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Strategy Update News Wire for Tuesday March 4, 2008

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Strategy Update News Wires for Monday March 3, 2008

Go to LA Daily Blog for news wire updates throughout the day.

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Inflation Numbers Creep Into Today's CPI Report: Gonna Send The Market South -- NO BOTTOMS YET!

2/20/08 Pre-Bell Update: Oh no...Inflation creeps into CPI number today. Fed will have balancing act! Will have to cut rates anyway and hope increased growth will offset inflation. Gonna scare market...Headed to 11,500 and below sooner than later. Metals will sell off today due to profit taking and fear of no rate cut, now, due to inflation fears. SU feels Fed will still feel pressure to cut, and worry about inflation later. (No bottom yet! I repeat, no bottom yet!)

2 PM UPDATE -- MINUTES FROM JANUARY '08 FED MEETING: Based on the minutes from the last three meetings the Fed had regarding rate cuts vs inflation, it appears as though there will be a focus on the short term need for further rate cuts to help stimulate growth -- and if inflation becomes a major issue, they will reverse the cuts. (To paraphrase.) This would seem to favor gold prices rising higher than existing record high levels this year.

Updates, news wires and 24 hour LIVE gold and metals charts and more at StrategyUpdate.com.

Friday 2/15/08 Pre-Bell Update: YIKES! Not gonna be a pretty day on Wall Street (Very Unpretty)

Oil is up above $96 per barrel and gold is back up at record level highs of $915 (as of 8:50 AM). Platinum broke an ALL TIME EVER record high overnight. And all the slow growth recession fears are being reflected in new data released this week and this morning. Plus fears of the bond insurer/subprime mess still yet to find the bottom (based on Paulson's/Bertankie's comments yesterday. And word on the street is finally catching up with Strategy Update's many massive warning that the credit derivatives market is the Shaquille O'Neil sized shoe that is waiting to drop. (It currently falling as we speak. Spreads getting wider.) Plus, due to a new change in SEC filing rules, people who used to have to wait a year to sell stock, can now sell after only six months -- and if things weren't bad enough, that will add several billion dollars worth of stocks that will become available to sell today. (Imagine if a lot of people are in a rush to sell, on top of everything else. Extra pressure on the way down!)

SUMMARY: We told you the February Song of the Month was "Hell's Bells" by AC/DC (as performed by Zuma Dogg and today may prove to be a good reason why.

UPDATES THROUGHOUT THE DAY AT STRATEGYUPDATE.COM

Strategy Update Gold Alert for Friday 2/15/08

2/14/08 Gold Trader Alert: Gold is up from recent downs today. However, mining stock are down today, because the DOW is down, and these stocks can take a hit (or just tread water) when the DOW drops 175 points like today. However, with gold up to the $910 levels, miners should be making up for the difference with some make-up gains. Could be a day trade opportunity.

CLICK HERE FOR STORY

Buffett Offers Muni-Bond Insurer "Safety Net", Paulson Announces Homeowners Assistance Plan & GOLD ALERT!!!

IMPORTANT GOLD ALERT FOR 2/12/08 AT STRATEGYUPDATE.COM (This blog's companion web site with updates posted between blog updates.)

GOLD WATCH: Something I've noticed..."Smart Money" (hedge funds/big boys) seems to own Yamana Gold (AUY) more than almost any other gold miner. Here's why I came to the conclusion. When gold is up, or in rally mode...I've noticed AUY is the first gold mining stock to start to go south, when gold prices start to drop. AUY is not necessarily to first to rise back up, when gold prices rally back (however if you do see it rally first, expect the rest to follow), but you can use this "down" indicator to help you be on guard for gold to drop, if you are planning on selling -- or allow you to be ready to buy if you want to buy on the dips.

DOW RALLY (DO NOT BE BAMBOOZLED!): Don't be fooled by the warm and fuzzy feeling that causes Wall Street rallies over these press release announcements like Buffet's $800 billion offer to re-insure municipal bond insurers, as a safety net if they want it. (And one of three insurers Buffett made the offer to already turned down the offer.)

Problem with this nice gesture, is these muni bonds aren't the root of the problem that looms ahead. These are the low risk bonds. However, if they ever get threatened that they are about to lose a "AAA" rating, they can fall back on this offer to avoid the sell off that would occur on a downgrade.

And Paulson announced that the Treasury Department and HUD are going to help keep people in their homes with a new warm and fuzzy, fluff-ball plan that won't make a dent in the subprime problem.

However, Wall Street psychology is a factor, and these announcements will falsely remove some of the fear that has been casting a gloom on the market, and we'll see a short term rally. The Fed, White House, Buffett and everyone else can try as they will to keep the market propped up, and the economic factors in check, but there's no way to artificially keep things propped up in the long run. We're talking stuff of historic proportions ahead.

Please beware -- the credit derivatives market is the big problem here: The spreads are getting wider -- and the problem is bigger (and getting bigger by the day) than the financial institutions have accounted for.

Plus, like subprime affected the housing market, get ready for the same thing to hit the car dealers/auto industry -- and watch for credit card companies to start seeing much later payments, and complete defaults. And as people's homes continue to drop in value, and they end up owing more on the property than it is worth, more and more people will be walking away from the payments and stiffing the banks.

So enjoy any short term rally this month. We think it will be time for a chorus of "Hell's Bells" sometime soon. (Like this month.)

Click here for updates throughout the day, between these daily blog posts, at StrategyUpdate.com. (Investors resource site with news links and 24 live gold, euro and metals charts.) Already posted everything on this blog last night and early this morning. Set a Google Alert for "strategyupdate.com" so these blog alerts will be sent to your email inbox, right away.

Wall Street Alert: Watch This Video of the Week (Based on Bond Insurance Crisis)

StrategyUpdate.com blogger Zuma Dogg sings a little song to indicate where he thinks the stock market will be going based on the credit derivatives market and bond insurers' crisis. We've been posting doomsday alerts since October of '07, predicting a historic downturn as soon as the calendar turned to January '08, that would be the small wave, before a second downturn in February, worse than the historic losses in January. Don't think the bail out express will be here in time. And when it does get here, won't be able to help in the long run. The biggest to be hit are Municipal Bonds -- like the one's the City's and State's sell to the people. WATCH THE CREDIT SPREADS IN THE DERIVATIVES MARKET...That is why this is our video of the month.



strategyupdate.com 24 hour gold and metals charts and links to all the newswires and charts. Plus pre-market predictions.

Strategy Update Pre-Bell Report for Monday 2/11/08

Here are some stories from the overnight news wires to be aware of for Monday:

METALS ARE UP AGAIN IN OVERNIGHT TRADING: Gold gets all the attention, but Platinum and Palladium are outperforming those metals due to Plat & Pall production outages and now shortages. See list and analysis below, and check the 24 hour LIVE charts at strategyupdate.com
PAL IS UNSTOPPABLE! VGZ has been a tippy-top performer, lately, on days that gold is up. Check it out! (10AM UPDATE: PAL was up nearly 10%, grossly outperforming other metal stocks, and the rest of the stock market -- before metal prices started going down in the 10 AM hour. When metals rise again, expect it to be led by PAL, which may rise 10%-12% at that time.

KRY: They released some news at 9:19am, right after pre-market trading closed. Hmmm. Let's see how this (good) news drives this $1.80 a share gold mining stock.

(Be aware of automatic profit taking by major hedge funds when gold hits record levels. But if the trend is up, it will only be a temporary dip. You can take your chances that we will see that dip, but read the analysis below.)
2/11/08 GOLD ALERT:

Platinum price hits record high amid S.Africa power crisis

Angloplat earnings fall, power cuts to hit output

Newmont predicts all major gold miners will see production decline

Newmont forecasts higher costs

Oil climbs $92 on Venezuela threat
U.S. light crude for March delivery rose as high as $92.71 a barrel in early trade, matching its recent January 30 peak, the highest point since January 15.

Platinum hits record high on supply concerns
SINGAPORE (Reuters) - Platinum hit another record high on Monday on the back of lingering supply concerns in South Africa, which produces four-fifths of the world's metal. Spot platinum rose to $1,885/1,892 an ounce from $1,880/1,888 late in New York on Friday.


Venezuela threatens to stop US oil sales over Exxon
CARACAS (Reuters) - President Hugo Chavez on Sunday threatened to stop sending oil to the United States unless it halted an "economic war" that he said included an Exxon Mobil lawsuit freezing $12 billion in Venezuelan assets.

Goldman Sachs boosts wheat price forecast
SYDNEY (Reuters) - Investment bank Goldman Sachs (GS.N: Quote, Profile, Research) has raised its outlook for Chicago wheat futures by 47 percent to $13.50 a bushel after the U.S. Department of Agriculture cut projected 2007/08 U.S. wheat ending stocks.

The Goldman Sachs three-month and six-month price forecast compares with CBOT March soft red winter wheat WH8 futures closing price on Friday of $10.93 a bushel, after prices again rose by their 30-cent daily limit.

Record high wheat prices were sparked on Friday by new world agriculture supply and demand estimates by the USDA, which cut projected U.S. wheat stocks at the end of the 2007/08 marketing year on May 31 to 272 million bushels from its estimate of 292 million bushels in January.

This is the lowest levels of stocks since 1947/48, Goldman Sachs said in its Commodities Watch report, issued on Friday.

Acute world wheat shortages, after crop problems in both the northern and southern hemispheres and strong export demand, have sparked wheat price rises on U.S. futures exchanges by the daily 30-cent ceiling for most of the past three weeks, causing the exchanges to raise the limit from February 12.

Reuters reports that Australia's Central Bank Warns of More Rate Rises: Australia's central bank bluntly warned on Monday that it would likely need to raise interest rates again to restrain inflation, even as it trimmed its outlook for economic growth.

The unusually explicit warning from the Reserve Bank of Australia (RBA) lifted the local dollar above 90 U.S. cents while bills futures slid as the market priced in a greater risk of a further rate hike, perhaps as soon as March.

STOCK MARKET UPDATE: Experts are saying it's time to jump on the financial stocks, since they have been beat up so much. Batcomputer says, you will have a chance to buy the financial sector at lower prices than they are currently at. (And that's an understatement.) Batcomputer is very, very nervous that there will be a big bottom in the low 11,000's (or high 10,000's), before a big rally back to the 13,500 range. Look how the market has tanked in January, then again last week. But long term (2-3 years), you should be o.k. if you wanna take your chances on financials. Although the Batcomputer wouldn't. It's just not worth the risk since the dust hasn't settled yet. And we say there will be a lot more dust. Interested in gold in '08? See our update, including watchlist of picks. Wall Street updates throughout the day at strategyupdate.com.

2/11/08 Pre-Bell Update: Yahoo boardmembers to reject Microsoft's takeover bid feeling the offer is to low and wants $40 per share. (LOL!) Batcomputer says, "Watch CNET". (Let's watch and see what happens this week.)

Experts are saying it's time to jump on the financial stocks, since they have been beat up so much. Batcomputer says, you will have a chance to buy the financial sector at lower prices than they are currently at. (And that's an understatement.) Batcomputer is very, very nervous that there will be a big bottom in the low 11,000's (or high 10,000's), before a big rally back to the 13,500 range. Look how the market has tanked in January, then again last week. But long term (2-3 years), you should be o.k. if you wanna take your chances on financials. Although the Batcomputer wouldn't. It's just not worth the risk since the dust hasn't settled yet. And we say there will be a lot more dust. Interested in gold in '08? See our update, including watchlist of picks. Wall Street updates throughout the day at strategyupdate.com and do a Google alert for "strategyupdate.com" to receive blog reports.


IT GOLD ABOUT TO REALLY TAKE OFF?: Oil prices rising, inflation already rising (see commodity prices) and more Fed funds rate cuts expected...Gold miners are yet to catch up with gold's recent rise, proportionately. But of course gold itself is going to be safer than any one mining pick. It depends on what you are looking for in an investment. But although you always see gold and metals take some hard falls (especially at record high levels, that we are approaching again, as hedge funds take their automatic profits) -- if last week was any indication...gold is not only holding it's own in this volatile market...but could start to speed up it's gains, and reduce the sell offs this week.

Usually, I would be too nervous to buy metals after this big run-up this past week (because you can see some painful drops). But on Monday February 11, 2008...I think time will show today is about as good as you are going to do in the long run, when it comes to gold. (Unless you have the cajones to hang in there for one more "profit-taking dip" we usually see at these record levels. The last hedge fund sell off was at $836/oz. So you still have another $10 rise on gold before you have to worry about it.)

And the Batcomputer says that by that time, inflation fears, a weaker dollar, and higher oil prices may offset any major dips on it's way to $950-$1000. Gold is now the third currency and if the stock market runs into a "rough patch" over credit derivative/subprime/bond insurer crisis -- people will be pulling out of stocks -- and jumping into gold. (It would have been nicer to jump in at $800. But people always say, "Too late now" -- and then they look back and say, "Damn, I liked gold at $920!" (See Gold Update for list of miners and more on gold investing stategy.")

AND WE CALLED PAL ON FRIDAY: We predicted metals would be up led by Palladium. Sure enough, metals were up, led by Palladium. And our Palladium pick (PAL), closed at $5.60 -- up 12.45% for the day! PAL was at $3.59 on 1/23/08. (Better than gold!)

METAL STOCKS ARE STOCKS, NOT THE COMMODITY ITSELF: And since these are stocks, they sell off, too when the market takes a dive.. But long run, when/if the stock markets go REALLY south, due to economic problems, gold will rise without the DOW-based sell-offs. AND, as the DOW goes down...gold and gold miners stock will/do not go down as much as general stocks, so you still win. (That's the point!)

So in other words, on some of these down 200-300 point days, your gold miner may only drop 2%-3%, when everything else in the market is down 7%-9%. And this past week, dropping -123 point, followed by -370 points -- it closed Friday down another -63 points. While gold had it's best day all month. Read the writing on the wall, y'all!

PROFIT TAKING FEARS: With gold this high, assuming you will see profit taking drive the price down. What do you do when it looks as though it's only going up? I would buy it like crazy on Monday in pre-market hours if the Batcomputer is giving the "buy" sign at 7:00am EST on Monday 2/11/08. (However, there is a lot of volatility with the Euro and metals in overnight trading, so you may want to watch to see which way the wind blows before you buy right before a dip today.)

UPDATES THROUGHOUT THE DAY AT STRATEGYUPDATE.COM. (Plus 24 hour LIVE gold, metals and euro charts.)

Gold Update and Gold Stocks Watchlist, Plus Pre-Bell Wall Street Update for 2/8/08

When It Comes To Gold, The Signs Are Always Clear...You Just Have To Monitor Things
24 Hours A Day
by Strategy Update

Click here for new article on gold trading, including some safe picks for investing ("buy and hold") and some short-run picks if you like to trade.

Plus, overall market update at StrategyUpdate.com

Pre-Bell Report for 2/7/08 Gonna Be A GREAT Day on Wall Street...(If You Are PRO ETFs That SHORT The Market!)

Check StrategyUpdate.com for updates throughout the day. Here's a starting point...

2/7/08 Pre-Bell Update/Comedy Script: Gonna be a GREAT day for the stock market. (If you buy some ETFs that SHORT the market.) Here are a few: REW, SKF, SRS, DXD; plus RRZ and SKK short the Russell. (If you bought RRZ & SKK this month, you'd be a billionaire!).

Since you left your office yesterday, the whole world fell apart.

Looks like the economic stimulus package that wasn't supposed to be delayed over partisanship, has been delayed over partisanship. Subprime crisis is just getting warmed up. One of the Fed members said something that is being taken out of context. The CISCO CEO said something that indicated the world was ending, and the stock tanked in after hours -- so that's gonna drag down the whole market -- and retail ain't lookin' too good, perceptually, at least. Basically, anytime someone opens their mouth these days -- or reports earnings, it's gonna tank the market. (Don't sneeze...Kleenex shares might tank because your sneeze was one "achoo" too short, and you might use one less Kleenex next year.)

Besides that...you probably think the market is gonna rally back, because you have no idea what is really going on; but are an optimist because the market always rallies back! It DOES always rally back, right? Yes, it does! See Elton John - "Rocket Man (I Think It's Gonna Be A Long, Long Time)."

GOLD: Kinda surprised gold is hanging in there around $900. Check back for pre-market gold update. I bought Vista Gold (VGZ) in pre-market today, and it was up 8.93% today! (Lucky guess?) See the SU gold list below.

See the thread below this one on this blog.

back to strategyupdate.com

(And don't go nuts with those ETFs...was just kinda being sarcastic, although those probably will all do well today...just don't jump on them like that cause I was trying to make a point as to what kind of day I think the DOW will be having.)

Gold and Wall Street Update for Wednesday 2/6/08

Here's an update of the past two days worth of updates from the Strategy Update website. StrategyUpdate.com: Updates, newswires and 24 hour metals charts.

Start with a new closing bell update for 2/6/08: After dropping -370 points yesterday, the market rallied as much as up +125 (based on good news at Disney perhaps), before ending on a days low of down -65 points.

That's a give back of -190 points off the days high. And it's never good for the next day when you end on the days low, with a give back like that. Overall, not a lot of confidence, especially with bond insurers and credit derivatives crisis looming. Even many bulls are saying we will be hitting recent lows, again (we dropped to 11,900 range this year, so far.) However, unless some goverment "mircale anvil" falls out of the sky to save the financial industry, SU predicts lows in '08 will be in the 10,700 between now and August.) But even if it's just a drop into the high 11,900 range...don't expect to see the DOW back in the 13,500 range anytime in the first half of '08 (or longer).

NOW, some GOLD TALK, since gold was up in overnight and early morning hours. It came down, slightly, as oil prices dropped on news on increased reserves. But gold has really held it's own (closing at $903.90). And you won't believe it, but I bought ONE gold miner stock in pre-market hours, from my watchlist of 50 miners. IT CLOSED UP 8.93% FOR THE DAY!!! Most other good mining stocks were flat to up +0.00%-+2.00% (GFI, GG, ABX, GLD, SLV, AUY were all in this range.) So for Vista (VGZ) to close up +8.93 is off the hook. But ZD trusted in his Batcomputer when they picked this name off the list this morning. (We posted it this morning...see below.)

2/7/08 UPDATE: Bad news on popular gold miner Newmont Gold (NEM), which is the #2 gold producer in the world, and popular with investors due to their non-hedged gold reserves. However, bad news on the earnings call means stay away from KGC until it shakes out.

HERE'S THE UPDATES FROM THE WEBSITE OVER THE PAST 48 VOLATILE HOURS:

2/6/08: Gold and gold mining stocks are up and outperforming the stock market today. But oil inventories come out in a half hour, and there is expected to be a surplus, so that could drive down the price of oil, and gold along with it. And although there will still be many ups and downs, gold will probably be outperforming the stock market in '08.

Be careful buying gold today, because you can expect the price to drop, based on a rise in oil inventories that most likely will reduce the cost of oil, per barell. However, with recent Fed cuts, and more expected, investors may be hanging on to gold positions, so it may not give back as much as usually expected.

1:30 PM GOLD UPDATE: Batcomputer says 1:30pm will be the peak for gold today. Be prepared for short-term downward price movement based on declining oil prices. (See more below)

Gold miners: But, if you decide you want to buy gold miners today, or in the future, SU likes AUY and VGZ (a nice little engine that could) the most. Also on the list; GCGC, KGC, EGO, UXG, NG, HMY, HL and GOLD. And two safer ones; ABX and NEM. (See news on NEM posted above. GOLD, Rangold Mining, had some news we don't like last week, but it hasn't seemed to hurt the stock, otherwise it would have been our #1 pick.)

Consider the miners above to be the "StrategyUpdate Gold ETF Basket", if we had one. (Once you buy one, stay on top of news releases that may have an effect on the stock.)

PLG and GRZ are two new ones we like, but haven't watched long enough. PLG is tied to Platinum and is kickin' butt today, but see alert below. GRZ is gold reserves. (Research 'em first!)

OTHER GOLD MINERS: These are popular ones, too, that go up and down, proportionately with the others mentioned above. Most of these I just turned cautious on over power outages in S. Africa that slowed production, and may suffer more power reductions in the future: GFI, GG, AU, IAG.

PLATINUM AND PALLADIUM WATCH: Gold is more of a currency, where Platinum and Palladium are industrial metals that have been hotter than gold, this year.)However, an expected drop in car manufacturing is expected to hurt these two metals. Which is why we took PAL (Palladium) off our list, but you can still trade it, as a cowboy. Platinum and Palladium still look to still be squeezing out big gains, today, as metal prices rise, due to shortages in these two metals caused by production outages in Australia and S. Africa. So that may be offsetting the downs you should expect to see in Plat and Pal, as industrial demand drops.

GLD is a popular ETF. (IAU is a similar, lesser talked about gold ETF, too.) It's price is linked to gold bullion prices. It's less risky, than individual mining stocks, but you won't see the big gains, either. I say, forget GLD. GDX is the gold miners ETF, which is tied to gold miners, as opposed to gold, itself. Same thing though...too safe. GRZ is a gold reserve ETF we like better. (Disclosure: VGZ, UXG)

2/5/05 GOLD & DOW ALERT: No gonna be a fun day for gold. Read Friday's prediction on what is going on with gold, today. And you are crazy if you think the DOW isn't about to hit a "rough patch" (as Bush calls it) on the opening bell, over bond insurer crisis and a much worse than expected ISM number (economic number). (All we've done since November-December is warn you about February. But you still aren't ready to believe what is about to happen. Because you never heard the phrase, "historic proportions", so you think you know what you can expect.)

Gonna be a GA-REAT day for SKF...(see alert below).

2/05/08 9:45 AM UPDATE: We told yo azz!!! In the first 15 minutes of trading, SKF is UP 5.73% and the DOW is DOW-N 223 points. (See also: REW, UP 5.74%.)

10:50 AM UPDATE: Batcomputer (SU Indicators) says Dow is ready to drop a little more, below it's current down -180-200 point range And don't look for one of these, "Down 200, then up 300" rally days like we have seen recently, though. If news of the bond insurers continues to scare investors, this could be a slow boil of consecutive DOW-N days. (SKF is a good indicator...when it is up 5%, DOW will be down about 220...and if SKF hits 6%...well, you know what comes next.)

11:35 ALERT!!!: SKF HITS UP +6%...let's see where the DOW goes from here.

12:10 NOON: To those who feel gold is taking only a short term dip, now is the time to start "layering in" your buy. Some folks feel gold is taking more of a long term, downward trend to 850, or below. But Batcomputer on Friday said, Tuesday or Wednesday would be the low point on gold and metals, before they take the big rise, based on all these rate cuts.

12:24 PM -- SKF vs DOW UPDATE As SKF moved to +6%, the DOW moved to -250 points. When SKF was up +5%, DOW was down 220 points. SKF up 4.50%=DOW down -185. It's very predictable. Hope SKF doesn't hit 7% today! Now, SFK is up 6.5% and DOW down 270 points (at 12:42pm). See the pattern!

MORE PATTERNS: 1:12 PM SKF UP 7%, DOW down -285. SFK UP 7.19% = DOW down 300 points (at 1:49PM). SKF UP 7.67% = DOW down 320 points (3:04 pm) SKF UP 8.27=DOW down 360!!! SKF 8.45%, DOW DOW-N 370 points (at closing bell) See the pattern?

SRS: Here comes SRS (Short Real Estate)...

2/4/08 ALERT: When SKF (Short Dow Financials) goes UP, the DOW goes DOW-N! (Click Daily Blog Link for more)

strategyupdate.com

We Told You So Tuesday: DOW will be DOW-N Over Bond Insurer Crisis & Extra Weak Economic Number

10:50 AM UPDATE: YIKES...after opening down -200 points at the bell, and leveling off to down -180, or so...The Batcomputer started going nuts...and raised the alert level, indicating a drop further to the DOW-N -220 to -250 (or -- clears throat -- more level). Watch SFK as an indictor. When it is UP above +5%, or more...start worrying about the DOW being down 220 at that point. So if SKF rises to +6%, or more...you know what is coming next!!! With the scare the bond insurance crisis, and derivatives market has given Wall Street (rightfully so) -- could be a slow boil of many DOW-N -200 points (or more) days this month.

2/5/05 GOLD & DOW ALERT: No gonna be a fun day for gold. Read Friday's prediction on what is going on with gold, today. (See thread on this blog below.)

And you are crazy if you think the DOW isn't about to hit a "rough patch" (as Bush calls it) on the opening bell, over bond insurer crisis and weaker than expected economic numbers. (All we've done since November-December is warn you about February. But you still aren't ready to believe what is about to happen. Because you never heard the phrase, "historic proportions", so you think you know what you can expect.)

2/4/08 ALERT: When SKF (Short Dow Financials) goes UP, the DOW goes DOW-N! (See yesterday's thread below.)

Gonna be a GA-REAT day for SKF! (Price is Right "Loser" Sounder): Whomp, whomp, whomp, whomp...(deflated), Whooooooooooompppppppp.

STAY AWAY FROM GFI & IAG: IAMGOLD (IAG) used to be a good mining stock. It was hit with bad news last week that we brought to your attention, and more bad news today, as it's target is lowered -- today -- most likely based on the news we brought you last week. Gold Fields (GFI) was one of the most recommended at the end of '07. Not anymore based on this kind of news:

This conversation was conducted on February 4th 2008 from . Bellwether Report

Q: What's your professional opinion of Gold Fields Ltd.?

A: We are taking a negative stance on share of Gold Fields Ltd. as we believe the company will experience tough operationally challenges for fiscal 2008.

Q: Why do you take a negative' stance on this stock?

A: One of the biggest issues will be increases to deep level mining risks. As it stands, the company has already announced a 7% decline for its second quarter South African gold production due to health and safety stoppages over the quarter. Adding to this is the rise in the cost of capital expenditures, which will put further pressures on margins. Lastly, the recent power supply shortages that the company has been experiencing as a result of the nations rapidly increasing demand for electric power will surely put a damper on production and profitability for the near future.

Q: What more can you tell us about the Company's current position amid power issues?

A: Currently, Gold Field's power usage has been limited to approximately 90% of its normal power requirement. However, the larger threat is that there is no guarantee that this power level will be sustained. In addition, at current power levels, six of the company's 21 operating shafts will be at risk of closure, seriously putting profitability at risk.

Q: Based on this, what would you tell investors looking to position themselves in this equity?

A: Consequently, we do not advice investing in shares of GFI until we see evidence of improving operationally conditions.


(Strategy Update recommended to pull out of this stock a week ago, or more, based on S. Africa electric problems that affected GFI's production):

When it it time to buy gold, don't buy GFI & IAG.
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Strategy Update for 2/4/08 - If SKF Starts Going Up, The DOW Will Go DOW-N...

2/4/08 1:15 PM UPDATE: The future of Wall Street financials ain't looking good if you use the ETF SKF (Short Wall Street financials) as an indicator. Although there is talk of a bond insurers bailout, looks like the talk isn't enough, fast enough. As of the time of this update, SKF is UP 5% for the day. It was trending down last week, with all the warm and fuzzy talk of a bailout. When SKF starts going up, looks like Wall Street is betting it will be too little, too late. The derivatives markets start coming due this month. And that's not going to be good news for the entire market. This little detail could be why SKF is rising. (Smart money showing what is to come?) HERE'S THE PROBLEM FOR THE DOW (AND THE ENTIRE STOCK MARKET)...

Remember last week, when problems with the bond insurance market, cause the market to start heading south at least a couple hundred points, even though the Fed stepped in with an emergency rate cut the day before? Well that means this little crisis can head the market to historic downs. So if SKF is an indication of what is to come, the stock market may be heading south fast. The G-force may be crushing! (MONITOR CLOSELY...and check back here for updates.

BIG BANKS WORK ON BOND INSURERS BAILOUT: "Efforts to help bail out troubled bond insurers are escalating, with one group of big banks focusing on a potential rescue of Ambac Financial Group, according to CNBC." Banks in possible talks include RBS, Barclays, Citigroup, Wachovia, UBS, Dresdner, BNP Paribas and the now famous Societe Generale. (Does "French Rouge Trader" ring a bell? It rang the Fed's.)

Only problem, SU sources say all of this mess is worse than they are planning/can admit, they are now pandering overseas for a bailout; and AMBAC is only one little old company, compared to the big boys. (Ambac is the little wave, before the big one.)

Start watching SKF (Short financials to gauge Wall Streets latest sentiments regarding the bond insurance crisis and the likely hood that there will be a big enough bailout in time. Since SKF SHORTS the Wall Street financials, when you see it rise -- bad news for banks. If you feel the subprime, credit, derivatives and bond insurers are in worse shape than currently factored into the market, today may be the day for SKF!

RANGOLD (GOLD) is a mining stock that had a great run, as gold rose recently. It was up more than most any other mining stock you will find. But earnings came out today, and they disappointed Wall Street. Watch for this one to start under-performing the other miners. And don't but it. We put an alert on it last week, due to power outages in South Africa, so hopefully you were already out, if you had it. If not, better watch it carefully today, if you own it. (And I doubt my readership is that huge that anyone owns that specific stock.)

CHECK STRATEGYUPDATE.COM for 24 hour LIVE gold, silver, platinum and palladium charts.

PLATINUM AND PALLADIUM: Forget gold...well, don't exactly forget it, but look at Platinum and Palladium, first for Monday and beyond. With production problems in Australia (biggest producer), and South Africa (power outages over the past week, or so) -- the price of these two sister metals has taken off like the space shuttle. Even if gold and silver experience temporary "dips" as people access their take on the dollar's strength or weakness (also based on upcoming European rate cut decisions*) -- Platinum and Palladium have been nothing but UP. But you gotta watch Palladium, it goes up and down (a little more volatile) than Platinum. (But it's a fast, fun ride up, when you catch it at the bottom of the predictable, cyclical dip.)

ALERT: WITH PALLADIUM CLOSING AT ALL TIME RECORD HIGHS ON FRIDAY...EXPECT TO SEE SOME BIG AUTOMATIC PROFIT TAKING (SELL-OFFS)...SO THE PRICE MAY BE DROPPING TO EARLY "BUY" POINTS ON MONDAY MORNING!!! However, the wild-card is the fact that there are production outages at the biggest miners, causing a shortage which is why the metal has been skyrocketing. If you check the 24 chart, you will see some wild downs, and ups on Palladium, while Platinum continues to rise at at steady pace. Gold is up and down in overnight trading, too. So watch for the dip on PAL, because with Platinum rising steady, Palladium should be following that trend line.

I HATE making specific stock picks, but PAL is a $5 palladium stock that I like a lot. It can go up and down 10% in a day (before the mining outages which has cause the prices to go up more than usual, without the usual dips).

Recently, it has been leap-frogging gold and silver, having up 10% (or more) days. So you wanna make sure you don't buy it just as it's about to take the 10% down -- but if you agree that Platinum and Palladium will only be going up, due to shortages, even if gold and silver take a temporary "dip", as a world-wide liquidity infusion into the U.S., has made the dollar look temporarily stronger, then check out PAL.

(disclosure: I do not own PAL at the time of this post, but I hope to buy some at the right price!)


4:00 AM UPDATE: WOW! If you check the micro-charts on our website (StrategyUpdate.com), you can see the exact point when the price of gold (and silver) took a huge dip...more like a dive. Initially, it was up in early overnight trading in Hong Kong and Australia. If you check the point where these metals took the dive, it was right as the London Market opened! So there was either some major hedge fund profit taking, overseas; some giant overseas investor just made an ATM withdrawl (withdrew some gold, the way you and I withdrawl cash from the corner ATM) to pay for one of many upcoming financial bail-outs in the U.S.; or some other reason why some folks in London had to sell off a bunch of gold, enough to drive the price down $10 dollars from it's overnight high in the 4 am EST hour. EVEN PLATINUM, THE UNDEFEATED-ERA MIKE TYSON OF METALS THIS PAST WEEK HAS SOLD OFF PROPORTIONATELY, AS WELL. (See SU micro charts at 4am EST.)


SPEAKING OF HATING GIVING PICKS: Here are some of my favorite stocks. And it's tough to recommend them, because they are all up big today. So I make the prediction now, because even though they are up at heartbreaking levels today, I think they are all headed for continued heartbreaking upward trends. SNCR, DPTR, MOS, VOL, PAL, (and get ready to jump on the gold mining stocks). And ZD likes SEED , which used to be risky and volatile, but recently, it doesn't look so risky if you check the charts. The only risk is not having it. BUT DO YOUR RESEARCH ON THIS ONE. It's a definite BUY...but it's also a definite SELL at certain times, based on the strength of the dollar.


HOW BUSH USED THE MEDIA AND POLITICS TO HELP BRING DOWN THE PRICE OF OIL!: "There are troubling signs...serious signs that the U.S. economy is weakening."

What would compel Bush to come out so publicly in the media to create such widespread panic, when they are trying to instill confidence in the U.S. stock and industrial markets? He had to do what he could to help drive down the price of oil, because when the dollar drops in value, you can expect oil prices to rise (as OPEC has to find a way to make up for their loss in profit per gallon, since they are paid in U.S. dollars (for now).

Remember last month, when Bush flew to the Middle East to try and convince oil sheiks to increase output, so the price would drop? (See: Supply and Demand) But of course they said, "No", and kept levels steady. First of all, it's not like they can just start cranking out more oil so easily, even if they wanted to. (Which they don't!)

Secondly, there is no indication that there needs to be a boost in output, because indicators show U.S. demand slowing, if anything. (Even though Strategy Update feels world wide demand for oil in emerging markets will keep demand high -- OPEC will claim they are at maximum production levels/no increase in production to keep up with rising global demand -- and we will see oil prices rise in '08. The Batcomputer feels in March/April oil price will rise toward and above $100 a barrel.

So OPEC says, "No, gonna keep output where it is", which is supposed to keep prices stable. So Bush flies home, and returns the favor to OPEC by jumping on TV and announces to the world that there are serious, troubling signs that the U.S. economy is weakening.

And look what happens...the price of oil drops on fears of a U.S. recession. Even though Bush knows that it is more likely to be increased U.S. growth in '08, as the Fed continues to cut the dollar. (And don't think that Bush's "serious, troubling signs" announcement was also issued to help pave the way for Bernanke and the Fed to continue to cut rates at pleasing levels at the next meeting in March.)

All of these cuts will add up to global investors pull money out of other markets and having them pour it into the deeply discounted U.S. marketplace.

I don't know if any of this is true, in reality. But if it is...perhaps this is one good thing Bush has done for the U.S. since he has been in office.

And now watch for OPEC to return the favor, again, by announcing some problem they are experiencing in production.

(Remember MAD Magazine's "Spy vs Spy"?

*= European rate cut changes?: The European Bank (in London) says no rate cuts, and any talk of such is, "wishful thinking". However, The Bank of England says it will cut rates a quarter point (.25%) to 5.25%, on it's own.

OIL PRICES STILL DROPPING on fears of U.S. recession will cause slower growth. The Batcomputer does not feel oil prices will be lower, in '08, past this short-term seasonal dip.

2/4/08 Updates at StrategyUpdate.com
PLUS -- LIVE 24 Gold, Silver, Platinum and Palladium Charts!

(disclosure: UXG, and PAL was purchased since this thread was initially posted.)

Why Is The Dollar Getting Stronger and Why Did Gold Prices Drop, After 1.25% Rate Cut?

As someone who bought gold (mining stocks) much too late, but still early enough (last month), I was expecting a big bump in the price of gold (and therefore mining stocks) after the Fed added another half a point rate cut on the Fed funds, after the emergency .75% -- for an unprecedented 1.25% rate cut, which is supposed to weaken the dollar and make gold prices rise.

So as I noticed it was dropping (and it ended up dropping below the pre-cut price at the end of U.S. trading), I ran to the Batcomputer and typed, "Why are news wires saying the U.S. dollar is getting STRONGER?" (Because the dollar getting stronger, was the reason gold was heading south, as quickly as it went north after that last rate cut.)

A: First of all, as gold and other metals hit record highs in overnight trading, when the market opened in the morning, two LARGE hedge funds sold TONS of gold. (Probably much more than tons...tons and tons. A heck of a lot, let's just say.)

Why would professional investors sell gold when the whole world is expecting it to go up? Not because they don't think it will be going up, too. But because they have the price limit triggers set at those record high prices, and they strictly go off charts and numbers. They're not saying, "Hmmm...maybe we should hold it?" So that's a little of the bureaucracy that helps keep things extra safe (but not necessarily extra profitable).

And when you have that much gold dumping into the market, yes...2 companies can make the price go down.

But what about the reason the dollar got stronger according to news reports today (2/1/08),which further drove down the price?

A: After the big 1.25% rate cut, a lot of liquidity was poured into the U.S. market as a result of the new low rate. So that's a short and quick bump up, but a hard fall down. (When you pour gas on a fire, you get an initial burst of flame.)

So if we've seen the big up, get ready for the big down. When? I'll tell you if you pay for a paid subscription...

JUST KIDDING. Batcomputer says expect the price of gold to drop further on Monday, and start watching on Tuesday -- maybe Wednesday -- for gold to hit it's lows before it starts rising back up, and keeps on rising (with dips here and there, of course) on it's way to $1000-$1100.

From a price point, start buying it ("layering it in") at $880-$890. Be prepared for it to continue down to $860, even $850. So if you start layering-in your buy at $880-$890 and you see it drop...keep buying...it's going to $1000 in the next 30 days.

Platinum and Palladium are hotter than gold right now because you have mining problems in some areas around the world, so production is down, and the reserves are low. And most of the world's platinum is held in Russia. So with these two metals down in supply, they sure do mark up the price like Springsteen tickets in the '80's.

So although I do expect the price to drop between now and the next few days (and Palladium will go up 10% or more in a day (like it did today), and it will fall pretty hard the other way, too. PAL is a $5.00 palladium stock, and I've been following it since platinum and palladium started skyrocketing due to the shortage, and it can go the distance, all the way to the top of the heap, leapfrogging gold with those up 10% days like it sees. So try and catch it on the way down, but it's so hot right now, it may not fall as hard as usual. But even if you pay a little too much for this, or other metals, right now -- if the Batcomputer is correct, it won't make a difference this time next month, cause it'll be way up from anywhere it will be next week.

If you already own gold, and are nervous when you see it go down next week, hopefully this can help you in your decision making process, based on what you are comfortable with. Traders...start your engines. Long term gold holders...don't even trip when it goes down over the next three days...it's going back up.

BUT THIS IS ALL ADVICE FROM A DUSTY OLD, OUTDATED COMPUTER FROM SOME ABANDONED CAVE. SO TAKE THIS ALL WITH A GRAIN OF SALT, AND RESEARCH IT YOURSELF. Or, just wait it all out and see how the Batcomputer did, and you can try it next time.

StrategyUpdate.com Investors resource page with links to all the site my Batcomputer monitors throughout the day. (News wires, micro TV feeds of CNBC and Bloomberg, 24 hour gold charts and more.)

Batcomputer says silver (currently at $16.79) is going to $21.00, and Palladium from $490 to $500.

Strategy Update Pre-Bell Report for February 1, 2008 -- OPEC Won't Increase Oil Supply and Wall Street Bets Rate Cuts Will Benefit Housing Builders

OPEC MEETING TODAY: My sources in Saudi Arabia say OPEC WILL NOT be increasing it's oil production, as urged by U.S. President George Bush at today's meeting. Reason being, no added demand means no reason to increase supply.

Also keep in mind, they are close to maximum capacity, anyway, and you can't just churn out oil like Dairy Queen soft serve.

Although the price of oil dropped last month, after hitting a record high of $100, due to decreased demand, do not think it is because of recession fears: The drop in demand (and therefore price) is due to a seasonal cycle that occurs almost every year at this time.

Oil may drop to $85 per barrel in February (maybe $80), but expect to see the price rise to $111 per barrel as early as March.

Keep in mind, with the recent 1.25% Fed funds rate cut in January -- and Wall Street placing another half point cut at 100% for the next meeting in March, the oil sheiks aren't going to be too happy about their deflating dollars in which they are paid.

So they tend to want to charge MORE per barrel, not less, to make up the difference.

HOME BUILDERS: With 1.25% rate cut last month (and Wall Street certain of another half point cut at the next meeting), home builders benefited most by the massive cuts, last week, as Wall Street bet the lower interest rates will give a big boost to home builders and sent shares back up, off their depressing bottoms.

A 1.25% cut is a big stimulus boost, but will it actually be able to jump start the industry? All of these cuts are like giving crack to a crack addict. You get a big high, real fast...then you crash (once the credit derivatives market starts to tank over the next five months (starting this month.)

Job numbers will also play a factor in the success or failure of this big home building comeback.

METALS: Batcomputer says Platinum and Palladium will be outperforming gold and silver BIG TIME in the upcoming month(s). PAL is a palladium stock the Batcomputer likes. It's only about $5 a share. BUT BE CAREFUL...it's up 14% today (at 3:00 PM), and it goes up and down a lot in cycles. I would wait for it to drop back down some at this point...BUT, who's to say whether that will happen? LONG TERM INVESTORS WHO FEELS METAL WILL BE ONLY GOING UP...check out Palladium and Platinum, before gold, and I wouldn't be as concerned about waiting for a dip. Palladium stock I like is PAL currently trading at only $5.11 a share.)

Please read this post for more on why we feel the the subprime/derivatives/bond insurance market is much worse than has been disclosed, and how the REAL bottom this year (Dow Jones) is going to be at the 10,700 level between now and August, with lots of ups and downs. (Told you it was worse than accounted for.)

strategyupdate.com

Strategy Update January Recap, February Predictions

1/31/08 End of Month Update = WORST JANUARY IN HISTORY:

When you see the Dow trade in a 400 point range on the same day (the day after another Fed rate cut) -- something is going on...and you better be careful, out there. Those who have been following this site and blog, know that since the end of '07, we have been screaming to pull out of the market by January 2, 2008 to avoid a HUGE down month of historic proportions.

And with historic rate cuts, bail out talk, stimulus packages, and today's 200 point rally -- it is still the worst January in history. Long term investors will say, "So what, it always goes back up." And there is always plenty of money to be made in down markets.

However, for those non-professional investors -- people who cannot afford to take that kind of hit (want to avoid stepping in the biggest puddle in history, if possible) -- then I hope we gained some credibility with you for the future. If you are someone who feels safe because you stick to mutual funds -- or buy a "safe" stock and hold it for life because you know things always go up...this year's market isn't for you. READ MORE

1/31/08 Update (2pm):

* The Dow is up 120 points, after being down 190 on the opening bell. You would HOPE the market would be up after another Fed rate cut! But if people feel the market is at a bottom, Batcomputer says the DOW will be trading in the 10,700 range (the real bottom) between now and August, if not sooner. So please keep that in mind as you make your investment plans this year. It's all about the bond and derivatives market and it's coming down fast and hard. (Feel free to bet against the Batcomputer, but read the Daily Blog for previous predictions first, please.)

* GOOGLE EARNINGS ANNOUNCED AFTER THE BELL: I don't care what the earning results are...in this market Wall Street will find something they don't like and the stock will go down in after hours trading. (But this isn't based on the Batcomputer, just my opinion.)

1/31/08 Pre-Bell Alert:

* You gotta admit -- all SU has done is warn about the bond insurance crisis as we turn the calendar to February '08. Sorry I was off by a day. See 1/30 Closing Bell Investor Alert below. DOW will open up DOW-N! (Hope you can handle the G-Force)

* 1/31/08Opening Bell Update (9:33am): Dow drops 180 points in the first three minutes of trading.

* BOND INSURER BAILOUT: We are looking at nothing less than a massive government bail-out of the bond insurers. Hope they can pull it together in time, before the series of down 300 days hit the market. And SU still feels that the government/Fed will not be able to keep propping up the global economy, long term. A bail-out will help in the short term, but it'll get way too ugly, first because you can never expect for them to pull it together in time -- but I hope they do.

* SEE 1/30 CLOSING BELL INVESTOR ALERT BELOW.

* Gold dropped in overnight trading, but rebounded as the dollar becomes weaker and is trending back up -- but is going down in the 9:00 am hour. Overall, though, don't you think gold will be going up in '08? Should see some up $50 dollar days as the Fed collapses the dollar and inflation kicks in. Gold is the third currency, now. It's not about industrial use, or jewelery. It should be traded as a currency like the dollar and euro. We will see things happen to the euro this year, that we have never seen in history. Things are happening!

* I don't care what people say about supply and demand -- when the dollar goes down -- oil sheiks raise the price of oil to make up the difference. (Added inflation.) So in this case, do not look for an increase in production output to try and bring the price down.

* Weekly jobless claims and consumer spending numbers were released in the 8 AM hour. Reuters says, "Consumers spent less in December than at any time in the past 15 months while applications for unemployment benefits soared last week, two more signs the economy is weakening." This should add a little weight to the anvil, this morning.

1/30/08 Post-Bell Update:

* WE TRIED TO WARN YOU!!! DON'T WAIT TOO LONG IF YOU NEED TO ADJUST YOUR PORTFOLIO! Welp, looks like the bond insurance news Strategy Update has been crying about since late last year -- and early this year -- and even more so this month, warning of problems starting as soon as we turn the calendar to February -- has started to affect the market today, as news is starting to leak out. (See DAILY BLOG and read every thread for the past two weeks.) Evidence? The market was up 125 points (plus), but went south at 3:15pm on this bond insurers news (downgrades starting, and word is getting out that it is much worse) for a DOW close of down 37 points. (And a further slide was "saved by the bell!")

* Reuters Story on bond insurers killing Wall Streets' Rally: Wow, did my Batcomputer and Los Angeles street sources call this one!!! I have NO idea how they know these things, when they know these things (see daily blog)...but at least I listen and have this website to post the news.

* 1/30/08 3 PM HOUR UPDATE: Short term gold traders -- now is the time to sell/take profits for the day. This hour only, otherwise you may want to wait for another bump up, cause at $840/record highs, you will see some profit taking.

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Almost as Important as The Super Bowl or American Idol -- Bertankie Fed Decision at 2PM EST

UPDATE: FED CUTS HALF A POINT. Let the good times roll!


"The most important Fed rate decision ever" - Erin Burnett on CNBC 2:00 PM 1/30/08

Not that the decision deserves the attention of the Superbowl or American Idol, but the Fed will announce if there will be a Fed Funds rate cut, and if so how much, at 2:00 PM today.

If it's half a point, there is hope for the world. Anything less, and the world will sink into a black hole, economically. But remember, there is also a Britney Spears hearing about her kids coming up today, too.

GO TO STRATEGYUPDATE.COM FOR BREAKING NEWS ALERTS