Dr. O

Can Apple Stop the Android?

I'd get an iPhone if it were on the Verizon network. I switched to Verizon from Sprint years ago due to the superior coverage.

What limits stock price appreciation for companies like GOOG, AAPL, MSFT, etc, is simply that the company, its revenues, and its profits become too large to grow rapidly.

The so-called law of large numbers. Yahoo finance puts the market cap of AAPL around 180 billion.

As recently as 2003 you could have bought AAPL at a split-adjusted $10 dollars per share. Now its $200.

The risk-reward appears unfavorable.

The Twenty Year Stock Bubble Is Still Inflated

What about wise women?

Hard to say, what with 0% interest rates, and high commodity prices. It's like we're in the midst of recession-depression for most people, but speculators have high access to free money. Credit for most people is tough to get, and small businesses are crumbling.

Ultimately, I think stocks will go back down before economic activity picks up enough to support asset prices.

Personally, I'm about hard assets.

Long GLD, TWM, SDS.

Fed Sends Gold Higher, But What Is It Good For?

Dudes. Forget about how much gold is in Fort Knox vs how much paper currency is raining from the skies. Money supply maybe 1 Trillion? Plus or minus. 12 Trillion in debt and climbing a trillion or two per year. A banking system teetering on insolvency, still. An economy in a death spiral of unemployment, falling real estate prices, declining tax revenues, and local and state municipalities teetering on bankruptcy. Unfunded future obligations? Tens of trillions of dollars. Lets face it. The US will not be able to service its debt sooner or later. I think gold may just make people rich. Why not? People get rich in lots of ways.

Silver: Use Leverage on the Laggard Metal

A nice way to play SLV with leverage is with in the money calls. Premium is fairly low.

Gold and Silver Continue Their Ascent

I've noticed dealers in the US are also marking up some forms of bullion as well, more so than in the past. For gold bullion coins, the lowest prices I've seen are about $40-50 over spot. But some of the outfits advertising on TV, even the well known ones, charge much higher than that. I'm referring to Gold American Eagles, Maple Leafs, Krugerrands, etc.

Silver coins like Silver American Eagles, Maple Leafs, etc, actually have a higher percentage mark up, due to the lower cost of silver. Depending on quantity, the best prices I've found for silver coins is about $1.80 over spot, or about a 10% mark up.

The least expensive way to hold some gold or silver yourself would appear to be bullion bars. If you're wealthy the standard seems to be that you buy the bullion and have someone else store it for you. But you can and perhaps should take delivery yourself and hide it away for a rainy day.

Silver is challenging though. I calculate $250,000 would buy about a half ton of silver. So your average safe deposit box or wall safe would not quite do it.

If you're interested in going off the beaten path, palladium has been on a tear.

Thursday Outlook: Commodities, Global Markets

Been wondering for a while why small stocks are outperforming in spite of small companies poor access to capital and reliance on the domestic economy. Indeed, big multi-national companies either don't need capital, or have access to it, and, sell into the stronger foreign markets, where a declining dollar is good for profits. Wouldn't surprise me to see large stocks outperform now that our big bounce off the bottom has run its course.

Today in Commodities: Potential Reversal Looming

>>Gold made a new high again by another 1% today. It just doesn’t feel right; we suggested December $1075 puts today for $300. We are anticipating a $30-50 break<<

I hope so. I would like to acquire more bullion at lower prices.

Interview with Jim Rogers: Commodities Are a Great Place to Be, No Matter What

Here is a link to a 40 minute interview with Jim on Bloomberg from July (www.youtube.com/watch?...).

He reiterates his point of view: more money, higher prices, inflation, etc. What I found particularly interesting was watching the Bloomberg ticker as the interview progressed. Gold at 948, Silver at 13.55, oil at 65.

I personally think Jim is right, and I have one additional reason I haven't heard anyone else discuss. Since gold has only recently made new nominal highs (not inflation adjusted), I was wondering what the value of US gold reserves are in current gold prices. A mere 300 billion or so.

In fact the value of all the gold in the world is only a few trillion dollars at current prices. Really just a fraction of the the value of all the paper assets in the world.

So I'm wondering if we are merely at the beginning of a seismic shift in the revaluation of hard assets, including precious metals, relative to paper assets like stocks, bonds, currencies, and various other financial instruments.

If so, the sky is the limit for gold and silver and maybe oil as well. Although oil price is self correcting due to demand destruction. Gold and silver not so much because investment demand can easily compensate for a decrease in jewelry demand.

Long GLD, SLV, GDX, QLD, and some bullion.

Tuesday Outlook: Commodities, Global Markets

The trend is your friend (unless the trend has pushed valuations to nutty levels, like 1999). With 0% interest rates, no immediate risk to total financial meltdown, and some recovery in global economies, the rally in all things continues. Except the US Dollar. It's weird but there it is. Heck, who knows who's giving equities a bid? Could be foreigners diversifying into cheapening US assets.

Disclosure: long QLD, GLD, GDX, SLV, AAPL, FXI

Elliot Wave: The Dollar Is Set for a Major Rally

>>“I think stocks are topping out, commodities are topping out and the dollar is making a bottom,” says Robert Prechter, president of Elliott Wave International and author of “Conquer the Crash“.<<

This would have been a terrific call in the Fall of 2007. His "predictions" have already occurred, and have since reversed. So he's saying that these events will occur again in the near future. It usually doesn't work that way. And with liquidity flowing out of every orifice of every big central bank in the world, the path or least resistance is up for everything except the US Dollar.

Watching the USD Drop? Here's What You Should Really Be Watching

>>While the US economy derives about 70% of its GDP from its consumers, the Japanese economy is much more export driven and hence much more dependent on global demand<<

Seems like a good thing to be given their proximity to China and the many developing nations in Asia. We, on the other hand, are dependent on people spending money. This in the midst of a credit crisis (contraction) and soaring unemployment. Personally as long as I get to choose I like the Swiss Franc, the Aussie, the Euro, and the Real. If I had to pick one I'd take the Swiss Franc, which is just a whisker from parity with the US Dollar (almost a double in the past decade).

Thursday Outlook: Commodities, Global Markets

>>I might be missing a zero but I come up with 285,120,000,000 in gold 8100 tons at 1100 per oz. that is 285 billion not much to get excited about.<<

I think you're correct. I couldn't find a calculator with scientific notation, and did my best to count zeros. So even 8100 tonnes of gold is only a couple hundred billion dollars. I guess we are broke, completely. Seems to me that if all the gold in the world is only worth a couple trillion dollars, that the gold is vastly undervalued. I mean, Obama pissed away a trillion dollars on a stimulus bill in like a month. And bailing out the banks cost a trillion last fall. All that paper backed by nothing.

Thursday Outlook: Commodities, Global Markets

>>The Fed just green-lighted a continued fall in the dollar and rise in commodity prices, and worse, they don’t seem to care.<<

A crazy thought. The US (a financial basket case, granted), still is the largest known holder of gold in the world (about 8100 tons). I know, some think the gold is no longer "there" (conspiracy theorists).

Sooooo, who makes the most money if the price of gold goes up? The USA, or, whoever controls that 8100 tons of gold. Even at current prices, its only a few trillion dollars, but, its something.

And, unlike oil, and other stuff we need, rising gold prices don't hurt anyone, except brides in India. The rest of you can use Palladium, lol.

Gold Soars to New Highs

I feel like watching Austin Power's in "Goldmember" again. Gold and gold stocks are just so right here.

Tuesday Outlook: Commodities, Global Markets

I've noticed the largest volume in SPY, IWM and QQQQ since March-April in the past couple of weeks. This volume surge coincides with good earnings and a highly extended and tired intermediate-term uptrend in the market. In short, "they're" selling the good news, the markets are under distribution, and heading lower.

The first index to go has been the Russell 2000. There's no catalyst other than profit taking to take the markets lower, it's not like last year with a near collapse of the financial system. But problems remain in the banking system, loans continue to go bad, the economy is weak, and trust in government is low.

Since all assets are so highly correlated, I'm not sure if there's anywhere to hide except Treasury Bonds and, ironically, the US Dollar (for a little while). This may go on a month or so, then I'd be a buyer again. Frankly, I'm concerned with the future of the US Dollar and the US Bond market. When you owe more than you're worth, aren't you bankrupt?