It was a brutal six years for the mining industry. While some metals saw their prices rebound in 2017, others didn’t.

There is a formula for rising prices — demand must exceed supply. In some cases, like zinc, a lack of investment meant supply fell below demand. Copper, whose price rose 27%since early 2016, is another metal that will struggle to meet demand.

In 2018, a different metal’s price will begin its rise…

Platinum’s New Trend

Here’s a six-year price chart of platinum:

You can see the steady decline from 2011 to 2016. The price fell by more than half to January 2016. There was a brief rebound that year. Then the price collapsed to its lowest price in two years earlier this month.

The question is: Why do I think this trend will change in 2018?

The answer is simple … supply can’t keep up with demand. In 2017, the supply/demand number was almost even. According to the World Platinum Investment Council, 2017 will end with a small deficit, around 15,000 ounces.

However, that same group expects the gap to expand. In 2018, demand for platinum will rise 2% to 8 million ounces. Supply will fall by 1% to 7.75 million ounces. That means the deficit will be 250,000 ounces.

An Extreme Low for Platinum Prices

In the past, this kind of deficit was enough to draw platinum sellers out. However, the platinum price is sitting at an extreme low. Without a significant increase in price, there won’t be an incentive for sellers. That’s one reason I expect platinum prices to rise in 2018.

But there’s another reason … sentiment.

One of the reasons that copper prices rose so rapidly in 2017 was the idea that electric vehicles would spur demand. That’s right, the price of copper rose because of expected demand. On the opposite side of the coin, platinum prices fell because of a lack of expected demand.

Platinum’s main commercial use is in diesel catalytic converters. In the wake of the Volkswagen scandal, where the company admitted to faking diesel efficiency, the perception of diesel cars fell. And so did the perception of platinum.

In other words, investors didn’t think demand for platinum would come, so they didn’t buy platinum. And so, the price fell.

From a supply perspective, platinum is far worse off than either zinc or copper. Platinum isn’t widespread. Most of the existing mines are deep, old and running out of metal. There aren’t many new platinum mines on the horizon.

Add that to low prices (which spur demand) and a stronger European economy (that prefers diesel cars). That will change platinum’s fortunes in 2018. It wouldn’t surprise me to see platinum prices rise 25% next year.

Good investing,

Matt Badiali

Editor, Real Wealth Strategist

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Source: Banyan Hill

If you’re looking for the best place to invest in 2018, one of your best bets is to put on your investment banker’s hat and bet on “M&As” — mergers and acquisitions.

The biggest of 2017 — the proposed Disney-Twenty-First Century Fox tie-up for $52 billion — is just the beginning.

Tax reform is one piece of the puzzle. It promises to free up billions in corporate cash held in overseas accounts, and lower the corporate tax rate to 21%.

The attitude of American consumers is another component. Consumer spending hit a one-month record not seen since 2009, when the U.S. economy was just emerging from the recession and financial crisis.

2018: The Year of Mergers and Acquisitions

The change is evident in a recent Deloitte “M&A 2018” survey of 1,000 executives at large corporations and private equity firms.

• For one, a rising number of companies — two-thirds of those surveyed — say their cash reserves increased and “the primary intended use of that cash is for M&A deals.”

In recent years, companies indicated they were most likely to pursue organic investments — growing a business in-house — as the most likely use of their cash reserves.

• But as the report notes, “that’s no longer the case. Predominately, companies now say they are seeking M&A opportunities, with 40% citing that as their No. 1 intention.”

• In addition, nearly two-thirds of the companies “anticipate the average size of transactions in the next 12 months will exceed those in the past year.”

We’ve already seen a step-up in mergers and acquisitions as the year draws to a close. The analytics firm Dealogic pegged November as the second-largest month ever for M&A activity since it started keeping records in 1995.

A Low-Risk Play

What’s the best way to play this kind of trend?

You can bet on individual stocks. For instance, Bristol-Myers Squibb Co. (NYSE: BMY) and Biogen Inc. (Nasdaq: BIIB) are sometimes mentioned as potential buyout candidates in the pharma sector.

Among the hard-hit retail sector, Nordstrom Inc. (NYSE: JWN) — with its stock down 40% since 2015 — has been mentioned as a potential buyout target.

In the tech sector, Akamai Technologies Inc. (Nasdaq: AKAM) shares leapt 14% on Monday on rising prospects for a buyout.

But such investments are all-or-nothing bets. A better way is to invest through an exchange-traded fund (ETF), such as the IQ Merger Arbitrage ETF (NYSE: MNA). It’s up 5% this year, and up 24% in the last five years.

(Source: TradingView.com)

The ETF, developed by New York Life Investment Management LLC and managed by IndexIQ Advisors LLC, invests across a range of publicly announced mergers and acquisitions candidates. It’s a good, low-risk way to play the coming explosion of deals in 2018.

Kind regards,

Jeff L. Yastine

Editor, Total Wealth Insider

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Source: Banyan Hill

Editor’s Note: Welcome to our week-long special series! Our editors for both the Sovereign Investor Daily and Winning Investor Daily are looking ahead to 2018 and providing their insights into what they believe will be the big movers and shakers for the new year. They are also looking at critical steps you can take to preserve and grow your wealth. Happy reading! — Jocelynn Smith, Senior Managing Editor

Most people know the 1967 World War II film The Dirty Dozen … at least by name. It’s become shorthand for any set of 12 things that can be advantageous to do, even if they seem a bit disreputable.

The IRS, for example, publishes a Dirty Dozen list of tax scams every year. It includes both scams perpetrated against taxpayers, and those perpetrated by taxpayers against the IRS.

For my final Sovereign Investor Daily article of 2017, here’s my Dirty Dozen list of tax steps you can undertake before December 31 to wring the maximum amount away from Uncle Sam before the law changes in 2018.

Every one of them is a direct consequence of the Republican Party’s looming federal income tax changes. And every one of them is perfectly legal.

Let’s start with a review of the structure of the new federal income tax system — good and bad.

On the plus side, as of Friday last week, the GOP tax plan included lower marginal tax rates for all income brackets, at least until 2027.

All else being equal, that will reduce most people’s taxes at first:

In addition, owners of pass-through businesses such as limited liability companies (LLCs), partnerships and S corporations will now be able to deduct 20% of their profits from their personal income taxes, up from 17% at present.

For example, if your LLC earns $100,000 in profits, $20,000 of that will be tax-free. The remaining $80,000, plus whatever you draw in salary for yourself, will be taxed at the rates above.

The increase in the standard deduction will result in far fewer households itemizing their deductions. Currently about 30% of households do; under the GOP plan only 5% would do so, since the standard deduction would be higher. Many lower-income households will benefit from the higher standard deduction.

Make Hay While the Sun Shines

That’s the good stuff. But for many of us, the news isn’t all good.

Above all, the combination of the elimination of the personal exemption, a cap of $10,000 on deductions for state, local and property (SALT) taxes, and a limit on mortgage interest deductions will mean that many households — especially in high-tax states — will end up paying more tax.

Nevertheless, this creates simple tax moves that you can undertake between now and the end of the year. They are all based on the principle that if you maximize your itemized deductibles now, lowering your 2017 federal income tax bill, you’ll come out ahead … because you won’t be able to deduct them in 2018.

If you anticipate that your itemized deductions in 2018 will be less than $24,000, you won’t benefit from itemizing.

But if you prepay some of 2018’s deductible expenses now — adding them to your 2017 itemized deductions and reducing your federal income taxes this year — you’ll be able to benefit from them one last time. For example:

1. Give more to charity before December 31. (Note that if you’re thinking about donating stocks to charity, and you own different lots of the same company’s stock, donate the most valuable lots this year. Under current law, you can donate the shares that have appreciated the most to get the largest charitable deduction. Under the new law, you will have to sell the shares first in, first out.

2.  Prepay your 2018 property taxes in full. (Under the final version of the tax bill, you are unfortunately not allowed to prepay 2018 state and local income taxes, but property taxes are fair game.)

3. Prepay next year’s mortgage interest.

4. Prepay any outstanding student loans.

5. Prepay medical expenses that you know you will incur next year, such as a scheduled procedure.

6. If you live in a state that charges sales tax on automobile purchases up front, buy a car before the end of 2017 so you can add that tax to your 2017 itemized deductions.

The same logic also works in reverse. For example:

7. Since you’ll face a $10,000 cap on SALT tax deductions next year, if you live in a high-tax state like New York or California, try to move some future earnings into 2017, boosting your SALT taxes — and thus your itemized deduction — for 2017.

8. Similarly, if you expect to get an annual bonus early next year, ask for it to be prepaid in December.

9. If you’re a consultant or on retainer, see if you can get clients to prepay some of next year’s invoices now to boost your 2017 earnings.

There are also some more arcane strategies you can adopt:

10. If you’re planning to undertake a 1031 swap in 2018 for something other than real estate — say, business equipment or artwork — do it now. From 2018, 1031 swaps will be limited to real estate only.

11. If you’re thinking of converting a traditional IRA into a Roth IRA, run the numbers to see if you will be better off doing it before the end of 2017 to increase your taxable income, which you can offset with some of the itemized deduction strategies above. (Bear in mind that you can do a Roth conversion even if your income exceeds the cap for Roth contributions.)

12. For the pièce de résistance, consider converting yourself into a limited liability company. Depending on your income level, you could double your tax savings by quitting your job today and returning tomorrow as a paid consultant.

Remember, these are all perfectly legal.

But I’d go ahead and look for an experienced tax attorney anyway … after all, with the train wreck that’s headed our way because of this hasty change to the federal income tax law, we’re all gonna need all the help we can get in 2018.

Kind regards,

Ted Bauman

Editor, The Bauman Letter

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Source: Banyan Hill 

Despite the rapid approach of the holiday season – with plenty of investors going on vacation – there has still been plenty of financial news to contemplate. Of course, the biggest news item in the world of investments has been the rapid rise of the price of bitcoin, along with the launch of bitcoin futures.

Actually, “rapid rise” is putting it mildly, as the price has basically gone straight up. The craziness and popularity of cryptocurrencies is probably why we’ve heard almost nothing about gold. It seems like a long time since the masses were clamoring for every ounce of gold they could get their hands on.

These days, gold is barely an afterthought. Who needs precious metals when you can buy bitcoin… or so it seems.

Of course, many investors know better than to fully write off gold. Interest in the yellow metal has always been cyclical There’s no doubt gold will rise again, probably about the time this whole cryptocurrency bubble bursts and investors start panicking.

At least one big options trader is very bullish on gold as early as next month. He or she executed a sizeable trade in January options of SPDR Gold Shares ETF (NYSE: GLD) called a risk reversal. This strategy uses premium from short puts to help finance a long call positon.

Once again, it’s extremely bullish and a bit risky depending on your perspective. The risk reversal can lose the call premium on a down move and even more on the short puts if the price of GLD drops below the short put strike.

On the other hand, if you believe there is a floor to how far gold can fall by January, this type of strategy can be a good, cheap way to bet on gold’s upside.

In this case, the trader bought the January 19^th 124 calls and sold the 115 puts at the same time, with GLD around $119 per share. The trade was done for a $0.07 credit, 2,100 times. So, if GLD stays around the current level, the trade makes a small amount of money. Below $115, the trader loses $210,000 per $1. But, above $125, the position makes $210,000 per $1 move higher.

The best part is the risk reversal collects a small amount between $115 and $124, which is a pretty wide range. Basically, it eliminates the negative effects of time decay while still allowing full participation on the upside.

Moreover, gold likely does have a floor as GLD hasn’t been below $115 in almost a year. Plus, with the cryptocurrency mania and other political events, investors aren’t going to stray too far from gold. Gold may be ignored right now, but it isn’t forgotten.

If you’re bullish on gold, you can skip the risk reversal since you likely won’t be trading 2,100 contracts. Instead, buying the calls straight up isn’t a bad idea with how cheap they are right now. The January 120 calls are only trading for $1.00. Getting to $121 (the breakeven point) seems like a very reasonably possibility with a month to go to expiration.

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