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Special Report: How to Buy Silver

May 15, 2012

By Larry D. Spears, Contributing Writer

In late December, silver dipped to a 12-month low near $26 an ounce, and traders who responded to the barrage of "buy" recommendations were quickly rewarded as the metal soared to a high of $37.18 just two months later.

Today, silver has pulled back below $29 an ounce, giving investors another chance to establish a position before the metal makes its next move higher.

After all, the fundamental case for silver prices remains as strong as ever.

The U.S. dollar continues to weaken, inflation remains a concern, silver demand from industry and emerging markets remains strong even as supply shrinks – plus we're facing growing uncertainty over the outcome of the 2012 elections.

It's a perfect recipe for higher silver prices – most likely even higher than last year's peak at $50 per ounce.

But what's the best way to play the next upmove by the "poor man's precious metal"?

For the purist seeking to hold metals as a long-term store of value and a hedge against inflation and global turmoil, the first choice is always the physical silver itself.

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Berkshire’s Annual Meeting: Warren Buffett Talks Stocks and Successors

May 7, 2012

By Diane Alter, Contributing Writer, Money Morning

Billionaire investor Warren Buffett held court this weekend at Berkshire's annual meeting, fielding dozens of pressing questions about the company, investing strategies, and a new CEO.

Some 40,000 gathered to hear what the leader of the storied Berkshire Hathaway (NYSE: BRK A, BRK B) had to say about the state of the company and its fate following Buffett's recent diagnosis with prostate cancer. The Oracle of Omaha triggers such an enthusiastic investing response the event ends up more like a festival than a shareholders' meeting.

Buffett dismissed the health news as a mere non-event, barely touching on the subject.

The investing legend instead focused on the money.

Buffett on Berkshire

Berkshire posted first-quarter earnings Friday after the close that doubled compared to the same period a year ago, fueled by gains in its insurance, manufacturing, service and retail businesses.

The company reported earnings of $3.25 billion for first quarter 2012, translating to $1,966 per Class A share, versus $1.51 billon in the first quarter of 2011.

Operating income came in light at $1,615 a share. Analysts surveyed by Thomas Reuters had forecast $1,780.

The company also posted gains from its derivates holdings – investments that Buffett once referred to as "financial weapons of mass destruction."

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How To Buy Silver: A Guide To Today's Top Silver Investments

April 19, 2012

By Peter Krauth, Global Resources Specialist, Money Morning

As precious metals go, silver may not have quite the same mystique as gold.

But let's be honest: The "white metal" has its backers, too.

In fact, when Money Morning published its "How to Buy Gold" special report just a few weeks ago, one of the biggest questions that we received in response was: "When can you do the same for silver?"

That's just what we've done here. In this special report, we show you how to buy silver.

Silver: The "Other" Precious Metal

Although gold possesses the greatest allure of precious metals, silver has a longstanding tradition in many cultures – a tradition that in some cases reaches back thousands of years. Nearly 2,500 years ago, for instance, China was the first to use silver as money.

Here in the United States, silver alloys were still present in some of our everyday coins as recently as 40 years ago. Today, however, silver is no longer viewed that much as a monetary metal. But that's because about 40% of silver is used for industrial applications.

The physical silver market is small, with annual demand of slightly less than 900 million ounces.

Since the financial crisis of 2008, silver prices have increased by 300%.
And that's only the beginning. Silver is on the verge of a massive "short squeeze". The last time something like this happened, investors pocketed upwards of 195% in just a few months – but more on that later (Or you can get a sneak peek of our new silver special presentation right now. You can find it here.)

An important metric to understand and watch is the silver-to-gold ratio. It tells you how many ounces of silver it takes to buy one of gold. Historically, that ratio is 16 to 1. On this basis alone, silver should be much higher right now.

But perhaps a more realistic level, at least in the short term, is the ratio of silver-to-gold since the start of this bull market back in 2000. That ratio has been about 50-55 ounces of silver for one of gold. Even this more conservative estimate of silver prices vs. gold provides an excellent opportunity for investors to cash in as gold prices continue to rise.

How to Buy Silver

Like gold, silver investments can be made in a variety of forms. Let's take a look at some of the most popular.

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With or Without "Obamacare" These Healthcare Stocks Are Headed Higher

April 2, 2012

By Don Miller, Contributing Writer, Money Morning

The fat lady hasn't sung yet…but she is warming up.

Three days of arguments before the Supreme Court have made it abundantly clear – "Obamacare" is in danger of being gutted or completely wiped off the books.

Only one thing's for sure. Investors will want to keep buying healthcare stocks -especially as 10,000 baby boomers a day turn 65 years old for the next 20 years.

But there's one segment of the healthcare sector that will be sitting in the driver's seat when it comes to delivering healthy profits and investment returns – no matter how the court rules.

Here's what you need to know…

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How to Beat High Gas Prices

March 29, 2012

By Don Miller, Contributing Writer, Money Morning

Are high gas prices giving you road rage? Well, wait "til you see what's coming.

Prices at the pump currently average $3.89 for a gallon of regular unleaded, up 30 cents in the last month.

But it's already over $4.00 per gallon in many cities – more than double the $1.85 a gallon that prevailed when President Barack Obama took office.

And most analysts are predicting gas prices will go much higher.

The national average gas price should reach $4.25 by the end of April as refiners shift over to more expensive summer blends, Tom Kloza of the Oil Price Information Service told the Wall Street Journal.

As prices shoot through the previous high-water mark of $4.11 in 2008, filling your tank could soon hit you for $75-$90.

And the sky's the limit if Iran decides to block the Strait of Hormuz in retaliation for economic sanctions that go into effect in June.

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How to Earn a 9.25% Gain in 30 days While Waiting for Apple's
(Nasdaq: AAPL) Dividend

March 26, 2012

By Larry D. Spears, Contributing Writer, Money Morning

Although it's been one of the market's darlings for a decade now, dividend-oriented investors have long shunned computer giant Apple Inc. (Nasdaq: AAPL) because, well … it didn't pay one.

That, coupled with AAPL's historically high share price, has always kept me from buying Apple stock – but, as a trader, it hasn't kept me from generating income with Apple options.

Last week, the cash-rich company finally took a step toward rewarding loyal shareholders by declaring a dividend – a quarterly payout of $2.65 a share, beginning with the fiscal fourth quarter, which runs from July 1 to Sept. 30, 2012.

Assuming the payouts continue, which they almost certainly will, that means Apple's annual dividend in fiscal 2013 will be $10.60 a share, which sounds fairly rich – except for one thing…

At its closing price of $599.34 last Thursday, Apple remains one of the market's highest-priced stocks, meaning the new annual dividend of $10.60 will equate to a yield of only 1.76%.

That's decent, but it's hardly near the top of the income-stock ranks. Plus, it'll be well over a year before you can collect the full dividend.

Fortunately, by using options, you can easily generate some significant income while waiting for Apple's new dividend to kick in – and multiply your yield at the same time.

Let me explain…

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2012 Financial Crisis: Wall Street's Latest Scheme Uses Your Bank Account to Create the Next Crash

March 23, 2012

By Keith Fitz-Gerald, Chief Investment Strategist, Money Morning

In 2008, reckless credit default swaps nearly obliterated the global economy. Now comes the next crisis – rehypothecated assets.

It's a complicated, fancy term in the global banking complex. Yet it's one you need to know.

And if you understand it, you will get the scope of the risks we currently face – and it's way bigger than just Greece.

So follow with me on this one. I guarantee that you'll be outraged and amazed – and better educated. You'll also be in a better position to protect your assets at the end of this article, where I'll give you three important action steps to take. So follow along…

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How to Trade Gold with ETFs and Options

March 21, 2012

By Larry D. Spears, Contributing Writer, Money Morning

With few exceptions, most leading financial gurus agree that every portfolio should include some physical gold.

But while the yellow metal itself is great as a long-term hedge against turmoil and inflation, it's a lousy trading vehicle.

Here's why.

For shorter-term trading purposes, most gold investors look first to the futures markets, generally focusing on either the CME Group's full-size COMEX contract, which represents 100 ounces of the metal, currently valued around $165,000, or its little brother, the 50-ounce miNY gold future.

However, that can be a fairly costly proposition, with initial margin requirements on a single 100-ounce contract running in excess of $10,000.

And, as anyone who has held those contracts in recent weeks can attest, it can also be an extremely risky one.

For example, the single-day loss on a 50-ounce miNY future on Feb. 29 was $3,845, with the intraday trading range topping $5,200.

Similarly, last Wednesday's one-day decline of $51.30 an ounce in the price of the full-size April future would have cost traders on the wrong side of the move a whopping $5,130.

Even recent intraday moves have been scary.

On March 9, April gold futures plunged $27.70 an ounce shortly after the open, only to rebound and trade as much as $39.50 an ounce higher later in the day.

That swing had a total value of $6,720 – in a single 5-hour and 10-minute trading period!

So, if those numbers give you pause, but you'd still like to mine for profits in the gold market, what can you do?

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Trading Silver with Options: How to Earn 127% in Four Months

February 17, 2012

By Larry D. Spears, Contributing Writer, Money Morning

If you listened to Money Morning's recent special report from global resources expert Peter Krauth, you know the long-term outlook for silver is decidedly positive.

Soaring investment demand, continued industrial use, a growing supply shortage, and falling ore quality all signal a sharply bullish outlook for the "poor man's precious metal."

So, how can you position yourself to profit from silver's coming advance without exposing yourself to the excessive risk?

One way is to use options – either on silver futures contracts or shares of silver-related stocks and exchange-traded funds (ETFs) – in a strategy that strictly defines and limits your risk while still offering short-term returns of 100% or more.

Silver Options: How to Create a Bull Call Spread

Known as a "bull call spread," this technique involves simultaneously buying and selling two call options with the same underlying security and expiration date, but with differing strike prices.

Typically, a bull call spread involves buying an at- or slightly in-the-money call option – one with a strike price very near the current price of the underlying asset – and simultaneously selling an out-of-the-money call option with a strike price several increments above the current security price.

The difference between the two strike prices is referred to as the "spread."

To illustrate, let's look at an example using options on silver futures, which are traded in the CME Group's Comex division. In this case, one futures options contract represents 5,000 ounces of silver.

To create your bull call spread, you would purchase the slightly in-the-money July $33.00 call, quoted at $3.451 an ounce ($17,255), and simultaneously sell the out-of-the-money July $35.00 call at a price of $2.572 an ounce ($12,860).

The net cost of this spread is 87.9 cents an ounce ($3.451 – $2.572 = $0.879), or $4,395. That is also your maximum possible loss on the trade should the July silver future stand below $33.00 when the options expire on June 26, 2012.

What's more, the spread trade breaks even at a July silver futures price of just $33.879 as opposed to the break-even price of $36.451 had you merely purchased the $33.00 call alone.

So, what's the catch?
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Emerging Market Dividend Stocks Give Investors the Best of Both Worlds

February 16, 2012

By Martin Hutchinson, Global Investing Strategist, Money Morning

In today's market, dividend investing is the best way to achieve a decent income stream without taking on too much risk.

On the other hand, this is also true: emerging markets give investors the benefit of the world's fastest economic growth.

Investors would be wise then to combine these two strategies by buying emerging markets stocks that pay steady dividends.

In practice, this is more difficult than it ought to be – but it's not impossible.

In fact, as you'll learn later I have found numerous ways to profit from this best of both worlds strategy.

What You Need to Know About Emerging Market Dividend Stocks

Dividend-paying stocks in emerging markets have the same advantages as they do in the U.S. market.

Just like here in The States, a sizeable dividend from overseas is not only money in your pocket, it's also evidence that the management is working in your interests as a shareholder.

And by paying dividends investors can be sure that at least some of the earnings the company is generating are real and not the result of an accounting flim-flam.

If a company in a fast-growing emerging market is able to pay a decent dividend and participate in local growth, then you can anticipate very good returns indeed, since the dividend itself is likely to grow on the back of the company's rapidly increasing profits.

Of course, there are always risks in emerging market investing, but a good yield gives your holding a solidity that isn't present in companies with mere paper earnings.

But here's what you need to know…

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