This article is to provide you with some ideas on what to invest in to protect yourself in an inflationary environment?  Think prices can’t go higher?  You ain’t seen nothing yet. If your reading this, then I’m pretty sure you have pulled your head out of the sand and see that something is going on (that is, your hard earned and saved dollars are buying you less and less) but you just aren’t sure how to preserve your wealth and even profit in this environment.  Well, I hope to give you a push in the right direction and light that fire for you to do something about it.  This is just a starting point, you need to do your own homework and make your own choices.  Probably a good idea to spread your investment around the following groups.  So, with that lets get to the point, Invest in hard assets:

PRECIOUS METALS:

#1) Invest in Gold, Silver and Platinum:

Personally, I like  US Bullion type 1 oz coins such  Silver and Gold Eagles coins or Canadian Maples.   You can buy these at your local coin store.  A few good sources to give you an idea what to pay is at TULVING.com and COININFO.com.   My personal preference is Silver  over gold for many reasons (i.e., Silver has been used as money longer than gold, it has more of an industrial demand that is growing because of it’s physical properties and it is less likely to be confiscated by our government than gold is).  Now is a great time to begin buying Silver and Gold with the recent pullback.  Silver spot price went from about $42/oz to $30 oz.  I just bought a few more rolls (20 coins per roll) of $1 Silver Eagles at $34 per coin (premium of $4 over spot), could buy cheaper at Tulving but you have to buy 500 at a time.

Another good way is to Invest in an Exchange Traded Fund (ETF):  Such as SLV for silver or GLD for gold.  These trade just like a stock and you can purchase them through your brokerage account.  Finally, you can invest in mining stocks.  Stick with the big boys that are actively mining gold, silver,  and rare earth metals.  Going with penny stock or exploratory phase only companies is just a gamble.  Your purpose is to preserve your wealth not gamble it away.

ENERGY COMMODITIES AND STOCKS:

#2)  Invest in Oil and/or the transportation of it.

Well let’s see, you aren’t going to go buy 55 gallon drums of oil or gas and store them in your garage are you?  I sure hope not.  The best way to invest in the commodity itself is through Exchange Traded funds such as USO or USL.  You could also choose to invest in pipeline funds or transporters that are not tied to the price of the commodity.  These type of funds invest in pipeline and the transportation of oil, gas and such.  Do a search, you will find many.

FOOD:

#3)  With rising prices, food ain’t going to get any cheaper and people still need to eat no matter what happens.   There is so many choices in this sector and the commodities (sugar, grain, coffee….) Again I like ETFs for this purpose such as the agriculture food fund DBA.

SUMMARY:  These are just some starting points, there are many ways to invest in these sectors.  I’m not going to tell you what or how, just a few tips to get you headed in the right direction.  What you choose is a personal preference.  I like Silver and other commodities.   I’ll buy physical positions in them, ETFs, stocks as well as take Options in them at certain points (both Put and Call) to either short them or go long when I see that volatility is about due (need rapid price change in order to profit on an option).

Lithium penny stocks are blazing hot this week (just look at the 5 penny stocks presented below to support this statement).  You think Silver is going parabolic?  Take a look at LEXG which was a penny stock (below $5.00) just days ago and is now a $10.00 stock, having moved from under 10 cents to $10.57 since March (that sure makes silvers recent 70% gain look rather weak).  The penny stock lagers in the Lithium sector are now following suit, so Lithium is the opportunity of the moment as penny stock speculation in this sector is growing (Don’t just focus on Lithium Mining/Resource penny stocks, take a look into related Lithium categories such as Electronics and Alternative Energy). 

Penny stocks move much faster (in both directions) which is why I prefer to trade them (not invest) over larger companies. Here is a few Lithium penny stocks on my watch list.   

LTUM @ 1.02 (Lithium Corp. up 343% on breakout volume of 14.4 million shares)

LTHU @ .044 (Lithium Technology up 49%.)

AMLM @ .55 (American Lithium Minerals up 89% on breakout volume of 3.7 million shares)

AMEL @ .54 (Amerilithium Coproration up 69%)

LEXG @ @ 10.57 (Lithium Exploration Group up 38% today..this was less than 10 cents a month ago.  I’m not going buy this one, way to expensive for me to trade, just listed it so you can research it and learn what causes a Lithium penny stock  to go up 10,000% in a month.)

EVCA @ .024(This is a wild card play.  Evcarco up 33% isn’t a Lithium stock but it’s mission is to make a wide selection of environmentally friendly vehicles available.  With the recent breakout chatter this may be another type of play to capitalize on the move in the Lithium sector.)

At this moment Silver Spot price is flirting with $46.00 and is up about 75% since the end of January when it was about $26.00.  In summary, I’m LONG Silver but at this moment I will be preparing to hedge my bets for a short term pull back (GOING TO SHORT IT).  I’m not saying it doesn’t have more room to continue this parabolic run.

Personally, I have been a precious metals investor since early 2000 when silver was around $5.00/oz and gold at $265.00/oz.  I was super excited at the time and couldn’t stop telling my friends, family, neighbors, co-workers, anyone I came across that they should begin investing in the metals and detailing all the reasons why.  Well, let me tell you…most of them thought I was a nut case.  I have learned that offering advice is a no win proposition no matter what happens.  If they made money from my suggestions it was all their doing….if they lost….it’s all my fault (No good deed goes unpunished).  That’s one reason I stopped posting regularly here.  Most recently I became super bullish on Silver in October 2010 when it was about $23.00/oz I told my closest friends and family that it was time to take a position if they hadn’t already and that it would outperform Gold this year.  Well, sad to say some of them won’t even talk to me anymore cause apparently buying precious metals is Un-American…whatever…F-em!

I’m holding onto my Silver positions (I have lots of reasons to remain bullish long-term besides the economic situation were in) but now I’m ready to hedge that position buy buying Put Options on the Exchange Traded Fund SLV which closely mimics the price of Silver.   This is funny….everyone is now talking about buying Gold and Silver while I’m telling them to hold or sell (don’t add yet…buy the pullbacks)….here we go again…I’m a nutcase.  As Silver continues to go higher…I’ll keep adding more puts (don’t go all in at once).  Now you ask, why would a guy who is so bullish on Silver want to short it when it’s seems like it’s now just beginning to catch on fire?  Mainly….it’s gone to far to fast and PUT Options (call it insurance) will not only protect me if Silver takes a dive but will add to my profits.  Yes, we could see a huge move up in a very short time frame (all the late comers chasing it, Possible short squeeze…..) and that will give me even more confidence to short the metal (for the short term).

Everyone (everyday people, traders, institutions, millionaires, billionaires, countries…..) who pays any attention about the economy, the money supply, the debt, the deficit, inflation, chaos…….and believes that all this gloom and doom is going to kill the dollar has most likely already taking a position in the metals to protect against inflation or profit from the rally.  Hard times lay ahead but I want to have faith (or I’m Naive) that things can’t possibly get that bad (not to us..right?), they won’t let that happen (or will  they?)

Anyway, I’m not going get on a political debate cause I’m merely a capitalistic pig who is not giving any advice…..I’m just saying that I’m a long term silver bug who is getting ready to hedge (insure) his long-term position by shorting  Silver with PUT Options of SLV.

Long-Term I’m also highly bullish on Natural Gas.

If you ever want to become a better stock trader than you must not trade based on emotions.  Trading on emotions will cause you to make the worst decisions.  Hopefully you have read some of my educational  articles and have some basic understanding of my trading strategy and what to look for when investigating, initiating and closing a trade.

Let’s briefly discuss the traits of three types of emotional trades and how to avoid some pitfalls:

The Fearful Trader:  This trader hasn’t done enough research to really understand why a particular stock is on the move or why it could become the next hot penny stock.  Ultimately this lazy trader  (McFly) is looking for a get rich quick stock tip.  As such, McFly is like a deer in the headlights when the time to initiate a penny stock trade has arrived.   Because McFly has no self determined valid reason to initiate a trade, he sits on the sidelines watching the next hot stock begin to move up.  Later in the day, the stock pulls back to a support zone and then makes another large move up, but McFly is thinking it’s to late to get in now and still continues to watch.  The hot stock party continues as the stock moves to the high of the day.  Finally, fearful McFly can’t stand being left out and jumps in at the top.  Guess what, McFly is most likely going to get hosed again.  A Bold and Fearless trader would have remained calm, have the ability to make quick methodical decisions and be well prepared by having a complete entry (i.e. bought on a pull back) and exit plan (i.e. buying volume turns into selling).  The Fearless trader would have  had a number of tools available and at least understood share structure, technical indicators such as support/resistance zones, potential for dilution, news, what is driving the Hype (Pump), who the market participant are (i.e day traders), level II data (volume, time and sales) and so on.  You must  be  BOLD and FEARLESS by having as much  information as possible.  All available resources will assits you in your evaluation to either avoid the stock or provide you with a valid reason to initiate the trade at the correct time.  The Fearless trader also knows when to admit when they are wrong and isn’t scared to take a small loss before it becomes a bigger one.

The Greedy Trader:  This trader is never satisfied and believes that the stock is going to continue to move up  or doesn’t want to miss out on further gains.  Greedy fearful Mcfly happened to grow a set one day and  got lucky by  jumping in on a hot pump stock tip.  McFly only put in about $100.00 (because he is still fearful) and the stock happens to go up 100% in a short time.  But, McFly isn’t satisfied with only $100.00 profit because he wants more and it’s just not worth his time.  Well, it is possible that the stock will continue on up (maybe even 1000%).  So, McFly continues to wait but the stock pulls back and is only now up 50% near the close of the day.  McFly is pissed and doesn’t close the position.  After a few trading days, the hot stock turns into a stinky dried shriveled up old raisin and is now trading at loss.  McFly grows disheartened and lets the stock grow dust cluttering  his trading account with another worthless turd to add to his collection.  The GRACIOUS and FEARLESS trader would have been confident in his initial decision, put in a bit more money and began selling his position as the stock moved up. When the stock was up 100% he could have sold half his position so that he took some profits and remained in the game as it continued to move up or reduce his risk.  It’s easier to make $100.00 ten time then $1000.00 one time.

The Hopeful Trader:  This trader is pathetic, just doesn’t think or have any plan….he just hopes.  Hopeful Joe buys into any piece of hype, believes everything he reads is true and that others are honest.  Joe never admits when he is wrong, drinks the koolaid, smokes the catnip and thinks everything will work out.  Hopeful Joe is going to end up with a small fortune…….pocket change.  There is no hope when it comes to trading penny stocks, it is or it isn’t.  When it comes to penny stock trading, don’t trust anyone, believe nothing and be pessimistic.

Some Stocks to Watch Tuesday:

EYSM, SSHS, PFNO, CWRN and AMEL

I’m in search of signals that define the ultimate penny stock wake-up pill and set a penny stock off before the momentum has fully awaken.  I’m sure this is going to be a difficult task as there is many possible signals and events to consider…..we call these trends.  Not going to get into a lot of detail here as I need to continue to collect the data in real time.  Currently I’m always following the momentum when I initiate a penny stock trade.  Many times that leads me to getting in at the end of a run which either leaves me with little profit or a big loss if I refuse to admit I’m wrong.  My interpretation of penny stock momentum is when the price of the stock breaks out (or continues to move up).  The price breakout is usually preceded with or followed by an increase in share volume (# of shares traded) and/or an increase in message board chatter.

Normally I look for breakout price, breakout volume and breakout chatter (hence The MOMENTUM) before placing a trade.  However I have found that my best profits have been by placing trades before the momentum has occurred.  Many penny stocks have eaten the poison apple (sleeping) so it’s hard to guess which one is the next to get kissed (wake-up)…your odds of picken it are pretty dismal unless you follow the momentum.  So, I’ll be analyzing different signals and methods (or combination) to determine which act as the best momentum catalyst.   Of course I value your input, so please post a comment on this subject.

Penny stocks to watch that might have hit bottom and injested the ULTIMATE WAKE-UP PILL.

LFBG @ .0024 (Mild momentum in process:  Potential catalyst are news, breakout from a triangle formation, bottom bounce)

VGPR @ .0006 (No momentum yet:  Potential catalyst is all time record breakout volume off the bottom….this stock was trading at ~40 cents 3 months ago.)

ATPT @.0017 (No momentum yet:  Potential catalyst is all time record breakout volume off the bottom…..this stock was trading at 3 cents about 2 weeks ago.)

What is next? Who is next? I dunno what is next? You don’t know who is next!  This stocking game is way bigger and trickier than you, so don’t even think you know.  Just be grateful when you happen to have been at the right place at the right time, made the catch and then moved back out of the way when the bus comes running by.

So, Sssssshhhh be vewy quite….I’m stocking cwazy little stocks.  You know, the ones that pop their heads out of the ground and make a run for it.  Well, of course I’m not the only one out there hunting and stocking, we have competition and conspirators in the midst.  None the less, all us stockers collectively pounce at the chance when we see an opportunity to fatten our tummies.  You may think that poor little stocket is just so innocent with it’s big dark beady eyes but it’s not always what it seems.  The stocket begins to run around wildly, teasing and enticing you to pursue.  Up, down and around you chase that little stock till either you or it is caught, bagged, cooked and gutted.  I hope you don’t become dinner.

Two little ones popped out of the hole this October 4th of 2010….I have my sights set on em!

LFBG @ .0024

EPGL @ .0004

It’s been awhile since my last post because I took some time off trading stocks and created my own economic stimulus plan.  I went for it big and built an entire new house on top of my old house more than doubling it’s size (and my payments….lol).  I’m going to spare you the details but I would not advise anyone to go through that process……just buy an existing home, it’s a lot less stressful. 

I think the timing is right and I’m ready to play the stock market game again.  But first I have to hunt those little hotties down that are worthy of my attention.  They may be easy to spot, standing out like a lighthouse beacon with a twinkle in her glass eye.  However, she is more like to be a Praying Mantis waiting to strike.  Not only will she bite off your head after your in, she will pocket your cash and kick you in the ash.  Yeah…I bet you think your big and smart enough to satisfy her so she lets your pocket grow bigger before you pull out.  More likely to be a big silly bug caught up in the electric bug zapper.  Have a plan before you get caught up in the hot stock hype.  Why not read some of my educational articles before you stick it all in again.

Penny Stocks to Watch week of 8/25/10

In addition to one beautiful lady (Nicki Minaj……check out her video “Your Love”)

ADAC @ 0.0103  (Volume and chatter breakout,  News, up ~347% from previous days close)

DMGM @ .035 (INSANITY - Supposed news  of $2.00 share buy out?????  Well believe what you want…I don’t.  However, what drives these stocks up is potential and hype.  The momo is on this one (for the momoment).   I been watching this from .015 and right now it’s at .15…wishing I had the guts to get in at .035….OH Well…  Way to risky for me now.  Not very often I see this kind of action with chatter building up so I just wanted to bring it up to your attention…..she sure has mine.)

Penny Stocks are Ruthless but be smart and they will make your bedrock!  Trading penny stocks is very similar to gambling.  If your smart, think on your own and have a plan, the rewards can be high.  Don’t be a fool and think your always going to be right, because the losses can also be catastrophic if you dont admit when your wrong.  You should never fall in love and marry any penny stock or any of our suggestions, they are not your friends or investments (if you do stay in for the long haul, more than likely they will suck the life from you and leave you penny-less).  It’s always best to take your profits as soon as you realize the gain you want considering such things as key resistance levels as well as limiting your losses if or when support levels are broken.  You must be disciplined if not robotic (Just Do, don’t hope).  Please always remember that timing is everything (a trade may be good only for a few minutes to days) and then again the penny stock may have already run its course and the top penny stock is going nowhere but down (don’t be left holding an empty bag of poop).

Ruthless Penny Stocks to Watch

SKGO @ .0069 (Day # 1 Breakout volume, price and chatter.  Solid uptrend.  Lot’s of attention on this hottie but don’t forget that she is Ruthless and will take your money if you stop paying attention.)

BEDA @ .0024 (Breakout volume and price.)

HPNN @ .0108 (Breakout volume and price.)

CBAI @ .0107 

Don’t be a sheep following the heard.  Do your own homework and have a plan.  Checkout the education section in the category archives for more details.

Penny stocks up and penny stocks down. Which one is next is any one’s guess.  The key to making money in penny stocks is trading the one that has all the attention. This new attention creates volatility in the stock. This volatility is where a disciplined trader (not investor) can potentially profit on a trade.  All the penny stock market players are looking for the same thing…….who is next?….how far will she go up?….how low will she go?……. and when do I get back in so I can do it all over again?

EWKS @ .0004 (Historical breakout volume signals massive attention.  Day #1 of volume and price breakout so good chance she goes higher.  I tried a good part of Friday to buy in at .0002 and couldn’t.  The first time it hit .0004 was all the confirmation I needed to raise my bid.  I up-ed my bid to .0003 knowing I had a good chance that profit takers (up 300% at that point) would push the ask back down.  As expected that happened and my order filled and before long it was back at .0004.  Maybe we see .0003 (ask) again but I’m pretty sure .0002 (ask) is gone for now.)

BZCN @ .0028 (This baby has been on the watch list several times.  Boy I love BZCN she has been so good to me!!!!  What a great stock to trade last week and I still keeping her on my watch list.)

VIPR @ .0019 (Another text book beauty that  has been on the watch.)

KMAG @ .009 (Bounce play.  Breakout volume keyed me in but the price went the wrong direction…..SELLING!  I’ll be looking for buying volume as confirmation to enter this play.)

Where there’s smoke you usually find fire.  Many stocks appearing on our watch list start off with a puff of smoke before turning into a blazing fire.

BLAZING STOCKS STILL ON THE RADAR

• VIPR @ .0016 (VIPR has appeared on our watch list a number of times and was just re-listed on 11/23/09 at .0008 and has moved up 100% since.  Today we had confirmation with breakout volume and price.)
• BZCN @ .0049  (Was re-listed on 11/22/09 at .0013.  Chat, volume and price continue.)
• QEDN @ .0006 (Listed on 5/21/09 at .0001.  Today we hit .0010 (900% move since first identified).  A bit of a pullback today as I was expecting, took some profits and remain in the game for now.)
• FFGO @ .0002 (Well she ain’t blazing at the moment but I still see some smoke so she remains on the list.)

I SMELL SOMETHING BURNING

• SARO @ .0005  (Hasn’t really begun to move yet but I did notice it was able to bust .0004 resistance with breakout chatter on iHub.)
• SKGO @ .0013  (Up 62% today)
• KENS @ .0475 (Up 69% today with a gap up from .028.  Don’t really like buying on gaps, I much prefer to see them pull back and fill the gap.  Breakout volume might signal that this fire is just getting started.)