Month: January 2012

As the saying goes, there are many possible reasons for an insider to sell as tock, but only one reason to buy — they expect to make money. So let’s look at two noteworthy recent insider buys.

Limited Brands Incorporated (LTD) announced its quarterly dividend of 25 cents per share, an increase of about 25% over its prior dividend in November of 20 cents.. The regular quarterly dividend will be payable on March 9, 2012, to shareholders of record at the close of business on Feb.

The December unemployment rate for the 17-member countries comprising the Eurozone rose to the highest level since the Euro was introduced in 1999. For the month of December, the rate for the entire region rose to 10.4 percent after the November result was similarly revised upwards one tenth of a percent from the originally-reported 10.3 percent.

A total of 16.5 million people across the Eurozone are now out of work. This is an increase of three quarters of a million in the past year alone. But the pain is not being felt equally amongst all Eurozone nations.

Greece and Spain recorded the greatest increase in unemployment over the past year. At 22.9 percent, Spain had the highest unemployment rate for the entire area with Greece not far behind at just over 19 percent. Portugal watched helplessly as its unemployment rate continued to climb reaching 13.6 in December.

Comparing the results of these southern countries with the northern jurisdictions reveals the gap between the north and the south. In Germany, for instance, December’s unemployment rate actually fell more than expected to 6.7 percent – the lowest since German was reunited. Meanwhile, Austria and the Netherlands continued to record the lowest Eurozone unemployment at just 4.1 and 4.9 percent respectively.

Unemployment to Increase in Some Eurozone Countries

Looking ahead to the coming year and beyond, there is every likelihood that the situation will actually worsen. As even the most casual observer knows, the Greek government is presently under intense pressure to implement the infamous “austerity” measures to address the country’s widening deficit.

The massive spending cuts targeted to meet the goal of ultimately eliminating the deficit will require Greek authorities to eradicate a significant number of government jobs. Other countries including Spain, Portugal, and even Italy will be forced – to some degree at least – to follow the same agenda in order to get a handle on overall spending.

Widespread job losses will not be restricted to just the government, however; the private sector too will be forced to reduce costs as companies struggle with falling sales. In the face of the continued uncertainty and growing fears of recession, companies will postpone or even cancel all but the most essential new projects, delaying new hiring accordingly.

Again, it will be the southern countries that will feel the effects of this most keenly.

Article by forexblog.oanda.com

Bargain hunters are wise to pay careful attention to insider buying, because although there are many various reasons for an insider to sell a stock,presumably the only reason they would use their hard-earned dollars to make a purchase, is that they expect to make money. Today we look at two noteworthy recent insider buys.

In trading on Tuesday, water utilities shares were relative leaders, up on the day by about 1.3%. Leading the group were shares of Pure Cycle (PCYO), up about 9.2% and shares of American States Water (AWR) up about 1.9% on the day.

Jan. 31 (Bloomberg) — Mei Gao, a portfolio manager at Fore Advisors, talks about the outlook for European and Japanese debt markets and investment strategy. She speaks with Stephanie Ruhle on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)

Solar energy detractors point to the fact that it can’t compete without “huge” government subsidies. And up until now, I couldn’t argue to the contrary.

But very soon, those detractors will likely be eating their words. I’ve said it many times in the past: Technology marches on, and the cost of manufacturing will come down.

Well the cost of manufacturing solar isn’t just coming down; it’s dropping through the floor. By the end of this year, solar will be so cheap it will compete with just about any other form of generation. It already does in some places, and at commercial scale levels. The best part? It will do it without subsidies.

You see, solar panel prices are about to cross a tipping point. It’s all due to the drop in price of a solar module’s most crucial ingredient: polysilicon.

The Polysilicon House of Cards

Polysilicon prices have collapsed 90% in the last five years. That translates directly into lower module costs, lower panel prices and ultimately into a lower installed cost per watt.

How did this happen? Way back in 2006, there was a run on polysilicon. It turns out it’s the same material used to make integrated circuits. But all of a sudden, the solar industry was booming, and competing for what was then a limited supply.

Its use for solar was rising rapidly, and 2006 was the first year that 50% of all polysilicon went into the manufacture of modules for solar panels. And panel manufacturers were clamoring for even more.

Polysilicon makers were laughing all the way to the bank, and then some. They essentially were an oligopoly, and were earning upwards of 40% margins on their product, according to a recent research report published by GTM Research.

Prices just kept rising along with demand, and by 2008 the shortage was so severe, polysilicon was selling for over $400 per kilogram on the spot market. Margins had risen to 70%.

Naturally, this lured new players into the market, and led existing makers to expand manufacturing capacity. But they overestimated how much was really going to be needed.

By 2011, much of this additional capacity began to come online, and polysilicon prices started falling. By March of 2011, the spot price had dropped to $80 per kilogram, and by this past December, it was all the way down to $30 per kilo.

This incredibly low spot price was all the leverage customers with long-term contracts needed to renegotiate lower prices.

GTM Research predicts that in 2012, these declining silicon prices will lead to even lower module prices. At the beginning of 2011, module prices were $1.80 per watt. By the end of 2011, they were halved to $0.90 per watt.

Closing in on Grid Parity

This year, GTM expects module prices to breach the $0.70-per-watt barrier and continue to head south. Of course, with other manufacturing costs and installation being relatively fixed, lower raw material means lower panel prices. And $0.70 per watt is below the magic $1.00-per-watt level that’s widely viewed as “grid parity” for solar.

That’s the point where it makes just as much sense to use solar as any other form of generation.

The system I installed at my farm is 10.08 kilowatts (KW). Over its 25-year lifetime, it’s expected to produce an average of 12,000 to 18,000 kilowatt-hours (kWh) per year.

I’m leasing my system for five years, and will then purchase it. My total all-in cost is about $27,000. (Since I’m leasing the system, I don’t receive any government subsidies or tax breaks.)

Let’s assume that the system produces the minimum amount per year, 12,000 kWh.

Multiplying by 25 and then dividing by the cost of the system, we come up with $0.08 per kWh. My current electricity from the grid operator costs $0.14 per kWh.

That’s almost a 50% savings. If I produce even more, my savings will be even higher.

And this system has panels that were manufactured in 2011. Panels made this year will be even cheaper, and so will the all-in cost.

Misinformation and Black Eyes

So what’s keeping solar from being widely adopted? Lack of information, for one…

The industry got quite a black eye over the Solyndra deal.

GTM Research Senior Analyst, Brett Prior, believes the industry will continue to grow at 10% to 20% per year for the foreseeable future. He had this to say about the polysilicon market today:

“After a half-decade of silicon demand outstripping supply, the aggressive expansion plans finally overshot.

“This supply/demand imbalance will push producers to lower contract prices closer to the level of manufacturing costs at $20 per kilogram, and will force higher-cost manufacturers to exit the industry.

“The end result is that the current roster of over 170 polysilicon manufacturers and startups will likely be winnowed down to a dozen survivors by the end of decade.”

I believe that as prices continue to drop, solar will continue to gain in popularity.

Big panel manufacturers like U.S.-based SunPower Corporation (Nasdaq: SPWR) will be around when the dust settles. They currently make the most efficient (19%) commercially available panels in the world. The stock is way off its highs of a year ago, but is up a healthy 22% since the beginning of the year.

So is it solar boom time? I don’t have a crystal ball, but with module prices continuing to drop, it becomes more attractive every day. That’s good news for panel manufacturers, as they’ll continue to improve as volumes ramp up. Investors certainly won’t find them any cheaper than they are right now.

Good Investing,

David Fessler

Article by Investment U

Solar energy detractors point to the fact that it can’t compete without “huge” government subsidies. And up until now, I couldn’t argue to the contrary.

But very soon, those detractors will likely be eating their words. I’ve said it many times in the past: Technology marches on, and the cost of manufacturing will come down.

Well the cost of manufacturing solar isn’t just coming down; it’s dropping through the floor. By the end of this year, solar will be so cheap it will compete with just about any other form of generation. It already does in some places, and at commercial scale levels. The best part? It will do it without subsidies.

You see, solar panel prices are about to cross a tipping point. It’s all due to the drop in price of a solar module’s most crucial ingredient: polysilicon.

The Polysilicon House of Cards

Polysilicon prices have collapsed 90% in the last five years. That translates directly into lower module costs, lower panel prices and ultimately into a lower installed cost per watt.

How did this happen? Way back in 2006, there was a run on polysilicon. It turns out it’s the same material used to make integrated circuits. But all of a sudden, the solar industry was booming, and competing for what was then a limited supply.

Its use for solar was rising rapidly, and 2006 was the first year that 50% of all polysilicon went into the manufacture of modules for solar panels. And panel manufacturers were clamoring for even more.

Polysilicon makers were laughing all the way to the bank, and then some. They essentially were an oligopoly, and were earning upwards of 40% margins on their product, according to a recent research report published by GTM Research.

Prices just kept rising along with demand, and by 2008 the shortage was so severe, polysilicon was selling for over $400 per kilogram on the spot market. Margins had risen to 70%.

Naturally, this lured new players into the market, and led existing makers to expand manufacturing capacity. But they overestimated how much was really going to be needed.

By 2011, much of this additional capacity began to come online, and polysilicon prices started falling. By March of 2011, the spot price had dropped to $80 per kilogram, and by this past December, it was all the way down to $30 per kilo.

This incredibly low spot price was all the leverage customers with long-term contracts needed to renegotiate lower prices.

GTM Research predicts that in 2012, these declining silicon prices will lead to even lower module prices. At the beginning of 2011, module prices were $1.80 per watt. By the end of 2011, they were halved to $0.90 per watt.

Closing in on Grid Parity

This year, GTM expects module prices to breach the $0.70-per-watt barrier and continue to head south. Of course, with other manufacturing costs and installation being relatively fixed, lower raw material means lower panel prices. And $0.70 per watt is below the magic $1.00-per-watt level that’s widely viewed as “grid parity” for solar.

That’s the point where it makes just as much sense to use solar as any other form of generation.

The system I installed at my farm is 10.08 kilowatts (KW). Over its 25-year lifetime, it’s expected to produce an average of 12,000 to 18,000 kilowatt-hours (kWh) per year.

I’m leasing my system for five years, and will then purchase it. My total all-in cost is about $27,000. (Since I’m leasing the system, I don’t receive any government subsidies or tax breaks.)

Let’s assume that the system produces the minimum amount per year, 12,000 kWh.

Multiplying by 25 and then dividing by the cost of the system, we come up with $0.08 per kWh. My current electricity from the grid operator costs $0.14 per kWh.

That’s almost a 50% savings. If I produce even more, my savings will be even higher.

And this system has panels that were manufactured in 2011. Panels made this year will be even cheaper, and so will the all-in cost.

Misinformation and Black Eyes

So what’s keeping solar from being widely adopted? Lack of information, for one…

The industry got quite a black eye over the Solyndra deal.

GTM Research Senior Analyst, Brett Prior, believes the industry will continue to grow at 10% to 20% per year for the foreseeable future. He had this to say about the polysilicon market today:

“After a half-decade of silicon demand outstripping supply, the aggressive expansion plans finally overshot.

“This supply/demand imbalance will push producers to lower contract prices closer to the level of manufacturing costs at $20 per kilogram, and will force higher-cost manufacturers to exit the industry.

“The end result is that the current roster of over 170 polysilicon manufacturers and startups will likely be winnowed down to a dozen survivors by the end of decade.”

I believe that as prices continue to drop, solar will continue to gain in popularity.

Big panel manufacturers like U.S.-based SunPower Corporation (Nasdaq: SPWR) will be around when the dust settles. They currently make the most efficient (19%) commercially available panels in the world. The stock is way off its highs of a year ago, but is up a healthy 22% since the beginning of the year.

So is it solar boom time? I don’t have a crystal ball, but with module prices continuing to drop, it becomes more attractive every day. That’s good news for the companies I mentioned above, as they’ll continue to improve as volumes ramp up. Investors certainly won’t find them any cheaper than they are right now.

Good Investing,

David Fessler

P.S. Our friends at Asset Strategies International, Inc. are offering Investment U readers a special limited time offer. To find out how to get a free Morgan Silver Dollar, click here.

Article by Investment U

The surge in precious metal prices has revitalized an unscrupulous business that’s been ripping off investors for thousands of years – the counterfeit bullion trade.

Today, the business of phony gold and silver dupes hundreds of millions of unwary investors every year.

In fact, one Chinese counterfeiter recently bragged about producing 100,000 fake U.S. silver dollars a year.

And he’s just one guy – the tip of a monstrous iceberg that America’s top counterfeiting watchdog calls “a global economic train wreck waiting to happen.”

Counterfeiters – especially from China – are becoming more and more sophisticated with their dishonest art. And modern counterfeit bullion can sometimes even deceive experts. But with a bit of information you can properly authenticate your precious metals and your investment will be guaranteed.

China has been the source of bogus retail goods for decades. From phony high-end watches to designer purses and luxury sunglasses, everyone knows that knock-offs are “Made in China.”

Global Piracy & Counterfeiting (GPC), America’s most quoted source on counterfeiting, says 10% of China’s GDP is a direct result of counterfeiting, and that China is the world’s leading manufacturer of counterfeit gold and silver bullion.

Most recently, the watchdog group has issued urgent warnings for precious metal investors about the dangers of today’s counterfeiting bullion trade. A few weeks ago, the group put out a press release stating:

The Global Piracy & Counterfeiting Consultants is calling counterfeit U.S. Silver Dollars, precious metal, coins, or bars, or counterfeit gold coins, a global economic train wreck waiting to happen, courtesy of the Chinese. Ten percent of China’s gross domestic product is related to counterfeiting, and the Global Piracy & Counterfeiting Consultants fears the problem is much worse than anyone knows.

Laser-imaging 3-D technology has made it much easier for counterfeiters to produce near-exact copies of mint dies. And today’s counterfeit bullion is of such high quality it can very difficult to spot, even to the veteran eye.

Counterfeit vs. Copy

It’s important to make the distinction between “counterfeit” and “copy” bullion coins. A “copy” is a coin that has borrowed its design from another coin. These coins may or may not be made of precious metals. There are many legitimate private mints that use copies of popular coin designs on their bullion. The term “copy” or “replica” just refers to the design, and is not generally intended to deceive.

A “counterfeit” or “fake” bullion coin intentionally misrepresents its metal content with the explicit intent to deceive a buyer. Various different metal alloys are used to create counterfeit bullion, depending on the nature of the particular fake.

Sometimes a counterfeit gold coin might really be minted mostly in gold. There are many well known examples of counterfeit gold sovereigns – produced in the 1950s and 1960s – that were minted with an alloy consisting of only 60% to 80% gold, instead of the proper 91.6%.

Other counterfeit bullion coins are simply base metals that have been plated with a precious metal. For example, this is a counterfeit silver bullion coin from China…

Source: Silver Coin and Bullion Photos

I bought this coin on eBay, knowing it was bogus and only paying a few dollars for it. I keep it as an example. Some hardcore numismatists even collect counterfeit coins in what they call a “black museum” or “black cabinet” collection.

This coin is just a base metal planchet (a coin blank) that has been stamped and plated in silver. But it is clearly marked as a one ounce .999 fine silver (Ag is the chemical symbol for silver) bullion coin.

Sometimes it’s not easy at all to recognize fake bullion coins. And you may not spot them at first. But there are a few simple techniques that anyone can perform to ID a potential fake.

10 Ways to Avoid Buying Fake Bullion Coins

1. The Bite Test – But Don’t Do This One

You’ve probably seen it in an old movie, or parodied on Looney Tunes – a grizzled, white-haired prospector biting a gold coin to verify if it’s the real deal. It might seem a little odd, but there’s a very good reason for this.

Compared to copper, silver, or other metals that might be used to fake it, gold is very soft metal. So simply biting pure gold will leave a tooth mark – while biting copper or silver will leave you with a dentist bill.

Biting real gold might land you at the dentist office, too. And, best-case scenario, you’ll have a real gold coin with tooth marks on it, which will definitely deflate the coin’s value. So I don’t recommend gnawing on any of your bullion coins, but just wanted to mention it.

2. Familiarize Yourself With the Weight of Bullion Coins

One of the biggest giveaways of a counterfeit bullion coin is its weight. Gold, for example, is a very dense and heavy metal. There are only three non-radioactive metals with a density higher than gold – tungsten, platinum and iridium. And these metals are either too expensive or difficult to work with. So a counterfeit gold coin will almost always be too light.

Counterfeit silver coins can also be too light. Often the discrepancy in weight is obvious. I don’t need a scale to tell that the coin above weights less than an actual silver ounce.

When it’s not so obvious, simply weigh your bullion with a reasonably accurate scale. And don’t forget to keep in mind the difference between 1 troy ounce (31.1 grams) and 1 avoirdupois ounce (28.3 grams). Gold and silver bullion coins are supposed to be 1 troy ounce.

3. Know the Correct Dimensions of Bullion Coins

Another dead giveaway of fake bullion coin is an incorrect diameter or thickness. Counterfeiters often alter the dimensions of bullion coins to add weight, meaning the coin or bar will be too large or too thick.

All legitimate government and private minters have standard dimensions for their bullion coins. You can find these dimensions in a coin catalog or online. If not, you should probably buy a different bullion product.

Get a reasonably accurate set of calipers and take measurements. The tolerances on legitimate bullion coins are miniscule. So when it comes to bullion coins with an inaccurate weights or dimensions, they’re generally fake.

4. Look At the Details – Color, Quality, Content, etc.

Another great way to ID a fake bullion coin is to closely examine the quality and color of the metal. Fake gold coins can appear either too dull or too shiny. And may sometimes also look casted and not pressed, leaving a grainy texture. Other fake bullion coins might be mottled or flecked on the surface.

Other signs of counterfeit bullion coins include tool marks or misshaped edges. The rim is also a good place to easily spot a fake gold coin. Counterfeit gold coins are sometimes made in halves, and then soldered or glued together. A seam on the rim of a gold coin where two halves were joined is a great indication that the coin is counterfeit.

Get a cheap magnifying glass or jewelers loupe and compare the details of the coin to one you know is legitimate. If you don’t have a real coin to compare with, find a photo online and compare the tiny details of the original with the one you’re checking.

Look at the space between letters, look at the size and number of elements. Misspellings or grammar mistakes are obvious signs of a phony. It’s rare, but counterfeiters do overlook simple things like spelling, especially when coins are made in foreign countries.

5. The Ring Test

All metals have a distinct sound when they clang together. It’s not the best way to spot a phony bullion coin, but it can certainly help once you’re familiar with a metal’s sound.

My favorite way to listen to a metal is to flip it. Some metals ring in the air after flipping off your thumb, while others do not. Both pure gold and silver will ring in the air. The counterfeit silver coin that I showed you above does not ring when I flip it.

If it were truly .999 fine silver, it would.

There’s a really cheap way to practice the ring test… Get two U.S. pennies; one minted before 1982, and one minted after 1982. Then, listen carefully for a ringing sound as you flip each one off your thumb.

The penny minted before 1982 will have a high-pitched ring while it flips though the air. The penny minted after 1982 won’t. This is because U.S. pennies minted before 1982 (there are rare exceptions) are made of 95% copper, a metal that will ring. Starting in 1982, the U.S. government began minting pennies with an alloy consisting of 97.5% zinc, a metal that won’t ring. Again, the ring test is not always the best way to spot a phony. But it certainly helps.

6. The Scratch Test

Geologists often use scratch tests in the field to identify a metal. Explorers will scratch a piece of suspect gold on a stone (an unglazed porcelain tile works best) and examine the color streak left behind.

Gold will leave a yellow streak, while something like pyrite will leave a greenish-black streak. But of course, scratching your bullion coins will devalue them, so this is another test that I don’t recommend. Moreover, a counterfeit coin might pass the scratch test if it’s been plated.

There is one scratch test for gold, however, that shouldn’t hurt the value of your coin too much if you just want to try it. Gold has a hardness of about 2.5 to 3.0 on the Mohs scale. Glass, on the other hand, has a hardness of 5.5 on the same scale.

Try scratching glass with the piece of gold. If it scratches the glass, it is definitely not gold, or is mixed with other metals and the purity is very low.

7. Use a Magnet

Both pure gold and silver are non-magnetic. If a bullion coin sticks to a magnet, it’s a counterfeit. Much of China’s counterfeit bullion is produced with iron-based planchets. And a magnet is a cheap, easy way to spot this kind of counterfeit. But like the ring test, a magnet can’t indicate a coin’s metal content with precision. As a good example, the counterfeit silver coin that I showed you above is not magnetic either. But it’s still a fake.

8. Gold and Silver Acid Tests

There are acid tests that you can perform to ensure the legitimacy of bullion. Gold, for instance, is a noble metal. It will not react or dissolve in nitric or sulphuric acid. Putting a spot of nitric or sulphuric acid on a legitimate Gold Eagle should cause no reaction. Acid solutions to test silver are also available.

Acid tests, however, haven’t gotten any safer since Woodstock. And even with the obvious danger of playing with dangerous chemicals aside, acid tests always damage a tiny portion of a coin, devaluing it. So the acid test isn’t exactly ideal for investors with small bullion holdings. However, if you own a large amount of bullion, testing a few coins from of your horde wouldn’t hurt.

9. Use a Counterfeit Gold Coins Detector

There are a few simple counterfeit gold coin detectors on the market. I do not own one personally, nor have ever used one, so I can’t speak from personal experience. However, the counterfeit gold coin detectors on the market today check for three fundamental elements of a legitimate bullion coin that we talked about today: weight, diameter and thickness.

The most popular counterfeit gold coin detector on the market today is the Fisch Fake Coin Identification Gauge.

The downside to the Fisch Fake Coin Identification Gauge (as I see it) is two-fold. First, one detector doesn’t work for all gold coins. Fisch makes a total of seven different-sized detectors. So you might have to buy more than one if you have a lot of different gold coins to test, which brings me to the second big downside – the price.

The Fisch Fake Coin Identification Gauge can set you back as much as $170 per gauge. Again, I don’t have one, and can’t speak from personal experience. But I just can’t see myself paying $170 for what looks like a thick piece of plastic. Besides, it would be cheaper to take your bullion to have it authenticated by an expert.

10. The Absolute Best Way – Only Buy Bullion From Reputable, Licensed Dealers

The absolute best way to avoid being conned is to buy gold and silver bullion from accredited bullion dealers, and avoid private party transactions. For instance, Investment U recommends Asset Strategies International, Inc. For more information on ASI, click here.

If you were sold counterfeit bullion, you can then take immediate action against the offending dealer, as opposed to waiting years and years only to find out you’re holding a worthless metal.

Also, it’s important to trust, but verify. It might be a good idea to buy from one dealer and get your investment appraised by another. Most of the time they’ll do it for free…

Conclusion

Take the time to learn about your bullion. It won’t take long. And I think you’ll find that it’s really very interesting. But more importantly, you’ll save headache and heartache further down the road.

Good Investing,

Luke Burgess

P.S. Our friends at Asset Strategies International, Inc. are offering Investment U readers a special limited time offer. To find out how to get a free Morgan Silver Dollar, click here.

Article by Investment U

Source: ForexYard

News that euro-zone leaders came to an agreement to set up a permanent bailout fund lifted the euro throughout today’s trading session. While Greece still has yet to come to an agreement with its creditors regarding a debt-swap deal, investors responded to the EU news by shifting their funds away from safe-havens to riskier assets. The EUR/USD briefly crosses the 1.3200 line as a result, while the EUR/JPY shot up over 50 pips before staging a downward correction.

Analysts are still maintaining that any gains the euro makes in the coming days are likely to be temporary. Even if Greece finally announces a debt-swap deal, as it is widely expected to do by the end of the week, optimism in the euro-zone economic recovery is likely to be short lived. Signs that Portugal is close to defaulting on its debt are one several indications that the euro-zone crises is far from over.

Tomorrow, traders will want to pay attention to the US ADP Non-Farm Employment Change figure, as it is likely to determine the direction the euro takes in afternoon trading. Last week, negative US news led to major gains for the common currency. Should today’s news come in below forecasts, the euro may be able to extend its bullish trend.

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.