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| Wednesday December 22, 2010 | |||||
Market Minute: Copper Continues To Ride High What Happened: Copper broke its record high set in mid-2008. So far this year copper prices have gone up by over 35%. And The International Copper Study Group is expecting a 435,000-ton deficit in the refined metal next year. What It Means: The market is recognizing copper's superb fundamentals. Demand is taking off and supply has no hope of catching up. Why It Matters: Time is running out to invest. This is your last chance to catch copper at reasonable prices before an increasingly enthusiastic market pushes the red metal way up. Suggested Action: The copper bull is alive and well. Invest in copper mining companies, especially those aggressively increasing output. The Obama Surprise of 2011 Most Americans don't know it yet, but the U.S. government has a big surprise in store for 2011. That's the report from a multi-millionaire U.S. businessman, who says it is critical to act now to not get caught in this trap. Gold's Big Head Fake Many gold investors aren't getting what they think they are. And they're probably wondering why their returns aren't higher. If you're thinking of getting into gold, you need to know that one of the most popular gold investment vehicles out there isn't playing straight with you. That's troublesome for any kind of investment. But for gold, it's downright unacceptable. People invest in gold as the ultimate safe haven... as protection against a plunging dollar and uncertain markets. The last thing they should have to deal with is deception. With a little information, you don't have to be a victim of the "mislabeling" this gold vehicle employs. So let me fill you in... The Better Choice: Gold in the Ground First, some background... As a gold investor, you have two choices. You can invest in the physical gold itself. Or you can invest in gold mining companies. When the price of gold is rising, the gold miners can give you more bang for your buck. Why? Because the gold you're buying is still in the ground. You get it at a hefty discount. After all, there's no guarantee that the company will dig it up. But when it does, it's going to be worth much more than the price you paid, especially with gold going up. One of the easiest ways to invest in gold miners is through an ETF (exchange-traded fund). But be careful. One trusted gold ETF is fooling investors. The ETF in question is the Market Vectors Junior Gold Miners ETF (GDXJ). Now that's a mouthful. The keyword here is "Junior." It doesn't belong in the name. But there it is, and for good reason. With their mouthwatering upside, juniors attract a lot of attention from investors. Leave off "junior" from the name and this ETF would not be nearly as popular. The fund's managing company, Van Eck, knows it too. Junior miners are to big miners what small biotech companies are to big pharma companies. They do much of the hard work in finding the products their big brothers crave. Pharmas gobble up small biotechs that have a pipeline of exciting if not quite proven drugs. Why? Because it's much less expensive to buy these small go-getters than to develop the drugs themselves. And shareholders in the small biotechs do very well when these buyouts take place. The junior miners serve the same function. These small but aggressive companies search the world for buried yellow treasure. As they document and "prove" their findings, they draw the attention of the big miners. The big boys end up buying the juniors at a sizeable premium -- for amounts way above their stock value. Shareholders make a killing. Junior miners rarely have a market cap above $50 million. They average around $30 million in size. It's not unusual for them to be bought out for twice that amount -- in many cases, 5-10 times that amount. One of the world's leading resource experts, Matt Badiali, says that "junior mining stocks are popular with investors and traders because of this tiny size... and because they offer the chance for once-in-a-lifetime gains. When one of these tiny companies finds a big precious metals deposit, the returns are extraordinary." So let me list the top holdings of GDXJ...
There's not a company under a billion dollars among them, never mind one approaching $30 million. The biggest so-called junior they hold, New Gold, is more than 100 times bigger than the average junior! Their smallest holding, Gammon Gold, is more than 36 times the average junior. At $3.7 billion, there is absolutely no way that New Gold will be bought out at twice its price. It's far too big for that kind of mark-up. Shareholders will still profit from a takeover by a bigger mining company, but their profits won't be in the same ballpark as the profits they would get from a buyout of a legitimate junior. If you were to invest $10,000 in New Gold, getting back $12,000 from a buyout would be a reasonable expectation. But getting back $20,000 - $50,000 would be dreaming. This is not to say you can't make decent money investing in the GDXJ. It's been a very good year for gold, and this ETF is up over 60% so far this year. But you need to know what you're getting for your money -- and GDXJ is not an investment in gold junior miners. Gold juniors can do much better than 60%. My colleague, Dr. Rusty McDougal, has made huge profits investing in these companies. Take a look...
Unfortunately, there is no ETF covering "true" junior miners. If you want to invest in the real gold juniors, you have to invest directly in the individual companies (like Rusty McDougal does). There are dozens to choose from, such as those I mentioned above. Most are listed on the Canadian exchanges, Toronto's or Vancouver's. That's really the only way you can set yourself up for the huge paydays that many of the juniors give their shareholders. "Complete newbie" at Internet business building finds a way to bring in profits in just 90 days! How did she do it? And how can YOU enjoy similar success... no matter what your experience may be right now? It is called the Internet Money Club, and a limited number of spaces just opened up. Click here to learn more... but you must act fast. Once those spots are gone, the door to the IMC closes for another year. "This year's conference BLEW MY SOCKS OFF again." I just had to tell you what a LIFE CHANGING experience it was to attend ETR's Info-Marketing Bootcamp for the second year in a row. I thought I knew what to expect from Bootcamp this year because I had attended last year... because you and the ETR family are committed to giving each customer MORE THAN THEY COULD HAVE DREAMED of to equip them for SUCCESS... This year's conference BLEW MY SOCKS OFF again. Thank you for being amazing people with the willingness to share those gifts with others... I will be there to be CHANGED again next year and WILL have my own business growing... (with your help, of course)! John Marsh Don't Even Think of Starting a Business Until You've Read This Book Brian Tracy calls Michael Masterson's Ready, Fire, Aim "an extraordinary book -- full of practiced, proven strategies and techniques to help you make more sales and greater profits than you ever imagined possible." And Robert Ringer says, "What sets Masterson apart from most of the gurus who write about how to do it is that he's actually done it -- over... and over... and over again." Find out just what Michael is saying in his New York Times and Wall Street Journal bestseller here.. Today's Words That Work: Cynosure A Cynosure (SIE-nuh-shoor) -- from Kynosoura, the Greek name for the constellation Ursa Minor -- is a person or thing that is the center of attention or admiration. Example (as used by Anthony Lane in a New Yorker review of the movie "The Fighter"): "[Mickey] is the cynosure of his mother's eye. 'All we ever wanted for you was to be world champion,' she tells him. No pressure there." | |||||
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środa, 22 grudnia 2010
Early to Rise - Investors Edition
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