1. Gold: The technical analyst at Barrons sees gold pulling back some before resuming its next leg up to his target of $1,350. He does not see the recent pullback as being related to the U.S. dollar rally, since gold also fell in Euros. One thing is clear to me. Parabolic moves can not sustain themselves. Gold has been in a parabolic move for a longer period than the gold bulls will recognize. And, I have yet to see an analysis from any of the gold bulls on the more probable or not type scenarios when there is a parabola after a prolonged bull move in the asset price: Gold (GLD) and Dangerous Parabolas
The only question is whether the last parabolic move in gold was what I call a dangerous parabola which generally will presage a far greater pullback than the 10% or so seen by the gold bulls. As I have mentioned, I am a long term holder of gold and silver bullion, with all of those buys below $300 an ounce for gold and mostly lower than $6 for silver. Historical silver charts can be found at this web site: Historical Silver Data and Charts - London Fix Under no circumstances, would I be a buyer at the current levels.
Some investors do not know that the U.S. government started again to mint U.S. gold and silver bullion coins back in the mid 1980s. U.S. Mint Online Product Catalog The new silver dollar is modeled on the U.S. Walking Liberty design for the half dollar that was minted with 90% silver until 1947. These bullion coins, close to pure gold and silver, can also be bought from dealers at small premiums over the spot price of the metal. I have no interest in buying either gold or silver at the current prices however.
2. Cramer Negative on Common Stock of European Banks: I was watching Mad Money when Cramer went negative on the common stocks of European banks. CNBC Actually, it was more than negative. He was basically saying that they are managed by bigger morons and stooges than even our morons. While I am not as negative as him on a few of the names mentioned, I do not own a single share of common stock in any European bank, and I am in no hurry to add any. I was then surprised to hear Cramer recommend the ING and Aegon "preferred" stocks, not really much of recommendation though. He said something like, if you have to buy something, then buy the preferred stocks of ING and Aegon. Well, that is exactly what I have been doing since last October. The video of this part of his show is embedded in the preceding link. My gateway posts on the ING and Aegon hybrids can be found following these links:
It would be impossible to have any favorable opinion on the competence of our Masters of Disaster and the Europeans may be worse.
3. Modification of Lottery Ticket Purchase Rules: The LB is always refining its rule book. Working on rules is its favorite activity. In fact, its mental rule book now exceeds the length of the Internal Revenue Code, and is far more complex, a feat that almost makes the LB smile in a moment of self-congratulation. Some of the rules for LT purchases are summarized in this post: LOTTERY TICKET PURCHASES: LINKS IN ONE POST The primary rule is to limit the purchase to less than $300. Previously that sum could be increased only by profits realized in previous transactions on the same security. The amendment allows the $300 to be increased by the dividends paid on that security, whenever owned, and by the dividends paid on any preferred stock or hybrid security issued by that company. Interest paid on the pure bonds would still be excluded. Thus, Aegon common could be bought as a LT in an amount exceeding the $300 by adding to that amount the dividends paid on its hybrids which are owned including AEG, AEF and AEH.
4. Bought 50 Valero (VLO) this morning at $16.32 (see disclaimer): I would have to say the VLO is disliked by most investors, and for good reason given its recent series of earning disappointments and losses. Part of the problem is the rise in oil prices and the fall in demand for distillates, which will wreck havoc on a refiner's margins. I previously traded Valero at a profit last Fall, buying those shares at less than $17 and selling them for $21.14 in December: Sold Alon (ALJ) & Valero (VLO) My most extensive discussion of Valero is in this post from October 2008, where I go over some of the key points impacting Valero's profitability. Refiners: ALJ and VLO Prior to today, I had no position in any refiner. I will also occasionally venture into small companies with refining operations like DK and ALJ too, both of whom own chains of convenience stores.
This video from the TheStreet TV makes the case for Valero. I am not as confident as that commentator about Valero's prospects in the coming year. It is certainly possible than demand for distillates will improve some next year as the economy recovers more from the Near Depression. Valero has taken steps this year to cut costs, including the closure of some of its least profitable operations. It is impossible for me to see the light at the end of the tunnel on this one, and the refining business is a capital intensive one with inconsistent profits and at times extensive losses. Still, it is hard to see much downside from the current price of around $16, meaning I would be surprised by a fall to below $13. And I would view a rise to $19 to be more likely than a fall to $13. The buy yesterday was also beneath the June offering of common shares which were sold at $18.Paul Wilmott & The Need for Nerd Therapy/Valero/Bernanke Testimony/ That post contains more discussion of analysts opinion from that month and general information about Valero's operations.
The last quarter's reports was ugly: e10vq I did not see anything positive in that report. I would not expect much positive news in the current quarter either. VLO is currently paying a dividend of 60 cents per year which translates into about a 3.68% yield at my price. I would not call that dividend secure, however. The earnings estimates for this company can change on a dime, but the current estimate for 2010 is $1.3. That could be way off either up or down.
Another factor in VLO's favor is its low price to book and sales ratios. Price to sales is around .13 and price to book is at .57. VLO Sometimes, I will buy a TC containing a Valero bond, PJZ, but I have no interest in it at the current price, and would prefer to speculate on the common shares. sold pjz and bought nestle late today/ Buys of PJZ JWF KSA DIS and NYX
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