All for One Euro, One Euro for All?

http://www.marketoracle.co.uk/Article28262.html

All for One Euro, One Euro for All?

I have long said that the euro is not an economic currency but a political one. The question now before the voters and politicians in Europe is whether the EU evolves into something that looks more like the US, with limited state sovereignty and market-imposed limits on sovereign debt, where states and cities can fail and bond holders are at their own risk, and where the ECB takes over regulation of all national banks and becomes the backstop, as with the Fed, or devolves into something else.

Have the powers that be in the ECB quietly decided to let Greece go, as they should never have been allowed it into the eurozone to begin with, and because Greece clearly cheated on its statements about its debt and balance sheet in order to get in? You will never hear that in public from the leaders. It is simply not politically correct in "all for one, one for all" Europe. But that may be the outcome if Trichet really means "non!"

It really is the political class all over the world we have to watch. I will be glad when we get through the Endgame and can go back to worrying about balance sheets and consumer spending. What a quaint time that now seems. Think it is interesting now? Have you watched Spanish debt spreads? Wait until the market turns on Spain. Stay tuned.

(Woody assigned me some books on political theory to read on vacation. Hope I can get them on my iPad. Seems like a good time to start reading up on what the masters have to say.)

We're Off to Europe

I leave Monday for Philadelphia and Boston, and then its on to Tuscany (where the euro is way too strong!) for a few too-short weeks, where I hope I can catch up on some reading and get my next book outlined and started. I really have to get into Schumpeter and his thoughts on change. Most of my kids (5 out of 7) will already be there when I arrive; and then when they leave Tiffani (and Ryan and Lively and the nanny) and I will stay for a working holiday, with friends dropping in to see us. I am planning on not going more than a hundred meters from the villa, except for power walks. The little village of Trequanda (pop. 1,000) has a 4-star restaurant, Il Conte Matto (http://www.contematto.it/ita/index.php), an awesome pizza place, and a bar; and you can get local chefs to bring fresh food most nights and cook, so we can eat out on the patio watching the sun set over the Tuscan hills. It hardly gets any better. This is the first place I have gone back to for a vacation in my adult life.

I do travel a lot, and work on the road, but this is kind of an experiment for Tiffani and me to see if we can work and really get things done while not in Texas. I am usually not as productive on the road as in my office, so we will see if I can move my office to Tuscany. If you see us at a large table at Il Conte Matto, come by and say hello! I can recommend some great local chardonnays!

It is time to hit the send button. But I must confess that I am not pleased with the results of the Mavericks-Thunder series so far. Somebody forgot to tell Oklahoma City they are supposed to roll over. But I will say it has been great basketball. I will miss that while I am on the road.

Have a great week. If we have a week. Once again we have some guy getting a lot of press here in the US with his prediction that the world ends tomorrow (really, why is Fox News among others covering this nut case?). I can say with some certainty that all previous such predictions have been bad bets, and since I am writing this letter late at night, I guess we can say that I am doubtful of this one as well. Now, predicting the end of the euro as we know it? Or that Greece will default? That is an "end of the world" I can believe in.

Your assuming you did not get raptured if you are reading this analyst,

John F. Mauldin
johnmauldin@investorsinsight.com

John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to:http://www.frontlinethoughts.com/learnmore

All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.

11 Silver Factors

May 9, 2011

David Morgan explaing THE 11 SILVER FACTORS

Silver Guru David Morgan explains the 11 factors that make him become hyper bullish on silver , only physical gold and silver are real money , the dollar and all paper money are currencies not real money their intrinsic value is ZERO , and one day they will eventually go back to their real value which is that of a paper painted with ink useless paper with a zero value....

All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.

dshort.com - Current Market Snapshot May20

dshort.com - Current Market Snapshot

http://dshort.com/articles/current-market-snapshot.html

The S&P 500: Down for the Day and Week
May 20, 2011

The S&P 500 closed the day down 0.77% and the week down 0.34%. The index is 97.1% above the March 9 2009 closing low but 14.8% below the nominal all-time high of October 2007. Here are two charts of the index — with and without the 50 and 200-day moving averages.

Click for a larger image

Click for a larger image

For a better sense of how these declines figure into a larger historical context, here's a long-term view of secular bull and bear markets in the S&P Composite since 1871.

For a bit of international flavor, here's a chart series that includes an overlay of the S&P 500, the Dow Crash of 1929 and Great Depression, and the so-called L-shaped "recovery" of the Nikkei 225. I update these weekly.

These charts are not intended as a forecast but rather as a way to study the current marketin relation to historic market cycles.

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All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.

dshort.com: The "Real" Mega-Bears

dshort.com: The "Real" Mega-Bears

http://dshort.com/articles/2011/mega-bear-2000.html

The "Real" Mega-Bears
May 14, 2011 weekend update

It's time again for the weekend update of our "Real" Mega-Bears, an inflation-adjusted overlay of three secular bear markets. It aligns the current S&P 500 from the top of the Tech Bubble in March 2000, the Dow in of 1929, and the Nikkei 225 from its 1989 bubble high.

Click for a larger image

This chart is consistent with my preference for real (inflation-adjusted) analysis of long-termmarket behavior. The nominal all-time high in the index occurred in October 2007, but when we adjust for inflation, the "real" all-time high for the S&P 500 occurred in March 2000.

Here is a nominal version to help clarify the impact of inflation and deflation, which varied significantly across these three markets.

See also my alternate version, which charts the comparison from the 2007 nominal all-time high in the S&P 500. This series also includes the Nasdaq from the 2000 Tech Bubble peak.

Click for a larger image

All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.

The Best Long-Term Investment: Gold vs. Silver vs. S&P 500

http://seekingalpha.com/article/271054-the-best-long-term-investment-gold-vs-silver-vs-s-p-500

In recent years investors have witnessed a spectacular rise in silver and gold prices, while the S&P 500 stock index, having experienced two declines of 50% or more in the last decade, is still significantly below the levels it reached in 2000. It used to be that hording gold and silver was the purview of the die-hard gold bugs but it seems that today a lot of investors, big and small, prefer putting their money into precious metals, whether in the form of ETFs, such as GLD and SLV, or physical bullion. Obviously, if you bet big on anything when it starts a big move up, you can make a lot of money. But since most of us can't perfectly time the markets, I wanted to compare historical returns to three investment strategies where every year you consistently invest in either S&P 500, silver, or gold.

Suppose, starting in 1981 you were to invest $1000 each year in either S&P 500 index, silver, or gold at the average price for that year. For the S&P 500 strategy you would reinvest the following year the dividends received during the current year along with the next $1000 investment. Columns 1, 2 and 3 of the table show the value of your holdings at the average price for that year for S&P 500, silver, and gold, respectively. Columns 4, 5, and 6 show the annual compounded returns that your investments would have earned through that year.

	(1)	(2)	(3)	(4)	(5)	(6)
	Value	Value	Value	Comp. Ann.	Comp. Ann.	Comp. Ann.
	SP500 ($)	Silver ($)	Gold ($)	Ret. SP500	Ret. Silver	Ret. Gold
1981	1,000	1,000	1,000	-	-	-
1982	1,987	1,755	1,819	-1.33%	-24.47%	-18.12%
1983	3,772	3,533	3,050	23.84%	16.83%	1.65%
1984	4,935	3,518	3,596	14.19%	-8.51%	-7.06%
1985	6,994	3,648	4,165	16.85%	-15.83%	-9.15%
1986	10,150	4,251	5,831	20.87%	-14.02%	-1.14%
1987	13,601	6,458	8,076	21.67%	-2.70%	4.73%
1988	14,087	7,013	8,895	15.71%	-3.80%	3.01%
1989	18,599	6,905	8,764	17.40%	-6.80%	-0.67%
1990	20,893	7,066	9,821	15.59%	-8.02%	-0.40%
1991	25,312	6,932	10,273	15.70%	-9.77%	-1.38%
1992	29,775	7,744	10,750	15.43%	-8.42%	-2.03%
1993	34,221	9,463	12,255	14.94%	-5.51%	-0.99%
1994	36,768	12,596	14,076	13.71%	-1.65%	0.08%
1995	45,377	13,386	15,073	14.42%	-1.65%	0.07%
1996	58,191	14,393	16,217	15.49%	-1.43%	0.18%
1997	77,838	14,556	14,844	16.85%	-1.98%	-1.73%
1998	99,089	17,466	14,190	17.56%	-0.36%	-2.89%
1999	124,258	17,453	14,454	18.06%	-0.95%	-3.16%
2000	136,028	17,563	15,476	17.38%	-1.39%	-2.80%
2001	116,285	16,498	16,027	14.83%	-2.50%	-2.81%
2002	99,419	18,362	19,325	12.55%	-1.77%	-1.26%
2003	99,103	20,479	23,676	11.61%	-1.07%	0.26%
2004	119,017	28,947	27,649	12.05%	1.59%	1.21%
2005	130,652	32,789	31,043	11.87%	2.18%	1.75%
2006	144,837	52,793	43,160	11.77%	5.22%	3.81%
2007	166,748	62,178	50,737	11.91%	5.84%	4.50%
2008	142,317	70,637	64,555	10.34%	6.19%	5.63%
2009	114,343	84,285	84,990	8.54%	6.79%	6.84%
2010	140,892	140,970	92,852	9.18%	9.18%	6.90%
28-Apr-11	173,400	233,917	115,889	10.28%	11.84%	8.12%
18-May-11	170,931	166,144	112,880	10.20%	10.05%	7.98%

Investing in stocks had been much more profitable in the first 20 years. In 2000 the average value of your stock holdings would have been $136,028, whereas silver and gold would have been worth $17,563 and $15,476, respectively. Furthermore, silver and gold investments would have had a negative or near zero compounded annual return until 2004. Since then however, the precious metals have begun to quickly make up ground and, helped by S&P 500's 57% crash during the last recession, silver managed to slightly surpass stocks in 2010, while gold was still behind. On April 28, 2011, when the price of silver was near its peak, silver was a clear winner with a value of $233,917 and a compounded annual return of 11.8% compared to S&P 500's $173,400 and 10.3%, and gold's $115,889 and 8.12%

However, the subsequent price decline put silver behind S&P 500. As of May 18 close, the stock portfolio would have been valued at $170,931; silver at $166,144; and gold at $112,880. At the current level of the S&P 500 index the break-even price for silver is $36.10 per troy oz, and for gold -- $2,290.77 per troy oz.

At this point, the attractiveness of each of the investment vehicles depends on your beliefs of where the prices will go from here. The S&P 500 has the higher historical annual rates of return on its side, but if you really think that recent rates of price increases for gold and silver will continue into the future, you would obviously prefer the metals. Personally, I believe investing in stocks is a better long-term strategy for the following reasons:

1) The magnitude of compounded rates of return depends a lot on the window of time you select. It would have been worse for gold and silver if I had started with 1979, and much better if I only took 2003 and later years. And all the years in between were terrible for gold and silver. I think that it's a lot more likely that at this point we are on the back side of the price hump for silver and gold.

2) One of the main reasons to hold PMs is hedging for inflation. But stocks are also an inflation hedge, since if inflation were to occur, the companies would be selling their products and measuring earnings in inflated dollars. And while the potential inflation seems to be more than priced in into silver and gold, stocks are most likely not priced with expectations of high inflation.

3) The transaction costs of buying and selling physical bullion are very high and eat into your profits. Also, if you own bullion, instead of ETFs, like SLV and GLD, you will have storage costs unless you are planning to hold all of your PMs in your house (in the above analysis you would have accumulated 4803 troy oz (or ~149 kilos) of silver. Holding S&P 500 in the form of an ETF, you would incur comparable management fees, so that cancels out, but looking at historical price charts, it is easy to forget about the dividends that you receive holding stocks. Over the 30 year period in my example, you would have accumulated and reinvested $39,921 in dividends.

4) And finally, the IRS will take out a much larger chunk of your capital gains in precious metals than it would of your long-term capital gains on stocks. Currently, it taxes gains on PMs at a maximum 28% rate, whereas the rate for both dividends and capital gains on stocks is 15%.

The data used in this analysis comes from LBMA's website for gold and silver prices, and Compustat for S&P 500 prices and dividends.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The Best Long-Term Investment: Gold vs. Silver vs. S&P 500  |  May 20, 2011 

This article is tagged with: Long & Short Ideas, Long Ideas, United States

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http://seekingalpha.com/article/271054-the-best-long-term-investment-gold-vs-silver-vs-s-p-500



All information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.