Gold hits a new 24 1/2 year high

February gold delivery briefly touched above $534 this morning, a new nearly quarter century high. I’ve written extensively in the past about gold breaking $500 and the psychological effect it would have on the public. I believe that we are in the beginning of the third phase of a bull run and that the road to solidly entering the third phase will be a bumpy one. Investors taking profits along the way will likely cause minor pullbacks in the price of gold. As long as we can maintain above $500 prices for another 3-6 months, there should be enough momentum and interest by the general public to create a buying frenzy. I am thinking of buying shares in IAG, IAMGold Corporation, GG, Goldcorp, Inc., and AUY, Yamana Gold, Inc. as a hedge against a weak dollar and declining market.

I use a great website, Kitco, to track the daily price of gold and gold related news.

I believe a strategy of going in and out of non-gold related stocks and conversely in and out of gold related stocks will produce strong returns in 2006. Greed and speculation appear to be in gold’s favor at the moment.

Good Morning, lets get started

This morning I’ll be watching MBAY, MediaBay Inc. for some PR announcements. I’ve lowered my stop for MBAY to $1.35 and extended my timeframe to hold MBAY until the end of December if no new news is released. MBAY was one of my limited speculative purchases. I don’t recommend risk adverse investors getting in on this one. I still see a possible double for MBAY with a .30-.40 downside risk. I will be watching AUY, Yamana Gold, Inc. for a chance to pick up shares under $5.50.

RawGreed midday update and market prediction

The market is struggling to find its direction in December. I’m sure I’m not alone in saying that these fluctuations are nauseating. A few day’s ago we are on the verge of breaking 11,000 on the Dow. Today we are struggling to close above 10,800. It seems that the market is having a hard time digesting December’s economic data. The dollar is strong, job data is strong, and oil is hovering at or under $60. These are all positive points for a continued rally. The bears see an anticipated weak housing market, a mortgage market crash, continued interest rate hikes and fears over a bird flu pandemic. I can call this, the uncertainty of everything. The market sustaining a rally really is a toss up depending on who you speak with. This creates a market ripe with speculation and large price swings. There is one positive after effect of the confusion, gold has continued to rise. Gold promoters tout the metal as an alternative currency and safe bet if a bird flu pandemic strikes. I tend to agree.

I expect that we will see a December rally in the market. Longer term I expect that the market will continue to fluctuate around the current 4 1/2 year high’s. We probably won’t see a bull run like the .com days for quite some time. I simply don’t see a catalyst to create such a mania. Gold has a shot of producing the same type of .com mentality that drove herds of investors to lose their fortunes. Analysts are backing gold’s continued rise and there is enough economic uncertainty and global fears from terrorism and bird flu, that I don’t see the metal crashing in the near term. I will continue to watch the stocks on my gold watchlist and will likely buy a few if a pullback occurs. At the moment I believe the general public is beginning to take notice of the gold rush. Institutional investors are still building their positions. I believe we are in the beginning of the third phase of a normal bull run. Gold passing $500 is an important public psychological milestone. If gold can maintain above $500 levels for another 3-6 months, we should see the start of a gold mania.

Considering additional purchases

This afternoon, I am looking at a few different stocks to buy in December.

For pharmaceutical and biotech companies, I like BIIB, Biogen Idec, Inc. BIIB and ELN, Elan Corporation, plc, have been caught in a struggle over the status of Tysabri. The promising Multiple Sclerosis drug, was removed from the market after complications were discovered in a small percentage of patients administered the medication. On November 17th, 2005, The FDA granted ELN, Elan Corporation, plc a priority review of Tysabri. The results are expected to be announced in 6 months instead of the normal 10 months it takes for an FDA review. As we get closer to the results I expect ELN and BIIB to jump up as investors speculate over a positive response from the FDA. If the FDA review produces an unfavorable response for Tysabri, I expect BIIB to drop another 15-20% from today’s prices. I expect the price of ELN to drop 80% or more. Biogen has more protection against an unfavorable response since the company has other products in its pipeline. Tysabri is Elan’s primary catalyst in revenue. I like BIIB around $41-$42. I may purchase shares of BIIB if the stock trades in that range.

For gold I like AUY, Yamana Gold, Inc. The company engages in the acquisition, exploration, and development and operation of mineral properties in Brazil and Argentina. Production and 3rd quarter revenue looks good. If gold can maintain levels above $500 going into 2006, which I believe it can, AUY should continue its rise. I expect to see AUY in the $7-$8 if production stays on track and the company can produce its estimated 400,000 OZ target in 2006. I like AUY at low $5’s or just under $5.

If I purchase shares of either BIIB or AUY I will post a detailed analysis.

New Feature

I’ve added a portfolio function to RawGreed, accessible by clicking the most recent portfolio value on the sidebar of this blog or by clicking the portfolio link at the top of the page. Readers can now track which stocks I am holding in my portfolio.

RawGreed Portfolio Value, 12/07/2005 - $146,984.17
Stock Symbol Company Name QTY Purchase Date Avg. Cost Last Target Sell Price
TSM Taiwan Semiconductor Manufacturing Company Limited 4598 Various $9.02 $9.90 $11
NT Nortel Networks Corp. 9000 Various $2.58 $2.98 $5
LU Lucent Technologies, Inc. 8000 Various $2.96 $2.79 $4.50
WHI W Holding Company, Inc. 2000 Various $8.44 $8.55 $13
UMC United Microelectronics Corporation 10000 11/11/2005 $3.20 $3.31 $4.50
MBAY MediaBay, Inc. 2000 11/30/2005 $1.67 $1.54 $2-$3

Notes:
Click the stock symbol to read a more detailed description of how I calculated the target sell price. Just to start things off I've updated my portfolio value today. I normally update my portfolio value anytime I sell something.

Raw Greed Portfolio 12-7-05

RawGreed, midday update

The market is teetering back and forth as we move toward new highs. In trying to get a handle on the opinion of professional investors and portfolio managers, I’ve concluded that they appear to be mixed over a sustained December rally. From my own observation, each day since November 22nd, 2005, the Dow has reached over 10,900. In the few instances we have approached a striking distance of 11,000, the market has seen a pullback. This has happened almost everyday since November 22nd, 2005. I believe the market is overbought and additional drops are possible until a mid December to late December rally that will take the Dow over 11,000 and the Nasdaq over 2300. In the meantime I see two categories of stocks that have risen aggressively, airlines and gold. AMR, AMR Corporation and CAL, Continental Airlines, Inc., in particular, have experienced a steady rise since early October this year. Gold has risen to a 24 year high and is currently trading at $514. If I were to short shares of airlines, I would short AMR and CAL. For gold, I would short BGO, Bema Gold Corporation. BGO is a volatile mining company with good daily traded volume that rises or drops heavily on speculation.

Good Morning, lets get started

Yesterday, in the last hour of trading, the market gave up most of the gains we saw in the morning and early afternoon. BIDU, Baidu.com, Inc. has traded in the $77-$80 range since November 30th, 2005. GOOG, Google Inc. has traded in the low $400’s since November 30th, 2005. I expect both stocks to jump up if the market posts strong gains in mid to late December. I still remain confident that BIDU’s stock price has been over inflated by speculation and greed. I’ve written in detail about BIDU in previous articles. I recommended investors interested in BIDU to read through my archives. I will look to short shares of BIDU if the stock hits $85 by the end of this week.

It looks like AAPL, Apple Computer Inc. has strong momentum behind it, following a recent deal signed with NBC that will allow iTunes users to purchase previously broadcasted NBC television shows and content. I actually expect this to be a hit among video enabled iPod users. UBS analyst Benjamin Reitzes, has raised his price target for APPL from $74 to $86. I predicted earlier that AAPL’s all time high would be $80. I predicted that AAPL would reach $70 by the end of the year which it passed on November 28th, 2005. I believe AAPL’s rise to be aggressive, but the speed of the stock increasing has exceeded my expectations. There is a lot of speculation over the company’s growth rate and long term prospects driving the increase in AAPL’s stock price. I believe that Apple will not be able to sustain such positive growth over the long term. AAPL is highly dependent on the iPod and unless the company opens the DRM technology behind iTunes to other portable audio devices I see the company’s growth tied solely to the iPod. Any slowdown in iPod sales will cause the price of AAPL to drop. I expect the drop in AAPL to be almost as rapid as its rise. I would look at shorting shares of AAPL above $80.

RawGreed, midday update

Today is shaping up to be a great day for gains in the market. We are making our way closer to breaking 11,000 on the Dow. So far my portfolio is up again, driven a second day in a row by gains in TSM, Taiwan Semiconductor Manufacturing Co. Ltd. and UMC, United Microelectronics Corp. TSM just briefly reached $10. I believe we could see $10.40 by the end of the week for TSM and $3.40 for UMC if the market continues to rally.

AU Optronics Corp. conference call transcript

David Jackson, of Seeking Alpha fame, chimed in to let readers know that the AUO, AU Optronics Corp. conference call transcript is available on his site at, http://seekingalpha.com/article/3683. Investors interested in AUO should take a look.

RawGreed, updated poll

I’ve updated the new poll question to “Which Brokerage do you use?” If you haven’t submitted an answer, please do so.

A look at China’s gaming stocks

NTES, Netease.com, Inc., and SNDA, Shanda Interactive Entertainment Limited are both part of my watchlist of Chinese stocks. Today I have added NCTY, The9 Limited to my watchlist. I see tough times ahead for Chinese online gaming companies. The Chinese government is imposing regulations to prevent the growth of online gaming. The fear from the Chinese government is that the youth of China is becoming addicted to the online world that the game publishers are creating. I believe that the Chinese publishers of these MMORPG’s, massively multiplayer online role playing games, will have a hard time producing consistent hits. The game publishers are similar to movie studios, there is strong interest when a new game arrives but a follow up success is never a guarantee. The roll off in interest is less severe than a movie since there is a degree of interactivity in MMORPG’s not found from movies. Investors would do well to remember that the attention span of the youth playing these games tends to be brief. Retaining interest from these players will prove to be a complicated task. I believe shares of NTES, SNDA and NCTY have jumped over the novelty of China’s youth joining the online gaming community en masse. For many of the new Chinese players, they have never played or seen a MMORPG so they aren’t sure what to expect.

Shares of NTES, SNDA and NCTY have all seen setbacks from their one year highs. I believe NTES, SNDA and NCTY will struggle to become the diversified, long proven companies like ERTS, Electronic Arts, Inc. or ATVI, Activision, Inc.. It will be hard to make long term investment decisions on NTES, SNDA and NCTY. I’m sure there will be additional start-ups to create heated competition among the companies. I expect to see stock prices stable going into the holiday season with additional declines in early 2006.

Good morning, lets get started

Today I believe TSM, Taiwan Semiconductor Manufacturing Company Limited has a shot at crossing $10. Shares of AUO, AU Optronics Corp. are down about 5% this morning. Just a reminder, I like AUO at under $12. AAPL, Apple Computer, Inc. is jumping up this morning. Shares have crossed $74 and have hit a new one year high. My predicted all time high for AAPL is $80. If AAPL passes $80 I will start looking for an opportunity to short shares of the company.

RawGreed poll results

I asked “Do you think Jim Cramer’s Mad Money picks are useful?” With 201 votes cast, 27% or 54 votes said “Yes”, 33% or 67 votes said “No” and 40% or 80 votes said “Sometimes”. I’ll change the poll later this morning.

RawGreed update, watching AU Optronics Corp.

The market behaved much like I thought it would. It appears that investors were taking profits today. My portfolio closed moderately higher today, led by gains in TSM, Taiwan Semiconductor Manufacturing Co. Ltd. and UMC, United Microelectronics Corp. I expect shares of both companies to rise in December. Riding along with the theme of Taiwan’s improving economy, I added AUO, AU Optronics Corp. to my watchlist. The company is one of Taiwan’s largest LCD flat panel manufacturers. AUO was formerly known as Acer Display Technology, Inc. I like AUO at under $12. AUO recently reported a record 3rd quarter in revenue while improving margins. Long term I see margins diminishing rapidly as competing display technologies drop in cost. I see AUO making up for the decline in long term margins by increasing shipments. 2006 should be a record year for volume LCD flat panel shipments.

RawGreed midday update

It looks like BCON, Beacon Power Corp. is jumping up, shares are up about 10% today. BCON could do a strong run-up to mid $2’s this week. I believe SLR, Solectron Corporation could do a strong run-up going into 2006. I am bullish on the Semiconductor industry. SLR provides equipment and services to OEM’s and Semiconductor manufacturers. If the Semiconductor industry enjoys a sustained rally, driven by a new consumer electronics cycle, Solectron will benefit tremendously. I like SLR at $3.50. I see SLR reaching $4.50-$5 in 3-6 months.

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