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  • Christopher Welch: Searching For A Perfect 10 In Miners [View article]
    Hi David,

    Thanks for the IR/PR piece. What is your position in this stock? Are you compensated for the above statements?

    Jan 22, 2013. 12:53 PM | Likes Like |Link to Comment
  • Is 2013 The Year For Gold Stocks? [View article]
    Greetings Boredwalk,

    If the price of gold is the tide and gold stocks are the boats then it should be made clear that gold stocks do not outperform the price of gold. We're only referencing the gold majors as reflected by the XAU or HUI indexes since junior and exploration companies can have a varied outcome from going stratospheric, being acquired above/below market price and going bust.

    As an example, in the peak in the price of gold and gold stocks in 1974, the price of gold fell -44% to the 1976 low while gold stocks, as represented by the Barron's Gold Stock Index declined -66%.

    At the 1976 low, gold increased nearly 8 times to the 1980 peak while gold stocks increased only 6 times. Additionally, gold increased 4 times the 1974 high to the 1980 peak while gold stocks only increased 2 times the '74 high.

    More recently, gold declined -30% from the 2008 high to the 2008 low. At the same time gold stocks as represented by the XAU index decline -68% from the same 2008 peak and trough.

    Meanwhile, the price of gold is above the 2008 high while gold stocks, as represented by the XAU index, are at or below the 2008 peak.

    A strategy is needed for investing in gold stocks as we've outlined in our November 3, 2011 article (found here: This was subsequently followed up with the call to sell gold stocks on February 8, 2012 (found here: resulting in a decline of nearly -30% in the XAU and a significant rise in our recommendation of DUST.

    Additionally, on April 4, 2012, we said that a bottom in the price of gold stocks would be achieved between April 4, 2012 and June 7, 2012. May 15th was the actual low, almost the exact mid-point based on our estimates (found here:

    In our view, it is better to understand the history rather that the popular perceptions, rumors and legends attributed with the movement of gold and gold stocks. One such notion is that a rising tide will lift all boats, in the case of gold and gold stocks, this isn't the case.

    Jan 19, 2013. 08:26 PM | Likes Like |Link to Comment
  • Is 2013 The Year For Gold Stocks? [View article]
    Greetings BA2007,

    What gold stock investors should get from the performance of last couple of years is that gold stocks and the precious metal prices are not joined at the hip. Additionally, fundamentals, no matter how favorable, do not apply to precious stocks. Also, projections based on a higher gold price is a pipe dream. A strategy is needed.

    Making matters worse are what we deem "woodshed wonders." Gold stocks that manage to collapse in the middle of a gold bull market in shortest amount of time possible, as indicated below:

    (AEM): 9/2011-11/2011 down -39%
    (GORO): 6/2011-7/2011 down -36%
    (HMY): 2/2012-5/2012 down -34%
    (GOLD): 2/2012-5/2012 down -37%
    GOLD: 10/2012-1/16/2013 down -27%
    (GFI): 1/2012-5/2012 down -30%
    (ABX): 2/2012-8/2012 down -35%
    (HL): 9/2011-10/2011 down -35%
    (CDE): 2/2012-7/2012 down -50%

    This is just the short list of woodshed wonders in the precious metal stock sector.

    Even as we have a bias towards the royalty players in the industry, the most stable play on precious metal, having less ties to management ineptitude, they too have managed to be mini woodshed wonders. (SLW) being the most prominent woodshed wonder with a decline of -41% from February 2012 to May 2012.

    Suffice to say, we're still in a secular bull market for precious metals. However, miners that attempt to grow through a policy of acquisition tend to be shooting themselves in the foot. Just pay the higher dividend instead.

    Jan 18, 2013. 02:17 PM | Likes Like |Link to Comment
  • The Old Guard Analysts And Their Gold Price Forecasts - Part 2 [View article]
    Greetings MetalMiner,

    FINALLY!!! An objective analysis on gold prices from a metals publication.

    Even if the forecast turns out to be incorrect, the hedged commentary that "...only a prolonged and strong move higher will dissuade us from our view that gold has already peaked and its 12-year bull run is probably at an end" is realistic and appropriate with whatever market conditions that materialize.

    We say this after recently taking positions in individual gold stocks.

    Good job. we look forward to future updates based on changed or confirmed commentary with reference to this article.

    Jan 18, 2013. 01:11 PM | Likes Like |Link to Comment
  • 3D Systems: A Sobering Reality [View article]

    DDD is something like Xerox (XRX) of the 1970's. XRX never completely recovered from that binge. We'll see if (DDD) can learn from the exact same mistakes that XRX made. If not, then some Japanese or Chinese company will come in and do it better for a whole lot less.

    Jan 16, 2013. 07:17 PM | 7 Likes Like |Link to Comment
  • What Does Warren Buffett See In IBM? [View article]
    Hi Momintn,

    Time to consider going all in on IBM. And while there doesn't "appear" to be any reason for the stock to decline further, IBM is now within 6% of the 52-low. This is in stark contrast to IBM being 21% above the 52-week low when this article was published. The more the stock languishes at the current level the more value is being built into the stock.

    This explains why we were specific on declining to the 52-week low rather than an arbitrary price like $140 or $100. A two-part purchase at the current price and again when the stock declines to $166 with 10% of the portfolio each time, for a total holding of 20%.

    Any initial purchase below the current price is a bargain. As S.A. Nelson said, "Values go on increasing, while the market rests…” Right now we believe IBM is increasing in value WHILE it rests.

    Best regards.
    Jan 15, 2013. 12:04 PM | Likes Like |Link to Comment
  • Unusually High Volume Presaged Molycorp's 23% Plunge. Who Knew Something? [View article]
    Shock E,

    Cash is my protection. However, MCP is a pure speculation and therefore does not receive any allocation of protection since it is not an investment.

    Anyone holding MCP should consider it a total loss and not attempt to throw good money after bad. If the stock goes up then you'll be pleasantly surprised. Otherwise this is dead money.

    Jan 14, 2013. 12:26 PM | 1 Like Like |Link to Comment
  • Unusually High Volume Presaged Molycorp's 23% Plunge. Who Knew Something? [View article]
    Greetings Stockhawk,

    I agree with you, I don't trust pre-market and after-hour trading. Which is why I'd rather do away with it altogether. However, since it does exist, a strategy should be formulated around such trading. Maybe something based on what you've described.

    Jan 14, 2013. 09:37 AM | Likes Like |Link to Comment
  • Herbalife CEO Says U.S. 'Will Be Better When Bill Ackman Is Gone' [View article]

    HLF hit the $24.33 level as stated on May 3, 2012 and then reversed to the upside. We've given our upside target on our website at

    Jan 13, 2013. 01:01 PM | Likes Like |Link to Comment
  • Unusually High Volume Presaged Molycorp's 23% Plunge. Who Knew Something? [View article]
    Greetings Seppo2,

    Your approach is the most appropriate way to deal with the problems associated with stop-loss orders. Glad you didn't get hosed.

    Best regards.
    Jan 12, 2013. 11:14 AM | 1 Like Like |Link to Comment
  • Unusually High Volume Presaged Molycorp's 23% Plunge. Who Knew Something? [View article]
    Greetings Eyilmaz9,

    Never use stop loss orders, no matter how wide the margin. MCP's gap down by -20% in pre-market trading does not trigger stop loss orders until the regular hours of trading begin. In fact, if the stock fell -75% in pre-market and opened down -75% then that is when your stop loss would be triggered. That is how most investors get burned with the use of stop orders in highly volatile stocks.

    Our May 10, 2010 article titled "Automated Orders Don't Provide Protection" (found here: makes it clear that stop losses are a waste when issued to your broker as a standing order.

    If no one is willing to protest against stop loss orders from not being executed in pre-market and after-hour trading then it will be difficult to accuse those who trade outside of regular hours of manipulation.

    Best regards.
    Jan 12, 2013. 10:51 AM | 1 Like Like |Link to Comment
  • Unusually High Volume Presaged Molycorp's 23% Plunge. Who Knew Something? [View article]
    Greetings Shock,

    The problems of MCP have been known since at least May of 2011 with the stock. We've been saying since Jan. 2012 (found here: that "rare" earth isn't so rare and the assemblage of such materials to create "rare" earth isn't so difficult as MCP and other "rare" earth marketing firms make it out to be.

    The real "crime" is the pre/post market activity that sets the course for the rest of the trading day. In the case of MCP, the combined amount of after-hour volume for January 9th and pre-market volume on January 10th was 848,063 shares. The total regular hour trading volume was 43,044,447 shares. This post/pre market volume was 2% of the total volume for all of January 10, 2013.

    Despite being such a low percentage of total volume, MCP fell from the close on January 9th at $10.79 to $8.58 before the 9:00am open on January 10th. Only 2% of all the volume traded in after/pre-market trading resulted in a decline of -20.48% of the -22.71% decline for the whole day. Over 43 million shares traded during regular hours could not offset the after/pre market decline.

    Anyone who had stop-loss orders at 5% below the $10.79 level got out at the $8.58 level when regular hours of trading began.

    Investors need to wake up to the reality that after-hour and pre-market trading is affecting the ability of the market to actually function as it did in the past (albeit slightly better than it currently operates). After-hour and pre-market trading sets the course for the whole day, even though the rest of the day accounts of 98% of all trading volume.

    We've tracked Pre/Post market activity in an article titled "Gaming the Pre/After Hour Markets" (found here: and also in the following SA article titled "AIG Trading Notes:The Pre-Market Story" (found here:

    Only time will tell whether investors are willing to protest against pre/post manipulation regardless of whether it is insiders or not. I'd rather have the insiders have to face criminal prosecution with clear violations of the law or have them compete on the open market like the rest of us.

    Jan 11, 2013. 02:43 PM | 5 Likes Like |Link to Comment
  • Where Are We In The Secular Bear Market? [View article]
    Greetings MW23,

    It is much easier to have your stance after the fact than to make the case beforehand.

    On August 23, 2009, we said that the recession, based on the NBER definition (vague as it is), ended in June 2009 (found here: It took the NBER 15 months after the fact (September 2010) to announce that June 2009 was the end of the recession (found here:

    In the same article, we also said, "...the stock market will only follow the pattern of a cyclical bull market (bear market rally) within a secular (long term) bear market. I doubt that the general public will agree that the recession is over since jobs will not be as plentiful as the past." Which directly relates to the points made in the article above about secular/cyclical bear markets.

    On December 10, 2010, we said the real estate market had bottomed in an article titled "Real Estate: The Verdict Is In" (found here: Using the exact same indicators that were mentioned in the Dec. 2010 article, we were able to confirm that, in fact, the real estate market did bottom in December 2010 in our article titled "Real Estate: A Sustainable Rise" (found here:

    We've already pointed to our February 13, 2009 titled "The Importance of Market Perspective " (found here: suggesting that the likelihood of a full market rebound was quite high.

    While it is understandable that there is skepticism that the market could rise on its own accord from such great depths without intervention, history has shown us that it is quite normal.

    As an example, When the stock market rebounded from the bottom in July of 1932, the market rebounded even though we were in the middle of the "Great" Depression." Some claim that if the production for the WWII didn't get the stock market and economy out of the Depression/Panic then it had to be the Roosevelt New Deal spending. However, the New Deal began in 1933 while the bottom in the market was in July of 1932.

    Finally, regarding the last 4 years, we wrote an article titled "A Market Cycle Worth Observing" (found here: which covers the 4 year cycle of the stock market which was recognized as early as 1900 by Charles H. Dow, co-founder of the Wall Street Journal. Later, the 4-year cycle was written about by Richard Russell in 1979 going as far back as 1949.

    We've stated our case at or near the respective turning points (for some individual stocks as well) with substantial evidence to support our stance. Again, it is far to easy to claim that stimulus from the Fed is the reason the market rose, after the fact, when rebounds in the market of similar magnitude took place regularly before the existence of the Fed.

    Best regards.
    Jan 11, 2013. 02:00 AM | Likes Like |Link to Comment
  • Upon Closer Examination: Dow Theory and Richard Russell [View article]
    Greetings Leftfield,

    To answer your question, "Meaning, only as a sidelight, or as an increasingly important variable?"

    In the early days of stock market trading in the U.S., the only reliable average that could be constructed was based on stocks that were had high volume. Some stocks would not hit a bid/ask for days and weeks. Therefore, when constructing Dow Theory, Charles H. Dow and all market analysts paid close attention to trading volume.

    These days, the U.S. markets are so liquid that volume is of less importance as a factor to watch for. Especially with mutual funds, ETFs, Index funds and pension funds regularly providing liquidity to the market no matter how little the credibility the company or stock has.

    This is why I believe that volume, as a indicator, isn't as important as when the concept was applied to Dow's logic in the late 1800's. However, the characteristics related to volume are significant in emerging markets like the BRIC nations.

    Thanks for the great question and sorry for the delay.

    Jan 11, 2013. 01:15 AM | 1 Like Like |Link to Comment
  • Where Are We In The Secular Bear Market? [View article]
    Greetings Julius,

    Something to consider regarding your assertion that Fed policy influences the market so much.

    July 1, 1954:

    Fed Funds rate: 0.80%
    3-Month T-Bill: 0.72%
    Dow Index: 334.12

    February 1, 1966:

    Fed Funds rate: 4.60%
    3-Month T-Bill: 4.65%
    Dow Index: 975.89

    In the data above,the Fed Funds rate and 3-month T-Bill (secondary market) rose well over 4x, at the same time, the Dow Jones Industrial Average rose over 3x. Because we have been in a period of declining interest rates has deceived investors into believing that Fed policy is the cause of markets moving higher (source: St. Louis Fed,

    Fed easing policy is not the reason the stock market increases. Fed easing policy can cause short-term declines or increases in the stock market depending on the interested rate cycle we're in. However, it is the preponderance of values causes the market to rise and the lack of values to cause the market to fall, OVER THE LONG-TERM.

    Best regards.
    Jan 10, 2013. 12:08 PM | Likes Like |Link to Comment