5 Money-Saving Shopping Tips

Have you already squeezed every last penny out of your budget? Maybe not. Thanks to free market capitalism, we can choose from a wide variety of products at a wide variety of prices pretty much any time we want to buy something. Unlike investing, saving money on purchases doesn't require any specialized training and is an easy way for anyone to stretch their budget a little farther.
No matter what your income level, you can give yourself more breathing room by becoming a savvy shopper. Here are five tips to help you get started.

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The Year of the Market Breakouts

Andrew Gordon Reporting: Delray Beach, FL.                           

"Breakout Markets" give you a great chance to make a bundle. And they’re coming your way.

These are markets that surge hard and fast. They go up a lot more than anybody expects. Along the way, many investors get out with modest gains of 20%, 30%, even 50%.

Making 50% in a matter of months is pretty good. But waiting a little longer and making 100% is much better. If there’s an easier way of doubling your money, I don’t know what it is. And today, I’m going to show you just how easy it is.

Many people are afraid of "Breakout Markets" because they eventually peter out and go down. They shouldn’t be.

In a report I’ve just written, I’ve dispelled the following myths...

• It’s impossible to identify these markets early enough to make serious money.
• Only “insiders” or professional investors with "connections" know where to look for them.
• Timing when to get in and when to get out is just too difficult to pull off.

None of these things are true.

As a matter of fact, it’s easy to recognize "Breakout Markets" in plenty of time to jump on board and made HUGE GAINS.

And I’m going to show you exactly how to know when to get out. Not only that, you can exit these investments in such a way as to virtually guarantee that you won’t have a loss. 

So where’s the risk?

The risk is not knowing what to do... getting in too late... and getting out too late. But, as I’ve said, all those things are avoidable.

Breakout Mania

Breakout Markets begin under the radar. And prices start to go up for sound supply-and-demand reasons. Then people begin getting enthusiastic – and before long, "Breakout Mania" sets in.

You’ve heard of the tulip mania in the 1600s. That’s one of the oldest examples of a rising market gone berserk. But have you heard of the nutmeg mania?

Back in the 1600s, nutmeg was the miracle drug. It could cure anything from tuberculosis to insomnia. Or so it was thought. Nutmeg came from the "Spice Islands," now part of Indonesia. More than half the ships that took the treacherous journey to the Spice Islands – halfway around the world from England and the Netherlands (the two countries that traded the spice) – never made it back. Yet sailors begged and clawed to join those expeditions. Just half a pound of nutmeg could buy them an expensive house in the city or a hundred acres of farmland.

But here’s what history has taught us about manias: They come and they go. And you can get rich in the coming. But in the going, you can lose everything. However, as I’ve said before, that’s only if you don’t know what you’re doing.

That’s not going to be the case here. I’m going to show you how to make a great deal of money without risking a loss.

But before I do, I want to show you how easy it was to make money in the last three "Breakout Markets."

This is the oil market. The blue stripes represent getting in at 20% and exiting with a 100% gain.

Here’s another breakout market. This one is China...

 Again, the blue stripes represent getting in at 20% and exiting with a 100% gain.

Now I’m going to show you one more example...

 his shows the U.S. real estate market with the same entry and exit points: getting in at 20% and getting out when the market has doubled.

The Year of the “Market Breakouts”

"Market Breakouts" will begin in Asia where economies are recovering much faster than anywhere else. And Asian central bankers already see them coming.

Hong Kong’s central banker, Norman Chan, gave the San Francisco Fed’s President Janet Yellen an earful last month during her visit there... "We have seen a very massive inflow of funds that is explainable by the very low global interest rates and coupled with this huge amount of quantitative easing," Chan said.

"This question of... asset bubbles forming is a big challenge for us," he said to Yellen.

And Former U.S. Treasury Undersecretary Timothy Adams said that his biggest concern is that "we are simply creating new bubbles... as capital sloshes around the global markets."

In a 2002 report on these markets, the authors (six of them) said that "breakout markets" start with "a decision of a central bank to increase lending or some other similar event. The expansion of credit comes along with an increase in prices...."

The Fed is guilty on both counts: expanding credit and lending more. And so are the central banks in China and most of Europe.

We’re in classic “Market Breakout” territory. 

How to Invest

In the next week issue , I’ll show you three ways to take advantage of these runaway markets with very little risk. And, apart from Asia, I’ll let you in on the most likely places where “Market Breakouts” will take place in 2010 – giving you multiple chances to double your profits.

Invest Safely,

Andrew Gordon

FED will keep interest rates low during all of 2010

The FOMC minutes showed that they are forecasting 9.5% unemployment rate in 2010. The yield curve shifted lower and by that action it was revealed that monetary policy will remain lax in all of 2010.

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What's going on?

Theme Comment

·         Yesterday’s GDP data was basically in line with expectations and the Conference Board Consumer Confidence was better than expected. The FOMC minutes unfortunately showed that the most important economic institution in the world is confused and in completely uncharted territory. E.g. they are forecasting 9.5% unemployment rate in 2010?!? The yield curve immediately shifted lower, since everybody knows that is not going to happen. In other words, the Fed has revealed that monetary policy will remain lax in all of 2010.

·         Another data-heavy day: The USD will edge lower and risk (stocks, HY, AUD etc.) will edge higher.

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Calendar

Economic Data Releases
Country	Time (GMT)	Name	Expectation	Prior	Comment
US	13:30	Personal Income/Spending MoM (OCT)	0.1% / 0.5%	0.0% / -0.5%
US	13:30	Durable Goods Orders MoM (OCT)	0.5%	1.4%	Saxo Bank: 0.3%
US	15:00	New Home Sales MoM (OCT)	0.4%	-3.6%	Saxo Bank: -1.5%

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FX

FX	Daily stance	Comment
EURUSD	0/+	Buy dips to 1.4955, or break of 1.5015, for a test of 1.5060. Stop below 1.4910.
USDJPY	0/-	Sell rallies to 88.50-60 res area for a push through 88.0 targeting 2009 low of 87.15.
EURJPY	0	Expect consolidation within a 132.0 -133.0 band.
GBPUSD	0/+	Break abv 1.6620 suggests 1.6675 next target but seen capped there for return to 1.6585-95.
AUDUSD	0/-	May have seen temp top at 0.9262. Retracement can extend to 0.9220 before rebound higher.

---

FX Options

FX-Options	Comment
EURUSD	Vols have slipped with plenty of sellers for strikes 7 Jan and under. As spot revisits the
	1.50 area, expect more offers keeping spot capped.
USDJPY	Seeing a few buyers of short date low delta downside this morning with the move in spot
	lower. 8800 level remains key and gamma being at such low levels remains good value.
AUDUSD	Front end remains soft all day in Asia. 1m traded down to 14.2 and spot has settled in
	a range around 9250 level. Few buyers of upside 9300-9400 strikes for 3w-1m area.

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Equities

Equities	Daily stance	Comment
DAX	0/+	Buy on dips towards 5748 targeting 5784. S/L below 5731.
FTSE	0/+	Buy on dips towards 5311 targeting 5344. S/L below 5295.
S&P500	0/+	Buy on dips towards 1102 targeting 1110. S/L below 1099.
NASDAQ100	0/+
DJIA	0/+

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Futures

Commodities	Daily Stance	Comment
Gold	0/+	Buy on dips towards 1175 and target 1185. Stop below 1170.
Silver	0/+	Buy around 18.75 and target 18.95. Stop below 18.66.
Oil (CLZ9)	0/+	Buy on dips towards 76.10 and target 78. Stop below 75.20

Dollar Lower, Oil Higher, Equities Higher - Wakeup Call

We maintain a buy on dips stance – credit markets still look supported in the short term with HY bonds outperforming IG bonds significantly.

What's going on ?

Theme Comment

· EURUSD broke 1.45, but gold didn’t manage to break the 1006 mark for good. Stocks edged higher in the US session, but Asian markets are down around 1%.

· US Consumer Credit declined a record $21.6B in July (stocks actually rallied intraday on that news), but the Federal debt increased by $111.9B.

· We maintain a buy on dips stance – credit markets still look supported in the short term with HY bonds outperforming IG bonds significantly.

FX

EURUSD Buy dips down to 1.4470 for an extension of rally to 1.4580+.

USDJPY Look to sell rallies to the 92.60-70 area for a re-test of o/n lows near 92.0.

EURJPY Seen pivoting around 134.0. Res 134.50, suppt 133.50.

GBPUSD Seems we have more upside. Buy dips to 1.6470-80, stop below 1.6430 for 1.66.

AUDUSD 0.8580-90 crucial for further gains. Below targets 0.8450 else 0.8670+ beckons.

FX Options

EURUSD Vols traded much higher with 1 mth up 1 vol and risk reversals were bid. Market is looking for 1-2 mth 1.50s so we expect spot to continue climbing.

USDJPY Although front end saw some life, it still seems offered but back end is holding up well.
Should Dollar weakness push spot down towards 9100 we should see bigger jumps in vols.

AUDUSD Gamma turns bid with plenty of buyers in the front end. Risk reversals also saw some aggressive buying under 1wk which should keep spot from offered.

Equities

DAX Buy/Sell at the break of 5501/5456 targeting 5538/5419. S/L below/above 5476/5476.

FTSE Buy/Sell at the break of 4971/4925 targeting 5505/4895. S/L below/above 4955/4938.

S&P500 Buy/Sell at the break of 1027/1020 targeting 1033/1014. S/L below/above 1024/1022.

Futures

Gold Buy at the break of 1008 and target 1022. Stop below 1000.

Silver Buy on dips towards 16.50 and target 16.70. Stop below 16.60.

Oil Buy at the break of 71.80 and target 74. Stop below

Wakeup Call

Keep an eye on ISM Non-Manufacturing today

Keep an eye on the ISM Non-Manufacturing today as it is still expected to come out below 50 (meaning contraction). A reading above 50 would translate into a rally in stocks.

What's going on?
Theme Comment

FOMC Minutes reveal discussions about ending the QE for Agency and Mortgage Backed Securities, although rates should still be kept very low. Some members feared a “substantial” decline in inflation (i.e. more deflation) and there is still a considerable weakness in the labor market, which needs to improve before rates can be hiked again. The STIR Futures market is still indicating that the first chance of a rate hike is March-May 2010.

· The ADP Employment Change yesterday showed that the labor market was deteriorating less rapidly than in July, but this notion is not corroborated by the Weekly Initial Jobless Claims.

· Keep an eye on the ISM Non-Manufacturing today as it is still expected to come out below 50 (meaning contraction). A reading above 50 would translate into a rally in stocks.

FX

EURUSD : Likely to be capped at 1.4290-00. Sell rallies for re-test of 1.4220-25, stop abv 1.4330

USDJPY : Resistance still 132.50 for break below 131.0 to target 129.50-70 m/term

EURJPY : 91.90-00 now critical support. Below targets 91.25 else 92.00-92.75 range

GBPUSD : MA res 1.6285-90. Sell into there for 1.6225 else buy break above for 1.6350-60

Equities

DAX : Buy around 5280 targeting 5326. S/L below 5260.

FTSE : Buy around 4782 targeting 4817. S/L below 4769.

S&P500 : Buy at the break of 1000 targeting 1006. S/L below 996.

Futures
Commodities

Gold : Sell on rallies towards 980.50 and target 971. Stop above 982.

Silver : Neutral. Risk-reward not convincing.

Oil : Sell on rallies towards 69 and target 67. Stop above 70.

Wake Up Call - Equities to head higher

Despite the GDP numbers from US last Friday Asian markets were off to a positive start driven by better than expected earnings. We expect this trend to continue into the European session.

What's going on ?
Theme Comment

US GDP Friday was on the surface better than expected, but far worse if you do some digging into the numbers. The expectation was -1.5% QoQ and the realized was -1.0%. However the prior number was revised lower from -5.5% to -6.4%; and furthermore personal consumption (which amounts to 70% of GDP) dropped to -1.2% from 0.6%. This is not a recovery.

·US banks that have been bailed out are returning the favor by stepping up purchases of Treasuries, helping to temper a rise in borrowing costs (notice the drop in yields). However, this will only be a short term phenomenon as the amount of Treasuries issued in one week amounts to the total liquidity that those banks possess.

·Watch for US macro numbers today and earnings from Barclays and HSBC.

FX

FX	Daily stance	Comment
EURUSD	0/-	Major res at 1.4340, sell there, or break below 1.4220 for 1.4150.
EURJPY	0	Expect to see a 134.0-135.50. Still within recent ranges.
USDJPY	0/+	Buy dips down to 94.50 for a retracement to 95.70.
GBPUSD	0/-	Risk we have a cap at 1.6775 with slippage to 1.6680 possible.
AUDUSD	0/+	Prefer to buy dips to 0.8325 for a rebound to 0.84 again, stop below 0.8290.

Equities

Equities	Daily stance	Comment
DAX	0/+	Buy on dips towards 5320 and target 5395. Stop below 5300.
FTSE	0/+	Buy on dips towards 4605 and target 4658. Stop below 4600.
S&P500	0/+	Buy on dips towards 987 and target 996. Stop below 985.
Nasdaq	0/+	Buy on dips towards 1605 and target 1622. Stop below 1602.
Dow Jones	0/+

FX Options

FX-Options	Comment
EURUSD	Front end vols are down close to year lows and market still undecided on the next move.
	Back end slightly bid but indicates vols could explode if 1.37/1.43 range is broken.
USDJPY	Quiet session with vols holding steady across the curve. Few bids for 9500 strikes under
	1w and front end likely to be well supported after Friday’s move.
AUDUSD	Gamma turns bid this morning with spot attempting to test 8400 level. Mid curve also
	traded higher so it seems vols are showing signs of bottoming out.

Futures

Commodities	Daily Stance	Comment
Gold	0/-	Sell at the break of 950 and target 944. Stop above 953.
Silver	-	Sell around 14.10 and target 13.90. Stop above 14.22.
Oil	0/+	Buy on dips towards 69.60 and target 71. Stop below 68.70.

Closing A Real Estate Deal In A Down Market

When the housing market slumps, it's often best to take your home off the market and wait it out - but not everyone has that luxury. Many people are forced to go through with a sale because of a job transfer or a personal liquidity crisis. But even if you're selling in a very bad market, there are things you can do to make the best of a raw deal. Read on for the top tips on how to close a real estate deal in a down market. (For related reading, see Selling Your Home In A Down Market.)

Tip No.1: Sweeten the Deal
In declining markets it is extremely important to be cognizant of comparable properties in the surrounding area and to price your home at a level that will entice potential buyers to view it and ultimately bid on it. In other words, the seller must reject the temptation to hold out for top dollar or to price the home at the upper end of what the market will bear.

There are three easy steps you can take that will give you sense of what similar homes are selling for:

* Attend open houses
* Peruse the newspaper for local listings
* Ask a real estate agent to print up comparable listings on the multiple listing service (MLS)

Tip No. 2: Keep It Simple
In a down market, buyers have a lot to choose from, so it's important that you try not to give them a reason to turn down your property. Therefore, you should eliminate or reduce the number of "contingencies" that you may have otherwise insisted be in the contract. In other words, be flexible and don't make the sale contingent upon any factor that isn't absolutely essential. Make your conditions as simple and straightforward for the buyer as possible and you'll find that they'll be more apt to sign on the dotted line. (To learn what buyers are looking for, read Buying A House In A Down Market.)

Tip No.3: Throw Some Bones
Let's face it - there is a lot of competition out there when it comes to selling a home. In fact, at any one time, there are literally millions of homes for sale throughout the country! In order to make your home stand out from the crowd, you may have to take some extraordinary measures. These extras don't have to cost you a lot of money - you just need to give an interested buyer that extra push toward choosing your house over another.

For example:

* Compensate the buyer for any points he or she might have to pay in order to obtain a mortgage. You can do this by reducing the price. (Read more in Mortgage Points – What's The Point?)
* Offer to pay for any attorney's fees the buyer might incur with the sale. (See The Benefits Of Using A Real Estate Attorney for the advantages of consulting these professionals.)
* Be more flexible with regard to the buyer's requests. More specifically, if the buyer requests that a window be replaced or a room be painted, consider satisfying that request. (Read more about which home improvement projects are the most valuable come resale time in Fix It And Flip It: The Value Of Remodeling.)

Remember, in a down market it's the little things that will help close the deal. Also remember that if you are not accommodating in this type of market, a buyer will simply move on.

Tip No.4: Hire a Professional
Real estate agents often charge commissions that can range up to 6% of the sale price of the home. That's expensive! And it is a major reason why so many individuals decide to place a "For Sale By Owner" (FSBO) sign on their front lawn and try to go it alone. (Read about the advantages of selling your house yourself in Cut Commissions With "For Sale By Owner" Sales.)

The problem with FSBOs is that they often fail to draw traffic. In fact, very few people ever see the sign on the seller's front lawn or the tiny postage-stamp-sized advertisement they've placed in the local paper. Real estate agents, on the other hand, are motivated by a commission, and will aggressively contact potential buyers and direct them to your home. Plus, they offer multiple listing services, which makes your listing accessible to anyone who's looking to buy.

There are no guarantees that a real estate agent will ultimately be successful at selling a home, but hiring a good real estate agent tends to increase the likelihood that a qualified buyer will come out to see your house, making an offer more likely. (Read more in Do You Need A Real Estate Agent?)

Tip No. 5: Get Out of Town
Before an individual buys a car, he or she typically wants to sit in the vehicle and test drive it to see if it "fits". The same is true for a home. In fact, would-be buyers want to walk through a home and take their time exploring every nook and cranny to make sure that they are making a wise choice.

Open houses are designated points in time when potential buyers can walk through a home and ask questions. They can be a very valuable tool when it comes to marketing a home - especially when they are held by a real estate agent. Folks shopping for a home don't feel comfortable opening up closets and drawers and talking with their spouses about what they like and don't like in front of the homeowner - they want adequate time and freedom while doing their due diligence.

The seller should also be prepared to place a key box on the home's front door so that the home will be accessible to real estate agents at all times. The advantage of having a key box is to make sure that would-be buyers will have the ability to walk through the house when you are at work or out running errands. Nobody wants a seller lurking nearby while they peruse the home - it's uncomfortable.

Tip No.6: Raise the Bar
In a buyer's market, the onus is on the seller to make the home as attractive as possible and to make it stand out from the pack. That is why many sellers retain home stagers to help them sell their home. A home stager is a consultant who will recommend cosmetic changes so that the home is more attractive to would-be buyers. Typical recommendations include removing clutter from a room, rearranging furniture, painting or adding more appealing décor. Your home should also be spotlessly clean. (Read more in 12 Worst First-Time Homeseller Mistakes.)

Stagers' fees vary, but they usually range from a couple of hundred dollars to just over $1,000, depending on the services provided. If you think you have a keen eye for detail, you could also take this task on yourself.

Tip No. 7: Don't Be Cheap
In order to make sure that real estate agents pay attention to your property and are eager to show the home to prospective buyers, sellers must provide incentive. That is, they must be willing to pony up the full 6% commission to the broker who sells their home. You can negotiate, of course, but remember that the idea is to give the broker/agent an adequate incentive to market your home ahead of others that he or she maintains in inventory. (For tips on successfully navigating any negotiation, read Getting What You Want.)

If you want to negotiate your agent's commission, consider establishing "breakpoints" in the listing agreement. In other words, establish terms so that the agent of record will receive 6% if, for example, the home sells within the first 60 days. If the home sells within 60-90 days, a 5% commission might be agreed upon, and so forth. Again, the idea is to persuade the agent and the listing firm to give your property as much attention as possible.

Bottom Line
Sellers looking to unload their homes in a down market must be flexible with regard to both price and contingencies. They should also be prepared to enlist the help of an agent or broker to help them better market the home. For those who follow the above tips, it is possible to sell your house successfully, even in a faltering real estate market.

source:
http://investopedia.com/

Housing's Still Overvalued & Silver's Still Cheap

Housing's Still Overvalued & Silver's Still Cheap
(Sell your House and Buy Silver!)

So far, out of 80,000 readers, nobody has asked me when the housing collapse will end. Funny. I might be regarded as knowing something about that, since I called it in advance, well before the peak, 5 years ago:

Overvalued Housing, Bonds & Stocks July 2, 2004

The lack of questions is a sign that the housing collapse has a long way to go, because, generally, people are still in the first stage of mourning the death of the housing boom: denial. Nobody can ask "When will the housing collapse end?" if they can't admit the phrase "housing collapse".

After Denial, next in the stages of mourning comes Guilt. Then Anger. Then Depression. Then Acceptance.

Unfortunately, people don't start asking questions until they get to the anger phase, and they don't start doing anything about it until the acceptance phase.

Let me help you get there more quickly.

Denial: Wake up! Housing prices will NOT soon stop going down, since in many locations, 10% of all properties are 90 days past due on their mortgages, and those foreclosures have not yet hit the market, and they will.

Guilt: You should have known! Government intervention into the economy always creates distortions, and government sponsored home loans through Fannie Mae and Freddie Mac and corruption at all levels gave everyone with a pulse and the ability to lie to qualify for a home loan, that extra and excessive buying power created the top, and this was easy for anyone to see. Why didn't you see it? Were you asleep?

Anger: But good intentioned democrats who wanted to help their poor constituents achive "the American Dream" of home ownership did nothing of the sort, they helped enslave poor people into debt, not true ownership, due to government meddling. It's the government's fault!

Depression: But what can you do about it? Nothing! No matter how much you work on your yard or keep your neighbors mowing their lawns, or no matter how much you write your congressman, and regardless of electing Obama, home values will continue to go down, and there's nothing you can do about it.

Acceptance: Well, there is one thing you can do. Sell your house! Get out of the way of this oncoming train wreck in motion.

The government is doing everything they can to stop it, but they will fail.

Everyone should know by now that the government is buying up the "toxic assets" of the banks, meaning, the mortgages that are worth more than the homes are worth. Government bought at the top, and they bought the worst of the "assets".

The housing crash will end when the government finally sells all of their housing, and "exits" the market.

That's what marked the bottom of the gold market. When the governments of the world were hell-bent on selling as much gold as possible, back in 1999-2001, when gold bottomed at $250/oz. They are still selling gold, but not as much, since they are running out of gold to sell.

Government intervention always distorts markets.

Housing topped, because of excessive government-backed loans. See, government was really buying housing on the way up, creating the top. The continued government buying, through bailouts, means we are still at the top.

Government buying created the top.

Therefore, government selling will create the bottom.

Tell me when the government, or Fed, will sell all their "toxic" mortgages, or forclose and sell the houses that back them, and I'll tell you when the housing market will bottom out.

Government dumping of all mortgages and housing could be a long way off--perhaps decades.

If we are fortunate, housing prices will drop 50-75% in 4-8 years, and it will be over quickly. That is unlikely, and would require the election of somebody like Ron Paul as President.

More likely, due to continued government intervention, as is taking place, the housing collapse could last another 20-30 years.

Yes, 70% of home sales are either short sales or foreclosures. However, this only means that some banks are selling. Most of the government mortgages are not being sold, and most of the homes owned by people are owned with mortgages, meaning, on leverage, and these are not yet being sold either. Just wait until the public starts dumping homes, AND the government starts dumping at the same time. Then, you will really see a housing crash.

A "normal" housing market will have most homes selling for far LESS than construction costs. After all, homes deteriorate, and a 20 year old faucet is not nearly as nice, or functional, as a new one. People know how to "write off the depreciation" of a home on their taxes, but this generation does not yet seem to understand that real homes, do, in actual fact, depreciate, as a normal function of real life!

If a new car can lose 20-30% of the value the moment it "drives off the lot", why is that not also applicable with homes? It should be the norm. When it's not, it's a bubble. Housing is still a bubble. Grossly overvalued.


I've been reading and writing about silver for 10 years now. Sometimes, it's hard to "come up with something new" about silver, and so, sometimes I touch on real estate, or oil. But I think I have an new and important insight to share.

My education about silver has mostly come from other men who are writing today, who have 20 to 60 years of experience in precious metals, and it comes from my reading of history, and, of course, from my readers.

The historical perspective is important, but sometimes, things get forgotten by historical writers as people forget over time, and yet, knowldge is gained over time as humanity advances.

Back in the depression in the 1930's, silver was valued at around 29 cents per ounce, yet that silver was turned into U.S. silver coinage that was valued at around $1.40 per ounce! That silver thus formed the "backing" for the currency; as it was the currency, but it also formed the backing for the paper currency. In other words, paper could be "redeemed" or "exchanged" for silver currency, and thus, it was said that silver "backed" the currency.

Unfortunately, writers in the metals community lost some perspective on that by 1964, and I believe that negatively influenced my thinking for years.

They wrote statements like this, and see if you can see the inconsistency with the facts above:
"After 1964, 90% silver coins were no longer issued, and silver no longer backed the currency. Thus, without any possibility of redemption, people were forced to hold unbacked paper money, or trade their dollars for other fiat paper currencies, as there was no safe haven."

Or they would write:

"After 1964, 90% silver coins were no longer issued, and silver no longer backed the currency. After that, paper money could be exchanged to buy silver only at excessive premiums which discourage trade. See, when silver was money, you could exchange a $1 of paper, for a silver dollar, at zero cost, paying no premiums."

BUt silver was not valued at $1.40/oz. the entire time that silver was used as currency in dimes, quarters and half dollars for 173 years or so, but as low as $.29/oz! The silver that you could get, when turning in your paper, was up to 400% overvalued, as $0.29 x 5 = $1.45!

These days, we all know a bit more about silver premiums, which is the extra price you pay, over spot, to buy silver. In the last year, premiums for silver coins and bars have ranged from about 50% down to about 5% over spot.

My math tells me that 5-50% is much less than 400%. Wouldn't you agree?

Thus, silver has a much lower premium today, than when "silver was US coinage".

I've written on this before, but here's the insight.

If silver, at 400% overvalued, can "back" the currency, then don't we have a de-facto "private" backing of the currency if you can actually buy silver from private dealers for much less, ranging from 5% to 50% over spot?

Yes, we do. Interesting thought, isn't it?

Here's something else. Over 100 years ago, before the founding of the Federal Reserve which issues all paper money, there were privately issued paper money called dollars. But who issued them? Various banks. Each bank would issue paper dollars that said it was issued by each bank, like the First Bank of Iowa, or some place. Other banks would redeem those dollars, at varying discounts, depending on how far away the issuing bank was from the redeeming bank, and also depending on the reputation of the bank. After all, a redeeming bank would have to trust the issuing bank could deliver the gold or silver upon redemption.

Our markets works shockingly similarly, even today.

Today, coin shops and bullion dealers will redeem Federal Reserve Notes (dollars) at varying discounts, depending on the volume of trade, and also, depending on their supply sources, such as mints, major wholesalers, or public selling. Some of those supply sources tap directly into the large bullion banks that are the owners of the Federal Reserve and/or who have enormous short positions at the COMEX or in over the counter derivatives, and/or are custodians for the bullion ETFs.

Our markets are so free, that we actually have a de facto private precious metals backing for the current paper dollar. By "de facto" I mean "in practice but not necessarily ordained by law".

My main point is that anyone can exchange their paper money, for silver or gold, on much better terms today, at much less premiums today, than during the vast majority of the time that silver "officially" backed the currency!

The fallacy of thought was that silver could be bought for "zero premium" when it was money, while today, you have to pay an "unfair 5-10%". The truth is that when silver was money, government distortions and monopoly pricing created 400% premiums, also called "seniorage".

http://en.wikipedia.org/wiki/Seniorage

Implications? I don't mean that all of our currency is backed by silver. The relative amounts are so different, it's shocking. Dollars in the banks now exceeds $14 trillion, or $14,000 billion, but the amount of money going into physical silver per year, world wide, is only about $1 billion.

I can see the criticism now. People will say that I'm just trying to justify selling silver at up to 10% over spot when other dealers may have it offered at 5% over spot

Of course I am! Every business does that. Quality goods typically cost more.

But the point is that the free market in silver, or multiple sellers and suppliers (not just government currency), is creating the competition that leads to sometimes absurdly low prices, which is great for all silver buyers today.What quality do I offer? Speed & reliability, at a very low price!

You might be able to buy silver cheaper elsewhere than from me, but it may cost you more in terms of time, or you might lose it all in a default. Other dealers still have a 2-5 month delivery delay. Or the other dealers might default, because they might not have the silver, or might be in debt, or their suppliers might not have the silver.

What's worse is that some dealers are slower, less reliable, and more costly than I am!

I have 81,000 oz. of silver that I'm using to deal silver.

Thus, we have the goods, the real silver, ready to deliver upon demand, with zero default risk to you.

If you want to sell your home, and buy silver, you will be a very wise, and rare, customer.


Sincerely,

Jason Hommel

source
Silver Stock Report

Gather Silver with Both Hands

It is a matter of almost holy writ with us here in the Whiskey Bar that “the poor man’s gold” is something we should be buying with every spare non-silver dime we have. We believe! We believe!

We believe on fundamentals, technicals, and common sense.

We even believe all this in the face of the recent gyrations in the market.
In May silver shot up dramatically, so why is it falling dismally in June? Beats me, Babes, it truly does. By every standard I can devise silver is still the investment of choice:

*

For sixteen years straight mining has not kept up with demand.

* Almost all the gold ever mined is still in existence, barring bits that were hidden from various totalitarian governments and forgotten, or lost, or sunk beneath the briny sea transporting treasure from the New World to Spain.

* Silver is consumed, other than for jewelry and tableware; again, supply is unequal to demand.

* Silver has multitudinous industrial uses, even now that the vast amount once used for photographic film has been reduced to very little.

* Silver has been running less than half of the least classic ratio with gold and slightly over four times the highest one! That varies, historically, between 16:1 and 30:1. At recent levels of 65:1 silver is so wildly undervalued that it is almost insanity not to buy it.

* Only recently has silver become available at spot or close to it; last year those who had wouldn’t sell.

* Mints can’t keep up with demand.

* To really ice the cake, silver is down well over ten per cent below last month’s highs.

So...why did it fall again today? Quite frankly, I have no idea, and I don’t really care. I like $13.85 silver a lot better than I did $15.50 silver last month so long as I’m purchasing, as I expect to be for some years to come! I chortled happily today when I bought over eighty ounces at $10.85 or $11.32, depending upon whether the weight was in Troy or Avoirdupois. Either way, I did well. I picked up another forty-odd ounces for $500.

Those who are familiar with my “TOIS” (Traynham’s Own Investment System, pronounced “toys,” because that’s what I buy) know that I read the market via complex technical, psychological, and analytical market runes (otherwise known as Craig’s List and e-Bay.) The torrent of silver available through such markets has reached flood level as 20% joblessness (no matter what the government says) and a minimum of 6% inflation (again, no matter what Obama says) devastate the land.

The shortsighted are turning loose of family treasures and luxury items rather than tightening their belts, and they will regret it bitterly sometime in the next five years.

Never before has the market been so advantageous for the buyer of used vehicles, fine china and other luxury goods, farm machinery, and livestock. As I noted in yesterday’s article on Morning Whiskey, we just bought a pair of very fine horses for a quarter of what they would have cost last year. We want a diesel truck (for reasons covered in past articles), and made a short list quickly and easily of two dozen that would have done splendidly, the most expensive of which was $2,000. MDC (My Darling Charles) chose a Big Bubba that has been in use as a repo truck, meaning it comes with what is virtually a small crane and heavy chains worth a quarter of the price we’re paying.

This country is in big trouble economically from crashing stock and real estate prices. We expect the bond market and commercial real estate to totter next. Taxes are rising, income is falling, hours are being cut, the USA is averaging 625,000 lost jobs a month, and Congress intends to tax our cattle for emitting methane. BRIC is maneuvering to replace the dollar as the standard currency. Nobody more significant than Sri Lanka is discussing a gold standard. The far left is dismembering the carcass of business and distributing the bleeding hunks to favored voter blocks.

MDC and I spent our usual luxurious three hours sitting on the terrace watching the sun go down over the lake and laughing at the antics of the animals. We came up with one slight possibility of an explanation. Remember the Hunt Brothers? Back in the late Seventies they almost cornered the market in silver, and after that splendid idea failed went back to running one of the nation’s biggest trucking companies. It could just be that the increasing costs of trucking and the possibilities of a breakout in silver made surviving Hunts think May was a good time to turn loose of some of their glittering hoard. A look at volume for the year might be enlightening, along with speculation about whence came genuine Ag, although it may be the rise was promulgated through mining stocks. I still say it doesn’t matter, buy it when the price is advantageous.

I expect the day to come when I have to admit that I erred in not paying what silver cost when I had the chance at current levels. That has happened to far better than I. Silver is particularly vulnerable to this error because there is usually a limited amount of the physical metal to be had at any time. Don’t say that you weren’t warned that my gleeful hand rubbing today over buying at twenty and thirty per cent. under spot won’t give way to mourning that I didn’t buy much more even though it was $15-20/ounce.

I miss the good old days of the Eighties when I hunted for cyclicals and charted happily every day, but I think we have a better chance to make really big gains now than have been possible for ordinary, sensible people since the Great Depression. I love reading the market suggestions the big guns of Agora Financial offer us regularly, but day in and day out you can protect yourself and your future through small, common sense purchases. Food, fuel, trade goods, sterling you can hold in your hand, ammunition (if you can find it!), tobacco, alcohol, and soap...those will be the daily hard money in the future I see coming.

Why is silver falling? Who cares! Just go buy all you can get your hands on.

Warm regards and happy shopping,
Linda Brady Traynham

Chart of the Week

JEFF CLARK'S BUY POINT FOR GOLD STOCKS

We're borrowing an idea from our colleague Jeff Clark for our chart of the week...
Jeff is one of the few traders we've ever seen who consistently trades the short-term movements in gold stocks for profit... so we always pay attention to his opinions on the sector.

Just a few days ago, Jeff updated his readers on his "wish price" to buy more gold stocks. As you can see from this week's chart of the gold miners fund (GDX), gold stocks are in a confirmed uptrend since last December. Each time they dip down to their trendline, they tend to rally higher.
Jeff's target buy price to get the GDX "on sale" is around $33. If you're looking to trade gold stocks, keep an eye on that number.

Brian Hunt

Classic Chart Pattern Predicts Bad News Followed By Good News

By Rick Pendergraft

In last week’s article, I pointed out three levels of resistance that I thought would keep the S&P in check over the next few months. I have to admit that so far, that prediction is looking good, but one week does not make a trend.

In an interview on Fox Business News last Monday, I pointed out the same three levels of resistance to Fox viewers that I pointed out to IDE readers earlier that morning (it pays to subscribe). One thing I did on Fox that I didn’t do in IDE was make a recommendation, so I feel like I owe readers something. My recommendation on Fox was to buy the ProShares UltraShort S&P 500 ETF (SDS). I still think this is a good pick and I think it could jump 30-40% over the coming weeks. As a bonus pick, I think you can make every bit as much with the QID, which is the ProShares UltraShort QQQ ETF.




After looking even closer at the charts, I noticed what appears to be a very well defined inverse head and shoulders pattern. Look at the weekly chart below to see the different parts of the formation.

One thing that strikes me about this chart so far is the symmetry of the move from the neckline to the head and from the head back to the neckline. Each of these moves lasted nine weeks. It doesn’t have to be that well defined to fit as an inverse head and shoulders pattern, but it struck me as interesting.

So where does this leave us? It looks to me like the S&P will decline over the next 7-8 weeks and then should start to find support near the 750 level. If the 750 level holds as support and we start heading higher again, you could play the up move for about six weeks or so and then see what happens after it reaches the 950 level again.

If all of this pans out the way I think it will, the end of this year could see an explosive move to the upside as it breaks above the neckline.

The thing about head and shoulders patterns is that you typically want to wait and play the break above (on an inverse) or below (on a regular H&S). The big move comes after the pattern is complete.

In the interim, you can play the short side as I think the three resistance levels I talked about last week will be too much to overcome when the S&P is as overbought as it is on the daily and weekly charts. We move down again, the moving averages have time to catch up, and we won’t be as far below the 52-week (360-day) moving average as we are now.

We saw a similar pattern develop in the 2000-2002 bear market. It wasn’t as clearly defined as the one we are seeing develop now, but it was there never the less.

Be patient, the biggest gains are yet to come. The rally from the March low was very enticing, but there is even more money to be made if this plays out as I think it will.

Good luck and good trading,
Rick

Passive Interest Rate Moves May Confine Canadian Dollar, Japanese Yen To Range

As we know it, Japan's economy has been labeled recessionary given its two consecutive quarters of negative strength. July GDP data shows the North American country seeing some relief, expanding 0.7% in that month alone. With these two conditions in minds both monetary authorities are unlikely to react to growth as inflation is only now beginning to retreat. Rate cuts here would only add upward price pressure that these two banks have sought to avoid. As such, yield-gap neutrality may continue for the near future and thus see no changes in relative strength between the Canadian Dollar and the Japanese Yen.

Trading Tip -
Financing the purchase of a currency with the Japanese Yen is generally a riskier endeavor in times of greater volatility. Recent weeks have shown financial market turmoil to be benefiting the Yen as a result. As a precaution, traders may want to wait for volatility before trading this range. In addition to a stop loss, we will look to control risk further by removing any unfilled orders by the end of the week or should spot close above 102.19 prior to our order being filled.
Event Risk for Japan and Canada

Japan - Between Monday and Tuesday the Bank of Japan will announce its decision for their benchmark rate. Consensus forecasts call for no changes as the BoJ continues to find itself in a tight situation where the overnight cost of borrowing is already at 0.50%. Japan's week will be highlighted instead by the minutes from September's central bank meeting. One may see Yen volatility ensue if the minutes reveal a sharper and more urgent tone among the bank's board members. But as oil and goods prices fell through August, we may see that the members had become increasingly dovish on the inflation front. Their monthly report will probably suggest the economy is indeed in a recession and will probably highlight the easing inflation. The country's Leading Index has been generally known to precede large deviations from trending economic activity. The metric which has been on trending decline since May of 2006 might continue to fall as spillover from the US financial crisis continues to impact global financial markets.

Canada - Of the two major events on Canada's calendar this week labor data will be of most concern. With Canada's economy depending so much on export and oil driven growth, the fall in crude may deteriorate the country's overall prospects. Despite commodity decline, GDP in July alone grew 0.7% for the North American country. If it indeed does find itself trending upward through August and September, labor data may come in stronger than expected. The Ivey Purchasing Managers Index, a volatile metric measuring the monthly change in purchases made by corporate executives, is expected to decline for a third straight month in September. Implications in the figure's actual outcome will be limited as Loonie traders take labor data as the paramount concern this week.

How to Profit from Europe's Folly

By Dr. Steve Sjuggerud
August 5, 2008
The euro is now 50% overvalued versus the U.S. dollar...

In fact, the euro is as expensive as it's ever been. So it's time for it to come back to earth. Let me explain the story...

The euro went from expensive to outrageously expensive in the last year, as the chart shows.



Now, the euro has reached the point of ridiculousness. Here's a concrete example: A McDonald's Big Mac in Europe will cost you 50% more than a Big Mac in the States.

The Economist magazine's Big Mac Index is actually a pretty darn useful gauge of which currencies are cheap and which are expensive. This index simply compares the price of a McDonald's Big Mac in all the major currencies of the world. The theory goes that countries with similar levels of development should have similarly priced Big Macs. So in theory, a Big Mac should cost roughly the same in Europe and America.

According to the Economist, early 1995 was the last time a Big Mac was 50% more expensive in Europe than it was in the States. The last time Europe's currency got this expensive, it crashed by nearly half.

The Euro Hasn't Been This Expensive Since 1995



Could the euro continue to get even more expensive? Of course. But as the Big Mac chart suggests, the euro currency "rubber band" is stretched as far as it's ever been stretched.

The rubber band always returns to its "equilibrium" state of value. Just when is the question.
Could the euro continue to get even more expensive? Of course. But as the Big Mac chart suggests, the euro currency "rubber band" is stretched as far as it's ever been stretched.
In the latest issue of my newsletter Sjuggerud Confidential, I told my readers about the very best way to safely make money on the euro falling. I think we'll make 50% or more over the next two years.

We are at the brink of a major downtrend in the euro. I think it's time to make a safe wager. Bet against the euro while it's extremely overvalued and get out in two years or so. The euro will probably still be too expensive, but it'll be a lot cheaper than it is now.

Good investing,

Steve

The Three Best Gold Investments Right Now

By Dr. Steve Sjuggerud
Aug 2008
In June 2002, I was pounding the table, telling people to buy gold at $250 an ounce... but nobody cared.

Today, in 2008, people are finally asking me about it.

The fact that people are showing interest for the first time in two decades... and that now you see gold covered much more in the mainstream financial media... tells me this bull market in gold is building steam, and getting ready to move a lot higher.

I also want to point out something else about investing in gold right now, if you are new to it: There will be short-term pullbacks in the price.

My friend Chris Weber, who became a self-made millionaire thanks to savvy investments in the last gold bull market, says:

These "down periods" are going to happen. No price goes in one direction forever without stop. When there is a correction or consolidation phase of the gold bull market, I would strongly advise anyone who does not have enough of the metals to use this time to start buying...

Before this bull market is over – and I see it lasting well into the next decade – it would not surprise me to see gold at $3,000 and silver at $187.50...

Richard Russell, who's been following the markets for about 50 years in his DowTheory Letters, agrees with what's been happening this year:

The great gold bull has broken free of its chains. The US public is unaware of the great phenomenon that is playing out before their eyes. Somewhere ahead, the US public will enter the bull market. My advice on gold, as it has been all along – ride the bull, and buy more on pull-backs.

The best financial professionals also agree...

As Michael Metz, chief investment strategist with Oppenheimer & Co., says of today's global economic situation: "You have a perfect storm that favors gold for as far as the eye can see. It's not too late to buy it..."

In this report, you'll learn about our three favorite precious metals opportunities right now – two in gold, and one in silver (and why you should own silver, too).

The first opportunity I want to tell you about is the simplest and safest way to own gold. It's perfect for part of your savings. I think it will grow steadily over the next decade and beyond. In short, every investor, no matter how young or old, should have some.

The second opportunity in this report comes from Porter Stansberry. He'll show you why you also should own some silver right now... and the easiest way to buy it.

The third opportunity we'll tell you about, from professional geologist and mining stock expert Matt Badiali, is our single favorite gold stock to buy right now. It's big, cheap, and safe... and right now, you can buy it at a double-digit discount.

So let's get started...

5 Reasons to Own Gold
& Precious Metals Now

1. Gold is still cheap, while stocks are expensive. In January of 1980, both the Dow Industrials and the price of gold were at the same level: 800. Now, nearly 30 years later, the Dow is above 10,000, and gold is around $950.

2. Governments can print money to pay off their debts and pay for bailouts... But they can't create gold or silver. For example, the U.S. government is printing tons of new money right now to get the banks to lend, and bailing out all the financial institutions that have failed recently (more will fail for sure). In other words, the supply of paper money can be infinite. But the supply of gold is extremely limited. They say the entire gold production in the history of the world could fit on the basketball court at Madison Square Garden. And it's not so easy to get it out of the ground.

3. Precious metals do well in major international conflicts. The price of gold was fixed during World War I and World War II. But silver rose by more than 100% in both world wars. Gold has risen for the duration of the War on Terrorism. It all comes back to No. 2, above... Governments ultimately print money to pay for wars.

4. Gold will rise during inflation... and during deflation. Gold rises as the value of the dollar falls. But what many people don't understand is that gold will do even better during deflation, as the government lowers interest rates and wildly prints money (creating inflation) to offset that deflation. This leads to substantially higher gold prices... which is exactly what's happening right now.

5. Gold lowers risk in your investment portfolio. In the past, gold has tended to do the opposite of stocks: It skyrocketed in the 1970s, when stocks did horribly. Then in the 1980s and 1990s, when stocks soared, gold lost more than half its value.
So right now, you want to be a buyer of gold. Here's the first way I recommend you do it:

Investment No. 1
The Easiest Way to Own Gold

There are several ways to own gold through the stock market.

You can either buy stocks of companies involved in the production of gold, shares in a gold fund, or exposure to the metal itself, in share form.

Of these three gold instruments, the third option offers the least risk: owning gold bullion in share-form.

The instrument I'm talking about is the SPDR gold shares ETF. The symbol is GLD. Each share of GLD is worth exactly one-tenth of an ounce of gold. Buy 10 shares of GLD and you own one ounce of gold. It's that simple.

When you buy the stock of mining companies, especially the juniors, you take on all sorts of additional risks... like investing in politically unstable countries, higher energy costs, labor shortages, and bad management decisions.

With this ETF, you own gold without all the baggage.

Recommendation: Buy the SPDR gold shares ETF (NYSE: GLD).

Investment No. 2
Why Buying Silver Is the Most Important Action You'll Take This Year
By Porter Stansberry

Today, after six years of dollar destruction – with more to come after the U.S. government's rescue of Fannie Mae and Freddie Mac... the IndyMac takeover... and the Bear Stearns bailout – the prices of gold and silver are getting ready to head through the roof.

When people have tangible evidence that something has gone badly wrong with the economy, they begin to hedge against it. They hoard real assets. Rich people hoard gold and silver.

Hedging is like buying life insurance. You buy insurance so that, if something terrible happens, your family will have something to live on. Likewise, you should have some exposure to gold and silver in your portfolio. And no, it's not too late to buy some – far from it.

What you want in a hedge is a lot different than what you want in an investment. With an investment, you need something that's stable, which hopefully provides a yield, and isn't going to drive you crazy with volatility. Silver is none of these things.

But it is a perfect hedge, because, when things go wrong economically – when there's a crisis – the price of silver goes bananas.

Why? Because of the silver-to-gold ratio.

Historically, when demand for silver soars because of a monetary crisis, the price rises until it's roughly equal to 16 times the price of gold. As a result, the price of silver tends to move far more than the price of gold during a monetary crisis. Today, gold trades for around $950 an ounce. Dividing $950 by 16 shows the price of silver would be $59 an ounce. But today, silver still trades for less than $20.

Said another way, silver is the best hedge against a money crisis because its price will increase many more times than gold, as the silver-to-gold ratio reverts to its historic average. Silver will once again be worth 1/16th the price of gold. It is now worth only about 1/48th.

The easiest way to get into silver is the iShares Silver Trust (AMEX: SLV). If you don't want to buy real coins, this vehicle should work fairly well.

Make sure you own a substantial amount of gold and silver. I would recommend at least a 5% position in gold and a 5% position in silver. I wouldn't allocate more than 15% of your portfolio. That should be plenty to hedge yourself.

Investment No. 3
The Best Gold Stock to Buy Now
By Matt Badiali

My favorite gold stock investment bills itself as... "The Gold Company."

You'd think shares of the so-called Gold Company would skyrocket when the price of gold rallies like it has... but that hasn't happened.

In the last three years, the price of gold has risen 88% and the price of copper (the Gold Company's other major product) has jumped a whopping 140%. Meanwhile, the Gold Company's shares are up a pathetic 19% during that same period.

So, why buy this seeming laggard? Assets.

The company produced and sold 2.4 million ounces of gold from its Nevada mines in 2006 – 43% of its total gold sales. And the company has another 33.1 million ounces of proven reserves in Nevada. That means a little less than one-third of its 93 million ounces of reserves are located in a safe, stable, mining-friendly country.

With that in mind, we can still buy the company for less than $3,500 per produced ounce of gold. That's a 39% discount to the average for smaller, mid-tier producers working in much dicier locations. Who wants to pay a premium for riskier gold production?

Personally, I'll go for big and stable.

The Gold Company is Newmont Mining (NYSE: NEM) – the world's largest unhedged gold producer.

At its current price, Newmont is a fantastic buyout target. And that is what makes it a great place to be invested now.

The mining industry is in a frenzy of consolidation – and the price of gold is well past record-breaking territory. When a company combines assets as incredibly valuable as Newmont's and an unfairly cheap market value, it will be bought.

Just consider these giant mergers:
• Rio Tinto acquired aluminum producer Alcan for $38.1 billion.
• Freeport-McMoRan bought Phelps Dodge for $22.6 billion.
• Xstrata bought Falconbridge for $18.2 billion.
• CVRD acquired Inco for $18 billion.
• Goldcorp bought Glamis Gold for $8.7 billion.

Newmont has some serious assets to tempt a potential suitor. It built three brand new mines in 2006. It put 9 million ounces of reserves into production in 2007. And the company holds 29 million square miles of land in the world's premier gold-mining districts.

The company will produce between 5 million and 5.5 million ounces of gold this year. That gives us a worst-case sales number (at $650 per ounce gold) of $3.25 BILLION. Newmont says those ounces will cost between $375 and $425 per ounce to produce. That gives us a rough gross profit of $1 billion.

The company is currently worth around $22 billion, so it's trading at 22 times earnings. However, the rising gold and copper prices will buoy its earnings. That will attract interest in a takeover. Potential suitors will look at the volume of gold ounces coming out of the ground and the potential gains of lower-cost production.

In the meantime, the company pays a small (40¢ per share annually) dividend that we will collect while we wait. And we should enjoy some capital gains even without a takeover.

The company's copper hedges expired recently, so it can finally take full advantage of its copper production. Under existing contracts, Newmont has been selling its copper at prices that don't reflect the metal's current price.

Copper prices rose 80% since January 2006. As copper stays up around $3.70 per pound, Newmont will benefit.

Recommendation: Buy Newmont Mining (NYSE: NEM) and use a 25% trailing stop. When one of the world's largest gold producers is selling at a ridiculous discount to its peers, it's time to buy.

10 Rules For Successful Trading

Traders have developed lots of rules over the years in an attempt to refine the way they make trading decisions. So it’s not hard to come up with a list of 10 trading rules that can be part of a trading plan. Some are generic and general and not exclusive to any particular trader or trading approach. Others can be very precise as traders tweak rules into their trading system. The rules below have been selected for their broad appeal to many types of traders. They are presented in no particular order of importance.

1. Don’t trade markets about which you know very little.
This is not to imply that you have to be a fundamental expert on every market you wish to trade. However, you should know about what fundamentals are impacting, or could impact, a market you are contemplating trading. For example, a person who has only traded grains would not want to jump right into a Treasury Bond futures trade without first doing a bit of homework on how the bond market trades - price increments (dollar amount per tick), trading hours, on what exchange the market trades, etc.
A trader could pick up a Wall Street Journal and read the “Credit Markets” section for a week or so to become familiar with fundamental factors that influence the bond market. Also, consider this: Most traders enjoy the process of trading. If they did not, they would likely just hand their money over to a “fund manager” and give the manager discretionary control over their money. Learning and knowing what fundamental factors are impacting or could impact a market that a trader plans to trade is part of the process (enjoyment) of trading.

2. Don’t trade hot “tips.”You may trade for 20 years and never hear a good trading tip. Reason: There aren’t any . . . at least not any that are any good for regular individual traders. Markets are way too big and too tightly regulated to be impacted by any tips or inside information. Any legitimate “early information” has almost certainly already been factored into the market price structure by the time most individual traders could ever benefit from it.
Don’t confuse tips with rumors. Markets do move on rumors more than just occasionally. Rumors are a part of trading but still fall into the category of “not much use” to off-floor traders. Besides, many rumors are never confirmed as fact and are often self-serving to those who try to start them.

3. Don’t get too fancy with your market orders.
Entering a trade “at the market” with a market order may be the best way to enter a trading position, especially in markets that are liquid (have high open interest). It’s certainly the easiest way to enter. Fiddling around with limit or stop-limit or other multi-step orders to save a tick or two or three can cost a trader a good entry point or even a missed trade altogether.
It’s certainly easy to be guilty of this offense because every trader is always trying to get just a little better price. This doesn’t mean that limit or stop-limit or other types of orders are not useful in certain circumstances because they are. However, most trade entries are best made “at the market.” Look at pitchers in major league baseball who “nibble” with their pitches around home plate. Most wind up with a walk instead of an out.

4. Don’t form a new market opinion during trading hours.
This rule goes hand in hand with the rule that says you need to stick to your trading plan of action. Day-to-day market “noise,” or the minor up-and-down price fluctuations of a market, can be at least distracting to a trader and at most prompt the trader to make a hasty and poorly founded trading decision.

5. Don’t force trades; if you don’t see a trade, stand aside.
Don’t chase a market just to put on a trade. Try to exhibit patience and discipline in trading - easily said but hard to follow. Patience and discipline are not easy virtues for any trader to learn because a typical futures trader has a “Type A” personality with a competitive nature who hates to wait in lines. However, to have even a chance at success in trading, you have to control your impatience. If you happen to miss a trading opportunity because you waited too long, other trading opportunities will come along.
A good trade is usually profitable right from the beginning. If the market price moves “your way” in the first couple days after you’ve executed the trade, then odds are significantly higher that your trade will be a winner if you have waited patiently for the right position. This rule reinforces the notion that tight protective stops are an important part of trading success. But there is a time to be impatient: If a straight futures trade is under water after two or three days, more times than not it’s prudent to take a small loss and move on. Do not be patient with losers.

6. Use intermarket analysis to spot trading opportunities.
No market trades in isolation but is influenced by what is happening in a number of related markets. Don’t focus on just one market as much of today’s single-market technical analysis does. Instead, take into account developments in other markets that are likely to affect prices in your target market. If you trade stock indexes, you have to be aware of what is taking place in interest rate, currency and commodity markets such as gold. The price of a market you want to trade may be the sum of what is happening in ten or more interrelated markets.

7. Watch open interest statistics, especially in options.
When you are contemplating trading any contract, make sure to first check the open interest for that specific contract or strike price. If a futures contract or options strike price has a low open interest total, it is probably best to seek out a more liquid contract. Fills on both entry and exit can be tough and may produce more slippage than is desired. When you get into a position, be sure it is liquid enough so you can get out on favorable terms.

8. Know what you can and cannot control.
You can control the market you want to trade. You can control the type of market order you want to give your broker. You can control when you want to enter the market. You can control the amount of contracts you wish to trade. You can control when you want to exit the market.
But you can’t control the market, which often has a habit of doing unusual and unexpected things. Knowing and prudently managing the market factors you can control and knowing that you cannot control the market gives you a trading edge.

9. Make the market’s action confirm your opinions.
If you have a particular market on your “radar screen” for a trade, don’t just jump in based on a hunch or a “gut feeling” or because you want to get a fill right away. That’s when a market order advised above may not be in your best interest. Make the market first confirm your opinion. Make the market show you some strength if you want to be long, or make it show you some weakness if you want to be short.

10. Do not overtrade.
Trying to trade too many markets or too many contracts in one market can create problems for an undercapitalized trader. There is no set rule for how many markets a trader should trade at one time. Some traders can trade many markets at the same time and not have a problem. However, if you are feeling stress about a position you are carrying or can’t keep up with what’s going on in all the markets you are trading, then you are likely over-trading.
For those traders who are really not sure how many markets to trade at one time or how many contracts to trade for each position, it’s always better to take a conservative approach. Step in slowly until you become comfortable trading in a larger size or in multiple markets.