Gold fell almost 5% today to below $1,160 an ounce on the latest jobs data. Unemployment unexpectedly fell to 10%. Employers only cut 11,000 jobs in November. That's the least since the recession began, and less than the 130,000 expected cuts. This could be the beginning of the gold correction so many are predicting...
Economist David Rosenberg says we're in a secular bull market for gold. He says central bank purchases, led by China, will eventually push gold to $2,600. Like Jim Rogers, though, Rosenberg thinks the short dollar/long gold trade is crowded. He expects a short-term correction in gold of as much as 20%. That would bring gold near its 200-day moving average of $970 without violating the trendline.
Making a gold correction even more likely, Rosenberg's biggest gold catalyst, China, already said it won't recklessly chase prices up...
"We must keep in mind the long-term effects when considering what to use as our reserves," said Hu Xiaolian, the vice-governor of the central bank. "We must watch out for bubbles forming on certain assets and be careful in those areas."
With China's $2.3 trillion in reserves, it's difficult to buy gold without moving the market. Expect China to buy on the dips, creating a floor for the metal.
Finally, the great Richard Russell – of Dow Theory Letters fame – weighs in on the gold debate. From yesterday's update:
Question – What would it mean if [the Dow] Industrials and [Dow] Transports broke out to joint new highs?
Answer – I think it would mean that the Bernanke Fed was beginning to win the war against deflation, and assets were once more beginning to inflate. In that case, gold should move higher.
Question – What would it mean if this advance topped out, and the bear market was taking over again?
Answer – I think it would mean that the Fed had lost its battle against inflation. If that was the case, I believe the Fed would spend even more, there would be even more stimulus programs and interest rates would remain at zero "for the duration." In that case, gold should move higher.
(Thanks to The Daily Crux for passing that along.)
Doc Eifrig just sent over this money-saving tip for holiday travel...
Riding the bus is coming back. And these days it's not like the buses of old, with bums in the back drinking whiskey on all-night trips to Tennessee. These new buses are filled with modern conveniences and, in some cases, are better than the train or plane.
The coaches feature WiFi access (so you can surf the Internet), power outlets, and even movies. But the best part is the price.
If you get the first seat on the bus, it's only $1. Yep, that's right, one buck. But even if you miss that first seat, you can get tickets for next to nothing.
The bus lines "Bolt Bus" and "MegaBus" are offering dirt-cheap fares in the Northeast (Bolt) and Midwest (Mega).
I recently rode from Baltimore to New York and loved it.
The fare round trip was only $34.50, which is 73% less than the cheapest Amtrak rate. And I booked it at the last minute, too.
Here's a few sample fares from Bolt Bus, if you buy the day before travel:
Departure
Destination
One-Way Fare
Baltimore
Boston
$16
New York
Boston
$15
New York
Philadelphia
$13
D.C.
New York
$19
If you can plan out a bit further, for example three weeks, you can book a Baltimore-to-NYC roundtrip for only $20.
The buses run every two hours and the pickup and dropoff is right next to the train stations in both cities.
If you're trying to travel on the cheap or have kids who love to travel, this deal is a perfect Retirement Millionaire winner.
If you're looking for more tips on saving money and living well, check out Doc's Retirement Millionaire. His latest issue is out now. In it, he tells readers about the six questions you must discuss with your family, a gold scam you should avoid, and many other tips to improve your lifestyle. To access this information – and learn how to save as much as 80% on almost everything you buy – click here.
The FDA rejected Hemispherx's (HEB) drug Ampligen this week. The stock plummeted 40%. It's down over 85% from its 52-week high.
According to our biotech expert George Huang, it's a classic pump and dump scheme, the kind Brian wrote about in Growth Stock Wire. Here's what else George had to say...
For the last few months, I've been telling FDA Report subscribers to steer clear of Hemispherx... that the stock was going to crash. We couldn't short it because shares were impossible to borrow. But we did make a short trade on Osiris, an overhyped stem-cell company. It expired this month for a 40%, four-month gain.
Every month, George publishes a "crash list" full of worthless biotechs. All his trades on it have closed for double- or triple-digit profits so far. If you want to get a peek, click here.
New highs: Verizon (VZ), Johnson & Johnson (JNJ), iShares High Yield Bond Fund (HYG), Burlington Northern Santa Fe (BNI), AmeriGas Partners (APU), Providence Service Corporation (PRSC), Ormat (ORA), KMG Chemicals (KMGB).
Are the holidays making you lethargic? The mailbag is lacking creativity. Give us something good... feedback@stansberryresearch.com.
"Thank G-d Barney Frank is only a congressman. Think of the damage he could do as a Senator!!!" – Paid-up subscriber E Williams
Goldsmith comment: Our apologies. We mistakenly referred to Barney as a senator and not a congressman. Thank G-d it was only a mistake.
Regards,
Sean Goldsmith
Baltimore, Maryland
December 4, 2009