Boys and Girls;

The market is up this morning and our main portfolio got out of AAPL with in trading minutes of the 10 billion dollar stock buy back and the 24.50 a share dividend announcement.  Timing is everything.  BUT I never begrudge a profit.

The main purpose of the this quick update is to warn about Gold.  We have cleared GLD and GLD options out of every portfolio we manage.

Economic news is killing the price of US treasuries and the yield is up at the various auctions.  That is a clear sign that safe monies are looking for place to lite.  Gold is considered safe money.  All morning there are some saying 1500 or lower (as low as 1325) for gold over the next few weeks.  This support some of the technical support number we gave you last week.  If you keep gold in other forms, just be aware that we all made a nice run on the shiny stuff.  Keep in mind, bears make money, bulls make money, PIGS get slaughtered.  You can always get back on that horse.  I just did with Apple getting back in at $597.85.

Brian

Since sending that this morning about 9:30, I have received a couple of e-mails asking who said 1500 or lower. Here is a short list;UBS, Credit Suisse, Goldman, Morningstar, Bloomberg, The Australian Business press-w the WSJ, The WSJ, Forbes (They say below 1550), and that is just a few. I do not make this stuff up. It is logical if you look at the weakness for US treasuries.

Again the 10 Year Treasury is considered the "safest money". Rightly or wrongly it is the benchmark used to measure the return of ultra conservative investing. It has risen from an October low of 1.67% to the current high of 2.37%.

The reason the yield is going up is because people are feeling more secure about putting their monies to work some where else. Their confidence is up and Uncle Ben Bernanke has just said, no more quantitative easing.

As a result, the value at which those 25,000 dollar notes are being sold is at a discount, in other words below 25,000 dollars which moves the yield up.

Gold too is considered safe conservative money and all those folk who have been buying it and speculating are seeing what is going on with the Treasuries and saying "Cha Ching", let's take some profit.

If we see a week of positive economic data to support the already slightly positive trend in employment you could see the 10 year yield hit 2.50% and another 10-15% down in Gold.

Turn On The Gas or Water

Now here is a bit of a contrarian play. When people have been defensive in their investing, yes you see them take on money market and T-Bill assets and gold and stuff. The also take on utilities seeking a safe investment and expecting a decent dividend yield. Since the Treasury yield has been nudging up, we have been watching the utility sector slide down. As the prices slide down (just like the selling price of the Treasury Bill) the yield goes up.

We checked out 6 Utilities that are seeing some institutional buying and have yields close to double that of the 10 year Treasury. Here they are:

EOC Empresa Nacional de Electricidad S.A., together with its subsidiaries, engages in the generation, transmission, production, and distribution of electricity in Argentina, Colombia, and Peru.

They have had a nice run YTD 24.4%. They have a lot of debt, but the big boys have been buying this since late February. I know this sounds weird, but I'd like to see the chart makes its way back to 58 and then down to this 54 level before buying it. It is 6% off of a possible buy point which means I only have a point or two to the down side and I will be out.

ENIEnersis S.A., an electric utility company, engages in the generation, transmission, and distribution of electricity in Chile, Argentina, Brazil, Colombia, and Peru.

The number of fund picking up this utility is back to it high of last March. It's yield is weak and while it has some safety built into it as most of the target prices are 35% up from this point, It is about 13% below the last recognizable buying point. Since I am looking for yield, got to turn this one back.

HNP Huaneng Power International Inc., an independent power producer, engages in the generation and sale of electric power to the regional or provincial grid companies in the People's Republic of China.

This one looks like a dividend trap. The dividend is really sexy over 5.1% But look at the payout ratio. That is an indicator of how hard the company is working to pay that dividend. The PO ratio is 110%. We get worried with anything over 50%. Also look at the Return on Equity at 5.2% not pretty at all. We will pass.

TEG Integrys Energy Group, Inc., through its subsidiaries, operates as a regulated electric and natural gas utility company in the United States and Canada. It provides natural gas utility services in Chicago, Wisconsin, Michigan, and Minnesota.

We are liking this one with a yield of 5.2% and decent (far from perfect fundamentals. With a recent buy point of $55.30, This could be a nice point to get i. Unfortunately there are no playable options to squeeze a few more points out of this stock. It is on the watch list.

SRE Sempra Energy operates as an energy services holding company worldwide.

While the 4.1 yield looks interesting, the nuclear problems at San Onofre have me concerned. I don't want a stock that splits and that has atoms that split. I'll pass.

STR

Questar Corporation operates as an integrated natural gas holding company headquartered in Salt Lake City, Utah.

OK I added this one because I write a check to them every month in Utah and thought I could get some of it back. I am not impressed even though we made a nice profit on them in 09.

After all of that, we have one possible, TEG. We will keep you informed, but you should put this down in your Salve Lucrum book of lessons learned. Sometimes the best investment is the one you did not make.

Have a great night.

Salve Lucrum