Month: December 2011

London Gold Market Report
from Adrian Ash
BullionVault
Fri 23 Dec., 09:45 EST

WHOLESALE PRICES to buy gold were little changed in London on Friday, ending the short pre-Christmas session at $1607 per ounce, some 0.6% higher against the Dollar from last week’s finish.

Silver prices also held flat, moving in a tight range below $29.50 per ounce and recording a London Fix almost 1.9% down for the week at midday.

Thursday’s series of attacks in the Iraqi capital Baghdad, which killed perhaps 200 people, were followed today by the murder of 40 people by two suicide car bombers in Damascus, Syria – blamed by the government on al-Qaeda. But global stock markets ticked higher overall in what equity dealers called “very thin” trade.

US crude oil prices extended their strongest week since October, up more than 6.5% from last Friday.

“Our Hong Kong office observes that the gold price has gone up during the period between Christmas and New Year in eight of the last nine years (2004 being the exception),” said Mitsui’s London note today, “[rising] by just over 2% on average.

Dealing in London’s bullion market will re-open Wednesday after the Christmas and Boxing Day holidays.

“If [the] trend continues,” says Mitsui, “gold would stand around $1,650 by the year’s end.”

“[But] the 200-day moving average, currently at $1624, continues to provide strong resistance,” says Russell Browne at Scotia Mocatta in New York.

“We still stress the vulnerability of precious metals to a tightening of Eurozone money market liquidity,” says Standard Bank’s London team, “which might result from the region’s sovereign debt problems.”

European Central Bank member Lorenzo Bin Smaghi – who leaves the ECB this month to avoid “over representation” of Italy after Mario Draghi became president in November – says in a Financial Times interview today that he sees “no reason” not to use quantitative easing “if the economic outlook deteriorated and deflation became a risk.”

Spanish and Italian government bonds ticked lower in price on Friday, nudging the interest rate on 10-year debt above 5.4% and 7.0% respectively.

The ECB should “use as much constructive ambiguity as possible” Bin Smaghi says, adding that the ECB “has a duty of action” to help struggling governments where the issue is liquidity, not solvency.

Meantime in India – the world’s No.1 physical gold consumer – “A sharp drop in the gold price is required to boost the demand,” MoneyControl today quoted a Chennai-based wholesaler, as the Indian Rupee gold price continued to hold near historic highs thanks to the currency’s record low exchange rate.

“Jewellery demand is very weak…gold investment demand is also weak,” the Reuters news agency quotes a spokesperson in Ahmedabad for Zaveri and Co, one of India’s largest jewelry retail chains, who attributes low sales to the current period of Kharmas observed by some Hindu calendars, when there are no “auspicious” festivals or events.

Across in Tehran, however, “Iranians are rushing to buy gold and Dollars,” reports Bloomberg, “sending the national currency plunging.”

The Rial has lost some 15% vs. the Dollar this month, and bureau de change are charging 15,300 Rials per Dollar, says Bloomberg – almost 39% above Tehran’s official rate.

“State television this week showed lines of people camped out overnight in front of state banks, with sleeping bags and blankets, saying they were waiting to buy gold coins,” the newswire goes on.

Faced with new US and EU sanctions – plus inflation running near 20% per year – the Central Bank of Iran suspended deliveries of gold coins on Dec. 20, imposing what it calls a “just distribution” system by delaying settlement of new purchases by four months.

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK’s leading financial advisory for private investors, Adrian Ash is head of research at BullionVault – winner of the Queen’s Award for Enterprise Innovation, 2009 and now backed by the World Gold Council market-development and research body – where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Dec. 23 (Bloomberg) — Norman Chan, head of investment at Calibre Asset Management in Hong Kong, talks about the outlook for global stocks. He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)

The Coming Solar Trade War Threatens Progress

by Ryan Fitzwater, Investment U Research
Tuesday, December 20, 2011

Solar power is finally becoming a viable renewable energy resource. This was accomplished by major achievements from different parts of the world over the past two decades and a rapid reduction in solar modules over the past two years.

The solar market reached the point at which generating solar power (with no subsidies) costs less than the electricity purchased from the grid – better known as grid parity.

Sounds like great news right? Not so fast…

What has taken decades of global collaboration and competition, to finally create affordable solar power, might be spoiled by a trade war between China and the United States.

Can’t We All Just Get Along

In November of 2011, the U.S. Commerce Department opened a trade case against Chinese solar module manufacturers. The Commerce Department opened its case acting on a filing by six American solar companies and SolarWorld’s (a German manufacturer) U.S. branch.

The main argument – China is dumping panels here for less than their total shipping and manufacturing cost, and they could be using billions of dollars in subsidies on exported panels, which is against international trade rules.

U.S. solar companies are arguing that all these factors are giving Chinese manufacturers an unfair position in American markets.

So here come the tariffs…

According to The New York Times, the Department of Commerce is considering tariffs of 50 to 250 percent on Chinese solar panels.

But the United States isn’t the only one threatening to impose tariffs on imported solar products – China could fire back with similar import taxes on U.S. solar products.

The recent U.S. trade case has sent Chinese companies into retaliation as they’re supposedly considering filing their own trade case with China’s Commerce Ministry.

The Chinese trade case would most likely focus on American exports of a key component in solar panels – polysilicon.

The United States is currently one of the world’s largest producers of the product, with manufacturing big in Washington and Tennessee due to their access to hydroelectric power.

Access to hydroelectric power is key because it takes massive amounts of energy to create polysilicon. It typically takes a whole year of solar panel operation to capture and even out the energy it took to make it. And since hydroelectric power is cheap, American manufacturers have the advantage.

In China things are less efficient, worse for the environment and much more controversial. China’s polysilicon manufacturers greatly rely on coal-fired power plants. And due to weak environmental controls, the polysilicon industry in China has seen numerous toxic spills that have polluted rivers and streams.

Environmental concerns aside, the Chinese manufacturers’ move to file with China’s Commerce Ministry is a logical retaliation. The American polysilicon industry exported around $873 million to China last year, almost matching what China shipped in solar panels to America over the same period of time.

Please Don’t Cloud Our Future

The potential development of a solar trade war between the United States and China will only hurt the industry in a time when it could finally start to flourish due to more affordable solar power.

According to Martin Green, the Executive Research Director at the Photovoltaics Centre of Excellence at the University of New South Wales in Australia, it takes more than one country or company to improve solar efficiency and drive down costs – totally global collaboration is necessary.

International advancements and collaboration is one of the reasons that recent costs for solar modules have dropped to around $1 per watt. And just look at the drop in price of polysilicon in the graph below, this is one of the factors has pushed the price of solar panels down over the past few years.

Trade barriers will only undermine recent developments, and increase the price of solar products and electricity.

And if prices rise due to solar tariffs, you could see political support for the solar industry fall even more.

Chinese solar manufactures have already put plans on the table to move production sites to Taiwan, South Korea and the United States in order to dodge any American tariffs that could arise in the future.

And let’s not even go into the fact that India has stated it may begin an anti-dumping probe of its own on imported Chinese solar products. Multiple countries imposing tariffs on one another will further impair the development of cheaper solar power.

Investors should keep an eye on developments in trade barriers between the United States and China. If any tariffs are imposed on exported or imported solar products, this could hurt an industry that has been struggling for decades to bring investors profits and provide a cleaner, renewable energy source for the planet.

Good investing,

Ryan Fitzwater

Article by Investment U

Dec. 23 (Bloomberg) — European Central Bank Executive Board member Lorenzo Bini Smagh said policy makers shouldn’t shirk from using quantitative easing if deflation becomes a danger to the euro region. He commented in an interview published by the Financial Times. Linda Yueh and Mark Barton report on Bloomberg Television’s “On the Move.”

The World’s Greatest Uptrend for Income Investors

by Dan Ferris, Investment U Special Contributor
Friday, December 23, 2011

I get more crazy feedback about one issue than any other…

Many of my readers – I think mostly ones who are new to investing – complain that a few of the stocks I’ve been recommending “haven’t gone anywhere for a long time.”

They’ll read my recommendations, which are often about the world’s best, safest businesses… and then write in to tell me I’ve lost my mind.

Take Microsoft, for example. Microsoft is a safe, dividend-paying cash-generating powerhouse. It dominates its industry. In 1998, it was selling for about $25 a share. Where is it today? About $25.

Or take Wal-Mart. Wal-Mart is the King of Retail. It, too, is a steady, dividend-paying, cash-generating business powerhouse. Toward the end of 1999, it had climbed to $60 a share. Today? It’s just under $60.

For my new readers, that’s proof we shouldn’t own these stocks. They’ve been “dead money” for folks who bought in 2000. All that matters to them is the where the share price has been over the past decade.

If you’re in this camp – where past price performance is all that matters to you – it’s extremely unlikely you’ll make money as a long-term investor.

What should matter to folks is how much cash the company is capable of earning and distributing in dividends… and how sustainable that cash-generating ability is over the long term.

If this idea doesn’t immediately make sense to you, try thinking of it like a private business investor would.

Let’s say the owner of a successful, sustainable, cash-generating business wants to sell that business and retire. If you’re looking to buy that business, would you devote your time to figuring out the right price to pay – say seven times annual earnings – or would you devote your research to what the previous owner paid for the business eight years ago?

I imagine that when you look at buying stocks (which are pieces of a business) this way, you’ll agree with me that studying the quality and sustainability of the business is 100 times more important than studying what the business changed hands for more than a decade ago.

And when you understand this concept, you’ll understand why we have a fantastic opportunity today to buy super-high-quality stocks. Let me show you why…

In 2000, shares of Wal-Mart peaked at $70, when it was trading for more than 50 times earnings. Remember, this was during the peak of the 1998 to 2000 stock mania. Stocks were incredibly expensive back then.

Since that time, as I explained, Wal-Mart’s share price has basically gone nowhere. Meanwhile, the value of the underlying business has soared. Take a look…

Last year alone, Wal-Mart produced $23 billion in cash earnings, bought back $14 billion in stock and paid out more than $4 billion in cash dividends.

It’s the same story with Microsoft. In 2000, Microsoft peaked at $58 a share and just over 68 times earnings. Like they did with Wal-Mart, folks had bid Microsoft to insanely overvalued levels.

The share price fell more than 65% that year and has gone nowhere ever since. Meanwhile, the value of Microsoft’s business has soared…

Last year, Microsoft produced $24 billion in cash earnings, bought back $9 billion in stock and paid out more than $5 billion in cash dividends.

I could tell the same story about Intel, Abbott Labs and Coke. When my readers look into the past and focus only on a business’ share price, they figure these stocks are lousy trends to buy into.

But all three companies are also World Dominating Dividend Growers. All three companies have grown cash earnings over the last decade. And all three are increasing the amount of cash they’re paying out to shareholders, just like Wal-Mart and Microsoft.

Those are the trends I care about. Those are the trends that will take a small investment today and compound it into a sizable retirement account down the road. Those are the trends that will keep your capital safe… and reward you for investing it. Those are the trends that turn small current income streams into large annual payouts.

So when a knowledgeable long-term investor talks trends, he talks about business results… not historical share price performance. Now more than ever – with the market whipsawing up and down – the long-term investor must be a buyer of strong businesses… not a predictor of future share price movements… and not someone obsessed with past share price movements.

New investors get caught in this trap more than any other. They get stuck on what has happened with a stock in the past. They think buying a stock like Wal-Mart that has drifted sideways for many years is a bad idea. They don’t understand that past price action has nothing to do with buying a great business at a great price.

And they’re not alone. Right now, the market is stuck looking into the rearview mirror on these super-high-quality stocks. Since many elite businesses have grown their underlying values and cash-generating ability – while watching their share prices drift nowhere – they are now extraordinary values. I recommend buying them before it’s too late.

Good investing,

Dan

Article by Investment U

Senior Strategist Ib Fredslund Madsen outlines the overall themes for 2012 and give his view on the different asset classes.

Legal information

Video courtesy of en.jyskebank.tv

Ever wondered why price quotes from brokers vary or why a trading system return profits on one broker and loses money on another broker account?

Most fellow traders think it is connected with the spread, the execution time or the brokers which manipulate the price feed. Well, some may manipulate the price quotes but the main reason is the decentralized structure of the foreign exchange market.

Let me show you how the “4 trillion USD chaos” is structured, how the hierarchy looks and how you can benefit from it.

Before examining the major “patient,” the Forex market itself, let’s get to probably the world’s first monopolist in prices – stock markets.  It is a whole public entity (a loose network of economic transactions) for the trading company and derivatives at an agreed price.

Exactly, the price agreed. This is where jack-in-the-box leads to total centralization! All of stock trades MUST go through the single specialist. It totally controls the trades and prices being able to manipulate the quotes it is offering to accommodate its needs. For example, too many seller’s VS few buyers and there is a big chance that stocks left unsold. No deal here for the specialist who here widens a spread or increases the transaction cost to please the sellers. And yes… new sellers are unwelcome in the market.

Stock market = centralized, Forex = decentralized

Stock market counts many “team players” across the Globe: the New York Stock Exchange, that one in London, Hong Kong and other million-citizens-cities. Though different nations, there is only one price that each stock deals with.

The Forex market structure is quite different: there is no single price for a given currency at any time. As result, quotes from currency dealers vary.

In this globalized economy where many businesses have an international exposure the currency exchange does matter for completing transactions.

For example, Honda makes cars in Japan. Then it ships those certainly brilliant machine pieces to the U.S. were common Americans will exchange those cars for their green dollars. And there are the Japanese workers in the country of the rising sun – they expect those dollars to be exchanged for Yens and be paid in their national currency.

And so the companies turn to Forex. Basically, it makes up the whole currency trading “galaxy” where there is a tough struggling between dealers for the best deal.

And there is a big chance to catch a good fish with a daily Forex market turnover of about $4.0 trillion.

That is more than $500 a day for every man, woman and child on this planet.

The huge trading volume represents the largest asset class leading to very high liquidity. The variety of factors affecting exchange rates really struck the mind. And again, in comparison to stocks, you can trade Forex wherever you are – with Internet at hand.

The Forex Hierarchy

Even such looking chaos can sometimes be put into order and have its levels. It is also about Forex market.

The “top level” party of the FX hierarchy belongs to the major/smaller banks and securities dealers. They trade with each other, directly or via the Electronic Brokering Service (EBS) or Reuters Dealing 3000-spot Matching. This two electronic trading has always been struggling for clients and getting bigger market share. Leaving the technical issue behind you as a trader could be interested in what they are offering in pair’s trading.

EBS platform provides high liquidity on majors while Reuters excellent market depth on cross pairs.

Like in real life, the rates will be largely dependent on the established credit relationship between the trading parties. The better your credit standing and reputation with them, the better the interest rates and the larger loan you can avail.

The next Forex hierarchy level belongs to market makers, hedge funds and retail Electronic Communication Networks (ECNs). As these institutions provide speculative operations, they don’t have tight credit relationships with the participants of the interbank market. So, their rates are slightly higher and more expensive.

The bottom Forex hierarchy level is occupied by the retail traders. They can become a part of this Forex herd indirectly through brokers or banks. As the Internet, electronic trading platforms and retail brokers saw the light of the day, Forex is kindly opening its doors to practically everyone who wants to be a trader.

At the bottom are we retail traders who deal through Market Makers and ECN Brokers on the Forex market.

Different brokers = different quotes = different results = bee in the pants?

Because of the very specific Forex market structure we traders have to deal with different price feeds. This spring I tested the same system with the same settings, on the same VPS on 3 different broker platforms and “surprise”. The results were quite different.

On the first account the system banked +296 Pips, on the second +210 Pips and on the third -47 Pips. It has to be said that I used a short term trading system for testing. Those kind of trading systems are in general more sensitive but even with a long term system the results will vary from broker to broker.

To avoid bad surprises I suggest that you trade with minimal lot size whenever you start using a new system or switch to new broker.

Although the fact of different price feeds are somewhat like an unwelcome bee in the pant, there is one awesome way, we can make them work for us to bank large profits. And I mean REALLY LARGE. I will share my “detailed insider knowledge” in one of my next blog posts. So, make sure you subscribe to the blog and stay tuned.

Read more about Forex market structure and Forex Hierarchy on Pipburner blog.

Source: http://www.opportunitiesplanet.com/forex-trading/structure-of-forex-market/

PipBurner on Google+: https://plus.google.com/114299061993276296858/

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

Source: ForexYard

Despite starting Thursday off on a promising note, the euro managed to tumble against most of its main currency rivals as the euro-zone debt crisis continues to drive investors away from the currency. With analysts forecasting an increase in today’s US New Home Sales figure over last month, it appears unlikely that the euro will reverse its recent bearish trend.

Economic News

USD – Unemployment Claims Boost USD Ahead of Holiday Weekend

Yesterday’s US Unemployment Claims gave the USD an added boost against its main currency rivals ahead of the holiday weekend. The latest unemployment figure came in significantly below analyst expectations at 364K, the lowest level since April 2008. The positive jobs report gave further incentive to investors looking for a safe haven outlet in the wake of the on-going euro zone debt crisis.

Turning to today, traders can expect further market volatility ahead of the Christmas holiday. Several US indicators, namely the Core Durable Goods Figure and the New Home Sales report may lead to further gains for the buck. In particular, the New Home Sales figure will likely play a prominent role in tomorrow’s trading session. Along with employment, home sales were one of the main contributing factors to the US financial crisis. Should the figure come in at its expected 314K, dollar traders may be able to enjoy their holiday that much more.

EUR – EUR Unable to Recoup Losses in Thursday Trading

Despite starting the day off on a positive note, the euro was unable to maintain its bullish trend yesterday as a number of factors caused investors to abandon the currency. While the ECB decision to institute a three-year refinancing operation boosted hopes that the euro-zone debt crisis may be easing, negative rumours about the actual of state of the European economies brought the currency back down. The news brought the EUR/USD dangerously close to the psychologically significant 1.300 level.

In addition, positive US news caused traders to redirect their money to the more stable greenback ahead of the Christmas Holiday. Analysts are warning that the euro is unlikely to rebound ahead of the New Year, and there is a chance that the currency will maintain its downward slide well into 2012.

GBP traders should also be prepared for continued bearishness, as sterling has been closely mirroring the euro in recent days. As a whole, investors seem less and less interested in betting on riskier assets like the euro and pound. This is particularly significant for Forex traders, as the low liquidity environment in the market right now can cause even small trends to become exaggerated.

JPY – JPY Continues to Drop against USD

The yen continued to fall against the dollar throughout the day yesterday, as investors continue to shift their funds toward safe haven assets. Negative news out of Europe has continued to boost the dollar, often at the expense of the Japanese currency. The USD/JPY hit a three-week high yesterday, although the pair seems to have now stabilized and may even see a downward trend ahead of the Christmas holiday.

Against the euro, the yen has fared significantly better. The EUR/JPY pair has dropped very close to the psychologically significant 101.00 level. Should the pair breach that support line, further downward movement may take place.

Turning to today, the low liquidity environment in the marketplace means that current trends will likely maintain. That being said, traders will want to pay attention to the US news set to be released today. Any surprise results will likely impact yen pairs.

Crude Oil – Oil Prices Jump amid Possible Increase in US Demand

Crude oil experienced a hectic trading day yesterday, as improvements in the US economy led to forecasts that American demand for the commodity may increase in the near future. Analysts were also quick to add that demand for crude oil typically increases during the cold winter months in the United States.

Bullish sentiment was somewhat offset by the negative news coming out of the euro-zone. The on-going debt crisis continues to weigh down on crude prices. Still, with the commodity likely to breach the psychologically significant $100 a barrel line, traders may want to go bullish ahead of the Christmas holiday.

Technical News

EUR/USD

On a weekly basis the EUR/USD broke some important technical barriers, closing below the rising trend line from the January and October lows. The weekly close 1.3045 was also in-line with the 61% Fibonacci retracement from the 2010-2011 bullish trend. While weekly stochastics are currently oversold the monthly stochastics may have room to run lower. The January low of 1.2870 is the near-term support with additional support coming in at 1.2665 from the monthly chart off of the 2008 and 2010 lows. Resistance is back at 1.3140 and the 20-day moving average of 1.3275, followed by the December high of 1.3550.

GBP/USD

Sterling has consistently been sold at previous resistance levels and with falling weekly and monthly stochastics this strategy could remain intact. Initial support is found at Friday’s high of 1.5560 and the pair may have scope back to the range between the 55-day moving average at 1.5740 and the late November high of 1.5775. Any rally could be capped at 1.5890 from the falling trend line off of the August and October highs. The test for sterling shorts will come at the October low of 1.5270. A break here may find support at the trend line stemming from the January 2009 low which is found at 1.5100.

USD/JPY

The USD/JPY is encroaching on its trend line from the 2007 high which comes in at 78.30. Weekly and monthly stocahstics are both moving higher and a break above the trend would expose the post-intervention high of 79.50 and the August high of 80.20. A failure to make a significant close above the trend line could have the USD/JPY testing the December low of 77.50 and the November low of 76.55.

USD/CHF

Last week’s break above the 0.9330 resistance opens the door to this year’s high of 0.9782 as well as the December high of 1.0065. The falling trend line from the 2003 trend line comes in at 1.1165 and makes for a long term resistance level. To the downside 0.9330 will now act as a support followed by the late November low of 0.9065 and the 200-day moving average at 0.8925.

The Wild Card

EUR/JPY

The EUR/JPY is a textbook example of how broken support levels turn into resistance. The November low of 102.50 was breached by a swift move lower though the EUR/JPY slowly retraced back to this level. Yesterday the pair ran into selling pressure at the same price. Forex traders should now look to the supports at 100.75 and the 2010 low of 99.90.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By The Sizemore Letter

Turkcell is Charles Sizemore’s recommendation for InvestorPlace’s “10 Stocks for 2012.”  For more details and to view the other picks for the year, follow this link: 10 Stocks for 2012

Before falling to the Turks in 1453, Constantinople was known as the Queen of Cities across Europe and the Middle East.   No other city in the world could match its culture, sophistication and economic development.  The city sat at the intersection of the Mediterranean and the Black Sea, the West and the East, Europe and Asia.  It was the axis around which the known world spun.

Modern Istanbul lacks the economic clout of a New York, London, or Hong Kong—for now.  But as it did in its former days of grandeur, Turkey finds itself at the center of several very powerful forces.  It is the bridge between a wealthy but economically distressed Europe and a poor but growing Middle East.  It is a European country with a customs agreement with the European Union; but it is also an emerging economic and political leader in the Islamic world.  And while much of the Islamic world—and non-Muslim developing countries like Russia and China—is still struggling through the unstable transition from autocracy to democracy, Turkey is a good 20 years ahead of most of the pack.

The “BRICS” of Brazil, Russia, India and China may get most of the press, but Turkey has one of the brightest futures among emerging market contenders.  Turkey has a younger population than any of the BRICS save India, yet fertility rates have recently fallen to Western levels; this puts the country in a demographic sweet spot for falling inflation and rising real consumer spending growth for decades to come.

Of course, the downside to being at the crossroads of Europe and the Middle East is that Turkey finds itself sandwiched between the two most problematic regions of the world. Europe is struggling to contain its sovereign debt crisis, and the Middle East has been wracked by social revolution and the threat of war against Iran.

Not surprisingly, Turkish stocks have taken a beating.  The MSCI Turkey Index is down nearly 50 percent since October of last year.

If you believe, as I do, that Turkey has one of the brightest futures of any country on the planet, then the crises on Turkey’s borders should be viewed as a phenomenal opportunity to buy shares of some of Turkey’s finest companies.  And my choice for 2012 is mobile phone operator Turkcell Iletisim Hizmetleri AS (NYSE: $TKC).

Figure 1: Turkcell (NYSE: TKC)

It’s been a rough year for Turkcell shareholders.  Actually, it’s been a rough several years.  The share price is barely a third of its pre-crisis level, and earlier this year it came close to falling below its 2008 meltdown lows.  Investors fleeing the volatility of Europe and the Middle East have had little use for a Turkish bluechip like Turkcell.

Their loss is our gain.  There is no object more essential to life in the modern world than the mobile phone, and Turkcell is the dominant wireless carrier in Turkey with a 54 percent market share.  And while mobile phones are ubiquitous in Turkey, the overall market is far from saturated.  Market penetration is at about 2/3 of the European average.  And smart phones—with their lucrative data plans—represent only 10% of Turkish cell phone users.

Turkey, while the biggest, is far from Turkcell’s only market.  The company is also a major player across Eastern Europe and the Middle East, and Turkcell is the market leader in five of the nine countries in which it operates.  The key to take away from this is that telephony is still a growth industry in most emerging markets, and Turkcell is a fine company in a great position to profit from that growth.

In Turkcell, we have:

• A world-class company with a dominant market position in a dynamic emerging economy
• A company that sells service that has become a basic necessity for both consumers and businesses—meaning that it is recession resistant
• Great opportunity for growth
• A direct play on the Turkish consumer

Turkcell is also a conservatively financed company.  The company has no net debt, and a third of its balance sheet is cold, hard cash.  Turkcell has $3.73 per share in cash; not bad considering the stock price is currently less than $12.

Skeptical investors might well be wondering: What’s the catch?

If investing were this simple, it wouldn’t be fun.

Most good value stocks have a few black marks that have caused them to fall out of favor with investors, and Turkcell is no exception.Turkcell’s board of directors has had an on-again, off-again power struggle between two shareholder groups that reached a boiling point earlier in 2011.   The company missed its dividend payment, not because it couldn’t afford it (it most assuredly could) but because the board couldn’t stop bickering long enough to approve it.  Markets hate uncertainty and the uncertainty plaguing this stock explains a fair bit of its underperformance of late.

The board situation will get fixed soon.  In the meantime, life goes on and the company continues to grow and prosper.  When the dividend payment is resumed, I expect it to be in the ballpark of 5 percent.  In the meantime, investors can buy a piece of one of the finest emerging market telecom companies in existence trading for just 9 times expected 2012 earnings.

Action to take: Buy shares of Turkcell and plan to hold for the duration of 2012.

If you liked this article by Sizemore Insights, you’d probably enjoy The Sizemore Investment Letter, our premium members-only newsletter. Click here for more information.