Strategy Update News Wire for Tuesday March 4, 2008

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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

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.

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

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.
StrategyUpdate.com for updates, news wires and 24 hours live gold charts.