TFN eNews 12/03/2009: Even I underestimated just how bad the situation really is!
Published via e-mail broadcast on December 3, 2009
In today’s TFN eNews:
* When liberal spending hits nouveau frugality
* Racking up gains on gold
* More gains on natural gas losses
Dear TFN eNews reader,
“So that Obama can not be blamed for the recession, I am helping him out with some serious retail therapy,” wrote one of my former colleagues (and now Facebook friend) on Black Friday.
A noble sentiment: After Pinwheels for Peace, it’s Shopaholics for Obama! Who is peace. Except when he’s for war. Which was “not the answer” up until Tuesday but now again is prerequisite for peace. Which is patriotic.
But my liberal friend’s deliberate spending didn’t make a dent in the parsimonious conservatism of the newly frugal, the unemployed, those distrustful of government-mandated recovery.
U.S. retailers posted much weaker-than-expected sales for November. Macy’s, Inc. (NYSE:M) forecast quarterly earnings below estimates and paid for the omission with a 2%-plus drop.
Same-store sales rose by just 0.5% over last year’s horror numbers as 11 out of 15 retailers missed analyst estimates — including Costco Wholesale Corporation (NASDAQ:COST), Walgreen Co., and Hot Topic Inc.
(The Costco shortfall was not my fault: I stocked up on groceries to the tune of almost $600. They never told me teenage boys eat that much!)
*** Gold hit record highs over $1,225 an ounce today. In a consumer environment like this, that’s certainly not driven by jewelry sales. But strictly by speculative demand.
(The European Central Bank also made sure that the opportunity cost of holding gold was only incrementally worse than holding euros, as it left bargain-basement rates unchanged!)
Gold may have risen by more than 7% since last Friday’s Dubai scare. But we did it one better!
As even those companies who say they have plenty of it in the ground — but haven’t produced an ounce of it — are up handsomely. One of them is Great Basin Gold Ltd. (USA) (AMEX:GBG).
We recommended this miner to Hot Stock Confidential members on November 19, with a justified expectation of 20-30% gains. We saw that today — albeit on the lower end of the spectrum.
GBG ended up being double-digit gainer #72 for Hot Stock Confidential members this year, achieved in just 10 trading days! Yesterday, we pulled the trigger on 16% on platinum miner Anooraq (AMEX:ANO).
Don’t you think it’s high time you join the HSC gains machine!?
*** Meanwhile, one single commodity continues to tank as everything else soars. Have we beaten this subject to death yet? Well, we seem to be alone among the pundits!
TFN’s natural gas strategist Andrew Snyder wrote: “I remain about as bearish as it gets when it comes to natural gas. But even I underestimated just how bad the situation really is.
“Most analysts expected the year’s first official drawdown in U.S. natural gas inventories. I expected a drop in supplies of one, maybe two, billion cubic feet of gas. (Most analysts expected twice that as the nation starts to crank up its thermostat.) In fact, I was so certain, I recommended TFN Strategic Trader members lock in gains on a couple of our natural gas plays. We did, to the tune of 56%, by selling half of our position in one play –and 50% gains by unloading another play in its entirety.
“Looks like we jumped the gun. According to the Energy Information Agency’s latest report, released at 10:30 this morning, the nation managed to produce more gas than it consumed once again. This time last week, the agency showed a gain of one billion cubic feet. This week, the figure doubled to a weekly increase of two billion cubic feet.
“Under normal circumstances, this would not be much of an issue. But the nation’s storage facilities are 99.9% full and pipeline pressures are rising as suppliers try to squeeze in as much of the fuel as possible. So far, natural gas futures have not reacted too strongly to the news (which helps prove my theory about selling yesterday). December gas contracts are down by just $0.035 so far, which puts the price at $4.495.
“As analysts finally realize this winter will be unlike any other for the natural gas market, that price will sink lower and lower. At TFN Strategic Trader, we continue to sit on several options contracts with January expectations. I expect prices to hit their lowest levels in the weeks directly following the New Year.
“Right now, one of those contracts is worth gains of 357%, as its underlying asset hit yet another 52-week low following this morning’s data.
If you “do” options, read more of my strategy here. If not, you have the option of shorting some of the nation’s largest gas producers, like Chesapeake Energy (NYSE:CHK) or Range Resources (NYSE:RRC)…”
But wait, Andrew’s not done yet. Read more right here! http://www.todaysfinancialnews.com/oil-and-energy/high-fives-for-the-bears-10466.html
*** *** If you want to make the highest gains, you have to play the smallest stocks!
We’ve identified 12 tiny stocks with “Moon Shot” potential! Read on… http://www.todaysfinancialnews.com/PSC/LAUNCH/EPSCKB08.html
*** Quote of the Day:
“It was the speech of a Nobel War Prize laureate.” — Gabor Steingart, Der Spiegel
Recommended Reading:
3 Penny Stocks With Winning Potential
Today’s Top 3 Financial News Stories:
MoneyNews.com – Retailer Numbers Falling Hard “U.S. retailers from Macy’s to Costco posted much weaker-than-expected sales for November as shoppers focused only on big bargains at the start of the key holiday selling season.”
Telegraph.co.uk — Gold hits new record “Gold hits another record high as demand for the precious metal shows no sign of abating.”
Bloomberg.com — Services Industries in U.S. Unexpectedly Contract “Service industries in the U.S. unexpectedly contracted in November as companies lost confidence the recovery will gather strength.”
Cordially yours,
J. Christoph Amberger
Executive Publisher, TodaysFinancialNews.com
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