abx

Late in the evening of November 11, The Daily Telegraph reported that Barrick Gold (ABX) has shut its hedge book because the world gold supply is running out. Barrick Gold's president, Aaron Regent, told the periodical that global output has been shrinking at a pace for nearly 1 million ounces a year since the start of the decade.

At RBC's annual gold conference in London, Regent noted that "There is a strong case to be made that we are already at 'peak gold.'" Regent believes that production peaked around 2000 and has dropped ever since, he adds that Barrick Gold believes the decline will continue because "It is increasingly difficult to find ore."

When gold miners and gun-toters lag the broader economy, it's usually a good sign that conditions are on the mend. Both sectors outperform when times were tough, but this year, their growth has slowed relative to the market has a whole.

The S&P 500 index has gained 57% since March 9, 2009, according to a USA Today report, while Barrick Gold (NYSE: ABX) and Newmont Mining (NYSE: NEM) are up 36% and 21%, respectively, for the same period. Smith & Wesson (NASDAQ: SWHC) is up 30%. Again, these are definitely respectable results, but they aren't keeping pace with the index.

Barrick Gold Corp. (NYSE: ABX) announced that it would begin eliminating its hedges against a collapse in gold prices.

In so doing, the company is raising some $3 billion with the sale of stock that will dilute current shareholders.

While the gold hedges may have acted as a brake on revenues and profits in a rising gold price environment, the strategy was prudent.

Gold at $1,000. Better buy now or you will miss the greatest invention since tulips in the 1800s.

Or so they say. I say, what a bunch of baloney. Why on earth would I want to put hard-earned cash on something that may look pretty but has no real tangible value?

That's right, gold has no tangible value. Well, that's not entirely true since there is a vast cult of worshipers out there that say gold is the only thing with value. As a result of their die-hard belief, gold actually does have value, as we now see with AU trading for $1,000 per ounce.

Today was another up and away day, although after the 2:00 PM Beige Book and after a Treasury auction, it felt like today was just going to be a difficult one to call.

This is a light week on data and a light day on earnings and that makes it a hard tell each day to have serious conviction for bulls and bears alike. The DJIA went above 9,500 and marks the 4th day in a row of a rally.

Here are today's unofficial closing bell levels:

Dow 9,538.23 +40.89 (0.43%)
S&P 500 1,032.47 +7.08 (0.69%)
Nasdaq 2,058.60 +20.83 (1.02%)

Top Analyst Upgrades
Top Analyst Downgrades
Top Day Trader Alert Stocks

Baxter (NYSE: BAX) is hosting an analyst day on September 16. BAX closed at $55.60. BAX September option implied volatility of 22 is near its 26-week average of 32 according to Track Data, suggesting decreasing price movement.

Chesapeake Energy (NYSE: CHK) closed at $23.09. Natural gas is recently up 1.32% to 2.844 according to Bloomberg. CHK September option implied volatility is at 45, October is at 47; below its 26-week average of 61, according to Track Data, suggesting decreasing price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

"In the 2000s, as we've alternated between deflationary and inflationary worries, gold has been the only major investment to rise every year," says Stephen Leeb.

In his The Complete Investor, he explains, "We think that many miners are exceptional bets today. And among our favorite gold investments is one that we hold in our small cap value model portfolio: NovaGold Resources (AMEX: NG)."

"The case for mining stocks is that the price of gold rises faster than miners' costs, allowing margins to increase.

Analyst upgrades:

• Keefe Bruyette upgraded BB&T (NYSE: BBT) to Market Perform from Underperform as it believes downside risk has been reduced following the company's capital raise. The firm raised its target price to $23 from $15.
  
• Janney Montgomery upgraded FEI Company (NASDAQ: FEIC) to Buy from Neutral on expectations margins will improve and various country stimulus packages will provide benefits in 2010. The firm has a $31 target on the stock.
  
• Citigroup upgraded Tyco Electronics (NYSE: TEL) to Buy from Hold as it believes automotive headwinds are priced in and the company's long-term fundamentals are intact. The firm raised its target price to $25 from $19.
• Barrick Gold (NYSE: ABX) was upgraded to Outperform from Sector Perform at RBC Capital.
  
• J.B. Hunt (NYSE: JBHT) was raised to Overweight from Equal Weight at Stephens.
  
• Roper Industries (NYSE: ROP) was upgraded at Oppenheimer to Outperform from Perform.

Analyst upgrades:

• Banc of America/Merrill upgraded Lincoln National (NYSE: LNC) to Buy from Underperform and raised its target to $17 from $10 citing expectations that the company will "qualify for and accept TARP funding."
  
• Credit Suisse upgraded AU Optronics (NYSE: AUO) to Outperform from Neutral as it believes inventory levels are low end demand is better than expected.
  
• JP Morgan upgraded Shaw Group (NYSE: SGR) to Overweight from Neutral. The firm views the recent pullback in shares as a buying opportunity given the company's attractive nuke position and expected ramp in government spending.
• Patterson-UTI Energy (NASDAQ: PTEN) was upgraded to Buy from Neutral at Goldman.
  
• Barrick Gold (NYSE: ABX) was raised to Overweight from Market Weight at Thomas Weisel.
  
• Stryker (NYSE: SYK) was lifted to Sector Perform from Underperform at RBC Capital.

I confess to being surprised by the extent of the current rally, even after many times warning that bear-market rallies tend to be sudden, violent affairs.

Nevertheless, the facts point to the dramatic advance of the past 10 days (the best seven-day rally since 1939) as still nothing more than a rebound following a sell-off that took prices to a level that had to be attacked by bargain hunters and patient investors alike.

Now, however, the easy part is behind them.

Analyst upgrades:

• Citigroup upgraded Blue Nile (NASDAQ: NILE) shares to Buy from Hold on valuation following the recent sell-off as they believe weakening fundamentals have been factored into estimates and that Blue Nile should benefit from the recent softening of diamond prices. The firm raised its target price to $30 from $20.
  
• Baird upgraded AmSurg (NASDAQ: AMSG) to Outperform from Neutral based on valuation, potential upside from in-line results, good visibility, and FCF yield.
  
• Oppenheimer upgraded DryShips (NASDAQ: DRYS) to Perform from Underperform on valuation following the recent weakness and believes the company is at least halfway through its $500M equity offering.
• UAL Corp (NASDAQ: UAUA) was raised to Buy from Neutral at Banc of America/Merrill.
  
• Mylan (NASDAQ: MYL) was upgraded to Overweight from Equal Weight at Barclays.
  
• Exxon Mobil (NYSE: XOM) was lifted at Deutsche Bank to Buy from Hold.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Abercrombie & Fitch Inc. (NYSE: ANF) beat Q4 earnings estimates handily, sending shares higher.
• Activision Blizzard Inc. (NASDAQ: ATVI) did well in the holiday period but offered weak guidance.
• Barclays (NYSE: BCS) one-time gains offset write-downs and said it expects to resume dividend payments.
• Boeing Co. (NYSE: BA) shares fell after it announced that it had understated its Q4 and fiscal 2008 loss.
• Coca-Cola Co. (NYSE: KO) topped Q4 earnings estimates due in part to volume gain internationally.
• Diageo (NYSE: DEO) earnings rose in the first half, but it cut its full-year forecast.
• GSI Commerce Inc. (NASDAQ: GSIC) "solid" Q4 results led to an analyst downgrade.

Caterpillar (NYSE: CAT) is recently at $31.88 in pre-open trading, below its close of $35.66. CAT says 2009 will be a very tough year. CAT reported Q4 sales and revenues rose 14% from 2007. CAT February option implied volatility of 76 is above its 26-week average of 55, according to Track Data, suggesting larger price movement.

Barclays (NYSE: BCS) is recently trading at $4.50 in pre-open trading, above its close of $3.07. BSC said it will avoid further capital increases as revenue grows. BCS overall option implied volatility of 80 is below its 26-week average of 92, according to Track Data, suggesting decreasing price movement.

Barrick Gold (NYSE: ABX) closed at $39.58. Gold is recently up 1.09% to $907.50 according to Bloomberg. ABX is scheduled to report Q4 EPS in late February. ABX March option implied volatility of 72 is near its 26-week average according to Track Data, suggesting non-directional price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

The mythical lore of gold dates to the dawn of man. Whether for jewels, religion or currency, gold's place in history is quite secure.

In the modern day, gold has become more about safe havens for fear mongers ready to declare the end of the world.

These folks will have you believe that the U.S. dollar will be worthless due to inflationary pressures arising out of a printing-press monetary policy. And that the collapse of U.S.-style capitalism necessitates a return to the one thing that we can count on to hold value no matter the circumstances.

Hogwash! Why not just make granite or bricks the de facto currency of choice. Ridiculous, right? But seriously, tell me the difference.

Of course, gold means so much more to the lunatics that believe the precious metal will solve all of their problems. What a joke. The only real utility for gold is aesthetic. The stuff looks nice in the form of baubles and chains. Beyond that, there is little true value.

You can imagine my surprise when I checked the Canadian markets and saw them totally unchanged. After several refreshes when the zeroes didn't budge, I even panicked. Then I saw the headline (how did I miss it before) that trading was halted on the Toronto Stock Exchange and TSX Venture Exchange due to a computer glitch. Not only that, but there's also no estimate when trading will resume.

The exchanges have actually failed to open at the regular time of 9:30 a.m. EST, and as one reporter put it "have been dead in the water since." If this is frustrating and stressful for me, I can't imagine what the mood is like on Bay Street; how traders and other market professionals must feel.

I'm not sure what could be done if there are big swings and news out of the U.S. While it's true the Canadian markets don't totally track their American counterparts, as they're heavily weighted in oil and commodities and react to news from those sectors often, they are still affected by what's going on at Canada's biggest trading partner to the south.

Still, it may not be the end of the world as the Canadian holidays also don't exactly follow the American ones and there are days when the TSE is closed while the American markets are open. Also, there are four alternative trading systems in Canada, two at least have reported to be functioning and operational. While volumes there were higher than usual for these system, they were hardly normal for the market as a whole. No doubt, though, these systems will get a boost following this fiasco.