Monthly Archives: February 2012

Critical Warning Number Six

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Critical Warning Number Six by Michael Lombardi, Profit Confidential

Know Here What is Critical Warning Number Six

When I first got this controversial report by Michael Lombardi, entitled the Critical Warning Number Six, while it is an economic issue, we all know how economic and financial standings can affect relationships whether it be a marriage, family or even for singles in a relationship, that I feel I had to share to readers. Money matters collectively is one of the triggers of divorce, and is one of the factors involved as to where and how a marriage or family will thrive, as well as planning for the future to the point of considering relocation sometimes around the globe. Thus I felt the moral obligation to share this report so as to give ample time for couples and families to plan ahead. In the Critical Warning number Six, Michael Lombardi talks of his expert prediction of a major US economic disaster in six months ( as of August 14, 2011) or maybe less.

In case one might think that this is a prophet-like prediction, it is far from that. Michael Lombardi has a master’s degree in one of Europe‘s oldest universities – his passion has always been analyzing the economy and has been known to have made several predictions based on expert analysis in the past decade, to include the surge of gold prices, the crash of the housing market in the US in 2007, the crash of the stock market thus resulting to recession in 2008 and 2009. And now in this Critical Warning number six, he talks of an economic disaster several months from now, worse than 2008 and likened to The Great Depression.

Aside from his personal recommendations about where to put your money on for the long-term, on the immediate short-term action plan when unemployment is becoming an ever growing threat, it is best to prepare us through several ways: (1) acquiring additional skills to enable us to adapt to employment opportunities; (2) finding other sources of income, one that is globally-based so that the impact of recession is lessened (as opposed to local sources), such as internet opportunities; (3) looking at opportunities abroad whether for mere employment or an entire family relocation where it will be more feasible to live.

Secure a good health insurance for you and your family.

Learn to live simply and curb on some wants and unnecessary expenses.

Find ways and means to cut bills and expenses.

While this is a controversial report, being forewarned of this Critical Warning Number Six by Michael Lombardi will help us get prepared should it come, especially that should his expert prediction come to pass as all his five other predictions did, this will definitely be a major life-changing situation.

Also Read: Critical Warning Number Six

Also Read: Critical Warning 6

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Gold and Silver Outperform in January, Is There More Upside in 2012?

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With January wrapping up, I’ve looked at some of the sectors in the market to see their relative performance. The January flow of money is interesting to note, as this can indicate where the big funds are placing their bets for the rest of the year. As the clock ticked over into the New Year, the results are that silver and gold have been the big winners in January.

Silver was up approximately 20% and gold up just over 11% for the month of January. In fact, if we looked at the entire precious metals sector, like platinum and palladium, they’ve all had great a great month. Is this more to go for these precious metals? I would say yes, although I wouldn’t rush out and buy precious metals tomorrow, as there are always some consolidation gains before moving up.

With the Federal Reserve stating that they are going to leave rates at these low levels until well into 2014, we’re looking at more monetary stimulus worldwide being implemented over the next couple of years. This will inevitably create inflation and a lack of trust in the faith of paper currencies. This added liquidity will also be pushed into commodities, as it has historically. Just look over the last 10 years and you will see gold and silver prices rising along with additional liquidity (money printing).

This creates value in gold and silver mining companies. Both big-cap and small precious metals miners can offer some value for the investor. Barrick Gold Corporation (NYSE/ABX) and Goldcorp Inc. (NYSE/GG) are huge, diversified precious metals mining firms that have a variety of gold and silver mines. This diversification protects the investor from any problems at one specific mine and the scale of production allows a better ability to predict the flow of revenue from gold and silver sales.

Small- and mid-cap precious metals miners can offer the additional upside of being potentially bought out by the bigger gold and silver miners. Firms like Nevsun Resources Ltd. (AMEX/NSU), which has properties bearing gold, along with copper and zinc, start to look attractive to bigger gold firms that need more precious metals reserves. Plus they pay out a small dividend, which is an additional bonus. Getting paid to wait while the price of gold continues to go up is a nice bonus.

In the silver space, an interesting company is Silvercorp Metals Inc. (NYSE/SVM). This is a company with $1.00 of cash per share, forward price-earnings ratio of 12, and revenue that continues to grow. Profit margins are a healthy 38% and the company has no debt. With prices of gold and silver, as well as other precious metals, continuing to move up, you should look at the miners that have a solid resource base, relatively low level of debt, and a consistent history of hitting their targets.

One area that management can’t control is the actual price of gold and silver. But, thanks to the statements by central bankers and politicians around the world, they’ve essentially laid out the roadmap for the next several years. With more monetary stimulus—meaning more money printing—we will get more inflation. This is a hugely bullish sign for precious metals.

Gold and silver will continue to go up as long as central bankers keep the money tap open.

Gold & Silver – Why You Wanted Some Yesterday & Need Some Today and Tomorrow

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The price action in gold and silver is much more positive and these precious metals are seemingly now out of their recent price correction. I firmly believe that an investment portfolio should have some exposure to these precious metals, as the commodity price cycle remains one of the only major investment themes this decade. We’re probably halfway through it.

There are so many reasons to own some gold and very few not to. Being commodities, they are inherently volatile and so are gold stocks. But that’s the risk you take to own a store of value that is unique in the world.

The spot price of silver has also been particularly positive lately. A silver trade is perhaps even more attractive than gold due to its stronger correction. A lot of Street analysts have been saying to buy silver over gold, because it has more potential upside. As a commodity, silver is used in a lot of manufacturing (especially automobiles) and we know that the industrial economy is outperforming a lot of other industries.

There are always attractive trades in mining companies, but you don’t have to take on company-specific investment risk to have some exposure to gold or silver. There are all kinds of exchange-traded funds (ETFs) that have physical ownership of gold or silver bars and/or futures. For a speculator, I’d consider some mining companies along with a physical position in gold and silver. Today, there are even ETFs that allow you to have a leveraged position in the spot price action. A number of funds, for example, use derivatives to give you twice the percentage change in the spot price of silver or gold. You can even use these funds to bet against the commodities.

In this kind of market, there’s no need for investors to rush into anything. However, I do think that the fundamentals are strong enough for investors to have some kind of hedge in their portfolios, even with the spot price of gold near its all-time high. The prospects in the world for sovereign debt defaults, inflation, war, and currency instability are too great not to warrant some exposure to gold and silver. And it isn’t just these factors that make these commodities attractive. It’s the demand/supply factor as well. Despite the fact that many mining companies are awash in cash (see Precious Metals Winners—Three Excellent Wealth-creating Stocks), global supplies of gold and silver are relatively stagnant.

Probably, the better actionable trade at this time would be to buy silver. Large-cap gold stocks haven’t done much of anything over the over the last 12 months and I don’t believe they need to be an area of focus for equity investors. I’d rather own higher dividend paying stocks in other industries. At the micro-cap level, the trading opportunities are plentiful, but event-driven.

This year is going to be a wacky one for global financial markets. There’s so much political interference that is helping capital markets over the near term. Longer-term, however, the structural problems facing most of the world’s mature economies remain and that’s why you want some exposure to gold and silver. Whether economies get better or they don’t, spot prices should still move higher.