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By MoneyMorning.com.au

We’ve come to view the annual Federal budget in much the same way that a turkey may view Christmas.

The outcome is inevitable. It would be great if they would just get it over and done with rather than prolonging the agony.

So today we’ll try to spare you the agony of budget boredom.

What’s more important is whether the technology stock rally is over, or if this is just a pause before the rally resumes…

From the start of the year until now the US NASDAQ Composite index is down 0.25%.

That’s not much.

It’s a little worse if you take the starting point from early March. Since then the index is down 4.9%.

But even taking that drop into account, the NASDAQ is still 20.6% higher than it was one year ago.

Of course, the index only reflects the performance of a select number of stocks. While the index has fallen only marginally, some tech stocks have fallen much more than 6.4% since March.

Time for panic? Not a chance…

Breaking news: stocks go up and down

This isn’t the first and it won’t be the last time that the market has pummelled stocks after a strong run.

Look at any price chart over any timeframe and you’ll see periods of ups and downs. That’s what happens. That’s what you get on the stock market.

The question is whether this will be another one of those times when the market rebounds, or whether this is just the beginning of a much bigger fall?

As always, you’ll only know for certain after the event.

But while that may be true, it’s not particularly helpful advice. By the same token there’s no point in guessing either.

What you need to do is make an informed decision based on what you believe are likely events. This also means making sure you don’t have too much exposure to any particular stock or sector.

But it means something else too. Any period of falling stocks means an opportunity to buy stocks at a cheaper price.

The thing is, you can only do that if you actively manage your investments, take care of your cash flow, and be disciplined enough to make sure that you don’t overpay for a stock.

Let’s look at what we mean by that in more detail.

Cash can be your best friend in a falling market

When we talk about actively managing your investments we don’t necessarily mean trading in and out of stocks. Actively managing your investments can simply mean keeping an eye on them.

Or it could mean delaying a planned stock purchase if the price is too high, or buying a few more shares of a company you already own if it offers shares through a purchase plan or rights issue.

In short, it means taking an interest in your investments.

That’s where managing your cash flow also plays a key part. Our view on stock investing is that you should always have a big cash buffer. For two reasons. One, you should hold cash because it’s the most liquid asset you can own.

And second, having a decent cash balance means that if the market hits a short-term bump you’ll have spare money to buy a stock or two at a cheaper price.

Finally, make sure you don’t overpay for a stock. We always publish buy-up-to prices in Australian Small-Cap Investigator, Diggers and Drillers, and Revolutionary Tech Investor.

This indicates the maximum price an investor should pay for a stock. This is important, because sometimes a stock can climb higher much faster than you expect. And you know what that means? A stock can fall much faster than you expect too.

That’s exactly what has happened in the tech sector over the past two months. And it’s why there are now so many speculative opportunities in the tech sector.

Will investors buy low?

Tech analyst Sam Volkering knows all about this.

For the past few months he has fielded comments from subscribers of his premium technology research service Revolutionary Tech Investor.

They weren’t angry because stock prices had fallen. They were angry because Sam wouldn’t raise the buy-up-to price on a number of his stock picks.

Some of these subscribers wanted to pay the higher price, but Sam refused to raise the buy-up-to price on most of the stocks. That’s because these revolutionary stocks are for the long-term, not for short-term trading opportunities.

As it happens, several of these stocks are now back below the original buy-up-to prices. That makes them a great buying opportunity. We’re talking about 3D printing stocks, game-changing biotech stocks, and leading edge immersive technology stocks.

Sure, as well as being an opportunity, these stocks are risky too. But if you want the biggest returns you’ve got to take risks. And as far as tech stocks go, now’s the time to take those risks.

Will everyone take advantage of these new beaten-down prices? Probably not. After all, as we’ve mentioned before, most investors prefer to buy high and sell low. Very few investors — real contrarian investors — actually ever do what an investor should; buy low and sell high.

Cheers,
Kris+

PS: The tech sector is full of exciting, breakthrough firms. But it also covers established telecom companies like Telstra, Optus, and Vodafone. Check out the Money Morning Premium Notes to discover whether now could be a good time to buy the biggest of the bunch — Telstra.

To find out more about Money Morning Premium, including how you can upgrade your membership now, click here.

From the Port Phillip Publishing Library

Special Report: The ‘Big Flip’ That Is the Single Biggest Threat to Your Retirement You’ve Never Heard of

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By MoneyMorning.com.au

By MoneyMorning.com.au

Recently I’ve been reading about a brilliant new clothing company. These guys look to have some pretty amazing gear.

It blends technology with clothing and data. It could be the beginning of something truly industry changing. In fact it’s the kind of wearable technology you’d probably see in the R&D labs of Nike or Adidas rather than a small, new start-up.

But while everything in terms of their wearable technology looks highly promising, I think they might have missed one of the key aspects of clothing. In fact this is such an oversight it could mean this company is doomed even before they begin.

Personally I try to stay pretty active. Weather permitting I’ll get out, head down to the park and have a kick of the footy. (Yes even in London I still have my trusty Sherrin).

On the not so sunny days I’ll jump onto the spin bike and punch out a few kms with MTV blasting over my entertainment system.

I even used to be a member of a gym. Used to do free weights, the machines…all the usual stuff one does at the gym. But recently I’ve enjoyed being outside in the open more often.

Now having been pretty sport-oriented back in the day I’ve got a pretty strong appreciation of sport technology. From the basics of moulded footy boots, through to heart rate monitors and recently a Fitbit flex, I think technology really can assist people to get and stay fit.

One of my favourite pieces of kit when I work out are my trusty Under Armour ‘Core’ compression leggings. I find that they help me recover faster, and importantly keep me cooler when I’m sweating it up.

Under Armour is just one company that makes compression clothing for the health and fitness industry. There’s also the Australian-born Skins and 2XU, as well as the usual players in this space, Nike and Adidas.

The market for compression wear has blossomed into a multi-billion dollar industry. In fact in the space of just over seven years, Under Armour has grown into a $9 billion company purely off the back of this kind of apparel.

And now OMSignal (OM) wants in on the action. However, OM’s gear isn’t like your typical Nike compression vest or like my Under Armour leggings.

OM’s pioneering gear has sensors and technology integrated into it. As their website states, ‘The high-energy compression shirt simultaneously simulates blood flow and increases muscle capabilities, while delivering real-time biometric data through insights designed to make you faster, stronger and fitter.’

It is really brilliant technology on the face of it. There’s a ‘Push Gauge’ for when you’re at the gym. You can measure your breathing. You can even track your ‘RPM & Fuel Gauges’.

Wearables and the Quantified-self

It’s all part of the whole quantified-self movement. And it’s a buzzing industry right now. I do believe it to be a hugely important industry. But from what I can see, there are a lot of companies that will fail in the coming years.

Sure, they are developing technology that is hugely important to the health and wellbeing of people. But these quantified-self wearables are just a bit of a gimmick at the moment.

I only need to reference Fitbit and Jawbone as two examples of this. They are both companies that have become household names. Their activity monitoring bands have sold like wildfires around the world.

I even have a Fitbit. And as great all the sensor technology is, the device itself is annoying. My Fitbit has spent more time in the drawer than on my wrist. It’s great to tell me how far I’ve walked, and useful to help monitor my activity levels.

But really I don’t need a wristband to tell me I’m being a lazy slob. I know it myself. So in my opinion the technology in the Fitbit or Jawbone will live long into the future, but not as a wristband.

And OM seems to agree with me. That’s why they’ve put this technology into their compression wear. It’s the kind of innovation we’ve come to expect from pioneering start-ups. OM’s gear is genuine smart-clothing. I commend their forward thinking and innovation.

I might even get an OM top and see how it goes. I might find I use it more than my Fitbit, which isn’t going to be too hard.

However I think OM has neglected one huge problem with their sportswear.

We don’t all have the body of Hugh Jackman

There are a lot of fat people in the world.

Sometimes I see people running along in nothing but leggings. The way I see it that’s like going for a run in your undies. So I’ll always chuck on a pair of shorts over the top of my leggings.

What I rarely see though is people running in a skin-tight compression top. And it’s simple to answer why. It’s because most people have got love handles and rolls in all the places, which they don’t want to advertise to the world.

There’s no way I’d venture outside or hit the gym in just a skin-tight compression top. Too many squidgy bits for that nonsense. I might think about it if I had 5% body fat with washboard abs.

But right now…no. And not many people would. After all, we don’t all have a body like Hugh Jackman.

And that’s the biggest problem OM will face. Their technology actually looks to be fantastic. And I think it would be hugely beneficial for millions of people. Obesity is a growing epidemic across the world. In Australia almost one in four people are obese. In the US it’s over a third.

And it’s those people that would benefit most from this kind of tech. But here’s a news flash. Fat people don’t like to wear skin-tight tops. Normal people don’t like to wear skin-tight tops.

Only the fractional proportion of the population with single-figure body fat percentages would even consider wearing skin-tight tops. And that’s why this kind of tech is going to flounder.

Sure, there’ll be a healthy take up from the really committed to health and fitness. But for the people who will actually most benefit from this tech, they’ll likely stick with oversized t-shirts and tracksuit pants.

So if you really want to build a company like Under Armour you need to branch out beyond the skin-tight gear. That’s what UA did. And they now cover normal t-shirts, footwear, accessories and sport specific gear for the NFL player and golfer.

If your sole product is skin-tight tops imbedded with tech, then you might want expand the range. All you need is a normal size t-shirt that doesn’t hug the bosom and still has all the tech bells and whistles. Then you might just have a really successful company on your hands.

Sam Volkering+
Contributing Editor, Money Morning

Ed Note: The above article was originally published in Tech Insider.

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By MoneyMorning.com.au

By Doug French, Contributing Editor, Casey Research

How important is housing to the American economy?

If a 2011 SMU paper entitled “Housing’s Contribution to Gross Domestic Product (GDP) quot; is right, nothing moves the economic needle like housing. It accounts for 17% to 18% of GDP.

And don’t forget that home buyers fill their homes with all manner of stuff—and that homeowners have more skin in insurance on what’s likely to be their family’s most important asset.

All claims to the contrary, the disappointing first-quarter housing numbers expose the Federal Reserve as impotent at influencing GDP’s most important component.

The Fed: Housing’s Best Friend

No wonder every modern Fed chairman has lowered rates to try to crank up housing activity, rationalizing that low rates make mortgage payments more affordable. Back when he was chair, Ben Bernanke wrote in the Washington Post, “Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance.”

In her first public speech, new Fed Chair Janet Yellen said one of the benefits to keeping interest rates low is to “make homes more affordable and revive the housing market.”

As quick as they are to lower rates and increase prices, Fed chairs are notoriously slow at spotting their own bubble creation. In 2002, Alan Greenspan viewed the comparison of rising home prices to a stock market bubble as “imperfect.” The Maestro concluded, “Even if a bubble were to develop in a local market, it would not necessarily have implications for the nation as a whole.”

Three years later—in 2005—Ben Bernanke was asked about housing prices being out of control. “Well, I guess I don’t buy your premise,” he said. “It’s a pretty unlikely possibility. We’ve never had a decline in home prices on a nationwide basis.”

With never a bubble in sight, the Fed constantly supports housing while analysts and economists count on the housing stimulus trick to work.

2014 GDP Depends on Housing

“There’s more expansion ahead for the housing market in 2014, with starts and new-home sales continuing to rise at double-digit rates, thanks to tight inventory,” writes Gillian B. White for Kiplinger. The “Timely, Trusted Personal Finance Advice and Business Forecast(er)” says GDP will bounce back.

Fannie Mae Chief Economist Doug Duncan says, “Our full-year 2014 economic forecast accounts for three key growth drivers: an acceleration in spending activity from private-sector forces, waning fiscal drag from the federal government, and continued improvement in the housing market.”

We’ll see about that last one.

Greatest Housing Subsidy of All Time Running Out of Gas

With the central bank flooding the markets with liquidity, holding short rates low, and buying long-term debt, mortgage rates have been consistently below 5% since the start of 2009. For all of 2012, the 30-year fixed mortgage rate stayed below 4%. In the post-gold-standard era (after 1971), rates have never been this low for this long.

The Fed’s unprecedented mortgage subsidy has helped the market make a dead-cat bounce since the crash of 2008. After peaking in July 2006 at 206.52, the Case-Shiller 20-City composite index bottomed in February 2012 at 134.06. It had recovered to 165.50 as of January.

However, while low rates have propped up prices, sales of existing homes have fallen in seven of the last eight months. In March re-sales were down 7.5% from a year earlier. That’s the fifth month in a row in which sales fell below the year-earlier level.

David Stockman writes, “March sales volume remained the slowest since July 2012.” He listed 13 major metro areas whose sales declined from a year ago, led by San Jose, down 18%. The three worst performers and 6 of the bottom 11 were California cities. Las Vegas and Phoenix were also in the bottom 10, with sales down double-digits from a year ago.

This after housing guru Ivy Zelman told CNBC in February, “California is back to where it was in nirvana.” Considering the entire nation, she said, “I think nirvana is not far around the corner… I think that I have to tell you, I’m probably the most bullish I’ve ever been fundamentally, and I’m dating myself, been around for over 20 years, so I’ve seen a lot of ups and downs.”

Housing Headwinds

Housing is contributing less to overall growth than during both the days of 20% mortgage rates in the 1980s and the S&L crisis of the early 1990s.

In Phoenix, where home prices have bounced back and Wall Street money has vacuumed up thousands of distressed properties, the market has gone flat.

In Belfiore Real Estates’ April market report, Jim Belfiore wrote, “The bad news for home builders is they have created a glut of supply in previously hot market areas… Potential buyers, as might be expected, feel no sense of urgency to buy because they believe this glut is going to exist indefinitely.”

Nick Timiraos points out in the Wall Street Journal that with a 4.5% mortgage rate and prices 20% below their peak, “… homes are still more affordable than in most periods between 1990 and 2008.” So why is demand for new homes so tepid? And why have refinancings fallen 58% year-over-year in the first quarter?

“Housing’s rocky recovery could signal weakness more broadly in the economy,” writes Timiraos, “reflecting the lingering damage from the bust that has left millions of households unable to participate in any housing recovery. Many still have properties worth less than the amount borrowers owe on their mortgages, while others have high levels of debt, low levels of savings, and patchy incomes.”

More specifically, “So far we have experienced 7 million foreclosures,” David Stockman, former director of the Office of Management and Budget, writes. “Beyond that there are still nine million homeowners seriously underwater on their mortgages, and there are millions more who are stranded in place because they don’t have enough positive equity to cover transactions costs and more stringent down payment requirements.”

Young people used to drive real estate growth, but not anymore. The percentage of young home buyers has been declining for years. Between 1980 and 2000, the percentage of homeowners among people in their late twenties fell from 43% to 38%. And after the crash, the downtrend continued. The percentage of young people who obtained mortgages between 2009 and 2011 was just half what it was ten years ago.

Young people don’t seem to view owning a home as the American dream, as was the case a generation ago. Plus, who has room to take on more debt when 7 in 10 students graduate college with an average $30k in student loan debt?

“First-time home buyers are typically an important source of incremental housing demand, so their smaller presence in the market affects house prices and construction quite broadly,” Fed Chairman Ben Bernanke told homebuilders two years ago.

There’s not much good news for housing these days. For a little while, the Fed’s suppression of interest rates juiced housing enough to distract Americans from weak job creation and stagnant real wages. Don’t have a job? No problem! Just borrow against the appreciation of your house to feed your family.

But Yellen’s interest rate wand looks to be out of magic. The government had a pipe dream of white picket fences for everyone. But Americans can’t refinance their way to wealth. Especially in the Greater Depression.

Read more about the Fed’s back-breaking economic shenanigans and the ways to protect your assets in the Casey Daily Dispatch—your daily go-to guide for gold, silver, energy, technology, and crisis investing. Click here to sign up—it’s free.

Source: Brian Sylvester of The Gold Report(5/12/14)

http://www.theaureport.com/pub/na/juniors-operating-from-the-drivers-seat-adrian-day

Adrian Day has spent years making money for clients by steering them into and out of positions in precious metals equities. While higher commodity prices are always welcome, the founder of Adrian Day Asset Management says in this interview withThe Gold Reportthat he maneuvers toward more telltale fundamentals like strong balance sheets and sound business plans. He believes investors should shift toward companies helmed by experienced managers with skin in the game and with exceptional projects, and names a handful that fit the bill.
The Gold Report: In an interview with The Gold Report after the March Prospectors & Developers Association of Canada convention, you said that gold had bottomed and that it would be a mistake to sell it too soon. Since then the ongoing situation in the Ukraine and mixed buying and selling news from China has further blurred the gold picture. What is your near-term forecast for gold?

Adrian Day: When you have a market that’s declined the way gold has, it would be a mistake to imagine that it’s going to bounce back quickly. There’s little question that gold has bottomed. I think we’re going to see higher prices for the rest of the year.

TGR: Gold fell back in late March. What was behind that?

AD: Two major items hurt gold in March. One was the Chinese economy. The manufacturing and export numbers have not been good. History tells us that recessions are bad for gold and if the Chinese economy went into a recession that would have a negative impact on gold.

The second item was concern over monetary tightening, particularly in the United States. U.S. Federal Reserve Chairman Janet Yellen initially made statements that focused on ending additional bond buying. That set a negative tone. More recently she and other Fed people have made it clear that monetary policy is going to remain easy for some time.

I think the market grossly overacted. China is still growing at over 7% a year with under 2% inflation. That’s real growth of more than 5%. Frankly, it’s not that much different from when China was growing at 10% with 5% inflation.

TGR: What’s the trade in gold now?

AD: At the early stage of a bull market or a recovery from a correction, we tend to see everything move. But the senior miners go first for obvious reasons: they have more liquidity and the names are well known. We saw that in the rally from December through March when even names like Barrick Gold Corp. (ABX:TSX; ABX:NYSE) and Kinross Gold Corp. (K:TSX; KGC:NYSE) moved up.

Frankly, we can talk about everything that’s wrong with the senior miners but they’re very cheap and they’re the ones producing. If the gold price moves up, the companies that actually produce gold should move up too.

TGR: What is your prognosis for investors in the junior gold sector?

AD: In May or June we’ll probably see gold move up to $1,350–1,370 per ounce ($1,370/oz) and I suspect we will begin to see some of the juniors move up more. The juniors move more rapidly as a recovery develops.

TGR: With so many juniors out there, where should investors focus?

AD: Investors should focus on companies that have good balance sheets because that enables them to move ahead with their plans without excessive dilution. They should also look for projects that could potentially be taken over. The senior gold producers are hungry for both reserves and mines. We’ve seen this recently with the takeover of Osisko Mining Corp. If you’re Barrick producing 7 million ounces a year (7 Moz/year), that means each year you have to find another 7 Moz. That’s difficult. Juniors and exploration companies with coveted assets will be in the driver’s seat.

TGR: Investors want to know how they should manage their gold portfolios through the summer months. Refresh? Reload? Rebalance? What’s your advice?

AD: A little bit of everything. If there are stocks that have moved ahead of themselves, it would be a good idea to sell them and raise the cash for any additional market weakness, which I would expect to see over the summer.

Another strategy, unless you are trading in an individual retirement account, is the opportunity to take tax losses. That’s always a sound tactic in the gold space.

TGR: Adrian Day Asset Management (ADAM) has had some success with the prospect generator model. These companies find economic deposits and then bring in partners to help or fully fund further exploration. Is that the biggest asset of these companies?

AD: Prospect generators’ biggest asset is their ability to preserve their balance sheet. The average exploration company has to spend a lot of money to find economic deposits. By its nature an exploration company constantly has to go to the market to raise more capital. The prospect generator model obviates that huge downside by using other people’s money. The other big asset prospect generation gives these companies is exposure to multiple mining projects. A lot of exploration companies might only be able to drill one or two projects at a time. While the majority of a project likely belongs to someone else, some of these prospect generators have 5 or even 10 drill programs going on at the same time using other people’s money. If investors buy a basket of prospect generators, they are getting exposed to perhaps 60 or 70 drill plays, which is a good thing.

TGR: Please tell us about some prospect generators that you’re following and may even be buying.

AD: There are several but my favorite remains Virginia Mines Inc. (VGQ:TSX). In its early days Virginia was more of a pure prospect generator, but its main asset today is a royalty on Éléonore, Goldcorp Inc.’s (G:TSX; GG:NYSE) next gold mine, which should start up by Q4/14. Virginia was one of the few gold stocks that went up last year and the year before. But it’s down this year. It’s down because there’s a misunderstanding of an Éléonore technical report from Goldcorp. NI 43-101 rules allow companies to include only reserves. That means Goldcorp must exclude over half the resource and high confidence resources from that study. Goldcorp has continued to emphasize, however, that this is a long-life, robust mine that will operate for at least 20 years. And Goldcorp is continuing to drill.

TGR: The Éléonore royalty is considered one of the best royalties held by a junior. Virginia recently bought another small royalty, too.

AD: Virginia is buying little royalties all the time. It did another deal last year with TerraX Minerals Inc. (TXR:TSX.V; TXO:FSE). Virginia is always looking for projects that can enhance value. It has over $40 million ($40M) in cash—it’s in the driver’s seat. I would use the price decline as an opportunity to buy.

Another prospect generator is Almaden Minerals Ltd. (AMM:TSX; AAU:NYSE). I think it’s a good price right now. The company’s key asset is the Ixtaca gold-silver deposit in Mexico, where Almaden decided to go it alone. It just released a preliminary economic assessment (PEA), and a PEA can include resources, whereas a feasibility study or technical report, such as Goldcorp’s on Éléonore, can include only reserves. These are high confidence resources—about 85% is in the Measured and Indicated category.

Almaden has completed all its infill drilling, so it could likely convert much of the resource to reserves without additional drilling. Ixtaca is a low-grade, bulk-tonnage project with good infrastructure and lots more drill targets around. It has a reasonably high capex for the size of the deposit but Almaden isn’t in the business of building mines.

TGR: Almaden’s share price was once above $3. Now it’s well below $2.

AD: The stock went way above where it should have. Stocks tend to overrun on the downside just as they overrun on the upside. Almaden has continued to drill that project for the last year or so with excellent results, but it’s been a bit of a yawn for the market. The market has almost come to expect good results.

TGR: What’s going to push the stock back above $2?

AD: Good question. Over the next 12 months Almaden can complete a prefeasibility without spending much money. That’s normally a very weak period for a stock. It is going to continue to drill other targets and if it makes another discovery on a nearby target, I think that changes the picture. Almaden has $12M, $2.5M in gold bullion, plus$6–7M in shares of juniors. Almaden also has Duane and Morgan Poliquin—the father and son team that runs it. They’re two of the best people in the business.

TGR: Perhaps one more prospect generator?

AD: One we’ve been buying recently is Riverside Resources Inc. (RRI:TSX). Riverside remains a pure prospect generator. The company does both traditional joint ventures and strategic alliances, a sort of twist on a traditional joint venture. Riverside has alliances with Antofagasta Plc (ANTO:LSE) and Hochschild Mining Plc (HOC:LSE). Riverside works mostly in Mexico, but also in British Columbia and the U.S. Again, it has about $9.5M, plus $3M in equity from other juniors. The key to Riverside is the activity. It will launch at least three drill programs this year, with more than $6M being spent by its partners.

TGR: Would you say that Tajitos or Penoles is Riverside’s flagship asset?

AD: I’m not really buying Riverside for any one project. To me that’s the beauty of a pure prospect generator. With Virginia the royalty is the number one asset. With Almaden Ixtaca is its number one project. With Riverside and with other prospect generators that we own, we can’t really say what their key projects are because over the last five years those key projects have often changed.

TGR: Royalties are another staple of ADAM’s gold portfolios. You stick mostly with large royalty equities like Franco-Nevada Corp. (FNV:TSX; FNV:NYSE) and Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX). Are there some small-cap royalty equities that you’re buying?

AD: We largely stick with the larger ones because if you have a lot of money to put to work you go to the big-cap names first. If I could only pick one gold stock I would pick Franco-Nevada. That’s a cornerstone of a portfolio. The reason I like royalty equities is the same reason I like the prospect generator model—it minimizes risk and the upside takes care of itself.

One of the smaller ones I like a lot is Gold Royalties Corp. (GRO:TSX.V). That’s a $6M company. I should point out that ADAM is a 10% owner.

Gold Royalties now has 20 royalties after acquiring a package of Québec royalties, one of which is perhaps three or four years from production. The company received its first royalty payment earlier in the year from Metanor Resources Inc.’s (MTO:TSX.V) Bachelor Lake gold mine. It might appear that Gold Royalties doesn’t have a great balance sheet—about $500,000—but it has an extremely low burn rate. Gold Royalties believes it can raise money when there is something to buy. Gold Royalties has come to me twice saying, “We want to buy this and we’re raising some money.” I like that concept. The stock has declined significantly in the last month. This is an incredible opportunity to buy it, but it is very thinly traded.

TGR: Another one?

AD: I like Callinan Royalties Corp. (CAA:TSX.V) a lot. The stock has a yield of 4.6%. Much of its cash flow is from HudBay Minerals Inc.’s (HBM:TSX; HBM:NYSE) 777 mine, which is a base metal mine near Flin Flon, Manitoba. The 777 mine is good for at least another eight years. President and CEO Roland Butler is an extremely good steward of other people’s money. Butler is Callinan’s largest shareholder and I always like to see management with strong positions. Butler thinks most royalties for sale are overpriced because there’s a lot of competition. He’s taken the unique approach of trying to generate royalties through exploration alliances with prospect generators. For example, he did an exploration alliance with Evrim Resources Corp. (EVM:TSX.V) in Mexico. Evrim is another one of my favorite prospect generators, albeit a smaller one. Callinan has about $28M and is buying back shares.

TGR: You’re on a roll.

AD: Another is Solitario Exploration & Royalty Corp. (SLR:TSX). Solitario has three main assets. One is the majority-owned Mt. Hamilton gold project in Nevada. Money is being raised to put that into production. The second is the Bongará zinc project in Peru. There’s not a lot of a big zinc mines coming onstream over the next three or four years. Solitario is carried to production on Bongará but I would not be surprised if it converted its 30% interest to a royalty. The same goes for the joint-venture Pedra Branca platinum-palladium project in Brazil with Anglo American Platinum Ltd. (AMS:JSE), the largest platinum producer in the world. Solitario is carried to production there, too, and if you’re a South African platinum producer with all the headaches in South Africa, you’re looking for platinum deposits elsewhere.

TGR: It’s noteworthy that you’re long on all these names.

AD: By nature I’m not a trader. I much prefer to find a really good company with good management and a good balance sheet that I can hold for many years. If investors have a really good position in Callinan, for example, and see the stock run up to $2.20, I have no objection with trimming a little—with the emphasis on “a little”—and then look to buy it back if it drops back to $1.80. These are definitely long-term positions; they’re investments, not trades.

TGR: What are some other well-funded juniors with promising projects that could warrant a long position?

AD: Mandalay Resources Corp. (MND:TSX). It’s traded on the Toronto Stock Exchange but it doesn’t have a high profile in North America. I think that’s one of the reasons the stock is so low. Mandalay has producing assets in Australia and near-term production assets in Chile, primarily gold and silver. It’s a $300M company that pays a 3.3% yield. It’s trading at $0.98 and I think it’s just a steal. We’re buying away on that one.

Another well-funded junior is Asanko Gold Inc. (AKG:TSX; AKG:NYSE.MKT), the former Keegan Resources. Asanko has a strong balance sheet, an experienced management team and a very large gold resource at its flagship Esaase gold project in Ghana, West Africa. Development is moving slowly but all the ingredients are there. To me, this is a long-term hold while Asanko develops Esaase and puts it into production.

Another company that has good funding is Rye Patch Gold Corp. (RPM:TSX.V; RPMGF:OTCQX). It has a good balance sheet and a royalty on Coeur Mining Inc.’s (CDM:TSX; CDE:NYSE) Rochester gold-silver mine in Nevada. Rye Patch can’t sell that royalty at the moment but it’s probably worth about $20M on its balance sheet. Rye Patch ended the year with about $8M. Basically, Rye Patch’s cash plus the value of the royalty equals the market cap. All the exploration that Rye Patch is doing—three exploration projects in Nevada—comes for free. That’s what I really like.

TGR: Parting thoughts for investors?

AD: If gold goes to $1,800/oz, Barrick, Kinross, Newmont Mining Corp. (NEM:NYSE) and others are all going to do well. But until then you need to stick with companies that have good people, good balance sheets, and strong business plans. Stick with the best whether it’s the seniors, juniors or exploration companies. Don’t be too quick to take profits, but keep an eye on companies that deviate from their business plan.

TGR: Adrian, thank you for your insights.

Adrian Day, London born and a graduate of the London School of Economics, heads the eponymous money management firm Adrian Day Asset Management (www.adriandayassetmanagement.com; 410-224-2037), where he manages discretionary accounts in both global and resource areas. Day is also sub-adviser to the new EuroPacific Gold Fund (EPGFX). His latest book is “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.”

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DISCLOSURE:

1) Brian Sylvester conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Gold Report: Virginia Mines Inc., Almaden Minerals Ltd., Metanor Resources Inc., Mandalay Resources Corp. and Rye Patch Gold Corp. Goldcorp Inc. and Franco-Nevada Corp. are not affiliated with Streetwise Reports. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Adrian Day: I own or my family owns shares of the following companies mentioned in this interview: Franco-Nevada Corp., Goldcorp Inc., Royal Gold Inc. and Virginia Mines Inc. Clients of Adrian Day Asset Management own shares in all companies recommended in this report. 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: None. 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 CentralBankNews.info
    This week, May 11-16, 2014, monetary policy committees, councils or boards at four central banks will be meeting to review their policy stance.

By CentralBankNews.info
    Last week in global monetary policy, Serbia took advantage of the relative calm in financial markets to return to its easing campaign despite the simmering conflict in the Ukraine and the ongoing tapering of quantitative easing by the U.S. Federal Reserve.
    The Bank of Serbia (NBS) puts its easing cycle on hold in January and has maintained rates for the last four months due to a bout of volatility in global financial markets as investors adjusted to the start of the Fed’s reduction in asset purchases.
    Political and social unrest in Ukraine, followed by the annexation of Crimea by Russia in March, then added geopolitical tensions to the mix, convincing the NBS that it should maintain high enough interest rates to ensure that global investors wouldn’t suddenly abandon the dinar currency.
    But buoyed by falling inflation and a convincing parliamentary victory by the Serbian Progressive Party and its commitment to deficit cuts, the dinar was suddenly attracting investors and the NBS was forced to intervene on at least six occasions to limit its gains.
    The Serbian central bank’s relief was almost audible last week as it stated that “no negative impact on the country’s risk premium and external trade has so far resulted from the Fed’s QE tapering and geopolitical tensions arising from the Ukrainian crises.”
    Serbia’s policy rate was cut by 50 basis points to 9.0 percent, following 2013’s cut of 175 basis points, as inflation fell to 2.3 percent in March and then 2.1 percent in April, below the central bank’s tolerance range of 2.5 to 5.5 percent inflation.

   Apart from Serbia, 14 central banks maintained their policy rates last week though both Malaysia and the Philippines are now clearly on a policy tightening path.
    Bank Negara Malaysia (BNM) maintained its Overnight Policy Rate at 3.0 percent but warned that financial imbalances were brewing and said that “going forward, the degree of monetary accommodation may need to be adjusted to ensure that the risks arising from the accumulation of these imbalances would not undermine the growth prospects of the Malaysian economy.”
   Bangko Sentral ng Pilipinas (BSP) also maintained its policy rate at 3.50 percent but raised its reserve requirement by a further 100 basis points due to solid domestic economic activity and “to help mitigate potential risks to financial stability that could arise from the strong growth in domestic liquidity.”
    The Philippine central bank already raised its reserve requirements by 100 basis points in March and has now raised them to 20 percent.
   
    The other main events in global monetary policy last week were Fed Chair Janet Yellen’s renewed commitment to accommodative policy and European Central Bank President Mario Draghi’s statement that the “Governing Council is comfortable with acting next time, but before we want to see the staff projections that will come out in early June.”
    During their April meeting, the ECB council discussed what monetary policy tools, including extraordinary measures, it could employ to tackle the risk of a prolonged period of inflation. ECB policymakers are concerned that a further rise in the euro’s exchange rate will push down import prices, and thus inflation, and also retard the economic recovery by making exports less internationally competitive.
    Last week the council continued this discussion, possibly concerned that a campaign of jawboning since early April really didn’t put much of a dent in the euro’s exchange rate.
    But Draghi’s hint that the ECB may act in June seems to have left more of an impression on markets. The euro is down about 1 percent since the ECB press conference on May 8, trading at 1.376 today, down from 1.391 prior to the news conference.

• Australia maintains rate, still sees period of stable rates
• Romania holds rate, sees inflation 3.3 percent end-2014
• Georgia holds rate on geopolitical risks, wants to tighten
• Poland holds rate, repeats steady rate until end-Q3
• Czech cuts inflation forecast, may extend cap on koruna
• Norway holds rate, repeats rate steady till summer 2015
• Philippines holds rate, but raises RR another 100 bps
• Malaysia holds rate but warns it may have to raise rates
• BOE maintains rate, stock of assets, as expected
• Serbia cuts rate 50 bps, sees room for further easing
• Indonesia holds rate, keeps close watch on inflation risks
• ECB holds rates, repeats ready to ease further
• Korea holds rate, inflation low for time being
• Peru holds rate, inflation seen converging to target
• Zambia holds rate at 12%, sees lower Q2 inflation

By HY Markets Forex Blog

Crude prices were seen trading slightly higher on Monday on concern over the ongoing crises in Ukraine which may weigh on crude supplies from Russia, the world’s biggest energy exporter.

Futures for the North American West Texas Intermediate crude (WTI) for June delivery traded 0.13% higher to $100.12 a barrel on the New York Mercantile Exchange at the time of writing.

While the European benchmark Brent crude for June settlement added 0.39% to $108.32 per barrel on the ICE Futures Europe exchange at the time of writing.

Crude – Ukraine

Tensions in the city of Slavyansk continue to escalate over the weekend as voters in Ukraine’s Dontesk and Luhansk regions supported Sunday’s referendum to split from the country by 90% voters against 10%, RIA Novosti reported. Leaders in the US, Ukraine and the European Union condemned the referendum and said it was illegal as Ukraine plans to hold presidential elections on May 25.

Foreign Ministers from the European Union are expected to meet in Brussels to discuss adding further sanctions against Russia, the world’s largest oil producer.

On Monday, Saudi Arabia’s Minister of Petroleum and Mineral Resources Al-Naimi said that the Organization of Petroleum Exporting Countries (OPEC) is ready to face any shortage in oil supplies if the ongoing tension in Ukraine affects the oil exports from Russia.

On Friday, Futures for WTI dropped 0.24% lower to $100.02 on a stronger greenback which was at its highest in a month against the 17-block euro currency after the European Central Bank hinted it could ease its monetary policy by next month.

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The post Crude Prices Lifted on Sanctions Impact Concerns appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By HY Markets Forex Blog

Stocks – Asia

Asian stocks were seen swinging in between gains and losses on the first day of the trading week with shares in China trading higher on speculation that the government will boost equities.

Japan’s benchmark Nikkei index lost 0.35% closing at 14,149.52 points, while Tokyo’s Topix index dropped 0.65%, ending the session at 1,157.91 points after reports from the country’s current account surplus narrowed to 116.4 billion yen in March from 612.7 billion yen in February, while analysts’ forecasted a surplus of 347.7 billion.

The nation’s currency slid 0.1% lower against the greenback on Monday. The Japanese Economy Watchers Current Condition Index dropped to 41.6 in April from 57.9 in March, dragged lower by the sales tax hike. While the economic outlook index climbed to 50.3 in April, picking up from 34.7 recorded in March.

Hong Kong’s Hang Seng index surged 2.19% to 22,290.15 points at the time of writing, while the mainland Chinese benchmark Shanghai Composite soared 1.90% to 2,049.80 points at the same time.

China’s President Xi Jinping said the nation’s growth fundamentals haven’t changed and needs to adjust to the slow pace of growth.

“Our country’s capital markets have developed very rapidly over the last 20 years, and we have nascent market systems to cover stocks, bonds and futures. Our nation’s capital markets are still immature and some organizational and systematic problems still exist,” the State Council said in the statement.

The South Korean Kospi index rose 0.43%, closing at 1,964.94 points, while Australia’s benchmark S&P/ASX 200 index lost 0.25%, ending the session at 5,447.40 points.

Australia’s largest provider of workforce solutions, Skilled Group saw the most gains, rising to 5.20%, while steelmaker Arrium lost 4.34%.

Stocks – Europe

European stocks were trading mixed on Monday as the crises in Ukraine continue to remain in focus. The European Euro Stoxx 50 rose 0.01% higher to 3,184 at the time of writing, while the German DAX gained 0.18%, trading at 9,599.24. Meanwhile, the French CAC 40 slid 0.23% to 4,466.87, while UK’s benchmark FTSE 100 climbed 0.24% to 6,831.02.

Ukraine

As clashes in the eastern region of Ukraine continued over the weekend, pro-Russian separatists’ leaders in the country’s eastern region of Donetsk declared victory in Sunday’s referendum to leave Ukraine, with almost 90% votes in favor. Leaders from the Western nations said the referendum was illegal and will not recognize the vote and results.

“Events in Ukraine are likely to once again cast a shadow over financial markets this week, as the risk of further civil unrest looks set to rise in the wake of the weekend referendums in Donetsk and Luhansk, which went ahead despite a request from Russian Vladimir Putin to postpone them last week,” chief market analyst at CMC Markets Michael Hewson said in a note.

Officials from the European Union are expected to meet in Brussels later in the day to discuss further sanctions on companies and individuals associated with the crises in Ukraine.

Visit www.hymarkets.com   to find out more about our products and start trading today with only $50 using the latest trading technology today.

The post Stocks Market Report 12th May appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By HY Markets Forex Blog

Investors who trade gold have experienced a volatile market in recent weeks, as multiple events are pushing the precious metal in different directions. According to Businessweek, the strength of the stock market is pushing gold down.

The Dow Jones Industrial Average increased 0.6 percent – nearing a record – last month. Last year, gold slumped 28 percent with strong stock performance, so if stocks continue positive momentum, a similar decline could happen this year.

“The strength in equities is working against gold,” Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago, told Businessweek. “There is very little interest in gold.”

However, recent comments by Fed chair Yellen forced gold up, as investors discovered that the bank is not in any hurry to reduce the size of its balance sheet, according to Reuters.

“Bullion’s inability to break over the 50-day moving average of $1,315 an ounce may have led to liquidations by disappointed investors,” James Steel, chief precious metals analyst at HSBC, told Reuters. “Weak prices near term may continue until geopolitical tensions or fresh physical buying halt losses.”

Another situation that requires close attention is Ukraine. Russia is currently pulling troops from the border, which could lead to deescalation in the area. However, there is no predicting what will increase tensions again. But, currently, Russia moving out of the region is putting downward pressure on gold, as investors are no longer seeking the safe haven provided by the precious metal.

The post Gold Prices are up and Down appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By HY Markets Forex Blog

AUD/USD continues to rise after the recent reversal from the strong support zone surrounding the support level 0.9250.

The support zone was strengthened by the 100-day moving average and the 38.2% Fibonacci Correction of the preceding sharp intermediate (C)-wave from the start of March (as you can see from the daily AUD/USD chart below). AUD/USD is expected to rise further in the currently active second intermediate corrective wave (2) toward the next buy target at 0.9460 (the top of the previous primary correction ②).

The post HY MARKETS News: Forex Report: AUD/USD appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog