Gold Prices Plunge! What Does This Mean For Its Future?

“The yellow metal is down 24 percent from its highs. Is this the end of the gold bull? Or is it a temporary correction?

“I believe it’s temporary! In fact, I expect to see huge amounts of capital flowing back into gold, taking the prices far above their previous highs. Here’s why!”

We’re only 4 months into 2013, and we’ve already had a series of historic financial crises.

Investors have been bloodied in multiple markets. And the battering hasn’t yet run its course.

For maximum success in our investing, we need to anticipate the strongest trends, and get in front of them. Right now, one of the largest global trends is…

Fear!

Investors are scared, and rightly so. Even the assets that used to be safe are risky now.

Nevertheless, wherever there is danger, there is also opportunity. When oceans of capital move from market to market, there are big winners and big losers. If we want to flourish as investors, we need to follow the money. We must anticipate where it’s going, and get there first. That’s when tremendous profits can be made.

Right now, the world is awash in liquidity that’s flowing from one asset to another. The markets are scared and confused. That’s why we’re seeing such truly bizarre events, like a crash in the price of gold even as global central banks have printed almost $17 trillion (!) in new money. [Read more...]

A Small Island in the Mediterranean Sea Reminds Us of Risks of the Global Financial System

Another Energy Company Recommendation

Summary

  • The Cyprus banking crisis was a major recent event, and it reminds us of the global risks investors face.
  • The markets reflect the many positives of the economy: an accommodative Fed; low inflation and interest rates; earnings and cash flow growth; improving real estate markets; energy is a bright spot in the economy; alternative investments potential are limited making stocks attractive.
  • The markets are up about 11% year-to-date, how much further can they go?
  • Last month we looked at the U.S. outlook for oil, this month we look at the global oil outlook
  • Global demand is expected to increase in 2013.
  • Global surpluses have improved, and is helping stabilize prices but not bring them down significantly
  • I try to answer the questions, how much oil does the world have, and how long will these global reserves last?
  • This month’s recommendation is another high yielding Canadian energy company. [Read more...]

“Don’t Be Deceived: The Shortage of Cheap Oil is Real, and Long-Lasting!”

“Recent media reports claim that new reserves like the Bakken formation will provide abundant oil, make America self-sufficient, and bring oil prices back down. Rubbish!

“Oil prices will remain high for years to come. Here are seven reasons why!”

As the name of this publication indicates, we focus our investing efforts on gold and energy—especially on crude oil, the most important form of energy in the modern economy.

There’s been a gusher of news reports lately, telling Americans that we’ll have abundant crude oil for the next decade or more.

For example, the current World Energy Outlook report from the IEA (International Energy Agency) predicts that just five years from now, the United States will pass Saudi Arabia to become the world’s largest oil producer. The New York Times went even further, reporting that the US is on track to be “all but self-sufficient” in oil.

Even Harvard University has joined the fun. It published a report called “Oil, The Next Revolution: The unprecedented upsurge of oil production capacity and what it means for the world.” That report included cheery graphics like this one: [Read more...]

Collectors, Investors and even Rare Coin Dealers, Falling Victim!

Some new suggestions on how to buy and sell safely!

By James DiGeorgia

Over the years I have preached to collectors and investors just like you, to be careful not to give their rare coins and or precious metals to ANY dealer or broker for storage.

Having literally grown up and in the rare coin and precious metals market, I have seen virtually every scam and convenient bankruptcy possible. Among the most expensive have been the collapses of so called “independently audited” storage facilities as well as brokers and dealers that issue “certificates of precious metals deposits”.

In my opinion, if you don’t take physical possession, you’re setting yourself to be robbed. Always take physical possession, rent a safety deposit box and store your precious metals and rare coins on your own. The cost of insurance for even a great deal of value is very inexpensive.

Besides storage risk, there’s a growing risk of being scammed in the rare coin and precious metals business that you must not ignore. This rising threat is not only putting investor/collectors like you at risk, but this scam has also put professional dealers with decades of experience at risk. [Read more...]

AEROVIRONMENT (AVAV-$18.85)

EARNINGS MISS DOES NOT DIMINISH ITS TAKEOVER POTENTIAL ONE BIT — AND MAY HAVE ACTUALLY ENHANCED IT

By Charles M. LaLoggia

AeroVironment (AVAV-$18.85), which I recommended here last week as a takeover candidate over a 12 to 24-month horizon, reported sharply lower than expected revenues on Tuesday for its third fiscal 2013 quarter ending in January. The huge disappointment in AVAV’s results, said the company, came as a result of military order delays due to budget uncertainties resulting from the federal budget battle currently raging in Washingon, specifically the “sequester”. AVAV closed down around 9.7% on the disappointing results after trading much lower than in after-hours trading Tuesday and during the regular session on Wednesday. [Read more...]

“Coming Your Way: Debt Defaults and a Bond Meltdown!”

“While Congress bickers about spending cuts and prepares to fight over the debt ceiling—again!—there are not one but two far more serious financial crises approaching.

“As investors, we can and must prepare for the fallout. Thankfully, there’s one single investment that’s positioned to profit from both of these crises. That’s our topic this month!”

Two major financial crises are facing America. They will cause wrenching disruptions to our nation as a whole, and to our lives as individuals.

On a national level, they can’t be avoided. But on an individual level, they can. In fact, you can take huge profits as they unfold—if you play them right.

Let’s start our discussion by asking… [Read more...]

Why Investing in Drone Companies Make Sense and What Company to Start With…

BUY AeroVironment (AVAV-$22.03) AS A POTENTIAL TAKEOVER TARGET

By Charles Laloggia

If you are willing to invest the old-fashioned way by buying a stock and having the patience to hold for 12 to 24 months I think there is a very good possibility that AeroVironment (AVAV-$22.03) could become a takeover target at a price substantially higher than where it currently trades.

AeroVironment makes small unmanned aircraft — also known as drones, unmanned air systems (UAS) or unmanned air vehicles (UAV) that wirelessly transmit live video and other information to a hand-held ground control unit. AVAV also makes electric vehicle charging systems for passenger and fleet vehicles. AVAV is the Pentagon’s largest supplier of small drones, which can give troops an aerial view of a situation that may be around the bend or over a ridge.

The use of drones to kill suspected terrorists has received a lot of publicity lately, but that controversial utilization of unmanned air vehicles is just the tip of the iceberg when it comes to the expanding use of drones which is almost certainly on the horizon. [Read more...]

“Will the Bond Market Melt Down in 2013?”

“The ongoing circus in Washington has grave implications for the US bond market, and therefore for your investments as well.

“This month: the three major threats to the bond market, and three paths to making big profits from the current turmoil!”

“When written in Chinese, the word crisis is composed of two characters. One represents danger, and the other represents opportunity.”

John F. Kennedy, in a speech on April 12, 1959

If any two words describe today’s investing climate, they’re “danger and opportunity.”

The list of dangers is long, and growing. But where there is danger, there is also much opportunity.

When markets are overcome with fear, large moves are possible in a short time. And large moves can mean large profits.

That’s our theme in this issue: the big dangers and big opportunities that await us in 2013.

We’ll start with a brief look at… [Read more...]

“Coming in 2013: Perhaps the Most Challenging Year Ever for Investors!”

“We’re facing the most challenging investing environment we’ve seen in a long time. And the fireworks begin in just a couple of weeks.

“Many Americans are so caught up in the holiday rush that they’re ignoring what’s going on in the markets. Don’t be among them!”

In past issues of GEA, I haven’t said much about the ‘fiscal cliff’ that’s due to arrive on January 1. There wasn’t much point in talking about an event months before it arrived.

After all, Washington had plenty of time to deal with this. And surely, with such a crucial deadline approaching, Congress would set aside its usual bickering and get something accomplished, right?

Right?

Of course, that didn’t happen. And now the United States is about to begin its… [Read more...]

Goldman Sachs Dead Wrong on Gold!

Gold Investors Should Prepare for New Highs

Major investment firms have a pretty great strategy when it comes to producing the outcomes that they desire the most. In effect, this strategy involves saying something might or might not end up being true, and repeating that thing over and over again until the markets respond in a way that makes it true. It’s a sort of corporate, self-fulfilling prophecy that was worked wonders for companies like Goldman Sachs. And it is because of this type of prophecy-making that consumers should be wary when Goldman and others come out with major predictions about commodities, gold prices, economic recoveries, and other matters that impact how people live their daily lives.

Goldman Sachs recently released a report that borders on bullish. In many areas, it is actually entirely bullish. One of these areas is the economic recovery and, connected to it, the price of gold per ounce. Over the past five years or so, the price of an ounce of gold has skyrocketed from just around $600 to more than $1,700 this year. That’s an amazing increase, and it’s one that has largely been due to the unique conditions of the latest economic downturn. In 2013, Goldman Sachs believes these conditions will subside and, with them, the price of gold will do the same.

They may be right. They may also, however, be quite wrong. Most independent experts believe that Goldman’s motives are suspect and that their forecast likely won’t come to fruition. This prophecy might be a bridge too far for the company.

For Reference, Consider the Company’s Stance on Oil Futures

Back in 2008, when Barack Obama and John McCain were battling to see who would help to control the effects of the latest recession, oil prices were rising to $157 per barrel. It was a big spike that was causing real concern among consumers, and one that both candidates resolved to fix when they took office in early 2009. The oil prices were bad, but Goldman Sachs was forecasting that they were about to get a lot worse.

That year, the company released a forecast in which it predicted that oil futures would continue to climb dramatically, reaching as high as $220 per barrel by the end of 2008 or sometime in 2009. That was a bold and scary prediction at the time, and it is one that was never fully borne out by reality. Eventually, the price increases subsided and oil futures stabilized. This, however, was probably not the outcome that Goldman Sachs was looking for.

The company was later discovered to have been running the world’s single largest oil trading desk. That means that, for every increase in oil prices, Goldman Sachs made a pretty big increase in profit. It’s no coincidence, then, that the company was forecasting high oil futures, likely in an attempt to make them a reality. The same might hold true for gold in this year’s forecast.

A Look at Why It’s Good for Goldman When Gold Goes Down

As of 2013, a key change is coming to the banking industry in the United States. Banks will be able to use gold to underwrite their operations to a much larger extent, giving the precious metal a renewed sense of value and power that it currently does not have, even with its relatively high value.

At the beginning of next year, major banks throughout the country will be able to use 100 percent of gold’s value as collateral for their accounts and assets. Currently, only 50 percent of the value of gold can be used for this purpose. This will have major implications on the value of gold itself, setting it up for another big rise in the coming year if economic conditions do not improve dramatically, like Goldman Sachs is now predicting that they will.

The implications of this rule change are not favorable to Goldman Sachs, generally speaking, and thus it makes sense for them to forecast a strong 2013 economy and a weak overall picture for the value of gold. Gold, though, is likely not going anywhere but up. That’s due in large part to an economy that is barely limping along, and will likely continue to do so at similar levels throughout most of the upcoming year.

Bulls and Bears: Who Wins Out in the Upcoming Year?

The most optimistic economists in the country are predicting that 2013 will be a pretty good year for the American economy, but none of them is quite as sold on the idea of an “accelerated” recovery toward the end of the year like Goldman Sachs’ analysts have indicated. Instead, even those with the best idea of 2013′s economic picture assume that the nation’s economy will continue to limp ahead at about 2 percent growth for the next twelve months, give or take a few tenths of a point. That is hardly “accelerated.”

With an economic growth rate of just 2 percent, it would be extremely hard to see Ben Bernanke, Chairman of the Federal Reserve, changing course on major economic policies put in place since the recession began a half-decade ago. His goal is to aggressively pursue full employment, keep credit markets open, and maintain low interest rates and a low overall value for the dollar. With 2 percent growth, there will be no policy changes needed in pursuit of these objectives.

Without a major shift in policy at the Fed, and especially without a major interest rate hike for the first time in years, gold’s value is certainly not going to decrease. The conditions that are in place today are among the most favorable in a century for the value of gold. Those conditions will inevitably change, perhaps in 2014 or 2015. After that, gold may experience some struggles making upward progress. That is not going to happen in 2013, however.

Don’t Believe the Anti-Gold Messaging from Investment Firms

Investment firms like Goldman Sachs are generally looking out for the best interest of their own bottom line and their customers’ accounts. In many cases, that doesn’t involve gold. Don’t let companies like these make gold seem like a risky investment. Gold’s high prices today are likely to be its floor for the upcoming year, as it continues to rise amid a shaky economy and the same fiscal policies that have been in place for the past four to five years.

Whether or not gold will rise another $1,100 per ounce over the next half-decade is a matter of more sophisticated debate, however. The value of an ounce of gold will likely continue its upward climb for a while. Its trajectory may even out in a few years, and it may stabilize for quite some time, after the economic recovery does begin in earnest.

Until then, investing in gold is easily one of the soundest investments any American can make with their money. It’s certainly a better bet than chasing things like oil, stock market futures, and a whole host of other risky investments that are still seeking to find solid, stable ground after the worst economic downturn of the past 80 years. Consumers looking to get into gold have no time like the present, especially if prices again rise and make that initial investment even more costly to undertake.