Short Term Coverage

Temporary health insurance is also known as short term health insurance in some circles. As the name suggests, this form of insurance is put in place for a relatively short period of time. Most policies will cover you from between 30 days and six months depending on the specific terms offered. In some cases, the term can be extended out to a full 12 months, but this is really not the purpose of this type of policy.

Why Buy Short Term Coverage?

Why would anyone want such a temporary form of health insurance? Normally you wouldn’t unless it’s only needed for a short period of time. For example, a person hired for a new job typically is not given health insurance immediately. They usually have to wait between 30 and 90 days before they can join the group policy held by the business. A temporary health insurance policy can fill this gap so that if anything happens in the interim, you are covered.

How to Get Short Term Health Insurance

Getting temporary health insurance is actually fairly easy. Since the insurance company will be covering you for such a short period of time, it is much more lenient in who it will issue policies to. You can simply access quotes online by doing searches for “short term health insurance” or by speaking with a health insurance salesperson in your area.

The application is actually very simple. You are going to list who you wished to be covered by the policy as well as their basic information. This includes their name, address, date of birth, place of work, phone number, height and weight. You will then be asked specific questions about their health including past treatments, diagnosis, surgeries and ongoing medications being taken. The terms of the policy that you are seeking will then be detailed in relation to deductible amounts and premiums. At this point, the policy is usually submitted and approved, rejected or further clarity one particular issues is sought by the insurance company. There is no need for a physical in the vast majority of cases.

The biggest issue that arises with these policies is pre-existing health conditions you might have when applying. The language of every temporary health insurance policy is different, but in general anything you have been treated for in the previous three years will be excluded from coverage. If you have a serious, ongoing medical condition, you may be better off seeking either COBRA coverage from your previous job or looking into more permanent private insurance.

When applying, it is vital that you pay close attention to the deductible terms of the policy. Most temporary health insurance has a stepped deductible plan. You will be responsible for 100 percent of the deductible up to a certain amount, then 50 percent of the costs up to a second level after which the insurance pay everything. For example, you might be required to pay all of the first $500 in medical costs incurred and then 50 percent of the next $3,500. Only after you incurred $4,000 in total fees would the insurer pay 100 percent of your ongoing medical costs. It is vital that you understand the terms of your policy so that you don’t end up buying something that doesn’t satisfy your needs.

If you are someone who currently has a Health Savings Account, you should consult the HSA Rules prior to making any changes in your health insurance coverage. In order to participate in HSAs you need to be on a high deductible health plan so it’s important to make sure you maintain the correct policy.

Temporary health insurance is designed to fill gaps in your coverage. If you need a policy to tie you over for a few months, the low cost and ease of approval make these policies a good choice.

According to Ramond James analyst Pavel Molchanov, “We think there will be a disconnect in the price of U.S. (West Texas Intermediate) crude oil prices and world oil prices (Brent) similar to the current situation in Natural Gas”. One company mentioned in Pavel’s segment on CNBC was Chevron (CVX) but this will also give many industries in the United States a competitive advantage over the coming years which could also revitalize the U.S. industrial sector.

This Citi report is similar to a report I found on Motley Fool that was published in late March. Citi analysts had a similar take on the potential for Canadian Oil Sands, the Bakken Oil Field as well as a revitalization of drilling in the Gulf Of Mexico. Today we import 50% of our daily crude oil consumption and moth reports indicate that this could drop to 25% by the end of 2015 and to 0 by the end of the decade.

As far as oil and gas companies that may benefit according to the Motley Fool article, there are companies such as:

EOG Resources Inc. (EOG)
Enterprise Products Partners LP (EPD)
Helmerich & Payne Inc. (HP)
Valero Energy Corp. (VLO)
MarkWest Energy Partners LP. (MWE)
Sunoco Inc. (SUN)
Sunoco Logistics Partners LP (SXL)
Calpine Corp. (CPN)
KBR Inc. (KBR)
LyondellBasell Industries NV (LYB)
Roper Industries Inc. (ROP)

Personally I also like to track a group of relatively small oil and gas related companies that I consider to be Bakken Oil Companies because of their concentration in that area. Since the Bakken contains a high concentration of high quality crude in addition to natural gas it has been a tremendously profitable play the past couple years and shows no sign of slowing down.

T Boone Pickens has been one of the driving forces behind the idea of converting the long haul trucking industry from diesel to compressed natural gas. This would take a lot of upward pressure out of the diesel market, which has been inflated for years by strong military and industrial demand.

Low natural gas prices and eliminating our need to import crude oil from the Middle East would be the two biggest steps the U.S. could take to get back on track to a more secure future. Since the government has been unwilling to provide any subsidies to encourage the conversion to Natural Gas let’s hope they at least don’t increase the regulatory burden. Right now, market forces are working and with no change in current policies the U.S. energy industry can lead us back to prosperity.

Gold stocks gave a nice buy signal yesterday so I was hoping that gold and silver futures would do the same thing today. So far however, it’s just a choppy day with little direction. Traders seem to be waiting to see if the dollar rally fizzles out here. That will be what saves the day for the precious metals!

Here is a perfect example why. Silver broke above it’s 200 day simple moving average about a week ago. The market then set back slightly and for a short term trade I bought the futures at $35.45. The hard part about this trade was that we were quite a bit above the 10 day moving average which always makes me nervous. However when the market blasted higher yesterday I thought maybe I was worrying for nothing. Here is what the chart looked like at the end of the day:

In my early years of trading I would’ve simply been excited about a winning trade but it kept bothering me that realistically my stop had remain way down at about $33.65 in order to be safe. A $3.50+ stop might be fine if you are in a silver etf but not when you are in the futures, that’s ridiculous. So following my gut alone I exited the trade at $37.19 for a nice one day gain. I decided I was going to wait for a test of the 10 day moving average and if I missed the boat it wouldn’t bother me.

Well, the following day my gut instinct was validated when Bernanke made a few minor comments during a congressional testimony and it triggered a massive sell off in gold and silver. Here is the hourly chart of silver following the comments.

As you can see anything above $33.50 would’ve been stopped out and I probably would’ve been stopped out at the low of the day. Now the question is whether or not it was the right move to get out based on my gut? It’s not what I normally do but over the years I’ve learned to always follow my gut.

What I normally do is move my stop up to break even after a big move like yesterday. Then each day I wait for the morning lows to be made and then I move the stop up. Alternatively, if the market the market is getting over heated I normally get out at the end of the day like I did yesterday. With all the leveraged ETFs in the market that need to reset their position at the end of the day the markets seem to close frequently on the high or low. So it’s the best time of the day to exit a trade.

By the way, silver wasn’t alone in the sell off today. Gold actually broke down worse (chartwise) than silver. I’m going to simply sit back and let the dust settle…. enjoying my cash position!

The moral of this story is that if you are trading futures on a short term basis like I do, it’s important to continuously protect gains by aggressively moving stops up or down. Metals tend to move fast and hard so when they do you want to “lock in” your gains and protect against big losses. The only ways to do this is to remain glued to your screen or use stops. For me…. stops are the only way to go!

It Apple 22 years to sell 55 million Macs
It took them 5 Years to sell 55 million iPods
It took them 3 Years to sell 55 million iPhones
It took less than 1 3/4 Years to sell 55 million iPads!

Isn’t it amazing that 10 years ago Apple was struggling to survive?  I remember buying Apple stock at $22 (which would be $11 split adjusted) because I really liked the first iPod.  Later that year I got stopped out of it when it dove below $20 during the tech meltdown.  At that time people were convinced that Apple was dead money (similar to Microsoft in recent years).  Sure people thought the iPod was a nice gadget but no one saw the incredible opportunity that was about to unfold before our eyes.

Looking at the overnight success of the iPad it’s easy to see in hindsight why this type of success is now possible.  Today consumer sentiment is exactly opposite of what it was 10 years ago and Apple is widely regarded as the most successful tech company in the world.  Consumers assume that each new product released will be more amazing than the last.

iTunes has created a steady stream of small, recurring sales for Apple and now with multiple devices (iPod, iPhone & iPad) all buying music and apps it seems that Apple is untouchable.  The only question I have going forward is how others will be able to compete?  The only two companies right now that are in a position to compete with Apple are Google and Amazon.  Each of those companies are also positioning themselves to have a steady stream of consumer payments (via Android and Kindle) and both are going full steam into cloud services.

All I can say is I sure wish I still had 200 shares of Apple stock, today it would be worth $102,000!  Not bad considering it only cost $2200 to buy a decade ago……  hmmm.

See the latest iPads:

Silver went parabolic in March blasting to it’s all time high at nearly $50. At the time I heard of several people putting up to 50% of their retirement accounts into the silver etf (SLV). I felt sorry for them when the market turned and plunged to $30 giving back almost all of the gain in a matter of days. The entire “giveback” was completed recently in the massive “Risk Off” liquidation sending silver futures back to their January low of $26.

Next it was gold’s turn to go parabolic (in July) blasting to new all time highs, making a double top and giving then retracing most of it in a few days. Gold is still up significantly on the year but I’m not so sure we are completely out of the woods yet.

The biggest loser so far in 2011 has been copper & especially copper stocks. In fact, if you look at the following chart of copper futures you can see that it’s down nearly 25% since the beginning of the year. Copper prices are the most economically sensitive of the 3 so it makes sense that it’s had a tough year. If we actually slide into another recession there is probably another 25% downside in copper.

If you look at the daily chart of the most popular copper etf (COPX) which is made up of copper stocks you can see the carnage is even more severe. COPX was down nearly 50% for the year before the reversal on Monday.

We are in an environment where the short term pressures are deflation and recession but everyone expects monetary lead inflation in the long term. This leads to a very volatile environment. This is why it’s best to limit metals to about 10% of your overall investment portfolio, otherwise volatility can keep you up at night!

The only one option for tracking the actual price of copper is the iPath Dow Jones-UBS Copper ETN (JJC)

Even though it’s an ETN instead of a Copper ETF it is the most direct way to track the price of copper. This ETN basically tracks copper prices using the High Grade Copper Futures contract which trades on the COMEX. Since it uses futures, it does carry the risk of contango causing roll-over losses but this has generally been a much smaller problem in the metals than in oil and natural gas. Since this fund is an ETN it is basically a senior debt issued by Barclay’s so it does contain counter party risk. This became an issue during the credit meltdown in 2008 but doesn’t pose much of a threat in normal times.

Its expense ratio is 0.75% (75 basis points) and the symbol is JJC.

First Trust ISE Global Copper Index ETF (CU)

This ETF was the first of 3 based on copper related mining stocks. It tracks the ISE Global Copper Index so it consists of copper mining companies as well as extractors of other metals so it is not a pure play.

They attempt to compensate for this by weighting each company according to the level of copper exposure they have and the percentage of revenues derived from copper. Geographically, it includes companies in the developed countries with 1/2 the exposure in Canada and the UK.

Its expense ratio is 0.70% (70 basis points) this copper ETF symbol is CU.

Global X Copper Miners ETF (COPX)

The COPX copper etf tracks the Solactive Global Copper Miners Index, which consists of stocks for companies that focus purely on copper mining. There are several companies that overlap with CU but COPX has more smaller mining companies. Geographical this ETF is more concentrated in Canada and the UK making up 2/3 of the exposure.

Its expense ratio is 0.65% (65 basis points) and the copper ETF symbol is COPX.

Emerging Global Shares Emerging Markets Metals & Mining ETF (EMT)

Once again, this is a stock-based ETF that invests in mining and extraction companies but includes companies that mine nickel, gold and platinum in addition to copper. Copper makes up about 50% of the metal produced by these companies. Another major difference is that this ETF focuses on miners that are in emerging markets.

A majority of the miners making up the Dow Jones Emerging Markets Metals & Mining Titans Index tracked by this ETF are located in China and Brazil, with a significant presence in South Africa as well.

Its expense ratio is 0.85% (85 basis points) and this copper ETF trading symbol is EMT.

This is a good place to start when looking to invest in copper, there will most likely be additional “physical” copper ETFs coming to market sometime, but it seems to be taking some time.

#1 – Silver Futures (Comex & Mini)

This was my first introduction to silver back in 1988 when silver had a nice rally following the 1988 drought. At the time I bought an option on Comex Silver Futures and went on a wild ride. Back then however a $3 or 4 move was pretty substantial and didn’t happen on a weekly basis like it does today. The two different futures contracts that are available are the 5000 ounce Comex Silver contract that trades on the CME and the 1000 ounce E-Mini contract that trades on NYSE/Liffe. Both are viable trading vehicles with plenty of liquidity.

#2 – Silver Coins

This was the second way I purchased silver in 1989, unfortunately I bought too high in the quality structure (MS 65-66) and paid way too much. If you are buying simply for the value of the actual silver I would buy junk silver (pre-1965 coins) that contain roughly 90% silver. The other way to go is to purchase silver bars that come in a variety of sizes. Check prices at reputable online dealers before you venture out to local dealers, that way you will know the spreads ahead of time. There are lots of great dealers but plenty of crooks as well.

#3 – Silver ETFs

The explosion in popularity of SLV – the largest silver etf as well as the Physical Silver ETF (SIVR) and the Sprott Physical Closed End Fund had a lot to do with the sharp run up in silver. In the weeks leading up to the top I had heard from several different sources of people who were putting large chunks of their retirement accounts into the SLV. These ETFs generally move penny for penny with the price of silver so they are very volatile compared to the stock market. If you crave even more volatility, ProShares offers the Double Silver ETF (AGQ) as well as a Double Short Silver ETF (ZSL). Be careful with these as they are designed to be trading tools and not held as long term investments.

#4 – Silver Mining Stocks

My favorite silver mining stock is Silver Wheaton – SLW because they are not actually a mining company. They buy silver from other mining companies that produce it as a by product of copper mining etc. They typically pay low prices ($4-5) on a long term contract, so they have tremendous leverage as the price of silver rises. Since they have no mining risks or production cost risk it tends to eliminate some of the company specific problems that can plague mining stocks. The other way I like to play silver mining stocks is by using SIL which is a silver mining etf that is made up of all the major global silver mining companies. Mining companies tend to be leveraged to the price of silver so they can outperform when prices are rising but tend to under perform when prices are falling.

As you can see there are many different ways to purchase silver and it basically comes down to why you want to own it. If you are planning for the end of the monetary system, then it’s best to own the actual physical silver. If you are buying it to profit from a price rise, I prefer the mini futures contract as you can hold 1000 ounces for just a few thousand dollars. Just don’t over extend yourself, that’s the quickest way to get in trouble in the silver market. It’s definitely not a place for the faint of heart!

#1 – Buy Physical Gold in the form of coins or bars.

The Krugerrand and the American Gold Eagle are the two most popular 1oz coins and both trade for about a 10% premium over the price of gold. They both have very liquid markets making them easy to buy and sell which is important.

There are also gold bars available which range from 1 gram to 400 Troy ounces. Just for reference the U.S. gold price is typically quoted in Troy Ounces and there are approximately 31.1 grams in a troy ounce. This makes it easier to compare prices for different sized gold bars.

The benefit of physical gold is that you have actual physical possession of your gold in case there is ever a complete collapse of the international monetary system. The down side is that you have to have a secure place to keep your gold so it isn’t stolen, commercial storage is an option but then you incur additional costs.

#2 – Buy Gold Futures

Gold Futures were the first way I ever bought gold back in 1987 and continue to be my preferred way to make large purchases of gold. The fact that I can hold 100 oz of gold for a few thousand dollars (currently $185,000 worth of gold for $5500) is very appealing and allows me to really capitalize on the trend without tying up all my capital. The down side is that same leverage, with gold moving $20-60 per day you have to be able to handle swings in your account of $2-6000 per day. There is also a mini-gold contract which I frequently trade that is 1/3 the size of the Comex Gold Contract. This contract has become very active in the past few years so is a very good way to go.

#3 – Gold ETFs or ETNs

The Gold ETF has become very popular over the past several years since GLD began trading in 2004. In fact, GLD has become the second largest ETF based on Assets Under Management behind only SPY which is the S&P 500 ETF which basically started the whole industry. The Gold ETFs are backed by physical gold which is stored on behalf of the trust holders. There has been some concern as to whether there is enough gold in storage to completely back up all of the outstanding ETF shares. Those who have an issue with these types of allegations should stick with physical gold (coins or bars). Since GLD is currently trading at roughly $186 per share (1/10th ounce of gold) some individual investors might be more interested in IAU from iShares which trades at $18.60 for (1/100th ounce of gold) as it makes round lot share purchases much more affordable.

There are also Leveraged Gold ETF and ETN options available for not only playing the upside but also capturing the downside of the gold market. UGL (2X long ETF) and DGP (2X Long ETN) both seek to replicate 200% of the daily price move in cash gold prices. The leveraged short gold etf – GLL (2x Inverse ETF) and DZZ (2x Inverse ETN) seek to provide 200% inverse correlation to the daily price movement of cash gold. In other words if gold fell 1% on a given day the goal of these funds is to rise 2%.

#4 – Purchasing Gold Stocks or Gold Stock ETFs

Gold stocks have long been a favorite way for investors to participate in bull moves in the gold and silver markets. Gold miners tend to be leveraged to the price of gold so in theory they can go up and down much more on a percentage basis than the actual price of the metal.

I tend to use the Gold Mining ETF (GDX) instead of choosing an individual company as past history has shown it’s difficult to pick the right one. Also, mining companies tend to be volatile along with mine results so company specific risk is a definite hazard.

If you crave even more volatility you can go with the junior miners which tend to be in the development stages and offer additional volatility. In this case I would definitely stick with the Junior Mining ETF (GDXJ) instead of trying to choose individual winners. Junior mining companies are capable of dropping 50% or more with very little warning so they tend to be horrible investments for the average investor.

For those who want to trade a Leveraged version of the gold stocks Direxion now offers a Triple Leveraged (3X Long) Gold Stock ETF trading under the ticker symbol NUGT and a 3X Short version – DUST for those who want extreme volatility. These are designed to be trading vehicles and are definitely not designed for buy and hold investors.

There you have it. These are the 4 basic ways that individual investors can go about investing in gold. Each way has it’s pros and cons so you simply have to decide which is right for your situation!

At this point I’m keeping lots of cash on hand until we see how this plays out. Looking at the German DAX it’s very possible that Europe is going to continue to drag us lower. Our financials are once again taking a beating and it seems there is no catalyst in sight that could turn them around.

When everyone comes back after Labor Day it’s going to be interesting to see if they are ready to buy or if they will continue to take off risk. If they take a look at the charts on Tuesday morning, they won’t like what they see.

For now it’s just to wait for more market direction. Many people are talking about a retest of the August lows as being the ultimate downside risk but unless we can stop penetrating the 1200 level on the downside, this market is on life support.