. On the paper front, investors sold 177 tonnes of gold (or six percent of global demand) through exchange-traded funds (ETFs) worth approximately $9.3 billion. (Source: “Global demand for gold jewellery up 12% in Q1 2013 driven by significant increases in India and China,” World Gold Council web site, May 16, 2013.)

But it wasn’t all bad news. Total jewelry demand was up 12% year-over-year. China led the way, up 19% at a record 185 tonnes. Demand in the Middle East and India was up 15%, respectively, and demand in the U.S. increased for the first time since 2005, climbing six percent.

Sales of gold bars and coins were also up in the first quarter. Sales increased 22% in China and 52% in India; in the U.S., sales jumped 43%. Central banks continued to increase their holdings, purchasing in excess of 100 tonnes for the seventh consecutive quarter.

ETFs may be liquidating their holdings, but the average person on the street isn’t—and neither are central banks. Even though sales of bars and coins, jewelry, and the technology sector make up about 80% of the market, the total demand for gold each … Read More


Should Fundamental ETFs Hold a Top Spot in Your Retirement Portfolio?

By for Daily Gains Letter | Mar 14, 2013

140313_DL_whitefootWhile the Dow Jones Industrial Average continues to climb into uncharted territory, there is a large number of investors on the sidelines, holding their retirement funds, doubtful that the good times can continue to roll. And who can blame them—it’s not as if the underlying economic indicators are backing up Wall Street’s euphoria.

Unemployment remains stubbornly high, investors have been experiencing weak returns on equities, housing prices are still depressed, and Americans are saddled with high debt levels, low wage growth, and the declining availability of company pensions. All of which are obstacles to a comfortable retirement.

It should come as no surprise to learn that the disconnect between the Dow Jones Industrial Average and the underlying economic indicators are spooking the average investor. As a result, a lot of Americans looking for places to park their retirement funds have, on some level, given up on the idea of finding individual stocks to invest in. This is not the best strategy for investors looking for income streams as they near their retirement.

Those who want to own a balanced allocation of asset classes while keeping costs down should consider exchange-traded funds (ETFs). An ETF, similar to a mutual fund, tracks an index, commodity, or basket of assets and trades on a stock exchange where individuals can buy or sell shares at their discretion.

On January 22, the investing community (quietly) celebrated the 20th anniversary of the first (and most popular) ETF in the U.S. Now the SPDR S&P 500 (NYSEArca/SPY), the fund corresponds to the price and yield performance of the S&P 500 index.

Since then, exchange-traded products (ETPs) have … Read More


How to Save for Retirement Even When You’re Buried in Debt

By for Daily Gains Letter | Feb 14, 2013

DL_Feb_14_2013_JohnIt’s hard for some people to think of saving for retirement when they’re sinking in debt.

During the third quarter of 2012, total consumer debt stood at $11.3 trillion. Of the roughly 47% of American households with credit card debt, the average balance is more than $15,400. Average mortgage debt is $149,782, and average student loan debt sits at $34,703. (Source: “Quarterly Report on Household Debt and Credit,” New York Federal Reserve web site, November 2012, last accessed February 13, 2013.)

With an unemployment rate hovering near eight percent, a weak U.S. dollar, and anemic growth projected for the near future, U.S. households are trying to avoid further debt—especially high-interest debt, like credit cards. While less debt is good, a downturn in consumer spending also has the reverse effect of limiting the speed of economic recovery.

The need, or reluctance, to use credit cards for purchases also points to the fact that Americans have less money in their pockets, which does not bode well for a consumer-driven economy.

It also means that Americans have less money to set aside for retirement or a rainy day.

According to a study by the Employee Benefit Research Institute, just 14% of Americans are “very confident” they will have enough money to live comfortably when they retire; 23% say they are “not at all” confident. Many workers also noted that they have virtually no savings or investments. (Source: “The 2012 Retirement Confidence Survey; Job Insecurity, Debt Weight on Retirement Confidence, Savings,” Employee Benefit Research Institute web site, March 2012, last accessed February 13, 2013.)

Saving for retirement means investing in stocks and bonds; unfortunately, … Read More