Precious Metals: Prices Down, Chances to Buy Up

The prices of many precious metals fell last week after Federal Reserve Chairman Ben Bernanke’s announcements regarding the Fed’s projected end to quantitative easing (QE) by the middle of 2014. And they are continuing their weakening trend this week, bringing ETFs and other metals-themed products down to levels that that some analysts are pointing to as good buying opportunities for investors.

The general outlook of gold and silver prices, says ETF Securities Research, should stay negative while interest-rate expectations keep rising and the U.S. dollar continues to improve. This means there are plenty of “reasons for contrarian investors to look favorably on precious metals,” wrote analysts Nitesh Shah and Nicholas Brooks in their outlook report on Friday for ETF Securities.

“At current levels gold, silver, platinum and palladium are estimated to be trading around or below their respective marginal costs of production,” they said.

“Therefore, while further downside in the short-term is possible, investors with longer-term time horizons may start to look at the recent sell-off as a longer-term accumulation opportunity,” Shan and Brooks emphasized.

Low and Lower

Gold prices dropped 7% last week, 5% for the month, 20% for three months and 18% for the past 12 months, according to Bloomberg data cited by ETF Securities. Meanwhile, silver fell even more — declining 8%, 11%, 31% and 29% during the same period.  

Prices on platinum and palladium also have moved down, but not as dramatically.

Platinum decreased 6% last week, 6% for the past month, 14% for the past three months and 6% over the last 12 months. Palladium dropped 8% last week, 9% in the past 30 days and 12% in last 90 days, but is up 9% for the 12-month period.

“As long as the Fed continues to reaffirm its commitment to reduce QE in the coming months, it seems likely that gold prices will remain weak,” the ETF Securities analysts said in their report.

But there are several factors that could change hurt U.S. growth, they add, and such a shift might prompt the Fed to step back from QE reductions. “With gold positioning so negative, this has the potential to stimulate a strong short-covering gold price move,” the analysts wrote.

Frank Holmes, CEO and chief investment officer of U.S. Global Investors, said before the Fed’s latest announcement that he had expected a 10% drop in gold prices, but he also notes the potential for a 30% move on the upside over the next 18 months.

Platinum, Palladium

The recent price drops of these metals is likely associated with a more general move by investors away from “risky” cyclical assets “in reaction to expected reduced liquidity injections by the U.S. Fed later this year,” Shah and Brooks say.

“In our view, however, to the degree that the Fed ultimately reduces its easing policy because of continued recovery of the U.S. economy," they conclude, "both platinum and palladium should benefit.”

ETF Efforts

As metals prices have moved down in the past 12 months, metal-themed ETFs — of course — have declined as well.

The SPDR Gold Shares ETF (GLD) has seen large outflows. GLD fell roughly 12% in the past 30 days, about 23.5% year to date and 19% in the last 12 months.

The iShares Silver Trust ETF (SLV) has fallen roughly 7.5% for the month, 35% year to date and 28% in the past 12 months.

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NY Times in Neutral Lane - Analyst Blog

We reaffirm our long-term Neutral recommendation on The New York Times Company (NYT). Tough economic conditions along with softness in advertising demand have been weighing upon the company's performance. Consequently, the company is trying every means to shield itself from the impact of an unstable market and has been contemplating new revenue generating avenues. Currently, The New York Times Company carries a Zacks Rank #3 (Hold) status.

Why the Reiteration?

Advertising, which remains a significant source of revenue, is largely dependent upon the global financial health. We observe that The New York Times Company's total advertising revenue slid 11.2% in the first quarter of 2013. Print advertising dipped 13.3% during the quarter. Other publishing companies such as Journal Communications, Inc. (JRN), The E.W. Scripps Company (SSP) and Gannett Co. Inc. (GCI) are also encountering similar headwinds.

Advertisers are shying away from making any upfront commitments in an economy that is showing an uneven recovery.

The New York Times Company has been adding diverse revenue streams, which include a circulation pricing model and a pay-and-read model to make it less susceptible to the economic conditions. The company is also adapting to the changing face of the multiplatform media universe, which currently includes mobile, social media networks and reader application products in its portfolio.

Despite hiccups in the economy, what still guarantees revenue generation is The New York Times Company's pricing system for NYTimes.com, which was launched on Mar 28, 2011. The company also recently announced that mobile app users will now be able to access a maximum of three articles per day from over 25 sections, blogs and slideshows, before being asked to subscribe.

The publishing industry has long been grappling with sinking advertising revenue. This comes in the wake of a longer-term secular decline as more readers choose free online news, thereby making the print! -advertising model increasingly irrelevant. To curb shrinking advertising revenue and seek new revenue avenues, the publishing companies contemplated charging readers for online content.

In an effort to offset the declining revenue and shrinking market share, publishers are scrambling to slash costs. The New York Times Company has been realigning its cost structure and streamlining its operations to increase efficiencies, and in turn the operating performance. The company is also offloading assets that bear no direct relation to its core operations.

The New York Times Company completed the sale of Regional Media Group in Jan 2012 to re-focus on its core newspapers and pay more attention to its online activities. The company divested its remaining stake (210 Class B units) in the Fenway Sports Group in May 2012. The company, in Sep 2012, completed the sale of About Group and sold its stake in Indeed.com in Oct 2012. The company also intends to sell its New England Media Group, including The Boston Globe and its allied properties.

The Dow's 4 Most Impressive Dividend Growth Stocks

Many investors seek to buy the stocks in the Dow Jones Industrials (DJINDICES: ^DJI  ) because they represent the cream of the crop of the U.S. stock market. Yet all 30 stocks in the Dow also share an important trait: they all pay dividends to their shareholders.

Still, dividend investors have gotten increasingly picky about the stocks they choose to meet their income needs, and one important element of making choices for a dividend portfolio is finding stocks that don't only pay healthy dividends now but will also continue boost their payouts in future years. That's why this article highlights four stocks that have made massive increases in their dividend yields since the market last hit record highs back at the end of 2007. Let's look at those four stocks.

Hewlett-Packard (NYSE: HPQ  )
As of the end of 2007, HP stock had a dividend yield of just 0.6%, but in the years since then, the yield has more than tripled to its current level of 2.2%. What makes that yield all the more impressive is that the stock has bounced sharply this year, gaining more than 80% and therefore cutting the yield almost in half from the 3.7% level it boasted at the beginning of 2013. HP had paid the exact same quarterly dividend for more than a decade until it made a 50% boost in its payout in mid-2011, recognizing the value of returning more cash to shareholders. Even through tough times last year in the midst of multiple failures in past efforts at restructuring, HP kept paying dividends, and now that the stock appears firmly on the comeback trail, investors increasingly believe that focusing on more profitable business lines could produce even greater dividend growth.

Intel (NASDAQ: INTC  )
Chip giant Intel has gone from a typical tech stock to a Dow dividend giant, with its yield having risen from 1.7% at the end of 2007 to 3.9% today. The company has doubled its dividend over that period of time, but the other part of the yield equation hasn't been as kind to investors, as Intel's share price has actually fallen over that period. Intel had the financial strength to withstand the market meltdown, but its ongoing struggles to adapt to the mobile revolution haven't resulted in the growth that investors would prefer to see. Until the company can capitalize more fully on newer technology, Intel's status as a mature tech company with more prospects for dividend income than future growth could hold the stock back.

ExxonMobil (NYSE: XOM  )
The oil giant's dividend has risen from just 1.5% in 2007 to 2.7% today, with an 80% rise in per-share dividends accounting for pretty much the entire increase in its yield. Energy prices remain reasonably strong, with oil still trading at triple-digit levels despite huge production gains from unconventional drilling practices. Yet despite the powerful earnings that the favorable energy environment has produced, ExxonMobil still struggles with the need to replace declining production from older wells with new finds that are large enough to make a significant different in its total business. Combined with share buybacks, Exxon returns more capital to shareholders than any other company, and that's likely to continue as long as Exxon doesn't find the need to make a massive strategic acquisition that uses up its available ash.

Microsoft (NASDAQ: MSFT  )
Microsoft has boosted its dividend yield from 1.2% in 2007 to 2.9% today, with its quarterly dividend having more than doubled. Like Intel, Microsoft has seen struggles in producing sizable growth from its core business in a world in which PC demand has started to decline dramatically. Yet by returning more capital to shareholders, Microsoft reminds investors that its legacy businesses still generate huge amounts of cash, and even if they're in decline, they'll likely keep rewarding dividend recipients for years to come. If the company's planned restructuring can reinvigorate its product innovation, moreover, Microsoft could finally reawaken growth to go with its solid dividends.

Accept only the best
The best stocks offer not only good yields but improving payouts. By focusing on the stocks that will give you favorable dividend characteristics, you'll reduce your chances of being disappointed by the dividend stocks you own.

Dividend stocks can make you rich. It's as simple as that. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of the only nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Should I Buy Tui Travel?

LONDON -- Tui Travel's (LSE: TT  ) share price has been flying lately, up 33% over the past six months. Over 12 months, it has soared a gravity-defying 120%, compared to just 25% for the FTSE 100. Have I left it too late to hop on board?

Investors in Tui Travel, which owns Thomson and First Choice, have had plenty of fun in the sun but, like any holiday romance, it is difficult to sustain in the longer term. Yet the world's largest tour operator has staying power, grabbing profitable market share and cashing in on strong demand from sun-hungry, recession-sick Brits and Nordics. Tui's full-year underlying operating profit growth is on course to hit 10%, according to its recent interim six-monthly results.

Fun in the sun
Tour operators typically lose money in the winter, when seasonal bookings are sharply down, but Tui has been trimming its losses. Operating loss fell 43 million pounds to 274 million pounds, a drop of 14%. Pre-tax losses shrunk by 53 million pounds to 404 million pounds, despite a 1% drop in first-quarter revenue to 5.39 billion pounds.

The annual summer holiday is one tradition most of us still like to observe. Summer 2013 bookings are up 15% in the U.K., 11% in the Nordics, and 9% in Germany, offsetting a slowdown in France. That's the benefit of diversification. The Internet has whacked many a business model, but package holidays could be a surprise exception. Maybe we're getting a bit tired of DIY holidays, and want somebody to do the legwork for us, at an all-inclusive price. Tui has also fought back through its strategy of offering "unique holidays" unavailable elsewhere.

Tui or not Tui?
Management is confident, hiking the interim dividend 10% to 3.75 pence. That leaves Tui yielding 3.3%, close to the FTSE 100 average and nicely covered 2.2 times. This is forecast to rise to 3.9% by September 2014. Despite the recent share price surge, at 13.9 times earnings this stock isn't as pricey as I would have expected (it has largely been making up lost ground after a troubled 2010 and 2011). Earnings per share (EPS) growth of 11% in the 12 months to September and 10% to September 2014 suggest Tui could still have a little further to travel.

If you want the sun to shine on your retirement, then don't miss our special report "5 Shares to Retire On." This free report by Motley Fool share analysts names five FTSE 100 favorites to secure your retirement. To find out more, download this report now. It won't cost you a penny, so click here.

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Millennials: Beware of Financial Advice From Your Parents

Getty Images From birth, we're raised thinking mommy and daddy know best. They have our best interests in mind when they scare away tattooed teenage boys, keep the liquor under lock and key, and set our curfews earlier than those of all our other friends. Unfortunately, when it comes to money, mommy and daddy might be leading you astray. Financial literacy rates in the Millennial generation are abysmal. This year the Treasury Department and Department of Education tested the financial literacy of 84,000 high schoolers, who scored an average of 69 percent. With little to no financial literacy taught in our education system, children have no choice but to learn from dear old Mom and Dad. But if Mom and Dad were never taught -- or never bothered to learn -- how to appropriately handle money, they sure aren't the ones who should be giving financial advice. If you've ever heard your parents say, "Don't get a credit card," they were wrong. Credit cards are one of the easiest ways to build your credit score. Granted, establishing new credit only makes up 10 percent of your score, but if you aren't paying off loans yet, it might be the only way for you to establish a line of credit. Length of credit history makes up 15 percent of your score, so the longer you've had a "healthy" history, the higher your score will typically be. Parents are often reluctant to give their college-age children access to plastic, but if you know how to treat your card right, it'll pay off. When you graduate and start looking for an apartment, a respectable credit score is important to your landlord, while a lack of one can prevent you from signing a lease. If you've ever heard your parents say, "Keep a monthly balance on your credit card," they were wrong. Somehow, parents heard a rumor that keeping a monthly balance on your credit card will help your credit score. They spout some nonsense about how paying the minimum shows responsibility and increases your score. False. Carrying a balance does nothing to improve your score and instead costs you more money because you're accumulating interest on the balance. Instead, pay off your credit card in full each month (which means not charging more to the card than you know you can afford). If you've ever heard your parents say, "X,Y or Z college is worth the student loan debt," they were wrong. Millennials are drowning in student loan debt. As a generation, our debt is so horrific it's predicted to delay our retirement age until 73. For many millennials, it's too late to turn back now; the debt has already been accumulated. The only hope is to diligently, or quickly, pay down debt, and simultaneously start figuring out how to save for retirement from the moment you get your first paycheck. The other option is to start a side hustle and increase your influx of cash. For the younger millennials and Generation Z, there's still hope. When considering college, apply to every scholarship you qualify for. Sometimes your GPA doesn't matter as much as your height or your ability to call ducks. It's a good idea to set your pride aside during your college-decision-making process and really evaluate whether the ROI of your major at X, Y or Z school is worth tens of thousands of dollars in debt. If not, consider state schools, smaller liberal-arts colleges, or simply choosing the college that offered you the best financial package. If you've ever heard your parents say, "Don't invest in the stock market; it's just gambling," they were wrong. Yes, 2008 was a tough year, and the market took a tumble. Boomers lost money and some saw their retirement accounts take a hit. Unfortunately, this led to the millennial generation developing a great mistrust of the stock market. While we might be reluctant to get in bed with the stock market, it's certainly still willing to love us. The greatest advantage for an investor is time, and time is exactly what 20- to 30-year-olds possess. If you're not quite ready for index funds, mutual funds or buying individual stocks, you should at least contribute to your company-matched 401(k)s or open a Roth or Traditional IRA. If you've ever heard your parents say, "Have babies," they were wrong. Starting a family is certainly a personal choice, but not one you should be making based on parental pressure. Raising a child is a tremendous financial commitment. In 2012, it cost middle-income parents $286,860 to raise a child from birth to age 17. If you're willing to pay for college in full, then you can tack on an extra $100,000 or more. For many millennials stuck in the red, starting a family could complicate an already stressful financial situation. Parents mean well, but sometimes their advice comes from a negative personal experience or a lack of knowledge. Instead of always trusting their financial advice, be sure to educate yourself and check against credible sources.

A Few Stocks Bucking the Downward Slide

This morning, investors received two key economic data points and a number of earnings reports, which ultimately caused the markets to fall. The Dow Jones Industrial Average (DJINDICES: ^DJI  ) closed the day down 81 points, or 0.56%, and now sits at 14,537, which is a far cry from the 15,000 some investors were hoping to see this week. The S&P 500 closed the day down 10 points, or 0.67%, while the Nasdaq plummeted 1.2% during today's trading session.

One of the economic reports was the Labor Department's initial jobless claims number, which rose last week by 4,000, to 352,000, while economists were expecting only 346,000. The other data point came from the Commerce Department, and focused on housing starts during the month of March. On a seasonally adjusted basis, analysts were expecting 917,000 starts, but the number actually came in at 1.04 million. 

While one number indicates the economy is growing stronger, the other point gives investors a slightly less optimistic view. But, regardless of what economic data is telling investors, what truly matters is earnings, and today, a few of the Dow's components rose higher on the back of good results.

Shares of American Express (NYSE: AXP  ) were higher by 1.42% after the company released strong earnings last night after the closing bell. The company reported that net income rose 2% and hit $1.15 per share, while analysts were expecting $1.12 per share. But, while the company beat expectations on the bottom line, American Express missed on the top line when they reported $7.88 billion, which represented 4% growth from the first quarter last year;l analysts wanted to see $8.03 billion on the top line. The company also reported that card member spending grew 7%, which represents the fourth consecutive quarter of growth. 

Telecommunications giant Verizon (NYSE: VZ  )  saw its shares soaring higher today after the company announced earnings this morning. The company also missed on the top line, but beat on the bottom. Revenue was expected to hit $29.6 billion, but came in at $29.2 billion, while Verizon's earnings per share were estimated at $0.66, but hit $0.68 per share. Although revenue missed, it did come in 4% higher than last year. 

Intel (NASDAQ: INTC  ) shareholders also had a good day, as shares rose 1.41%. The rise was likely due to comments made by the company's competitor Advanced Micro Devices (NYSE: AMD  ) . AMD is planning to get as much as 20% of its revenue outside PC chip sales by the fourth quarter, which could be great news for Intel. If AMD finds success in other areas, it may gradually move away from PCs, opening up more opportunity up for Intel. 

When it comes to dominating markets, it doesn't get much better than Intel's position in the PC microprocessor arena. However, that market is maturing, and Intel finds itself in a precarious situation longer term if it doesn't find new avenues for growth. In this premium research report on Intel, our analyst runs through all of the key topics investors should understand about the chip giant. Click here now to learn more.

Buffett's Market Indicator Flashes Red, Prepare To Sell

With each passing month, it's becoming evident that the current bull market has slowed from a gallop to a trot.

The S&P 500, which rose 29% in 2013, will likely trail such a gain this year, as it is up only 7% in 2014 as of September 15. And by one key measure, the bulls advance may cease altogether, potentially resulting in a market reversal.

Make no mistake, the market has been in rally mode for more than five years in large part due to the Fed's easing hand, which is fueling ultra-low interest rates and ample liquidity for stock buying. Yet it's always wise to keep an eye on traditional market metrics, in case the market starts to become fully disconnected from the fundamentals.

[Related -PBoC joins other major central banks with unconventional monetary policy action]

Each investor can focus on their own sense of fair value. For example:

-- Some investors like to compare the dividend yield on the S&P 500 to federal fund rates. The current dividend yield stands at around 2%, higher than short-term interest rates. Still an eventual upward move in short rates will pressure this valuation gauge.

-- Other investors like to see how stocks are trading in relation to their private market value (i.e. what they would likely fetch in a buyout). Private equity historically acquires mature business at 4-to-6 times trailing cash flow, and growth businesses at a somewhat higher multiple. Fully 83% of the companies in the S&P 500 are trading for more than eight times trailing cash flow.

[Related -A Buyback Boost?]

-- Other investors like to focus on EPS growth. Per share profits have been enhanced in recent years by massive share buybacks -- a trend that may not last. If buyback activity cools, underlying net profit growth will come into greater focus. Many companies in the S&P 500 are seeing profit growth slow to less than 10% as the low-hanging fruit of streamlining efforts disappear.

Warren Buffett has an easier way to gauge the valuation of stocks. He thinks that the combined value of all stocks -- as measured by the Wilshire 5000 Total Market Index -- should be worth less than the Gross Domestic Product (GDP) of the U.S. economy. And this ratio has typically generated a sell signal whenever it gets out of whack. It happened in 2000 and again in 2007, and though the market marched higher after crossing that threshold, the 12-to-18 month outcome was fairly bleak.

Unfortunately, we're back into the danger zone. The stock market's total value surpassed GDP in March 2013, and is already beyond the point it stood in early 2008, just before the last major market pullback. As this chart from financial blogger Doug Short shows, the market is now more than 15% overvalued, at least according to Buffett's gauge. This gauge actually rose above 135% in 2000, and the dot-com melt up turned out to be a painful experience for most investors.

To be sure, "this time is different" is a mantra that you'll hear on Wall Street trading desks. These traders suggest that corporate profit margins have never been higher and companies now deserve higher valuations.

Here's the problem with that logic: Profit margins often peak in the early stages of an economic recovery as companies skimp on spending. Indeed work forces remain lean and capital spending has been depressed, but as an economy starts to strengthen, many companies amp up their rate of spending and profit margins return back to Earth.

Still, investors can remain bullish as long as per share profit growth remains robust. Will that be the case? It's hard to know how the U.S. economy will be faring in 2016 and beyond as China, Europe and our own economic cycle remain as major question marks. But we can at least gauge EPS trends before then. According to Factset Research, the projected earnings growth rate is 7.3% for the S&P 500, rising to 11.5% in 2015. Double-digit profit growth will likely only happen if the U.S. economy grows at a 3% pace next year.

S&P 500 Profit Growth & P/E

Obama wants more financial reform

  Obama: 3 ways to help working families NEW YORK (CNNMoney) The ink is barely dry on the post-crisis financial reforms, but President Obama says more is needed.

He said big banks need additional restraints from making bets that leave taxpayers "holding the bag."

"That's going to require some further reforms. That's going to require us looking at additional steps that we can take," Obama said in an interview with the public radio program "Marketplace."

He suggested some would come from Washington and other changes require "restructuring the banks themselves -- how they work internally."

"We have to continue to see how can we re-balance the economy sensibly, so that we have a banking system that is doing what it is supposed to be doing to grow the real economy, but not a situation in which we continue to see a lot of these banks take big risks because the profit incentive and the bonus incentive is there for them," he said.

Meanwhile on Wall Street, many big banks are making their own internal changes, shutting down the profitable but particularly risky speculative trading units.

And regulators have been slow to flesh out how the industry reforms Congress passed in 2010 will work. Just over half of the nearly 400 federal rules required under Dodd-Frank have been finalized, and nearly a quarter haven't even been proposed, a key early step in the rulemaking process, according to Davis Polk, a financial industry law firm.

But federal prosecutors have stepped up their tactics against misbehaving banks, settling charges with guilty pleas for the first time in decades. In May, Credit Suisse (CS) pleaded guilty to tax evasion-related charges, and this week, the French bank BNP Paribas (BNPQF) entered guilty pleas related to sanction violations and agreed to pay nearly $9 billion in penalties.

It seems unlikely additional financial industry reforms would move smoothly through divided Washington, and the majority of Obama's efforts on the economy have focused on wages and college costs. He has pledged what he calls a pen-and-phone approach to accomplish his priorities through executive orders and the bully pulpit.