Weekly Ramblings of an Australian Stock Trader – incorporating ASXweekendtrader.com

Gold a bubble? No chance, says respected Swiss investor Marc Faber.

The reason that people think gold is a bubble, says Faber, is that its current price seems a lot higher than its 1999 price of $252. But despite the significant gains, gold is still not as widely owned as other assets were during past examples of bubbles.

“In 1989, everybody owned Japanese stocks. And in 2000, everybody owned tech stocks. That is the bubble, when the majority of market participants own an asset. I think there are more people that own Apple stock than gold.”

The increase in gold’s price is down to the huge increases in debt levels, not tech-boom-style irrational exuberance.

“We had an explosion of debt, not just government debt, but private sector debt, and an explosion of unfunded liabilities.” [Read more →]

Sometime in the next few weeks we’re going to find out if Greece can afford to stay in the euro. We’re also going to find out if Spain and Italy can afford to leave the euro. Access to credit markets is the key issue. The stigma of default will lock a country out of capital markets. If you don’t have a plan to replace your currency and then devalue it, you’re doomed.

But first, the crisis in Greece didn’t come to a head over night but it can’t be far away. Rival political parties have been unable to form a government. New elections are scheduled for the second week in June. The financial has definitely become political. The people have run out of patience with unsound money and the world built on it.

All that said, the Greeks managed to make a €430 million payment to hold-out creditors last night. Nearly 97% of Greek creditors agreed to the restructuring of the country’s debt in March. That wiped off over €100 billion in Greek debt and resulted in 70% losses for some of the bondholders who accepted the deal. Not all of them did. [Read more →]

In today’s Money Morning, we’ll show a chart that could give you a sneak peek into the future.

When we showed it to our old pal, Sound Money. Sound Investments editor, Greg Canavan, he said, ‘That’s what outright deflation looks like. Savers’ purchasing power grows in terms of financial assets.’

In other words, the value of money rises as asset prices fall.

That’s deflation: The friend of prudent savers. The foe of over-leveraged borrowers…and banks.

In short, when deflation hits, make sure you’re a saver, not an over-leveraged borrower. [Read more →]

We’ll be honest. This falling stock market has us licking our lips.

The S&P/ASX 200 has dropped 6.2% in two weeks.

And yesterday the index had its first 100-point fall since 3 October last year.

The ASX Emerging Companies index has done even worse. It has dropped 17.1% in seven weeks.

If you want to become a successful, profitable share trader in the stock market, you need to implement a few basic guidelines.

Listed below are a few ideas you might find invaluable in your future trading.

1. Adhere to your written down plan for buying and selling shares. I.e. The amount you are going to spend, the amount you can afford to lose if things go the wrong way (2 -5%% of the total value is a good guideline)

The % profit you want to make, after allowing for brokerage etc.

.The time frame you would like. (Not always possible) for the total transaction. Is it short, medium or long term?

The number of shares you want. (This depends also on your capital constraints)

 Diversify don’t invest just in one area. Spread your risk over different types of companies. [Read more →]

Imagine you are one of two people playing Monopoly. While you follow the rules religiously, the other player, who also happens to be the banker, does not.

He routinely appropriates properties. If he doesn’t like the score on the dice, he simply changes them. He continually takes as much money from the bank as he likes. Whenever the rules don’t suit he arbitrarily alters them in his favour.

Oh, and he hates to lose. Rather than concede defeat, he is perfectly willing to set fire to the table.

Imagine no longer. This is the state of the financial markets. You are playing against the world’s central banks.

For some time now, the Financial Times has been running articles (under the inauspicious label of ‘Collateral Damage’) discussing the merits or demerits of central banking. Only one contributor, Ron Paul, has challenged the status quo:

“[W]hile socialism and centralised economic planning have largely been rejected by free–market economists, the myth persists that central banks are a necessary component of market economies.”

[Read more →]

One of the buzzwords at this week’s Australian Petroleum Producer and Explorer Association (APPEA) conference is ‘Shale’.

And specifically, shale gas.

If you’re not familiar with it, shale gas is gas that’s trapped within deep shale rock formations. Until recently, it was almost impossible to recover this gas.

But technological advances mean natural gas companies can now access this gas. To the extent that it’s now revolutionizing the energy world right before your eyes.

This article is contributed by Pinnacledigest.com. One of the TOP sites for up to date information on the Canadian and US Stock Markets. For more information  subscribe to their free newsletter.

Dear member,

In this increasingly volatile market, our team continues to focus on companies with proven management, adequate capital, large resources and working in regions with majors and massive mines or deposits.

Our Featured Copper Company of 2012, Redhawk Resources (RDK:TSX), just came out with a 175% resource increase on its Copper Creek Project in Arizona on Thursday May 10, 2012. The title of the news release read: Redhawk Reports 175% Increase in Resources at Copper Creek to 7.75 Billion Pounds Copper and 150 Million Pounds Molybdenum.

Our team featured Redhawk Resources in late January of 2012 at $0.56. Its stock moved up to $0.79 in less than two months after our introduction (a 40% increase), but has since fallen back to $0.465 in this most recent market crash. While it’s disappointing to see RDK’s share price fall below our introduction price, the company has delivered significant news since late January.

Alexander Smith, Head of Market Research at Pinnacle Digest, had a chance to catch up with Joe Sandburg (Redhawk’s CEO) and Steve Barley (Redhawk’s Executive Chairman) immediately following the release of the company’s updated resource. In the interview, the details of the new resource update and Redhawk’s project development plan are discussed at length. [Read more →]

Gold prices had gold bugs giddy in the fall of 2011. In September, the luminous yellow metal touched an intraday high of $1,920 a troy ounce, putting the precious metal up roughly 35% for the year.

At the time it seemed like investors, traders and even the guy at the corner store were all buying, hoarding, and lusting for gold.

But the stellar gains were short lived, and by the end of the year gold prices had fallen by nearly 20%.

Part of the striking decline in gold was due to the fact that the “smart” money that had once been amongst gold’s biggest cheerleaders, sold it.

Some booked profits, some sold it to reflect gains in portfolios, others were forced to sell to meet margin requirements, and others wanted to start the New Year with a clean slate. [Read more →]

As the Eurozone continues to show weakness, events in Athens may accelerate the situation. The downward movement in oil prices in both London and on the NYMEX testifies to the rising concern.

The aftermath of the Greek elections propelled the new radical left party SYRIZA into the limelight as the second strongest party in the country. Given the adamant refusal by SYRIZA leadership to accept bailout reforms, the party’s new brokering position means the crisis will continue.

Bitter austerity measures await the formation of a coalition government, since no party received a majority of the seats in parliament from the vote. The coalition is supported by both the New Democracy and socialist PASOK parties, which have taken turns ruling Greece for nearly four decades.

But the surprise showing of SYRIZA has thrown the possibility of an accord into disarray.

At best, this means a further delay and likely a new election. [Read more →]