Month: October 2013

By MoneyMorning.com.au

Soon we won’t have Ben Bernanke to kick around anymore. Janet Yellen will head the US Federal Reserve Bank.

What does it mean to you?

In an ideal world, it would mean nothing. You would shrug and go back to your morning coffee. Fed chairmen (and chairwomen), like referees, should not have such an impact on the game.

But we don’t live in that world. So unfortunately, we have to at least consider what reckless thing the Fed might do next.

Perhaps we should back up and say what the Federal Reserve is all about. As President Obama said: ‘A lot of people aren’t necessarily sure what the Federal Reserve does.‘

Including, I might add, the president himself. If he did, he wouldn’t have said the outlandishly stupid thing he said next.

Thanks to Ben, Obama said, ‘more families are able to afford their own home; more small businesses are able to get loans to expand and hire workers; more folks can pay their mortgages and their car loans.‘

Ben is responsible for all that, is he?

Mainstream Media an Establishment Mouthpiece

The press generally gushed over the choice. I chuckled as I canvassed the newspapers, the mouthpieces of the establishment. I thought of my old favourite, A.J. Liebling (1904-1963), who wrote some of the most insightful press criticism in the English language.

In his The Press (I recommend the expanded 1975 edition put together by his widow, Jean Stafford), Liebling wrote how newspapers ‘did not always, monolithically, without effort, like a piano falling down a stairwell, follow the official line…‘ But mostly, they did. They still do.

The New York Times was typical:

‘President Obama was wise to nominate Janet Yellen, vice chairwoman of the Federal Reserve, to be the Fed’s next leader. As a deeply respected economist, she will bring two vital attributes to that role as a steward of the economy.‘

The ‘deeply respected‘ bit was something that was often repeated. Not repeated was the fact that she didn’t see the last crisis – the biggest since the Great Depression – until it happened.

In her own words:

‘For my own part, I did not see and did not appreciate what the risks were with securitization, the credit ratings agencies, the shadow banking system, the SIVs – I didn’t see any of that coming until it happened.‘

I have no idea if she is competent. Competence in an economist is hard to measure, like knowing whether your auto mechanic is really any good.

As for vital attributes, the Times did get one right. ‘She represents continuity,‘ the Times wrote. That pretty much says it all. Janet Yellen is establishment all the way. She won’t wobble the canoe. She’s not a Paul Volcker coming in to break things up.

And that’s all you need to know about Janet Yellen. She’s got the same playbook in her pocket as Bernanke. If anything, there are hints she’ll be even more aggressive in printing money than Bernanke.

And old Ben was pretty proficient in this area. Since he took over back in February 2006, the Fed’s securities holdings are up 365%, to $3.5 trillion. It bought all that with money it created out of nothing.

How Big Will the Pile Be When Yellen Leaves?

My guess is it will be higher. Expect the easy money and distortions to continue. The stock market may continue to rise, as it has, with the size of the Fed’s holdings. This can’t end well, but the party between now and the end could be something.

Already, the markets have come unhinged.

I can’t help but drag out a quote from my well-thumbed Humble on Wall Street, by Martin Sosnoff. ‘The most reliable indicator of speculative excess is the new-issue market,‘ he wrote.

If you want to see the effects of an overindulged, careless market, look there. A good piece by Telis Demos in the Wall Street Journal highlighted this. Out of the 28 new technology stocks listed this year, 19 of them were money-losing firms.

That’s the highest percentage of losers since 2007. Twitter is the next one up. It will go public and likely command a market value that starts with a ‘b’. Yet last year, it lost $79 million.

The rise of the profitless corporation is a curious phenomenon. Murray Stahl, the money manager at Horizon Kinetics (and co-manager of the Virtus Wealth Masters Fund) picked up on this idea in a note in August:

‘It is hard to imagine that there are companies deemed successful that have little or no profit – and yet they exist. Examples include Salesforce.com, Workday, Netflix and even, to a great extent, Amazon.com.‘

Amazon has been around seemingly forever. The market values the stock at $141 billion. It begs one to ask as Stahl does:

‘If it is possible to be successful without generating profits [but] merely by growing revenues, why should not more companies engage in that approach?‘

He leaves the question unanswered, but probably the executives at Twitter have wondered the same thing, if only privately.

On the other side of the spectrum, there are many companies enjoying profit margins at or near record highs. IBM, for example, has profit margins nearly twice as high as in 1999, right near the peak of the last tech bubble.

As Stahl points out, ‘There are many huge firms in the major stock indexes with enormous profit margins.‘ Among these are IBM, Microsoft, Oracle, Intel and Apple. So these stocks – and others – look cheap based on recent earnings. But those recent earnings come from reaping the rewards of  high profit margins. There is a big risk that these will revert to something less heroic.

(This is why I’ve been careful to pick up stocks where profit margins are at historically low levels at the moment – such as banking or insurance. Reversion to some average is a force you want to harness for gains, not one you want to fight against.)

US Stocks a Tough Market

Point being we live in a weird, funhouse sort of market. Fed policy distorts everything, starting with its suppression of honest interest rates. The market rallies over silly things – even a ‘temporary’ fix to the debt crisis gets a cheer, instead of groans – and no bad news keeps the market down for long.

All of this makes it a tough market to stay safe in, because you may lag behind awhile. I like to read the shareholder letters of a number of my value-minded friends and colleagues. Many are lagging the market this year because they don’t own the junk that’s leading the pack.

Robert Sanborn, who runs the Elkhorn Fund and is one of the laggards, reminisced about how this market reminds him of the 1990s. He lagged then too.

‘I distinctly recall one partner of mine tell me that I would never ever ‘catch up’ to the relative performances of the highfliers that year… In the next three years, the Nasdaq dropped about 70%, and I had the best absolute and relative investing years of my life. Those heroes of the late ’90s all imploded and from point to point, suffered large and permanent losses in capital.‘

I think the Yellen era may well follow a path like that. It’s a big party for a while, and then it isn’t.

Chris Mayer
Contributing Editor, Money Morning

Publisher’s Note: Janet Yellen: An Insane Choice for a Debt-Crazed Economy originally appeared in The Daily Reckoning USA.

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Source: Brian Sylvester of The Metals Report (10/15/13)

http://www.theaureport.com/pub/na/maximizing-returns-in-an-uncertain-mining-market-tom-szabo

Tom Szabo, an investment strategist and principal of MetalAugmentor.com,

invests in miners with base metal, specialty metal and rare earth element projects because the market isn’t quick to notice them—meaning it’s easy to get in early on a great project. His Peerless system helps to identify opportunities based on unique attributes. So, which metals and rare earth companies are set to strike in this volatile market? Szabo doles out tips in this Metals Report interview and explains why he likes companies that have yet to achieve market favor.

The Metals Report: As an investment strategist at MetalAugmentor.com, you use the Peerless system to rank equities in the mining space. What exactly is the Peerless system?

Tom Szabo: Our system is a qualitative ranking of companies. It’s a binary system: A company is either peerless or it’s not. However, we do have companies that we consider “candidates” for peerless. The Peerless system takes into account success factors. These success factors may be different based on the stage of development of the company. An exploration company’s success factors will be somewhat different from a producer, although they will share some similarities like management and corporate strategy.

TMR: What are some non-precious metal equities that are providing interesting opportunities in the current cycle?

TS: In base metals, we are more interested in the exploration or earlier-stage plays. One of the reasons is the market doesn’t tend to add a large premium to a non-precious metal discovery until the bigger players have had a chance to wrap their arms around the story. Often the proper valuation doesn’t appear until the project becomes an obvious candidate for being taken out. While the wait can sometimes be frustrating, it also allows astute investors to be positioned ahead of the crowd.

An example of a peerless company in this space would be North American Nickel Inc. (NAN:TSX.V). This is an exploration company that’s active in Greenland. It has made a potentially district-scale discovery of a magmatic nickel-copper-cobalt-platinum-group-metals system with some similarities to the Sudbury Basin in Ontario, Canada.

TMR: Is Greenland considered mining-friendly?

TS: It is. The population seems to be pretty pragmatic. Most people live in areas away from where the exploration and deposits are located.

TMR: They tend to be very protective of their glaciers and things like that, however.

TS: Yes, this is true. You don’t want to be around the areas where there are heavy glaciers. There are quite a few mining projects elsewhere, however. You can develop projects in Greenland if you approach it in the right way.

The area where North American Nickel is active along the southwest coast doesn’t have year-round snow. There are also huge areas elsewhere in Greenland that have not been explored because recent glacier melting has just exposed these areas, some of which could be world class.

TMR: What’s the next step for North American Nickel?

TS: It has found several areas of mineralized conduits, including the Imiak Hill complex. It encountered massive sulfides across decent intervals deeper in the system. Assays are confirming the high nickel grades that have been anticipated. It’s an encouraging development that’s accounted for a run-up in the share price.

TMR: You’ve suggested investors play North American Nickel through VMS Ventures Inc. (VMS:TSX.V), which owns a large stake of the company.

TS: VMS Ventures owns about 25% of North American Nickel. At this stage, the leverage isn’t that great, but if North American Nickel starts to run you’ll see the leverage start to work.

VMS also has the Reed Lake joint venture with HudBay Minerals Inc. (HBM:TSX; HBM:NYSE).

TMR: VMS bills itself as Manitoba’s next copper mine.

TS: It should be in full operation next year. VMS’s underlying price is more or less supported by the Reed Lake project. Anything that happens with North American Nickel is a bonus. It is a lower-risk, longer-term, value-oriented way of being exposed to a discovery story and a near-term production story at the same time.

TMR: Barclays reported in September that five of the six base metals in the London Metal Exchange are currently in surplus, but the bank remained more optimistic about the long-term prospects for base metals due to possible mine shutdowns in the near term. Are there some base metals you favor?

TS: Copper is king. I don’t suspect we’ll run out of copper deposits anytime soon, but we could run out of deposits that are inexpensive to mine. Deposits that have high grades or low cost profiles are attractive to me. Copper will continue to be big. China has really just started to electrify beyond the public transmission and transport infrastructure. India hasn’t really even started. Africa hasn’t started at all.

Zinc also comes to mind. There aren’t any huge zinc mines waiting to come on line. Most of the deposits that are larger have issues or are located in areas where development isn’t easy. The deposits that can be developed readily aren’t particularly big.

Nickel has some similarities to copper in terms of both supply and demand. Nickel sulfides tend to occur with copper. Nickel laterites are large but low-grade deposits similar to copper porphyries whereas magmatic systems containing nickel can be quite high grade as we are seeing with companies like North American Nickel. In any case, miners need a certain price in order to be profitable. A viable long-term operation also needs to be low cost and there are a few different opportunities out there among the various deposit types.

TMR: Do you have any other ideas on how to get exposure to copper?

TS: Atico Mining Corp. (ATY:TSX.V; ATCMF:OTCBB) in Colombia is almost like a “Fortuna Copper”: The principals are from Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE). The strategy is similar. Atico is picking up a historical operation that has not seen modern mining applied to it.

TMR: It’s a small, high-grade story at this point. Is there reason to believe it gets bigger?

TS: What’s been explored here historically has been near the surface. But there hasn’t been a lot of modern exploration to find additional mineralized lenses at depth or along trend. Atico came along and it wasn’t too difficult for the company to find the next ore body.

It’s a growth story. Management has been focused on getting this up to a level where it can expand and self-sustain.

TMR: Do you have a zinc play that you’re following?

TS: Pure zinc deposits are virtually nonexistent. With zinc you usually end up with a polymetallic-type system. Pretty much all the silver producers are polymetallic. However, they don’t produce a large enough portion to be considered zinc plays.

If there were to be some kind of zinc mania in the future—and we actually sort of had one already when zinc went to $2/lb in 2006—I would perhaps look at Hecla Mining Co. (HL:NYSE). It is a peerless candidate and its Greens Creek project has a very significant zinc component. Hecla is not on our list now, but if it’s able to get its Idaho Lucky Friday operation stable, it will start to focus on growth opportunities elsewhere. The company has several projects it’s been looking at building up in the background.

Let’s go from a relatively large company to an extremely tiny one, Western Pacific Resources Corp. (WRP:TSX.V). It’s actually run by a couple of former Hecla big wigs. It started out with some gold projects in Nevada and Idaho. The company didn’t want to suffer from too much dilution in such a difficult financing environment, so it searched out a near-term production story. It found one at the Deer Trail Mine in Utah.

This was a project that was mismanaged by a previous company. It did have a significant amount of mining infrastructure installed, however. There is a bona fide deposit there. It’s not big at this point, but it has the potential for a similar style and scale of polymetallic replacement mineralization that’s found in a number of successful mines in Mexico. We should note that Western Pacific does have to raise money to finish refurbishing the mine and get into production.

TMR: What other non-precious or specialty minerals or metals should investors be paying attention to in the near term?

TS: There has been a lot of hype around the so-called rare earth elements (REEs) but they aren’t really that rare. There are lots of REE deposits, it’s just a matter of getting at them and processing them effectively. However, while they might not be geologically rare, there also may never be a substitute found for some of these substances.

Take, for example, neodymium and dysprosium, the REEs that are primarily used in high-strength magnets. In order for the technologies and industries that rely on magnets to grow, there will need to be more mine supply of these REEs. There’s opportunity for a new project developer to be that supplier but that doesn’t mean just mining at a low cost. It has to also be competitive with China on selling the specific products demanded by the market and that essentially means having access to a separation process that produces a high-purity REE material like the neodymium metal required for magnet alloys. In other words, the prospective REE mining company and its partners must cut China out of the loop. This is proving to be exceedingly difficult to accomplish, but someone will eventually figure out a way to do it.

The agricultural minerals phosphate and potash have a fundamental growth story: an increasing global population and less nutrient-rich arable land. In order to produce more food we will have to provide more and more nutrients artificially into the soil to keep up the yields. There are quite a few potash and phosphate deposits, but which have an advantage? Are some close to market, have better processing that makes it more attractive or some other aspect that creates an advantage beyond the size or economics?

One of the companies we like in this space is Allana Potash Corp. (AAA:TSX; ALLRF:OTCQX) in Ethiopia. The Dallol project is in a large evaporitic basin. One of its key advantages is that the hot desert allows the potash concentrate to be left in big salt ponds to dry out prior to shipping, significantly reducing capex and operating costs. Also, the project is close to roads, planned rail lines and the east coast of Africa. From there it’s a relatively short distance to India, Southeast Asia and China.

TMR: There’s been some turmoil in Ethiopia over the years. Is that a negative factor?

TS: The fact is that you’re probably not going to find too many stable jurisdictions in Africa, but you could do worse than Ethiopia. Generally speaking, I don’t consider instability to be an ongoing issue.

Funding could be an issue. Allana Potash will have to find someone who can look past the fact that the project is in a country that hasn’t historically seen big investments of this nature. More and more, that “someone” seems to be China although the company is working with a number of international groups as well.

TMR: Why is Allana a timely investment?

TS: The price driver is obtaining funding. That will remove a significant source of uncertainty and take the company to the next level. It is significant.

TMR: Any other specialty minerals or metals?

TS: Perhaps I should add to our previous discussion of REEs because many of the issues that apply there will also be important in other specialty sectors. For example, deposit size or ore grade are often not the most critical factors in these non-commodity mine products. Namibia Rare Earths Inc. (NRE:TSX, NMREF:OTCQX) doesn’t have a particularly large deposit, but the development timeline could potentially be short. It also has a very high percentage of valuable heavy rare earths, probably one of the highest in the world. At 0.5% to 1% grade the value of it is much more significant on a per-ton basis than most other deposits out there. Namibia’s project would not be a huge operation, but it could be a highly profitable one if it could join up with a partner that’s able to take the product further than just production of a mixed REE concentrate. There are a number of potential partners in the form of exploration and mining companies looking for innovative ways to move further up the REE production value chain. Two interesting ones we follow are GéoMégA Resources Inc. (GMA:TSX.V) andGreat Western Minerals Group Ltd. (GWG:TSX.V; GWMGF:OTCQX).

Similar to REEs, other specialty metal and mineral projects require a viable plan to add value beyond just producing an ore concentrate at competitive cost. Investors who cast their nets wide enough should be able to find several attractive candidates across the mining sector at any given time.

TMR: Are there companies that investors perhaps should sell?

TS: The list is too long! In general, it’s a good idea right now to sell companies with production predicated on high prices because it’s going to be very difficult for these companies to generate profits. It may also be difficult for them to raise necessary funds if they have significant debt. And of course companies that have run out of cash and don’t have any attractive assets are at risk of going dormant and missing out on the next upturn in the sector. Consequently, investors should also sell any exploration play without ready access to capital especially if that company doesn’t already have at least a significant sniff of a major discovery on its hands.

TMR: Do you think investors should stay out of the equities market until the U.S. government shutdown is resolved?

TS: It’s difficult to read how one event in isolation will impact equities. If you just focus on one thing, you could always find a reason not to be in equities. In fact, that “reason” to stay out can ultimately turn into a reason to be invested. If the federal shutdown is over next week, there could be a big relief rally back up before the next artificial crisis comes along.

Generally, however, equities are highly overvalued. I’m not talking about mining equities. I’m talking about general equities. There is a significant risk of another correction or crash in the general markets. I’ve also discussed elsewhere that there’s probably going to be a secondary bottom in gold and the other metals. Perhaps it’s a correction in general equities that precipitates it. There may not be a fundamental issue with gold or the mining sector. It could just be a drag-down effect from the general markets.

TMR: Do you have a timeframe for that second bottom?

TS: It doesn’t have to be a lower bottom than what we’ve already seen so we won’t know until after the fact. I believe it will be sooner than later. For example, some technical work that we use suggests that the earliest phase of a new multi-year rally may appear by next spring. Our other qualitative and quantitative work indicates a mining cycle peak in the next two to three years. That would suggest the bottom is not too far out because the market will need time for the rebuilding phase to undo all the technical damage. Then you get into the speculative blow-off stage of the rally, which itself could take 6 to 12 months.

TMR: Wow.

TS: What we’re looking for now is a classical bottom, which should have capitulation and other factors indicating that the last marginal seller has thrown in the towel. Capitulatory selling has been happening in fits and starts, but I don’t get the sense that it’s finished yet. I don’t mean to be pessimistic. It’s just part of the market cycle. I still think that there are good opportunities out there, but generically buying the mining sector is probably not a good idea—at least for the time being.

TMR: Thanks, Tom. It’s been a pleasure.

Tom Szabo is co-chief analyst of MetalAugmentor.com, an investment research service focused on metals and mining. Szabo has co-founded several precious metal related businesses and investment funds.

Find out how Tom Szabo applies his Peerless concept to precious metals in his interview with The Gold Report, The Peerless Way to Precious Metal Profits.

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DISCLOSURE:

1) Brian Sylvester conducted this interview for The Metals Report and provides services to The Metals Report as a 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 Metals Report: Namibia Rare Earths Inc., Fortuna Silver Mines Inc. and Atico Mining Corp. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Tom Szabo: I or my family own shares of the following companies mentioned in this interview: Atico Mining, Geomega Resources. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: VMS Ventures. 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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Article by Investazor.com

Last year, there were a lot of speculations that because of the dry weather from the United States the wheat and corn production would be very low so the prices rallied to record highs. In the autumn of 2012 even though the yields were pretty low, the production was not that bad and prices started to fall. This year the production is estimated to be high. Each time prices go up; producers are planting more and more so the offer rises fast, while the demand remains constant. In these cases the price tends to fall.

Chart: Corn/Wheat, Daily

The prices of corn and wheat tend to be pretty good direct correlated. But sometimes happens that the prices start to diverge. This happened again during the past weeks. From 20^th of September, the price of corn continued its down trend, while the price of wheat started a rally.

At this point there are some technical signals that corn might come back above 4.5$ per bushel. The positive divergence on the RSI signals a possible reversal, but from my experience, I would say that it will be helpful to see a close above 450.00 level. For the 2.4$ spread, between these two grains, to be covered we could also expect a fall of the price of wheat. The technical signal for this would be a drop under the local support, given by the latest low.

Using this divergence, traders could use a spread system and enter long corn and short wheat. A pretty used hedging system that could get a pretty interesting return for its user.

The post Corn – Wheat Spread might Narrow Down appeared first on investazor.com.

The U.S Dollar Trading Mixed

The EURUSD Fails to Increase Above 1.3600

There is no any progress in the EURUSD. The pair has tested the support near 1.3545, and then increased to 1.3597 and returned to the support. Thus, the situation remains the same. The growth and ability to be consolidated above 1.3600 will confirm upside potential retention. The loss of the support near 1.3475 will open a way to the 34th figure. If U.S. lawmakers reach a compromise, this may trigger a sharp decline in the pair’s rate, but, most likely, it can be considered as a possibility to buy EURUSD.

The GBPUSD Trading Below 1.6000

The situation both in the GBPUSD and the EURUSD is the same. Yesterday the pair was traded within a narrow range, being unable to develop a movement in one or another direction. The inability to rise and be consolidated above 1.6000 may trigger a more deep descending correction, the support near the level of 1.5766 may become its aim. In order to reach it the bears should break through the area of supports at 1.5915—1.5873. A growth above 1.6018 will give the GBPUSD bulls confidence.

The USDCHF Sticks in the 91st Figure

The USDCHF still cannot break away from the 91st figure. The pair has decreased for a while to 0.9063, but demand for it preserves and it has increased to 0.9114. Thus, the range has been formed here, its breakout is necessary for the further movement direction marking. Consequently, a rise above 0.9130 will open a way to 0.9200—0.9220 and a fall above 0.9063 will give the bears a possibility to test the 90th figure.

Demand For The USDJPY Remains

Despite the current situation in the U.S. the USDJPY continues to be in demand. Yesterday, after a decline to 98.09 the pair was purchased, which allowed the rate to increase to 98.70. Here buying interest dried up and the dollar fell back to 98.39. As in other currency pairs, the situation in the USDJPY had not changed yesterday. We can only point to remained sustainable demand for the dollar, but if the pair fails to overcome the 99th figure, the bears may return to the market, and then the support around 97.00-96.56. would be at risk again.

provided by IAFT

By Mitchell Clark, B.Comm. For Profit Confidential

Reporting this week is one of my favorite benchmark stocks.

Union Pacific Corporation (UNP) is a railroad company that’s been a solid wealth creator in what’s been a resurgence of old economy stocks over the last several years.

Wall Street earnings estimates have been going down for Union Pacific for this year and next. But the company is still expected to post double-digit earnings growth in 2013 on an estimated five-percent gain in total revenues.

The company provided the marketplace with its own third-quarter guidance. Earnings per share are expected to be between $2.45 and $2.48, compared to $2.19 in the third quarter of 2012. Operating revenues are expected to grow 4.0%–4.5%.

The worry for Union Pacific and other railroad companies is coal. Low natural gas prices are eating away at the demand for coal, which is one of the principal commodities that railroads haul. Warmer weather is also an issue, and the company cited flooding in Colorado as also having an impact on coal shipments.

Union Pacific is typically conservative with its forecasting. But it’s possible that the recent winning streak for many railroad stocks could be coming to an end. Shipments of oil are way up, but not enough to offset declines in coal.

The Association of American Railroads said that 11 of the 20 commodity categories it tracks saw a year-over-year increase in carload in the month of September. The biggest carload gains were in crushed stone, sand, and gravel, followed by automobiles and parts, then petroleum and petroleum products.

September declines were in coal, down 2.7% to 12,894 carloads, and grain, down 11.3% to 8,627 carloads for all members combined.

This time four years ago, Union Pacific was trading around $60.00 a share. Now, it’s approximately $160.00 a share, with a 2.1% dividend yield and a forward price-to-earnings (P/E) ratio of around 14.5.

On the stock market, Union Pacific has always been a solid performer. The company’s share price was cut in half during the financial crisis, but like so many other old economy names, it recovered strongly to its current level.

Even with a slow quarter based on lower shipments of coal, I wouldn’t necessarily take profits in a company like Union Pacific. The railroad business is still a good one to be in, and revenues are expected to accelerate from their current rate in 2014. (See “Strong Cash Flow, Increasing Dividends Make This Old Economy Stock Attractive.”)

Union Pacific has outperformed on the stock market compared to a number of other railroad stocks, especially over the last six months.

This is a market where I believe existing winners will continue to be the place for investors to be. Union Pacific falls into this category, and its peer group leadership should continue.

I’m not a big fan of buying this market, and equity investors definitely don’t need to rush into any positions. According to history, the right railroad company would be a worthy addition to a long-term equity portfolio. Canadian National Railway Company (CNI) and Union Pacific are my two favorites within the sector.

By George Leong, B.Comm. For Profit Confidential

The restaurant and fast food sectors are fickle, and can easily turn lower without much warning. It happened to burrito maker Chipotle Mexican Grill, Inc. (NYSE/CMG), when it got hammered between April and early October 2012 following its reports of soft results. The stock has since staged a steady rally back to above its previous high in April 2012.

The same thing happened to Ruby Tuesday, Inc. (NYSE/RT), with the stock plummeting around 16% after reporting a soft first quarter that saw continued declines in many key metrics, according to my stock analysis. Ruby could and will likely rally, based on my stock analysis, but it’s not in the same ballpark as Chipotle, so be careful if you are looking to trade the stock.

If you are looking for small-cap growth in the restaurant and fast food sector, you may want to consider a play like Denny’s Corporation (NASDAQ/DENN), as my stock analysis suggests. This sit-in family diner is known for its “Grand Slam” breakfast. The company has superior valuation to its peers, as my stock analysis indicates.

Take a look at the table below, and see how Denny’s sizes up:

The big Wall Street shops focus on the big-name stocks that bring up tons of investment banking and advisory fees. While McDonalds Corporation (NYSE/MCD) is clearly the “Best of Breed” in the restaurant and fast food group, my stock analysis suggests smaller companies, like Denny’s, offer an alternative for investors along with better upside potential; albeit, they’re also riskier. (Read “McDonald’s Proving Position as ‘Best of Breed’ in the Fast Food Sector.”)

Denny’s has gone up 22.47% over the past 52 weeks and has easily outperformed the S&P 500 advance of 15.60% and the 0.99% advance by McDonald’s.

Chart courtesy of www.StockCharts.com

Over the past few years, Denny’s has restructured its operations by selling many of its stores to franchisors, which allows it to simply collect franchise fees while cutting overall costs to operate the stores, based on my stock analysis. According to the company’s web site, about 90% of the 1,690 restaurants in its global network are currently franchised. By changing to this model, Denny’s is now a stronger company, as my stock analysis indicates.

For those interested in Denny’s, my stock analysis suggests that the upside is there, but it could take a while, as the company continues to streamline its operations, play with its menu, and make it more visible to both the investment community and restaurant goers.

My stock analysis indicates that while McDonald’s is the top player in the restaurant and fast foods sector, for some added potential, a restaurant like Denny’s is geared toward the investor looking for a small-cap idea.

London Gold Market Report
from Adrian Ash
BullionVault
Tues 16 Oct 09:15 EST

The WHOLESALE price of gold bounced hard Tuesday lunchtime in London from new 3-month lows, regaining $10 per ounce from $1255 as European shares rose but US stock futures pointed lower.

 The Dollar rose, knocking almost 1 cent off the Euro, as word spread of an apparent US political deal to avert technical default at the debt limit’s deadline on Thursday.

 The proposal would extend government funding to January, with an interim hike in the $16.7 trillion debt limit, according to reports.

 US bond prices edged lower, however, nudging interest rates up.

 Silver mapped and extended the action in gold, dropping almost 3% before climbing back to $21.01 per ounce.

 “Most disappointing [about gold],” says a note from brokers INTL FCStone, “is the fact that the precious metal has hardly managed to stage any kind of rally, even when the outlook for the US budget and debt ceiling negotiations was at its bleakest.

 “Now that an imminent resolution seems to be in the offing…the prospects for a further advance look all the more questionable.”

 Looking at the trading action, “What is evident,” says one Singapore dealing desk in a note, “is that gold remains trapped in a bearish trend.”

 “Gold market bears have the technical advantage,” agrees Indian dealer and jewelry chain Riddisiddhi Bullions. “A seven-week-old downtrend is in place.”

 Rupee gold prices also slipped Tuesday to a new 3-month low as the India currency recovered further from September’s all-time record lows to the Dollar.

 Legal exports of gold bullion to India from Dubai – a major route into the world’s largest gold consumer – fell nearly one-fifth by value over the first 8 months of the year, new data from the Arab emirate’s Chamber of Commerce said at the weekend, dropping to the equivalent of $815 million.

 Following rumors of Indian gold deposit banking products, aimed at “mobilizing” existing gold holdings to meet new consumer demand, Reuters today said the central bank is about to launch savings certificates linked to changes in India’s inflation rate.

 This retail investing offer is part of a move announced in May to raise $2.4 billion using inflation-linked bonds. It’s also part of the Indian government’s “continued bid to encourage households to diversify away from gold,” Reuters says, citing official sources.

 Consumer price inflation in India rose in September to a 7-month of 9.8% per year. The best bank interest rate currently offered is 10.1% for 16-month deposits, according to MoneyControl data.

 Speaking in Washington yesterday, “[India] can pay three-fourths of its debt from its forex reserves,” said Raghuram Rajan, governor of the Reserve Bank of India.

 Stressing that India has no need of IMF support to strengthen its reserves or boost the Rupee, and referring to private gold consumption, “We [as a nation] bought over $60 billion gold last year,” said Rajan.

 “$60 billion accounts for three-fourth of our current account deficit. If the push comes to shove, we can pay the world in gold.”

 Gold dealers in China have meantime “been a reasonable buyer of late,” says a note from MKS Capital, a division of the Swiss-based refining and finance group, pointing to a rise in Shanghai Gold Exchange’s gold prices to $19 above London’s benchmark.

 “But the more progress made [in US debt ceiling talks], the more pressure is applied to gold. Investors are becoming increasingly worried about gold’s long term stance as an investment product.”

 Talking about gold prices on Monday with Bloomberg, “I think between $1200 and $1250 it’s getting into a buying range,” said Swiss money manager and now Asia-based author Marc Faber of the Gloom, Boom & Doom Report.

 “The sentiment about gold is very negative. But if you look at everything considered, [there is] monetization of the US debt, and the debt ceiling sooner or later will be increased.

 “Because both Democrats and Republicans are big, big spenders.”

 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 fully allocated bullion already vaulted in your choice of London, New York, Singapore, Toronto or Zurich 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.

By Elliott Wave Analysis Service

USDJPY is trapped in tight range for around four months now which could be at the end if we consider an Elliott Wave triangle pattern that is pointing higher. The reason is a move in five legs, labeled as A-B-C-D-E, which suggests that pattern is near completion. In fact, we have seen a sharp reversal last week from 61.8% Fibonacci support compared to wave C) distance which is usually a stopping point for E) waves. As such, we suspect that prices will rally in days ahead, this time towards and ideally through 100.50 mark that will put bullish price action in play for a new high of the year on USDJPY.

USDJPY Daily

Educational Part: Elliott Wave Triangle Pattern

A Triangle is a common 5 wave pattern labeled A-B-C-D-E that moves counter-trend and is corrective in nature. Triangles move within two channel lines drawn from waves A to C, and from waves B to D. A Triangle is either contracting or expanding depending on whether the channel lines are converging or expanding. Triangles are overlapping five wave affairs that subdivide 3-3-3-3-3.

Contracting triangle

• Structure is 3-3-3-3-3
• Each subwave of a triangle is usually a zig-zag
• Wave E must end in the price territory of wave A
• One subwave of a triangle usually has a much more complex structure than others subwaves
• Appears in wave four in an impulse, wave B in an A-B-C, wave X or wave Y in a double threes, wave X or wave Z in a triple threes

Written by www.ew-forecast.com

Try EW-Forecast.com’s Services Free For 7 Days >>> Here

Global Market Report provided by binaryoptionsdailyreview.com

Dow Jones

Stocks on Wall Street initially opened weaker but hopes grew during the afternoon that politicians in America were inching towards an agreement to raise the debt ceiling before the possibility of the US going into default. The Dow, which had been down 101 points, rallied to close up 64.15 at 15,301.26. The S&P 500 index added 6.94 points to finish at 1,710.14 and the Nasdaq Composite gained 23.40 points to close at 3,815.28.

Europe

European markets were lacking direction on Monday as the continuing deadlock over a solution to the debt ceiling in the US kept investors on the sidelines. Mixed economic data out of China also did little to enthuse investors. The Stoxx Europe 600 Index ended the session up 0.2% at 312.22.

FTSE

The FTSE ended the day higher despite the ongoing uncertainty surrounding the US debt ceiling, as US politicians still seem unable to come up with a solution that suits both parties. It closed up 20.46 points at 6,507.65, marking the highest close since the 27th September.

Pre Market Opening

European markets are expected to open higher, following gains on Wall Street and in Asia as optimism grows that US politicians would soon agree on a deal to re-open government and avoid a possible debt default. According to news reports the plan under discussion would end the partial government shutdown and would raise the debt ceiling by enough to cover the nation’s borrowing needs up to mid February 2014. The FTSE is expected to open around 30 points higher, the DAX around 40 points higher and the CAC around 20 points higher.

The Nikkei closed up 36.80 points at 14,441.54; the Hang Seng was last seen up 97.71 at 23,316.03.

Analyst View

There was mixed economic data released from China as trade figures showed an unexpected year on year decline of 0.3% in September as a result of weaker global demand. However imports jumped 7.4% which, along with a pick-up in consumer demand in August, showed that domestic demand is strong. In Europe, industrial production rose slightly more than expected, coming in with a rise of 1% against an expected rise of 0.8%.

Forex News

The Dollar was weaker early in the day’s trading session following the breakdown of debt ceiling talks over the weekend. Some losses were reversed late in the session as news emerged of further meetings to try and break the deadlock. The USD/JPY ended up 0.14% at ¥94.42 having rallied from a low of ¥98.12. Better-than-expected Eurozone data helped the EUR/USD gain 0.24% to $1.3573. The Pound was slightly better against the Dollar with the GBP/USD up 0.29% at $1.5992. Weak Chinese trade data over the weekend and weaker-than-expected home loans data initially caused the AUD/USD to drop but it managed to claw back losses to end 0.31% better at $0.9495. The Dollar was also easier against the New Zealand and Canadian dollars with the NZD/USD up 0.32% at $0.8818 and the USD/CAD fell 0.04% to close at CAD$1.0353.

Commodity News

Gold futures ended the day firmer but off session highs; short covering, bargain hunting and some safe-haven demand were seen as reasons for a firmer session. Gains in gold were pared in late-morning trading on reports US lawmakers may be close to agreement on a US budget and debt ceiling plan that would reopen the US Government. December gold was last up $9.80 at $1,278.00 per ounce. Spot gold was last quoted up $5.30 at $1279.00. December silver last traded up $0.141 at $21.40 per ounce.

Oil futures moved away from their lows of the day as news that president Obama was set to meet with congressional leaders raised investors’ hopes that a deal on the debt ceiling was close. Crude oil for November rallied from below $102 to close $.051 better at $102.53 per barrel.

Market Overview

The ZEW economic sentiment is being released today for both the Eurozone and for Germany. Being the powerhouse of Europe, more importance is place on the German reading. It’s worth bearing in mind that forecasts are for a split with the German number weakening slightly and the Eurozone strengthening and so may have little impact on the market. However should both move in the same direction there is a possibility that the Euro will react. The expected reduction in the German number is small, with forecasts pointing at a reduction from 49.6 to 49.2, given that this figure has outperformed on the past two occasions there is a good possibility that we could see this move higher.

By www.CentralBankNews.info     Sri Lanka’s central bank cut its benchmark repurchase rate by 50 basis points to 6.50 percent because the favourable outlook for inflation had made room for a further easing of monetary policy to stimulate the economy and thus reach a higher growth trajectory in 2014.
    The Central Bank of Sri Lanka has now cut its repurchase rate by 100 basis point this year following a rate cut in May and also cut its reverse repurchase rate by 50 basis points to 8.50 percent.
   The central bank cut its rate by 25 basis points in December last year and economists had expected the central bank to keep its rates steady today. However, in July the bank’s governor had said that monetary policy was likely to remain on hold until September or October when he would be a little more inclined to relax the policy if inflation continued to fall.
    Sri Lanka’s inflation rate eased marginally to 6.2 percent in September from 6.3 percent in August while core inflation fell to 3.0 percent. Inflation has remained in single digits for the last 56 months.
    “Going forward, the inflation outlook continues to remain favourable with restrained international commodity prices, reduced domestic supply side pressures, and well contained demand driven inflationary pressures,” the central bank said.
    The central bank aims for inflation to fall to 5.0 – 5.5 percent by the end of this year for an average rate of 7 percent.

    The bank added that broad money growth in August was in line with its projections, “indicating that the current monetary conditions could support higher growth in the second half of 2013.”
     Lower credit obtained by public corporations during August is expected to continue and thus release resources for private sector investments, the bank said, adding the easing of policy since December had resulted in a “reasonable” downward adjustment in short term interest rates, with space for further adjustments in longer term lending rates.
    Sri Lanka’s Gross Domestic Product expanded by an annual 6.8 percent in the second quarter and the central bank said the reduced borrowing costs have encourage private sector investment and this should enable the economy to exceed a 7 percent growth rate this year.
    Previously, the central bank has forecast 7.5 percent growth this year while the International Monetary Fund has forecast growth of only 6.3 percent, slightly down from 2012’s 6.4 percent.
    But while the central bank was largely optimistic about Sri Lanka’s economy, it voiced concern over the global economy.
    “The heightened uncertainty arising from the delay in announcing tapering of the quantitative easing (QE) by the US Federal Reserve, coupled with the current political impasse experienced by the United States, resulting in a government shutdown and inability to increase the debt ceiling has also increased market volatility,” the bank said.
    Nevertheless, Sri Lanka’s gross official reserves reached 7.0 billion in August – the equivalent of 4.5 months of imports – and the trade account deficit narrowed by almost 25 percent due to higher export earnings and lower imports, easing the pressure on the current account and balance of payments.

    www.CentralBankNews.info