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By WallStreetDaily.com

Do rematches ever live up to the hype? I’ll let you be the judge.

Last Friday, I was invited back on CNBC’s Closing Bell to square off with Bert Dohmen of Dohmen Capital.

The topic? The outlook for shares of the world’s largest company, Apple (AAPL).

The stock has been range-bound for most of the year, trading between $500 and $550. I don’t expect the sideways trading to last much longer, though.

To find out why, all you have to do is click on the image below.

As I shared during the segment, I expect Apple to make a major splash into the mobile payments and wearables markets. Both promise to drive sales and profits materially higher. And the stock is bound to follow suit.

Now, I already provided all the evidence behind my mobile payments prediction. As far as the move into wearables, once again, patent filings provide the proof of Apple’s intentions…

• In April 2013, the U.S. Patent and Trademark Office published three patent applications from Apple (#20130085711, #20130085677 and #20130085700). All three relate to improving the accuracy of pedometer readings in mobile devices – a key function for any wearable.

• Fast forward to February of this year, and Apple was granted a patent (#8655004) for headphones that can detect head gestures and monitor the wearer’s activity, temperature, perspiration and heart rate.

• A few weeks later, and another patent application (#20140074431) for “wrist pedometer step detection” was made public. It reveals that Apple is now honing in on a location for the wearable. Since it’s the wrist, the new tech might be an iWatch – or maybe a souped-up fitness band. Time will tell.

Clearly, Apple wouldn’t be filing for patents – and refining technology that’s essential to a wearable device – if it didn’t intend to ultimately enter the market.

In terms of timing, it couldn’t be more perfect. I say that because, based on the latest research out of Canalys, the wearable market is expected to grow by “mammoth proportions.”

In terms of smartwatches, the firm expects five million units to be sold this year, up from only 330,000 in 2012.

As for “smart bands,” the firm expects shipments to top eight million this year, over 23 million in 2015 and over 45 million by 2017.

“Though currently a relatively small market serving fitness enthusiasts, wearable bands represent a massive opportunity in the medical and wellness segment,” says Canalys. Indeed!

Apple has proved this time and time again… It doesn’t have to be the first-mover in the market to end up dominating the space. Especially since it can leverage its loyal user base to instantly gain traction.

An analysis by Trefis suggests that a move into wearables could add about $50 billion in value to Apple’s market cap, or about $50 per share.

I think it’s a tad premature to make any such calculations, at least until we get a clear picture of the wearable product price points.

Nevertheless, the conclusion is the same…

If Apple enters the wearables market this year, as I expect, the move will have a meaningful impact on the company’s financials – and, in turn, share prices.

Bottom line: In this increasingly valuation-crazed market, don’t let Apple pass you by. It’s legitimately underpriced and primed for the picking.

Ahead of the tape,

Louis Basenese

The post Wall Street “Bloodbath” Captured on Live TV appeared first on Wall Street Daily.

Article By WallStreetDaily.com

Original Article: Wall Street “Bloodbath” Captured on Live TV

By HY Markets Forex Blog

Investors who participate in forex trading should be tracking the actions of the European Central Bank, as it could have a major impact on the direction of the euro against the U.S. dollar.

According to Investing.com, EUR/USD showed stability despite comments from the ECB that were meant to keep the single currency down. EUR/USD has had either a 1.37, 1.38 or 1.39 handle for the last 28 working days, but European Commission vice president for industry Antonio Tajani said future gains could hurt the economies of certain European nations.

“[The euro at 1.40] hurts the economies of Spain, Italy, France and, in the long run, Germany,” Tajani said.

Two things forex traders should pay attention to include the ECB considering negative interest rates and asset purchases to guard against dangerously low inflation, according to MarketWatch. This would be a more aggressive approach toward getting the euro zone economy out of trouble, and could have a major impact on the EUR/USD.

There are many factors forex traders can watch to help predict the ECB’s stance on interest rates. The most relevant economic indicators include the consumer price index, consumer spending, employment levels, subprime market and housing market.

When these indicators improve, the ECB could be forced to push interest rates higher, which is valuable information of forex traders. However, slight improvement could lead to no movement. Additionally, traders should watch for major announcements from the central bank, as these can provide valuable information about where interest rates are headed.

The post EUR/USD Shows Stability Despite ECB Comments appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

EURUSD stays in a trading range between 1.3749 and 1.3875. Resistance is at 1.3875, a break above this level will confirm that the downtrend from 1.3966 had completed at 1.3749 already, then the following upward movement could bring price to 1.4500 area. On the downside, a breakdown below 1.3749 will signal resumption of the downtrend, then deeper decline towards 1.3550 could be seen.

Provided by ForexCycle.com

Source: Brian Sylvester of The Gold Report  (3/26/14)

https://www.theaureport.com/pub/na/jeff-killeen-a-picky-players-guide-to-a-cautiously-optimistic-mining-market

The price of gold may be enjoying a double-digit increase so far this year and some equities may even have doubled their value, but Jeff Killeen of CIBC World Markets says it’s not time to jump into metals with both feet. Be selective, he says. In this interview with The Gold Report, Killeen shares the higher-quality names that have a prospect for development.

The Gold Report: The price of gold has increased 14% this year. Is that due to gold’s safe haven status?

Jeff Killeen: The safe-haven mentality is one element that’s supporting the gold price. There is uncertainty in the market about the strength of the U.S. economy. A number of economic indicators reported during the last two months have not met forecasts. The rebound may be slower than expected. Buyers are coming back to bullion.

Unrest in the Ukraine is also helping to support the gold price, however, to a lesser extent than U.S. economic data. If weaker-than-expected indicators persist—and severe weather in the U.S results in soft data —such a scenario could be positive for gold in the near term.

Even before this rebound, there was very strong physical buying around the $1,200 per ounce ($1,200/oz) level from Asia. The investment community believed that there was a base established and started putting money back into the space with much less risk of a downside move.

TGR: It’s now six years since the economic crisis of 2008. Is it possible that a consensus could form that a traditional economic recovery is not going to occur? And if this consensus does form, would it be a big boost for gold?

JK: Certainly. However, I think that that consensus may take a little while to form because most of the U.S. economic indicators started moving in the right direction in 2013. In the next three to six months the impact from severe weather last winter will obscure the data picture.

TGR: The mood at this year’s Prospectors and Developers Association of Canada (PDAC) conference has been described as “cautious optimism.” Would you agree?

JK: I’d say the tone was divergent—some senior management teams were feeling very cautious about commodity prices and general market appetite for mining equities, whereas a lot of the junior management teams had a much greater conviction that 2014 would be a strong year for the metals and equities.

TGR: If you look at the juniors and mid-caps, a lot of these stocks have gone up 25%, 50% and even 100% this year. I would have thought you would’ve seen a lot of smiling faces at PDAC as a result of that.

JK: Very true, but even a 100% uptick still leaves some share prices below where they may have been at better points in 2012. There is still that rearward-looking view to where the stock prices have come from, and a lot of them are a long way from there.

TGR: As capital returns to the mining sector, would it be correct to say that it will return first to the producers, second to companies with late-development assets and then, third and finally, to explorers?

JK: That succession sounds reasonable; however, new capital investment will certainly be selective. I would expect to see capital flowing into the space across the market-cap spectrum, but those companies or projects that are marginal at the current gold price or require further appreciation in the price to generate acceptable returns are likely to find it difficult to attract any new investments in 2014.

TGR: How can smaller companies, specifically explorers, demonstrate that they are worthy of financing?

JK: The first question anyone should ask when looking at the explorer space concerns the management team. Pick a solid team, especially in a market where accessing capital can be difficult. Spending dollars wisely is important.

Beyond that, a project with strong grades can give a comfort level to the buy side that a project could be profitable in the future, considering it’s very difficult to assess where gold prices might be four, five or seven years from now.

Other benefits—geographic or logistic—such as being in the right region for having a smooth permitting process and having good roadways, rail or power, can add value.

TGR: Which major gold producers do you like?

JK: We like Goldcorp Inc. (G:TSX; GG:NYSE) and Agnico-Eagle Mines Ltd. (AEM:TSX; AEM:NYSE)because they have high-quality, high-grade cornerstone assets that generate a large amount of cash flow, have strong balance sheets with a lot of cash and the potential to use that cash to help grow their businesses through mergers and acquisitions. They have strong management teams with good-quality assets that will have secure cash flow even in a softer gold price environment. And that’s where investors should be focusing.

TGR: What are your top picks in the gold sector?

JK: I cover some nonproducing explorers and some producing juniors and intermediates. In the junior nonproducer space, my top picks would be Continental Gold Ltd. (CNL:TSX; CGOOF:OTCQX), Premier Gold Mines Ltd. (PG:TSX) and Pretium Resources Inc. (PVG:TSX; PVG:NYSE). All three have assets with higher grades, are sufficiently financed to complete all planned work for the next year or more in some cases, and will continue to generate meaningful news flow over the next year, which can add value to their assets and keep the investment community engaged.

Continental is expected to release an updated resource estimate for the Buriticá project in Colombia by the end of Q1/14. In addition to increasing resource confidence by upgrading Inferred ounces to the Measured and Indicated (M&I) category, I anticipate there will be growth in total resources as well.

Pretium is expected to file an environmental assessment certificate with the British Columbia government within the next month. That will kick off the formal review process for the mine plan. The company will continue to work toward completion of its feasibility study for the Brucejack project in H2/14. In the meantime, the company will continue underground drilling within the Valley of the Kings and is expected to extract another 1,000 ton sample from the zone for processing.

Premier will continue to work at all three of its core projects. Drilling results from the Cove project in Nevada are looking particularly interesting. Several new mineralized zones have been recognized, both gold mineralization and polymetallic mineralization with gold, copper, lead and zinc. The Hardrock project will have infill drilling completed during the course of this year that will support moving the project from the preliminary economic assessment (PEA) phase to the feasibility stage. Its Red Lake joint venture project with Goldcorp should have drill results from the down-dip area of the Wilmar zone within the next couple of months. The market is anxious to see what this drilling will yield as it is a relatively untested target.

TGR: What did you make of the PEA on Hardrock that was released in January?

JK: It was a quality piece of work. You could certainly tell the skill level that’s been brought into this company in the last couple of years, including Ebe Scherkus coming on as chairman of the board from Agnico-Eagle and bringing quite a few skilled members from the Agnico-Eagle team over to Premier. Hardrock certainly looks compelling. It’s near a highway. It’s very close to power. It should get lots of local support. The projected returns are double-digit. Arguably, some might want to see a few more percentage points on that internal rate of return, but ultimately, Premier will do a good job in proving some of those numbers over the course of transitioning to a feasibility stage.

TGR: Continental’s Buriticá project in Colombia shows high grades in gold. Do you expect these grades to decrease as the resource grows larger?

JK: I expect grades will be similar to what we see today. Most of the drilling between the two principal zones—Yaraguá and Veta Sur—have had very similar numbers since the last resource estimate was produced. It is important to note that the M&I categories within its 2012 resource estimate are substantially higher than the Inferred grade. As we see some of the Inferred ounces converted into those higher-confidence categories, grades may even improve as drilling becomes denser within the zones. I’m not building that expectation into my valuation, but it is a possibility.

It’s also important to note that it’s very small scale, but there is an active producing mine at the site. This mine has been operating and producing gold for more than 20 years with a head grade of roughly 20 grams per ton (20 g/t) in recent times. There is a bit of real-world proof that those high grades do exist at site.

TGR: What other gold companies have you rated Sector Outperformers?

JK: Among the producing companies that I cover, B2Gold Corp. (BTG:NYSE; BTO:TSX; B2G:NSX) is my top pick and rated Sector Outperformer. The company has an attractive cost profile across its asset base, and all-in costs are expected to decline in 2015 and capital spending at the Otjikoto mine in Namibia will wind down next year. This is a mine that’s currently being constructed now. We expect all-in costs to be sub-$900/oz in 2015 and that the company will be positioned to generate significant free cash flow by next year. Otjikoto coming on-line will contribute to a nearly 50% increase in gold output from 2013 to 2015.

That does not take into account the recently discovered Wolfshag zone. I would expect that once the company is able to incorporate the higher-grade Wolfshag zone into the Otjikoto mine plan, we’ll see further improvement in cost and gold output from that project.

Beyond the development of Otjikoto, B2Gold’s management has shown improvements at each of the company’s three projects currently in production, and we’re expecting modest increases in output from each of the La Libertad, El Limon and Masbate mines this year. With B2Gold projected to exceed a half-million ounces (0.5 Moz) gold by 2015, that certainly puts it into a fairly substantial production base.

The bottom line is that B2Gold is a company with attractive margins and significant near-term growth that’s all internally funded. That’s a great combination for any producer to have.

TGR: There were concerns raised about B2Gold’s acquisition of Volta Resources Inc. Do you think that’s a good fit?

JK: It was an acquisition the market didn’t expect, but I can understand why the company likes the asset. It liked the exploration and management team. Plus, it was a rather small acquisition, at roughly 3% of its market cap, for something that could be important in the longer term. I think it made sense.

TGR: Which other gold producers do you like?

JK: Primero Mining Corp. (PPP:NYSE; P:TSX). The company put out a revised resource and reserve estimate for San Dimas mine that showed increases in all categories for total ounces and grade. Its acquisition of Brigus Gold Corp. will help bring total production for the company into a new bracket. It remains one of the lower-cost producers in the space.

TGR: Let’s talk about some of the companies you’ve rated Sector Performers.

JK: The names I cover that are Sector Performers include Alamos Gold Inc. (AGI:TSX), Asanko Gold Inc. (AKG:TSX; AKG:NYSE.MKT), Argonaut Gold Inc. (AR:TSX), Belo Sun Mining Corp. (BSX:TSX.V),OceanaGold Corp. (OGC:TSX; OGC:ASX) and Orezone Gold Corporation (ORE:TSX). Each has its rating for different reasons. Some are simply calls on relative valuations. Some are based on project returns and so forth.

For Argonaut and OceanaGold, the rating is largely a valuation call relative to peers in the space. Argonaut is trading at roughly 13x our 2014 cash flow per share (CFPS). The stock trades at a sharp premium to most of the midtier peers in the group. The company has an attractive low-cost profile. It is increasing production as the La Colorada mine comes into full stride in Mexico in 2014.

Orezone is operating an exploration program at Bomboré project in Burkina Faso. The company has completed scoping studies and is trying to move toward feasibility. The project return may be smaller than what many in the investment community would look for in a new developable asset. The company is looking at how it can reduce the upfront capital expenses (capex) and potentially reduce the operating costs for Bomboré, as well as improve the metallurgy. How those elements come together toward the later part of this year certainly could change the way that we view that project.

TGR: Can you tell us about Alamos?

JK: Alamos’ Mulatos mine in Mexico is still one of the lowest-cost producers and better-quality names in the space. But looking at it relative to peers, it is trading at a fairly steep premium. Alamos is trading at roughly 18x our 2014 estimated CFPS compared to 9x for the peer group.

However, I do see some upside. It has one of the strongest balance sheets of any company I cover, with more than $400 million ($400M) in cash. There are very good development assets in Turkey, which are being held up by permitting issues. Until we get more clarity on that, it could be a headwind for the stock.

TGR: What can you say about Belo Sun?

JK: Belo Sun’s Volta Grande project in Brazil looks like a great project with fairly simple geology. It’s an open-pittable, greenstone-hosted gold deposit much like what you find in many places in Canada. The bigger concern has been the capex estimate of more than $700M. That was certainly a holdback for this stock. The company has explored how to reduce that upfront capex and has produced a PEA that effectively cuts the capex in half. It needs a little bit of help from the gold price or reduced costs to improve the overall economics.

TGR: What is interesting about Asanko?

JK: Asanko’s merger with PMI Gold Corp. has been completed. It’s a positive because it gives more optionality for development in Ghana. The merger puts two 5 Moz deposits within about 25 kilometers of each other under one company. Looking forward, Asanko will reassess PMI’s Obotan deposit. I’d like to see more details about how that will look before we can revise the valuation.

TGR: Are there other companies that you can talk about?

JK: Earlier this year Pilot Gold Inc. (PLG:TSX) released two drill holes from its Mount Kinsley project in Nevada; they have very good grades and breadth. The headline hole that it reported was 6.9 g/t over almost 42 meters (42m). This mineralization was within a new shale unit where very little or no drilling had been done by previous operators, and only one hole by Pilot had been drilled in late 2013. That could open up a new horizon at the Kinsley project for exploration that hadn’t been identified before.

TGR: Which streaming royalty gold companies do you like?

JK: My go-to answer would be Franco-Nevada Corp. (FNV:TSX; FNV:NYSE). It has a best-in-class portfolio and management team. It has lots of cash on its balance sheet to make acquisitions. It has cornerstone assets that will continue to generate free cash flow even if commodity prices drop significantly.

I also like Silver Wheaton Corp. (SLW:TSX; SLW:NYSE) because it is the best way to get exposure to the silver space, as silver producers are having difficulty securing positive cash flows and margins.

TGR: Any other companies?

JK: Allied Nevada Gold Corp. (ANV:TSX; ANV:NYSE.MKT) did a good job at turning around the heap-leach operations at its Hycroft mine, but it does have a significant amount of debt. We find it difficult to see the Hycroft heap-leach operations being able to generate enough cash flow to repay that debt at these commodity prices. It would need a fairly significant increase in the price of gold, on the order of $200–300/oz, to be able to generate enough cash flow.

It also has a lot of work ahead of it on its proposed mill sulfide recovery project. At this point, it seems that the test work is going well, but it’s in the early stages.

TGR: Given the recent increase in the price of gold and the significant uptick in a lot of equities, do you think that investors are embracing the sea change?

JK: There is a belief within the investment community that we’re finding a bottom for the commodities. We do know that equities underperformed to the down side of the gold and silver price. Even just to revalue based on current spot prices means that there is probably still some upside to be had in a lot of the equities. With that in mind, investors are feeling better, but not excited to the point where there’s going to be broad-scale investment across the mining space. It’s going to be selective. It’s going to be higher-quality names or those that have a higher prospect for development. It’s not going to be widespread just yet.

TGR: Jeff, thank you for your time and your insights.

Jeff Killeen has been with the CIBC Mining research team since early 2011. He covers and provides technical assessment of junior exploration and mining companies worldwide. Previously, Killeen worked as an exploration and mine geologist in several major mining camps, including the Sudbury basin and the Kirkland Lake region. Killeen earned his Bachelor of Science degree from Carleton University and is an executive committee member of the Toronto Geological Discussion Group.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

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 Streetwise Reports: Continental Gold Ltd., Premier Gold Mines Ltd., Pretium Resources Inc., Argonaut Gold Inc., Primero Mining Corp. and Pilot Gold Inc. Goldcorp Inc., Allied Nevada Gold Corp. and Franco-Nevada Corp. are not associated with Streetwise Reports. Streetwise Reports does not accept stock in exchange for its services.
3) Jeff Killeen: I own, or my family owns, 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: 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.
4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.
5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.
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The Australian dollar has been the performer this week with strong bullish closes on every trading session, pushing the AUDUSD into fresh highs. We’ve been focusing a lot on the AUDUSD because it’s been dropping some nice clean price action signals.

On the AUDUSD daily chart you can see the market has just fired up higher off the back of a bullish rejection candle with a strong close to the body. Now the market has breached a key containment level and floating at new highs, we are waiting for pullbacks into the mean value for buying opportunities.

We’re watching the important level marked on the chart to hold as support. A bullish price action reversal signal will be the icing on the cake here. The area we’ve got the spot light on also should line up nicely with the mean value, which creates a “hot spot” or high confluence area to look to get long.

Article by www.theforexguy.com

By MoneyMorning.com.au

‘We’re making the long-term bet that immersive, virtual and augmented reality will become a part of people’s daily lives.‘

For a minute, when we read that sentence we thought we were reading something from our resident technology and innovation expert, Sam Volkering.

Immersive, virtual and augmented reality is exactly the thing Sam has banged on about in Revolutionary Tech Investor since we launched the service last June. We discussed it yesterday in our regular monthly video update for Revolutionary Tech Investor subscribers.

But for a long time Sam was the only guy talking about this stuff anywhere. Most other folks were too busy worrying about whether the US Federal Reserve would stop money printing.

So, who is it that’s now making a ‘long-term bet’ on the kind of things Sam was talking about a year ago? Mark Zuckerberg, the CEO of Facebook [NASDAQ:FB] following the company’s US$2 billion takeover of technology firm Occulus VR Inc…

Remember that this comes hot on the heels of Facebook’s takeover of messaging app WhatsApp for US$19 billion.

Zuckerberg certainly isn’t shy about splashing around the company’s cash on highly speculative business deals.

But will any of these billion dollar deals pay off?

That’s impossible to say right now. But it’s inarguable that Facebook had to do something to plan for future growth. There are surely limits to how much Facebook can make from allowing people to stalk and spy on each other.

But this deal is important. It confirms everything we’ve tried to explain for the past year or more.

Life goes on

One reason we decided to launch a premium technology investment advisory last year was that we knew that whatever happens from a macro-economic perspective, life still goes on.

People still buy things.

Investors still invest in things.

Companies still sell things.

And importantly, entrepreneurs and capitalists still innovate and create new opportunities.

The fact is, if you decide that you’ll only invest once all risk subsides and you think it’s safe to venture back into the market, the odds are you will have missed the best investment opportunities.

As far as we can tell, our reasoning has been spot on. We’ve come across one trumped up crisis after another, and yet, what has happened?

That’s right, stocks have gone up. In fact, from the date of Sam’s first Revolutionary Tech Investor stock pick on 10th June last year the S&P/ASX 200 has gained 13.5%.

The NASDAQ Composite index has gained 22.1%.

Source: Google Finance
Click to enlarge

It’s a shame to think so many investors missed out on these gains because they were scared rigid of taking risks.

But taking risks is what investing is all about.

Zuckerberg’s big investment punt

That’s exactly what Facebook CEO Mark Zuckerberg has done on a grand scale. Facebook has made two takeovers totalling US$21 billion.

Zuckerberg has done this at a time when the world, investors and markets have been on edge about Russia and Ukraine.

And yet, did that stop him splashing out US$21 billion?

No, it didn’t.

And while we don’t expect you to put that much on the line, or even to sell the family silver in order to buy stocks, we do recommend that you take a leaf out of Zuckerberg’s book.

But in what way?

Remember the type of stocks we’re talking about. These are the riskiest stocks on the planet. So you should only invest money that you can afford to lose.

We’re not talking about your blue-chip dividend-paying stocks that you should have tucked away, hopefully never to sell. You’ll make some nice returns from those stocks over time. But you won’t make the kind of ‘moon-shot’ returns that you can bag with the stocks Sam follows.

This is chump change to a multi-billion dollar company

One of the keys to speculative investing is to look at the big trends.

That may seem an odd thing to say when we’re generally talking about such tiny stocks.

But it’s the big trend that can make or break a company.

Zuckerberg understands this. He’s invested US$2 billion into buying a company that makes an immersive technology that looks like ski goggles.

But although two billion may seem like a lot of money, it’s actually chump change. Facebook has a market capitalisation of US$165.3 billion. In other words, the takeover amounts to just 1.2% of Facebook’s market cap.

Or put another way, it’s the equivalent of someone with a $100,000 share portfolio investing $1,200 in a speculative stock. Most investors in that position wouldn’t think twice about making a speculation like that.

And yet when Zuckerberg does the equivalent with Facebook’s cash, cries abound of ‘tech bubble’ and ‘wasted money’.

The reality is that Zuckerberg is taking a punt on a stock. And he’s doing it in exactly the right way. Relative to the size of the company (Facebook) Zuckerberg is making a tiny bet in exchange for what could be a huge return if the immersive, virtual and augmented reality markets begin to bloom as much as Zuckerberg – and Sam Volkering – expect.

Cheers,
Kris+

Ed note: The above article was originally published in The Daily Reckoning US. Dr Marc Faber, the infamous ‘Dr. Doom’ will be speaking at our World War D conference on March 31-April 1. Make sure to check your inbox for Money Morning on those days as we’ll be covering the event in detail. You can also follow us on twitter @MoneyMorningAU for live updates during the conference.

From the Port Phillip Publishing Library

Special Report: ASX: 15,000

Daily Reckoning: The Australian Dollar and a Cheap Money Addiction

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By MoneyMorning.com.au

I recently attended an event where one of the speakers suggested that investors should buy ‘happiness stocks‘, examples of which include luxury goods companies such as LVMH (Moët Hennessy Louis Vuitton), L’Oréal, Prada, and Tiffany (he also extolled high-end pleasure boat manufacturers), as well as Nestlé (because it manufactures and distributes chocolates). According to this consumer goods expert, people all around the world are trying to buy happiness, and these companies are suppliers of ‘happiness goods’.

Personally, I find this concept of ‘happiness stocks’ quite bizarre, as everyone has a different concept of what makes them happy, depending on their socioeconomic status. Low income earners might consider themselves happy if they have enough money to buy food, pay their rent, purchase other necessities of life, and have something left over to buy cigarettes, booze, candy, movie tickets, lottery tickets, consumer electronics, clothing, etc.

Wealthy people, on the other hand, might consider that happiness lies in having enough money to purchase a luxury home or yacht, an expensive watch, fine wines, high-end fashion brands, art and collectibles, etc. In both cases, each purchase will give the buyer some initial satisfaction (happiness), irrespective of whether it is a luxury product or a necessity.

Moreover, happiness products differ depending on age group. A child will generally be far happier eating at a McDonald’s than in a high-end restaurant, where they are likely to feel bored. Younger people tend to enjoy trendy, noisy restaurants, where the quality of the food is secondary to their wish ‘to see and be seen’; whereas the elderly are likely to feel happier in quieter, more traditional places, where they won’t have trouble hearing the conversation around the table.

But consumer satisfaction isn’t associated only with the purchase of goods; services are also an important source of happiness for most people, whether those services be travel, wellness or fitness centres, yoga classes, beauty and hair salons, the performing arts, cosmetic surgery, or nightclubs, spectator sports, amusement parks, movie theatres, concerts, shows, gambling venues, betting offices, escort services, bordellos and financial services.

In other words, ‘happiness’ comes in a variety of packages, depending on the consumer’s preferences. But I understand what the speaker at that event was driving at. Hundreds of millions of people around the world are joining the middle class, with luxury brands being a prime beneficiary of this social trend. I have some sympathy for this view, albeit with some serious reservations.

In the last few years, the demand for luxury goods has largely been driven by consumers in emerging economies (notably China) who have purchased these testaments to their improved social status either in their own markets or while travelling abroad in the more developed markets of the West. Therefore, if we assume that there was – and still is – a malaise in the emerging economies, a slowdown in the demand for luxury goods is almost a certainty.

Such demand is also driven by asset markets. Rising stock and property markets have a favourable impact on the demand for luxury goods but no discernible effect on the demand for necessities such as food and energy. Conversely, declining asset markets influence luxury sales more negatively than sales of necessities. So, assuming that the great asset inflation will at some point come to an end, a cautious (or negative) stance towards the luxury sector seems warranted.

I should also mention that competition among branded products is fierce, and that some brands may have over-expanded in terms of opening stores in very expensive locations. That all is not well in Luxuryland is evident from the recent performance of the stock prices of numerous luxury goods companies. LVMH Moët Hennessy Louis Vuitton is below its 2012 high, and L’Oréal is lower than it was in 2011. In the meantime, Coach has imploded.

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There is another point to consider. In most countries around the world, we are seeing an increase in wealth and income inequality. In order to appease the majority of people whose incomes and wealth failed to rise much, taxes on capital gains, assets, and luxury goods are likely to be increased. Take Singapore as an example. According to the Financial Times of February 6, 2014:

‘Sales of supercars in Singapore have crashed by up to 90 per cent to their lowest levels in years after government measures aimed at tackling growing social inequality started to take their toll. The Asian city state’s growing population of billionaires has been a magnet for carmakers including Maserati, Lamborghini and McLaren. The British marque opened its first showroom in Singapore last year. But the government, increasingly concerned about a yawning [gap] between rich and poor Singaporeans, introduced two measures in last year’s budget aimed at making the luxury cars less affordable. One measure raised the upfront tax on vehicles, while the other increased the proportion of cash downpayment that drivers require to buy cars using loans. Those measures have sent sales of top-end cars plummeting, with Ferrari registrations down by 92 per cent in the second half of last year, compared with the first half.‘

Now, I am not suggesting that taxes will rise on Hermès scarves, L’Oréal cosmetics, Chanel dresses, Louis Vuitton bags, and Ralph Lauren polo shirts, but our interventionist governments could easily increase capital gains taxes on the ’1%’ in order to tackle growing social inequality. Moreover, if the social climate deteriorates, wealthy people may choose to curtail their displays of opulence.

I have mentioned the luxury (high-end) sector of the economy once again because it is likely that we are in the midst of a colossal high-end sector bubble (properties in Mayfair, The Hamptons, Manhattan, and Newport Beach, watches, wines, entertainment venues, fashion stores, cosmetic surgery, prestigious hotels, private jets, sports franchises, art and collectibles, etc.), which is extremely vulnerable to the rats occupying tax offices around the world and the resentment of the bottom 50% of households.

Furthermore, everywhere I go, I hear about how foreigners (mostly Chinese, Latin Americans, Middle Easterners, and Russians) are buying up, or will buy in the future, these properties, that artist’s paintings, those luxury watches, that prestigious car, etc. Considering the meaningful slowdown in emerging economies as well as their weakening currencies, and the ‘mother of all credit bubbles‘ in China, I would be far less sanguine about the luxury (high-end) sectors around the world. In fact, how correlated the high-end sector is to asset markets is visible from the performance of Sotheby’s stock price.

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Marc Faber,
Contributing Editor, Money Morning

Ed note: The above article was originally published in The Daily Reckoning US.

From the Archives…

Hashing Out the Iron Ore Price
22-03-14 – Shae Smith

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By MoneyMorning.com.au

By Nick Giambruno, Casey Research

By OilPrice.com

Since the first discovery of the massive Jubilee oilfield in Ghana by a start-up company, the West African playing field has begun to change, and so too have investor sentiments, disappointed most recently by the low fourth-quarter 2013 results of major integrated oil companies like Exxon, Shell, Chevron and BP.

But while the supermajors are struggling with soaring project costs and poor balance sheets, innovative juniors and start-ups are increasingly swooping in to take advantage of new highly prospective plays–and as long as they don’t come up dry they are turning into superstars overnight.

West Africa’s emerging hotspot of Ghana is one of the best indicators of how the oil and gas playing field is undergoing a major transformation.

In 2007, a Dallas-based start-up company, Kosmos Energy LLC, jumped on this scene to great fanfare, making the Jubilee field discovery. It was the company’s first major discovery, and one of the largest discoveries in all of West Africa in two decades. First production came online in 2010 and average production today is about 104,000-110,000 bpd.

A record-breaking inflow of offshore oil investment followed this discovery, bringing in British operator Tullow Oil, which remains the key player in Jubilee, and a whole list of major oil and gas companies eyeing not only Ghana’s Jubilee field, but everything in the West African vicinity.

But at the end of the day, it was a small Dallas-based start-up that prompted the unparalleled development of oil and gas plays in West Africa.

Another start-up, the African-based subsidiary of CSE-listed Gondwana Oil, is continuing the trend in Ghana. Earlier this week, the company won exclusive rights to negotiate for the offshore Cape Three Points South Block in the highly prospective Tano Basin, about 30 kilometers from Jubilee.

This particular block hopes to take off where Kosmos left off with Jubilee. The block is surrounded by 20 producing discoveries in an area that has a commercial success rate for drilling of over 60%.

Gondwana is in a similar position to Kosmos when it made the Jubilee discovery.

So while there is some safety in the diversification of the major oil companies, it’s also harder for investors to get big returns on a hot new play like Ghana. As such, investors are increasingly willing to risk on juniors and start-ups who are focused on a single hotspot that promises a big reward. If these low-market-cap companies can actually get their hands on significant acreage in venues like Ghana, investors seem ready to take notice.

In the meantime, the bigger companies continue to make significant headway in with Ghana’s oil, despite a few setbacks , including delays to the country’s gas infrastructure, which means that associated gas is being lost to flaring or has to be re-injected into wells.

Italian oil giant Eni has been successful in the Tano Basin, not far from Jubilee, estimating that field holds around 150 million barrels of recoverable oil. Hess Corporation is also prioritizing Ghana, with seven successful wells so far in the Tano Basin and new exploration planned for this year.

Source: http://oilprice.com/Energy/Energy-General/Small-Oil-Companies-Eye-Huge-Prize-in-Ghana.html

By. James Burgess of Oilprice.com

By Jason Hamlin – goldstockbull.com

Gold and silver are testing key technical support levels this week. Some analysts have already flipped their outlook to bearish over the past few days, but I believe the uptrend remains intact as long as current support levels are not breached.

Goldman Sachs has predicted new lows for gold in 2014, but physical buying remains strong and precious metals represent a good safe haven during increasing political tensions worldwide. I also believe that precious metals are one of the only asset classes that remain undervalued at current levels. Stocks, real estate and just about everything else has climbed to unreasonable valuations by any number of measurements.

During late January, gold broke through resistance at the downward sloping trend line that had been in place for over year. This key breakout is circled in the chart below. A new uptrend support line was established starting in December and gold is now testing this support line at $1,300, also the 200-day moving average, for the second time.

A bounce off this support would be very bullish for gold as it would represent a higher low and verify the new uptrend has staying power. The RSI shows that gold has room to fall lower before becoming technically oversold. I will be looking for gold to find support at the 100-day moving average of $1,275, on any dip below $1,300. However, a failure at $1,275 support would suggest that gold will continue dropping to test the prior low of $1,195. This would mean the gold price drops back below the long-term resistance line and marks a reversal into the downtrend channel once more.

So, all eyes are on $1,300 and then $1,275 gold as critical price levels for determining the future trend. Investors might consider reducing exposure, hedging positions or going short gold on two consecutive days of closing below this support.

Silver Underperforming Gold in 2014

Silver has underperformed gold in 2014 by a wide margin. Some analysts view this as a bearish indicator, as silver usually leads the gold price higher. However, much of the underperformance can be explained by slowing economic growth in 2014. Gold outperforms silver in such an environment, as only 10% of gold’s demand is industrial versus roughly 50% for silver.

The silver chart shows greater volatility, but a more gradual uptrend line with support just above $19. Silver broke out from its long-term downtrend a bit later than gold, with a sharp move higher in early February.

Silver has given back most of its 2014 gains in the past week, as it has fallen back below $20. The uptrend remains intact as long as the silver price holds above $19.16, which is a key level as it is precisely where the two trend lines converge. This level around $19 is also key as it was strong resistance on numerous occasions in the past and this type of resistance often turns into strong support.

I will be watching for silver to find support above $19.16, which was the previous low in February. This would mark a ‘higher low’ for silver, which would be bullish and suggest a continuation of the 2014 uptrend. However, the RSI shows a bit more room to drop and if support fails, we can’t rule out a deeper decline towards $16 in the short-term.

Please keep in mind that technical charts are just an additional data point to be viewed in the greater context of your total decision making matrix. Technical charts can be useful, but they are only slightly more predictive than a dartboard.

I would not make too much of the recent ‘golden cross’ as the 50-day moving average for gold crossed upwards through the 200-day moving average. Silver came close to doing the same thing, but stopped just short. Those on the short-side of things also watch these signals and what better time to sell millions of paper ounces in a not-for-profit manner? Besides, the last golden cross occurred in November of 2012 with gold around $1,750 and we all know how that turned out.

Time to Exit Positions?

Despite the declines over the past week, I don’t think it is time to panic out of precious metals quite yet. The fundamentals have grown increasingly bullish in the past months and technicals remain bullish as long as the support levels mentioned above hold. So far, they appear to be holding, although sentiment is turning bearish and speculators/bots are quick to exit positions on any failure of key technical support.

Even if technical support fails and precious metals drop towards previous lows, I do not believe they will remain there for long. While deep-pocketed players can utilize paper derivatives and extreme leverage to manipulate prices however they wish in the short term, commodity prices rarely drop below their cost of production and never stay at those levels for long.

If producers of oil, food or any other commodity are not able to sell their product at a profit, they are forced to shut down operations. This causes supplies to drop and prices to rise again, assuming reasonably stable demand.

So, we should see a floor for gold and silver prices near the all-in sustaining costs. The industry average for gold is around $1,200 and for silver it is around $20. Therefore, I believe the downside risk with precious metals is limited at this juncture. In the short-term we could see prices fall another 10% or 20% at most.

However, the upside potential is limitless. A move bak to previous highs would represent gains of roughly 50% for gold and nearly 150% for silver. The more money that central banks around the globe continue to print, the higher the potential price of precious metals. There really is no ceiling as there is no limit to how much money can be printed and how much debt can be monetized by desperate banks and governments clinging to a decaying system that gave them power.

Of course, a 10X move to $13,000 gold does not equate to a 10X increase in purchasing power for gold investors. But we can expect the nominal price increase to far outpace inflation, resulting in a significant increase in purchasing power over time. More importantly, investors can sleep well at night knowing their hard-earned wealth is not stored in fiat paper form that can be wiped out by the whims of a few bureaucrats or banksters.

With exploding sovereign debt levels, the ballooning FED balance sheet, increasing consolidation of the banking industry, the ticking time bomb of toxic derivatives still in existence, growing distrust of governments, growing geopolitical tensions, increasing chances of Russia and China dumping U.S. debt/dollars as economic warfare, end of the petrodollar world reserve in sight and rise of alternative monetary systems, it is difficult to imagine gold and silver prices remaining at the currently depressed levels for long.

While I can’t predict exactly when the upward revision to gold and silver prices will take place, I believe we are witnessing the last great buying opportunity in precious metals. Whether prices rocket higher this year or next year, I believe those that were willing to buy when gold was out of favor will be handsomely rewarded. It is the most difficult time to buy when everyone around you is bearish and fearful. But these are exactly the moments when the most successful investors are able to seize the opportunity and buy when everyone else is selling.

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