ETFs explained in pictures

The world’s simplest and most straight-foward explanation of ETFs.

Here’s the world’s simplest and most straight-foward explanation of ETFs:

Ready to start trading ETFs? Check out my post on the Top 10 best gold and silver ETF funds.

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Top 10 best Brazil stocks to buy for 2011

If the Brazilian government can rein in spending and slow inflation, they may be able to head off a market sell-off and brave investors could be rewarded nicely. Here are 10 stocks poised to perform in the coming months.

While economies in the developed world are struggling to keep their heads above water, growth has been robust in pockets of the emerging world. China nabs most of the headlines, but Brazil presents a lot of opportunities for investors. Economists worry that blistering growth over the past few years can’t be sustained, but if the government there can rein in spending and slow inflation, they may be able to head off a market sell-off. Brave investors could be rewarded nicely. Here are some of my favorite play on Brazilian stocks:

Top 7 best Brazil stocks

1) Petroleo Brasileiro SA (NYSE:PBR). Combine an oil-rich company with an emerging economy, and you’ve got the potential for explosive growth. Shares in PBR are down 23 percent on the year, but they’re starting to look like a great value with a P/E ratio at 7.4 and a yield of 4.2 percent.

2) BRF Brasil Foods SA (NYSE:BRFS). Shares in Brasil Foods have rocketed up nearly 18 percent YTD, and they’re yielding another 1.78 percent on top of that. So long as wages in Brazil keep rising, consumers shouldn’t trim back cut back spending on food despite higher prices.

3) Companhia de Bebidas das Americas (NYSE:ABV). A bottling company for Pepsi, Brazil-based beverage giant Companhia de Bebidas could be one of the country’s best kept secrets. The stock’s up more than 12 percent on the year and is yielding north of 4 percent.

4) Gafisa SA (NYSE:GFA). A risky play on the Brazilian real estate market, you can’t get much bigger than Gafisa. The company operates in more than 130 cities throughout the country. Fears over the real estate market have crushed the stock this year, though, pushing it down more than 30 percent.

5) Vale (NYSE:VALE). A mining company that digs up just about anything it can get its hands on, Vale has businesses in fertilizer, aluminum, copper, coal and a host of metals. The threat of a global economic slowdown has pushed shares down 18 percent, but Vale’s now yielding north of 5 percent with P/E ratio of 5.9.

6) Banco Bradesco SA (NYSE:BBD). Brazilian banking giant Banco Bradesco has a market cap at $72 billion that nearly rivals Citigroup (NYSE:C) at $87.5 billion. Best of all, the company pays out dividends as often as three times a month for a yield over 3 percent.

7) CPFL Energia S.A. (NYSE:CPL). A utility company with a dividend of 6+ percent, CPFL is the biggest of Brazil’s electric companies to offer ADRs. CPFL serves nearly 7 million clients and has recently begun investing in renewable energy sources through a partnership with Energias Renováveis S.A.

Top 3 best Brazil ETFs

1) iShares MSCI Brazil Index ETF (NYSE:EWZ). The largest and most popular Brazil ETF tries to mirror the performance of the Brazilian stock exchange as measured by the MSCI Brazil Index. Each share in EWZ buys you exposure to a broad range of Brazilian securities. Daily volume exceeds 20+ million shares.

2) Market Vectors Brazil Small Cap ETF (NYSE:BRF). Focused on smaller, high-growth companies that do at least 50 percent of their business in Brazil, BRF can prove more volatile than its larger counterpart EWZ. But, much like the Russell 2000, when the economy is hot, small stocks tend to outperform the Blue Chips. Daily volume averages 232,000 shares.

3) ProShares Ultra MSCI Brazil ETF (NYSE:UBR). Daytraders with a good source for Brazilian news will likely pick UBR as their Brazilian ETF of choice. As an ultra ETF, it seeks to return 200 percent of the daily return of the MSCI Brazil Index. If the index goes up 5 percent, UBR should go up 10 percent. 40,000 shares change hands every day. If you’re convinced Brazil’s due for a hard landing, ProShares also offers an Ultrashort MSCI Brazil ETF (Public, NYSE:BZQ) that lets you make a leveraged bet against the country’s economy.

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How to invest in the Swiss franc

With the threat of inflation looming around the world, the Swiss Franc provides one of the few safe havens investors have left. Here are four unique ways to invest in the Swiss Franc.

In an economy where just about every government in the world is dreaming up unique ways to devalue its currency, there are few safe places for investors to park their cash. Inflationary fears have driven up the price of gold more than 31 percent since the start of year, and they’ve buoyed the Swiss franc (CHF) as well. Since January alone, the U.S. dollar has dropped 13 percent against the franc putting the exchange rate at 1 USD to 0.79 CHF.

I expect that trend to remain intact as the Swiss government recently moved to dispel rumors that it would peg its currency to the Euro. That leaves the franc, and perhaps the Aussie and Canadian dollars, as three of the most attractive currencies on Forex. Here are four ways you can hedge against inflation by investing in the Swiss franc:

1) Currency trading. I wouldn’t recommend currency trading for beginners without a lot of time for practice and research. The currency markets are the most liquid and volatile markets in the world, and – since they’re so leveraged – they can wipe out your trading account in minutes. Still, if you’re willing to put in the time to learn, it’s probably a safe bet that the Swiss franc is going to outperform the U.S. dollar in the coming months and perhaps years. Try a Forex practice account with Zecco.com (my broker of choice) before putting real cash on the line.

2) Go long the Swiss Franc ETF (NYSE:FXF). The CurrencyShares Swiss Franc Trust has rocketed up more than 17 percent since the start of the year. The ETF tracks the franc against the U.S. dollar, which means a weak greenback is good news for FXF-holders. Best of all, FXF’s chart is in a slow and steady uptrend. So long as the Swiss government’s willing to put up with a strong currency, you won’t get the stomach-churning ups and downs that come with investing in precious metals.

3) Invest in Swiss stocks. While it’s not a direct play on the Swiss franc, you could consider investing in Swiss stocks. That might not be a bad idea since the economy in Switzerland looks as if it’s emerged relatively unscathed by the housing and financial collapses that have rocked the U.S. Unemployment currently stands at a mere 2.8 percent in Switzerland (compared with 9.1 percent in the U.S.). The iShares MSCI Switzerland Index Fund (NYSE:EWL) gives you broad-based exposure to the Swiss equities market, or you can add specific Swiss stocks to your portfolio including heavy-hitters like food giant Nestle SA (ADRs, which trade on the Pinksheets under ticker NSRGY), healthcare company Novartis AG (ADR) (NYSE:NVS), international finance company UBS AG (NYSE:UBS), or pharmaceutical company Roche Holding Ltd. (ADR) (PINK:RHHBY).

4) Open a Swiss franc bank account. An interesting play on the Swiss franc is simply opening a global currency savings account that allows you to deposit your cash in Swiss francs. Jacksonville, Fla.-based Everbank does just that. Everbank doesn’t currently pay you a yield for stashing cash in francs, but it doesn’t matter if every other currency around the world is falling. Just convert your dollars to francs, and don’t touch them for a year. When you exchange your francs back into dollars, you should gain quite a bit of purchasing power (especially if the dollar falls another 13 percent against the franc!).

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Rally in gold prices could still have legs

Here are three key reasons why the bubble in gold prices isn’t quite ready to pop.

In case you haven’t noticed, the gold market is starting to feel frothy. Over the past month, the SPDR Gold Trust ETF (NYSE:GLD) has risen more than 18 percent while the Dow Jones Industrial Average has tumbled 14 percent.

In a sign of the times, the SPDR Gold Trust actually surpassed the SPDR S&P 500 ETF (NYSE:SPY) to become the world’s largest ETF yesterday (per USAToday). GLD’s now holding some $78 billion in gold in a London vault, while SPY’s holding $77 billion in paper assets.

Gold bugs have to be getting jittery, even as they watch the value of their favorite commodity scream higher. Why? Gold just might be going parabolic, and anything that goes parabolic is doomed for a collapse (no matter how short-lived).

The same thing happened six months ago in the silver market when silver prices rocketed up more than 30 percent from roughly the end of April to the end of May. A series of new silver margin requirements from the CME was widely blamed as causing silver prices to crash.

Now, investors are starting to look at their watches and guess when the same thing’s going to happen to gold. I’m not ready to be a bear yet, though, and here are three reasons why:

1) Seduced by silver prices. I was thinking gold prices were getting over-heated until I look at the chart for the iShares Silver Trust ETF (NYSE:SLV). In April, the run-up in silver prices made gold’s current spike look paltry. In the span of 30 days, silver shot up 30 percent.

By contrast, gold has risen a mere 18 percent over the past month. If bullion is indeed going parabolic, we could be right in the middle of the most powerful part of the upward thrust. We’ve got to be careful, though. Silver more than made up for its rise by giving up all its gains in five short days. That’s a plunge of 6 percent per day!

2) Margin calls anyone? The CME took the brunt of the blame for cooling the silver market after issuing a series of vicious margin hikes when the market got overheated. During a nine-day span at the end of April, CME raised silver margins by 84 percent (per the Wall Street Journal). Two weeks ago, they started in on the margin requirements for gold raising them 22 percent on Aug. 11. CME also hinted more hikes could be imminent for gold, but still, we’re a long way from the 84 percent hike we saw for gold’s white cousin.

3) Timing is everything. Gold prices will likely remain strong through the end of the week as investors await an announcement from Federal Reserve Chairman Ben Bernanke. He’s hashing over ideas with some of the world’s most powerful bankers at the annual symposium in Jackson Hole, Wyoming, right now, and he’ll make some sort of announcement on Friday morning.

Last year’s gathering brought us QEII, of course, and some are betting there’s going to be even more quantitative easing on the horizon as the banking elite look for ways to keep the ship afloat. If that happens, expect lots of fireworks in the financial markets. I’m just not sure if it’s going to be good for gold, but I know better than to argue with a trend until its broken. Friday might be the breaking point, but I’m at least bullish until then. And if gold prices do indeed fall, I’ll look for ways to add more to my portfolio in the rocky months to come.

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Silver prices in August 2011 look to keep rising

As congress hemmed and hawed over the future of America’s debt, silver prices climbed nearly 18 percent last month, and it looks like that trend is set to continue in August.

As congress hemmed and hawed over the future of America’s debt, silver prices climbed nearly 18 percent last month, and it looks like that trend is set to continue in August.

What’s bad for the economy is good for silver – and the economy doesn’t look great. Cases in point:

 •   The Commerce Department reported yesterday that consumer spending weakened in June despite a 0.1 percent rise in disposable personal income. Consumers spent some 0.2 percent less to kickoff the summer. That doesn’t sound like much, but it adds up to $21.9 billion (source: Bloomberg).

 •   Last week, we learned the country’s gross domestic product grew at 1.3 percent in the second quarter. That was far less than the 1.8 percent economists were calling for (source: Wall Street Journal).

 •   Worst of all: U.S. manufacturing is slumping back toward a recession. We learned yesterday that the Institute for Supply Management’s index of manufacturing tumbled to its slowest pace in two years. The index fell to 50.9 percent in July from 55.3 percent in June. That’s just 0.9 percent away from an officially contracting (i.e. recessionary) economy (source: TheHill).

In July, physical silver ETFs (led by the iShares Silver Trust – NYSE:SLV, which was up nearly 15 percent), outperformed all other ETFs (per IBD).

In an environment where there’s little optimism over economic growth, investors don’t seek out profits so much as they start looking for spots to preserve the capital they’ve already got. Silver and other precious metals fit that bill – particularly in an environment where the returns on bonds are low.

But there may be yet another more insidious factor that could drive silver prices higher in August: namely, the specter of QE3. If the bottom genuinely falls out of the stock market and the economy starts contracting, the Federal Reserve could feel pressure from Capitol Hill to find ways to prop up the ailing economy (particularly as we move toward another election cycle).

Such a move would stoke even more fears of inflation, and could hamper the U.S.’s economic growth in the years to come. It’d be better to take our medicine now, and start working toward a balanced budget, but I’m just not convinced the Fed feels the same.

Seeing Yellow in the South China Sea

Gold spiked to a new all-time record Tuesday on news that the Bank of Korea added more than $1 billion worth of gold to its holdings – the first net increase for the bank in more than a decade.

Apparently, the Bank of Korea has quietly added more than 25 tonnes of gold to its holdings over the past two months (per the LATimes). The dollar’s falling status as a safe haven has left central banks with few alternatives for stashing their surplus reserves. What’s particularly troubling about the news is the fact that the Bank of Korea has been a long-time buyer of U.S. Treasuries. A move into precious metals should be a signal to policymakers in Washington, and – perhaps more importantly – to retail investors looking for ways to protect their capital.

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How to invest in internet stock IPOs

Two new ETFs, EIPO and EIPL, make it easy to invest in a basket of new Internet IPOs, from LinkedIn to Yandex.

One of the easiest ways to identify hot stock sectors is by following the release of new ETFs and ETNs. Last week, the Internet stock IPO market got its first two ETNs. The ETRACS Internet IPO ETN (NYSE:EIPO) tracks a UBS index of 20 tech-related stocks that have debuted on the NASDAQ or NYSE within the past three years. That includes headliners like professional social networking company Linkedin Corporation (NYSE:LNKD) and Russian search giant Yandex (NASDAQ:YNDX).

A sister ETN – the Monthly 2X Leveraged ETRACS Internet IPO ETN (NYSE:EIPL) – ratchets up the stakes even more by seeking to return twice the performance of UBS’ new tech index.

The funds give investors exposure to new tech stocks without forcing them to put all their eggs in a single company. That could prove appealing as many of the hottest tech IPOs have come from companies based outside of the U.S. Unstable political environments and intense competition in China and Russia, for instance, makes sinking cash into a single company risky.

three-reasons-to-invest-in-eipl-or-eipo

Here’s a look at the Top 10 stocks in the UBS Internet IPO Index. The index, which the new tech IPO ETNs will attempt to track, reads like a who’s who of the hottest tech IPOs over the past three years:

No. Company Ticker Weighting
1) LinkedIn Corp. LNKD 10%
2) HomeAway Inc. AWAY 10%
3) Yandex YNDX 10%
4) Rackspace Hosting RAX 10%
5) Pandora Media P 9.57%
6) RenRen RENN 9.2%
7) OpenTable OPEN 6.48%
8) Ancestry.com ACOM 5.97%
9) SouFun Holdings SFUN 3.44%
10) Demand Media DMD 3.39%

How to invest in natural gas

One of the few commodities that has yet to benefit from rising inflation is natural gas. A lot of investors think that’s going to change soon, and here are some ways you can invest in natural gas.

One of the few commodities that hasn’t benefited from rising inflation is natural gas. Part of the reason is because it’s so plentiful. Indeed, some energy experts believe we have enough domestic natural gas in the ground to supply America’s energy needs for the next 100 years.

As I wrote recently in a post titled Natural gas prices on verge of breaking out?, it appears the market’s betting on the commodity as a key piece of the energy puzzle moving forward. The time to invest is BEFORE a major move in the natural gas market, and here’s a handful of ways you can do that:

1) Natural gas ETFs. The safest and easiest way to invest in natural gas is via an exchange-traded fund (ETF). ETFs trade just like stocks, but rather than investing in a specific company, they invest in an underlying commodity, currency, asset or derivative. In the case of natural gas ETFs, there are two dominant players: United States Natural Gas Fund, LP (NYSE:UNG) and First Trust ISE Revere Natural Gas ETF (NYSE:FCG).

UNG and FCG take two entirely different approaches. UNG, which is the most-traded natural gas ETF, invests in futures contracts for the commodity. Betting on UNG is a bet that the market price for natural gas is going to go up in the near-term. FCG, on the other hand, invests in a basket of natural gas stocks. A bet on FCG isn’t much different than buying stock in several different natural gas producers. By spreading your bet across several different natural gas companies, though, you limit the risk that you might pick a dud.

Check out my post on the Top 5 best natural gas ETFs for more.

2) Natural gas stocks. Should natural gas prices start to rise, so too will the fortunes of natural gas producers. Picking winning stocks in the sector could yield better returns than investing in a diversified ETF. Here’s a short list of some of my favorite natural gas stocks and their performance year-to-date:

  • Petrohawk Energy Corporation (NYSE:HK), YTD: +33%
  • Stone Energy Corporation (NYSE:SGY), YTD: +31%
  • Chesapeake Energy Corporation (NYSE:CHK), YTD: +17%
  • EnCana Corporation (NYSE:ECA), YTD: +13%
  • EXCO Resources, Inc. (NYSE:XCO), YTD: +5%
  • Questar Corporation (NYSE:STR), YTD: -2% (yields 3.5%)

Keep in mind that natural gas companies aren’t all equal. As with any industry, natural gas companies could be involved in some or all of the production chain: from exploration to production, transportation, storage or even companies that supply parts or technology to larger natural gas companies. Do your research and know what part of the supply chain you’d like to invest in before you pick your stock. Large, diversified multinational gas producers will likely be the safest stocks, but they probably won’t yield as large a return as a small natural gas exploration company with a track record of uncovering fresh deposits.

3) Natural gas futures. Sophisticated investors can dip their toes into commodities exchanges like the NYMEX in order to invest directly in natural gas. You’ll need quite a bit of capital to get started and a high risk tolerance as natural gas can be volatile. NYMEX futures contracts trade in increments of 10,000 million British thermal units (mmBtu).

When you buy a natural gas futures contract, you’re agreeing to purchase 10,000 mmBtu at a fixed price at the time of the contract’s expiration, which could range from next month to six years in the future. Most commodities traders roll their contracts into new contracts or sell them outright before they reach expiration date. E-mini Natural Gas futures contracts are also available on the NYMEX. Mini contracts are a quarter of the size of a standard contract (2,500 mmBtu).

4) Natural gas mutual funds. Fidelity offers a natural gas mutual fund called the Select Natural Gas Portfolio (Ticker: FSNGX). The fund invests predominantly in the common stocks of natural gas producers, refineries, and distributors. The minimum initial investment in the fund is $2,500 and your returns will be subject to expenses and fees. Plan to keep your money in the fund for at least 30 days, or you’ll be subject to a short-term redemption fee of 0.75%.

5) Cars of the future? The automotive industry has started experimenting with natural gas vehicles (NGVs), and Honda Motor Co. (NYSE:HMC) has made a big bet on natural gas. In fact, Honda’s the only company that’s currently selling NGVs in showrooms in the U.S. You can walk away with a 2011 Honda Civic GX, which is powered by compressed natural gas (CNG), for a starting price of $25,490. If NGVs catch on, Honda stock should be a big beneficiary. If NGVs falter, fear not, as Honda’s diversified into hybrids, hydrogen-powered cars and electric vehicles as well.

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Investors tentatively move back into silver after price collapse

Whether or not this is the turning point doesn’t matter in the bigger picture. Unless the global economic picture changes dramatically, silver prices will likely test their all-time record highs again before the end of the year.

Silver bulls started poking their heads out of the woods yesterday after one of the worst weekly declines for the metal in decades. At one point, silver was down 30 percent in four days of trading. Yesterday, though, the selling pressing seemed to lift, and the white metal tacked on a modest gain.

Total damage for the week? Silver plunged 28 percent. That’s got some investors wondering if the tide has turned against the metal for good – particularly since some of those same investors define the start of a bear market as a 20 percent decline in prices.

After four days of panic selling, Friday finally saw inflows for silver ETFs. The iShares Silver Trust ETF (NYSE:SLV) rose 2.25 percent on more than twice the stock’s typical trading volume, and the Sprott Physical Silver Trust ETF (NYSE:PSLV) surged 5.6 percent.

Silver ETFs use their share price to determine how much physical silver bullion to add or sell from their holdings. Since they’re so easy to move in and out of, the products have taken a lot of heat this week for helping to intensify the plunge in metals prices – particularly since retail investors can leverage their positions in the ETFs by using margin.

“Margin calls are eating the little guys alive, forcing them to give up their dreams of a silver-coated world,” ETF analyst Carlos Alexandre at CXA Markets told the Globe and Mail.

Of course, it wasn’t just the “little guys” getting creamed by silver’s decline. The CME Group, which owns the Comex, ramped up margin requirements for silver futures traders, too. And they didn’t do it slowly. Initial margin requirements shot up twice this week and another hike to $21,600 is due on May 9. That’s more than 80 percent higher than margin requirements were just two weeks ago.

The CME, of course, insists that their margin hikes didn’t worsen or lead to the decline in silver prices. “We try to make changes in a way that we can telegraph to the market, so that participants have notice. We try to be routine and predictable and provide no surprises,” Kim Tyler, president of CME Clearing, told the Wall Street Journal.

We can’t draw a direct cause and effect conclusion, but it’s interesting to note that the CME’s margin hike went into effect after trading on Friday, April 29. When the silver spot market opened Monday, prices immediately collapsed 12 percent and kept falling through Thursday.

Turning Point?

ETFs showed signs of stabilization on Friday, and silver mining stocks did, too. The silver streaming company, Silver Wheaton Corp. (NYSE:SLW), rose 1.91 percent, and Silver Standard Resources Inc. (NASDAQ:SSRI) climbed 2.76 percent. Some sanity, it seems, is returning to the precious metals market. Now, the question becomes, will prices bottom out here or continue falling in the weeks and months to come?

Most analysts seem to agree that the long-term trend for silver prices is up. Some are even calling on investors to buy even more aggressively in the face of the sell-off. “This argument will be hard to resist, but should be,” GMO forecaster Jeremy Grantham wrote in a recent letter to his clients (per Mineweb). “A second commodity collapse [after the 2008 plunge] may be psychologically hard to invest in…[But] in the next decade, the prices of all raw materials will be priced as just what they are, irreplaceable.”

Whether or not this is the turning point doesn’t matter in the bigger picture. Unless the global economic picture changes dramatically, silver prices will likely test their all-time record highs again before the end of the year. In an era of global currency debasement, commodities offer one of just a few safe places to hide. As I pointed out yesterday, silver prices are still up 18 percent on the year, and I expect them to be much higher come 2012.

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How to short bonds with ETFs before the collapse

Betting against bonds and the dollar could be one of the few prudent investments we have left. Here’s a list of the best short bond ETFs that will help you do just that.

The chairs on the Titanic will soon be rearranged. On June 30, the Federal Reserve is slated to end QE2. No longer will it be the primary buyer of U.S. debt. If foreign investors, mutual funds and banks don’t step in to fill the void, bond prices could fall quickly and yields could skyrocket in the face of rising inflation and record debt levels at the Treasury.

Just last week, we learned that Bill Gross, the founder of Pacific Investment Management Co. (better known as PIMCO), bet against the U.S. Treasurys market with short positions taken up in February. That’s a big vote of no confidence in U.S. debt as PIMCO manages world’s biggest bond fund.

You can do the same with a variety of short bond ETFs. Here’s a list of the most popular short bond ETFs. Keep in mind that long-term bonds (20+ years) are generally the most sensitive to inflation, and therefore will likely perform the best in the event of a bond market crash. All of the ETFs listed below are leveraged except for TBF. Direxion’s Treasury Bear ETFs are leveraged 300 percent:

ProShares UltraShort 7-10 Year Treasury ETF (NYSE:PST)
Volume: 158,000

ProShares UltraShort 20+ Year Treasury ETF (NYSE:TBT)
Volume: 15.7 million

ProShares Short 20+ Year Treasury ETF (NYSE:TBF)
Volume: 490,000

Direxion Daily 10-Year Treasury Bear 3X Shares (NYSE:TYO)
Volume: 39,000

Direxion Daily 30-Yr Treasury Bear 3X Shares (NYSE:TMV)
Volume: 1.1 million

In Bill Gross’ words, government debt and entitlements will undermine the dollar in the years to come. “Unless entitlements are substantially reformed, the U.S. will likely default on its debt; not in conventional ways, but via inflation, currency devaluation and low to negative real interest rates,” he writes at Pimco.com. Until we see change in Washington, betting against bonds and the dollar could be one of the few prudent investments we have left.

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How to short silver

When the music stops, silver prices, which are more volatile than gold, could take a drubbing. Here’s how to profit off a rapid fall in silver prices.

There’s a party right now in precious metals. Over the past 12 months, silver prices have clocked gains of more than 150 percent. When the music stops, silver prices, which are traditionally more volatile than gold, could take a drubbing. Here are some ways to make money shorting silver should investor sentiment sour on the “devil’s metal”:

1) Inverse ETNs. The simplest way to bet against silver prices is by investing in a short silver ETF. ProShares UltraShort Silver ETF (NYSE:ZSL) uses financial instruments in an attempt to return 2X the inverse of silver spot prices. If silver prices fall 1 percent, ZSL should rise 2 percent. Conversely, if silver prices rise 1 percent, ZSL should drop 2 percent. Shares in the UltraShort Silver ETF trade on the NYSE just like shares in an actual company.

2) Short the long ETFs. Don’t like being limited to a single inverse ETF? You could also profit from a silver sell-off by shorting shares in a long silver ETF. iShares Silver Trust ETF (NYSE:SLV) is hands down the most popular long silver ETF with nearly 30 million shares trading hands every day. Other popular silver ETFs include the SPDR S&P Metals and Mining (ETF) (NYSE:XME), which invests in silver mining shares, and the leveraged ProShares Ultra Silver (ETF) (NYSE:AGQ), which attempts to return 2X the spot price of silver.

3) Go long the dollar. It will take some remarkable tightening by the Fed to convince investors that the dollar’s future looks promising. If they adopt an aggressive plan to raise interest rates, silver prices will likely lose much of their support. At the same time, the dollar should strengthen against foreign currencies. In such an environment, a bullish bet on the dollar itself makes sense. Buying shares in the PowerShares U.S. Dollar Index Bullish Fund (NYSE:UUP) is equivalent to going long the USD and short the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.

4) Put options. Buying put options gives you the right to sell a stock at a specific price in the future. If you think the SLV is going to plummet by the end of May, you could buy put options that give you the right to sell shares in the ETF at a specific price – let’s say at $45. If the price of SLV falls below $45, you could go to the open market, buy the shares on the cheap, and re-sell them at the put option price. Incidentally, put options on the SLV spiked last week (per the Wall Street Journal) – an indication that investors are growing concerned about a silver sell-off.

5) Short the miners. Shorting the shares of specific silver mining companies could pay off. As the price of silver falls, so too will the profits miners reap. Silver explorers (companies that are yet to break ground on a mine) could be particularly vulnerable to a downdraft in silver prices. I’d caution, though, that you avoid shorting any company that could be subject to a buyout bid. Randy Smallwood, the CEO of Silver Wheaton Corp. (NYSE:SLW), went on the record recently predicting a wave of acquisitions when silver prices stabilize. If you’re caught shorting a company that’s bought out, your brokerage account could get cleaned out overnight.

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