Monthly Gold Chart & Happy Festivus!

Merry Christmas-Eve-Eve! Or Happy Festivus, if you're so inclined. Let the Airing of Grievances begin!

Here's my chart for today -- a monthly chart of gold. Note how the recent uptrend has been tested but hasn't broken (yet anyway). In fact, RSI, a measure of momentum, is now giving a "buy" signal.

I think gold could enter the New Year in a very positive position. Still, watch the euro-us dollar relationship that I posted about yesterday. That is probably the real key to what happens with gold.

Here is the other news and analysis I'm reading ...

U.S. debt approaches insolvency; Chinese currency reserves at risk

According to new figures published by Bloomberg in recent days, the American government has employed a total of 8.549 trillion dollars to stop the financial crisis. This means a total of about 24-25.4 trillion dollars of direct or indirect public debt weighing on American taxpayers. The complete tally must also include the debt - about 5-6 trillion dollars - of Fannie Mae and Freddie Mac, which are now quasi-public companies, because 79.9% of their capital is controlled by a public entity, the Federal Housing Finance Agency, which manages them as a public conservatorship.

Canaccord Adams: The worst for junior mining ‘is likely behind us'

"The year 2008 has shattered investor confidence, and market valuations reflect risk-averse investor sentiment," the analysts advised. "We believe that, to achieve a sustainable rally in the junior mining sector in 2009, investors must regain confidence in broader equity markets. "
"Given the ongoing issues in the global equity and credit markets, we believe that investors are likely to remain somewhat risk adverse. That said, opportunities to exist in the junior sector even under more subdued investor interest."

Why Short Sector ETFs Aren't So Smart Part 1 and Part 2

XXSean's note -- this is an interesting analysis on RealMoney.com about short ETFs. I think the author makes some good points. On the other hand, everyone has their own agenda. And the fact is, as long as you use short ETFs for short-term investing (not long-term), I think they have real advantages.

Existing Home Sales Plunge in November

I still expect sales to fall further over the next few months, although inventory has peaked for the year.

Holiday Sector Performance Relative to the S&P 500 -- From The Big Picture blog ...

Check out my new gold and energy blog at MoneyAndMarkets.com

3 ETF Stories

Here are some stories on the latest developments in ETFs and ETNs ...


Investors Sour on Exchange-Traded Notes

Investors yanked about $460 million from the 90 ETNs tracked by fund researcher Morningstar in September, a chunk of their $5.5 billion in overall assets.
October figures aren't yet available, but an early snapshot suggests they could be worse. About 12% of outstanding shares at iPath Dow Jones-AIG Commodity Index Total Return, the largest single ETN by far with $2.7 billion and run by a unit of Barclays PLC, were redeemed during the month through Thursday.
"We believe the outflows across commodity investment products, such as ETNs or ETFs, are only temporary," Barclays said. "The exchange-traded product market will continue to grow and there will continue to be new products offered to investors."

XX Sean's note -- I wonder how much of that rush to redemption has to do with the fact that AIG's name is on the fund, and AIG is about as popular on Wall Street right now as a leper at a nudist colony.

Triple Leverage ETFs Maximize Market Directions

Direxion has launched eight ETFs that are leveraged bull and bear funds designed to seek 300% of the daily performance, or 300% of the inverse of the daily performance, of the four indexes they track.

The new funds are:
Direxion Large Cap Bull 3X Shares (BGU)
Direxion Small Cap Bull 3x Shares (TNA)
Direxion Energy Bull 3x Shares (ERX)
Direxion Financial Bull 3x Shares (FAS)
Direxion Large Cap Bear 3x Shares (BGZ)
Direxion Small Cap Bear 3x Shares (TZA)
Direxion Energy Bear 3x Shares (ERY)
Direxion Financial Bear 3x Shares (FAZ)

Many ETFs Hit 52-Week Lows in October

Fears of a global slowdown and a strengthening dollar triggered a sell-off across all commodities, including gold, typically considered a safe haven amid uncertainty.
Inflows And Outflows
While investors dumped mutual funds this year, they bought ETFs.
They pulled $73.01 billion out of mutual funds across all categories in October, according to TrimTabs Data Research estimates. But they poured $4.33 billion into ETFs. Year to date investors took a net $199.37 billion out of mutual funds and put a net $83.60 billion into ETFs.

Check out my new gold and energy blog at MoneyAndMarkets.com

Emerging Market Mania

Bloomberg tells us today...

Emerging-market stocks may lead global equity returns for a sixth straight year because consumers from China to Brazil are becoming wealthy enough to propel economic growth even as demand for their exports slows.

Investors are targeting telephone companies and banks to profit from growing domestic spending after Chinese wages doubled during the past five years, Brazil's interest rates tumbled to the lowest in two decades and loans from Indian banks jumped 35 percent in the past two years.

Some factoids from the story...

• In China, per-capita disposable incomes in towns and cities, where more than 500 million people live, rose 10 percent in the first nine months of 2006 from a year earlier. In India, the number of households earning an annual income of at least $10,000 is rising more than 20 percent a year, according to consultants McKinsey & Co. in New York.
• Corporate and consumer lending in India has expanded more than a third in the last two fiscal years.
• An MSCI index of food and beverage stocks in China soared 89 percent in 2006. A gauge of companies in India that make cars and other big-ticket items jumped 39 percent. In the U.S., by comparison, Procter & Gamble Co., the world's biggest consumer products company, rose 12 percent.

You can read the rest of the story by CLICKING HERE.

Bloomberg is picking up on the theme I wrote about in last week's Money and Markets, "Using International ETFs in 2007." In that article, I said: "For my money, the real outperforming countries are those in emerging markets — places outside the G-10 group of developed nations. That shouldn’t come as a surprise to subscribers of my Red-Hot Asian Tigers service. We’re already seeing big gains on stocks that operate around the Pacific Rim."

Investing overseas is potentially very lucrative, but it's best done with professional advice, because those markets can be brutal. If you're going to do it with ETFs, you might want to check out my report, “ETFs Made Easy.”

Check out my new gold and energy blog at MoneyAndMarkets.com

Useful Link: Sector Report Card

Are you using ETFs for sector rotation? Then you might want to check out the Sector Report Card published by Standard and Poors. You can find it by pointing your browser to this link:

http://tinyurl.com/tyroj

It tells you the returns on each sector in the most recent week, 13 weeks, year-to-date, 2005 and five-year return. It also has the breakdowns on returns in each sub sector.

And in case that link changes, here is the main S&P sector indices page:

http://tinyurl.com/yhl6z5

If you want to learn more about ETFs, check out my new ETF report: http://tinyurl.com/yj9tvb

Check out my new gold and energy blog at MoneyAndMarkets.com