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  • Gold Soars to Record Highs! Is it Becoming the Ultimate Currency?

    After weeks of strong signals that it was ready for a surge upwards, Gold finally broke through not only several levels of resistance, but the all-important psychological barrier of $1000 and has soared to a new all-time high of $1,038 per oz.

    Since early last year, gold has attacked the $1,000 per oz. price level numerous times, and now has succeeded in breaking through the $1,000 per oz. barrier handily.

    Gold today (October 6th) rose to a record on speculation that inflation will accelerate and erode the value of the dollar, boosting the appeal of the precious metal for investors seeking to preserve their wealth.

    Gold futures climbed as high as $1,038 an ounce in New York, topping the previous record of $1,033.90 in March 2008. The spot price headed for a ninth straight annual gain, the longest rally since at least 1948. The dollar fell as much as 0.6 percent against a basket of six major currencies.

    “Gold has just begun its ascent,” said John Brynjolfsson, the chief investment officer of Armored Wolf LLC, a hedge fund in Aliso Viejo, California. “As central banks print more and more money, the private demand for gold as an investment and inflation hedge is destined to grow. It’s pretty clear that gold will be at $2,000 by 2012, and it could happen a lot faster.”

    Technical analysis is always after the fact and it only tries to get insights from historical patterns and there is obviously no guarantee on anything. However, if this 40 year pattern holds and gold stays in the 4-digit territory for a month, the chance is very good that gold will never fall back to $1,000 level again on the monthly chart. This implication is huge, which means anyone who has bought gold before today below $1,000 will make a profit, a true safe haven.

    One reason why gold has reached a new all-time high may be the fact that, for the last several weeks, Chinese state television has been openly promoting gold and silver as an investment and a store of wealth. Not long ago, the Chinese announced that they had been “secretly” buying gold – starting from 2003 they had bought over 600 metric tons of gold, bringing the gold to cash reserve ratio from 1.3% to 1.7%.

    So does this recent run-up in gold signal a pending stock market correction? Probably not in the short term. In fact, while a correction may occur, the long-term record does not support the idea that gold rises predict stock declines. Most analysts believe that the value of the US dollar and gold are somewhat linked. So as the dollar declines gold rises typically but not so much the same thing for the overall stock market. Having said that, however, many analysts also believe that the markets are starting to become over-valued at this time. The markets have risen too far too fast relative to the pace of recovery in the global economy and it is likely that a significant correction in the markets is on the horizon at some point. When that will happen only time will tell. For now the markets seem robust and moving upward and onward.

    Could gold go appreciably higher from here? With large hedge funds and central banks (such as the Russia and People's Bank of China) diversifying into physical bullion, investment demand remains as robust as ever and looks set to overpower the significant decline in jewelry demand and demand from the Indian subcontinent. The United Nations UNCTAD report warning that the "economic winter" was not over and calling for a new global reserve currency may have led to some buying also.

    “Even though the current inflation rate is low, the risk of a blowup in inflation in the future is becoming higher all the time,” said Adam Farthing, Deutsche Bank AG’s head of metals trading in Asia. “Gold is pricing that in.” Farthing projected the metal will reach $1,150 by the end of the year. “There’s definitely switching going on out of energy and agricultural commodities into gold,” Farthing said.

    In addition to the bullion looking poised to move higher, we feel there are many opportunities in gold stocks as well. We have highlighted a few of our favorites below:

    Gold Stocks To Put on Your Radar:

    American Sierra Gold (OTCPK:AMNP) - American Sierra is an American gold exploration company headquartered in Nevada, the heart of American gold country and sits a few miles south of a mine currently producing 200,000 ounces of gold a year.

    Aurizon Mines Ltd (AZK) - Canadian gold mining company engaged in the exploration and development of mineral properties in Quebec, Canada.

    Northgate Minerals Corp (NXG) - Canadian company engaged in mining and exploration of gold and copper properties in Canada and Australia.

    Richmont Mines (RIC) - engages in the exploration for, and acquisition, development, and production of gold in North America.

    Nova Gold Resources (NG) - engages in the exploration and development of mineral properties in Alaska and British Columbia. The company primarily explores for gold, silver, copper, zinc, and lead ores.

    Vista Gold Corp (VGZ) - engages in the evaluation, acquisition, exploration, and advancement of gold exploration and potential development projects in North America, Australia, and Indonesia

    Barrick Gold Corp. (ABX) - primarily engages in the exploration, development, production, and sale of gold worldwide. It also produces copper and silver; holds interests in a platinum group metals development project and a nickel development project; and has interests in oil and gas properties

    Golden Star Resources (GSS) - is an international gold mining and exploration company that produces gold in Ghana, West Africa owning a controlling interest in four significant gold properties in southern Ghana.

    Newmont Mining Corporation (NEM) - is primarily a gold producer with significant assets or operations in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico.

    Keegan Resources, Inc. (KGN) - is a junior gold company and owns properties including the Esaase Gold Property and Asumura Gold Project in southwest Ghana, West Africa.

    Banro Corporation (BAA) - is a Canada-based gold exploration and development company. The Company holds, through four wholly owned Democratic Republic of the Congo (DRC) subsidiaries, a 100% interest in four gold properties, which are known as Twangiza, Namoya, Lugushwa and Kamituga.

    Oct 06 4:12 PM | Link | Comment!
  • Gold Soars to Record Highs! Is it Becoming the Ultimate Currency?

    After weeks of strong signals that it was ready for a surge upwards, Gold finally broke through not only several levels of resistance, but the all-important psychological barrier of $1000 and has soared to a new all-time high of $1,038 per oz.

    Since early last year, gold has attacked the $1,000 per oz. price level numerous times, and now has succeeded in breaking through the $1,000 per oz. barrier handily.

    Gold today (October 6th) rose to a record on speculation that inflation will accelerate and erode the value of the dollar, boosting the appeal of the precious metal for investors seeking to preserve their wealth.

    Gold futures climbed as high as $1,038 an ounce in New York, topping the previous record of $1,033.90 in March 2008. The spot price headed for a ninth straight annual gain, the longest rally since at least 1948. The dollar fell as much as 0.6 percent against a basket of six major currencies.

    “Gold has just begun its ascent,” said John Brynjolfsson, the chief investment officer of Armored Wolf LLC, a hedge fund in Aliso Viejo, California. “As central banks print more and more money, the private demand for gold as an investment and inflation hedge is destined to grow. It’s pretty clear that gold will be at $2,000 by 2012, and it could happen a lot faster.”

    Technical analysis is always after the fact and it only tries to get insights from historical patterns and there is obviously no guarantee on anything. However, if this 40 year pattern holds and gold stays in the 4-digit territory for a month, the chance is very good that gold will never fall back to $1,000 level again on the monthly chart. This implication is huge, which means anyone who has bought gold before today below $1,000 will make a profit, a true safe haven.

    One reason why gold has reached a new all-time high may be the fact that, for the last several weeks, Chinese state television has been openly promoting gold and silver as an investment and a store of wealth. Not long ago, the Chinese announced that they had been “secretly” buying gold – starting from 2003 they had bought over 600 metric tons of gold, bringing the gold to cash reserve ratio from 1.3% to 1.7%.

    So does this recent run-up in gold signal a pending stock market correction? Probably not in the short term. In fact, while a correction may occur, the long-term record does not support the idea that gold rises predict stock declines. Most analysts believe that the value of the US dollar and gold are somewhat linked. So as the dollar declines gold rises typically but not so much the same thing for the overall stock market. Having said that, however, many analysts also believe that the markets are starting to become over-valued at this time. The markets have risen too far too fast relative to the pace of recovery in the global economy and it is likely that a significant correction in the markets is on the horizon at some point. When that will happen only time will tell. For now the markets seem robust and moving upward and onward.

    Could gold go appreciably higher from here? With large hedge funds and central banks (such as the Russia and People's Bank of China) diversifying into physical bullion, investment demand remains as robust as ever and looks set to overpower the significant decline in jewelry demand and demand from the Indian subcontinent. The United Nations UNCTAD report warning that the "economic winter" was not over and calling for a new global reserve currency may have led to some buying also.

    “Even though the current inflation rate is low, the risk of a blowup in inflation in the future is becoming higher all the time,” said Adam Farthing, Deutsche Bank AG’s head of metals trading in Asia. “Gold is pricing that in.” Farthing projected the metal will reach $1,150 by the end of the year. “There’s definitely switching going on out of energy and agricultural commodities into gold,” Farthing said.

    In addition to the bullion looking poised to move higher, we feel there are many opportunities in gold stocks as well. We have highlighted a few of our favorites below:

    Gold Stocks To Put on Your Radar:

    American Sierra Gold (OTCPK:AMNP) - American Sierra is an American gold exploration company headquartered in Nevada, the heart of American gold country and sits a few miles south of a mine currently producing 200,000 ounces of gold a year.

    Aurizon Mines Ltd (AZK) - Canadian gold mining company engaged in the exploration and development of mineral properties in Quebec, Canada.

    Northgate Minerals Corp (NXG) - Canadian company engaged in mining and exploration of gold and copper properties in Canada and Australia.

    Richmont Mines (RIC) - engages in the exploration for, and acquisition, development, and production of gold in North America.

    Nova Gold Resources (NG) - engages in the exploration and development of mineral properties in Alaska and British Columbia. The company primarily explores for gold, silver, copper, zinc, and lead ores.

    Vista Gold Corp (VGZ) - engages in the evaluation, acquisition, exploration, and advancement of gold exploration and potential development projects in North America, Australia, and Indonesia

    Barrick Gold Corp. (ABX) - primarily engages in the exploration, development, production, and sale of gold worldwide. It also produces copper and silver; holds interests in a platinum group metals development project and a nickel development project; and has interests in oil and gas properties

    Golden Star Resources (GSS) - is an international gold mining and exploration company that produces gold in Ghana, West Africa owning a controlling interest in four significant gold properties in southern Ghana.

    Newmont Mining Corporation (NEM) - is primarily a gold producer with significant assets or operations in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico.

    Keegan Resources, Inc. (KGN) - is a junior gold company and owns properties including the Esaase Gold Property and Asumura Gold Project in southwest Ghana, West Africa.

    Banro Corporation (BAA) - is a Canada-based gold exploration and development company. The Company holds, through four wholly owned Democratic Republic of the Congo (DRC) subsidiaries, a 100% interest in four gold properties, which are known as Twangiza, Namoya, Lugushwa and Kamituga.

    Oct 06 4:12 PM | Link | Comment!
  • New Housing Starts Up and Homebuilders Starting to See the Light Again
    New Housing Starts Up and Homebuilders Starting to See the Light Again
     
    In the middle of April, we posed the question, “Is now the time to get back into the home builders?” With the Philadelphia Housing Index ($HGX) having closed at $79.89, we cited several reasons why we felt it was, in fact, time to get the sector back on the radar. We cited, “… an unexpected sales jump in February and a rise in mortgage applications in March may also signal the housing market is stabilizing.”
     
    In addition, we noticed that the price of copper, a principal component used in home construction was surging in price and that its multi-month high suggested that demand by home builders could be growing.
     
    So where are we now? Well…we are pleased to report that OTCPicks members who followed our lead have certainly outperformed the broader market. In fact, the Philadelphia Housing Index, the very same index we referenced back in April at $79.89, recently reached a nearly a 10 month high at $102.75---nearly 29% since our original report.
     
    And where do we go from here? From a technical perspective, we believe the $HGX, a useful proxy for all the homebuilding stocks, is in the process of completing a very bullish “reverse head-and –shoulders bottom.” In fact, this next leg of the pattern is likely to be extremely profitable as the index retests the $150 resistance level from last fall.
     
    From a fundamental perspective, the data released in the month of July was almost universally positive. New homes sales jumped 11%, inventories have continued on a downward trend, mortgage rates have remained at low levels, and existing home sales climbed for the third straight month. Even house prices as measured by the Case-Shiller Index showed the first month increase since their peak in 2006. The only negative in any of the recent housing reports is the fact that foreclosures remain at elevated levels.
    Housing Related Stocks:
     
    We continue to see value in the following names and believe members should keep them on their radar…
     
    D.R. Horton (DHI) -- primarily markets its homes to first-time buyers, as well as first-move-up customers. DHI sees a majority of its revenues from Midwestern operations; this area was generally less prone to bubble-type market conditions compared to areas in the Southeast, Southwest, and West.
     
     
    KB Home (KBH) -- aims at targeting more entry-level homebuyers. We believe that KBH has been more conservative in terms of loading up on pricey land, and more aggressive in moving units; both positives. KBH also has exposure to the French market with operations in that country, which will provide much needed market diversity to help the company weather the current downturn
     
     
    NVR (NVR) -- is the most conservative homebuilder in terms of how it handles investments in land. NVR exclusively uses options to purchase land and only takes possession when it is ready to develop. NVR is also unique in that it has more cash than debt.
     
     
    Ryland (RYL) -- looks to be one of the better prepared builders with low debt levels and low levels of land inventory. The company should also benefit from having negotiated most of its land and options in 2004 and prior.
     
     
    Toll Brothers (TOL) -- maintains the largest land bank in the residential construction industry by a wide margin, with estimates placing land reserves equal to six years of construction. TOL’s market position should allow it to expense more expensive land acquired in recent years over a period of time, allowing the company to maintain its normally high gross margins.-Because TOL focuses on the high-end segment of the housing market, the company should also prove to be more resilient to credit tightening or regulation, as its customers are less dependent on generous financing terms.
     
     
    We also think that members should add
    these additional names to their radars…
     
    MDC Holdings (MDC) -- reported a gain in new orders last quarter for the first time since 2005
     
     
    Weyerhaeuser (WY) -- CEO Dan Fulton said he is “feeling like the worst is over in housing,” though adding that low consumer confidence and high unemployment leave him cautious on the timing of a recovery.
     
     
    Pulte Home (PHM) -- The company’s homebuilding business involves in the acquisition and development of land for residential purposes within the continental United States; and the construction of housing on such land for the first-time, first and second move-up, and active adult home buyers.
     
     
    Probably the biggest positive we hope for from stabilization in housing is that the industry stops being a drag on the economy. “Private investment in the residential” sector is a key contributor to the GDP calculation. The GDP reading just released on Friday showed that the housing market contributed negatively to the U.S. economy for the 14th consecutive quarter. This sector shaved almost a whole percentage point off of economic growth; in a quarter where the reading was a negative 1.0%. Thus, while numbers from the housing sectors are beginning to improve, the net effect is still a bit of a drag on the economy.
     
    Most industry experts have said that the sectors that led us into this recession will be the sectors that lead us out and we believe this to be true. Banking and Real Estate began things, and both are starting to show signs of stabilizing and the early stages of recovery and we stress the “Early Stages” part. Still time to get a piece of some nice turnaround stocks that can make our members money as the recovery continues into 2010 and 2011.
    OTCPicks.com is located at 3533 Twin Lakes Drive, Prosper, TX 75078, Telephone: (972) 546-3740, Email: Publisher@OTCPicks.com.
     
    DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. OTCPicks.com makes no recommendation that the purchase of securities of companies profiled in this web site is suitable or advisable for any person or that an investment such securities will be profitable. In general, given the nature of the companies profiled and the lack of an active trading market for their securities, investing in such securities is highly speculative and carries a high degree of risk. You are receiving this email because you have registered on OTCPicks.com or one of our affiliate companies.
     
     
    Disclosure: OTCPicks.com has not been compensated by anyone for the content of this OTCPicks.com Market Blog.
     
    Aug 10 1:51 PM | Link | Comment!
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