Month: June 2013

By HY Markets Forex Blog

The European stocks were trading mixed in the midday session on Thursday, after the European Union finance ministers finalized a deal regarding future bank failures.

The European Union finance ministers settled on a deal about bank bailouts in the future .The new rules shows that bondholders, depositors and shareholders with over 100,000 euros, should share the weigh down of saving a bank.

The European Euro Stoxx 50 index fell 0.18% to 2,598.12 as of 10.18am GMT , while the French CAC 40 index advanced 0.04$ to 3,727.56 and the German DAX index gained 0.09% to 7,948.36 at the same time . The UK FTSE 100 index added 0.39% to 6,189.30 at the same time. Germany’s Consumer climate index went up to 6.8 points in July from previous record of 6.5 in June, according reports from GfK.

According to the National Institute of Statistics (INE), retail sales in Spain weakened in May than the previous month.

Sales fell 4.6% in April, after a record of 4.8% year-on-year downfall in April. Retail sales picked up by 1.3% in May from April.

The European Central Bank (ECB) still going ahead to take action if the local government needs to extend growth, according the President Mario Draghi.

“The ECB has done as much as it can to stabilize markets and support the economy. Now governments and parliaments need to do all they can to raise growth potential,” he said.

“These include reducing barriers to entry for new firms and young people, and removing burdens on business like complex tax and labor laws or distortionary regulations,” Draghi added.

The post Europe stocks mixed while EU talks banking union appeared first on | HY Markets Official blog.

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By HY Markets Forex Blog

According to the German labor agency, the unemployment count in European powerhouse Germany dropped in June.

Registered unemployment in June dropped by 12,000, the first fall since January, according to reports released. However, the unemployment rate remained the same at 6.8% in June, while analysts predicted the reading would go up slightly to 6.9%.

Germany’s consumer climate went up 6.8 points in July from previous record of 6.5 in June, according to reports from GfK. Data released show that the consumer sentiment advanced due to the strong labor market , showing signs that the economy is recovering at a fast pace.

The ifo Business Climate Index for Germany rose to 105.9 in June, from previous record of 105.7 in May, according to Ifo Institute reports.

The Current Assessment index fell to 109.4 in June, from previous posting of 110.0 in May, according to reports. While the ifo Expectations Index advanced to 102.5 in June, increased from 101.6 in the previous month.

The ZEW index slightly increased to 38.5 points in June, from 36.4 points from previous month.

German’s gross domestic product (GDP) rose by 0.1 percent quarter-on-quarter, in line with the market expectations.

Germany’s adjusted GDP fell 1.4 percent in the first quarter, compared to the previous year, shown in reports from Germany’s statistical office Destatis.

Overrall, Germany’s GDP is expected to increase by 0.4 percent in 2013 and 1.8 percent the year after. Exportation predictions have improved regardless of the external orders for industrial goods, which have dropped.

The post German unemployment drops in June appeared first on | HY Markets Official blog.

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By www.CentralBankNews.info Here’s today’s Central Bank News’ link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don’t miss any important news.

By WallStreetDaily.com

The biggest problem with being a contrarian is having the nerve to actually buck conventional wisdom.

Most people don’t have the contrarian gene in their DNA, which means missing out on tons of moneymaking opportunities.

It’s a real shame, too. I mean, playing it safe is easily the worst form of self-torture one can inflict on his portfolio.

Long live the contrarian, I say!

Of course, being a true contrarian also requires a bit of patience.

That’s a tough reality to swallow in this day and age of instant gratification.

That being said, the wait might (finally) be over for one of my most contrarian calls in 2013. Let me explain…

Not Just Another Head Fake

Back in January, I told you to overlook “lingering financial turmoil, social unrest in Greece and Spain, and an economic rebound that still seems a long way off” – and just buy European stocks.

To be fair, Barron’s beat me to the punch by a few weeks. But they didn’t offer up a feasible way for everyday investors (like you and me) to play an imminent rebound. Instead, they expected us to buy shares listed on overseas exchanges. Based on my years of managing money, that’s not happening for the average investor. (More about that in a moment, though.)

What’s most important right now is the fact that European stocks just staged their most impressive rally in almost a year.

Since Monday’s close, the STOXX Europe 600 Index is up 3.2%, which is its biggest two-day jump since July 27 of last year, according to Bloomberg.

Of course, the move could be just another dreaded head fake. Or it could signal that the long-anticipated rally in European stocks is beginning in earnest.

I’m inclined to think it’s the latter. And here’s why…

Cheaper, Higher Yielding and (Long) Overdue for a Rally

Fundamentally speaking, a move much higher is warranted.

Remember, blue-chip European stocks trade much cheaper than their U.S. counterparts. And they yield more, too.

The average U.S. stock trades for 14.26 times forward earnings and yields 2.15%. In contrast, the average European stock trades for 12.61 times forward earnings and yields 3.75%.

So, yes, European stocks definitely represent the better bargain right now. And it appears other investors might finally be waking up to that reality, too.

Rest assured, a two-day price swing isn’t the only reason I’m getting more optimistic about my contrarian call on Europe.

Yesterday, I happened to speak with Morgan Stanley’s (MS) Head of Emerging Markets, Ruchir Sharma, who oversees more than $25 billion in investments. And he also believes Europe represents a compelling opportunity right now.

As far as specific European countries, he’s particularly optimistic about Germany’s prospects. The data backs him up, too.

The June consumer confidence reading in Germany came in higher than expected at 6.8. And analysts at GfK AG expect July’s reading to cross the board at its highest level since 2007.

Add it all up, and we could be approaching that critical turning point in sentiment for European stocks. Once that occurs, the buying will naturally follow suit.

And that’s where my recommendation of the SPDR EURO STOXX 50 Fund (FEZ) comes in…

Remember, it’s a low-cost, exchange-traded fund that invests in 56 of the bluest of blue-chip stocks in Europe. And it’s traded on a U.S. exchange, so we don’t have to worry about the hassle or expense of investing on overseas exchanges. (While Barron’s might forget about the little guys, we never will, because I’m one of them!)

What’s more, 33% of the fund is invested in German companies, including Bayer, Siemens and BASF.

Granted, the fund has failed to impress so far. It’s down about 1.8%, including dividends, since I first recommended it. But if the broad market rally in Europe over the last two days – along with the sentiment of some of the world’s most savvy investors – is any indication, we could be on the cusp of a breakout.

Bottom line: Being early doesn’t necessarily mean we’re wrong when it comes to contrarian investments. It just means we might have to wait a little while for average investors to wise up to the opportunity.

And thankfully, that moment might be upon us for European stocks. So don’t miss out.

Ahead of the tape,

Louis Basenese

The post Last Call for Europe? appeared first on  | Wall Street Daily.

Article By WallStreetDaily.com

Original Article: Last Call for Europe?

By MoneyMorning.com.au

Last week I said that if the S+P 500 fell below 1,598 then ‘my conviction levels will increase dramatically that further large falls are in the offing…‘

That very night the S+P 500 busted below 1,598 and we saw a very sharp fall over the next few days to a low of 1,553. My target on the S+P 500 from here is down to the 200 day moving average at around 1,504.

Longer term I think we’re heading much lower than that, but I would prefer to stick to realistic goals along the way.

There have now been some rather important shifts in momentum in US markets. I have been constantly amazed by their resilience over the past six months in the face of difficulties elsewhere, but the indicators that I like to keep an eye on are finally starting to roll over…

The first thing to note in the chart below is the fact that prices have closed below the 10 week moving average for the first time this year:

S+P 500 Weekly Chart

Click to enlarge

Look at the last few times we’ve seen a weekly close below the 10 week moving average in this bull market and you can see quite clearly that each and every time this indicator has presented itself the S+P 500 has had a pretty steep fall over the next few weeks/months.

While we remain in long term uptrend (10 week MA above the 35 week MA) the chances are that the stock market will revisit the 200 day moving average and then possibly bounce from there. That’s why I have that as my short term target.

The next thing to note is that the weekly MACD has now turned down and broken below its signal line. Again a quick look at the past instances of this occurring during this bull market and it’s plain as day that a shift in the MACD to the downside has been a great warning that more selling was coming around the corner.

The final thing worth pointing out (and the reason why I believe there is a lot more downside to come) is the fact that we’re having a false break of the 2007 high of 1,576. A confirmation of that false break will create a double top formation that so often signals of the end of a bull market.

The fact is that it’s not only a double top but a triple top when you see the data going all the way back to the 2000 internet bubble. A failure from this level could spell real trouble for the S+P 500 going forward.

Markets never go down in a straight line though. If you want to take advantage of a big fall in the stock market the key is to wait until other traders are ‘stopping’ out of their short positions before entering a trade.

The current squeeze higher in the share market is a perfect example. We’ve had a sharp sell-off and people are nervous. But a press conference in China that said absolutely nothing and some bad GDP revisions have increased confidence that Bernanke won’t start tapering just yet. This has resulted in a bounce over the last few days.

People who are short the market will be under pressure as the market goes higher. They won’t want to go from a winning position to a losing position, so they’ll stop out of the trade if the market runs back up to their initial entry price. This buying can feed on itself and create a sharp rally known as a ‘short squeeze’.

Once that buying is out of the way the stock market is often a lot higher than where it should be and sellers return. Since the buying was short covering and not genuine buyers, the buying volume dries up at the elevated level, and so prices then fall just as rapidly as they rose.

My prediction for the S+P 500 from here would be that the current rally will only last another 1-5 days and top out between 1,610-1,640 (with an outside chance of a move to 1660) before rolling over again and plunging to 1500.

Hang Seng Reaches Target in Two Weeks

Now let’s look at my last prediction.

On the 13th of June (two weeks ago) I wrote to you outlining some of my theories on price action and made a prediction based on where I thought the Hang Seng Index should go.

In the article I wrote that:

‘The Hang Seng is about to send the fourth long term downtrend signal and is busting down through the point of control on a weekly chart.

‘When you add up the principles above it seems pretty clear that there is a high risk we are about to see the Hang Seng fall all the way to the bottom of the range at 19,400. That would be a 9% fall from here.‘

Fast forward all of two weeks and the Hang Seng made a low of 19,395 on Tuesday 25th June and has since bounced above 20,000.

Hang Seng Hits 19,400 Target

Click to enlarge

So who knows if I’ll be right about the next move in the S+P 500? Sometimes the market does what you least expect.

But the technical set up in the S+P 500 at the moment is one of the most compelling I have seen in a long time.

Murray Dawes
Editor, Slipstream Trader

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From the Port Phillip Publishing Library

Special Report: Panic of 2103

Daily Reckoning: Tony Soprano’s Got Nothing on The Federal Reserve

Money Morning: China’s Growth Story Ends With a Whimper

Pursuit of Happiness: Is Technology the Most Exciting Industry in the World?

By MoneyMorning.com.au

Dear rest of the world: Please know that it’s painful for Americans to see what is happening in the case of Edward Snowden.

Here he is flying from Hong Kong to Russia – countries that seem like safe havens from the long reach of the US empire. Where will he end up? Could be Iceland, Venezuela, or Ecuador. He needs someplace to go where the authorities can’t be intimated to turn him over to his jailers and possible executioners.

It’s either that or face the chair for doing the right thing. Even though I understand the corruption of the system – and I get just how bad things really are – it’s still hard to process.

Liberty is Dead in America

The law under which he has been charged dates from 1917, and its sole purpose was to destroy the peace movement of the time. As Woodrow Wilson said before the law passed, ‘Creatures of passion, disloyalty, and anarchy must be crushed out.’

And they were. If you spoke out against the war, you were arrested. Papers were effectively nationalised. Prices were controlled. Independent thinkers of all types were jailed.

Actually, a number of Americans at the time fled to Russia for freedom and found themselves in the middle of the Bolshevik Revolution. Then, like now, the choice was the frying pan or the fire.

So yes, we know that America has not been itself for a long time. Maybe it never was. But still, we read the Federalist Papers. We read Thomas Jefferson. We read the Declaration, the Constitution, the words of Madison and Paine.

We just can’t shake the idea that there is something to this notion that government ought to be limited and that people have the right to freedom.

Snowden is a good young man who wanted his fellow citizens to know what our own government is doing to us. He wanted to warn us that our own government is reading our emails and chats and listening in on our phone calls.

He blew the whistle on the alarming fact that our own government is assembling a vast database from which it can draw at any point in the future, essentially putting the government in a position to blackmail every citizen forever.

He didn’t just assert all this. He proved it with vast documentation. And he blew the whistle because he thought that doing so might help bring change.

I detect something like naivete in his voice. It’s like he still holds to the old ideals. Maybe he was paying attention in the civics class where they teach about the ‘Land of the Free’ and things like that.

To say what he revealed is unconstitutional is a ridiculous understatement. This program utterly shreds not only the Constitution, but every notion of liberal society.

If we had any truly democratic features remaining in our system, Snowden would be given total immunity to prosecution and asked to testify to Congress. Then Congress would get to the bottom of the scandal and gut the agencies that took advantage of public fear to enact totalitarian surveillance.

Alas, Snowden is on the run. But everywhere he goes, he releases more information. No matter how bad you think it is, it seems to get worse. While in Hong Kong, he showed journalists evidence that the US government hacked Chinese mobile phone companies to read millions of text messages.

It followed the communications of professors at Tsinghua University. It burrowed into the databases of Pacnet in Hong Kong, their version of AT&T.

These revelations come after years and years of kvetching by US officials that China has been stealing US trade secrets. Whether that is true or not (maybe they’ve made a mountain out of a molehill), just think for a minute about what Snowden’s information implies.

Imagine the Shoe on the Other Foot

Let’s just say that a Chinese dissident came to the US and provided The New York Times with proof that the Chinese communists had tapped the phones of our university professors, had been reading our text messages, and had burrowed down deep to have a direct passage to listen to our phone calls.

Can you imagine that response? There would be hysteria. Sermons from the pulpit on Sunday would once again attack the godless communists and their imperial ways. After a few weeks, we might even be close to all-out war. The American people would be absolutely beside themselves.

So you wonder why the Chinese people might be just slightly annoyed to hear this information. And then consider that the US is hounding this leaker and demanding he be captured like a criminal and turned over to the US for a thorough flogging, a life sentence in jail, or possibly even worse.

What’s mystifying is that all of this is happening under a president who ran on a platform of encouraging whistle-blowers. Maybe this promise was like Chairman Mao’s promise to let a hundred flowers bloom. Once they bloomed, he cut them down. Maybe Obama’s encouragement of whistle-blowers was designed to find the traitors and eliminate them.

I actually doubt it, really. In fact, I wonder how much Obama really can control the national security state at all. I’m not against blaming the president for anything and everything, and it’s true that he might have intervened to stop it – and he might have even personally approved it.

More likely, however, is the strange reality that no American really wants to admit: namely, that the president is a figurehead. A glorified PR man for the state, and not a godlike central planner in charge of all things.

There are only so many hours in a day, and most of the president’s days are filled with defending himself, keeping his entourage together, putting the gloss on the elites and their policies, and meeting people and the like.

The system is much bigger than one man, and that one man that everyone trumpets is mostly a bit planner, a survivor who watches the clock and worries what the history books will say about him.

In the day-to-day machinations of the state, we are largely ruled by bad laws and legislation enacted by people long dead – the worst of it passed 100 years ago – and they are enforced by bureaucrats and players today who are not subject to any aspect of the democratic system.

This combination of legislative cruft plus bureaucratic inertia on behalf of public and private elites is the real source of the tyranny of our times.

Jeffrey Tucker
Contributing Writer, Money Morning

Publisher’s Note: This article originally appeared in Laissez Faire Today

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From the Archives…

The 12 Most Important Rules Every Investor Must Know
21-06-2013 – Vern Gowdie

The US Economy Butterfly Effect
20-06-2013 – Murray Dawes

Beware The Federal Reserve’s Deadly Game of Poker
19-06-2013 – Dr Alex Cowie

Why Thursday Could Be a Key Day for Silver…
18-06-2013 – Dr Alex Cowie

The Single Biggest Mistake a Technology Investor Can Make
17-06-2013 – Sam Volkering

USDJPY continues its sideways movement in a range between 96.86 and 98.70. Key support is located at 96.86, as long as this level holds, the price action in the range could be treated as consolidation of the uptrend from 93.79, one more rise to 100.00 area is still possible after consolidation. On the downside, a breakdown below 96.86 support will indicate that the upward movement from 93.79 had completed at 98.70 already, then the following downward movement could bring price back to 95.00 zone.

Forex Signals

Source: Brian Sylvester of The Gold Report (6/26/13)

http://www.theaureport.com/pub/na/15405

The gold price may have taken a tumble, but Ian Gordon, chairman and founder of the Longwave Group in British Columbia, is watching for a recovery. As bullishness in gold reaches some of its lowest levels, Gordon, in this interview with The Gold Report says he believes that is indicative of a turn and he discusses where he has invested his money to ride the upswing.

The Gold Report: On April 15, the gold price plunged about 9%—the biggest one-day loss ever for the yellow metal. Many gold investors got “murdered” that day. Has your personal investigation revealed any suspects?

Ian Gordon: I suspect it was akin to what happened in 1999. The then-governor of the Bank of England, Edward George, supposedly said that “any further rise in the gold price would take down one or more trading houses.” He said the rising price of gold was curtailed through the work of the Federal Reserve and the Bank of England. It appears that a bullion bank was caught offside on the short side and they had to take the price of gold down quite dramatically to allow it to cover.

I think something similar happened in April. I think it was manipulated to the downside. Goldman, Sachs & Co. encouraged its clients to short sell gold two days before this occurred.

TGR: Could it have just been an error?

IG: I always suspect the worst. There’s so much manipulation in all the markets as I see it.

TGR: That one-day drop caught even long-time gold investors off guard and shook their confidence. Is being a precious metals investor at this point simply about having the resolve to stay the course, or should even the ardent investors make adjustments to their gold portfolios?

IG: I’m extremely bullish on gold. Bullishness in gold, according to the website Market Vane, is at 40%, the lowest it has been since 2001. Bullishness in the stock market is at 70%, which is almost the highest it has been since Market Vane began tracking it. I see a reversal occurring here, for the gold price to the upside and the stock market to the downside.

TGR: There’s no way to sugar coat the disappointing performance of gold and silver in 2013. But has the current global economic backdrop provided some new and compelling reasons to own gold and precious metal equities?

IG: There are compelling reasons to be bullish on gold particularly, simply because there is a real worldwide crisis in fiat money. The unfolding crisis is similar to the 1930s, when the whole monetary system collapsed. We’re envisioning something quite similar to that collapse is now occurring.

We can see that there’s this huge move to gold, not only by countries like China and Russia and even the small “-stan” countries, but major investors are also taking up the physical metal because they can see this crisis unfolding.

TGR: Most of what I’m reading says that there just aren’t a lot of bids in the market right now for precious metals. Investment demand has waned, with gold falling consistently lower since its high in 2011.

IG: Investment demand is huge. The output of American Eagle gold bullion coins by the U.S. Mint is at record highs. Demand by the small investors for gold and silver is at unprecedented levels. The amount of gold that’s being imported through Hong Kong into China is at a record level.

TGR: Yet, at the same time, India, which is the world’s biggest gold consumer, increased the royalty from 6% to 8% on gold imports.

IG: It has, but India is notorious for gold smuggling. Most people are going to look for a way to go around those taxes. I suspect that there will be the same amount of gold imported into India through Dubai, but most of it won’t be declared.

TGR: You say you’re seeing strong demand for the physical metal, but investors have been getting out of exchange-traded funds (ETFs) and equities in mass numbers.

IG: With regards to the gold ETFs, I suspect that many investors are cashing in their paper claims to take possession of the physical. Yes, gold stocks, particularly the juniors, have been slaughtered, But once bullishness returns to gold, bullishness will return to gold equities. When you get this overly bearishness in markets, it’s usually indicative of a turn. I’m confident that we’re going to see a turn to the upside. I also believe that the turn in the stock market to the downside is about to begin.

TGR: I get the sense that there’s a prevailing sentiment that we haven’t hit a bottom yet in the mining equity space and that there’s another leg down before we see a move to the upside. Do you see that as well?

IG: That is always a possibility and it can’t be ruled out, but the precious metals’ fundamentals are as compelling today as they have ever been.

TGR: Could it be seasonality due to the summer?

IG: I don’t think so and anyway I am a long-term investor and I am essentially not concerned by short-term price machinations. As I have said, the most compelling reason to own gold is the crippling debt crisis, which has brought about the probability of a catastrophic end to fiat currencies.

TGR: Sean Boyd, the chief executive of Agnico-Eagle Mines Ltd. (AEM:TSX; AEM:NYSE), recently told Bloomberg that gold could reach about $1,800/ounce ($1,800/oz) within a year. What’s your medium-term outlook for gold and silver?

IG: The market is going to have to go through a consolidation that could last for weeks. However, I’m much more bullish on gold than I am on silver because gold has traditionally been recognized as money sine qua non. Industrial demand is going to drop quite precipitously as the world goes into the depression stage of the cycle. Nevertheless, it is likely that silver will take on the role of poor man’s gold.

My belief is we’re going to see a decoupling between the paper markets and the physical markets. The demand for physical is going to grow dramatically. It’s going to make the paper markets irrelevant.

I’m not sure if it’s going to be a year as Sean says, but it’s going to be extremely strong and the move will be very dramatic once it starts. The old highs of $1,900/oz will be surpassed by a long shot over the medium to long term.

TGR: Do you think silver will fall below the $20/oz level in the next six months to a year?

IG: We’re as oversold as we were in 2008, although the price isn’t as low as it was then. I see a consolidation in the price, but I don’t forecast much lower prices occurring in either of the precious metals. Once this consolidation is over, I see a resumption of the bull market.

TGR: Amid the moribund news cycle for gold and silver, there have been some feel-good stories in the equities space.

IG: True. A company like Newmont Mining Corp. (NEM:NYSE) is a really good story because it has a 4% dividend. It’s trading at a low book value.

Agnico-Eagle is well managed. It’s been moving into the junior space in anticipation of a move up in the market. Agnico-Eagle has recently acquired interests in five junior mining companies because management is bullish on gold and the company can invest in promising junior companies at very cheap prices that have good potential to grow their assets.

TGR: Does Newmont have the cash flow to maintain a 4% dividend?

IG: Yes, I think it does. Investors are buying these companies at or close to a price low. When the gold price increases, Newmont’s profitability will increase and it should be able to raise the dividend quite dramatically. The same thing happened in the 1930s. Even though the gold price was fixed at $20.67/oz, the dividends that companies like Homestake and Dome Mines were paying out were enormous—10% dividends were being paid out, particularly after Roosevelt raised the price from $20.67 to $35/oz.

TGR: Is there any good news among the juniors?

IG: In the junior sphere, you can buy some companies for nearly $10/oz of gold in the ground.

One of the juniors that I’ve consistently talked about is Temex Resources Corp. (TME:TSX.V; TQ1:FSE), which has about 4 million ounces (4 Moz) of gold in the ground in Ontario, Canada.

TGR: What is Temex’s cash position?

IG: The company has about $7 million ($7M) in cash. It did a financing prior to this horror story that we’ve gone through in the past year. I talked to the CEO, Ian Campbell, who said that Temex has sufficient cash to last another two years, even with the drilling that is ongoing.

TGR: Are you more bullish on the Whitney or the Juby project?

IG: I guess I’m more bullish on Juby, even though it’s a lower grade project. Temex only owns 60% of the Whitney property; Goldcorp Inc. (G:TSX; GG:NYSE) owns 40%.

The chances are that there’s about 3 Moz at Juby. The gold definitely runs beyond where the company has drilled and I believe that overall Juby could turn into a major deposit. I am not belittling the Whitney property because that too could be a very large deposit, but Temex only owns 60% of Whitney.

Another old favorite is Barkerville Gold Mines Ltd. (BGM:TSX.V). The company’s trading has been halted by the British Columbia Securities Commission (BCSC) as it answers some questions about its NI 43-101. . It has just published a new NI 43-101 resource of 4.98 Moz and a potential resource of 9–27 Moz. These are very good numbers. It will be interesting to see what value investors put to these numbers. I believe that there is significant potential for the company to grow this discovery quite substantially.

TGR: Are there any other gold equities that you’re fond of at these low prices?

IG: I own about 10% of Alliance Mining Corp. (ALM:TSX.V). The company has a little bit of a cash problem, but it has some fantastic projects in the largest gold-silver producing area in Arizona. It also purchased some properties in Mexico that are almost contiguous to the Orisyvo mine. The company is well managed and has good relationships with the mining fraternity in Arizona. It’s a good story with some very prospective properties.

TGR: What about some other companies?

IG: I own Freegold Ventures Ltd. (FVL:TSX) in Alaska, which has about 5 Moz and growing. It’s close to the Kinross Gold Corp. (K:TSX; KGC:NYSE) Fort Knox mine. I like the management of Freegold. Investors should be looking at it simply because of the growth in the ground gold assets that the company owns, its proximity to the Fort Knox mine and a dedicated management team.

I’m extremely bullish on Terraco Gold Corp. (TEN:TSX.V). The company is one of the best managed juniors out there. Todd Hilditch, the CEO, does a fantastic job in acquiring royalties on the Barrick Gold Corp. (ABX:NYSE)/Midway Gold Corp. (MDW:TSX.V; MDW:NYSE.MKT) Moonlight property in Nevada. These royalties have been estimated to have a value of about $70M on the Barrick/Midway Moonlight property in Nevada. Barrick doesn’t have to tell us how much gold is being discovered there, but people are quoting it at 6 Moz and I think that it is based on that number that the value of the Terraco royalty has been estimated.

TGR: What about Terraco’s Spring Valley project?

IG: It’s contiguous to the Barrick/Midway project. There’s a good chance that the gold being discovered on the Barrick/Midway project is going to run onto the Terraco property.

TGR: Terraco is worth about $18M right now. Why wouldn’t Barrick just buy Terraco versus obtaining the royalty?

IG: Some of these companies, like Agnico, are prepared to do that, but a lot of these seniors have made so many blunders that they’re too frightened to do anything. Take, for example, Pascua Lama, the Barrick property on the border of Argentina and Chile. See how mismanaged that appears to have been, the capital expenditure that has already gone into it, and the bickering between the Chilean government and the company and great properties?

But you’re right. Why wouldn’t someone go after a company like Terraco, which has a nice royalty?

TGR: What about companies outside the Americas?

IG: I like Orex Minerals Inc. (REX:TSX.V), which has about 1 Moz gold in Sweden. However, it has mainly silver properties in Mexico. Orex was planning to spin out the silver properties into a separate company, but it hasn’t done that yet because of the market.

TGR: Detour Gold Corp. (DGC:TSX) is not too far from Temex. It poured gold this year, but hasn’t reached commercial production yet. It secured a credit facility and financing. Is it on track to go commercial in the second half of this year?

IG: I love the Abitibi greenstone belt and I love Detour’s project. It’s huge—25 Moz. I’m sure it will get into production this year, but I don’t own Detour.

I did own the company that basically found Detour, Pelangio Exploration Inc. (PX:TSX.V). Pelangio was an exceptionally good investment for my investors when I was a broker at Canaccord. I did a financing in Pelangio around 2001 at $0.11/share. When Detour took Pelangio over, it was valued at about $5/share.

TGR: Pelangio plans to produce 650,000 oz annually. Is that realistic?

IG: It never happens as smoothly as anticipated. I’m sure there will be hiccups, but eventually that kind of production rate can be achieved.

TGR: The silver producers continue to perform regardless of the commodity price performance or investor sentiment for the most part. What names are you following in that segment of the precious metals market?

IG: I’m more bullish on gold, Brian. However, I do follow a few companies that I don’t have a stake in. I keep an eye on Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) because it took over an asset of a company that I financed called Continuum Resources Ltd. I like the management of Fortuna.

I watch Endeavour Silver Corp. (EDR:TSX; EXK:NYSE; EJD:FSE) because I helped finance the company in its preproduction days when I was at Canaccord. The company is also extremely well managed. I love the growth profile that the company has achieved. It’s really interesting and cheap. If you’re looking for a silver play, it might be the one simply because it’s so cheap. Its high is $13/share and it’s at around $3.85/share, yet it’s increasing production all the time.

TGR: You are often investing in financings. Do you ever buy equities in the open market?

IG: I do. For example, I bought Barkerville in the market. When it came out with its numbers last June, they were received with massive disbelief. The price of the stock didn’t reflect the numbers. I went in the market and bought substantially to build my position because the price wasn’t reflecting the asset.

I also bought Alliance Mining and Temex when the shares have been cheap.

TGR: How do you determine cheap?

IG: Relative to where it was formerly priced and the value I place on the company’s assets. I started to buy gold and silver stocks in 2000 because they were cheap and no one wanted them. We are in the same position in the market today. We know the bullish consensus numbers for gold are at the same levels that they were in 2001. You can buy these things really cheap.

The only reason anybody wouldn’t be buying them is because they don’t believe that the price of gold is going to rise. I believe that the price is going to rise substantially because the chaos in the financial markets is going to be horrendous.

TGR: Thanks, Ian.

A globally renowned economic forecaster, author and speaker, Ian Gordon is founder and chairman of the Longwave Group, which comprises two companies—Longwave Analytics and Longwave Strategies. The former specializes in Gordon’s ongoing study and analysis of the Longwave Principle originally expounded by Nikolai Kondratiev. With Longwave Strategies, Gordon assists select precious metal companies in financings. Educated in England, Gordon graduated from the Royal Military Academy, Sandhurst. After a few years serving as a platoon commander in a Scottish regiment, he moved to Canada in 1967 and entered the University of Manitoba’s History Department. Taking that step has had a profound impact because, during this period, he began to study the historical trends that ultimately provided the foundation for his Longwave theory. Gordon has been publishing his Longwave Analyst website since 1998. Eric Sprott, chairman, CEO and portfolio manager at Sprott Asset Management, describes Gordon as “a rare breed in the investment-adviser arena.” He notes that Gordon’s forecasts “have taken on a life force of their own and if you care to listen, Gordon will tell you how it will all end.”

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DISCLOSURE:

1) Brian Sylvester conducted this interview for The Gold Report and provides services to The Gold Reportas an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Gold Report: Goldcorp Inc., Terraco Gold Corp., Detour Gold Corp. and Fortuna Silver Mines Inc. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Ian Gordon: I or my family own shares of the following companies mentioned in this interview: Alliance Mining Corp., Barkerville Gold Mines Ltd., Freegold Ventures Ltd., Orex Minerals Inc., Temex Resources Corp. and Terraco Gold Corp. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

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By The Sizemore Letter

Harley-Davidson, Inc. ($HOG) is an American icon.  It’s also a well-managed company and one of those true rarities: a successful turnaround story.  This is a company that was facing bankruptcy in the early 1980s yet managed to rebuild itself into the pride of American manufacturing…and the subject of countless case studies in MBA programs worldwide.

Harley’s management was able to pull off that coup by leveraging that intangible quality that is so hard to imitate: brand cachet.  For a particular breed of leather-wearing motorcycle enthusiast, there is simply nothing on par with a Harley.

But all of that said, I wouldn’t touch the stock, or at least not at today’s prices.

At first glance Harley wouldn’t appear exceptionally pricey.  It trades for 17 times trailing earnings and 2 times sales.  This compares to 16 times earnings and 1.5 times sales for the S&P 500.

A modest premium is appropriate for an iconic company with Harley’s branding power (and not to mention its high return on equity of 25.8%), right?

Well, maybe.  But Daimler ($DDAIF)—a company that knows a thing or two about vehicle branding—trades for just 10 times earnings and 0.42 times sales.  Yes, I realize it’s not an apples-to-apples comparison and that Harley runs a higher-margin operation in a business with fewer direct competitors.  All else equal, Harley should trade at a slight premium to a larger automaker like Daimler.

But all else is not equal, and Harley has a serious growth problem.  And it’s not one that will go away with a recovering economy.

 Harley’s revenues are still below their pre-crisis highs (see chart).  Unit sales paint an even bleaker picture.  Harley sold 349,196 bikes in 2006; the number in 2012 was just 247,625.  That’s a unit decrease of nearly 30%.

To be fair, revenues and unit sales have enjoyed a nice bounce since the pits of the financial crisis.  But Harley will never get its old mojo back for one critical reason that is completely outside the control of management: demographics.

Down the road from my house in Dallas, there is greasy drive-in burger joint called Keller’s…a place I’ve been known to frequent a little more often than my doctor might recommend.  On any given weekend, you might see a dozen or more bikers parked in the lot, showing off their chrome-laden Harleys.  And nearly all of them are over the age of 45. Most are over 50.

This isn’t a coincidence.  Harley Davidson is a brand whose sales depend disproportionately—for that matter, almost exclusively—on middle-aged Caucasian males.  Riders younger than 40 generally lack the time, interest, or the bankroll to buy a Harley.  But by the time they get into their 60s or older, the noise and joint pain have begun to make riding lose its allure.  You may still ride in your 60s, but you’re doing it less frequently and you probably aren’t buying a new bike.

The sweet spot is the mid-40s to early 50s.  And with the Baby Boomers—the largest and wealthiest generation in history—now largely aged out of this key demographic bracket, Harley has a serious problem.  Generation X—my generation—is not nearly large enough to pick up the slack, and Generation Y (aka “the Millennials” or “Echo Boomers”) are decades away from being in the demographic sweet spot for Harley.  The number of American men aged 40-49 is set to decline through the early 2020s and won’t reach its old 2010 peak until 2035.

CNN Money reported on this as far back as 2010, and demographic strategist Harry Dent—my old boss—has used Harley as a case study for decades.

Harley Davidson’s management is not stupid.  They understand the issues they face, and they have gone so far as to address it with a dedicated page on their Investor Relations site: Harley Davidson Demographics.  The company has aggressively expanded its marketing efforts to attract younger men, non-Caucasian men, and women and has had modest success.  Per the demographic site, management writes “In 2012, U.S. sales of new Harley-Davidson motorcycles to our ‘outreach’ customers — young adults 18-34, women, African-Americans and Hispanics – grew overall at more than twice the rate as sales to our traditional U.S. customer base of Caucasian men, ages 35-plus.”

But realistically, there is no replacing the white Boomer male.  And this means a very rough decade ahead for Harley Davidson.

Stocks in industries in gentle decline are not necessarily bad investments, as tobacco stock investors have no doubt noticed (see “My Favorite Tobacco Stock is…Intel?” and “Can E-Cigarettes Relight Big Tobacco”).

Under the right set of circumstances—strong financial health, large barriers to entry, good dividend growth and share buybacks—stocks in no-growth industries can make better investments than those in high-growth industries.

But for this to be the case, the stock has to be priced appropriately.  Big Tobacco has had a great decade-long run because it started out cheap and hated and paid a monster dividend.  Harley Davidson, in contrast, trades at a slight premium to the market and yields only 1.7%.

Harley Davidson may be a good buy—eventually. But given the demographic headwinds it faces, it’s not cheap enough for serious consideration at this time.

Diclosures: Sizemore Capital is long Daimler. This article first appeared on InvestorPlace.

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