Will Tesla’s Demand Outstrip the Supply of This Key Commodity?

Posted on April 14, 2016 by Nirav

Tesla just pre-sold a whopping 325,000 Tesla Model 3s.

Yup, excited buyers gave the company $325 million in an interest-free loan for a car they haven’t seen, or who’s factory still hasn’t been built yet.

The excitement is understandable.

And it’s remarkable that a car company with no advertising, and no dealers can get people to stand in line for hours to buy a car that won’t be ready for over a year. Most of the people in line will have to wait 2 years, and probably won’t receive the $7,500 tax credit for electric cars either.

The key component to the car is the battery. Tesla is still building the gigawatt battery plant in Nevada, and is expected to be a large consumer of global Lithium ion production.

By the time Elon Musk’s prediction of rolling out 500,000 cars rolls around, it will most likely absorb the entire world’s annual Lithium production!

Unsurprisingly, prices for Lithium has soared, doubling this year.

This chart from the Economist shows prices up 3 fold from the long-term average of $5,000 per tonne. There are also rumors out of China that prices might double again from here.

If Tesla is absorbing the entire global production what are the other electric car manufacturers going to do, not to mention the makers of power tools, household appliances and rechargeable batteries, that all use Lithium ion as well.

Sounds likes it’s time for a short-term speculation in Lithium exploration/production companies!

While gambling on these sort of things rarely work out, if you’re so inclined, you might want to check out Global X’s Lithium ETF, which invests in the full lithium cycle, from mining and refining the metal, through battery production.

The fund isn’t exactly cheap, with a 0.77% expense ratio, and it owns 25 different companies, with Tesla (TSLA) being one of them. Also, two companies consist of 28% of the fund – FMC Corp and Sociedad Quimica Y Minera De Chile (or The Chemical and Mining Company of Chile, cutely called SQM).

According to Morningstar analysis, FMC is undervalued by about 20%, and SQM is overvalued by 25%. While valuations are highly subjective, Morningstar is a good quality resource at a cheap price.

I’ll probably pass on this fund, despite the fact that it’s an interesting opportunity.

Trading & Investing Strategies for the Current Environment

Posted on November 22, 2009 by Nirav

This guest post comes from Kevin at 20smoney.com, a blog covering financial topics such as investing, money management and the development of income streams.

Despite the fact that most people tend to think that a market that has already booked a 60%+ rally is a great time to be invested in stocks, I tend to lean the opposite direction. With such a massive run already in place, the risk/reward scenario is not nearly as good as it was when compared to earlier in the rally. So, how should you play the current environment?

The sectors with some of the largest gains this year have been technology and financials. As such, these sectors warrant extreme caution if you are currently long or are getting long any companies within these sectors. If you want to be long the sector, but aren’t sure of specific stocks, consider mutual funds or ETFs such as Financial Select Spider (XLF) and Technology Spider (XLK).

If you’re looking to gain exposure in these sectors, I strongly encourage you to monitor some basic technical signals so that you can identify a clear exit point in case the broad market and/or these sectors reverse and head lower. Watch the 20 and 50 day moving averages. If the stock (or ETF) breaks through these key averages, be ready to exit the position. If you don’t feel comfortable with such a strategy and want to take a more long term focus, I would then wait for a significant pullback, at least 5%, to enter your position. Remember, you’ve already missed a large run in stocks, and you need to be careful entering a position at these levels.

If you have held stocks this year, especially in the sectors named above, you may consider actually selling some of your positions to lock in profits. Taking profits is never a bad idea, and if you don’t want to pull out completely, simply sell half or maybe a third of your position.

If you are looking to enter other long term positions, I would point you towards dividend paying companies that will pay you to hold them. This will help offset any losses in share price if there is a reversal in the markets. Also consider multi-national companies that generate a significant portion of their earnings from abroad (this will help you hedge against weakness in the U.S. economy). In this category, consider Philip Morris International (PM), Wal-Mart (WMT), McDonalds (MCD) and perhaps Microsoft (MSFT).

For me personally, I’m pretty bearish on the economy and the markets. I’m skeptical on the strength and durability of the recovery and the stock market rally. I believe that we have structural issues with our economy that have not been addressed and therefore will prevent real growth. I’m not adding to any positions in the current environment, rather I’m “keeping my powder dry” waiting for much more attractive buying opportunities. I do own gold related instruments such as GLD and GDX because I think gold has the potential to perform well in both an inflationary recovery and a deflationary environment (pretty much the only asset with this ability).

As I mentioned above, if you’re looking to try and make a few bucks on the continued rally in the broad markets, be extra careful and be ready to exit by monitoring some key technical sell indicators. Protecting your money is a better strategy, in my opinion, than chasing returns, especially today. If you’re a long term believer in the recovery and the future of the economy, get long some solid companies, but don’t be afraid to be patient and wait for better entry points.

Guess Who’s Betting On Inflation!

Posted on September 12, 2009 by Nirav

If you’ve been reading the popular press for the past 6 months, there’s been a slew of articles talking about deflation. I’ve been somewhat skeptical of the long term probability of deflation and have been investing in gold and commodities in anticipation of inflation. Looks like I was a little early to the game (which, on Wall Street is just the same as being wrong!).

Now however, it looks like we are warming up the printing presses and gold has hit $1,000 twice in a week in anticipation of future inflation. Legendary hedge fund manager John Paulson, who made $2.5 Billion last year from his trades, has been betting heavily on gold and his fund has nearly 50% of its assets in gold or gold-related investments like gold mining stocks and ETFs. The gold ETF, GLD reportedly makes up 30% of his fund! He has also taken a large 12% stake in AngloGold Ashanti (ANGJ.J) making him the largest shareholder. According to Reuters, this is not a bet on the company being acquired but rather a bet on inflationary pressures pushing up the price of gold. As opposed to the popular theory of rising prices being a cause of inflation, I like to consider it as an effect of inflation, which is caused by printing money, a side-effect of fiat currency. If you’re unaware about the effects of inflation and how it can ravage the economic (and social) structure of a society, I strongly recommend watching the excellent videos on hyper-inflation.

Another fund which has done well with the gold mining ETF is David Einhorn’s Greenlight Capital, which picked it up at the lowest point of last year and which has more than doubled its investment so far. They both join China in being bullish on gold. Between Paulson’s bullion dollar gold ETF purchase and China’s multi-billion gold bullion purchase, it’s no wonder gold prices have been trending upwards.

How To Invest Like China

Posted on August 24, 2009 by Nirav

In the last post we saw that China was slowly diversifying away from it’s usual investments in US Treasury Bonds and investing in hard assets, natural resources and maybe other currencies.

There probably a very good reason why the world’s second largest holder of US Dollars is weaning itself away from bonds issued by the world’s largest debtor nation. If you believe the Chinese know what they are doing, it might make sense to imitate their investment strategy.

While you don’t need to buy $80 Billion worth of gold, you might do well buying gold equal to at least 5% of your net worth. Gold is not an investment in itself but a historic store of value. Regardless what anyone tells you, the US Dollar is not a store of value. During times when governments print money hand-over-fist, gold typically does well. In fact, over the past 10 years, gold has appreciated against every single currency.

You can either buy the physical gold, gold ETF(GLD) & gold mining stock ETF (GDX), gold certificates or a custodial account. You can also buy silver and silver ETFs in a similar fashion. There was a recent Chinese news report recommending Chinese investors buy silver since its a better value than gold!

You can also exchange your US dollars directly for foreign currencies. Everbank currently has a Marketsafe BRIC CD, which invests in a basket of Brazilian Real, Russian Ruble, Indian Rupee and Chinese Remnimbi. This CD doesn’t pay any interest but the principle is protected against loss! But if you’d rather take a risk and earn some interest, Everbank has a slew of CD products in several European and Asian currencies.

Another option are the CurrencyShare ETFs for Australian Dollars(FXA), British Pounds(FXB), Swiss Francs(FXF), Japanese Yen(FXY) and Euros(FXE). Another ETF worth considering is UDN, an inverse US Dollar ETF, which is a basket of the above mentioned currencies. (However, inverse ETFs may not accurately follow the downward movement so you’re cautioned to do some research).

I do not recommend forex-trading as a means of hedging yourself against Dollar devaluation. Forex trading is a highly leveraged, zero-sum speculation. In a zero-sum game, a participant can only win at the expense of another participant. In fact, it may be considerably less than zero-sum becauase your brokerage can run your stops (which it can see) and effectively trade against you.

If you are thinking of investing in currencies, definitely check out Everbank’s free newsletter, the Daily Pfenning. It provides a very informative (and entertaining) look at global economics and investing. Actually, you should subscribe if you do any sort of investing! Everbank also has a low-cost custodial account for gold and from time to time (whenever the price of gold drops dramatically) they offer a MarketSafe (which means principle-protected) Gold CD. Sign up for the newsletter and they’ll inform you whenver they come out with new products.

If you have a penchant for natural resources, you should look into Master Limited Partnerships (MLPs) like Tortoise Energy (TYY) or Kinder Morgan (KMP). Both pay a juicy dividend that is considered a return of principle and thus non-taxable (although it does alter cost-basis). However both have appreciated significantly this year. Canadian Royalty Trusts like Enerplus Resources (ERF) are also an option.

You can also buy natural resource stocks like Rio Tinto (RTP) or BHP Biliton(BHP). China has been trying to buy multi-billion dollar stakes in companies like these and is currently unsuccesful. If you think that a day may come where Chinalco will be successful, you might want to get in before that happens.

IRSA International (IRS) is an Argentinian company that trades on the ADRs. It owns farm land, resorts, hotels and shopping malls in prime locations. After decades of “quantitative easing” (another word for printing money) wreaked havoc on their economy and standard of living, Argentinians don’t trust banks or central bankers. They trust gold and farmland. The way the US economy is going, we too may come to that same conclusion. Just to be safe, I bought some of the stock. On the other hand, you might be better off buying farmland or a ranch for hunting. I’m pretty sure, buying farmland is next on China’s list!

Disclosure: I own ERF, TYY,FXA, IRS, Everbank MarketSafe Japanese REIT CD, GDX and physical gold/silver.

Which Dividend Stocks Are Worth Looking At?

Posted on August 23, 2009 by Nirav

The market has been defying gravity this summer, with the S&P500 up 49% since March. But most of the appreciation has been in what I consider lower quality stocks. Many homebuilders with doubtful prospects have doubled from their recent lows, while stocks that are somewhat recession proof like McDonalds, Walmart, Coca-Cola and Procter & Gamble have bounced a mere 15-20%.

According to Bloomberg, “companies with the worst earnings led the 45 percent gain in the Standard & Poor’s 500 Index since it fell to a 12-year low five months ago”. It might be a good time to sell some of your winners that have exceptionally well and either wait for a pull-back, or if you’re trigger happy, buy solid investment-grade companies.

Given the current economic environment with the US Dollar likely to devalue against foreign currencies and the high probability of inflation, you want to invest in a company with exposure to foreign markets, a stable business model that is non-cyclical and a history of growing dividends. You also want to avoid luxury brands or businesses that sell expensive goods.

Here are a few of the companies that I would consider looking at, along with their dividend yields.

Verizon Communications (VZ): 5.87%
Johnson & Johnson (JNJ): 3.21%
Procter & Gamble (PG): 3.28%
Colgate-Palmolive (CL): 2.41%
Unilever (UL): 4.39%
Altria Group (MO): 7.10%
Philip Morris International (PM): 4.61%
McDonalds (MCD): 3.55%
Walmart (WMT): 2.51%
Enerplus Resources Fund (ERF): 9.56%

While I don’t own any of these yet (except ERF), I do own some ETFs that hedge against dollar devaluation and inflation:

CurrencyShares Australian Dollar Trust (FXA): 2.04%
Morgan Stanley Emerging Markets Domestic Debt Fund (EDD): 7.45%
Market Vectors TR Gold Miners (GDX): 1.90%

If you are going to buy currency ETFs or currencies you might want to also check out some of the risk-free currency CDs offered by Everbank. At the very least, definitely subscribe to their free newsletter, the Daily Pfennig. It’s quite informative and very interesting.

ETFconnect.com is a great site to find out more information about ETFs. Having some exposure to foreign currency and gold miners isn’t a bad idea. I’ve been worrying about the effects of the Federal Reserve printing money like its going out of style and the CEO of Coeur d’Alene (CDE), a silver mining company that I happen to own, predicts that Silver will jump 29% by the end of the year because of this.

Demand from investors seeking a store of wealth accounts for more than half of silver’s 23 percent price jump this year before today, Wheeler said in an interview in New York. The metal will reach $18 an ounce with supplies little changed and demand buoyed by purchases from exchange-traded funds, he said.

“We have this crushing new debt and dollar weakness,” Wheeler said today. “The outlook for precious metals is very positive, and silver will be No. 1.”

The U.S. government has pledged $12.8 trillion, an amount that approaches U.S. gross domestic product, in a bid to stem the longest recession since the 1930s. The spending will erode the value of the dollar and boost the appeal of silver and gold as alternative assets, Wheeler said.

“There’s a lot of anxiety out there over this debt,” Wheeler said. “Around the world, there are a growing number of investors who want protection. They’re going to want silver as part of their portfolio.”

If you believe any of this, you might want to increase your exposure to silver miners like CDE, SSRI or SLW, although these don’t pay any dividends.

Disclosure: I own ERF, CDE, FXA, GDX, EDD, physical gold and silver.

How To Invest In Foreign Currencies & Foreign Stocks

Posted on May 27, 2008 by Nirav

Previously I had mentioned several ways to invest for a recession or a major downturn in the US economy. In that post, I stated that one of the ways to hedge against the declining dollar (apart from my favorite method of buying gold) was investing in foreign currencies.

Several people emailed me asking how to buy foreign currencies.

A few were concerned that they would have to travel overseas and open a foreign bank account. Luckily, it isn’t so difficult. You have 3 choices.

1. Buy Currencyshares ETFs. You can choose between several currencies like Australian Dollar (Ticker: FXA), Swiss Franc (Ticker: FXF), Japanese Yen (Ticker: FXY), Euro (Ticker: FXE), etc. If you have a brokerage account, its as easy as buying stock. This is probably the easiest method. They also pay monthly dividends and are quite similar to buying a foreign currency CD.

2. Open on account with Everbank and invest in their foreign currencies CDs or directly open an account in a foreign currency.

3. Open on account with Interactive Brokers and directly buy foreign currency (this is probably the most hassle so you’re better off sticking with the top 2 methods).

If you’re interested in buying foreign stocks, the easiest way is to buy the ADRs (American Depository Receipts). However a lot of foreign stocks do not trade in the US as ADRs. A good way to play the foreign markets is to buy foreign ETFs. For example, if you’d like to buy blue chip dividend paying swiss companies, the Swiss Helvetia Fund (ticker: SWZ) is a great investment. (I also happen to like the Swiss Helvetia Gold Coins too!). If you think Singapore’s economy is doing well, you can buy the iShares Singapore Index ETF (ticker: EWS). Or if you like Brazil, you can buy the iShares Brazil Index (ticker: EWZ).

For a more comprehensive list of foreign ETFs check out How To Conquer The World For Fun & Profit. If you’re interested in learning more about currency trading or investing in foreign currencies, I strongly recommend Everbank’s free daily newsletter about the currency markets, the Daily Pfennig. It’s really good.

Profiting From The Rise In The Price Of Oil

Posted on May 24, 2008 by Nirav

As I mentioned 5 weeks ago when oil breached $115/barrel, demand for the black gold will cause the price to keep on rising. On Wednesday, I drove to USC where I had an interview at the Marshall School of Business for the full-time MBA program. While driving there, I heard that Oil had exceeded $133 per barrel. I had a great interview (where I spoke about my background, my interests, the state of the economy, what a moron George W. Bush is, and the current elections) and then proceeded to a friends’ place to spend the night.

I later heard that oil prices hit $135/barrel. That news was broadcast incessantly on all the news channels and I kind of felt that it was being overdone. Whenever everyones saying that the price of something is breaking all records, it usually pulls back. I think thats why the US Dollar had shown some strength this year. I woke up on Thursday and bought the ULTRASHORT OIL & GAS ETF (AMEX: DUG), it went up a dollar and I exited my position, happy to have made enough money to pay for my gasoline bill for this month.

After that I went to UCLA for a class visit. I attended a class on Risk Management. One of the case studies they discussed was a deal between Amoco (American Oil Company, which is now part of British Petroleum) and Apache (APA) involving the sale of an oil producing property. Amoco sold the property with a guarantee to pay Apache a certain amount of dollars if the price of oil dropped below a certain amount. On the other hand, they would participate in some of the profits if the price of oil exceeded a certain amount. This was managed through the use of Put and Call Options.

It was interesting to see how large companies managed to hedge the price of oil through options, and especially ironic since oil was all over the news that day. Its not too different from how you can hedge your own expenditures on gasoline and heating oil. If you’re bullish on the price of oil and are willing to bet on this movement, you can buy the United States Oil ETF (USO). You can also buy options on this too.

Similarly, if you’re bearish you can buy the ULTRASHORT OIL & GAS ETF (DUG). You can also invest in Oil Futures contracts, however, if you’re that brilliant I doubt you’d be reading this blog!

But making directional bets in any asset class requires a certain amount of knowledge, homework and commitment. Its much easier to invest in high-yield Canadian Income Trusts like ERF, PGH, AAV, HTE, PEY-UN.TO, etc. They pay out a pretty good dividend (over 8% for most of them) and that should theoretically go up as the price of oil & gas goes up. (I say theoretically since there is some uncertainty regarding the Canadian Governments’ taxation of these trusts, so there is a black cloud hanging over them).

So far I’ve been pretty happy with my investments. I had been buying more on dips. For those of you lucky enough to have bought AAV under $9 back in January, in addition to the monthly dividends, you’ve already seen a 40%+ appreciation in the stock price! (unfortunately I wasn’t one of the lucky ones!)

But there are many ways to profit from the economic news if you keep your eyes open. By the way, USC called me on Friday. I got admitted to their MBA program with a Fellowship (tuition remmission)! So now it’s time to decide between UCLA, USC and UCSD!

What About LOR-Lazard World Dividend & Income Fund?

Posted on March 21, 2008 by Nirav

When I first heard about LOR, I thought it meant Lord of the Rings, but no, the topic was on Lazard World Dividend & Income Fund(LOR).

I got this email from a reader:

I love your blogs. Please tell me what to think about an odd stock – LOR. They make money from high dividend stocks AND from some sort of forward contracts involving emerging market currencies.They had a 25% yield last year but are extremely volatile ( and I don’t know why!). They have a lot of institutional investors and it looks like a good dividend pick but I don’t understand how reliable the currency contracts are. Could you do an analysis of LOR?

I’m not exactly a stock picking expert, but I’ll give it a shot. First of all I looked for LOR on Yahoo! Finance to see what it meant. I got the name of the company, the stock price graph but not much other info. That’s because it’s not a stock, but rather an ETF. Ah ha! That explains the high dividend, since I don’t know of any company that is so generous with their dividends.

Accordingly, I headed over to ETFconnect, which is a great site for finding information on ETFs. I see that its in the category of “global equity” which means it invests in world-wide stocks, just the kind of thing you’d expect from its name!

It states their investment objective:

The Fund seeks total return through a combination of dividends income and capital appreciation. The Fund may pursue this objective through a world equity strategy and a short-term emerging markets and debt strategy. The Fund may invest substantially all of its net assets in between 60 to 90 world equity securities that are financially productive and high dividend yielding. It seeks to enhance income through exposure to short-term emerging market forward currency contracts and other emerging markets debt instruments, limited to 33.3 percent or less of the total leveraged assets of the Fund, which will provide exposure to emerging market currencies.

The first part seems pretty straight-forward, but I’m not too sure what the last part entails. But at least they’re not leveraged 10 to 1 on some Subprime Real-estate Mortgage Backed Securities (RMBS) & Collateralized Debt Obligations (CDOs)! Being overleveraged is what caused Bear Stearns’ Hedge funds to collapse last July.

I also see that it’s currently trading at an 8.5% discount to its Net Asset Value (NAV). This means you can buy the basket of its shares for less than what the shares currently trade for! The current dividend yield is reported to be 8.43%. That’s strange because Yahoo! finance reported it to be 25%, a fact that I verified on Google Finance by looking at the distribution in the stock chart. It seems that in addition to the dividends, there were long and short term capital gains distributions in December 2007, which boosted the yield.

While this isn’t a bad thing in any way, one shouldn’t buy LOR expecting to see a similar 25% yield in the future. If you’re buying it for the dividend, you should expect to receive 8.5% and be happy with it. The only concern I have is whether or not that dividend is safe.

The ETFconnect site informs us that the fund is diversified by invested in the US (35%), th UK(23%) and other countries (42%). While it doesn’t say which other countries, looking at its top holdings we see companies like Taiwan Semiconductor, ENI and Tesltra, so we know its investing in South East Asia, Brazil and Australia. I like that global diversity.

It also seems to be diversified across various industries like finance, telecom, energy, materials, consumer staples, and so on. However, from the mix of industries it’s invested in, 32% is in the Financial Sector. That I don’t like at all. Considering that Bank of America, HSBC and Citigroup are also featured in its top holdings, I’d say thats a little to much for me. While the stocks in finance sector are currently rising on the backs of the Fed’s rate cut, I expect this joy to be short lived. And I still haven’t seen any information on its’ currency trading, debt-instrument contract or whatever it was.

So I guess it’s time to look at the company’s website, Lazard Asset Management. Here we get a little more insight to the investment objective:

*The Fund will invest substantially all of its net assets in between 60 to 90 world equity securities that are financially productive and high dividend yielding.
*It seeks to enhance income through exposure to short-term, emerging market forward currency contracts and other emerging markets debt instruments (limited to 33.3% or less of the Fund’s total leveraged assets), which will provide exposure to emerging market currencies.
These two strategies are complementary, with historically low correlation to one another, which may reduce volatility.

They may have a low correlation, but as we saw with LTCM and the recent global stock market correction, all markets are correlated to the downside. I’m highly skeptical of these statistical models that tout low correlation since they always seem to fail at inopportune moments. But at least their leverage doesn’t seem excessive. At least they’re honest and inform us that

There can be no assurance that the Fund will meet its investment objective.

But the rest of their site is actually quite informative. We already know that the stock portion of the fund is diversified across various countries, industries and capitalizations so I’ll skip over that part. But we haven’t seen much info on the currency & debt portion.

The Fund’s emerging market currency and debt strategy will also be broadly diversified across countries and regions, offering the potential for portfolio diversification- with the possibility of credit and duration protection and limited interest-rate sensitivity.

Not really sure how they’re implementing this strategy, but if it works, it would be pretty useful in current economic conditions!

They also have an interesting snippet about their dividend strategy too.

While the Fund’s equity investments are not chosen for yield alone, they will generally include the highest dividend-yielding stocks on Lazard’s equity platform, as well as a selection of stocks that may potentially have significant dividend growth. This is important because:

*Typically, dividends are real earnings, not hoped-for earnings based on the potential, future growth of a stock. They also offer the potential for stable income.
*The 2003 tax bill significantly lowered the U.S, tax rate on qualified dividend income of U.S. taxpayers.

Investing in companies with a track record of long term dividend growth is a sure fire way to beat the index averages [source: The Future for Investors by Prof. Siegal]. Investing for tax savings is not something I generally consider. First the investment has to make sense. Then you look at the taxes. If you’re so rich that you’re really worried about taxes, then maybe tax-free munies are the best route for you.

Finally, there seems to be some information on the currency trading aspects.

The Fund’s unique leveraging strategy allows greater flexibility, risk management, and economic efficiency. To enhance the income potential for investors, the Fund intends to employ financial leverage, initially up to approximately 33 1/3% of total assets, by investing in forward currency contracts and/or borrowings. Leveraged assets will be used for investing in emerging market currency or debt instruments.

It should be noted though, that the Lazard World Dividend & Income Fund, does not seek to profit from utilizing a leveraged spread-play. That is to say, the Fund is not borrowing at the short-end of the yield curve in order to invest at the longer-end of the yield curve (and profit from the spread). On the contrary, the leveraged portion of the Lazard World Dividend & Income Fund invests in very short duration instruments (typically, less than 12-months), and instead seeks to profit from accessing the high yields available in emerging market local currency debt.

Using leverage is a speculative investment technique and involves certain risks.

While its commendable that they aren’t borrowing short-term and lending long-term (remember the RMBS & CDOs I mentioned?), I get the feeling that they’re trying to profit from the carry-trade. Of course, I’m not 100% certain that’s what they’re doing, but it definitely sounds like that to me. With the Swiss franc nearly at parity with the US Dollar and the Yen up 26% in the past year, it strongly looks like the carry-trade is unwinding. In fact, they could start losing money on these kinds of trades.

To conclude, I think this is a very interesting fund. I would be amazed if they could continue to deliver 25% annual dividend yields, but 8-9% definitely seems achievable.

However, I’d look at ALPINE DYNAMIC DIVIDEND FUND (ADVDX) and even American Capital Strategies (ACAS) before I allocated any funds to LOR. Note, I’m not recommending either of the 2, I’m just saying I’d take a look at them before I made any decision.

Dollar Hits A New Low

Posted on July 4, 2007 by Nirav

This week the US Dollar sank to 25 year lows against the Pound, AU/NZ Dollars and other currencies. There’s a saying that money flows to where its treated best.

What does that mean? It means people are converting their money into currencies with the highest yields.

Yields on the AUD,NZD and South African Rand are quite a bit higher than here in the US. Their economies also seem to be growing faster than the US’ too. SA Central bank Governor Tito Mboweni said last week that interest rates were ‘too low’. The South African Reserve bank raised the benchmark lending rate by 50 basis points on June 7th and may raise them again on Aug. 16. Not surprizingly, the South African Rand is sitting at a six week high.

I don’t know if its already too late to the party, but buying foreign currency ETFs or stocks with foreign exposure might not be a bad idea. I’ve done very well with Anglo Amercian (AAUK) and BHP Billinton (BHP).

GDX Called Away

Posted on February 19, 2007 by Nirav

I’ve been selling covered calls on GDX – yes I know selling puts is the same risk-reward ratio but I usually do pretty well in selling far out options. I lost a whopping $40 than if I had outright sold them on friday. I’m hopping we’ll see a small dip in the market next week so I can buy back in at roughly the same price.

I’m thinking I might actually buy CEF or SLW (Silver ETF) instead since I think there’s a chance than silver might run up more than gold on a percentage basis this year. The markets closed today, but earlier kitco.com reported that Gold was around $672.00/oz. quite a jump in the past few months. Hopefully it consolidate before resuming its next leg up.

My GG naked puts expired worthless so I made $138.50. If they had expired in the money I wouldn’t have felt bad about actually buying the stock.

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