Email this page!
| Monday Oct 23, 2006
The gold paradoxTaipan Group Dynamic Market AlertBy J. Christoph Amberger-- The gold paradox ----------------------- $1.80 Hybrid Railroad Stock Set to Gain 145% by November 27 This $1.80 stock will be the first to successfully use hybrid technology on the $79 billion railroad industry, cutting air emissions by 90% and potentially saving the United States $1.4 billion in fuel per year! I’m so confident in this stock, I’m putting my money where my mouth is: You’ll gain 145% by November 27 or your subscription is on the house. ----------------------- The gold paradoxby J. Christoph Amberger If you want to find out what people are really thinking, watch how they spend their money. If they're full of optimism that the items they purchase -- be they candy corn or commodities -- represent a good bargain or have the potential of generating additional income, no reasonable objection will keep them from spending it. On the other hand, there are situations when people talk all about the enormous upside of a particular product or asset. And yet, they won't put their money where their mouth is. Last weekend, in an unwatched moment, I turned on the television set. Apparently, the thing was filmed a half year ago. Because the up, up, up of the prospects was never once marred by the steep drops in bullion prices we saw in spring and then again this fall. "Experts" were still predicting $2,000 per ounce, and compared to these prospects anything under, say, $1,900 qualifies as a "bargain." Now, I've given a short sample of predictive factors that those anonymous "experts" base their predictions on. (You can read up on them -- and my ideas of Value -- in my book, Hot Trading Secrets. http://www.dynamicmarketalert.com/hottradingsecretsdma.html The less fanciful merely take gold's 1980 highs, declare its "fair value" and adjust the number for inflation. More adventurous souls base the value of gold on the amount of money in circulation in 1980 and now, and arrive at something like $4,000 per ounce. The looney fringe does the same with the total money supply of the global economy. But are they walking the walk? -- Actually, gold investors who are expecting to make a few thousand bucks per ounce according to their new math stopped buying when gold hit $650 per ounce. That applies not just to investors and ETFs but also to those who require gold to make a living... like jewelers. Since Friday, gold has again dropped $20 an ounce, trading back in the $580s. Bloomberg's today quotes Philip Newman, a senior metals analyst at Worse, buying in recent months was fueled mainly by seasonal Asian buying. There are now warnings that another drop below $584 -- and we had a few of them just this month! -- might trigger technical selling by those commodities funds who are still tying up supply. Those funds follow wave analysis, not new math. When they start purging their inventories later this year, or early next year, we might have yet another one of what dear colleagues of mine call "the last opportunity in a lifetime to buy gold below $500." If not less.
A canary for a caterpillar? by Steve Lord Investors are abuzz over Caterpillar’s quarterly earnings miss. The company posted third-quarter EPS of $1.14, compared to consensus estimates of $1.35 per share, and reduced its guidance for the coming year. As misses go, this one is a doosie – CAT, a Dow stock, missed by a large margin right as the market hits a new record -- and Wall Street did not take the news lightly. CAT is down nearly 10 points, or a whopping 15%, so far today. The move is worth 40 points in the Dow Jones Industrial Index, meaning we would be significantly above 12,000 today were it not for CAT’s “contribution.” The earnings miss aside, CAT’s warning for the coming year has broad implications. Why? Because a great deal of the market’s ascent since 2003 has been built on the back of companies like Caterpillar. The company is highly leveraged to the booming heavy industry, mining, energy and infrastructure industries around the world, but these activities have been slowing along with the general economy. (Mining equipment purchases have slowed as the commodity boom deflates, and CAT specifically mentioned the slowdown in housing as a partial reason for its lowered 2007 expectations.) With housing, energy, mining and infrastructure buildout taking a breather, Caterpillar is looking at 2007 earnings growth of 5% -- at best. And frankly Wall Street is acting a little childish. CAT has doubled sales since 2002 and posted double-digit earnings gains for most of the past three years, a trend that is in sharp contrast the company’s historical -- and far stodgier -- record of single-digit growth. The stock has been the best performing Dow stock since the market bottom in 2002, rising a whopping 284% as the global commodity and energy boom (as well as orders from China and India) flooded in. Yet, in true Wall Street fashion, investors have become spoiled with CAT’s amazing gains over the past few years, and are not pleased it might be going back to its more historical rate of growth. This got us thinking. If CAT is anticipating this kind of slowdown, after posting three banner years, maybe this is a “canary in the coalmine” moment. How are other major industrial Dow stocks going to fare heading into next year? Remember, the market is perched at a very lofty level mostly due to the amazing earnings gains booked by large, blue-chip industrial stocks over the past eight quarters. Clearly, any further advance in the Dow Jones Industrial Average from here is predicated on these very same companies maintaining their momentum, and until today CAT was one of them. If Caterpillar is running into slower growth in the key areas of housing, earth-moving equipment (i.e., mining) and the like, then we have to wonder about the fortunes of other major industrials. Will the market’s rally since the summer turn out to be a classic example of “buying on the rumor, selling on the fact”? The bottom line is that much of the industrial growth that has driven earnings gains over the past several quarters may well have slowed or dissipated entirely by 2007’s second half. This means the primary driver of the Dow’s recent surge -- or at least one of them -- may be losing some steam. We’re not one to give odds, but we would play our cards close to the chest -- the chances of correction are increasing.
----------------------- Earnings Announcements Brought to you by http://www.AmericanCapitalist.net
10/23/06 – Corel Corporation is unlocking 6.5 million shares. Brought to you by http://www.gressor.com
Upgrades and Downgrades Foot Locker upgraded by UBS from Neutral to Buy. Best Buy downgraded by Bernstein from Outperform to Market Perform.
Quote of the Day: "There is an initiative in the state of Nevada to legalize small amounts of marijuana. This is the first time marijuana and initiative has appeared in the same sentence." - Jay Leno, Oct. 20, 2006
P.S. Your Future Wealth Is in Danger! Attention: The small-cap companies that made hedge funds rich are about to turn sour, leaving millions of individual investors broke! Do yourself a favor and make sure you are protected… Right now, after seven years, one of the safest investments you can buy is ready to rebound for steady, wealth-protecting gains in the next 12 months!
|
| Home | About Dynamic Market Alert | Contact Dynamic Market Alert | Subscribe to Dynamic Market Alert | Join Discussion! | Media Calendar | Advertising | Search | Whitelist Us | Disclaimer | Privacy Policy | Sitemap