____________________________
My fellow Americans… on this dark, dark day, when your PM positions have pulled back an egregious and insufferable one to two percent, I say to you, do not despair!
Do not feel compelled to jump on the gerbil wheel of drunken Chinamen.
Do not wander over hill and dale for the next Great Internet Bullshittery.
And do not even bother getting short anything. The Ben Bernank will shower all with increasingly feeble greenbacks. Some will feel warm. Some will point to value. It will matter little.
Today, you must ask not what the dollar can do for you, but what you can do for the dollar. At $76.25 or so, you can cheer the dollar on, and celebrate it’s deceased feline trampoline action by indulging in a select group of excellent names.
They be SLW, PAAS, EXK, NGD, AAU, ANV, EGO and MVG.
One other thing. If you are worried about 5% moves one way or the other, and trying to catch every inflection, this game is not for you. We are riding a wave of pure cement, and you are too small to challenge the intractable. You will be entombed like a random concrete pourer on the mighty Verrazano.
That is all, be well and healthy.
___________________________________________
If you enjoy the content at iBankCoin, please follow us on Twitter
Jake Gint, starring as Federal Marshal Raylan Givens in the new season of “Justified.”
Best show on teevee.
________
Indeued!
Love it when the Senator and the Commander are in a pissing contest, truly comic genius is at hand. Still holding EXK pending the Senator’s orders.
Some light Sat reading from Rex: ” a nation of fads and hollow gestures”………http://fullcomment.nationalpost.com/2011/03/05/rex-murphy-protecting-the-clutter-razing-the-culture/
Nice graphic. Thanks for the advise Sen. Cementhead / Mr. Gint.
Thanks for being explicit about the volatility. It’s helps me stay the course!
Indeed…
Sen. Cementhead,
I am very thankful for the sums of coin that have been banked adhering to your calls on the miners. As noted prevoiusly I know absolutely nothing about mining companies other than to buy the ones you point out. It works so I am not looking to deviate from this strategy anytime soon. However, I am interested to learn what you look for in a solid pick.
Also, what fundamental valuations are typically good indicators for miners? First glance I would think they get valued somewhat like the oil and gas companies. In other words it’s better to look at metrics like EV / EBITDA as oppossed to just P/E. Is this a valid assumption or am I way off here?
First off, EV/EBITDA is the best valuation metric for
ANY operating company, in my opinion. PE is largely a joke.
Second, higher valuations are assigned first to quality of assets and second to quality of management with regard to mining companies. In my opinion management is huge in this Bidness.
___
“this game is not for you. We are riding a wave of pure cement, and you are too small to challenge the intractable. You will be entombed like a random concrete pourer on the mighty Verrazano.”
Hi jake , my personal congrats on your Al Pacino style , that’s very fine prose showing from your mind
Loving the posts Jake. Always looking out for them.
Jake, any view on the huge selling-on-strength number yesterday in the IWM???
Not surprising. If you look at the PPT hybrid levels, we ascended unbelievably fast yesterday from the 2.60’s all the way to the 3.09 level, which in the past has indicated a near term top.
I am not very much invested in the “regular” stocks (sic) markets, as I think we are breathing borrowed oxygen at this point. I’ve even cut back on my lovely UPS, as I think the transports may be cooked.
__________
I’d still like to hear this UPS story some day.
Maybe over a beer. It’s not for public consumption.
It’s a great American story, though.
_______
i drove for them,and i can only say,that they are THEE best company in the world.
Agreud.
_____
Remember when DHL tried to take them on here in the U.S.? All DHL ended up doing was costing a whole bunch of people here to lose their jobs. I worked for DHL back then as a customs broker and watching DHL close all those offices after they took out UPS’s small competitors was pretty heartbreaking.
Are you in Dayton?
It was pretty bad for that area, as I recall. I think UPS may have grabbed some of that action, however.
_______
No, I was up on the Canadian Border. DHL is in my opinion the best Customs Broker and International Freight Forwarder, but they should not have tried to take on UPS here in the US.
Yes, they probably made UPS even stronger in the end. LOL
I was a FedEx courier for about 8 months (I had to take a break from University to save up for tuition for my wife and I). It was a great job! But UPS did seem to be encroaching on market share even back then (2001-2002). I mostly joined because my brother was there, and before sept 11 -01, he would hop on a jumpseat almost every weekend and see some new part of the world. He would get off the plane in Hong Kong or somewhere, spend a day there (the time it took to unload and re-load a plane’s daily deliveries) then fly back to Calgary via Memphis. Looked like a sweet perk! Almost as soon as I started, the “free flights for couriers” program was cancelled.
Yeah, we lost a lot of our perks, too.
I loved the industry and I might get back into it. As a Customs Broker, though, after 9/11 it got so stressful when everything turned from the Dept of Treasury and became all about THE FIGHT AGAINST TERRORISM. Gawd, it was awful, and most of the inspectors I had worked with for years ended up retiring, so they were hiring 20 yo rookies after brief 6 weeks of training. It was nasty and I was glad to leave. But now, I miss it.
Well, alert me next time you’re headed to Calgary. I’ll put you up, and supply the beer.
I’ve been trying to analyze this MF data and can’t find any correlations between it and the stock market since 2009…I thought maybe you had an angle…thx.
You talking about Corzine’s brokerage firm?
No bid.
________
That guy should be in jail, hoping the mafia boys hunt him down from Joysey.
Someday I’d like to hear the story of how an unrepetent communist (and seriously, the guy is Bill Ayers-level Red) came to be the co-head of Goldman Sachs, and then Senator and then Governor of Joisey. I mean, I know the latter two things were largely bought, but someone explain to me how one can come from the trading floor and have such little understanding of markets.
It’s a puzzle rivaling that of Puma Punkins.
________
Then your image-search-fu requires respect! Granted.
the jig is indeed up.
every day more and more will see that only pm’s are worth their weight in gold
5-10% this way or that is just noise.
It’s nice to see these posts, Thanks Jake.
What?
No compliments on my lovely green eyes?
______
Your mad photoshop skills leave us panting for more like Pavlov’s favorite beagle.
I have zero photoshop skills. All of these images are drafted from the bizarre-o-sphere.
_________
gold / sivler ratio = sub 41
was for a moment
Jake, would you speculate on if and when the pm’s might get “disorderly”?
Disorderly like off their historic means? Look at it this way…. at one point the silver/gold ratio was 72:1. If it can stretch that high over it’s historic mean (of about 40:1), then who’s to say it cannot stretch that far below it too, on a silver surge? That would be about a 22:1 ratio, fyi.
I think silver is going to stay strong here, but that gold will probably catch up once we get below the 40:1 historic mean. Gold’s been lagging but I don’t expect that to last.
________
I thought the guys at Got Gold Report were saying that the historical g/s mean was 20:1 not 40:1 ?
When I say “historical,” I mean the last 50 years. In the 19th century, the ratio was actually fixed at 16:1.
I wouldn’t mind seeing that again. 😉
________
Jake, you still holding FRG?
I was wondering the same thing. I still have mine, although I have taken profits.
I still have the core position, but I never added to it after the announcement, as I would have had it not been taken over.
__________
in the short term, as oil goes, so will PM’s. unless you truly believe Lybia/the Middle East are in the early stages of a longer-term problem, then prepare to be disappointed with PM performance in the coming months.
LOL.
It warms my heart to see there are still plenty of Unbelievers out there.
That means we’re still not at parabolic stage yet.
_______
We didn’t need the Middle East to move silver. That was just a bonus. Silver was already moving upward on dollar dilution.
And supply and demand, and a little pressure on JPM’s antics making them want to start covering their shorts.
When the shit hits the fan, I hope the Morgan and Rockefeller families get captured and put into a little box together to be displayed in front of jeering crowds who fling human feces and biological waste products at them until they die from parasitic infections.
You must have read the book “The Creature from Jekyll Island” that tells how and why the Federal Reserve was started.
I visited Jekyll Island when I lived in Savannah, after reading that book, and it was pretty interesting.
I have a tech/strategy question for anyone who owns the pink sheets –
Do you use stop limits to protect your profits? I have been using trailing stops to protect profits on my other stocks, but you can’t do that on pink sheet stocks.
How do you use the stop limits to protect your profits on those, and is it a good idea to use them, or to just take profits at certain percentage gains?
I don’t use mechanical stops on anything, but w. pink sheet stocks, I’d say prudence would commit you to a regular profit taking exercise, unless you saw the thing as a “buy and hold” for a long period of time.
___________
I didn’t think you did, but I was hoping someone else on here did. I do not want to be tied to a computer, and have only been on here like a maniac recently again because of this reason. Oh well, I’ll figure out how to deal with it.
EXK just printed $9.
Hey Now!
I’m still buying Silver Eagles and Canadian Maples.
Siiiiiilver!
http://www.impactsilver.com/s/Home.asp IPT Anyone looked closely at impact silver?
I own it. From my little knowledge if fundies, it seems solid, and the chart is gang busters.
Methinks Le Grande Docteur owes the Senator an apology…
http://tinyurl.com/25o2b4x
The link is blcoked on my work computer but also get error message on my phone…
i just clicked on it and it worked for me.
try this unshortened version.
http://www.youtube.com/watch?v=angi1vwUkQc&feature=related
Funny.
It’ll be a cold day in hell….
_______
le apology from le Flea ?
“1. Sometimes it pays to have a head made from cement. Although I sold AG higher than where it’s trading now, today’s move in precious is very impressive.”
Jake – Nice call on staying the course, I was hoping for a short term drop to buy more.
The same pullback we had yesterday happened last week on metals options expiration (It would be great to point out to the audience every time we have one since there is so much trickery).
My preference has been to take Olivia Newton’s advice with CEF, PHYS, and PSLV (real physical assets in those etf’s) since miners have somewhat lagged the performance in metals, but things appear to be changing. They are changing because we are running out of physical, so the next best thing is buying the companies that will have access to physical. If the exchanges can get the gold from Libya there will be a rest in gold but silver is still in short supply. Retail buying SLV or GLD could be hurting metals since that is a paper product with questionable audits and ownership. Bigs are purchasing ETF’s with basket options to get their hands on physical. SDR’s and a new currency would contain backing with gold for sure.
Interesting note: the author of the wizard of oz originally wanted Dorothy to wear silver slippers instead of ruby slippers – it was an appeal to sound money with the recommendation to follow the yellow brick road (gold) and silver. Dorothy photoshopped on the yellow brick road with silver slippers would be cool.
They can’t let metals get too far ahead of the market DOW/S&P500 because then everyone will dump it and go into metals. That is the key insight I have had in watching this end game play out. Yesterday metals were down almost the exact same percentage that the market was up. I am tempted to just buy calls on PM’s and miners, but this is a longer chess game and there might be a few surprises. I usually check out Jesse’s, FOFOA, Kingworldnews, McCalvaney, and a few others to get a feel for the market.
I suggest you also consult my friend Gary at SmartMoneyTracker. He’s quite good with the cycles on these things.
_______
I never heard that about the Wizard of Oz and Dorothy’s slippers. It would be a cool photoshop, and if you could play Dark Side of the Moon in the background, all the better. Remember that?
Enjoyed reading your take on things.
EXKAAAAAAAAAY!
Jake; I am dollar cost averaging into SIL EXK PAAS ANV SLW NGD and they are getting mighty expensive. Which ones have the most upside that I can get into all the way (or wait for a pullback)?
Who the heck told you to dollar cost average here? This is not mutual fund investing, it’s bull riding!
SIL is probably your best bet right now, as it’s a mutual fund that will absorb any pullbacks the best.
The golds have the most runway right now, so ANV, EGO, IAG are three I’d look at.
_______
What will happen to PM’s if oil is over $115 Bbl? (High prices not caused by a shortage but by the present crises in Libya plus Obama not granting the permits to drilll in the Gulf)…
I spent most of the night reading various newsletter articles and interviews (one of which sent chills up my spine regarding what might happen if the Fed announces it is going to stop buying treasuries) and I have decided to take as much profits as I have, trim way back, and get out of my illiquid lotto tickets altogether.
And then with lots of cash on hand I am waiting for a substantial pullback before I get back in with everything I’ve got. And in the meantime I am making my dream list to have ready.
I just have this feeling in my gut, the kind of feeling that makes you feel you should be doing something you are not, and that is why I have not been able to stop reading and fretting for the past week or so.
And even if I’m wrong, it is better to be safe than sorry. Volatility is a tool, and a friend, if you use it right, right?
@chanci:
You’re getting out of the pm’s when Jake just said to be a cement head?
Just trimming back, getting rid of the junk and making sure I have lots of cash on hand. I just got a bad feeling about March 15. But I do very much believe that the best of the bull market in PM’s is yet to come.
I lost so much money in PM’s in ’07and it wouldn’t have happened if I had done the above, and if I had cash left on hand I could have made a killing when like SLW was selling for $3. like Jake and his crew did.
I’m sitting on a lot of profits right now, and a lot of that has to do with Jake because of his steadfastness and cement headedness. LOL
Well, I’ll copy and print one of the articles from a newsletter I get (hope it’s not copy write infringement or anything), because this just made me think to be a little bit more careful with cash on hand in my account, just in case. And I have been reading what Rick Rule says about using volatility to your advantage this year and next as he says it will be very volatile going –
Here and Now: The Short Term
By David Galland
For the upcoming edition of The Casey Report, I interviewed Rick Maybury, an exceptional thinker when it comes to geopolitics. In his view, in the not-too-distant future, people will find themselves thinking about the world “pre-Tunisia” and “post-Tunisia.”
In the short term, the uprisings in the Middle East and North Africa (a topic Bud Conrad also weighs in on at length in The Casey Report) have the potential to change the world, and profoundly so.
For starters, the price of oil has a very direct effect on economic activity. At the least, the turmoil in the oil states is going to result in a near-term crimp in supplies that will keep oil prices high into the immediate future, and maybe for years.
At worst, if the unrest spreads to any (or all) of the big three of Iraq, Iran and Saudi Arabia – as it almost certainly will if Gaddafi follows Mubarak out the door – then speculative fervor alone could send the price of oil upwards toward $200 a bbl. That would be a crushing blow to the fragile global economy and maybe even send the U.S. military into action once again, this time in an attempt to regain American influence in the region and to ensure that oil continues to flow west.
The other near-term factor to watch very carefully is the Fed’s decision regarding continuing its quantitative easing. Friends in high places I have talked to expect, come June 2011, a hard stop to the easing, and based on the trial balloons now being sent up by the Fed, I have to agree. This, today, out of Bloomberg.
Federal Reserve policy makers are signaling they favor an abrupt end to $600 billion in Treasury purchases in June, jettisoning their prior strategy of gradually pulling back on intervention in bond markets.
“I don’t see a lot of gain to reverting to a tapering approach,” Atlanta Fed President Dennis Lockhart told reporters yesterday. “I don’t think that is necessary,” Philadelphia Fed President Charles Plosser said last month.
Central bankers, who next meet March 15, are about half way through their second round of bond purchases. To bring the program to a full stop in June, they must be confident that the economy is strong enough to endure higher long-term interest rates and rising expectations of an exit from the most expansive monetary policy in Fed history, said Dan Greenhaus at Miller Tabak & Co. LLC in New York.
“If this is a self-sustaining recovery that can withstand higher interest rates, then why not get the hell out?” said Greenhaus, Miller Tabak’s chief economic strategist. “Still, I am nervous about their ability to withdraw from this policy without broader disruptions.”
Full article here.
The Fed’s decision on further monetization is important on a couple of levels. The first is the potential impact a hard stop would have on the U.S. (and likely, global) stock markets.
Though I have previously shared this chart from the February 2009 edition of The Casey Report, I include it here again as it speaks volumes about the pending Fed decision. It is a snapshot of the interrelationship between Japan’s quantitative easing and that country’s stock market. The mechanics are easily discerned – pump up the money supply, and stocks rise. Pull the plug on the money supply, and the stock market goes down the drain.
Here’s a quick response back to me from our own Bud Conrad about the Bloomberg story quoted above.
You saw the possibility early that they might stop QE 2. They are floating balloons of policy change, and Geithner’s sales pitch to the banks suggests that they are trying. But I just don’t think they will get away with it, for all the consequences you articulated: rising rates would hurt stocks, the economy would tank, and the weak economy would get weaker. It might help the dollar, but the dollar has not collapsed at a level requiring the Fed to protect it.
Let’s see if the discussion by the Fed affects the markets as badly as the QE 2 discussion affected markets positively before the actual purchases. The 10-year Treasury bond dropped to 2.4% or so in August on just talk, and is a full % above that on the actual big purchases. If the talk scares the market (rates rise and stocks fall), I bet they extend QE 2 or diminish it slowly. They must be looking at the calendar for election year and will want to turn on the fire hose of new money printing at least 6 months or maybe a year before the election.
I wrote about all this over a year ago, explaining that the federal government deficit is too big to be absorbed by anybody but the Fed, and that they would do what came to be QE 2. The deficit hasn’t changed, so my prediction is that even if the Fed stops buying Treasuries for a few months, the bad reaction of markets will force them right back to the money printing press.
Absent that, the obligations to pay interest on the debt at higher and higher rates will make the deficit so bad that the dollar really crashes. There is no way for the Fed to stay out of the business of bailing out the federal deficits for more than a quarter, in my opinion, and I’m still not expecting they can really pull that off.
I think Bud has it right, though I expect that the Fed will actually pull the trigger and announce the end of quantitative easing, albeit with a strongly worded caveat that they will reinitiate buying Treasury bonds if the situation changes for the worse – and may even use higher oil prices as cover for doing so.
At least initially, I suspect the market reaction to ending quantitative easing will be very negative for stocks, even those of the gold and silver variety that we so favor. Conversely, when the Fed ultimately reverses itself and restarts its purchases of Treasuries, it will be very good for stocks… and especially those associated with precious metals.
While this service is not really intended to provide specific investment recommendations – that’s where our paid services come in, as they track the recommendations carefully – I will close this segment with some general thoughts on portfolio allocation at this point.
The risks associated with an overvalued stock market, higher oil prices and the Fed’s fumbling about for some sort of rational monetary policy are very high and will increase acutely in the months just ahead.
Stepping out of the way of that risk by selling highly appreciated stocks in favor of a higher allocation to cash or bullion is worth consideration. Yes, you might miss some upside, but I personally fear the downside more than any missed upside.
If the Fed does announce a full stop to its monetization and the market gets crushed, give it some time, then buy the best precious metals stocks with both hands, and even pick some up with your toes if you are able.
How long should you wait to buy if there is a crash? Generally, I don’t think there will be any great rush to get repositioned, but that will depend on a couple of variables, including how steep the crash is, if one occurs. The worse the crash, the greater the anticipation that the Fed will again reverse course and the quicker the precious metals stocks will come roaring back. So, we’ll have to cross that bridge when we get there.
If you still have a variable-rate mortgage, or one you are paying more than 5.5% fixed on, consider refinancing in a hurry – like yesterday. At this point, the 30-year rate is on the order of 4.88% – that’s like free money. Rates are going higher, and soon. And once that trend is in motion, it’s likely to stay in motion for a good long time.
And that, dear reader, is that for this week. Until next week, thank you for reading and for subscribing to a Casey Research service!
Vedran Vuk
Casey’s Daily Dispatch Editor
Jake, delete the above if you think it is inappropriate to copy and paste it here, but I couldn’t do a link.
I couldn’t copy and paste the chart they speak of either, on this old crap laptop I am using.
No worries.
______
Plus, I got another email this morning that I get every morning regarding whats going on with the big boys who were covering their shorts lately, but on Friday took out brand new shorts (in silver). What does that tell you? I can copy and paste that one, too, I guess if anyone wants.
Well, I’ll shut the hell up now before I get thrown out of here. LOL
Have had some great success again this time around with the PM trade. Have taken some really nice profits and have some core I am holding on to. Thanks for your insight always.
Silver outlook for next week;
http://www.youtube.com/watch?v=Et02g9OQ-LM
Silver (world spot) just cut thru 36 like a hot knife thru butter
http://www.kitco.com/market/
Friday, gold closed at it’s high for the day. Who remembers when that has happened before?
A little trivia for ya’ll.