Dow Jones Industrial Average: up 11%
S&P 500: up 13%
NASDAQ: up 16%
Oil: down 1%
Gold: up 29%
Silver: up 89%

What should you buy in 2011? Based upon the performance in 2010, Silver is the clear winner.

There are many ways to invest in Silver:

1. Silver coins and bullion. Open an account at Bullion Vault to have them buy and store silver bullion for you.
2. Silver ETF (NYSE ticker symbol: SLV) claims to hold Silver and tracks the price of bullion
3. Central Fund of Canada is audited to contain about 45% of its assets in silver (NYSE ticker symbol: CEF). The rest is in gold bullion.
4. Silver mining stocks (NYSE ticker symbols: HL, SVM, CDE) which provide good leverage to the price of silver

We see a similar pattern unfolding for silver which could take spot prices all the way down to $22-23/oz. See the chart below for an idea of where silver MAY go in the next 1-2 months.

As a new investor, be careful when someone says “never” or “always” in regards to investments.

While real estate never went down before 2005, the fact that so many people believed it was a “can’t miss” investment made it a losing investment. When too many people act with greed in their eyes and hearts, bad things happen.

Look at the chart below:

As you can see, real estate has gone down since 2006. And Gold has far outperformed real estate or the stock market since 2000.

To learn how invest properly and not get hooked into investing manias, take the Investing 101 eCourse. It has an entire chapter devoted to investing manias, how to spot them and how to avoid them before losing your shirt.

Some people say that a 15% overall decline in a stock market index like the Dow 30 or the S&P 500 or the NASDAQ constitutes a Bear Market.

Others say that a decline needs to reach 20% to be a Bear market. If that’s the case, then the Russell 2000 which is an average of smaller sized stocks, just entered Bear market territory.

On July 6th, the index slipped 20.5% below it’s recent high from April. That is a bear market by almost anyone’s definition.

Why is this important if only small stocks are falling hard? It is important because the small stocks tend to lead the market and the medium to big stocks soon follow.

You can follow the Russell 2000 index by typing ^RUT into most online financial sites. However, you can’t buy this ticker symbol, it’s just an index. If you want to invest in the Russell 2000, you can buy the iShares Exchange Traded Fund which mimics the index. It’s ticker symbol is IWM.

Below is a chart for IWM:

For more information about how to take advantage and profit from Bear markets, read our Investing 101 eBook.

Take a look at the below chart of gold. As you can see, prices are behaving in an orderly, upwards trend.

The rising trend line acts as support and the top line is resistance. Project these trend lines out about 30 days and they will converge. What happens then or before then?

In my opinion, prices will break out higher to $1300 at least. What to do if you’re sitting in cash? you have two options: 1) Don’t take a chance and buy now at $1243, 2) wait until prices again test this lower support line around $1220, maybe $1210 if you’re lucky.

If you want to learn more about Trend Lines and the science of Technical Analysis, then download our Investing 101 eBook which contains an entire chapter on Technical Analysis filled with more examples and charts like the one above.

There are three primary differences between savings and investing:

• Ownership: When you purchase stocks you are becoming an owner in the company in which you invest. This does not occur with a savings account.
• Potential for gain: A savings account typically pays a stated return on your dollars. Owning stock comes with a possibility of company growth, higher profits, and, of course, higher value (gain) versus the stock purchase price.
• Real risk potential: Savings accounts carry minimal risk. While your favorite bank is not likely to double your interest rate, even if it fails, your savings dollars are protected by federal insurance. Whether you are investing in penny stock or blue chips, you always have risk of partial or total loss of your money.

The other stock market basics include understanding that the NYSE, American Exchange, NASDAQ, and all other global markets work like your neighborhood flea market on a grand scale. People look at stock market investing odds and decide to buy if they think a stock price will increase and sell if they believe a market value will decrease. All of the varied technical data available only reinforces these beliefs.

The Gold to Silver ratio represents the price of silver relative to the price of gold at any given time. The ratio is simply the price of gold divided by the price of silver represented in the form of a ratio. If the price of gold is $1,000/oz. and the price of silver is $20/oz. then the gold to silver ratio would be 50:1, or simply “50″ (1,000 divided by 20 is 50).

Natural Supply

One factor determining the gold to silver ratio is the physical ratio of these naturally occurring elements in the earth’s crust. According to the U.S. Geological Survey, on average silver occurs at 0.07 parts per million, and gold at 0.004 parts per million in the Earth’s crust. Thus, the naturally occurring gold to silver ratio is 17.5:1.

Historical Ratio

Historically, the price of silver drops faster than gold in a precious metals bear market and rises faster than gold in a precious metals bull market. The ratio is therefore applicable in determining market direction.

In the last great precious metals bull market, 1960 – 1980, silver outperformed gold about 2.3 times (230%). Gold rose from $35 to $850 or a gain of 2,429%. Silver rose from 90 cents to $50, or a gain of 5,555%, and 229% better than gold.

Current Ratio

The 200 year average for the ratio is about 30:1. As of May, 2010, the gold to silver ratio sits at about 67 where gold is $1,190/oz and silver is $17.80/oz. If the ratio just reverts to its historic average of 30, silver will outperform gold very nicely.

Trading Strategies

One way to trade the gold to silver ratio is to buy silver through the Silver ETF (SLV) when the ratio is high, say over 75, and to buy gold through the Gold ETF (GLD) when the ratio is low, say under 25.

For more information on the Gold to Silver ratio:

1. Gold Eagle
2. Bullion Vault
3. Silver Seek

You may have heard a talking head say on TV that a rally in a stock, currency or commodity is just a “dead cat bounce” and wondered what they were talking about.

Today’s rally in global stock markets (Dow up 400 points as of this writing) is a perfect example of a dead-cat bounce. While the stock markets of the world are falling due to the European debt crisis, this is a relief rally which fools some investors into thinking that the 1,000 point fall in the Dow last Thursday was just an abberation, a black swan or some “fat-finger” mistake.

The expression comes from the idea that even a dead cat will bounce a little bit when thrown from a building. That’s a tough image to conjure if you’re a cat lover, but it explains the expression well. The underlying financial instrument (stock, bond, etc.) being bought and sold in the market may be going up, but the expression implies that it won’t last for long and will resume a downward path very soon.

Please note that although many investors will lose money from dead-cat bounces, no cats were harmed in the writing of this article or in making the photo above.

The Euro is about to die. The Yen has collapsed and the U.S. Dollar is a terminal patient on life support, although it has rallied recently. But soon, all national currencies will fail. There is just too much debt in the world with no one to buy it. In other words, the entire WORLD is BANKRUPT!

When that realization becomes mainstream, people will look to preserve whatever wealth they have by buying gold. Gold has been a store of wealth for 5,000 years and will continue to be so.

There are many ways to invest in gold:

1. Buy1 oz.  gold coins and store them in a bank deposit box or in a safe at home. Buy only Canadian Maples, U.S. Eagles or South African Kuggerands. Stay away from the “collector” coins since you will pay for something else besides gold – some person’s estimation of a collectible value. I store gold maples in my bank’s safety deposit box.
2. Buy gold through Bullion Vault and have them store it for you in a safe vault in one of three locations: New York, London or Zurich. Your physical gold is audited every quarter and is insured by Lloyd’s of London. You wire them Dollars, Euros or Pounds and they buy the gold for you and store it. I hold gold in Zurich through Bullion Vault and highly recommend them as a safe, easy way to own gold.
3. Buy shares of gold mining companies. This is the most risky way to play the rising price of gold but also offers the greatest opportunity for profit. The biggest gold miners in the world are Newmont Mining (NEM), Barrick Gold (ABX) and Goldcorp (GG). I own ABX and GG. Smaller miners that I recommend include Eldorado Gold (EGO), Hecla Mining (HL) and IAMGold (IAG) which I also own.

Stock Quote for Ford (F)

Reading the Wall Street Journal and viewing market quotes can be a huge challenge for the new investor. Nevertheless, like most puzzles or new skills, once you understand the components, your goal to learn to read stock market quotes will become easier. Ready?

The New York, American, and NASDAQ exchanges use the following format. Ten columns cover each stock. Column number definitions include:

1. 52-week high and low price range. Also includes column 2.
2. See above.
3. Company name and stock type.
4. Stock or “ticker” symbol.
5. Annual dividend amount, if any.
6. Percent yield (annual dividend return for each share divided by current market price).
7. Price-Earnings ratio (PE), which helps you analyze a stock’s relative value.
8. Daily trade volume for prior day’s activities (expressed in “hundreds”).
9. Hi/Lo, which displays the high and low prices of shares traded today.
10. Closing price and net change for the day.

NASDAQ also uses an abbreviated (four column) quote format for small cap stocks. These quotes include company name with dividend, volume traded, final price of the day, and amount of change from the prior day’s close.

Good beginner stock market training, like the Investing 101 eCourse, will give you comfort with understanding stock symbols and help you learn to read stock market quotes. Playing a stock market game in simulation form also gives you some experience in the real world without the money risk.