There is no Bernank, Only Zuul

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I don’t have a lot of time this morning, so I’m just going to feature the chart I put together last night.   As you know, I’m increasingly bearish here, and more so on the financial sector than any other, primarily because they are — like our internal deficit and debt problems — another can that has been kicked down the road.

Back in 2008, when the world was melting into a hardened polystyrene ball thanks to the implosion of the easy money real estate bubble, banks were allowed to escape (some just barely) thanks to the ministrations of the Fisc and the Fed via TARP and other more nefarious and clandestine sources.   Worse, Freddie Mac and Fannie Mae, the twin dogs of Zuul the Destroyer, were allowed to remain in their positions of power “for the good of the market.”

In other words, little was done in regard to true reform save “shoring up” for “the good of the industry and the economy.”    Bad mortage loans are still on many books, and real estate prices have been frozen in a glacial slide to the sea, rather than being allowed to correct in a more natural — if radical — manner.

Ironically, it is not those mortgage time bombs which will kill the banks in the immediate term, as the “propping up” methodologies of Congress, The POTUS and the Fed are actually hurting the taxpayer while assisting lame banks.  No, it will be the regulatory overkill administered in the fecal kludge which is Dodd-Frank Reform Bill, also known as “the second 2,000+ page bill that no one read before voting through.”

To give the Congresscritter some defense however, we can’t blame them for the criminal act of not reading the bill, since there were hundreds of pages of regulations YET TO BE WRITTEN found within its pages.  In my opinion, this is the far more egregious and unconstitutional sin.   In the case of signing a law that carried unknown legislative directives in it, Congress is yielding it’s power to an unelected alphabet soup of Federal financial bureaucracy.

Banks are just now beginning to “implement” some of the new regs.  You are already familiar with the loss of revenue due to debit card restrictions, but there are other capital and revenue limiting aspects which will also affect banks both large and small.

Ultimately, this will likely lead to another round of consolidation,which is what the cronies in Congress would like, as they loathe competition and it’s messy donation collection implications.   Until then, banks will be a mess, and I would steer well clear of them.   If you are adventurous like me, you might even take an interest in their downfall:

As you know, I added to my SKiFfles the other day, along with a position in TZA and more TBT (which remains a hair shirt).   What you don’t know, unless you are a member of The PPT was that I also loaded up on EXK, GDXJ and AG calls yesterday afternoon.

Yet another reason to look into a subscription for The PPT as soon as possible.  My best to you all.

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[youtube:http://www.youtube.com/watch?v=_qO66Rmi1Mw 450 300]

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I don’t know what’s going on, but it appears we’re about to be overrun by Viagra-popping leprechauns.   I’ve been buying some stuff back in drips and drabs but have been mostly waiting.  I added AUQ today and bought some more IPSU too. Both of those seem to be working well.  Meanwhile all the stuff I sold last week is doing aerobatics.  That’s annoying.

This is why we keep the core of course.  We don’t know what the bull is going to do… especially at these end stages.

I looked over all my charts tonight and there are quite a few looking like imminent breakouts.  These include AG, ANV, AUY, EXK and even — strangely — goofy old BAA.   Even GDX and GDXJ look pretty good, if you are into the ETF thing.   It’s our old friend the gold bug index $HUI that will provide the signal for me:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Most of those names in the chart above should break out with the $HUI index here, but I wouldn’t worry about having to pile in.   There should be pullbacks on all of them after the breakouts, so you should have ample opportunity, if you want to be cautious.

Besides the above, RGLD and NGD are rather stretched here, and I will be offloading some likely tomorrow on any $HUI break.

Best to you all, and watch out for midgets with orange hair, green vests and knotty chestnut shilelaghs.  Those fuggers will wield those beatin’ sticks.

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How many times have I told you? You never, ever sell your crappy juniors, no matter how crappily they’ve been performing and lying on the ground like so much offal shoveled out of the stomach from a slaughtered steer.

Case in point… crappy old Northgate Minerals — NXG for you in the ADHD crowd — was bought out by Aurico Minerals today (AUQ). I have had NXG since the days when I told you all to buy “the three N’s,” or NG, NGD and NXG. Guess which one was the laggard of those three? Sure, it was crappy old NXG. But guess what? Crappy, poor performing juniors get bought out in bull markets. It’s uncanny.

Note in this weekly chart how we’ve been consolidating for 20-something months?  Something was going to come out of this saucer… and in a bull market did you really think it was going to be a breakdown?  That would be “betting on the silly.”  Never a high percentage play:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

And here’s the bonus move..  AUQ, the acquiror got beagle-slapped today.  With two beagles, even.

I know you are not going to believe me, but I actually own none of this stock at this time.  Why, I am not sure, because when I’d read the news today I was chagrined to think that although I was “winning” 28% in my NXG position, I was also losing 18.5% in my corresponding AUQ position.  But then, saints preserve us (and they do), I found out that I had zero AUQ in my system.  I am going to have to research my notes to find out why I do not.  Perhaps I toe-dipped and had a stop or something.  Truly, I do not know.

That leads to another serendipity, however…. Not a long while ago I posted the below chart on AUQ with a proposed entry.  I give you that chart with no revisions from the last time I drew it up.    See anything interesting?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

My best to you all.

 

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I made good on my threats today, and took everything down to the 30% level on my personal accounts. 

I was up an average of almost 5% across a number of different portfolios and I finally said “enough is enough.”   I am keeping 30% invested, with the equal expectation that we could hit a precipitous downdraft in the precious metal sector at any time, just as we could shoot past $2,000 gold in an eye-blink.  

I care no more, as at this point risk avoidance has become very important to me.  If that means I miss the next $200 in gold on 70% of my portfolio, well so be it.   It’s very possible we could see a break past $50 in silver as well, and again, I’ll have no nonsense from any of you about it.   Really, I mean it.  Just shut up now.

And yes, that means I sold large chunks of AAU, AG, AUY, ANV, EGO, EXK, GDX, GDXJ, GG, MVG, NG, NGD, NXG, PAAS, RGLD, SIL and even beloved SLW.

And I blew out the rest of my NUGT as well.

And no, I am not abandoning the PM’s as a theme now, and won’t abandon them should they continue to skyrocket in flight to many more afternoon delights this late summer.   I am willing to wait for them, however, and to examine “other areas” whilst they frolic about like mad sturgeon on lady’s night at the Aquarium.

One of those “other areas” includes my old friend, Mr. Skiffles — SKF.  Along with his rebrobrate alchoholic brother, FAZ-tard, I believe Mr. Skiffles will be getting some nice exercise this second half of the year.  One of the reasons is the behavior of BAC, and now, most recently, the troubles of GS, and it’s Waspy rival MS.  

Another is the critical structural problems of Europe erupting again like plague boils on the carcass of its major banks.  This is a contagion that may yet again bolt across the Atlantic and may even explain the impolite selling vigor in some of our larger institutions.  Will the Fed be there to save their lying souls once again? 

Too big to fail, you say?   Maybe, but while “fail” might rhyme with “bail,” I wouldn’t be too sure equity holders won’t be left holding an empty bucket this time around.  Be warned, friends, storms approach.

Peace be upon you.

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Ah, alack and alas! The world is melting down again, and I think we can say we’ve entered into a bear phase, ovah heah, if not a full blow bear market.  I’m not going to show you the charts, as I haven’t annotated them, but we’ve got bear crosses on the major markets and the Transports — up to an including my beloved UPS are leading the way down.

Like in mid-2008, we are showing signs of a true Dow Theory bear episode, and who knows how long this one will take to exhaustion?  We’ll have to play it by careful ear as we did in 2008-09, when I was a painful two and one half weeks early in getting back in.

In the meantime, like a fine-toothed cyborg marinated in Gatorade, the price of gold (POG) continues to break to new highs despite everything else melting around it.  Silver, too, is being dragged along, if at a slower pace, which is driving our Gold:Silver ratio higher… to 45x at last count.  You may recall when silver got to 72x the POG during the last extremis… I don’t think gold will break that far away from silver again…. but if it does…

I am continuing to take this opportunity to either sell or hedge my miner positions here, as I think they are not eager to participate in what may be the last rally for gold for months.   This gives me pause, and it should you as well.

On the other hand, I continue to see setups (AUY, NGD) in the mining space, so I will endeavor to keep an open mind.  One thing I am assured of, however, is that I should be trimming my non-metal positions, no matter what happens in the PM sector.  The regular market has become a toxic swamp, and you are better off picking up limited short positions (like SKF that I bot today).

Stay alert, and I will try to do the same for you.

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Yes, I sold off or hedged quite a bit of my gold and silver exposure last week, though I still keep quite a few low-floaters for “venture capital” type opportunities.   Like as not I will trim down to the core this week.   My reasons for doing so are two-fold:

First, we saw gold hit a significant hurdle last week at $1820 or so without either silver or the miners really taking off.   We then saw gold drop more than $70 in scant days, taking it’s little sister silver along with it (far more precipitously, I might add).   Now both have stabilized, but I can’t help but think we’ve been riding this latest wave long enough and it’s time to step-off while there’s still some peanuts on the floor to take home to Mom.

Second, my gut is telling me the string is playing out, not only on our precious metal positions (albeit temporarily), but also on the market itself.

But not before a bit of a party.

As you may recall, I bot some ERX and some EDC last week and those have been doing fine.  I might add to some of those this week, depending on the reception we get tomorrow morning at around 11 am (my preferred “taste time.”)  I may even grab some TNA and QLD as well.

But be forewarned — I’m only grabbing ETF’s because they are easier to monitor with regard to swift moves  in the market, which I fully expect in these next few months.   Like as not, I will trim all extraneous non-ETF positions in the coming weeks, as the market continues to regain its health from the recent depredations.  That means even UPS and BWA will go — though they may go last.

Best to you all.

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