Saturday, April 18, 2015

An Insight into What Institutions Get When They Pay Top Dollar

Our trading partner and one of the industry’s most respected traders, Guy Cohen of the OVI Flag Trader, has released a new eBook that you must download and read. Guy is truly the experts’ expert when it comes to options. Over the last 13 years Guy has licensed this proprietary research to institutional clients including the NYSE, the ISE and several brokers.

Fortunately for you his obligations are fulfilled, and he’s now available for the first time in many years to show you his completely unique approach to options.

To celebrate his availability, I asked him to share some of his pearls of wisdom with my valued subscribers. I was just in time because Guy is also contracted to one of his publishers for a new edition of one of his bestsellers. So for starters, he’s written a brand new eBook showing you his uniquely simple approach that you can start implementing immediately. And we have the pleasure of sharing it with you today!

Grab Your Copy Here

In this publication you will learn how to.....

 *  Trade volatility around news events such as earnings (I love this section)
 *  Match the right options strategy with the appropriate chart setup (crucial for all options traders)
 *  Understand the Greeks in seconds (I kid you not...Guy’s approach to this is utterly unique)
 *  Trade for income with full illustrated examples (and I know there’s more to come) and much more.


If you’re interested in trading options at the highest level, from the industry’s leading expert, you will want to grab your copy NOW!

Guy has an uncanny ability to demystify and simplify options, which is why he’s a four time best selling author, and this is exactly what this new eBook will do for you and more.

See you in the markets putting this to work!
Ray @ The Hedge Fund University

Get Guy Cohen's latest FREE eBook....Just Click Here!

Monday, March 23, 2015

Crude Oil, Divorce, and Bear Markets

By Tony Sagami


Everybody loves a parade. I sure did when I was a child, but I’m paying attention to a very different type of parade today. The parade that I’m talking about is the long, long parade of businesses in the oil industry that are cutting jobs, laying off staff, and digging deep into economic survival mode. The list of companies chopping staff is long, but two more major players in the oil industry joined the parade last week.

Pink Slip #1: Houston-based Dresser-Rand isn’t a household name, but it is a very important part of the energy food chain. Dresser-Rand makes diesel engines and gas turbines that are used to drill for oil.
Dresser-Rand announced that it's laying off 8% of its 8,100 global workers. Many Wall Street experts were quick to point the blame at German industrial giant Siemens, which is in the process of buying Dresser-Rand for $7.6 billion.

Fat chance! Dresser-Rand was crystal clear that the cutbacks are in response to oil market conditions and not because of the merger with Siemens. The reason Dresser-Rand cited for the workforce reduction was not only lower oil prices but also the strength of the US dollar.

If you’re a regular reader of this column, you know that I believe the strengthening US dollar is the most important economic (and profit-killing) trend of 2015.

Pink Slip #2: Oil exploration company Apache Corporation reported its Q4 results last week, and they were awful. Apache lost a whopping $4.8 billion in the last 90 days of 2014.

No matter how you cut it, losing $4.8 billion in just three months is a monumental feat.

Of course, the “dramatic and almost unprecedented” drop in oil prices was responsible for the gigantic loss, but what really matters is the outlook going forward.


CEO John Christmann, to his credit, is taking tough steps to stem the financial bleeding, and that means:
  • Shutting down 70% of the company's drilling rigs.
  • Slashing it's 2015 capital budget to between $3.6 and $5.0 billion, down from $8.5 billion in 2014.
Those aren’t the actions of an industry insider who expects things to get better anytime soon.

I don’t mean to bag on Dresser-Rand and Apache, because they’re far from alone. Schlumberger, Baker Hughes, Halliburton, Weatherford International, and ConocoPhillips have also announced major layoffs. And don’t make the mistake of thinking that the only people getting laid off are blue-collar roughnecks. These layoffs affect everyone from secretaries to roughnecks to IT professionals.

In fact, according to staffing expert Swift Worldwide Resources, the number of energy jobs lost this year has climbed to well above 100,000 around the world.

From Global to Local


Sometimes it helps to put a local, personal perspective to the big-picture national news.

In my home state of northwest Montana, a huge number of men moved to North Dakota to work in the Bakken gas fields. Montana is a big state; it takes about 14 hours to drive from my corner of northwest Montana to the North Dakota oil fields, so that means those gas workers don’t make it back to their western Montana homes for months.

Moreover, the work was six, sometimes seven days a week and 12 hours a day, so once there, they couldn’t drive back home even if they wanted to. This meant long absences… and a good friend of mine who is a marriage counselor told me that the local divorce rate was spiking because of them.

Now the northwest Montana workers are returning home because the once-lucrative oil/gas jobs are disappearing. That news won’t make the New York Times, but it’s as real as it gets on Main Street USA.

From Local to National


Of course, the oil industry's woes aren’t a carefully guarded Wall Street secret. However, I do think that Wall Street—and perhaps even you—are underestimating the impact that low oil prices are going to have on economic growth and GDP numbers going forward.

Let me explain.

Industrial production for the month of January, which measures the output of US manufacturers, miners, and utilities, came in at a “seasonally adjusted" 0.2%.


A 0.2% gain isn’t much to shout about, but the real key was the impact the mining component (which includes oil/gas producers) had on the industrial-production calculation.

The mining industry is the second-largest component of industrial production, and its output fell by 1.0% in January. It was the biggest drag on the overall index.

However, the Federal Reserve Bank said, “The decline [was] more than accounted for by a substantial drop in the index for oil and gas well drilling and related support activities.”

How much did it account for? The oil and gas component fell by 10.0% in January.

Yup, a double-digit drop in output in just one month. Moreover, it was the fourth monthly decline in a row.
Last week’s weak GDP caught Wall Street off guard, but there are a lot more GDP disappointments to come as the energy industry layoffs percolate through the economy. Here’s how my Rational Bear readers are getting ready for GDP and corporate-earnings disappointments that are sure to rattle the markets.
Can your portfolio, as currently composed, handle a slowing economy and falling corporate profits? For most investors, the answer is “no.” Click above to find out how to protect yourself.

Tony Sagami

Tony Sagami

30 year market expert Tony Sagami leads the Yield Shark and Rational Bear advisories at Mauldin Economics. To learn more about Yield Shark and how it helps you maximize dividend income, click here.

To learn more about Rational Bear and how you can use it to benefit from falling stocks and sectors, click here.




Get our latest FREE eBook "Understanding Options"....Just Click Here!


Monday, March 9, 2015

Going Vertical.....Our Next Online Event

There are again signs on the horizon that the next gold bull market may not be far off.

On February 11, Bloomberg reported, “Gold producers with cash on hand are on the hunt for cheap mining assets as rising prices drive shares higher.” $2.7 billion in deals have already been announced or completed year to date—compared to a total of $10.5 billion in 2014.

Private equity firms (the “smart money”) are circling the mining industry for great deals. GDX, the Market Vectors Gold Miners ETF, currently has an aggregate price to book ratio of 1.06, while its little brother, the Market Vectors Junior Gold Miners ETF (GDXJ), trades at 76% of book value.

A stronger US dollar and falling oil prices are presenting two deflationary forces that are good for gold. The last two times oil dropped more than 50% in one year—1986 and 2008—gold rallied over 25% the following year.

Here's our video primer for this weeks event "Are you Going to Buy Low and Sell High this Time Around"

Investors are waking up to the fact that gold is rallying. Among the top 10 non leveraged ETFs are five gold miners ETFs. As of early February, investors had already poured $885.4 million in new assets into GDX—one of the best results among sector ETFs—and GDXJ attracted nearly $226 million.

No one can say for sure if this is the beginning of the next gold bull market. However, what is clear is that once the bull market does get started, the best of the best gold stocks will go vertical.

Successful gold producers may go up 150-200%. But the top ranked junior miners—the companies with quality management and great assets will take a moonshot. 500%, 1,000%, and more is not out of the question.

Casey Research’s free online event GOING VERTICAL aims to help investors understand where we are in the gold cycle, what to expect, and how to prepare their portfolio so they have a real shot at the jackpot when gold rises again.

Just Click Here to Reserve Your Spot

Eight industry stars discuss the most pressing issues of the day......

Pierre Lassonde, cofounder and chairman of Franco-Nevada
Rick Rule, founder and chairman of Sprott Global Resource Investments
Ron Netolitzky, chairman and director of Aben Resources
Doug Casey, chairman of Casey Research
Frank Holmes, CEO and CIO of U.S. Global Investors
Bob Quartermain, president, CEO, and director of Pretium Resources
and Casey Research precious metals experts Louis James and Jeff Clark.

Topics they will talk about in GOING VERTICAL include: 2015 outlook on the gold market; up, down, or sideways?—What to expect from gold’s next leg up, and how even stocks that have dropped 75% or more can come back with a vengeance—How to make money on junior miners even in the midst of a downturn—Which country may end up controlling the price of gold and what that means for investors—4 signs that a bear market is turning into a bull market—Which types of companies institutional investors will flock to first when gold goes up, and how to “front run” them—3 reasons why the best gold producers might double when the gold sector recovers—and much more.

Also, some of the experts talk about their favorite gold and silver companies, naming names—and Louis James reveals one of his favorite junior mining stock with vertical potential.

Register now to watch the event on Tuesday, March 10, 2:00 p.m. EDT. Even if you know you can’t make it at that time, register anyway that way you’ll get an email with a link to the video recording after the event and can watch it at your leisure.

Click Here to Learn More and Register

See you on Tuesday,
Hedge Fund University


Get our latest FREE eBook "Understanding Options"....Just Click Here!

Sunday, March 8, 2015

What Top Hedge Fund Managers Really Think About Gold

By Jeff Clark, Senior Precious Metals Analyst

In the January BIG GOLD, I interviewed a plethora of experts on their views about gold for this year. The issue was so popular that we decided to republish a portion of the edition here.

Given their level of success, these fund managers are worth listening to: James Rickards, Chris Martenson, Steve Henningsen, Grant Williams, and Brent Johnson. Some questions are the same, while others were tailored to their particular expertise.

I hope you find their comments as insightful and useful as I did…...

James Rickards is chief global strategist at the West Shore Funds, editor of Strategic Intelligence, a monthly newsletter, and director of the James Rickards Project, an inquiry into the complex dynamics of geopolitics and global capital. He is the author of the New York Times best  seller The Death of Money and the national best seller Currency Wars.

He’s a portfolio manager, lawyer, and economist, and has held senior positions at Citibank, Long Term Capital Management (LTCM), and Caxton Associates. In 1998, he was the principal negotiator of the rescue of LTCM sponsored by the Federal Reserve. He’s an op-ed contributor to the Financial Times, Evening Standard, New York Times, and Washington Post, and has been interviewed by the BBC, CNN, NPR, C-SPAN, CNBC, Bloomberg, Fox, and the Wall Street Journal.

Jeff: Your book The Death of Money does not paint an optimistic economic picture. What will the average citizen experience if events play out as you expect?

James: The end result of current developments in the international monetary system will almost certainly be high inflation or borderline hyperinflation in US dollars, but this process will take a few years to play out, and we may experience mild deflation first. Right now, global markets want to deflate, yet central banks must achieve inflation in order to make sovereign debt loads sustainable. The result is an unstable balance between natural deflation and policy inflation. The more deflation persists in the form of lower prices for oil and other commodities, the more central banks must persist in monetary easing. Eventually inflation will prevail, but it will be through a volatile and unstable process.

Jeff: The gold price has been in a downtrend for three years. Is the case for gold over? If not, what do you think kick-starts a new bull market?

James: The case for gold is not over—in fact, things are just getting interesting. I seldom think about the “price” of gold. I think of gold as money and everything else as a price measured in gold units. When the dollar price of gold is said to be “down,” I think of gold as a constant store of value and that the dollar is simply “up” in the sense that it takes more units of gold to buy one dollar. This perspective is helpful, because gold can be “down” in dollars but “up” in yen at the same time, and often is when the yen is collapsing against the dollar.

The reason gold is thought to be “down” is because the dollar is strong. However, a strong dollar is deflationary at a time when the Fed’s declared policy is to get inflation. Therefore, I expect the Fed will not raise interest rates in 2015 due to US economic weakness and because they do not want a stronger dollar. When that realization sinks in, the dollar should move lower and gold higher when measured in dollar terms.

The looming global shortage of physical gold relative to demand also presages a short squeeze on the paper gold edifice of futures, options, unallocated forward sales, and ETFs. The new bull market will be kick started when markets realize the Fed cannot raise rates in 2015 and when the Fed finds it necessary to do more quantitative easing, probably in early 2016.

Jeff: Given what you see coming, how should the average retail investor position his or her portfolio?

James: Since risks are balanced between deflation and inflation in the short run, a sound portfolio should be prepared for both. Investors should have gold, silver, land, fine art, and other hard assets as an inflation hedge. They should have cash and US Treasury 10-year notes as a deflation hedge. They should also include some carefully selected alternatives, including global macro hedge funds and venture capital investments for alpha. Investors should avoid emerging markets, junk bonds, and tech stocks.

Steve Henningsen is chief investment strategist and partner at The Wealth Conservancy in Boulder, CO, a firm that specializes in wealth coaching, planning, and investment management for inheritors focused on preservation of capital. He is a lifetime student, traveler, fiduciary, and skeptic.

Jeff: The Fed and other central banks have kept the economy and markets propped up longer than some thought they could. How much longer do you envision them being able to do so? Or has the Fed really staved off crisis?

Steve: I do not believe we are under a new economic paradigm whereupon a nation can resolve its solvency problem via increasing debt. As to how long the central banks’ plate spinning can defer the consequences of the past 30-plus years of excess credit growth, I hesitate to answer, as I never thought they would get this far without breaking a plate. However incorrect my timing has been over the past two years, though, I am beginning to doubt that they can last another 12 months. Twice in the last few months the stock market plates began to wobble, only to have Fed performers step in to steady the display.

With the end of QE, a slowing global economy, a strengthening dollar, and the recent sharp drop in oil prices, deflationary winds are picking up going into 2015, making their balancing act yet more difficult. (Not to mention increasing tension from poking a stick at the Russian bear.)

Jeff: Gold has been in decline for over three years now. What changes that? Should we expect gold to remain weak for several more years?

Steve: I cannot remember an asset more maligned than gold is currently, as to even admit one owns it receives a reflexive look of pity. While most have left our shiny friend bloodied, lying in the ditch by the side of the road, there are signs of resurrection. While I’m doubtful gold will do much in the first half of 2015 due to deflationary winds and could even get dragged down with stocks should global liquidity once again dissipate, I am confident that our central banks would again step in (QE4?) and gold should regain its luster as investors finally realize the Fed is out of bullets.

The wildcard I’m watching is the massive accumulation of gold (and silver) bullion by Russia, China, and India, and the speculation behind it. Should gold be announced as part of a new monetary system via global currency or gold-backed sovereign bond issuance, then gold’s renaissance begins.

Jeff: Given what you see coming, how should the average investor position her or his portfolio?

Steve: Obviously I am holding on to our gold bullion positions, as painful as this has been. I would also maintain equity exposure via investment managers with the flexibility to go long and short. I believe this strategy will finally show its merits vs. long-only passive investments in the years ahead. I believe that for the next 6-12 months, long-term Treasuries will help balance out deflationary risks, but they are definitely not a long-term hold. Maintaining an above average level of cash will allow investors to take advantage of any equity downturns, and I would stay away from industrial commodities until the deflationary winds subside.
Precious metals equities could not be hated more and therefore represent the best value if an investor can stomach their volatility.

Grant Williams is the author of the financial newsletter Things That Make You Go Hmmm and cofounder of Real Vision Television. He has spent the last 30 years in financial markets in London, Tokyo, Hong Kong, New York, Sydney, and Singapore, and is the portfolio and strategy advisor to Vulpes Investment Management in Singapore.

Jeff: The Fed and other central banks have kept the economy and markets propped up longer than some thought possible. How much longer do you envision them being able to do so? Or has the Fed really staved off crisis?

Grant: I have repeatedly referred to a singular phenomenon over the past several years and it bears repeating as we head into 2015: for a long time, things can seem to matter to nobody until the one day when they suddenly matter to everybody. It feels as though we have never been closer to a series of such moments, any one of which has the potential to derail the narrative that central bankers and politicians have been working so hard to drive.

Whether it be Russia, Greece, the plummeting crude oil price, or a loss of control in Japan, there are a seemingly never-ending series of situations, any one (or more) of which could suddenly erupt and matter to a lot of people at the same time. Throw in the possibility that a Black Swan comes out of nowhere that nobody has thought about (even something as seemingly trivial as the recent hack of Sony Pictures by the North Koreans could set in motion events which can cascade very quickly in a geopolitical world which has so many fissures running through it), and you have the possibility that fear will replace greed overnight in the market’s collective psyche. When that happens, people will want gold.

The issue then becomes where they are going to get it from. Physical gold has been moving steadily from West to East despite the weak paper prices we have seen for the last couple of years, and this can continue until there is a sudden wider need for gold as insurance or as a currency. When that day comes, the price will move sharply from being set in the paper market—where there is essentially infinite supply—to being set in the physical markets where there is very inelastic supply and the existing stock has been moving into strong hands for several years. Materially higher prices will be the only way to resolve the imbalance.

Jeff: You’ve written a lot about the gold market over the past few years. In your view, what are the most important factors gold investors should keep in mind right now?

Grant: I think the key focus should be on two things: first, the difference between paper and physical gold; and second, on the continuing drive by national banks to repatriate gold supplies. The former is something many people who are keen followers of the gold markets understand, but it is the latter which could potentially spark what would, in effect, be a run on the gold “bank.” Because of the mass leasing and rehypothecation programs by central banks, there are multiple claims on thousands of bars of gold. The movement to repatriate gold supplies runs the risk of causing a panic by central banks.

We have already seen the beginnings of monetary policy divergence as each central bank begins to realize it is every man for himself, but if that sentiment spreads further into the gold markets, it could cause mayhem.
Keep a close eye on stories of further central bank repatriation—there is a tipping point somewhere that, once reached, will light a fire under the physical gold market the likes of which we haven’t seen before, and that tipping point could well come in 2015.

Jeff: Given what you see coming, how should the average investor position his or her portfolio?

Grant: Right now I think there are two essentials in any portfolio: cash and gold. The risk/reward skew of being in equity markets in most places around the world is just not attractive at these levels. With such anemic growth everywhere we turn, and while it looks for all the world that bond yields are set to continue falling, I think the chances of equities continuing their stellar run are remote enough to make me want out of equity markets altogether.

There are pockets of value, but they are in countries where the average investor is either disadvantaged due to a lack of local knowledge and a lack of liquidity, or there is a requirement for deep due diligence of the kind not always available to the average investor.

The other problem is the ETF phenomenon. The thirst for ETFs in order to simplify complex investing decisions, as well as to throw a blanket over an idea in order to be sure to get the “winner” within a specific theme or sector, is not a problem in a rising market (though it does tend to cause severe value dislocations amongst stocks that are included in ETFs versus those that are not). In a falling market, however, when liquidity is paramount, any sudden upsurge of selling in the ETF space will require the underlying equities be sold into what may very well be a very thin market.

In a rising market, there is always an offer. In a falling market, bids can be hard to come by and in many cases, nonexistent, so anybody expecting to divest themselves of ETF positions in a 2008 like market could well find themselves with their own personal Flash Crash on their hands.

Unlevered physical gold has no counterparty risk and has sustained a bid for 6,000 straight years (and counting). Though sometimes, in the wee small hours, those bids can be both a little sparse and yet strangely attractive to certain sellers of size.

Meanwhile, a healthy allocation to cash offers a supply of dry powder that can be used to gain entry points which will hugely amplify both the chances of outperformance and the level of that performance in the coming years.

Remember, you make your money when you buy an asset, not when you sell it.

Caveat emptor.

Chris Martenson, PhD (Duke), MBA (Cornell), is an economic researcher and futurist who specializes in energy and resource depletion, and is cofounder of Peak Prosperity. As one of the early econobloggers who forecasted the housing market collapse and stock market correction years in advance, Chris rose to prominence with the launch of his seminal video seminar, The Crash Course, which has also been published in book form.

Jeff: The Fed and other central banks have kept the economy and markets propped up longer than some thought possible. How much longer do you envision them being able to do so? Or has the Fed really staved off crisis?

Chris: Well, if people were being rational, all of this would have stopped a very long time ago. There’s no possibility of paying off current debts, let alone liabilities, and yet “investors” are snapping up Italian 10 year debt at 2.0%! Or Japanese government bonds at nearly 0% when the total debt load in Japan is already around $1 million per rapidly aging person and growing. I cannot say how much longer so called investors are willing to remain irrational, but if pressed I would be very surprised if we make it past 2016 without a major financial crisis happening.

Of course, this bubble is really a bubble of faith, and its main derivative is faith based currency. And it’s global. Bubbles take time to burst roughly proportional to their size, and these nested bubbles the Fed and other central banks have engineered are by far the largest ever in human history.

As always, bubbles are always in search of a pin, and we cannot know exactly when that will be or what will finally be blamed. All we can do is be prepared.

Jeff: If deflationary forces pick up, how do you expect gold to perform?

Chris: Badly at first, and then spectacularly well. It’s like why the dollar is rising right now. Not because it’s a vastly superior currency, but because it’s the mathematical outcome of trillions of dollars’ worth of US dollar carry trades being unwound. So the first act in a global deflation is for the dollar to rise. Similarly, the first act is for gold to get sold by all of the speculators that are long and need to raise cash to unwind other parts of their trade books.

But the second act is for people to realize that the institutions and even whole nation states involved in the deflationary mess are not to be trusted. With opaque accounting and massive derivative positions, nobody will really know who is solvent and who isn’t. This is when gold gets “rediscovered” by everyone as the monetary asset that is free of counterparty risk—assuming you own and possess physical bullion, of course, not paper claims that purport to be the same thing but are not.

Jeff: Given what you see coming, how should the average investor position her or his portfolio?

Chris: Away from paper and toward real things. If the outstanding claims are too large, or too pricey, or both, then history is clear; the perceived value of those paper claims will fall.

My preferences are for land, precious metals, select real estate, and solid enterprises that produce real things. Our view at Peak Prosperity is that deflation is now winning the game, despite everything the central banks have attempted, and that the very last place you want to be is simply long a bunch of paper claims.

However, before the destruction of the currency systems involved, there will be a final act of desperation by the central banks that will involve printing money that goes directly to consumers. Perhaps it will be tax breaks or even rebates for prior years, or even the direct deposit of money into bank accounts.

When this last act of desperation arrives, you’ll want to be out of anything that looks or smells like currency and into anything you can get your hot little hands on. This may include equities and other forms of paper wealth—just not the currency itself. You’ll want to run, not walk, with a well-curated list of things to buy and spend all your currency on before the next guy does.

We’re not there yet, but we’re on our way. Expect the big deflation to happen first and then be alert for the inevitable central bank print a thon response.

Because of this view, we believe that having a very well balanced portfolio is key, with the idea that now is the time to either begin navigating toward real things, or to at least have that plan in place so that after the deflationary impulse works its destructive magic, you are ready to pounce.

Brent Johnson is CEO of Santiago Capital, a gold fund for accredited investors to gain exposure to gold and silver bullion stored outside the United States and outside of the banking system, in addition to precious metals mining equities. Brent is also a managing director at Baker Avenue Asset Management, where he specializes in creating comprehensive wealth management strategies for the individual portfolios of high-net-worth clients. He’s also worked at Credit Suisse as vice president in its private client group, and at Donaldson, Lufkin & Jenrette (DLJ) in New York City.

Jeff: The Fed and other central banks have kept the economy and markets propped up longer than some thought possible. How much longer do you envision them being able to do so? Or has the Fed really staved off crisis?

Brent: As much as I dislike the central planners, from a Machiavellian perspective you really have to give them credit for extending their influence for as long as they have. I wasn’t surprised they could engineer a short-term recovery, and that’s why, even though I manage a precious metals fund, I don’t recommend clients put all their money in gold. But I must admit that I have been surprised by the duration of the bull market in equities and the bear market in gold. And while I probably shouldn’t be, I’m continually surprised by the willingness of the investing public to just accept as fact everything the central planners tell them. The recovery is by no means permanent and is ultimately going to end very, very badly.

But I don’t have a crystal ball that tells me how much longer this movie will last. My guess is that we are much closer to the end than the beginning. So while they could potentially draw this out another year, it wouldn’t surprise me at all to see it all blow up tomorrow, because this is all very much contrived. That’s why I continue to hold gold. It is the ultimate form of payment and cannot be destroyed by either inflation, deflation, central bank arrogance, or whatever other shock exerts itself into the markets.

Jeff: As a gold fund manager, you’ve watched gold decline for over three years now. What changes that? And when? Should we expect gold to remain weak for several more years?

Gold has been in one of its longest bear markets in history. Many of us in the gold world must face up to this. We have been wrong on the direction of gold for three years now. Is this due to bullion banks trying to maximize their quarterly bonuses by fleecing the retail investor? Is it due to coordination at the central bank level to prolong the life of fiat currency? Is it due to the Western world not truly understanding the power of gold and surrendering our bullion to the East? I don’t know… maybe it’s a combination of all three. Or maybe it’s something else altogether.

What I do know is that gold is still down. Now the good news is… that’s okay. It’s okay because it isn’t going to stay down. The whole point of investing is to arbitrage the difference between price and value. And right now there remains a huge arbitrage to exploit. As Jim Grant said, “Investing is about having people agree with you… later.”

Now all that said, I realize it hasn’t been a fun three years. This isn’t a game for little boys, and I’ve felt as much pain as anyone. I think the trend is likely to change when the public’s belief in the central banks starts coming into question. We are starting to see the cracks in their omnipotence. For the most part, however, investors still believe that not only will the central banks try to bail out the markets if it comes to that, but they also still believe the central banks will be successful when they try. In my opinion, they are wrong.

And there are several catalysts that could spark this change—oil, Russia, other emerging markets, or the ECB and Japan monetizing the debt. This “recovery” has gone on for a long time. But from a mathematical perspective, it simply can’t go on forever. So as I’ve said before, if you believe in math, buy gold.

Jeff: Given what you see coming, how should the average investor position her or his portfolio?

Brent: The answer to this depends on several factors. It depends on the investor’s age, asset level, income level, goals, tolerance for volatility, etc. But in general, I’m a big believer in the idea of the “permanent portfolio.” If you held equal parts fixed income, equities, real estate, and gold over the last 40 years, your return is equal to that of the S&P 500 with substantially less volatility. And this portfolio will perform through inflation, deflation, hyperinflation, collapse, etc.

So if you are someone who is looking to protect your wealth without a lot of volatility, this is a very strong solution. If you are younger, are trying to create wealth, and have some years to ride out potential volatility, I would skew this more toward a higher allocation to gold and gold shares and less on fixed income, for example.

Because while I generally view gold as insurance, this space also has the ability to generate phenomenal returns and not just protect wealth, but create it. But whatever the case, regardless of your age, level of wealth, or world view, the correct allocation to gold in your portfolio is absolutely not zero. Gold will do phenomenally well in the years ahead, and those investors who are willing to take a contrarian stance stand to benefit not only from gold’s safety, but also its ability to generate wealth.

One other thing to remember about gold is that while it may be volatile, it’s not risky. Volatility is the fluctuation in an asset’s daily/weekly price. Risk is the likelihood of a permanent loss of capital. And with gold (in bullion form), there is essentially no chance of a permanent loss of capital. It is the one asset that has held its value not just over the years, but over the centuries. I for one do not hold myself out as being smarter than thousands of years of collective global wisdom. If you do, I wish you the best of luck!

Of course, bullish signs for gold have been mounting, which begs the question: could the breakthrough for the gold market be near?

Well, no one knows for sure. But what we do know is that when the market recovers, the handful of superb mining stocks that have survived the slaughter won’t just go up—they’ll go vertical.

Which is why we're hosting a free online event called, GOING VERTICAL, headlined by a panel of eight top players in the precious metals sector, names you'll no doubt recognize. Each of our guests give their assessment on where the gold market is right now, how long it will take to recovery, and what practical steps you need to take to prepare including - which stocks you should own now.

This free video event will air March 10th, 2pm Eastern time. To make sure you don't miss it, click here to register now.



Get our latest FREE eBook "Understanding Options"....Just Click Here!

Sunday, March 1, 2015

A Math Free Guide to Higher and Safer Returns

By Andrey Dashkov

I can make you instantly richer, and safely, by explaining a finance concept with a story about a dog.

There’s a hole in your pocket you probably don’t know about. You may feel instinctively that something is wrong, but unless you look in the right place, you won’t find the problem. The money you’re losing doesn’t appear in the minus column on your account statements, but you’re losing it nevertheless.

Frustrated? Don’t be. I’m going to tell you where to look and how to stop the drainage.

Volatility is every investor’s worst enemy. Over time, it poisons your returns. Unlike a 2008 style market drop, though, volatility poisons them slowly. There’s no obvious ailment to discuss with friends or hear about on CNBC. You only see it when you compare how much you lost to how much you could have earned—and looking back at your own mistakes is not a pleasant thing to do.

Here's the Replay of Last Nights Free Webinar....."Options and Premium Decay"

So instead let’s imagine two fictional companies: X-Cite, Inc., an amusement park operator with a volatile stock price that adventurous investors love; and Glacial Corp., a dull, defensive sloth of a corporation whose stock returns are consistent but often lower than those of its more glamorous counterpart.

Average return on both companies’ stocks was 5% for the past five years, but Glacial’s was less volatile. Safety is comfortable, but doesn’t higher volatility mean higher potential returns? Sometimes, but not always. When you accept high volatility, your returns might be higher at times, but they also might be lower. In other words, higher volatility generally means greater risk.

Nothing new so far, but the oft-overlooked point is that boring stocks make you richer over time.
The chart below shows each stock’s annual return over a five year period.


At first glance, Glacial Corp. appears to be the loser. It underperformed X-Cite in four out of five years. Both stocks returned 5% on average during these years, and X-Cite was almost always voted the prettiest girl in town. But for Year 3, it would be easy to persuade investors to buy X-Cite stock. Few would give Glacial a second glance.

Hold for the punchline: X-Cite, the stock your broker would have a much easier time selling you (before you read this article), would actually make you poorer. Let me explain.

I won’t get into any supercharged math here. Glacial is better because it makes you richer eventually. After five years, the total return on X-Cite is 25%. Not bad. Glacial? 27%. If you invested $10,000 in both (assuming no brokerage fees or taxes), at the end of Year 5 you would have earned $2,507 on X-Cite or $2,701 on Glacial.

Year-End Account Balance
X-Cite, Inc.
Glacial Corp.
Year 1
$10,500
$10,300
Year 2
$11,550
$11,021
Year 3
$10,164
$10,801
Year 4
$10,875
$11,341
Year 5
$12,507
$12,701
Total return
25%
27%


Where does the extra $194 come from? It comes from lower volatility. Although X-Cite looks like a winner most of the time, it has a higher standard deviation of returns. Note that X-Cite’s stock price dropped 12% in Year 3. The following year it increased 7%, while Glacial Corp.’s stock price only increased 5%—yet Glacial is still worth more from Year 3 onward. Why? X-Cite’s 7% jump is based on the previous year’s low.

But I promised to keep this note math-free, so imagine a person walking a dog instead. The shorter the leash, the less space the dog has to run around. The longer the leash, the more erratic the dog’s path will be. Standard deviation measures how much data tend to scatter around its mean—the path. As we just saw, low standard deviation also pays you money.

I could stop right here and hope that you take this lesson to heart, but I won’t. As much as I love describing finance concepts using clever company names and dogs, I want you to start making money right now.

I said this advice could make you instantly richer, and “instantly” doesn’t mean “maybe sometime in the future.” In the latest issue of Money Forever, we shared an opportunity to invest into a vehicle built to outperform the market by managing volatility. I was extremely excited to present it to our paid subscribers because I knew they’d love to earn more by risking less. Who wouldn’t?

So please pardon my blatant self-promotion. I work in an industry where 80% of the time the market is obsessed with the wrong stock, and the noise drowns out the right idea. I can silence the cacophony for you, though, and show you where to find the right ideas. And that goes beyond our most recent pick, although you do need it in your portfolio. Money Forever’s mission is to make your money last—plain and simple.

We think this pick will go a long way toward doing just that.

You can check it out and access our full portfolio immediately by subscribing risk free to Money Forever.

It’s about the price of Netflix, but unlike Netflix we won’t bother you if you decide to cancel. In fact, we’re so confident that the Money Forever portfolio can help you “earn more by risking less” that we’ll refund 100% of the cost if you decide to cancel within the first three months.

And we’ll even prorate your refund after that—it’s a no lose proposition. Click here to start earning more by risking less now.

The article A Math-Free Guide to Higher and Safer Returns was originally published at millersmoney.com.


Get our latest FREE eBook "Understanding Options"....Just Click Here!

Sunday, February 22, 2015

Free Webinar: How You Generate Consistent Trading Results in Today's Markets

Our trading partner John Carter is back this Tuesday February 24th with another one of his wildly popular free trading webinars. This time John will be covering his trading strategy using "premium decay".

If you have attended one of John's free webinars you know that he has a unique ability to give traders that "over his shoulder" view of how he performs these trades making it very easy to understand.

Best thing of all though, he shows us how this can be done in any size account. Limiting brokerage fees so we can make money even in small accounts.

Get your reserved seat now....Just Click Here

In this free webinar John will discuss....

  *  Why trading options are perfect for newbies, retirees, part time traders, and full time traders

  *  Why options are safer than trading stocks, futures or forex while holding on for bigger winners

  *  One strategy he uses for consistent trading results that you can use the next trading day

  *  The brain dead rules to follow so you can know exactly how to trade this one set up for consistency

  *  How traders get sucked into buying the wrong stocks at the wrong price so you never get suckered into a trade again

      And much more….

Johns webinars are highly attended and usually have a waiting list at start time. Get your seat now then make sure you log in 10-15 minutes early on Tuesday evening to make sure you keep that seat.

Follow this link to get your spot before this webinar is fully subscribed.....Sign Up Now

John has provided a great free video primer for this webinar.....Watch it Now

See you Tuesday!
Hedge Fund University



Get our latest FREE eBook "Understanding Options"....Just Click Here!


Chris' New Video Reveals Why 2015 is Going to be Big

The S&P 500 stock market has been under heavy rotation since mid 2014. Rotation in the stock market is when the trend sharply changes direction from an uptrend to a downtrend or vice versa. Depending how the price moves during these rotations this algorithmic trading system which Chris Vermeulen runs can generate large profits if the price action is favorable for the trading algorithm.

Unfortunately the second half of 2014 the stock market rotation moved in a way that was very difficult for the trading algorithm to generate trades but no trades are better than losing trades so its not the end of the world. But what Chris wants to show you in this video is how the current price action we have experienced since mid-2014 till now is the same price action and has similar characteristics that we saw in 2010 and again in 2011.

2015 is going to be a stellar year for his trading system!

This price pattern has led to substantial rallies in the stock market of 20% to 35% gains over a six-month period and its looks like it may happen again.

Chris' AlgoTrades algorithmic trading system does struggles during these rotational periods but so do CTA's and other money managers. There is not doubt that it has been hard to profit with the swings in the market because of the way they happened. When this phase of the market completes and a new trend emerges the trading algorithm will excel and pull substantial gains out of the stock market on autopilot just like it did in the first half of 2014.

Both times the stock market has formed these formations the algorithmic trading system pulled 64% ROI in 2010 and pulled 78% ROI 2012. 


Watch the video to learn more.....

Algorithmic Trading System


Visit Chris Vermeulen's Website to Learn more Algo Trades


See you in the markets,
Hedge Fund University


Get our latest FREE eBook "Understanding Options"....Just Click Here!

Friday, February 20, 2015

Simple Strategy Alert: Premium Decay

We all think we know what premium decay is right? Well, I thought I knew how it worked until I watched this new video from our trading partner John Carter of Simpler Options. I never knew just how powerful and simple it was to apply knowledge of the decay principal to trading options.

Basically it's a way to insure the health of your portfolio even in an unhealthy market.

In this free video John shows us a simple and effective strategy for using premium decay, but he also shows you his strategy to make money on a stock whether it's going up or down.


Here's a sample of what John will share with us.....

  *  How to “control” stocks for a fraction of the price so you don’t risk all your capital - How you can
      generate consistent returns being dead wrong

  *  What “premium decay” is and how you can use to it to give yourself an edge in trading

  *  How you can set up occasional home run trades while generating consistent returns

  *  A handful of the key stocks I look at every day so you don’t go bug eyed looking for stocks to trade


Don't miss the game changing video "Simple Strategy Alert: Premium Decay"....Watch Video Now


John Carter has become well known for his wildly popular free options trading webinars and his free options trading eBook that changed the way traders looked at options trading in 2014.

Download the free eBook HereWhile you still can!

Jim Rogers on Opportunities in Russia and Other Hated Markets

By Nick Giambruno

Nick Giambruno: Welcome, Jim. As you know, Doug Casey and I travel the world surveying crisis markets, and we always like to get your take on things. Today I want to talk to you about Russia, which is a very hated market right now. What are your thoughts on Russia in general and on Russian stocks in particular?

Jim Rogers: Well, I’m optimistic about the future of Russia. I was optimistic before this war started in Ukraine, which was instigated by the US, of course. But in any case, I bought more Russia during the Crimea incident, and I’m looking to buy still more.

Unfortunately, what’s happening is certainly not good for the United States. It’s driving Russia and Asia together, which means we’re going to suffer in the long run—the US and Europe. Another of the big four Chinese banks opened a branch in Moscow recently. The Iranians are getting closer to the Russians. The Russians recently finished a railroad into North Korea down to the Port Rason, which is the northernmost ice-free port in Asia. The Russians have put a lot of money into the Trans-Siberian railroad to update it and upgrade it, all of which goes right by China.

Usually, people who do a lot of business together wind up doing other things together, such as fighting wars, but this isn’t any kind of immediate development. I don’t think the Russians, the Chinese, and the Iranians are about to invade America.

Nick: So because of these economic ties to Asia, the Russians are not as dependent on the West. Is that why you’re optimistic about Russia?

Jim: I first went to the Soviet Union in 1966, and I came away very pessimistic. And I was pessimistic for the next 47 years, because I didn’t see how it could possibly work. But then I started noticing, a year or two ago, that now everybody hates Russia—the market is not at all interesting to anybody anymore.

You may remember in the 1990s, and even the first decade of this century, everybody was enthusiastic about Russia. Lots of people had periodic bouts of huge enthusiasm. I was short the ruble in 1998, but other than that, I had never invested in Russia, certainly not on the long side. But a year or two ago I started noticing that things are changing in Russia… something is going on in the Kremlin. They understand they can’t just shoot people, confiscate people’s assets. They have to play by the rules if they want to develop their economy.

Now Russia has a convertible currency—and most countries don’t have convertible currencies, but the Russians do. They have fairly large foreign currency reserves and are building up more assets. Having driven across Russia a couple of times, I know they have vast natural resources. And now that the Trans-Siberian Railway has been rebuilt, it’s a huge asset as well.

So I see all these things. I knew the market was depressed, knew nobody liked it, so I started looking for and finding a few investments in Russia.

Nick: Yeah, that definitely seems to make sense when you look at the sentiment and long-term fundamentals. So where do you see the conflict with Ukraine and the tensions with the West going?

Jim: Well, the tensions are going to continue to grow, at least as long as you have the same bureaucrats in Washington. You know, they all have a professional stake in making sure that things don’t calm down in the former Soviet Union—so I don’t see things getting better any time soon.

I do notice that some companies and even countries have started pulling back from the sanctions. Many companies and people are starting to say, “Wait a minute, what is all this about?”

People are starting to reexamine the propaganda that comes out of Washington. Even the Germans are starting to reassess the situation. I suspect that things will cool off eventually, because the U.S. doesn’t have much support and they’ve got plenty of other wars they want to fight or are keen to get started.

So Russia will become more and more dominant in Ukraine. The east is more or less Russian. Crimea was always Russian until Khrushchev got drunk one night and gave it away. So I suspect you will see more and more disintegration of Ukraine, which by the way is good for Ukraine and good for the world.

We don’t complain when the Scots have an election as to whether they want to leave the UK or not. People in Spain want to leave. We say we’re in favor of self-determination. We let Czechoslovakia break up, Yugoslavia break up, Ethiopia break up. These things are usually good. Many borders that exist are historic anomalies, and they should break up. Just because something happened after the First World War or Second World War and some bureaucrats drew a border doesn’t mean it’s logical or should survive.

So I suspect you will see more of eastern Ukraine becoming more and more Russian. I don’t see America going to war, I certainly don’t see Europe going to war over Ukraine, and so America will just sort of slowly slide away and have to admit another miscalculation.

Nick: I agree. Would you also say that Europe’s dependence on Russia for energy limits how far the sanctions can go? There’s been speculation that the Europeans are going to cut Russia out of the SWIFT system, like they did with Iran.

Jim: Well, anything can happen. I noticed SWIFT’s reaction when America tried to force them to do that: they were not very happy at all. I’m an American citizen like you, and unfortunately the bigger picture is forcing the Russians, the Chinese, and others to accelerate in finding an alternative. That is not good for the US.

The Americans have a monopoly, because everyone who uses dollars has to get them cleared through New York. People were already starting to worry in the past few years about the American dominance of the system and its ability to just close everything down.

So now the Russians and Chinese and others are accelerating their efforts to find an alternative to SWIFT and to the American dollar and the dominance of the US financial system. As I said earlier, none of this is good for the US. We think we’re hurting the Russians. We are actually hurting ourselves very badly in the long term.

Nick: I think one area where you can really see this is that the US essentially kicked Russia out of Visa and MasterCard. And what did Russia do? They turned to China UnionPay, which is China’s payment processor.

Jim: We could go on and on. There are things that have happened, and everything is underway now because Putin has told everybody, “Okay, we’ve got to reexamine our whole way of life that has evolved since the Berlin Wall fell,” and that’s one of the things. By the way, the Chinese love all of this. It’s certainly good for China. It’s not good for the US in the end, but it’s great for China and some Asian countries, such as Iran.

Nothing we have done has been good for America since this whole thing started—nothing. Everything we’ve done has been good for the Chinese.

Nick: So why are they doing it?

Jim: You know as well as I do: these are bureaucrats who shouldn’t be there in the first place. Power corrupts, and it has. You look at the beginning of the First World War, the Emperor, who was 85 years old at the time, made nine demands on the Serbians. Serbia met eight of his demands. For whatever reason they couldn’t meet the ninth. And so they said, “Okay, that’s it… war.” And then everybody was at war.

The bureaucrats everywhere piled in with great enthusiasm—great headlines about how the war will be over by Christmas. By the way, whenever wars start, the headlines always say the war will be over by Christmas, at least in Christian nations. But six months after that war started, everybody looked around and said, “What the hell are we doing?” This is madness. Millions of people are being killed. Billions of dollars are being lost.

This is not good for anybody. And why did it start? Nobody could even tell you why it started, but unfortunately it went on for four years with massive amounts of destruction, all because a few bureaucrats and an old man couldn’t get their acts together. None of that was necessary. Nearly all wars start like that. If you examine the beginning of any war, years later you ask, “How did it happen? Why did it happen?” And usually there’s not much explanation. The winners write history, so the winners always have a good explanation, but more objective people are usually confused.

Nick: Excellent points that you make, Jim. I want to shift gears a little bit. I know you’re a fan of agriculture, and parts of Russia and Ukraine are among the most fertile regions in the world. Investing there is a nice way to get into agriculture and also Russia at the same time. What do you think about companies and stocks that own and operate farmland in that region?

Jim: Well, historically you’re right. Ukraine was one of the major breadbaskets of the world, and some of those vast Russian lands were great breadbaskets at times in history. Communism can and does ruin everything it touches. It ruined Soviet agriculture, but many of those places have great potential and will revive.

I haven’t actually gone and examined the soil myself to see that it’s still fertile, but I assume it is because you see the production numbers. That part of the world should be and will be great agricultural producers again. It’s just a question of when and who.

By the way, I have recently become a director of a large Russian phosphorous/fertilizer company, partly for the reasons you’re discussing.

(Editor’s Note: We recently discussed how investors can access agricultural investment opportunities in Russia. There's an accessible stock that makes it easy to do just that. For all the details, you may want to check out Crisis Speculator.)

Nick: We were talking about Russia and Iran. I’ve had the chance to travel to Iran. It has a remarkably vibrant stock market, all things considered. It’s not heavily dependent on natural resources. They have consumer goods companies, tech companies, and so forth.

Do you see the potential for Iran to open up anytime soon, maybe a Nixon-goes-to-China moment?

Jim: I bought Iranian shares in 1993, and over the next few years it went up something like 47 times, so it was an astonishing success. I got a lot of my money out, but some of it is still trapped there. I don’t know if I could ever find it, but I took so much out it didn’t really matter.

Yes, I know that there’s an interesting market there. I know there’s a vibrant society there. I know huge numbers of Iranians who are under 30, and they want to live a different life. It is changing slowly, but it’s in the process.

Part of it, of course, is because the West has characterized them as demons and evil, which makes it harder. I was never very keen on things like that. Throughout history and in my own experience, engagement is usually a better way to change things than ignoring people and forcing them to close in and get bitter about the outside world.

So I don’t particularly approve of our approach or anybody’s approach to Iran. I certainly don’t approve of old man Khamenei’s approach to Iran either. There were mistakes made in the early days on both sides. But that’s all changing now. I see great opportunities in Iran. If they don’t open to the West, they’re going to open to Asia and to Russia.

There are fabulous opportunities in Iran, with over 70 million people, vast assets, lots of entrepreneur-type people, smart people, and educated people. Iran is Persia. Persia was one of the great nations of world history for many centuries.

So it’s not as though they were a bunch of backward people sitting over there who can’t read or find other people on the map. Persia has enormous potential, and they will develop it again.

Nick: I completely agree, and we’re looking at Iran closely, too. If the West doesn’t open up to Iran, it’s going to lose out to the Chinese and the Russians, who are going to gobble up that opportunity and really eat the Americans’ lunch.

Of course with the sanctions, it’s pretty much illegal for Americans to invest in Iran right now.

Jim: That wasn’t always the case. Years ago, if the investment was less than a certain amount of money, and some other things, there were no problems. I don’t know the details of the current law.

Nick: It’s difficult to keep up with, because the story is constantly changing.

Jim: Well, that’s the brilliance of bureaucrats; they always have something to do. It gives them ongoing job security.

Nick: Exactly.

Nick: Another place we have on our list is Kurdistan.

Jim: The Kurds have been a pretty powerful group of people for a long time. I hope they can pull it together. An independent Kurdistan would be good for Turkey and good for everybody else. Unfortunately, again, you have all these bureaucrats who don’t like change.

I’ve certainly got it on my radar, and maybe I’ll bump into you in Iran, or Russia, or Kurdistan, or who knows where.

Nick: Sounds good Jim, we’ll be in touch.

Editor’s Note: This was an excerpt from Crisis Speculator, which uncovers the deep value investment opportunities waiting behind the news that frightens others away.
The article was originally published at internationalman.com.


Get our latest FREE eBook "Understanding Options"....Just Click Here!

Friday, January 30, 2015

Free Video Series: Enjoy all of John Carters Options Videos

In 2014 our trading partner John Carter of Simpler Options changed the way traders look at trading options with his free and easy to understand videos and webinars that taught all of us how to put his methods to work.

In February John is preparing to do it all again by bringing us a new series and most likely all of his current videos will be taken offline. So we want to make sure you get to watch them all while you can.

Just click on the titles to access videos......

    My Favorite ways to Trade Options on ETF’s

    What the Market Makers Don’t Want You to Know

    High Frequency Trading….the effect the Rise of the Machines has on ...
    What's Behind the BIG Trade, How to Grow a Small Account into a Big...

Make sure to also get John's free eBook "Understanding Options" > Just Click Here

See you in the markets!
Hedge Fund University