Are stocks up only because the dollar’s down? How to recoup your purchasing power
Byron King identifies three catalysts for uranium’s next bull run
Chris Mayer on the “workhorse metal” with staggering profit potential
Our tech team pinpoints the drivers behind the next innovation wave
“Going Galt?”… Rebellion on behalf of gold and freedom in an unlikely place
“As pressure mounts on the greenback, U.S. stock futures chart a course modestly lower,” read a headline on MarketWatch before the open this morning.
Exhibit One on why the financial media is so confusing.
Up till now, a falling dollar has been given as the one constant that has propped UP stocks since coming off their late-April highs.
In fact, the upward trend in stocks has become especially pronounced as the dollar has weakened during the September rally. When the dollar rallied in August, stocks sold off.
Now, apparently, a falling dollar is responsible for stocks charting a “modestly lower” course.
The real takeaway: Since the April highs, the S&P is down 5% and the dollar index is down almost as much. Anyone holding an S&P Index fund just got handed a double whammy.
In our opinion, you’d do better to stick with specific stocks and forget the indexes as best you can. We’ll show you one good way we’ve cooked up to do just that below.
As it turned out, stocks merely treaded water on the open today. And the dollar index isn’t taking too brutal a beating. At 78.8, it’s not much lower than it was at this time yesterday.
Gold is holding firm at the record level of $1,308. More on gold, too, in a minute.
“The uranium market has turned bullish in 2010,” says Byron King, keeping his keen eye on all sectors of the energy space. Recently, he says, “word leaked out of the World Nuclear Association Symposium in London that uranium producers have quietly been purchasing physical uranium throughout the year.
“In essence, uranium purchases are an investment to take advantage of currently low prices. One representative from uranium giant Cameco stated that the company — already the world's largest producer — would not rule out buying more uranium on the spot market.
“Also last week, China announced it will need to source over 8,500 tonnes per year of uranium from other countries by 2020. By comparison, China's current uranium demand is about 1,700 tonnes per year. This number is projected to increase tenfold over the next decade.”
Another bullish factor: Kuwait is joining its Arab allies Saudi Arabia and the United Arab Emirates in building nuclear power plants, with groundbreaking set for January. “This Kuwaiti news,” says Byron, “adds to the 150-plus announced nuclear plants due to be constructed worldwide over the next 15 years."
All good news for the three tiny uranium producers Byron tracks in Energy & Scarcity Investor, no doubt.
“A careful examination of history reveals that the rate of technological change accelerates over time,” writes Ray Blanco, the newest addition to our editorial team, who’s partnering with Patrick Cox on our latest technology letter. “Due to this exponential rate of improvement, we are actually only seeing the beginning of disruptive, transformational changes in technology.
“That is why I don't worry about the current economic slump. We've been here before. The most recent extended period of economic depression occurred in the 1930s… yet technologies pioneered in that down decade set the stage for the torrid growth of the postwar era. Of course, this did not seem obvious to the people of that time. Those who invested in the pioneering technologies of that era, however, saw fantastic long-term returns.”
“Though we've seen some big success stories already,” adds Patrick Cox, “we are not yet seeing the true potential of emerging and immensely profitable science reflected yet in the American marketplace.” And Patrick blames it squarely on a lack of capital for startups and IPOs.
“This lack of capital is, in turn, due to ideas and policies that have played out in the political sphere.” But, “polls clearly show that they are rejecting the ideas and policies that have led to the current downturn. This will be made concrete in the forthcoming election.
“In the near term, America is going to roll back spending. It is inevitable. As a result, we'll see increased investment in startups”… setting the stage for those fantastic long-term returns Ray was talking about.
“We’ve talked a lot about the expanding global middle class,” reflects Chris Mayer on recent events. (It’s why he’s scooping out opportunities in Brazil this week). “It seems clear to me that people will use a lot more consumer products, such as cell phones, computers and TVs. As investors, though, it can be tricky to figure out which cell phones or computers. There are a lot of competitors. Sometimes it’s easier betting on the underlying commodity that they all rely on.
“Silicon metal is one such commodity. You find it in all kinds of consumer goods. It’s a metal, like steel, that people make. The basic recipe for making silicon metal is 2.8 tons of quartz, 1.4 tons of coal plus 2.4 tons of wood chips. Put it all together in a fiery furnace, and you get one ton of silicon metal. It’s not just as simple as this, but those are the basics.
“Steel and aluminum makers use silicon metal. A big driver of silicon use in recent years has been the increased use of the metal in aluminum in cars to make them more fuel-efficient. Over the last 30 years, the aluminum content in a typical car rose from 77 pounds to 326 pounds. Silicon also finds its way in numerous coatings, resins, rubbers and oils. You find it in shampoos and toothpaste. It’s really a workhorse metal. And in many applications, there is no substitute.
“If you know about silicon metal at all, maybe you’ve heard about its use in solar cells. This is the fastest growing use of silicon. The Norwegian Institute of Technology projects that solar cell usage alone will surpass all other applications combined by 2020! Just in the next three years, demand could double. If this pans out, we’ll make a fortune.”
Chris pinpoints his favorite maker of silicon metal in the special report 8 Stocks for RIGHT NOW. Our design team is putting the final touches on this report as we speak to prepare for its release at 5 p.m. today.
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Word is reaching The 5 about a massive tax revolt that’s erupted in response to a government crackdown on the gold business.
Gold dealers have shut down their operations in the capital and other key cities. Jewelers and goldsmiths are furious over a 3% value-added tax. But the government is holding firm, insisting the tax is necessary to stop illegal transactions and money laundering using gold.
"We, the members of the committee,” reads a stern statement by the bureaucrats, “support the law and the stance of [the] tax office and ask the intelligence bodies and judiciary branch to recognize the certain goldsmiths who are impeding the execution of the law and punish them strictly with maximum penalty and review their documents and accounts thoroughly and levy the tax up to the last cent.”
As it turns out, this epic showdown is taking place in… Iran.
“We'll stay on strike until the negotiation gets results,” Ali Mosavi, a goldsmith in the bazaar, tells the Los Angeles Times. "This is the third year we are protesting and so far we have been able to resist [the tax hike]."
It’s good to know people are standing up for gold and freedom somewhere. Here’s one way you can vote.
“People just don't get it,” a reader complains about our health insurance dialogue this week. “Unless you are a government worker, or have a private plan thru a good labor contract…. you cannot afford a good health care policy. The Republicans can piss and moan all they want…but until 'We' as a 'People' get/provide for health care for all, at an affordable price, we are not going to move forward as a nation.
“And don't give me the 'Socialist' argument/b——t. Drive across the border to Canada. Lots of smiles on a lots of faces because one of the biggest nuts they have to crack has been lifted from them.”
The 5: Oy. Isn’t that just the issue: how to provide health care for all at an affordable price?
In the vaunted American spirit of “compromise,” what came out as “reform” in this latest round of health debate amounts to collusion among insurance companies backed by federal authority. The reform bill went off the rails when insurance lobbyists were handed the keys to the locomotive.
“I was born and raised in England,” writes another in the same vein. “They recognize that health falls into the same bracket as the necessity for police, firemen and the military. Not something you'd necessarily volunteer a portion of your weekly wage to. But in actual fact it should be, thus they tax everybody and everybody is well looked after.
“Except, of course, those helping themselves to billions of dollars of would-be profit! I believe Hawaii has something similar, people seem happier there.”
The 5: Maybe that has something to do with the weather… just guessing.
“In California, the government has resorted to blackmail,” writes a reader alerting us to another battlefront for small businesses, “i.e. sending a bureaucrat with a clipboard to fine you for some infraction. Police, fire dept., EPA,OSHA, etc. no longer work with you.
"Here, you’re fined for having empty boxes next to the fire exit. $2,200.00 and not even a warning because you should have known it was a safety hazard. 12–15 times a month one or another agency comes in. And then there's the State Franchise Tax Board….”
“What is happening to civility in this country?” cries our last correspondent today. “Your readers are calling each other idiots and worse. You all should be ashamed of yourselves and your publication should have higher standards. But what can one expect when the self-righteous Mr. Perfect, Addison Wiggin himself, called some reader's opinion a ‘dumbass notion.’
“He owes us an apology and you all need to dial it back a bit. You are all showing no more class than a cheap talk show host, and we all know they resort to name calling when they don't have any facts, only anecdotes.”
The 5: You’re right. Ordinarily, we try to follow what our founder likes to call “The Presbyterian Standard” — write using only the words you would write to your mother. We wouldn’t write the word "dumbass" to mom. I guess we’re not perfect.
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