Month: January 2014

Article By RoboForex.com

Analysis for January 8^th, 2014

GBP/USD

GBPUSD, Time Frame H4. Tenkan-Sen and Kijun-Sen are influenced by “Dead Cross” (1). Ichimoku Cloud is going down (2); the price is on Tenkan-Sen, inside Kumo Cloud. Short‑term forecast: we can expect support from Tenkan-Sen – Senkou Span B, and resistance from Kijun-Sen – D Tenkan-Sen.

GBPUSD, Time Frame H1. Tenkan-Sen and Kijun-Sen intersected and formed “Dead Cross” (1). Ichimoku Cloud is going up (2), and the price is above the lines. Short‑term forecast: we can expect support from Tenkan-Sen – Senkou Span B, and growth of the price.

GOLD

XAUUSD, Time Frame H4. Tenkan-Sen and Kijun-Sen are influenced by “Golden Cross” (1); Kijun-Sen and Senkou Span A are directed upwards. Ichimoku Cloud is going up (2). Short-term forecast: we can expect support from Senkou Span A and growth of the price.

XAUUSD, Time Frame H1. Tenkan-Sen and Kijun-Sen intersected and formed “Dead Cross” (1); Senkou Span B is horizontal, other lines are directed downwards. Ichimoku Cloud is going down (2), and the price is on Tenkan-Sen. Short‑term forecast: we can expect support from H4 Senkou Span B.

RoboForex Analytical Department

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Article by Investazor.com

As we said it before, scalping could be a good way to make some fast money, especially if you don’t have too much time to spend in front of your PC as a trader. But to stay on a good a profitable path, in time you should test several scalping systems before trading your real money.

In our trading experience we observed that there really are trading strategies that do not have to be complex or hard to be applied to make money. Sometimes there are simple strategies that help traders get to constant profits. And the probability for this to happen rises with a good money management system applied to a simple strategy.

We back tested and live tested the following strategy and now we are putting it on our website for you to test and give us your feedback. It is a pretty simple strategy that uses a slow EMA and a default Stochastic (which is actually pretty fast, comparing it to the EMA) on a 1 minute USDJPY chart.

Why USDJPY? We saw in our testing that this currency pair gave us the best results without making many changes to the initial strategy. This major FX pair it is usually trending and has a medium volatility. Taking these into consideration we can say that it is a medium risk pair and can be used easily with a scalping strategy.

Let us now get to our strategy:

–          We used a 224 EMA on a 1 minute time frame. The slow EMA sets the trend and we used it as a support line, betting on a bounce after the price hits it.

–          Stochastic (14, 3, 3) on 1 minute chart. It is a default Stochastic, which has given pretty good signals. We were looking for oversold/overbought signals when the price touched the EMA.

–          For even better filtering we also looked for Candlestick patterns to raise the probability for a good entry.

In our example, you can see that the 224 EMA is below the price, meaning that the trend is up. In this case it is important to wait for pullbacks to the moving average. It will offer support, but to have better buying signals we should also look if the Stochastic fell in an oversold area and comes back (giving also a buying signal) and if we have a Candlestick pattern.

If these three conditions are met (see the second example with the Morning Star) we can enter a trade right after the Candlestick pattern is confirmed (on the opening of the next candle).  Set a Stop Loss below the pattern and below the EMA and a Take Profit at a distance 2 times further than the Stop Loss. This way you will have also a positive money management.

It is important for the price to get very close to the EMA, or even better to touch or cross the moving average. This way it will assure you a tighter and safer Stop Loss.

Changes can also be made to the strategy. Instead of using Candlestick patterns you can also use price patterns like Double Bottoms, Rectangles and triangles. These kinds of patterns usually give stronger signals, but you will need to have patience and wait for them to be drawn. Another change would be divergences on the Stochastic. Instead of simple overbought/oversold, this oscillator also makes divergences and these are also stronger signals of reversal.

We gave only an example on an uptrend, but the strategy works as well on a downtrend, you will just have to see the 224 EMA above the price, wait for overbought signals from the Stochastic and see Bearish Candlestick Patterns.

The post Simple USDJPY Scalping Strategy on EMA and Stochastic appeared first on investazor.com.

EURUSD remains in downtrend from 1.3892, the rise from 1.3571 could be treated as consolidation of the downtrend. As long as 1.3680 resistance holds, the downtrend could be expected to resume, and the target would be at 1.3400 area. On the upside, a break above 1.3680 resistance will indicate that the downward movement from 1.3892 is complete, then further rise to 1.3780 area could be seen.

Provided by ForexCycle.com

By MoneyMorning.com.au

Here’s an easy question for you.

Are stock markets in or approaching bubble territory?

Of course, it depends which stock markets we’re talking about.

But if you answered yes then we’d have to agree. Generally speaking stock markets are in or approaching bubble territory.

That’s got to be bad news right? It’s got to mean stock markets are primed to crash. That’s the argument put forward by the bubble watchers.

But as we’ll show you today, a stock price bubble doesn’t always mean a crash is imminent. In fact, it can be the pre-cursor to the bubble growing further.

Just ask the Danish…

We’ll make something clear, just in case you’re not sure of where we stand. We’re not one of those zombie lame-brained mainstream analysts who think the world has recovered from the 2008 meltdown.

We’re not one of those dopes who urged governments and central banks to intervene.

And we’re not one of those stock market cheerleaders who think it’s always a good time to invest in stocks. If you’re a long-time Money Morning reader you’ll know we’ve advised readers to get into stocks when things look good, and get out of stocks when things look bad.

So when we tell you it’s still a great time to own stocks, you can be sure that we believe it.

Bubbles Burst When They Burst and Not Before

OK. Now we’ve made that clear, we can make our point.

A common mistake made by bubble watchers is to assume that once they’ve spotted a bubble that bubble must immediately burst.

They don’t seem to accept the possibility that already stretched valuations can stretch even further. Or that company earnings could improve so that the valuation remains the same even though the price may go higher.

But the stock market is only half the ledger. The other side of the ledger is the debt market. The assumption on both sides of the debt debate is potentially flawed.

On the one hand those who rail against high debt levels say that central banks can’t do anymore with interest rates. They say that it’s inevitable that interest rates will rise. And when interest rates do go up it will spell trouble for borrowers, banks, companies, and the economy.

On the other hand, those who say the high debt levels don’t matter, argue that interest rates won’t go up, but that they won’t go down either. They say central banks have done as much as they can and that interest rates are now structurally – and potentially permanently – low.

But there is another possibility. And that’s where the Danish enter the frame…

Paying to Save

According to Bloomberg News, Denmark has the world’s highest household debt levels. The report notes:

‘Danish households owe their creditors 321 percent of disposable incomes, according to the Organisation for Economic Cooperation and Development. That’s the highest ratio in the world and a level that has prompted warnings from both the OECD and the International Monetary Fund to rein in borrowing.‘

As you’d expect, the Danes are eager to say that high household debt levels aren’t a problem. We’re sure the Danes are also fond of saying, ‘Det er anderledes her.’ That’s Danish for, ‘It’s different here.’

And maybe they’re right. Who knows?

For all those saying Denmark has a problem and should be worried, well, what if things are different there? What if Denmark provides a clue of what could happen elsewhere? What if Denmark has found a way to inflate bubbles further than most think possible?

That’s a heck of a lot of questions. And remember, we’re not saying any of this is desirable in the long run. All we’re saying is that folks shouldn’t be in a hurry to shout about bubbles if there’s a chance the bubble could keep expanding.

So, what’s the Danish secret?

Well, since 2012 the Danish central bank has operated a negative interest rate policy of minus 0.1%. That means in effect that banks have to pay in order to hold cash on deposit with the Danish central bank.

Needless to say, that’s not ideal for Danish banks. Why would they waste their capital by holding cash at the central bank when they could use it more effectively…by lending the money to borrowers?

Hence household debt currently standing at 321% of household income.

Denmark Proves Central Banks Can Cut Further

You can only imagine the impact negative interest rates have had on asset prices.

Like many countries, Denmark went through a housing bubble leading into 2008. And like many countries the housing bubble popped. But since early last year the market has begun to recover. No doubt low interest rates have helped.

But the place where low interest rates have really made their mark is in the Danish stock market. The OMX Copenhagen 20 index is up 160.7% since the 2009 low.

That’s three times better than the Aussie market performance, and it’s even better than the US S&P 500 index, which has ‘only’ clocked up a 148.5% gain.

This is why we caution people about selling stocks too early because they think they’ve identified a bubble. Remember, many cautioned during the mid-1990′s about the emerging internet stock bubble.

They were right to caution about it, but probably wrong to sell or short sell stocks seeing as even the blue-chip S&P 500 index gained 218% from 1995 to 2000. That’s a pretty good return.

The way we see it is that sure a stock bubble is forming, but it’s nowhere near the top. As we’ve warned, that doesn’t mean you should put all your money into stocks. But it does mean if you’re out of the market you’re also missing out on a lot of gains.

Contrary to popular opinion, the US Federal Reserve, European Central Bank, Bank of England, Bank of Japan, and even the Reserve Bank of Australia can still cut rates lower if they want. Look at Denmark. Maybe negative interest rates are on the way. How attractive would cash be in that scenario?

Cheers,
Kris+

From the Port Phillip Publishing Library

Special Report: 574 Years in the Making

By MoneyMorning.com.au

By MoneyMorning.com.au

What is a six letter word that’s great for the markets and your portfolio?

G-R-O-W-T-H.

In case you didn’t know, last month marked the hundredth anniversary of the crossword puzzle. The New York World published the very first one on Dec. 21, 1913. It was originally called the ‘Word Cross’, designed by Arthur Wynne. Since then, they’ve become been a fun diversion and a helpful tool for building a better lexicon in any language.

My grandparents introduced them to me as a small child. They would both do the puzzles from the New York Times, Philadelphia Inquirer as well as the now folded Philadelphia Bulletin. Doing the puzzles with my grandfather gave me my initial workout on words and research as well as disappointments when those last few words just wouldn’t come together to finish one of them off.

It formed the foundation for how I approach problems today – including puzzling out what’s going on in the markets.

So it seems appropriate to start this note with a crossword clue for a word that’s currently on every investors’ lips…G-R-O-W-T-H.

In December, the U.S. Department of Commerce reported that the economy expanded by 4.1% in the third quarter – almost back to the heady growth seen in the days before the financial fiascos of 2007-2008. Not only was it well above the initial estimates…it was also much better than analysts were expecting.

In addition, the internal rate of price inflation was actually down from earlier preliminary indications. The Core Personal Consumption Expenditure Index (PCE) was said to be rising by 1.5% – well below the 2.5% the Federal Reserve Bank’s Open Market Committee warned would be the signal to tighten money. But now it seems that the PCE is only rising at a rate of 1.4%.

Both the GDP and PCE indicate that the economy is faring better. Consumers are spending, businesses are investing and inflation is still tame by the official standards.

So fears of FOMC tightening should be set aside, and the markets should look for better performances by more and more companies – justifying higher stock prices.

And with lower inflation pressures – at least in the index that matters more to investors and the Fed – the value of dividend-paying income investments should also see the benefit of less of an attack from inflationary conditions.

In addition to the nice bit of economic news, the guys and gals in the US Senate also did some good work for the markets late last year by passing some budget legislation, including the budget for the Defense Department.

While there is still some further work on debt limits, for the most part we’re seeing Congress’ financial brinksmanship getting pushed back in the closet.

This means less uncertainty – and even if the deal isn’t what we as taxpayers might prefer, the markets like it when things get done and there’s some degree of knowing what’s coming.

So, good growth, lower inflation and stability. That should lead us into the New Year with a positive start.

Adding to the mix, of course, is that the Fed also assured us that they will keep spending $75 billion a month on Treasuries and mortgage securities – continuing to swell its portfolio by the trillions of dollars.

And not only will the Fed keep buying new debt, but all of the coupon payments and maturities of its massive Treasury and mortgage portfolios will keep being re-invested – meaning that the $75 billion is just part of the massive continued bond buying that’s not going away any time soon.

Our six-letter trend (G-R-O-W-T-H) looks set to payoff in 2014.

All my best,

Neil George
Contributing Editor, Money Morning

Ed Note: The Six-Letter Solution for 2014 Profits was originally published in Daily Resource Hunter.

By MoneyMorning.com.au

By Mitchell Clark, B. Comm.

 In the pursuit of reliability and consistency in business performance, AAON, Inc. (AAON) came through once again by reporting another record quarter.

 I’m absolutely convinced that any equity market portfolio is well served by having at least some exposure to what I refer to as “old economy” types of businesses. AAON is a Tulsa, Oklahoma-based company that manufactures and sells heating, ventilation, and air conditioning (HVAC) equipment to industrial customers.

 In the third quarter of 2013, the company generated record revenues and earnings—the strongest AAON has seen in its 25-year history.

 Third-quarter sales were $89.7 million, representing a gain of 17% over the third quarter of 2012. Earnings came to $10.5 million, or $0.28 per diluted share, compared to $6.0 million, or $0.16 per diluted share, representing an impressive gain of 75% over last year’s third-quarter earnings.

 While the company’s backlog declined slightly in the third quarter of 2013, management noted that an increase in its market share, rising selling prices, and lower costs for materials were all reasons for the earnings gain.

 This stock has had an exceptional breakout from its long-term trend. But even before the recent positive trading action, it was still a consistent winner and a very good enterprise in terms of generating sales and earnings growth. The company’s stock chart is featured below:

            Chart courtesy of http://stockcharts.com/

Arguably, investing in the HVAC industry is a long-haul proposition, as AAON’s share price performance in the above chart illustrates. But consistent stock market winners, as far as I’m concerned, are absolutely golden, especially given the inherent volatility with equity securities and the business cycle.

 Stocks that trade sideways when the broader market is trending lower are often good indicators of the types of businesses that will hold up well over time.

 When we looked at AAON in June of last year (see “How the Old Economy Can Pay More Than You Might Think”), the company reported record 2013 first-quarter results. Sales grew three percent to $66.8 million, while earnings grew 56% to $7.1 million, or $0.29 per diluted share.

 With so much media emphasis on technology and those companies generating the fastest growth, great old economy enterprises like this company are easily overlooked, which is a mistake, because AAON is a very good business.

 The company might be too small for a Berkshire Hathaway, Inc. (BRK-B) acquisition, but I wouldn’t be surprised at all if a larger corporation decides someday that it wants to add this little business to its portfolio.

With its recent breakout, this stock has been well bid and is fully priced like most other equities. But AAON serves as a great example of an enterprise that’s done a very good job of managing a cyclical business with the purpose of delivering consistent growth to shareholders.

 There aren’t a lot of businesses out there that are able to deliver consistent results, even if the growth is only modest. A company like AAON is a model for other public companies, because management wants deliberate growth, not grandiose outperformance. It’s also a model of a great stock market investment. It should be a case study in business schools.

This article Why This Company Should Be a Case Study in Business Schools was originally published at Profit Confidential

By George Leong, B. Comm.

 I’m not a shopper by any means but I just got back from my annual trip to south Florida where I was able to take a look at the retailers that appear to be attracting tons of traffic in the retail sector.

 First of all, the big-time shopping mall in the Orlando area is the “Premium Outlets” mall chain. The operator of these discount outlet malls across America (which recently expanded into Canada), Simon Property Group, Inc. (NYSE/SPG), is a very interesting play on the retail sector. In each mall, there are often many more than 100 retailers from the top brand-name retail stocks in America.

 As I walked around the mall, I noted what retailers were popular based on each store’s traffic and the buying frenzy inside. Remember, consumer spending drives the economy and overall gross domestic product (GDP) growth, so business in the retail sector can be quite telling.

 One of the top retailers was NIKE, Inc. (NYSE/NKE), which is a major attraction in the mall and one of the top stocks in the retail sector. While Under Armour, Inc. (NYSE/UA) has been increasing its market share, I continue to feel that NIKE is the “Best of Breed” in the sports apparel business in the retail sector.

 In the youth apparel area, The Gap, Inc. (NYSE/GPS) was a major focal point in the mall, along with Banana Republic, which The Gap also operates. In the youth and early adult clothing market, The Gap has been successful in turning around its business over the past decade and is now a good pick to consider in the retail sector.

 Also in the apparel market, Ralph Lauren Corporation (NYSE/RL), which continues to be a top player in the retail sector, was seeing decent business at its storefront in the mall. Ralph Lauren’s signature horse and polo logo has become a trendy status symbol in the retail sector, which could be the reason why it seems to be drumming up business here.

 In the luxury retail sector, stores in the mall that appeared to be attracting the most interest from consumers were Michael Kors Holdings Limited (NYSE/KORS) and Coach, Inc. (NYSE/COH). According to my wife, the lineups were out the door at these stores, as shoppers searched for significant sales. My top pick in luxury is Michael Kors (see “My Favorite Pick Among the Luxury Brand Stocks.”), which has been successful in expanding its product line to include apparel, unlike Coach, which only offers handbags and accessories.

 So in sum, the retail stocks I mentioned above are some of the best in the retail sector and are likely to provide some of the top buying opportunities for the retail investor.

This article What I Learned About Retail Stocks While Shopping in South Florida was originally published at Profit Confidential

Source: Peter Byrne of The Mining Report (1/7/14)

http://www.theaureport.com/pub/na/zinc-or-swim-do-base-metals-have-a-future

Joseph Gallucci of Dundee Capital Markets sees a rosy future for zinc investors. As the large zinc mines shut down, the juniors are stepping forward to meet growing demand for the industrial staple. In this interview with The Mining Report, Gallucci delivers smart tips for base metals investors on where to find opportunity when zinc prices start to climb.

The Mining Report: How are the fundamental challenges facing the global base metals markets likely to play out in 2014?

Joseph Gallucci: There are several long-term issues that impacted copper and the other base metal spaces in 2013, and those long-term issues will persist for the foreseeable future. Allow me to explain the basics via a few examples:

Indonesia recently stopped the export of intermediary products, such as pig iron nickel. The country’s leadership is increasingly practicing resource nationalism by restricting mining firms to in-house processing and to shipping only finished products. It is also unsettling that Intrepid Mines Ltd. (IAU:TSX; IAU:ASX) lost control of its project this year to an Indonesian partner!

In terms of supply chain disruptions in 2013, Grasberg and Bingham Canyon were two of the biggest issues, but we are still well below the annual average of a 5% supply disruption. This year has been an anomaly and quite low in that regard. Supply chain disruptions will definitely pick up going forward and they are impossible to predict.

For problems with mining infrastructure, Chile was the hot button. It has port access and infrastructure issues, and there are still no power agreements in place for many of Chile’s mining development projects. These types of long-term issues will continue to impact the base metals sector into the future.

TMR: Were declining ore grades an issue in 2013?

JG: The decline of ore grade is a long-term problem. We are now seeing projects with only 0.3% and 0.4% copper being developed. Those are very low-grade ore bodies in massive open pits. The issue going forward is the grades will continue to fall unless there are stellar discoveries—which is certainly possible. Reservoir Minerals Inc. (RMC:TSX.V) (BUY rated at Dundee) has put out some very impressive drill holes in Serbia. And Ivanhoe Mines Ltd. (IVN:TSX) (BUY rated at Dundee) is developing the high-grade Kamoa project in the Democratic Republic of the Congo. But those projects are outliers—the trend is for grades to fall lower as the geography of mineable base metal deposits becomes increasingly remote and difficult to find.

TMR: Given declining grades, is there an exploitable synergy between mining for base metals alongside precious metals in terms of lowering overall costs of production?

JG: It depends upon the nature of the ore body. Unfortunately, the declining grades are not strictly limited to copper. There is a decline across all of the base metals and precious metals. The grades just keep sinking lower and lower. But if a firm is mining a polymetallic ore body and it can make a concentrate, the mining and the processing activities are very similar for polymetallic ore bodies. On the other hand, if a firm is purely focused on producing gold doré bars, there are no synergies with the base metals on the processing side.

Look at the experience of Nevsun Resources Ltd. (NSU:TSX; NSU:NYSE.MKT) (BUY rated at Dundee). I just returned from visiting its Bisha operation in Eritrea. Nevsun was mining a gold oxide cap there—putting it through a gold plant and making doré bars. It has changed gears: shutting down the pure gold plant to make a copper and gold concentrate. On the mining side, that process is fairly similar, but on the processing side, producing concentrate is quite different from making gold bars. That is an example of precious metal-base metals synergy. Nevsun has successfully transitioned from being a gold producer to being a base metals producer. The company has a solid balance sheet. It has $300 million ($300M) in cash and pays a 4.5% dividend. It is very rare in the base metals space to see a dividend of any kind, let alone one of that magnitude.

TMR: Let’s look at zinc, which is a metal market that you have studied extensively. What are the commercial applications of zinc?

JG: About 50% of the zinc market is used for galvanizing steel as anti-rust protection for car manufacturing and construction. The biggest buyers are China at 45% and Europe at 20%.

TMR: What’s the global supply situation?

JG: The market in the Western world has been in a supply deficit for quite some time, and now, for the first time, it is in a global deficit. And the deficit will only get bigger. The zinc market is quite different from the copper market because about 40% of its production comes from junior miners, whereas in the copper space, juniors only account for about 7% of production. As the big zinc ore bodies are tapped out and the large mines close, they will continue to be replaced by smaller zinc operations. Brunswick was the first to close, and Century, Skorpion and a whole host of other mines are following suit.

TMR: Are companies hoarding zinc in anticipation of higher prices?

JG: Hoarding is definitely an issue. For example, the zinc inventories on the London Metal Exchange (LME) are controlled by four big players. The bulk of their inventory is stored in several warehouse facilities in New Orleans. The metal stores are not readily available for distribution and it is in fact due to the multiple locations that warehousing companies can move product among themselves in an effort to keep queues long. Therefore, queuing issues can cause price increases—although it is hard to calculate the extent of the problem at present.

TMR: You have talked about the large zinc mines shutting down, which should drive up prices. Can you expand on that scenario?

JG: The big zinc ore bodies are near an end and there is no replacement on the horizon for two reasons: 1) There are no more big ore bodies available. 2) There is no serious exploration for zinc. The copper business faces the same dynamic of gradual diminishment of raw material. Interestingly, as Brunswick and Century and Skorpion shut down their zinc operations, the sector has been freed up to bring on smaller-capacity mines, which helps the supply situation. And there is undeveloped supply capacity in China. But none of these potential developments can replace the magnitude of what we are losing by way of the big ore bodies going extinct.

TMR: Does the downward trend in terms of supply mean that the zinc market is not cyclical?

JG: All commodity markets have long-term cycles. But right now we are dealing with a special zone of the long-term zinc cycle as the big ore bodies close one after the other and are not replaced. This is a first for the zinc market, even though it was not unforeseen.

TMR: So what features can make the changing zinc market attractive to investors?

JG: Zinc equities are leveraged to the commodity, and there are not many equities left to buy on the TSX. But it is important to look at the zinc cost curve, which is very flat compared to the copper cost curve. As the zinc mine shutdowns cause supply limitations, and warehouse inventories start to peter out, market prices will have to rise. And due to the cost curve, even a small increase in the price of zinc will generate a big increase in revenue for producers.

TMR: Which zinc mining firms do you view as the most promising?

JG: My favorite is Trevali Mining Corp. (TV:TSX; TREVF:OTCQX; TV:BVL) (TOP PICK, BUY rated at Dundee). It is in production and it has access to a great partner in Glencore International Plc (GLEN:LSE) (not covered at Dundee). It is quite rare for a junior mining firm to have a strategic partnership with such a giant as Glencore. And because up to 40% of zinc production comes from the juniors, Glencore is interested in obtaining the zinc feed even though it does not have the time to directly manage small operations. In the Trevali-Glencore symbiosis, Trevali mines the ore and sells the zinc concentrate to Glencore at market terms. Trevali is well positioned on the Toronto Stock Exchange (TSX) to benefit from increases in zinc prices, or even by stability in the price.

TMR: Where are the Trevali mines located?

JG: Trevali has a zinc mine in Peru called Santander, which is operating at capacity of 2,000 tons per day (2 Ktpd). Its New Brunswick complex is composed of one mill and two mines, which are scheduled to go on-line by the end of 2014 at about 3 Ktpd. Trevali can rely on Glencore’s expertise to get these mines and mills into production. And the New Brunswick jurisdiction is very safe.

TMR: Trevali’s stock is down from last year. Why?

JG: Trevali was six months late in delivering on its Peruvian operation and the stock went into the penalty box. To secure financing for the New Brunswick operation, the firm announced a potential $60M debt facility arrangement with RMB Resources, but the deal did not close. Since then, Trevali has raised equity ~$45M at $0.83/share, and its stock has gone up. With the equity deal complete and the debt facility potentially resized to $35M, the financing overhang is gone. It is a good buy now that it has one asset in operation and the other asset is financed and can be put into production by the end of next year.

TMR: Who else do you like in the zinc space?

JG: There are not many players left in the zinc space! I like Canadian Zinc Corp. (CZN:TSX; CZICF:OTCQB)(BUY rated at Dundee). It has just finished a very long and rigorous permitting process that took six years to complete. Now, it is tasked with raising the funds to get the permitted asset into production. Its property is located in the Northwest Territories—a bit remote, but in a safe jurisdiction. The financing in 2014 will probably include a debt off-take deal and an equity portion. The project is undergoing some metallurgical work, but I expect news on the financing to start unfolding in H1/14.

There are also smaller zinc companies, such as Zazu Metals Corporation (ZAZ:TSX) (NEUTRAL rated at Dundee), Rathdowney Resources Ltd. (RTH:TSX.V) (NEUTRAL rated at Dundee) and TriAusMin Ltd. (TRO:ASX) (NEUTRAL rated at Dundee), which I follow. These three firms all have good potential, when and if we see higher zinc prices. Another company is Ivernia Inc. (IVW:TSX) (BUY rated at Dundee), which is a lead producer. Ivernia is the only pure-play lead zinc producer on the TSX and is now in production after some environmental issues. The company operates the Paroo Station mine in Australia, which is the largest pure lead mine in the world, and has a strong partnership with Enirgi Group (a private company). Zinc and lead tend to move in the same direction. Lead is currently outperforming zinc, however.

TMR: Will we see higher zinc prices in the near term?

JG: The price of zinc should respond positively as more shutdowns are announced. The fundamentals are clearly in place for both the zinc price and the equity prices that are leveraged to zinc to increase. The stock price of companies that are already in production, such as Trevali, will increase the fastest, but the others should quickly follow suit.

TMR: Is there some kind of technology that can replace the industrial use of zinc?

JG: Not unless you figure out a way to eliminate rust! Galvanizing is always going to be needed, and there is no cost-effective replacement for it as far as I know. If cars and buildings were suddenly made out of plastic, the need for zinc would fall. But short of total plastification, zinc is here to stay.

TMR: Are there other base metals firms that investors should investigate?

JG: I am impressed with the performance of Capstone Mining Corp. (CS:TSX) (BUY rated at Dundee). It is on the cusp of becoming a midcap copper producer. It acquired Pinto Valley earlier this year. Analysts will get a chance to visit the asset in Q1/14. On a multiple basis, Capstone is one of the larger pure copper producers and it is less expensive than its competitors, Lundin Mining Corp. (LUN:TSX) (BUY rated at Dundee) and HudBay Minerals Inc. (HBM:TSX; HBM:NYSE) (NEUTRAL rated at Dundee). Capstone can really shine in 2014!

TMR: Any other companies in North America that have your eye?

JG: Nevada Copper Corp. (NCU:TSX) (BUY rated at Dundee) is one of my top picks. Its two-phase project is unique. Phase 1 is completely permitted and under construction. Phase 2 is undergoing permitting, which will likely be resolved in H1/14. Pending the passage of legislation to transfer federally owned lands to local authorities, it will be permitted quickly. It is rare to find an asset in the U.S. that does not have permitting issues. Nevada Copper is often compared to Augusta Resource Corp. (AZC:TSX; AZC:NYSE.MKT) (SELL rated at Dundee). Augusta is a great ore body, a great deposit, but is undergoing a lot of permitting problems. The next four months will be key for Augusta, whether or not it can complete its permitting process as promised. Nevada Copper offers investors an option in U.S. copper development with very little permitting risk attached.

TMR: One of the companies you cover— Quaterra Resources Inc. (QTA:TSX.V; QMM:NYSE.MKT)(NEUTRAL rated at Dundee)—is developing its Yerington project in Nevada on a former Anaconda Mining Inc. (ANX:TSX), open-pit copper mine. How is that dynamic playing out?

JG: Historically, Quaterra has been spread a bit thin as a mining company, analyzed by many as lacking a clear-cut focus. After Steve Dischler took over as CEO recently, he made it quite clear that the focus is to be on Yerington—and that is the correct focus for this company. Quaterra has a variety of developmental resources. It owns the MacArthur solvent extraction and electrowinning SX-EW project adjacent to the Anaconda mine. That is a low-capex, heap-leach, run-of-mine operation, so there is no crushing required. It will take a relatively low capex to go into production. Quaterra also has the Bear deposit, which has a non-NI-43-101-compliant resource at the moment, and holds about 5 billion pounds (5 Blb) at 0.4% copper. That will be drilled off this year and, hopefully, we can get some positive information then. The short story is that Quaterra will thrive under the new management regime with its primary focus on Yerington, and it will bring other projects along as tailwind.

TMR: Are there any other junior firms you’d like to call our attention to today?

JG: Taseko Mines Ltd. (TKO:TSX; TGB:NYSE.MKT) (BUY rated at Dundee) is a copper producer that is highly leveraged to the copper price but is high cost. However, it has a good cost protection program using low-cost copper hedging. If an investor believes that copper prices will rise, Taseko is the highest-moving stock related to that scenario. Its Gibraltar project is in production and moving along rather well. The project’s third expansion has gone off great, but its growth project, Prosperity, is in the midst of a permitting battle. I do not have a current value for Prosperity. But in Q1/14, we expect an update on Prosperity, which could adversely impact the Taseko stock, or not.

Another stock for people’s radar to track is Reservoir Minerals Inc. (RMC:TSX.V) (BUY rated at Dundee). It has generated fantastic drill results of late in its Serbia project. Similar to how Trevali has Glencore as a partner, Reservoir has Freeport-McMoRan Copper & Gold Inc. (FCX:NYSE) (not covered at Dundee).

TMR: Thank you, Joseph, for being with us today.

JG: Thank you, a pleasure.

Joseph Gallucci has approximately 10 years experience in equity research. He joined Dundee Capital Markets in June 2012 as a senior mining research analyst. Gallucci spent the previous five years at Canada’s largest independent broker, in the mining research team where he was originally a research associate and then promoted to Mining Analyst. Gallucci’s main focus is on base metals and bulk commodities on a global scale. Prior to this, he was a research associate in the forestry sector at a Canadian bank-owned broker. Gallucci holds a Bachelor of Commerce degree from Concordia University and an Master of Business Administration in investment management from the Goodman Institute of Investment Management.

DISCLOSURE:

1) Peter Byrne conducted this interview for The Mining Report and provides services to The Mining Report as 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 Mining Report: Trevali Mining Corp. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Joseph Gallucci: I or my family own shares of the following companies mentioned in this interview: None. 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: Trevali Mining Corp. Dundee Capital Markets has provided investment banking services to companies mentioned in this interview in the past 12 months: Trevali Mining Corp. All disclosures and disclaimers are available on the Internet at www.dundeecapitalmarkets.com. Please refer to formal published research reports for all disclosures and disclaimers pertaining to companies under coverage and Dundee Capital Markets. The policy of Dundee Capital Markets with respect to Research reports is available on the Internet atwww.dundeecapitalmarkets.com. 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 John Whitefoot for Daily Gains Letter

Did gold make a New Year’s resolution? If it happened to set its sights on 2014 being better than 2013, then that might not be too hard to accomplish. For gold bugs, 2013 was abysmal. Gold bullion prices ended the year down about 28%—the biggest annual drop in more than 30 years.

Gold bullion prices experienced an unprecedented run-up after the tragic events of September 11, 2001 and soared higher in 2008 as the global economy teetered on the brink of a recession. Investors’ justifiable fears of economic turmoil and inflation sent them running to gold bullion and gold mining stocks to hedge against this economic uncertainty. Between September 2001 and September 2011, gold prices soared more than 560%.

But since then, gold prices have lost their lustre. And in June of this year, the precious metal hit a three-year low of $1,179 an ounce after the Federal Reserve hinted it would begin to taper its generous $85.0-billion-per-month quantitative easing policy. Investors took this as a sign that the U.S. economy was on solid footing.

Gold bullion prices remained weak near the end of the year after the Federal Reserve announced on December 18 that it would begin to reduce its monthly bond buying program to $75.0 billion a month starting in January. Gold bullion ended the year at $1,202.

2013 will be remembered as the year when (misguided) economic optimism helped lift the Dow Jones Industrial Average by 26%, the S&P 500 by almost 30%, and the NASDAQ by 34%. In 2013, that same optimism also shaved off half of the value of gold mining stocks.

But it could get worse for gold bullion and gold mining stocks in 2014. After all, gold has lost significant value and doesn’t provide a dividend. On top of that, some equities have been providing investors with really solid double-digit gains and dividend growth.

This, coupled with a so-called improving economy, has many gold bugs predicting a weak year for gold bullion prices. Some expect gold prices to trip below $1,000 in 2014, while others predict it will hover near $1,250. Not everyone is so pessimistic about gold bullion prices; gold enthusiast Eric Sprott predicts gold bullion prices will hit $2,400 by this summer. (Source: Keith, D., “Q&A: Eric Sprott on gold and why it’s heading to $2,400 in a year,” The Globe and Mail, August 15, 2013.)

Whether gold bullion prices will explode, go sideways, or give up more ground in 2014, there are a number of different strategies investors can take when it comes to gold mining stocks.

For example, a drop in the price of gold to below $1,100 per ounce could hurt more highly leveraged gold mining companies, such as Barrick Gold Corporation (NYSE/ABX), Detour Gold Corporation (TSX/DGC), and Newmont Mining Corporation (NYSE/NEM).

When it comes to gold mining stocks, look for those companies with a strong balance sheet (cash), large deposits, and production costs near or below $1,000 per ounce. Gold mining stocks that fit that bill include B2Gold Corp. (NYSE/BTG), Eldorado Gold Corporation (NYSE/EGO), and Goldcorp Inc. (NYSE/GG).

In a year when few expect gold prices to soar and many mining stocks are struggling to survive, you may also want to consider looking for junior gold mining stocks with proven resources to be valuable at current prices, such as Midas Gold Inc. (TSX/MAX) and Gold Reserve Inc. (TSXV/GRZ).

While 2014 may not be the year gold bullion regains all of its shine, it might be remembered as the year when astute investors got in ahead of the rush.

By Dennis Miller

Doctors cannot cure a patient in severe pain by pumping him full of painkillers; they need to accurately diagnose the root cause of the pain before treatment. Without an accurate diagnosis, it is nearly impossible to fix a problem, medical or otherwise.

And the stakes are high: a misdiagnosis can trigger treatment that may compound a problem instead of making it better. That’s exactly what happened with the bank bailout five years back: the “cure” set in motion new challenges for seniors and savers.

Forget all the technical mumbo-jumbo. Here are the need-to-know facts: for generations seniors and savers could invest the bulk of their retirement nest egg in safe, interest-bearing CDs, government bonds, and utility bonds. That, coupled with Social Security, allowed for a comfortable retirement. Those 6-7% yields are gone, as we all know.

Was the 2008 financial crisis properly diagnosed and treated? That depends on whom you ask. Most Americans, however, don’t think so. According to Pew Research, “Five out of eight Americans surveyed (63%) earlier this month believe the US financial system is no more secure in 2013 than it was before the economic crisis of 2008.”

In September, Sheraz Mian broke down the 2Q earnings reports of the S&P 500 companies in Zacks Earning Trends:

“Yes, the total earnings tally reached a new quarterly record in Q2 and the rest of the aggregate metrics like growth rates and beat ratios look respectable enough. But all of that was solely due to one sector only: Finance. … Finance results have been very strong, with total earnings for the companies that have reported results up an impressive +30% on +8.5% higher revenues. Excluding Finance, total earnings for the remainder of S&P 500 companies that have reported would be down -2.9% from the year-earlier period.”

Too-big-to-fail banks are certainly succeeding. The report continued:

“Earnings growth was particularly strong at the large national and regional banks, with total earnings at the Major Banks industry, which includes 15 banks like J.P. Morgan and Bank of America.”

Pew Research also reported that 33% of people it surveyed thought things were more secure in 2013 than they were in 2008. Those people must work in the financial sector.

The problem continues to grow. And it’s a problem that affects us all. While the Federal Reserve holds down interest rates and floods the banking system with money, the retirement dreams of several generations are being destroyed.

As interest rates tumbled, investors ran to bonds, utilities, dividend-paying stocks, and master limited partnerships (MLPs), which offer better yields. As one subscriber mentioned to our team, “at least they have a better chance of keeping up with inflation.”

Sure enough, the stock market came back to new, all-time highs. So now both the banks and Wall Street are happy. But where does that leave us?

In the middle of 2013, Mr. Bernanke uttered the word “taper,” sending the stock market into a tizzy and gold prices soaring. This was a preview of things to come. Many of the investments I mentioned above took a dive, as they have become interest-rate sensitive. Take utility stocks, for example. In September, I highlighted how these stocks took an immediate 11.2% tumble. Since then, although the Fed has tried to calm the markets, there is still real cause for concern.

I’m worried, but I refuse to throw down my cards. Doug Casey recently reminded us of one of his basic principles: “My preferred investment style is to look for opportunities where no one else is looking.” If we invest along with the crowd, we can expect to get caught in the rushing tide, regardless of its direction.

While the Federal Reserve has been trying to keep things under control, don’t be lulled to sleep. Interest rates may have turned the corner, and it is time to review your portfolio with that in mind. Here are five questions to ask about your current investments.

• Is this investment likely to get caught in the outgoing tide if the Fed gets serious about tapering?
• How has this company performed in other down markets?
• Can the company’s fundamental business thrive in both good and bad economic times?
• Is the dividend safe?
• Should the market turn down rapidly, what should you expect from this company?

At Money Forever, we put trailing stop losses on our portfolio picks for a darn good reason: We cannot afford large losses with our retirement money.

Invest where no one else is looking. All too often these are called “out of favor” investments. That implies there is something wrong with them, and people avoid them accordingly. Seventy-three years on the planet, however, tells me something different. There are many attractive people at every high school prom, but very few are crowned king or queen. The same principle applies to investments.

The real challenge is finding those attractive opportunities that have been overlooked by the majority of investors. Where should we look? Can we do the research ourselves? If we want to take on that challenge, do we even have the time and skill set?

Or could we turn to our stockbrokers? It’s not likely. Years ago, my broker and I wrote to her company’s research department in New York, asking for advice in a particular market sector. The “research department” sent a summary similar to what I now get from my online broker. Our request was probably handled in less than two minutes. Their analysis: buy their recommendation because 8 of 10 companies rate it as a “strong buy.”

No kidding! That was where everyone else was looking. It was the last investment I wanted to make.

The good news is: we have other options. Folks like Doug Casey saw a great void in the retail market, and investment newsletters began to flourish.

Fast forward to 2013… I asked our team of analysts for tips on looking where no one else was. We started our search with a basic premise: maximizing income and appreciation while avoiding catastrophic losses.

With modern tools, an analyst can put in a few variables and get a list of candidates without breaking a sweat. That works well until everyone picks the same investments. Real research takes a lot more time and effort. With that said, here are four tips for finding hidden gems.

1. Being #1 is not always an advantage. In our special report Money Every Month, we ranked the top dividend-paying stocks by dividend yield and payment date. It is common to stop at the stock with the highest yield. But there are a lot of good companies further down the list. They may pay a smaller dividend, but they are just as solid and much less volatile. If there is less money pouring into these stocks, there is less risk of losing dividend income if the stock tumbles and everyone exits.
2. Big does not always mean bad. There are some large companies that have a strong worldwide presence with a good dividend yield. While they may not be the #1 name in the industry, they do very well. These stocks don’t necessarily have tiny dividends—just not enough to catch the eye of yield-starved investors. It just takes time to find the right ones. It can be done; I know because we have some in the Money Forever portfolio.
3. Find investments where potential growth outweighs interest-rate sensitivity. If the primary driver in market price is not solely the dividend, the investment won’t be as affected during a period of rising or dropping interest rates as it might be otherwise.In the Money Forever portfolio, we have a convertible bond fund with a good yield, but its performance is affected by the performance of the underlying stocks. The one we selected has a large share of defensive stocks in sectors we are comfortable with, thereby reducing risk and raising the potential for appreciation.
4. Understand how various sectors react in a down market with rising rates. Concentrating on defensive sectors reduces risk. A company can have good dividends with growth and appreciation, but it might be a terrible investment in a downturn. The financial sector is a prime example: The dividends are good, and a strengthening economy can make the sector grow, but those dividends won’t pay off if another 2008 is just around the corner.The term “bond bubble” is being tossed around a lot lately. Should this bubble burst (much like the real estate bubble before it), the financial sector will be dramatically affected.

It has been five years since interest rates tumbled. We don’t need any more proof to know the political class is either unwilling or unable to fix the problem. We can’t sit around and wait for the good old days to come back, nor can we afford to just follow the crowd. We have to deal with our problem to have enough for retirement and make it last.

Sometimes laughing at yourself can be humbling; it can also be a great learning experience. I recently had an exchange with one of our regular readers; he wanted to know if our premium subscription was worth the money. With my marketing background, I have always believed that you should put the value before the cost. We discussed how our team is educating readers on subjects they are unlikely to read about elsewhere. And the Money Forever portfolio is doing quite well, to boot. Some subscribers have mentioned that their gains have paid for our services for many years to come. I told this particular reader that the current promotional price is $8.25/month, and if we can’t bring more value than that to our subscribers, we wouldn’t be in business. His response was humbling: “Gee, I didn’t know that was the price. Had I known that, I would have signed on weeks ago.”

So much for my marketing expertise!

On a trip to Vermont, we cut a short video outlining what we’re all about and how we fit in to the big picture—your big picture. I urge readers to take a few moments to watch. The best part is this: You can sign up for the subscription, download my book, and all our special reports and back issues. If, after you read through them, you decide this is not for you, you can cancel within 90 days and receive 100% of your money back. And you can keep the material as our thank-you for looking us over.