The move down in gold yesterday surprised many traders, March 9, and flashed an exit signal.

As we have mentioned before, we felt that gold was in a broad trading range and were not optimistic that it would shoot higher.

This week’s action confirms that we have more of a two-way market. I expect we’ll see further selling on any rallies from this level.

In today’s video, I share with you some thoughts I have on gold based on one important element: how gold energy fields propel this market.

Click here on the image below to watch the video:

You should watch this earlier video, Making Sense of Today’s Gold Market before watching today’s, for more background in to what Hewison is talking about.

You should also Energy Fields in Gold and How to Trade Them for a primer.

Testosterone: Friend Or Foe?

If testosterone is responsible for all of the negative behaviors among men, wouldn’t that mean that men with lower levels are healthier than those with normal or high levels of testosterone?

How to Treat a Cold with Dr. Pepper

Sore throat? Do you have a sinus headache? A little HOT Dr. Pepper can alleviate these symptoms. True, some people would rather not drink any soda warm, much less hot. Still, if you choose to give it a try, you just might discover that you like it (and join the ranks of other hot Dr. Pepper nerds… like the author of this article).

How to Be Assertive With Friends or Family

If you feel like you get pushed around, take on too many responsibilities with your friends and family, and don’t communicate your needs clearly, then you need to work on becoming more assertive.

Jenny McCarthy: Who’s Afraid Of The Truth About Autism?

Parents of recovered children, and I’ve met hundreds, all share the same experience of doubters and deniers telling us our child must have never even had autism or that the recovery was simply nature’s course. We all know better, and frankly we’re too busy helping other parents to really care.

Is Everyone Addicted To Something?

The National Institute of Drug Abuse reports that marijuana is the most commonly used illicit drug in the U.S. Over 14 million Americans aged 12 or older used marijuana at least once in the past month; 6,000 people a day try marijuana for the first time; sixty-two percent of them are under age 18.

Nutrition Tips: Real Food For Real People

In honor of National Nutrition Month, I thought I’d tackle the question I get the most: “What’s a snack that I can grab and take with me or get when I’m out that will taste great and satisfy?” I thought I’d help with some ideas I call: Real Food for Real People.

What do your food cravings reveal about your mood?

Recent research shows what many of us knew all along: Our moods dictate what we eat. Researchers studied the diets of hundreds of people to show how personality and foods collide-how our moods may steer us to certain foods, based on their physical characteristics. The study theorized that many moods send specifics signals (for example, stressed adrenal glands could be sending salt-craving signals). So what does your favorite turn-to food say about you?

Aging: What Are We So Afraid Of?

I live in the land of angels, but in Los Angeles these guardians are nipped and tucked with crooked smiles and lopsided eyes frozen on a static expression.

The Ultimate Expert Tips for Staying Young

Women are roughly twice as likely as men to get depressed, which can make them feel worn out and weary beyond their years. To guard against energy-sapping blues, get enough B vitamins: They may help ward off depression and play a role in how cells produce energy, says Christine Gustafson, MD, an integrative medicine specialist in Alpharetta, Georgia.

Top reasons why sex is better after menopause

Sex after menopause? Some experts will tell you it’s a downhill ride of waning sex drive and dried up hormones.

Crohn’s Disease - Topic Overview

Doctors don’t know what causes Crohn’s disease. You may get it when the body’s immune system has an abnormal response to normal bacteria in your intestine. Other kinds of bacteria and viruses may also play a role in causing the disease.

Crohn’s Disease - Prevention

Do not smoke. Smoking makes Crohn’s disease worse.

Common painkillers might hike risk of hearing loss

In the study, published in the American Journal of Medicine, researchers found that men younger than age 50 who regularly took acetaminophen more than twice a week had roughly double the risk of hearing loss compared to men who did not take acetaminophen regularly. Acetaminophen is commonly sold as Tylenol and other brands.

Study finds why ’sunshine’ vitamin D is crucial

Vitamin D is vital in activating human defenses and low levels suffered by around half the world’s population may mean their immune systems’ killer T cells are poor at fighting infection, scientists said.

The Etiquette of Funerals

Funerals provide closure, a necessary part of the mourning process. But the subject of death is difficult for many, and we are often at a loss for what to say.

Beautifully50: Power of the Sweet Potato (or ‘The Supreme Yam’)

Sweet potatoes…not just for the holidays anymore.

Beautifully50: The Big Brush Off

The Russians, Turks and Scandanavians have been performing body brushing for centuries (hmmm…that could be why my Swedish friend has ZERO cellulite on her body…). It’s very popular in most European spas and many cancer treatment centers throughout the world, as it’s a detox program for the skin and other organs.

Zeppole — Fritters for Saint Joseph’s Day

People named Giuseppe (Joseph), on the other hand, are especially lucky. His day falls on March 19 and is celebrated throughout Italy.

Wine Keeps Women Slim, Study - Red or White Diet?

A BBC headline should make women that like to have a glass of wine in the evening very happy.  The headline writer reveals a study claims: “Women who drink wine (are) less likely to gain weight.”  In this study, those who women that drank no alcohol gained the most weight while those that drank in moderation gained the least inches

7 Ways To Beat Depression After A Divorce

Divorce is the second most stressful life event, preceded only by the death of a spouse. And what is stress capable of? Expediting a severe bout of depression and anxiety to your limbic system (the brain’s emotional center) if you’re not careful. Acute and chronic stress, especially, undermine both emotional and physical health.

5 surprising ways your TV is slowly killing you

You’ve accepted the idea that TV makes you dumber. You know there are lots of more edifying things you could be doing with your time than cheering on the contestants on “Survivor.”

Happiness And The Money Factor

Happiness seems to be the catchword for 2010. We’re either looking for it, think we’ve finally found it, or are reluctantly redefining our personal meaning of the word.

We received several inquiries about why gold is declining.
 Our view is gold is retrenching because:

• UK QE has ended (for now)
• US QE will end in three weeks (for now)
• The ECB did a massive €295B drain (can you imagine the market reaction if Bennie Mae drained
$500B in one shot?]
• China is signaling that it wants to rein in inflation by tightening credit, hiking real estate down
payments to 50% and allowing the yuan to appreciate
• Europe’s sovereign debt crisis has ebbed (for now)
• Food commodities have broken down
• Gold stocks have greatly underperformed gold since mid-January (gold stocks tend to lead)
S&P

S&P 500 Index, Gold and Gold Stocks (GDX) – Gold stocks out-performed gold until late October. Then they traded together until mid-January. Since then gold stocks have under-performed gold.

Source: The Big Picture, March 12, 2010

Kornelius Purps, director of fixed income at Europe’s second-largest bank, UniCredit, has issued a stark warning to clients who wish to invest in the Britain: “I am becoming convinced that Great Britain is the next country that is going to be pummeled by investors.” Ambrose Evans-Pritchard reports reports that “Mr Purps said the UK had been cushioned at first by low debt levels but the pace of deterioration has been so extreme that the country can no longer count on market tolerance” and that “Britain’s AAA-rating is highly at risk. The budget deficit is huge at 13pc of GDP and investors are not happy. The outgoing government is inactive due to the election. There will have to be absolute cuts in public salaries or pay, but nobody is talking about that.” And everyone was wondering why the U in STUPID stand for UK (actually make that just CNBC, who never really bothered to even read the original definition). So can the whole sovereign default wave skip the PIIS and go straight to the U?

From the Telegraph:

“Sterling is going to fall further over coming months. I am not expecting a crash of the gilts market but we may see a further rise in spreads of 30 to 50 basis points.”
Yields on 10-year gilts have already crept up to 4.14pc, compared to 3.94pc for Italian bonds, 3.48pc for French bonds, and 3.19pc for German Bunds, though part of this reflects worries about higher inflation in Britain.
Ian Stannard, currency strategist at BNP Paribas, said markets are fretting over how the UK will cover its deficit following the pause in quantitative easing by the Bank of England. The Bank has absorbed £200bn of debt, more than total Treasury issuance over the last year.

Advertisement, story continues below

“The UK may have difficulty in attracting extra investors to fill the gap. We think they will have to do more QE as recovery falters,” he said.
BNP Paribas expects sterling to drop to $1.31 against the dollar this year and reach parity against the euro despite troubles in Club Med. “We’re very bearish on the UK,” he said.

And the biggest insult to the island nation? The insinuation that Greece is actually better off that Britain.

UniCredit said Greece is better placed than the UK in coming months even if deficits look comparable. “The polls point to a minority government in the UK, while Greece’s government can count on a majority to push austerity measures through parliament. Secondly, the British tax system offers less leverage for a rise in revenue,” he said.
Paradoxically, Greek tax evasion creates scope for a surge in revenues from tougher enforcement. “It is not out of the question that we will see a positive surprise in Greece: is there any such hope for Britain?” said Mr Purps.

Well Mr. Purps, this means that there is still hope for America. As the still sentient part of the population has decided to show the corrupt administration and the criminals on Wall Street the middle finger and maxed out their withholding exemptions, all it will take is an order from the US politbureau that the Treasury can withhold 100% of every paycheck, and in addition, garnish wages in perpetuity, DCFed at Ben Bernanke’s favorite discount rate of -100%.

Although the time series is rather short, the “Daily Growth Index” usually leads changes in US GDP (see chart below). Based on the historical relationship, the Index would seem to indicate slower GDP growth ahead. This concurs with a recent analysis of the US ISM non-manufacturing and ISM manufacturing surveys posted on the Investment Postcards site about ten days ago.

Source: Clusterstock - Chart of the Day, March 11, 2010.

Source: Unknown

The inflation pressures are building in key emerging economies, especially in the BIICs (Brazil, India, Indonesia, and China) - see this previous post regarding my new acronym, and this article at the Curious Capitalist (curiously posted just shortly after my post), which leaves my omitted “R” but relays the intuition behind the second “I”.

Although the inflation is not prevalent in any BIIC except India, really, I wanted to comment about why it will build…quickly.

First round, the construction of consumer prices is heavily weighted towards food and energy costs across the BIICs. Indonesia, India and China are highly susceptible to food price shocks (either driven by shortages or demand growth). Expect this as a first-round driver of inflation as the global economy recovers further. It’s already  happening.

Second round, the BIICs are growing quickly and nearing, or are already at, potential. Annual industrial production growth has recovered or surpassed its pre-crisis rate in China, Brazil and India - 19%, 16% and 17%, respectively. This is expected, given the drop-off in world trade (an illustration can be found from this May 2009 post), but unsustainable as the output gap closes.

Third round, interest rate differentials. This year, the BIICs’ central banks are expected to raise policy rates. In fact, Brazil, China and India have already boosted reserve requirements. But with US rates expected to stay low for an “extended period”, international interest rate differentials will change and monetary flows will shift. Capital inflows can lead to inflation if not properly sterilised.

To date, inflows have not been properly sterilised, as evidenced by the ongoing accumulation of reserves and rising money-supply growth (again, I refer you to my previous post on M1 growth rates.

The chart above illustrates the one-year-ahead nominal interest rate differential between the two-year forward government rate for each respective BIIC country versus the two-year forward US Treasury rate. The forward differentials for China and India are on a steady upward trajectory, while those for Brazil and Indonesia are simply steady. I believe this appropriately represents the sterilisation efforts and monetary policy management on the part of the BIICs’ central banks: more managed in Brazil and Indonesia, not as much in China and India.

So where does this analysis leave us? With a very interesting policy mix in the emerging-market space. In fact, in my view this is the riskiest part of the emerging-market cycle: the recovery. If policymakers get this wrong, we could see a lot of price action, final goods and assets alike, on the horizon.

Source: Rebecca Wilder, News N Economics, March 11, 2010.

* Rebecca Wilder is an economist in the financial industry. She was previously an assistant professor and holds a doctorate in economics.

Given our focus on following hedge fund movements, we thought it would be prudent to post up Goldman Sachs’ VIP list. The ‘VIP’ stands for ‘Very Important Positions‘ for hedge funds that employ fundamental strategies rather than technical or trading. In essence, these are the 50 stocks that most frequently appear among the top ten holdings of hedge funds. In our hedge fund portfolio tracking series you may have noticed various stocks popping up over and over again in their top 10 holdings. This is simply an aggregation of a larger set of data and stems from our previous coverage of the top ten hedgie holdings.

This basket of stocks returned 40% in 2009 versus 27% for the S&P 500. Goldman also notes that this list has, “outperformed the S&P 500 by 81 bp on a quarterly basis since 2001, with a Sharpe Ratio of 0.29.” Quarterly turnover on this list is typically around 15 positions out of the 50. Those of you with Bloomberg Terminal access can look it up via GSTHHVIP.

Goldman has aggregated data from 487 funds based on the recent slew of 13F filings so these were the most popular stocks owned as of December 31st, 2009. Again, they focus on fundamentally focused hedge funds but have taken a much broader view of hedge fund land than we typically have. We instead focus on a select list of funds to track that are ideal due to their strategy and portfolio concentration. What’s most interesting about the data Goldman has assembled is that many of the positions have actually been down year-to-date for 2010. We found that intriguing given that these are essentially ‘groupthink’ or consensus picks.

Below you will find Goldman Sachs’ VIP List with the name of the stock followed by the number of hedge funds that own that stock in their top ten holdings.

1. Apple (AAPL): 67 hedge funds hold it as a top ten holding
2. Pfizer (PFE): 45
3. Bank of America (BAC): 37
4. Google (GOOG): 37
5. JPMorgan Chase (JPM): 36
6. Microsoft (MSFT): 36
7. Mastercard (MA): 29
8. DirecTV (DTV): 27
9. Wells Fargo (WFC): 27
10. CVS Caremark (CVS): 24
11. Citigroup (C): 23
12. Hewlett Packard (HPQ): 23
13. Monsanto (MON): 23
14. Visa (V): 23
15. Cisco Systems (CSCO): 21
16. Walmart (WMT): 21
17. Oracle (ORCL): 18
18. Qualcomm (QCOM): 18
19. Exxon Mobil (XOM): 18
20. Ebay (EBAY): 17
21. Wellpoint (WLP): 17
22. Intel (INTC): 16
23. Mead Johnson Nutrition (MJN): 16
24. Merck (MRK): 16
25. Johnson & Johnson (JNJ): 15
26. Liberty Media (LSTZA): 15
27. Amazon (AMZN): 14
28. Apache (APA): 14
29. EMC (EMC): 14
30. Express Scripts (ESRX): 14
31. Ford Motor (F): 14
32. IBM (IBM): 14
33. Lear (LEA): 14
34. Teva Pharmaceutical (TEVA): 14
35. Yahoo (YHOO): 14
36. Crown Castle (CCI): 13
37. McDonald’s (MCD): 13
38. Transocean (RIG): 13
39. Barrick Gold (ABX): 12
40. SBA Communications (SBAC): 12
41. US Bancorp (USB): 12
42. Anadarko Petroleum (APC): 11
43. Berkshire Hathaway (BRK.B): 11
44. Philip Morris International (PM): 11
45. Transdigm Group (TDG): 11
46. Target (TGT): 11
47. Thermo Fisher Scientific (TMO): 11
48. American Tower (AMT): 10
49. Comcast (CMCSA): 10
50. Freeport McMoran (FCX): 10

Of the stocks mentioned, there are a handful that are brand new additions to Goldman’s VIP list. This means that enough hedge funds have brought their stakes in the company up to a top 10 position in their respective portfolios. Positions that hedgies added largely to in the fourth quarter include: Wells Fargo (WFC), Mead Johnson (MJN), Merck (MRK), Liberty Media (LSTZA), Amazon (AMZN), Apache (APA), IBM (IBM), Lear (LEA), Crown Castle (CCI), SBA Communications (SBAC), US Bancorp (USB), Anadarko Petroleum (APC), Target (TGT), American Tower (AMT), and Freeport McMoran (FCX).

Readers will take note that all three major tower stocks are included as we’ve been harping on this for some time now. We’ve highlighted how hedgies had increased exposure to AMT, CCI, and SBAC as demand for wireless data service continues to grow. Overall, an insightful list and now you can easily follow the smart money with these consensus plays. For more research from Goldman Sachs, head to our other post which covers an extensive look at the top hedge fund holdings. And don’t forget that you can also get specific hedgie portfolio updates by heading to our tracking series where we specifically focus on bottom-up stockpickers.

Source: Marketfolly.com, March 5, 2010

The MSCI World Index notched up one-year gains of 70.5%, whereas the MSCI Emerging Markets Index was on fire with +103.2%. As far as the US indices are concerned, the Dow Jones Industrial Index (+61.4%) and the S&P 500 Index (+68.6%) underperformed mature markets, but the Nasdaq Composite Index (+84.5%) and the Russell 2000 Index (+95.1%) gave investors reason to smile.

BRIC countries such as Russia (+117.5%) and India (+109.0%) were in the lead on the performance rankings, but China (+44.9%) - the first country to commence a bull market advance in November 2008 - has slipped badly over the past few months.

Notwithstanding the huge rally since the March lows, only the Chile Stock Market General Index has been able to reclaim its 2007 pre-crisis peak and is now trading 8.4% higher. Mexico and Israel could be the next countries to eliminate the bear market losses. The Dow Jones Industrial index and the S&P 500 Index are still 25.4% and 27.1% respectively down on their October 2007 bull market peaks.

Click here or on the table below for a larger image.

Considering stock market performance against the background of economic growth, Asha Bangalore (Northern Trust) said: “Real GDP growth across the world is yet to match the noticeable gains seen in equity prices during the past year. The US economy largely held steady on a fourth-to-fourth-quarter basis in 2009.  Growth in the European Union fell 2.3% in the final three months of 2009 on a year-to-year basis. Real GDP advanced at a rapid clip in China (+10.7%), while India (+6.1%) and Australia (+2.1%) also recorded gains in real GDP in 2009. Although equity prices advanced in Argentina and Brazil in the last 12 months, real GDP fell 0.3% in Argentina and 1.5% in Brazil during in the third quarter of 2009 compared with the year ago level.

“Typically, equity prices are leading indicators of economic growth. Based on this consideration, are the sharp upward movements of equity prices over the past year sending a message of robust economic growth in the quarters ahead? The answer depends on the economy in question. With regards to the US economy, credit market headwinds and weak labor market conditions cast a shadow on the possibility of a strong recovery.”

Be cautious out there!

What are the pros and cons of investing directly in emerging market equities and bonds as opposed to companies based in developed markets with emerging markets operations?

By directly investing in emerging market equities you obtain full exposure to emerging markets while with investing in developed market companies with emerging market operations, you don’t get that full exposure and you also get slow moving markets with lower growth potential mixed in. One advantage of some developed market companies is that they could have a global coverage thus giving the investor a more diversified coverage. Of course, there are also some emerging market companies that have that kind of coverage as well.

How probable is further tightening of monetary policy in China within the near future - and what would that step look like?

It is highly probable that there will be tightening of monetary policy in specific areas and not as a general policy. The Chinese have made it clear that they want to ensure that economic growth continues at a high pace and that means that they would want to keep liquidity and money supply at a high level with the proviso that if inflation increases then they would restrict lending and money supply to some degree. They will try their best to avoid taking any measures which would jeopardize the country’s growth and therefore any tightening will be specific and targeted to inflation in certain areas.

What is your outlook for Africa?

We believe that the outlook for Africa is very good for three main reasons: (1) abundant natural resources, (2) a young population, and (3) heightened interest from rich emerging market countries. Africa has some of the world’s greatest deposits of natural resources, and only a fraction of those resources have been tapped. In addition, it has a young and growing population who could improve their education and skills to become a major asset to expanded manufacturing and mining enterprises. These factors have stimulated the interest of countries like China and India, who require more natural resources for their growing economies, as well as countries like Russia and Brazil, who look to expand their enterprises into global operations. Countries around the world are showing growing interest in manufacturing within Africa for the African market, particularly emerging countries that have the capabilities to operate in challenging political and economic environments.

Africa is an interesting region. In South Africa, efforts by local companies to expand their international market share, as well as the presence of capable management teams, can assure investors of finding bargains here. Higher global demand for commodities, a recovery in domestic demand and the preparations for and hosting of the 2010 World Cup should further support economic growth this year.

In addition to South Africa, we have been taking a look at the lesser-known frontier markets in Africa, some of which are very large countries, such as Nigeria. Regional markets such as Egypt and Kenya are also beginning to look attractive, and we are seeing the growth of new markets in this region. Libya, for example, already has a stock market and is encouraging the privatization of state-owned enterprises - a development being repeated in a number of African countries.

Some commentators are saying that frontier markets represent some of the best contrarian investments at the moment - do you agree with this and why?

Yes, that is certainly the case. For example, many people would never invest in Nigeria or even might not even visit the country for fear of confronting violence but actually there are excellent investment opportunities. So there are opportunities simply because those opportunities are not attractive to other investors since they are not familiar with the possibilities.

Qatar, Kazakhstan and Nigeria are among those countries being cited as ones to watch this year - why do you think this is?

Those are some countries that are citied as being watched but we should add a number of others such as Vietnam, Romania and a number of others. Qatar, Kazakhstan and Nigeria are all being watched because of their natural resources: Qatar - gas, Kazakhstan - oil, and Nigeria - oil.

Are there any particular sectors within frontier markets that you think will perform better than others?

We employ a bottom-up, value oriented, long-term approach. As we look for investments, we focus on specific companies rather than sectors or regions. However, during our analysis, we also consider the company’s position in its sector, the economic framework and the political environment.

Our focus continues to be on two key themes: consumers and commodities. With rising per capita income and strong demand for consumer goods, the earnings growth outlook for these stocks is positive. Commodity stocks also look good because we believe commodity prices will trend upwards, partly because of weakness in the U.S. dollar, and also because we expect the global demand for commodities to outgrow supply over the long term.

Source: Mark Mobius, Franklin Templeton Investments - Emerging Markets Overview, March 10, 2010.

Source: The Economist, May 19, 2010 (hat tip: Atlantic Asset Management).