A Wonderful Blessed New Year to One and All - Investment Decisions for 2010
What an exciting time this is as we bid farewell to 2009 and glace in the rear view mirror to learn the lessons it taught us! Now we look forward to living better lives in 2010. We all have made some commitments to improve our health, lose weight, study the Scriptures more diligently, attend corporate worship on a regular basis, fellowship more often with dear Christian brothers and sisters, and to live a more Godly life. With the help of the Holy Spirit, we can accomplish a great deal as we follow the Law-Word of the Sovereign Creator of all. Each one of us was created in the image of the living God. Albeit, ours is greatly diminished from the original creation and in comparison with God's full perfect image. But each of us has been created with a religious propensity which makes us search to fulfill. However, it can only be perfectly fulfill as we are brought to life by the Holy Spirit and are brought to the only Way, Truth, and Life even Jesus Christ our King. Praise Him daily!
Since the markets are closed for the long week end, I wanted to take time to review some of our mining stocks. Let's start with the real money: Gold. This is the one money that will not go to zero value. All paper currencies have historically gone to zero value or at least very near it. The graph is indicating that gold has farther to go on this correction. We may be having another buying opportunity which could be very inviting. I will try to keep you posted on what I am doing on this and other potential opportunities.
Vista Gold looks to be headed much lower. I will be selling as soon as I can. This time, which is rare with me, I will be closing out VGZ. You decide what you want to do with it.
DROOY made some strong upward moves during December. In fact, it was one of the best performers during last month. I will be holding on to DROOY through the rest of this correction. May take the opportunity to sell a small portion of my holdings, though.
Turning to silver stocks, here is Fortuna. It has been leveling off and hovering around 2.00 price range. It appears to be quite strong with a good potential in spite of the lower price of silver. By the way, I have bought some Maple Leafs and will likely be buying some more Silver Eagles or Maple Leafs as silver drops in price. I am not selling Fortuna, as I believe silver is likely to out perform gold on the next rally.
Hecla Mining has not been looking as strong recently. However, this has been a good performer for us and looks to be strong in the future. I like HL and will continue to hold on to all that I have in portfolios.
Turning away from the precious metals, BYD Company (batteries & electric cars) is still performing well. I like this Chinese company, because it is filling a unique place in the market. Apple buys their batteries from BYD Company for many of their popular products. The narrow price range suggests an accumulation or consolidation period in preparation for the next upward surge. Of course, it could be downward, but if there is some improvement in world economies or if their electric cars hit the market with wide acceptance, we should see some substantial gains. I am looking to buy more on any set backs in the $7 to $8 range.
The market price (current value) of issued bonds is inverse to interest rates. This is easily visualized. For example Long Term Treasuries are issued in $1,000 face values at a set interest rate until maturity.
Let's say that one bond is bought for $1,000 and has a fixed interest rate of 3%. Therefore, the owner would expect to get $30 per year in interest. If the prevailing interest rates were to double to 6%, a person could invest only $500 to earn the $30 which the older bond paid. Thus, the theoretical market value of the $1,000 bond would be only $500. On the other hand, if the prevailing interest rate were to drop to 1.5%, one would have to invest $2,000 obtain the $30 of interest on the original bond. Thus, the theoretical market value of the old bond would be $2,000. I say theoretical, because the actual market value would not exactly, but approach the theoretical market value.
This coupled with the potential loss in the purchasing power of the paper dollars further penalizes the buyers of bonds makes them less of a long term value.
If you see interest rates continuing to increase in the near future and the potential long term value of the dollar to be decreasing, it would be wise to invest against Long Term Treasury Bonds. One simple way to do this is to buy the TBT which is an EFT which provides profit potential as the market value of these bonds decreases.
There are, also, options on this fund which give the advantage of leverage if you are into options. I have been looking at the early 2011 options and will likely take a position in them next week. I was looking to buy a complete spread, but my limit buy was not executed. Therefore, I have decided to buy the longer term call options which are available. You consider the facts, your risk tolerance, and your present portfolio and make your own decision on TBT. There are other funds which do about the same thing.
2010 looks to be another exciting year. Make the best of it!
Happy New Year to one and all, Doug
Since the markets are closed for the long week end, I wanted to take time to review some of our mining stocks. Let's start with the real money: Gold. This is the one money that will not go to zero value. All paper currencies have historically gone to zero value or at least very near it. The graph is indicating that gold has farther to go on this correction. We may be having another buying opportunity which could be very inviting. I will try to keep you posted on what I am doing on this and other potential opportunities.
Vista Gold looks to be headed much lower. I will be selling as soon as I can. This time, which is rare with me, I will be closing out VGZ. You decide what you want to do with it.
DROOY made some strong upward moves during December. In fact, it was one of the best performers during last month. I will be holding on to DROOY through the rest of this correction. May take the opportunity to sell a small portion of my holdings, though.
Turning to silver stocks, here is Fortuna. It has been leveling off and hovering around 2.00 price range. It appears to be quite strong with a good potential in spite of the lower price of silver. By the way, I have bought some Maple Leafs and will likely be buying some more Silver Eagles or Maple Leafs as silver drops in price. I am not selling Fortuna, as I believe silver is likely to out perform gold on the next rally.
Hecla Mining has not been looking as strong recently. However, this has been a good performer for us and looks to be strong in the future. I like HL and will continue to hold on to all that I have in portfolios.
Turning away from the precious metals, BYD Company (batteries & electric cars) is still performing well. I like this Chinese company, because it is filling a unique place in the market. Apple buys their batteries from BYD Company for many of their popular products. The narrow price range suggests an accumulation or consolidation period in preparation for the next upward surge. Of course, it could be downward, but if there is some improvement in world economies or if their electric cars hit the market with wide acceptance, we should see some substantial gains. I am looking to buy more on any set backs in the $7 to $8 range.
The market price (current value) of issued bonds is inverse to interest rates. This is easily visualized. For example Long Term Treasuries are issued in $1,000 face values at a set interest rate until maturity. Let's say that one bond is bought for $1,000 and has a fixed interest rate of 3%. Therefore, the owner would expect to get $30 per year in interest. If the prevailing interest rates were to double to 6%, a person could invest only $500 to earn the $30 which the older bond paid. Thus, the theoretical market value of the $1,000 bond would be only $500. On the other hand, if the prevailing interest rate were to drop to 1.5%, one would have to invest $2,000 obtain the $30 of interest on the original bond. Thus, the theoretical market value of the old bond would be $2,000. I say theoretical, because the actual market value would not exactly, but approach the theoretical market value.
This coupled with the potential loss in the purchasing power of the paper dollars further penalizes the buyers of bonds makes them less of a long term value.
If you see interest rates continuing to increase in the near future and the potential long term value of the dollar to be decreasing, it would be wise to invest against Long Term Treasury Bonds. One simple way to do this is to buy the TBT which is an EFT which provides profit potential as the market value of these bonds decreases.
There are, also, options on this fund which give the advantage of leverage if you are into options. I have been looking at the early 2011 options and will likely take a position in them next week. I was looking to buy a complete spread, but my limit buy was not executed. Therefore, I have decided to buy the longer term call options which are available. You consider the facts, your risk tolerance, and your present portfolio and make your own decision on TBT. There are other funds which do about the same thing.
2010 looks to be another exciting year. Make the best of it!Happy New Year to one and all, Doug
posted by Doug @ 10:53 AM
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