Annaly Capital: A Sinking Ship?

Ouch, a terrible selloff Tuesday (May 28, 2013) continued into the morning session yesterday (May 29, 2013) which knocked the mortgage real estate investment trusts (mREITs) down sharply on continued fears that the Federal Reserve will cease its asset purchases and interest rates will rise. By the end of the trading session yesterday, mREIT stocks had recovered most of their morning losses. Why so volatile? While the Fed has not confirmed or denied any actions yet, interest rates have been on the rise in the last few weeks, which can pressure the mREITS as I will discuss below. In fact, mortgage rates have now spiked to their highest level in a year, which has further pressured the mREITs. May has been one of the most awful and painful months in history for investors in mREITs as the entire sector has seen a selloff after poor earnings from both American Capital Agency (AGNC) and Annaly Capital (NLY). In light of the recent action, I was compelled to......................READ MORE

American Capital Agency: Time To Abandon Ship?

The pain continues. May has been an awful month for investors in the mortgage real estate investment trusts (mREITs) as the entire sector has seen a sell-off after poor earnings from both American Capital Agency (AGNC) and Annaly Capital (NLY). There was also disappointment reported from the hybrid mREIT American Capital Mortgage (MTGE). Last week, we saw a similarly depressing earnings announcement from an up and comer in the mREIT space, Western Asset Mortgage (WMC). After being inundated with inquiries regarding the future of AGNC and its main competitors, I felt compelled to.........READ MORE

The Fed To Trigger A Large Correction? Profit On The Panic

Stocks have had strong gains for six months straight after dipping in November. We are now in the longest stretch in over 7 years without a correction of 5% or more. This cannot go on forever, even with the Federal Reserve having its pedal to the medal. In fact, as soon as there is a confirmed indication that the Fed will pull its foot off the gas to reduce its massive third round of quantitative easing, aka QE3, big money will likely hit the sell button. Just this morning (5/20/13) the Dallas Fed President stated that it is not a matter of "if" they will dial back the easing, but "when" and how much. In fact, Fisher stated that halting it altogether will be "too violent for the market." I do not know how or when they will begin to dial back, but we are overdue for a correction. I think the market will ......READ MORE

After Dismal Earnings, 3 Hybrid REITs I Am Considering To Replace American Capital

Following American Capital's (AGNC) dismal quarterly performance, I have been on a hunt for a replacement for this beloved dividend paying real estate investment trust [REIT]. For my followers not familiar with a REIT, a REIT is simply any corporation, trust or association that acts as an investment agent specializing in real estate and real estate mortgages under Internal Revenue Code section 856. The rules for federal income taxation of REITs are found primarily in Part II (sections 856 through 859) of subchapter M of chapter 1 of the Internal Revenue Code. The advantage of being a REIT is that the company is entitled to deduct dividends paid to its owners, and thus a REIT may avoid incurring all or part of its liabilities for U.S. federal income tax. To meet the qualifications, REITs are required to distribute 90% of its earnings to shareholders. Although I still like AGNC, its earnings report (links to a pdf file) was worrisome. For the first quarter, it reported comprehensive loss per common share of $1.57. This included $0.64 net income per share with a $2.21 loss per common share in other comprehensive areas (such as unrealized losses on investments). AGNC also reported a $0.78 net income spread per share (that is, the income made after cost of borrowing, expenses and interest income). The book value of the company dipped 9% to $28.93, down from $31.64 at the end of 2012. In searching for a replacement

Despite Record Physical Demand And A Short-Covering Rally, GLD Still Bleeding Assets

For anyone who has not been paying attention, gold and silver are in the grasp of the bears now. Prices of gold are now down almost 24% since hitting an all-time high of $1,920.80 an ounce in September 2011. Silver is now down 52% from its April 2011 highs of $49.51. This price action has sparked fears that the bull market in metals, particularly gold and silver, is coming to an end. Investors have been bailing out of the SPDR Gold Trust (GLD) and the iShares Silver Trust (SLV). The GLD is trading at $141.60, whereas the SLV is trading at $23.50. They are now down 125% and 22.0% in 2013, respectively. With the historic sell-off that took place last week, huge physical buyers stepped in. Much of the physical demand came from Asia and the U.S. On the silver front, physical demand is...............READ MORE

Record Demand Lifts Gold Prices, U.S. Mint Suspends Sales

The disconnect between the price of gold as determined by futures trading and ETF selling versus the demand for physical gold and silver continues to grow. Demand is now near all-time highs after a historic sell-off last week. The most popular ETFs that track gold and silver, the SPDR Gold Trust (GLD) and the iShares Silver Trust (SLV), are now at $138.69 and $22.42, respectively. With the sell-off in the metals, GLD has been forced to liquidate about $12 billion worth of gold in order to meet shareholder redemption demand as a result of the selling. This pressure on the GLD may continue due to the redemption need, however the price of gold has a tailwind in the form of near record physical bullion buying. The buying is so great that national Mints are having difficulty keeping pace with buyer demand......................READ MORE

Gold, Silver, And Copper Are In A Bear Market - What To Look For This Week

Prices of gold are now down almost 26% since hitting an all-time high of $1,920.80 an ounce in September 2011. Silver is now down 53% from its April 2011 highs of $49.51. Copper has also been very weak, plunging 25% from a recent February 2012 high of $3.98 a pound. This price action has sparked fears that the bull market in metals, particularly gold and silver, is coming to an end. Investors have been bailing out of the SPDR Gold Trust (GLD) and the iShares Silver Trust (SLV). The GLD is trading at $135.47, whereas the SLV is trading at $22.40. They are now down 16.4% and 23.8% in 2013, respectively. The Copper ETN (JJC) has lost 15% year to date, trading at $39.18. This article will.............................READ MORE

The Pain Of Lower Gold Prices: Barrick To Sell Assets

As most of us know, the only way to describe the price action in gold and silver on April 12th and April 15th is panic selling. There were several reasons for the initial bearishness on April 12th which led to technical and panic selling into April 15th in the precious metals market. We have witnessed the strongest sell-off in gold since 1980. Much of the selling seems to have subsided for now, as gold has stabilized this week, coming up each day of the past week. Gold has come back from the lows of the week and is currently at $1407, while silver is at $23.23 an ounce. The pain in the precious metals has sent the SPDR Gold Trust (GLD) and the iShares Silver Trust (SLV) down considerably, trading now at $135.47 and $22.44, respectively. The pain in the metals has crushed the miners. The Gold Miners Index (GDX) is down another 6.5% this week, and down 40% year to date. The drop in gold prices is leading to one of the top gold producers, Barrick Gold (ABX), to contemplate..................................READ MORE

Gold, Silver And Bears Oh My: What Is Behind The Huge Sell-Off?

Gold was slammed on Friday (4/12/13). So was silver. The SPDR Gold Trust (GLD) bled 4.70% to close at $143.95 and the iShares Silver Trust (SLV) lost 5.32% to close at $25.28, both making brand new lows. The most frequently traded gold futures, the June 2013 gold contracts, fell below $1,500 an ounce for the first time in almost two whole years. This move appears to be largely technical in nature but has also been motivated by some important fundamentals. On Friday, there was no real economic news at all that should have resulted in such a volatile move, but there were some economic trends and pieces of news that fundamentalists took note of that likely started the selling. First.....READ MORE

Don't Panic Over The Silver Sell-Off

Panic. Fear. Sell now. That's what I have been hearing over and over regarding the precious metals these past few weeks. I have been inundated with personal messages and social media inquiries on what to do as gold and silver are under pressure once again this week. They have pulled back significantly from their autumn highs that were hit on October 4th this year after spiking following global central bank actions in August and September. All precious metals, especially silver are taking a beating again this week, and I view the sell-off as...........READ MORE

A Large Correction Coming? Ways To Profit On Volatility

Stocks have had strong gains for four months straight after dipping in November. However, there are some signs that this rally could be stalling. The Dow is now at 14,519 and the S&P 500 is at 1548. At the time of this writing the stock market is facing its worst week of 2013. With the Dow Jones ETF (DIA) is at 5 year highs at $144.89 and SPDR S&P500 ETF (SPY) at near its highs at $154.75, we have to question how we got here to make money......READ MORE

MIDZ: What Does The Upcoming Reverse Split Mean For Investors?

Bearish funds are an excellent way to profit from short-term panic as well as sustained selloffs and can help hedge one's portfolio. Because the Dow (DIA) and the S&P 500 (SPY) are up 12% and 10% year to date, one of the most popular emerging mid cap bear funds, the Direxion Daily Mid Cap 3X Bear Fund (MIDZ) is down a whopping 33% this year. As many mid cap stocks are up significantly in this bull market, as the DIA and SPY have been up in the last few years, MIDZ has degraded as it has been sold off because the investments made by MIDZ management led to losses. This has led to Direxion, a leader in providing popular alternative investment solutions, including other leveraged bear funds, to announce on March 1, 2013, that it will execute a reverse share split of the popular MIDZ Because....READ MORE

Silver Will Rebound

The last two years have given silver investors an excellent chance to buy on the way down as we've pulled back steadily since April 2011. This selloff has presented precious metal investors with opportunity buys for the long term. As the price has come down I have been recommending for some time to dollar cost average and/or pyramid down into silver and silver equities. My primary thesis, much of which is laid out in the background section here, is that the endless easy money policies from central banks around the globe have created a long-term tailwind for the various precious metals. Besides my favorite investment approach, physical coins and bullion, I have further recommended considering several gold plays, most notably the SPDR Gold Trust (GLD) and the iShares Gold Trust (IAU). I believe that although these are paper investments, they can still be profitable as all precious metals will benefit from inflationary actions by central banks worldwide in the coming years. While gold is a straightforward way to benefit from the currency debasement occurring globally, I believe that silver is poised to outperform in the next decade. Bottom line - I believe it will rebound because.....READ MORE

My 2 Favorite Silver Stocks, On Sale And Delivering Results

In light of the Federal Reserve announcement to continue to accelerate its debt-buying program, I believe that currency devaluation is a goal of the US central bank which is a buy signal for the metals and miners. The worries in Cyprus, namely the fear that this country's idea of raiding citizen's bank deposit accounts could spread throughout Europe, gives investors more reason to buy the metals. Further, I believe that inflation will pick up in the next few quarters. As such, with the recent weakness in the metals, I believe it is a good time to initiate or add to existing positions in the sector, particularly for the long-term investor. Further, while the aforementioned ETFs should perform well in 2013, individual stocks can offer substantially better returns relative to the ETFs and physical assets if selected carefully. With the recent sell-off, some of the best of breed silver companies are just oversold and are now opportunity buys for the long-term investor looking to initiate or add to a silver position. The purpose of this article is to review and highlight a few of my favorite stocks in the silver space that..............READ MORE

Almaden Minerals: This Stock Is A Leveraged Buy On A Gold Rebound

AAU is a mineral and precious metal exploration company working primarilty in North America. The company has several highly interesting exploration projects. Most notably AAU has the Tuligtic and El Cobre projects in North America (figure 1). These properties are largely at early stages of development but they represent significant opportunities for the discovery of large gold, silver, copper, lead and zinc deposits. One such example is at its site at Ixtaca, Mexico where significant discoveries were made in 2010. I like AAU's two-fold business plan. It is simple. First, AAU wants to....READ MORE