Dear Reader,

You would typically hear from me on Fridays, but I want to introduce you to a good friend of mine instead. He's been successfully trading commodities for the past 20 years. And he is the editor of one of the most successful commodities newsletters. Please welcome the "Maniac Trader", Kevin Kerr.

- Charles Delvalle

Golden Rule:
Looking for Profits in All the Right Places

By Kevin Ker

As a commodities trader for more than 20 years, I’ve seen markets come and go.  What's hot this month can often become what's cold the next.

One of the best skills a commodity trader can acquire is to identify markets that are on the cusp of breaking out, and then get out of those markets before they fizzle.  In the past few years, this ability has become even more difficult thanks to the onset of electronic trading and myriad new commodity contracts, ETFs, and hedge funds.

Even so, some of the markets that have been around since futures contracts began are still the most viable and ultimately profitable.  One such market is precious metals, especially gold.

Late in 2006, I was visiting friends on the floor of the New York Mercantile Exchange silver pit.  That day, they were launching the electronic version of the gold and silver futures on the exchange.  Since then, the electronic markets have virtually taken over and dried up liquidity in the open outcry trading pits.  This isn't because interest in the gold markets has waned.  In fact, it's the exact opposite.  Interest in these futures has increased exponentially, and the electronic markets make them even more attractive to a much broader segment of global investors.

Another major driver for gold's growth has been the emergence of gold ETFs.  These investment vehicles have allowed investors of all backgrounds to buy physical gold with the same ease as buying a mutual fund.  It's fair to say that with these new investment methods, gold has become even more attractive as money.

I’ve established accounts in my second home country of Estonia with a company that handles so-called e-gold.  By using gold credits, I am able to make transactions and accept payments just as I would with paper currency, but without the rate risk and exchange costs.  Other companies, such as GoldMoney.com, offer traders easy access to the physical metal without the worry of holding or storing it.

Lately, many investors are asking whether gold is a buy-and-sell investment or a buy-and-hold for the long term.  This very question may have been answered during the market’s recent sell-off/pullback.  ETF trading was volatile, to say the least, but if we really look at what happened, there was no widespread sell-off of gold holdings in ETFs.  That would seem to indicate that a large majority of investors are using gold ETFs as part of a buy-and-hold strategy.  I see a very strong future for these ETFs, to the extent that they're likely to continue to grow and drain gold supplies from the world market.

The recent pullback in gold was quickly retraced as the broader market recovered.  That’s a clear indication that the yellow metal may well be on the upswing of a new bull market.  Ongoing international tensions with countries such as Iran are also helping to support the price of gold.

One of the most important things for an investor these days is to be well diversified.  A diversified asset base is key to long-term growth, period.  And a properly diversified portfolio must include precious metals.

In my opinion, at the end of the day, gold will end up doing what it's always been known to do -- gain in value over the longer term.

Now that much of the fear about the yen carry trade and housing implosion is figured into the market, the long-term outlook for gold is shining bright.

Yours for Resource Profits,

Kevin Kerr

[Ed. Note: The world’s commodity market is almost like a Secret Club — shutting most investors out of a chance for triple-digit gains or more.  Now, at last, the “Maniac Trader” has broken from the ranks — and is ready to tell you how to beat the “Club” at its own game.  Don’t miss this chance for a quick ticket to gains of 400 percent or more!  Click here for more information.]

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Market Watch

Are You an Investor or a Trader?

By Charles Delvalle

When you first get into the stock market, one decision you need to make is whether you’re an investor or a trader.  Knowing what type of market participant you are should allow you to make more money because you’ll know what to focus on.

• A trader attempts to profit from short-term market moves. That’s why traders don’t give much weight to fundamental analysis, as fundamentals take longer to play out.  They prefer short-term indicators (9-10 unit) and charts (daily to minutes) to determine which way the market is heading.

• An investor attempts to profit from long-term trends that affect the market.  An investor gives the most weight to fundamental analysis and uses long-term indicators (14-20 unit) and charts (weekly and monthly) to determine which way the stock will head over the following year.

If you don’t know what category you fall into, you’ll probably make drastic mistakes.

For instance, a monthly chart may show a stock is ready to pop, while a daily chart on the same stock might show some weakness.  If you’re a trader looking at weekly charts, you might miss out on opportunities that can be found only in shorter-term charts.

Understanding what type of market participant you are will let you catch more moneymaking opportunities and become a more consistent winner.

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