[youtube:http://www.youtube.com/watch?v=q7vtWB4owdE 450 300]

________________________________

I don’t need to tell any of you who were paying attention about Friday’s crater job on the precious.  Coming about on the Friday before options expiration week, at at the end of a long and dreary down cycle, it certainly looked nicely timed to shake the trees loose of many golden and silver ducats.  Friday was a nice day to make that first physical purchase and tomorrow morning may be even better as a result of the follow through.

I’m holding on to what I’ve got for the almost inevitable mean reversion play here.  The precious miner bullish percentage index (“$BPGDM“) is at absolute ZERO.  The last time we hit zero on that scale was in December of ’08, at the very nadir of the financial meltdown.  What’s more the Hulbert gold sentiment rating is off the chart completely (yes, below -20, otherwise known as “uncharted territory.”)  We lost another $50 tonight before the rebound, and we could even see $1400 tomorrow.  Is this the time to give up the ghost?  No, it’s blood in the streets time.   You know what Mr. Rothschild said about the time to be looking to buy, right?  Consider that the Buying on Weakness number for GLD was its highest ever on Friday at $144 mm in block trades.  That’s the big boys out collecting.

The best bet right now is physical, and or waiting for the turn, with wariness and apt cunning.  Fly got some AG on Friday, and while he may have been a touch early, I think he’s got the right idea.  The fast flyers will rebound 20+% when this plunge is over.  I also like the fat dividend alpha males like AEM and NEM here… they too have been beaten down over-harshly.

Hang on, folks, we’ve been through these before.

Best to you all.

_______________________

 

Comments »

__________________________________

Everything’s relative, I guess, including pain.  Today’s revisit to the recent lows (and no, we’re not there yet) is not as painful as, say — a bloody compound tibial fracture jutting messily out of one’s shin.  That said, it sure has been a frustrating six months, hasn’t it?   And yet, if you look at all the major charts, it looks like at this late point in the cycle, the worst we are going to get is a revisit to the end of February lows, which — not insignificantly– were at the 200-week exponential moving averages for most gold and silver stocks.  Royal Gold (RGLD) is still my favorite here, but you’d have to be crazy not to take advantage of the yielding plays available through NEM, AEM, and even ABX — and those are large caps you’d never see me recommending in a “normal” market.

But this isn’t normal.  There’s a concerted, global (read Big 8) effort to devalue currencies — and therefore reprice debt — the world over.  The only way those central banks can get away with this kind of routine, and save their debauched systems, is to get it done under cover of a “deflationary” scenario.  The easiest path to that is to keep their foot on the less liquid large commodity and precious metal markets.   This whole American Earl Revolution is a God-send to the central bankers, because it’s bringing supply on line in a period of global currency inflation.  Ask yourself why oil prices have remained so stubbornly high, however, despite the onlining of so much new supply in the world’s greatest petroleum consumer.

How much longer can this kind of thing go on? Until the little guy cries “uncle” as loud as Soc Gen just did?  Given that I was expecting a retest, and the large volume bars we saw at the late February lows, I am thinking this week and maybe the next will be the final washout.  I’m still holding tight to my remaining cash, however.  Like in late February of 2009, I don’t expect these prices to hang around for very long once the next cycle takes flight.   That said, I think there will be ample time to take part once the bull trend resumes.

Best to you all, and Go Cards!

_____________________________________________

PS — this retrace is also an excellent time to buy some physical, if you’ve been holding off, including 100 oz silver bars and nice liquid gold coins like Maple Leafs or Eagles.
______________________

Comments »

 

[youtube:http://www.youtube.com/watch?v=YuHYMv_6KNU 450 300]

_______________________

Defense wins championships, right?  It also keeps one alive to survive and advance.  With Cypress pulling out the last minute levers to confiscate “excess deposits” in order to balance its public accounts, how good are you feeling about “independent” depository institutions right now?

Sure, I know.  None of that stuff could ever happen in the U.S.   We’ve only got $20 trillion or so in 401k assets across the country.  We’re only a Bloomberg decision away from your friendly gummint deciding that asset plan could be much more “sustainable” under their “supervision.”  And heck, what’s safer than gov’t treasuries after all?’

Remember, they are just looking out for your best interests.

But own some physical gold and silver anyway (now’s a great time to pick some up for the longer haul).  And you know what?  A Kimber ACP might not be the worst idea either.

Best to you all.  Go Cards.

_______________________

Comments »

__________________

…. the hard way!

Let me caveat what I am implying here by saying first that I fully expect the commodity price of gold to test the late 2011 lows of $1523, and perhaps even undercut them to really get the blood flowing.  I am prepared for that, as I realize the run to $1900 — much like the run to $49 in silver, was too far and too fast, even in a fiat printing, race to the bottom, currency bubble.  But with the $Gold:$HUI index approaching 2008 crisis highs, and the $Gold:$XAU index now reaching an unprecedented height, I am copacetic about holding what I have while becoming poised for a final shake out where I can harvest some of my favorite names once again.

Opportunities abound in high quality names, some of which offer dividends while one waits (I’ve already added AEM, as you know).  There’s no need to stretch on speculation, now, and look for any miners doing business outside the safe zones of Canada and the U.S. and Mexico for some silver plays.  RGLD at these prices is insane, and if you are worried about this pullback, please review that company’s past charts over the last ten years.  All of these stocks — yes, even the quality ones like SLW and AUY — have trod this rocky path before.   In my opinion, these, along with their underlying commodities, preferably held in part in the physical bullion, will help you weather the coming storm in collective currency crisis.

If however, you believe that Ben Bernanke can be the first Federal Reserve Chief to successfully inflate the economy out of a low growth, value inhibiting recession, then perhaps your trust in this new bull is warranted.  In my business, and in the entire economy, I see inflated prices for everything already, so the valuations of the stock market come as no surprise.   As we approach major all time highs in the SPX, I am increasingly skeptical that we can continue without a major correction, just as I was in late 2007-2008, when we saw similar overwrought behavior.  I may miss the final euphoric highs, as I did last time, but I will not end up like the Capo Vito, either.

To be sure, I am not telling you to buy these miners at this bloody juncture.  Even I am holding off for the turn, as I mentioned a few times over the last month.  But I would also counsel you not to short a bull, no matter how wounded.   Bulls are mighty, long lived beasts, and despite their weariness, can leave one singing soprano with little to no advance warning.

Best to you all.

___________________________________

Comments »

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

_________________

Choo-choo?

 

(Slowly, slowly now… no need to be hasty, but I like RGLD and AEM a lot.)

 

_________________

Comments »

___________________________________________________

The Signs were out there, that’s for certain. They glow more balefully–frighteningly, perhaps — by the day.  Soon you will find that their light will transform into warmth, and voila! — you are out of the cold.  This week we saw the $HUI:$Gold ratio approach it’s late 2008 nadir, despite the lack of any similar shade of trouble in the SPY or any other major index for that matter.  For many who have been suffering through this mind searing mini-bear in the miners, it was only one more pencil in the vile jellies.  For me, it was the light at the end of the tunnel.

Adding reassurance were the hairshirt boys and the plungers.  The hairshirt boys talked about “$21 dollar silver” and gold “heading back to $1200” this week.  More music to my ears.  Then the dear plungers.  Those who can always be counted on to ring the bell at the exact wrong time were actually starting to short stocks that had been pummelled for months now, quality be damned.   Again, the scent of ambrosia, the ply of relief. 

Can anyone predict the future?  Only in Tom Hanks movies involving haunted vending machines, my friend.  But there are time tested truths for all markets, and for the precious metal markets especially.   Perhaps the hardest and truest is that both the bulls and the bears will suprise the hell out of you in this space.  Such is the lot of a smaller capitalized, politically sensitive commodity group not exactly known for it’s GE-like management style.  But an ancillary truth resides in the recovery from both a bull and a bear… namely, the harder the band is pulled either up or down, the greater the snap back to the up or downside.

Recently we’ve seen near-unprecedented disintermediation between the price of the miners and their underlying commodity in both gold and silver.  Some of this is a result of input (cost) prices rising while commodity prices are remaining stagnant or falling off.  Some is the result of rational hedging, and some the result of anticipatory momentum trading.  It’s this last that has brought us to our most recent state, where one might say the blood in the streets approaches the door-level on our three-step brownstones.

But make no mistake, things are not going to be “different this time.”  We’ve seen this all before, and the results have been similarly spectacular.   We may have one more final “terrier shake” to throw the last remaining weak hands off the bus, but I have little doubt that the Fidelitys, the Blackrocks and the other large funds are right now gobbling up even more SLW and RGLD and AEM and AUY than they were last quarter.   And AG…. oh my yes, AG.

I expect one more pullback today and perhaps into early next week, but I will initiate buys in AEM at any price under $40, if I am so lucky.  Get yourself a dividend while you enjoy the rebound, why don’t you?  You can always use the extra beer money, no?

As for our friends in the smaller silver market, I would think next week the safer bet, but if we see some pullback today, I wouldn’t gainsay your taking some risk.  After all, for EXK to get back to a mere $7.00 (!!) is an almost 21% move from here.  EXK will be $10 before next Christmas, if my predictions weigh out properly.

Best to you all.  

 

 

Comments »