Month: January 2013

By Chris Vermeulen – TheGoldAndOilGuy.com

The precious metals sector has been dormant since both gold and silver topped in 2011. But the long term bull market remains intact. As long as we do not have the price of gold close below the lower yellow box on the monthly chart then technical speaking precious metals should continue much higher.

Large consolidation periods (yellow boxes) provide investors with great insight for investments looking forward 6-18 months upon a breakout in either direction (up or down). The issue with investing during these times is the passage of time. One can hold a position for months and sometimes years having their investments fluctuate adding extra stress to their life when they really do not need to.

Once a breakout takes place a powerful rally or decline will start putting an investors’ money to work within days of committing to that particular investment compared to money invested waiting months for the breakout and new capital gains to occur.

Gold Price Chart – Monthly

Gold Price Chart – Daily

The chart of gold continues to form a large bull flag pattern with a potential 3 or 5 wave correction. If price reverses this week and breaks above the upper resistance trend line then it will be a 3 (ABC)  wave correction which is very bullish. But there is potential for a full 5 wave correction which is still bullish, but it just means we have another month or two before metals bottom.

Gold Miner Stocks – GDX ETF Chart – Daily

Gold miners do not have the sexiest looking chart. It was formed a strong looking bull flag but has continues to correct and is not nearing a key support level. This level could act as a triple bottom (bullish) or if price breaks below then it would be breaking then neckline of a massive head and shoulders pattern which points to 50% decline. I remain bullish with the longer term gold trend until proven wrong.

Silver Price Chart – Daily

Silver remains in a long term bull market much like the monthly chart of gold shown earlier in this report. Silver continues to work its way through a large bull flag pattern with a positive outlook at this time.

Silver Miner Stocks – SIL ETF – Daily Chart

Reviewing the precious metals sector it seems that silver miners have the sexiest looking chart. All price patterns are showing strength and are in proportion to one other. If this chart plays out to what technical analysis is pointing to then we could see the precious metals sector put in a bottom and rally within the next week or two. And if this is the case then silver miner stocks should provide the most opportunity going forward.

Precious Metals Trading Conclusion:

In short, what you need to focus on is the yellow consolidation box on the monthly gold chart. A breaking in either direction will trigger a massive move that should last 6-18 months. Until then long term investors can simply sit back and watch the sector while they put their money to work in other active sectors.

From a short term traders point of view, that f mine. I am looking for a signs of a bottom on the daily chart to get my money working earlier to play the bounce/rally that takes place and actively managing the position until a breakout occurs. The charts overall are not that clear as to when a breakout will take place. Metals could start to rally next week or in a few months and all we can do is wait for a reversal to the upside before we get active.

Knowing the big picture trends and patterns at play along with major support and resistance levels (breakout levels) is crucial for success and piece of mind.

Get my analysis, daily updates and trade alerts each day at www.TheGoldAndOilGuy.com

Chris Vermeulen

By www.CentralBankNews.info

By www.CentralBankNews.info     Trinidad & Tobago’s central bank held its benchmark repo rate steady at 2.75 percent, saying the accommodative policy stance was still necessary to sustain the gradual recovery amid stable inflation and subdued demand for credit.
    The Central Bank of Trinidad & Tobago, which cut its rate by 25 basis points in 2012, said the annual inflation rate slowed further to 7.2 percent in December from November’s 8.1 percent and last year’s high of 12.6 percent in May. Core inflation was steady at 3.1 percent in December, suggesting that underlying inflationary pressures are still relatively subdued.
    On average 2012 inflation was 9.3 percent, up from 5.2 percent in 2011.
    “Although there were some encouraging sings of a recovery in domestic economic activity during the third quarter of 2012, credit demand is still quite subdued as evidenced by the slower-than-anticipated pace of loan growth in the banking system,” the central bank said, adding:
   “With core inflation relatively well contained at around 3 percent, the Bank has decided to maintain its accommodative monetary policy stance to sustain the nascent recovery in economic activity.”

    Last month the central bank said economic activity was likely to remain subdued in the third quarter.
    Gross Domestic Product contracted by an annual rate of 1.8 percent in the second quarter, a deeper decline than the first quarter’s 0.49 percent.
    Earlier this month the central bank’s governor said he was cautiously optimistic for 2013 and forecasting economic growth of 2.5 percent.

    www.CentralBankNews.info

By MoneyMorning.com.au

On one side of the office, the bear.

On the other side, the bull.

Two analysts, same publishing company, two very different views on China’s economy. Their desks are probably no more than five metres apart.

Oh boy, this is going to be interesting.

One says the dragon is about to roar again and take commodities – and selected mining stocks – up with it. And that now’s your chance to buy in on a resources comeback after the market shakedown in 2012.

The other says the Chinese slowdown in 2012 will continue and the recent stock rally and the rebound in the iron ore price are false flags to suck in gullible investors, so watch out.

In today’s Money Weekend, we’ll explore the two sides of the great China debate happening right here in our St Kilda headquarters. Grab a cup of tea, lean forward, engage your brain, and see which of our top analysts you agree with…

The China Bull and the China Bear

In the blue corner, you have Diggers & Drillers editor Dr. Alex Cowie. His message for investors? ‘China bears are about to get smoked.’

In the red corner, Sound Money.Sound Investmentshttp://www.soundmoneysoundinvestments.com.au/ editor Greg Canavan says the current rebound firing up the Chinese economy in the past few months is from an unsustainable burst of credit…and that contraction is assured.

Here’s what Greg says: ‘The consensus view is that China’s economy bottomed in the second half of 2012 and is set to rebound strongly in 2013. I must say I very strongly disagree with this view.’

For Aussie investors, the stakes don’t get much higher than this. China is Australia’s largest trading partner. Australian stocks and the Aussie dollar are proxies for international investors to play the Chinese growth story. China drives demand for oil and the base metals. China (and India) drives gold demand.

So where China goes, Australia follows. That means China bears mostly won’t want to own mining stocks, whereas bulls won’t be able to get enough of them.

That’s the way markets work, of course, and why buyers and sellers come together. But your view on China is a very important part of your investment strategy, and whether you’re defensive or aggressive in 2013. So which should it be?

The Dragon Will Roar

Well, if you ask the good Dr Cowie, his take is that the next leg up in resources is coming thanks to Chinese infrastructure spending.

Think copper, iron ore and coking coal. Copper because it’s the commodity with the broadest use across any modern economy, from infrastructure, to construction and manufacturing.

(By the way, Alex has put his reputation where his mouth is. He’s just tipped a copper stock in his latest issue of Diggers & Drillers.)

And iron ore and coking coal because they’re the main ingredients of steel. Actually, Alex’s position got a boost this week when iron ore miner Fortescue Metals [ASX: FMG] reported its biggest ever quarterly export figures, according to the Age.

But why now? Because the Chinese leadership transition is now in the can and Alex’s bet is this will trigger spending that will total trillions of yuan. With political certainty locked in, China will implement the next phase of its five-year plan.

If you take the position the new powerbrokers will spend big and early to cement their positions, 2013 shapes up as bullish for commodities driven by this spending.

Here’s an interesting chart Alex showed Diggers & Drillers readers recently. If history is any guide, Alex is on the right track:

This then is the catalyst for the cyclical mining sector to head back up after a tough two years. Alex wrote in his update this week:

‘This year is set to be a strong one for China. So the dozens of oversold, good-quality, mid-cap producers of industrial commodities look like a fantastic opportunity…there are bargains everywhere now.’

Infrastructure spending drives demand for commodities and rerates mining stocks. That’s the bull case in a nutshell. And according to Alex, the safest play is to focus on the producers, not the explorers.

That’s the bullish argument, but what about the bear? Read on…

Exit the Chinese Dragon

Greg Canavan wrote not one, but two reports in the second half of last year to warn readers about the coming crisis in China.

Here’s the problem, as we understand it: the Chinese economy is driven by state-directed investment. This has resulted in unproductive projects, misallocated resources and a lot of distortions inside the Chinese economy…

These distortions need to be corrected. The economy needs to be rebalanced away from investment to consumer spending. The problem is the transition won’t be pretty. In fact, Greg says it will be downright ugly with higher unemployment, social unrest and bankruptcies as the system cleanses itself.

But the Chinese elite keeps delaying the day of reckoning by creating more state-directed spending to juice-up the economy. That means the distortions increase rather than lessen. At some point, the system of expanding credit will crack and the slowdown will send a shockwave around the world, and knock the stuffing out of the Aussie economy.

Now, it doesn’t mean nimble traders can’t make money off the rallies and the dips.

But let’s be honest, most people aren’t nimble traders. Because of that, Greg says investors should focus on wealth preservation. Stock market rallies around the world are based on artificial stimulus and attempts to inflate the system. Eventually, you’ll get deflation when the bubble bursts…and that’s generally bad news for asset prices.

So his advice is to hunker down until the worst blows over. Be wary of the signals that come via stocks, currencies and interest rates because they’re all juiced and meddled with by central banks and governments. In short, the system is rotten.

But you have to do something with your money, so Greg recommends spreading your money across certain assets with different weightings. The Sound Money. Sound Investments portfolio is structured for this scenario.

This battle between the bull (yes, Alex is alone with his bullish stance in the office) and the bears has only just begun…but it looks set to be brutal.

This time next year, we’ll know who was right. In the meantime, the debate continues!

Callum Newman
Editor, Money Weekend

PS. Read on for our new weekly feature, the Money Weekend Market Digest…

From the Port Phillip Publishing Library

Special Report: The Big Money Secret of Ironstone Mountain

Daily Reckoning: Apple’s Half-and-Half Glass

Money Morning: Trading the Relative Strength Index: How to Profit from Market Momentum

Pursuit of Happiness: The WEF: The World’s Biggest Gathering of Socialists, Collectivists and Central Planners

Diggers and Drillers:
Why You Should Invest in Junior Mining Stocks

By MoneyMorning.com.au

ENERGY

According to the Sydney Morning Herald:

‘Linc Energy has released estimates its shale resource in South Australia is up to 223 billion barrels of oil equivalent, sending its shares up more than 10 per cent in morning trade.’

It has been a good six months for Linc Energy [ASX: LNC] investors. The share price has gone from 55 cents to $2.70 this week. Linc Energy was an Australian Small-Cap Investigator stock tip in 2007. We tipped it at 65 cents, and at the peak it hit $5.

The shale boom worldwide is huge. Oil giant BP even says it will lead to the US becoming a net exporter of energy by 2030. That’s a big deal for the US, which has relied on Middle East oil for the past 40 years.

GOLD

What’s happening to the gold price? Not much is the simple answer.

It’s floating around $1,600 (that’s in Aussie dollars). At this price level it’s pretty much where it was at the start of last year, so it hasn’t been a great year for gold investors. But what do the charts say?

Your editor isn’t a technical analyst so we asked Slipstream Trader, Murray Dawes for his take on the gold price. Here’s the chart, followed by what he told us:

Click here to enlarge

Source: Slipstream Trader

‘The current set up in the gold price is the most interesting I’ve seen for many months. I don’t have any gold stocks in my portfolios at the moment but I think the time is fast approaching to pick up a few beaten up gold stocks.

‘All the indicators point to a strong resumption of the uptrend in gold above US$1700.

‘My long term trending indicator is the 35 day/200 day moving average, and that shows gold is still in long term uptrend although the trend is weak at the moment. A close in the gold price back above the 35 day moving average while in long term uptrend will be a long term trending buy signal now that the price has retested the 200 day moving average.

‘Also there is an ABC set up which points at a buy signal above US$1700 when the price overlaps above ‘A’ in the chart.

‘The Point of Control of the past year and a half’s trading is also around US$1700. A close back above the point of control is another sign that the gold market is strengthening.

‘So from here there is a nice chance of a chain reaction above US$1700 in the short term.’

To be honest, we think gold is always a buy. But technical analysis is a great way to help you choose entry points. And based on Murray’s current analysis, buying gold now appears to be as good a time as any.

TECHNOLOGY

You can make a lot of money betting on technology stocks. We’ve tipped six technology stocks (and two others that cross into the technology sector) in Australian Small-Cap Investigator. But technology stocks can hurt investors too…even the biggest of companies.

This week US technology and fashion accessory company, Apple [NASDAQ: AAPL] did something it hadn’t done in a long time – it disappointed investors. Although you sometimes have to wonder at the fickle market. Apple reported revenue of USD$54.5 billion…for the first three months of its financial year.

But that wasn’t the disappointment. What disappointed the market was Apple’s forecasts for the current quarter. The company figures it will rake in revenue of USD$41-$43 billion. Sounds great? Sure, but it’s not great enough. Wall Street analysts had banked on revenue of USD$45.6 billion.

The outcome was investors crushed Apple’s stock in after-hours trading on Thursday morning. The shares sank 10% to USD$463. That’s the lowest share price since February last year.

The question for investors is whether Apple is now a bargain – it’s down 34% from the peak. Before you pick up the phone to your broker, one word of warning. According Jeff Gundlach, CEO of Doubleline Capital, he told CNBC:

‘I think $425 represents fair value, but since when do broken asset classes and stocks stop at fair value…’

Gundlach is an Apple bear. He even figures the share price could go much lower, perhaps below USD$400 towards USD$300.

If Gundlach is right, it’s much too early to think about bargain-hunting for Apple stock.

HEALTH

Here’s more potentially exciting news in the health world. Australian Life Scientist reports:

‘Cellmid (ASX: CDY) has completed its first animal trial of its anti-midkine antibodies (MK-Ab) in a mouse model of diabetic nephropathy.

‘The antibodies were able to reduce kidney damage and preserve kidney function in the treated animals…’

According to the report:

‘Midkine has been discovered to play a key role in inflammation and damage in a variety of kidney diseases and injuries. Cellmid’s antibodies are also under development for the treatment of cancer, and the company plans to commercialise midkine as a biomarket for cancer diagnosis.’

Like all medical research, there’s no guarantee anything will come of this testing. Medical companies have to go through so many regulatory hoops it can take years for a drug or medical product to hit the market.

That said, this looks like a great first step.

MINING

In Wednesday’s Money Morning, Diggers & Drillers editor Dr Alex Cowie nailed his colours to the China boom. He told readers:

‘It amazes me how anyone can be bearish on China’s economy when it has grown FIVE-FOLD in the space of ten years.

‘That’s right. My name is Alex Cowie – and I’m bullish about China.’

Alex goes as far to say that the ‘big trade of 2013 is to buy the best of the Australian resource market’s beaten up junior mining stocks.’

While we’re not entirely convinced on the China story, we have to admit that Alex makes a pretty compelling point on resources stocks. One index we’ve followed with interest for some time is the Metals & Mining Index:

This index has gained more than 20% since the middle of last year – outperforming the benchmark S&P/ASX 200 index. But Alex isn’t someone who just talks the talk. This week he released his January issue of Diggers & Drillers, and true to form he’s backed a stock that’s exploring for one of the most economically sensitive commodities – copper.

Looking at the chart above, it’s hard to argue with Alex’s view that small-cap mining stocks are trading at rock-bottom prices.

From the Archives…

How to Find Stocks for Troubled Times: Keep Scalable Businesses in Mind
22-01-2013 – Nick Hubble

Why It’s Still Not time to Buy the Japanese Stock Market
21-01-2013 – Murray Dawes

Hey, Give The Mining Guys a Break
19-01-2013 – Kris Sayce

Here’s Another Reason to Buy Gold at the ‘Bottom’
18-01-2013 – Kris Sayce

CBA Shares ‘Priced for Perfection’: Sell Now
17-01-2013 – Kris Sayce

By The Sizemore Letter

Charles Sizemore of Sizemore Capital Management and Jeff Reeves of InvestorPlace chat about the three smartphone stocks at the top of the industry– Apple (NASDAQ:$AAPL), Google (NASDAQ:$GOOG) and Research in Motion (NASDAQ:$RIMM).

Here are the highlights:

Research in Motion: Jeff continues to be bearish (all the way up, admittedly) on RIM and Blackberry going into the January 30 event that will unveil a new line of BlackBerry 10 devices. Charles agrees that Research in Motion’s enterprise dominance is in question vs. other smartphone platforms, and that the consumer market may be too little too late. Sure, there is likely going to be a third player – but that’s more likely to be the Windows Phone from Microsoft (NASDAQ:$MSFT) not RIMM. But what do we know, since the stock has almost tripled from its September lows.

Apple: Jeff likes AAPL stock even after Apple Q1 earnings and remain one of those trapped Apple longs out there.  Charles also thinks Apple remains a very strong company and may be a bargain, but the bottom line is that the short-term volatility is dangerous and there could be considerable downside momentum in the next few months. That’s what happens when a crowded trade sees a race for the exits.

Google: Last but not least, while Charles and Jeff agree on the first two smartphone stocks they differ on Google. Jeff thinks that it’s a bullish sign that the ad business seems to be stabilizing and they have a lot of products in the pipeline that could fuel future growth – such as its dominant Android OS. Charles is skeptical, however, that GOOG can maintain its ad edge and wonders if any of the cute projects like self-driving cars will ever hit the bottom line. (See “Microsoft will Crush Google“)

SUBSCRIBE to Sizemore Insights via e-mail today.

The post Smartphone Smackdown: Charles Sizemore and Jeff Reeves Talk Apple, Google, and More on The Slant appeared first on Sizemore Insights.

By The Sizemore Letter

Here is a little stat that might put Apple’s (Nasdaq:$AAPL) recent slide in perspective.  From its peak at $705 per share to its recent trough at $450, the stock lost approximately $240 billion in market cap.

The current total market cap of Microsoft (Nasdaq: $MSFT) is just $233 billion.  So, Apple has lost an entire Microsoft worth of market cap…and yet it is still the most valuable company in the world at $423 billion. (Exxon Mobil (NYSE:$XOM) is number two at $416 billion.)

I’m not knocking Apple; there are plenty of other people doing quite a bit of that already.  I write this just to illustrate how truly overpriced Apple was at its top, particularly given how nonessential the company is to the global economy.  If Exxon or Microsoft disappeared tomorrow (and took their products with them), the world as we know it would end and the global economy would grind to a halt.   If Apple disappeared, we’d have to stop playing Angry Birds and updating our Facebook status for a while, but life would go on relatively unaffected.

But with all of this said, Apple is still the most profitable company in the world by a wide margin.  After shedding well over a third of its value, is Apple worth buying?

Based purely on fundamentals, it would be tempting to say yes.  Apple trades for just 10 times trailing earnings and at 3 times sales—about on par with Microsoft.  The company’s long-term competitive position looks something iffy, as Samsung and other hardware makers using Google Android and (increasingly) Windows Phone have seized the all-important “wow” factor that allows Apple to charge such a large premium.  But given the low P/E multiple, a fair bit of this is already factored into the share price.

Still, in the short term,  Apple has the issue of overownership and oversupply.  Apple was the safest stock for a professional money manager to own.  To adapt an old market cliché, no one ever got fired for owning Apple.  And if you didn’t own Apple, you had some explaining to do to clients angry about missing the boat.

How overowned is Apple?  Insider Monkey compiled a list of hedge funds with outsized Apple exposure, and the numbers are ridiculous.  Some had more than 20% of their portfolios in the stock.  As the Apple bubble deflates, these managers and plenty others (as well as millions of retail investors) will be paring their losses and selling on any strength.

There may come a time when investing in Apple makes sense again.  But it’s not today.  As Microsoft, Intel, Cisco and the rest of the tech stocks that saw the biggest price bubbles two decades ago discovered, once investors fall out of love with a trendy stock, it can remained unloved for a long time.  Microsoft, Cisco, and Intel are all still FAR below their old bubble highs.

Though the easy money has already been made shorting Apple, Apple is more attractive as a potential short than a long today.

Disclosures: Sizemore Capital is long MSFT and INTC. This article first appeared on TraderPlanet.

SUBSCRIBE to Sizemore Insights via e-mail today.

The post If Past Tech Bubbles are a Guide, Apple Has Further to Fall appeared first on Sizemore Insights.

Today, every gas and electric meter in Baltimore is spinning. It’s a winter wonderland here. Which means, it’s damned cold.

Our thoughts turn to heat… and then to the expense of it… and
then we begin to wonder how ordinary families keep up with it all.

Heat… food… cable. It adds up.

But we have advice. In a few words: Don’t play that game.

We’ll explain that later. First, let’s review America’s middle-class
families. Everyone seems to be worried about them. President Obama
thinks they’re getting a bad deal. So did presidential challenger
Willard Mitt Romney. Some think the middle class are disappearing. How
are they really doing?

Real, hourly wages have not gone up since 1964. Nearly half a century of flat earnings. We’ve been saying that for years now.

But wait. How come people seem richer?

Because they are richer. At least in a way. They have bigger houses, more marble countertops, more cars, wide-screen TVs.

They’ve got a lot more stuff. Even better stuff.

Better Off Than in 1964?

That is the point of an article in yesterday’s Wall Street Journal. The authors argue that America’s middle class is actually much better off today than it was in 1964.

For one thing, they say, families have more members working (wives
went to work in the 1970s and 1980) so that family income is higher.

OK. Whether that is good or bad… we don’t know.

They also get the benefit of more health benefits.

Hmmm… We don’t know about that either. Families didn’t seem to need
healthcare benefits back in the 1960s. Because healthcare was
reasonably cheap and simple back then. Now, it’s complicated and
expensive.

Yes, say the authors, but it’s also a lot better. Which would you
rather have, they ask, 1960s healthcare at 1960s prices or 2013
healthcare at 2013 prices?

Hmmm… Again, we’re not sure. They say people live longer today. But
that may have nothing to do with healthcare. They live longer in other
countries too – places where people spend a fraction of what we spend on
healthcare.

And many of those tests that are included in our healthcare plans –
mammogram, PSI, colonoscopy – might be useless. That’s what the latest
research shows.

Oh… And now we all have access to jet airplane travel, iPhones and big TVs with options out the wazoo.

Electronic Voodoo

As to this last point, we offer a little personal anecdote. We didn’t have a TV
for a long time. Not from about 1982 to 2012. We bought our first one
this Christmas. A gift to the family. We watched a few movies over the
holidays. After the children left, we forgot about it.

Until last night…

Wife Elizabeth was away so we decided to turn it on for company.
Trouble was, we couldn’t figure out how. There were four remote control
devices. Which controlled what? It was far from obvious. We clicked
every button we could find. Nothing. Then we picked up the phone and
clicked a few buttons on that too. Perhaps there was some sympathetic
communication going on… some electronic voodoo.

In 1964, we turned one knob to turn the machine on. Another changed the channel. There was no doubt about it.

But come the miracle of electronics, and it took us a good 15 minutes
to figure out how to get the thing to work. Then we spent another 15
minutes riffling through dozens of programs before we realized that
there was not a single one that we wanted to watch.

Time lost: 30 minutes. Gain: negative.

So as to the wonders of modern gadgetry, we are less than impressed.

An Awkward Situation

But there is no doubt that the middle class is better equipped in
stuff than its hourly wages suggest. This is partly because the price of
the important stuff – food, shelter, clothing and utilities – has
actually gone down as a percentage of household income, from 52% of
disposable income in 1950 to only 32% today.

But the piece in the Journal doesn’t pay any attention to
the other side of the ledger: debt. In 1964, total public and private
debt in the U.S. was 140% of GDP. Today, it is 375% of GDP.

Hmmm… That’s about two and a half times as much debt per family.

The figures show NET WORTH per household at about the same level it
was 50 years ago: about five times disposable income. But those figures
do not include government debt – a huge and largely uncharted iceberg.

With so much debt to reckon with, the typical family is much more exposed to interest rate increases and other setbacks.

Right now, the cost of carrying debt is low. Because interest rates
are at their lowest point in more than half a century. But they were low
in 1964 too. And if they go up from here – as they did then – we’ll
have quite a hoopty-do. How many families could afford a 10% mortgage
interest rate?

And, of course, this calculation doesn’t include the trillions of
dollars in unfunded liabilities that the feds choose to ignore. Those
liabilities barely existed in 1964. Today, they come to (according to
professor Lawrence Kotlikoff at Boston University) more than $200
trillion – or about $150 trillion more than net assets. Now, how’s the
middle class doing?

But families don’t yet feel the weight of those unfunded liabilities
because they don’t have to pay them. In fact, they hope to be on the
receiving end… to be collecting Social Security… disability… and
health benefits, not paying for them.

Which just goes to show how corrupt and awkward the whole thing is.
Middle-class families work as hard as they can to keep up with expenses
now… and everyone hopes to live at everyone else’s expense in the
future.

It ain’t going to work.

A better approach… on Monday…

Regards,

Bill

The Next “Flash Crash” Could Happen Tomorrow…

Computers have taken over the stock market. One of every two trades
is done automatically by a computer.
These “high-frequency traders” — as they’re called — caused a 9% loss
in five minutes during the “Flash Crash” of May 6, 2010. And they’ve
only gotten more powerful since.
This report will show you how to protect yourself from catastrophe right away.

Other Related Articles:

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Let’s not overcomplicate a very simple point about the U.S. housing market…

The U.S. housing market is in recovery mode. That means buying a house is the single greatest investment you can make right now.

Last March, the average existing home in the U.S. cost $164,800. By November, it cost $180,600. That’s a jump of nearly 10%.

And that’s just the average price. There are much bigger moves in some local markets.

Meanwhile, we learn that existing home sales rose 2.1% in October — to an annual rate of 4.79 million homes.

And that home inventories — the total number of homes for sale — were lower than they had been since September 2005. (This means less supply and therefore even higher prices still.)

Prices are up. Sales are up. Inventory is down. Again, you can overcomplicate it. But this tells me all I need to know. The crash is behind us. A recovery lies ahead.

This on its own makes me “table pounding” bullish on real estate right now.

But the story gets even better. Ludicrously better, in fact…

That’s because on top of stupidly cheap prices in many areas… banks are offering you incredibly low interest rates to finance your purchase.

You’ve probably seen some variation of this chart. It shows mortgage rates going back to 1970.

As you can see, mortgage rates are the lowest they’ve been in over four decades. That means the financing to buy an American home is cheaper right now than it has been in over a generation.

In the February issue of my wealth-building newsletter, Unconventional Wealth, I recommend readers take immediate advantage of this situation. And I explain why historically low interest rates are potentially MUCH more lucrative over the long term than beaten-down prices.

According to Bankrate.com, as of Jan. 14, the average 30-year fixed-rate mortgage rate was about 3.54%.

But after speaking with one of America’s top-ranked mortgage brokers, I can confirm that qualified borrowers are tapping 30-year fixed-rate mortgages for as low as 3%.

So let’s see what kind of difference that 54 basis point spread would mean to you if you bought a house for the average price of $180,600 (as of November).

At a fixed rate of 3%… and with 3.5% of the principal down… your mortgage of $174,279 would cost you $734.77 a month.

At a 3.5% mortgage rate, your monthly payment would rise to $782.59.

That’s a difference of $47.82 a month…or $573.84 a year. Of course, there are other considerations such as mortgage insurance. But you get the idea.

If the 30-year fixed-rate jumps to 4%, your monthly mortgage payments would go up to $832.03.

And what happens as house prices continue to recover?

Well, if average house prices go up from $180,600 to $200,000… again with 3.5% down up front… a 4% mortgage works out at $921.41 a month.

In other words, the $180,600 home you could have bought using 3% mortgage financing could become a $200,000 home you buy with 4% financing.

It’s the difference between a $734.77 payment and a $921.41 payment.
That’s an extra $2,244 a year out of your pocket — money you could be spending on renovating your house… on a vacation… on a college savings plan.

Don’t throw this kind of money away. Act now.

Start looking for deals on Zillow.com or Trulia.com. Pick up the phone and start calling realtors. Lock in ultra-cheap financing.

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Best Regards,

Aaron Gentzler
Editor, Unconventional Wealth

P.S. To find out exactly how to benefit from the opportunity in the U.S. real estate market, check out Aaron’s latest recommendation to Unconventional Wealth readers. Including how to get the bank to pay you to borrow money. Find full details here.

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• The Forgotten Land of Pleasant Living
• The Secrets of Financial Asymetry

London Gold Market Report
from Adrian Ash
BullionVault
Fri 25 Jan, 07:45 EST

The GOLD PRICE slipped back to last night’s near-two week lows at $1665 per ounce Friday lunchtime in London, heading for a 1.1% drop on the week as world stock markets and other “risk assets” rose.

Silver also ticked lower to trade 2.7% beneath Wednesday’s 5-week highs.

Germany’s Ifo index of business sentiment meantime hit its best level since June.

The European Central Bank surprised analysts by saying 278 banks in the single-currency zone will repay €137 billion ($184bn) of their 3-year LTRO loans next week, nearly two-thirds more than expected.

“It now seems that the stronger tone in global equity markets, coupled with a notable easing in European and US market tensions, is leading to short-term pressure on gold,” reckons INTL FCStone analyst Ed Meir.

“We think it will continue for a little while longer, given that negative chart picture[s] are also contributing to the sloppier tone.”

Also looking at gold price charts, this week’s “failure to make a new high…is bearish,” says bullion bank Scotia Mocatta, pointing to $1625 as the “next level of support.”

Barclays’ technical analysts think a “pullback” to $1640 is now likely, following Thursday’s finish in US gold futures beneath $1675.

Despite stronger-than-forecast US economic data, however, “Accommodative [monetary] policy is still expected to remain in place for some time,” counters London market-maker UBS, “a scenario that continues to be conducive for higher gold prices.

“[Gold’s] recent pullback should be viewed as an opportunity to pick up metal at more attractive levels.”

On the currency markets Friday, the British Pound fell to a 5-month low against the Dollar and a 13-month low against the Euro after new data showed the UK economy shrinking 0.3% at the end of 2012.

That capped the drop in Sterling gold prices to £5 for the week at £1056 per ounce.

The quantity of gold bullion held to back shares in the world’s biggest gold ETF trust fund – State Street’s GLD – shrank again on Thursday, down another 3 tonnes to 1331.7 and now 1.7% smaller from mid-December’s record holding.

Silver backing the iShares Silver ETF – the SLV – extending this week’s contraction to 237 tonnes or some 2.2% of the total.

That is “still well under half” of last week’s addition however, notes Bloomberg News.

“We used to watch Comex [futures contracts] open interest,” Bloomberg quotes Bernard Sin at Swiss refining group MKS in Geneva, “but now everybody looks at ETF holdings to give a clear signal of investor interest.”

Over in Asia, meantime, China is “now clearly the largest global consumer of gold” – overtaking India at last – says the latest Commodities Weekly from Natixis.

Analysts at the French investment bank and bullion dealer point to the latest available import and mining-output data available from the world’s top two gold buying nations.

“India’s low figure is the combination of a weak Rupee, slower economic growth and higher import tariffs.”

On the supply side, gold mining bosses are “more optimistic” about gold prices in 2013 than they were in 2012, says the new Global Gold Price Report from consultancy PwC.

“Eighty-three per cent of executives believe we will see a rise in the price of gold, with zero expecting to see a decline,” says PwC.

“Executives of some of the largest gold companies expect to see the price of gold climb beyond $2000 in 2013.”

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich, Switzerland for just 0.5% commission.

(c) BullionVault 2013

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.