Archive for March, 2012
A Platinum-Gold ETF Showdown
Posted by Matthew Sauer, Esq.
NEW YORK (TheStreet) — Once an investment darling, gold has run into troubling headwinds during the opening quarter of 2012 as improving economic conditions have driven investors out of safe-haven asset classes. The Federal Reserve and its chairman, Ben Bernanke, have done little to instill confidence either; hints have been dropped, but with no solid word on additional rounds of quantitative easing, the yellow metal has struggled to regain any solid footing. As gold has foundered, other members of the precious metal spectrum have managed to gather steam. Platinum, in particular, has become a high riser. The ETFS Physical Platinum Shares (PPLT) has gained nearly 20% since the start of the year. Comparatively, the iShares Gold Trust (IAU) has seen only 7.5% returns. Platinum has a history of being more expensive than gold. However, as investors have poured into funds like IAU and prices have surged to staggering highs in recent years, the gap between the two precious metal players has closed and even reversed. Amid the turmoil that plagued the global marketplace during the final quarter of 2011, the platinum/gold ratio broke below parity. The recent run-up has helped stifle this decline and, since bottoming around 0.87 in January, the ratio has managed to creep back toward 1. 10 Top Warren Buffett Dividend Stocks Platinum’s gains have been encouraging, but it still looks inexpensive and this ascension could continue. As Bespoke notes, the ratio’s average since the turn of the new millennium stands at over 1.7. Unlike gold, which is usually turned to as a hedge during periods of global economic turmoil, platinum is a fair-weather precious metal. Like silver and palladium, platinum is used across a variety of sectors like automobile manufacturing. Therefore, when skies clear and markets head higher, platinum tends to follow suit. This quality has become glaringly apparent this year. Platinum has enjoyed a strong run-up in recent months. However, any chance of heading higher will ultimately depend on whether the U.S. and global marketplace can stay on its path to recovery. 10 Mid-Cap Stocks That Have Almost Doubled in 2012 While economic indicators have pointed to continued improvement here at home, there are still plenty of factors threatening to upend the rally. A harsh, persistent Chinese economic slowdown, for instance, could be enough to knock the industrial metal from its winning path. Europe, meanwhile, remain a contentious region as the sovereign debt crisis lingers. We have seen some solid progress on this front. However, in the event that fears flair up once again, the pain could spread to platinum resulting in gut-wrenching action for those who are all-in with PPLT. Source – TheStreet.com
Dion’s ETF Winners and Losers: VXX, FBT
Posted by Matthew Sauer, Esq.
NEW YORK (TheStreet) — Welcome to Don Dion’s “ETF Winners and Losers.” Be sure to stop by throughout the week to find out which ETFs are gaining or losing. Winners iPath S&P 500 VIX Short Term Futures ETN (VXX) 9.2% As major U.S. stock market indices waver, the fear index is finding some strength. Over the past two days, the VIX has managed to recoup losses and power back to March highs. It will be interesting to see if VXX can head higher in the days ahead. The fund continues to trade around all-time lows. First Trust NYSE Arca Biotech Index Fund(FBT) 1.4% Amylin Pharmaceuticals (AMLN) is surging during mid-week trading following news that the company had rejected a $3.5 billion bid from Bristol-Myers (BMY). FBT lists AMLN as its fourth-largest holding, accounting for more than 6% of its total portfolio. This jump has helped FBT return to its highest level since mid-February. The strength has not spread to all biotechnology ETFs. The iShares Nasdaq Biotechnology Index Fund (IBB) is taking a hit as the end of trading approaches. Guggenheim Shipping ETF (SEA) 1.1% Shipping stocks have seen a nice run recently, pushing SEA to four consecutive days of gains. The fund remains off its 2012 highs, but in the event that strength persists, this level may soon be tested. Despite this upward action, I urge conservative investors to watch from the sidelines. We have seen in the past how volatile this corner of the transportation sector can be. In the event of an upheaval, it will likely take a sharp shot across the bow. Losers Market Vectors Junior Gold Miners ETF (GDXJ) -4.2%Gold miners are locking in another day of losses as markets waver and the yellow metal heads south. The past two days of losses have pushed GDXJ to its lowest level this year. Gold producers aren’t the only precious metal miners taking a hit, though. The Global X Silver Miners ETF (SIL) is also sliding. Guggenheim Solar ETF (TAN) -3.7% The past two days of losses have pushed TAN to its lowest levels since the start of the year. The rollercoaster ride this fund has witnessed in 2012 has been gut-wrenching. However, given the inherent volatility of the solar energy industry and the top-heaviness of the fund’s index, it is not entirely surprising. All prices as of 2:10 PM DST Written by Don Dion in Williamstown, Mass. Source – TheStreet.com
Yen Strategy Pays Off for Now: DXJ vs. EWJ
Posted by Matthew Sauer, Esq.
NEW YORK (TheStreet) — China and Europe continue to be the standout points of contention as we prepare to close the book on the first quarter of 2012. On a lighter note, however, major United States equity indices have managed to maintain their footing at historical and psychologically important levels. The Nasdaq, for instance, is seeing its strongest first quarter since 1998. While the Nasdaq, S&P 500 and Dow Jones Industrial Average have become the poster children of strength over the past few months, they are not the only high fliers. On the contrary, in 2012, Japan’s Nikkei 225 Index has also carved out a leadership role, surpassing the S&P 500 on a year-to-date basis. According to a report from Bloomberg, this rally has allowed it to power to its highest level since 2011′s devastating earthquake, tsunami and nuclear crisis. Improving global confidence has helped to fuel this iconic Japanese equity index’s ascent. The nation’s floundering currency has also played a crucial role in the rally. The yen has been interesting to watch throughout the past year. Initially, following last year’s string of disasters, the closely watched currency took off. In an effort to stem the negative impact of an excessively strong yen, the Bank of Japan has taken policy actions to rein in its strength, however. Most recently, in February, the authority announced a plan to purchase 10 trillion yen worth of government bonds. So far, these moves have been effective in driving the currency lower; since the start of the year, the Currency Shares Japanese Yen Trust (FXY) has tumbled more than 7%. Japan-hungry investors can turn to a number of options in order to take aim at this developed marketplace. Each fund offers a different take, allowing individuals to customize their exposure to fit their specific outlook. The largest and most popular way to target Japanese equities is the iShares MSCI Japan Index Fund (EWJ). The fund is designed to cast a wide net over the country’s marketplace, targeting more than 300 different companies. EWJ’s underlying index is weighed using factors like market capitalization; meaning household names like Toyota Motor(TM), Honda Motor (HMC) and Canon are given top spots. Source – TheStreet.com