SHREVEPORT, La., Feb. 24, 2005 (PRIMEZONE) -- StockPickReport.Com (IARD #119079, http://www.stockpickreport.com - the web's only non-mainstream stock rating service), rates Cisco Systems, Sprint FON Group, Exxon Mobil Corporation, Johnson & Johnson.
STOCKPICKREPORT RATINGS:
Cisco Systems (Nasdaq:CSCO) - WEAK SELL
http://www.stockpickreport.com/abrating.php?sym=CSCO
Sprint FON Group (NYSE:FON) - SELL
http://www.stockpickreport.com/abrating.php?sym=FON
Exxon Mobil Corporation (NYSE:XOM) - STRONG SELL
http://www.stockpickreport.com/abrating.php?sym=XOM
Johnson & Johnson (NYSE:JNJ) - SELL
http://www.stockpickreport.com/abrating.php?sym=JNJ
Thursday, February 24, 2005 StockPickReport Commentary "Gold, Bonds, and Neil Batho"
Neil Batho (of Wave-Trade.Com) is a good guy. I've been talking with Neil for a while, and he is one of those stock analysts that "gets it". Last year, Neil joined me on a weekly radio show and made some picks. The picks he made went "the other way", but never hit his stop/losses.
Now, those picks are big winners.
Neil took some flack from some folks for those picks, but his calls were vindicated with nice moves in all of them. He's certainly shown me he knows what he's talking about.
Tonight, we're proud to let Neil talk with you about Gold, Bonds, and ways to profit from stocks that track them.
Neil's Commentary:
Most likely, you've seen your bonds rise in value over the past nine months. For example, a bond's par price is 100, yet many bonds are trading at higher levels like 105 and 108 if they have an expiry date going out a few years like 2007 or 2008. What happens now is that you can sell your bond for more than you paid for it in the market.
I sold a bond in my parents retirement account at 108, and put the proceeds into gold under symbol "GLD". This bond had a coupon rate of 6%, so, if the bond was bought new, at par, and you put in $10,000, then you'd get $600 per year until expiration. Simple enough. However, the bond was worth 108 now, meaning it could be sold for $10,800, which is more than an entire year of interest! Holding this bond to expiration, we'd only get $10,000, not $10,800, and lose the premium. I don't like the sound of that at all.
Lose premium? No way. What is very interesting, is that if one was to buy this bond right now, they'd still only get $600 per year in interest. But wait, if you pay more and still only get $600 per year. that means the ACTUAL YIELD is only 3.42%!. I don't know about you, but I don't want to "lock-in" 3.42%!
How did I calculate that? Just go here: http://www.smartmoney.com/onebond/index.cfm?story=bondcalculator Type in the price, and the coupon rate and the expiration date. Mine were 108, 6% and June 2008. So, since the premium would be gone by the time the bond expired, effectively, so I was only going to get 3.42% from this point in time on!
So, what did I do? I sold the bond and I took the profit, and I used the proceeds to buy gold under symbol "GLD". Gold bottomed out on its uptrend last week as it hit my pullback buy target of $415.00 that I wrote about two months ago to my readers when gold was at $454.60. And... bonds were topping out. So, I switched.
Now, I feel good about taking a profit on the bond which was topping out and putting the proceeds into gold, which I feel is at a good entry point and has the potential to rise more from here. "GLD" sharply rebounded after bouncing off its trendline at $415, but is still at a good point to get in. Maybe you'll miss the bottom by a $1 or $2 on symbol "GLD" (trading at $43.42 on 2/23/2005 tracking one-tenth the price of gold), but surely the trade of the year is going to be to sell bonds and buy gold -- if your timing is right, which is right now. I don't think the bull run on gold has really even begun yet, since most of the rise in the metal can be attributed to a falling U.S. dollar compared to other major currencies.
Look at this chart of gold in U.S. Dollar terms: http://finance.yahoo.com/currency/convert?from=XAU&to=USD&amt=1&t=2y We can clearly see it is in an uptrend... but wait! Look at this two year chart of gold in
Euro terms: http://finance.yahoo.com/currency/convert?from=XAU&to=EUR&amt=1&t=2y It is basically flat over two years!
So, we can see that the rise in gold has mainly been because of the falling U.S. dollar. Therefore, a true bull run in gold will not occur until gold rises against all major currencies. That hasn't happened yet, and gold is clearly in an uptrend on all major charts, including point and figure. With a record current account deficit, and budget deficits for years to come, the writing on the wall is really there now for gold. In fact, weekly momentum for the U.S. dollar, which has rallied for about the past 10 weeks has just turned negative, so I'd expect to see gold continue to move up from here since it is denominated in U.S. dollars in worldwide trade with part of the move being attributed to its inverse relationship to the U.S. dollar.
At my Option site, www.option-wave.com/?052517 , we bought the June 2005 $42.50 Call Option on Newmont Mining, NEM, on 01/26/2005 at bid:2.80, ask:2.95. They are now trading at bid:3.70, ask:3.90. That's a gain of 33.33% so far on the option. At my stock site, www.wave-trade.com/?052517 we bought Coeur D'Alene Mines Corp (CDE) on 01/10/2005 and we're up 18.11%. Gold, the metal, as well as gold mining stocks often make violent moves off their bottoms, and it's important to get in at the bottom, and catch the move back up.
Good Trading, Neil Batho Founder/Trader http://www.wave-trade.com/?052517 http://www.option-wave.com/?052517
If you have questions or comments, please email don@stockpickreport.com. For More Commentary Go Here: http://www.stockpickreport.com
All commentary written by Don Harrold, Senior Analyst.
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If the links to our ratings above do not work, please use these:
Cisco Systems (Nasdaq:CSCO) - WEAK SELL
http://www.bigtimenews.com/russell1000/CSCO-Stock-Quotes-News-and-Research.php
Sprint FON Group (NYSE:FON) - SELL
http://www.bigtimenews.com/russell1000/FON-Stock-Quotes-News-and-Research.php
Exxon Mobil Corporation (NYSE:XOM) - STRONG SELL
http://www.bigtimenews.com/russell1000/XOM-Stock-Quotes-News-and-Research.php
Johnson & Johnson (NYSE:JNJ) - SELL
http://www.bigtimenews.com/russell1000/JNJ-Stock-Quotes-News-and-Research.php