Equitymaster submits:
Despite immense volatility seen throughout today’s trades, Indian markets still managed to close in the positive. This was led by gains in stocks from the IT and telecom sectors. On the other hand, realty stocks closed with the biggest losses. On the BSE, one stock gained for every stock that closed in the red.
The BSE Sensex and the NSE Nifty closed with gains of around 35 points (0.2%) and 20 points (0.5%) respectively. Stocks from the mid and small cap spaces also followed suit. The BSE Midcap and BSE Smallcap indices closed higher by around 0.2% and 0.3% respectively. The rupee was trading at 46.65 to the US dollar at the time of writing.
Complete Story »
The Japanese yen has long been regarded as a safe haven currency. When equities sell off a bit, the yen firms, and the pundits reassure investors that Japan is the place to be. In late October after the yen had traded at 92, the large specs began accumulating a long position in the futures markets that totaled well over 50,000 contracts. They, no doubt, were part of the reason the yen was pushed to a multi-month high, 84.81 versus the dollar, much to the dismay of the Ministry of Finance and the big Japanese exporters. Some government jawboning and meetings with the US Treasury officials gave the appearance of pending intervention and the market stabilized. The rally back to almost 91 was in part due to large spec short covering, but more importantly, an awareness developed that the Japanese economy is a mess and perhaps not deserving of the revered safe haven status.
To combat the tepid recovery of the Japanese economy, an 81B dollar stimulus package was announced last week. Since the Japanese already have a massive deficit, a further expansion of the money supply will accompany the stimulus package. The debt burden of Japan as a percentage of the GNP is already 218%, among the highest in the world, according to the International Monetary Fund.
Complete Story »
The Gold Report submits:
Discovery Investing pioneer Dr. Michael Berry’s number-one hedging strategy against the struggling U.S. dollar is to simply own currencies of the commodity countries—of which Canada is his favorite. When Michael grew up in Canada, he recalls its currency— now fondly known as the loonie because of the image of the loon used on the die for the back of the C$1 coin—always being worth more than the U.S. dollar. We’ll be revisiting those good ol’ days within the next year, he predicts, as the Canadian dollar reaches parity with the greenback and then goes beyond. In addition to holding loonies and their C$2 counterparts, the toonies, Michael tells The Gold Report, in this exclusive interview that he believes in "some exposure to the physical" in every investor’s portfolio, maybe as little as 1%. He’s also a staunch believer in keeping a place in the portfolio for discovery investments, ideally in a mixture of incubator, mature and legacy companies, to partake in the bonanzas that can come when promising discoveries make it to the world-class stage.
The Gold Report: Gold is in the news. You’ve been talking about investing in gold for years, and now all of the investment programs are talking about it. In one of your recent Morning Notes, you said, "Today, you must own and hold gold bullion or coins." But how much more can an investor expect on the heels of a 215% increase in the gold price over the past four years?
Complete Story »
Jeff Nielson submits:
Investors in precious metals miners (like myself) were greatly disappointed by the performance of those stocks in 2008. There is no big surprise there. However, where precious metals investors differed from investors in most other sectors is that we were greatly disappointed by returns prior to the meltdown in markets which took place beginning in the summer of 2008.
In March of 2008, gold broke $1000US/oz, yet the share prices of most of the mining companies went nowhere. Some of the reasons for under-performance have been discussed here previously – with perhaps the most important factor being how the (so-called) bullion-ETFs soaked up billions of dollars of investor-capital which would have otherwise flowed into the precious metals miners, had those dubious funds not existed (see “Your ETF-Silver is For Sale”).
Complete Story »
David Rosenberg hasn’t changed his deflationary outlook, but he has become a bit more open minded as the rally has confounded even the best of analysts. In a recent research note he gave investors 6 ways to prepare for potential inflation:
There is no sense in being dogmatic. But just in case inflation were to stage a comeback, this is how one would prepare for it:
Complete Story »
