You’ll be Fortunate if You Can Keep Your Moustache Clean
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Just get in the manhole and try not to mind the company of the rats.  That is, unless you get hungry over the next couple of days. 

I think we are going to hit that dollar high in the next few days, probably by Wednesday, as this Greek PIIG drama doesn’t seem to want to go away.  That means we will probably see one final washout in the market as well, before a recovery.   

The good news is that the precious metals — gold, silver, and even more so platinum and palladium, are hanging in there and remaining rather unfazed by this most recent 50+cent appreciation in the DXY.   This is encouraging and may signal that the metals themselves will be turning before even the market.  

That being said, I wouldn’t be surprised to see one final reach down as the dollar heads to our target in the $80.20 range.   For gold, that might mean a test of the $1,030-40 area after all, and for silver, likely a break of the $16.00 mark.   I will be poised for that event — and on any rapid shakedown to these levels I will be adding egregiously to my [[AGQ]] and Royal Gold, Inc. [[RGLD]] for certain, and quite possibly I may add a touch more Allied Nevada Gold Corp. [[ANV]] , Eldorado Gold Corporation (USA) [[EGO]] and [[EXK]] as well.   I am holding out for one last purchase on the June $11 Silver Wheaton Corp. (USA) [[SLW]] calls too — hopefully in the low $3.00 range this time. 

We had quite a beard-curling day on Friday and I wouldn’t be surprised if we opened strong on Monday, only to give it all back in a nervous, feckless cowardly bout of trading that meanders thoughtlessly even unto Wednesday.

I say to you, now, do this:  Grab some cigars and some cheap bourbon and call five of your favourite (sic) comrades for a poker game below the city streets, under the comforting aegis of a two inch thick Neenah Wisconsin-forged steel manhole cover.    There, among the hollow echoes of  the moist, steam-filled tunnels and amidst the occassional squabble with the rats over the Cheez-it bowl, you will remain relatively unscathed — and perhaps more important, distracted — in the days ahead.  

Later, this week, we will comb out our moustaches and re-take our rightul places on the street-side of the manholes, where we shall kick various bears and their entourages down aforesaid (still) open cataracts, where they shall each reside again in bitterness, without the aid of kerosene lantern, cozy parka, or thrilling paperback romance novel.  

Off to price expensive cigars and cheap, but bracing bourbon.  Bless you, my friends.

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(For more information on Cup O’ Joe for a Joe click here.)
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The relationship of gold to the dollar is integral to my Jacksonian thesis, and I think to this overall market as well.  So I think it dispositive with regards to arguments that portray this market reflating on real earnings or anything of any tangible weurth (sic) to take a step back and look at a longer term picture of the gold dollar ratio. 

I bring you that view here with the following weekly chart illustrating the price of gold divided by the weurth (sic) of the U.S. fiat dollar in the form of “$USD.”

Maybe not exactly a textbook “CANSLIM” Whitman-style cup & handle, but given the proximity of the 34-week EMA here, I think we are setting up for a blastoff.

Here’s my other confirmation-biased bias chart that tells me the dollar is about to meet it’s comeuppance.   This is a longer term chart of the dollar alone ($USD again, and as of yesterday’s close) .   Note on this weekly how we are fast approaching two very significant fibonacci lines (50% retrace of the upmove and 38.2% retrace of the down-move) which I think will serve as a hard brake on this dollar exhuberance.

Note again that this is an “end of day” look (thanks to Stockcharts chintziness,  I cannot get you DXY intraday), and that we are already 40% of the way to filling the rest of that circled gap to the combination fib lines.  

Ben has been re-appointed ladies and gentlemen, and there’s a reason for that.   He certainly is not going to let down those 70 or so Senators who backed him in an election year.   The dollar will weaken again, believe it.

Trade accordingly.  I will be sniping for select names in the woods, as per usual.

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Stepped up the buying today, in the teeth of the downdraft.  I see these fat white bloated English bodies piled high, but stand firm in my resolution that we are approaching an oversold bounce in the precious market.   [[GDX]] gives me more than a ray of hope with it’s action today:

Note the 61.8% retrace hit on this weekly chart.   That’s a very significant level, which will usually put up a ton of support from the underside (as well as resistance on top).   Now we may get another tap of this level tomorrow, but I think this is the place we should all be accumulating our PM’s of choice.

You know I have.

Today, I added another 2k of Silver Wheaton Corp. (USA) [[SLW]] at $14.03, and yet another 40 June 11’s of the same name, this time at $3.90.   Don’t ask me why I keep buying 40 contracts at a time, there’s probably some internal fibonacci mechanism at work here.  I also added 2k more of Allied Nevada Gold Corp. [[ANV]] below $13 and another 4k of [[EXK]] at $3.32.  Last I put on 1k more CDE at below $15-.   I think that’s it for me in that name.

I also added significantly to my [[AGQ]] net weurth (sic), with another 800 shs at $51.52, give or take.   I now have 2k shares total.   I will add, but cautiously, to this bucking bronco.   I think that the dollar — [[DXY]] may scoop to $80 here, which could some additional pressure on the PM’s.

It will all be temporary, I aver.  

On the hedging side, I dumped another 50 of my [[SPY]] puts at a nice profit, which generally means that there will be a waterfall decline tomorrow morning.

You think I’m kidding.   I’m not.   I have 100 SPY puts left, and am still “full up” with 14k [[BGZ]] and 10k [[QID]] .   This has cushioned some of my long losses these last few days, but I can tell you verily that I look forward to blowing out of these positions.

I think we approach that time.   Keep in mind silver is trading right now at one sixty seventh the price of gold.  That’s nuts, and could presage a gold drop to $1,030-ish.    Even there the POG is still well over 60x the price of silver.  

Short summary — silver is already sold.   I don’t feel it has a whole lot farther to go.  Trade accordingly.

Best to you all.

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[youtube:http://www.youtube.com/watch?v=jIfu2A0ezq0 450 300]

Official Theme Song of Obamerica

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I may own 16 tonnes (sic) of No. 9 Silver by the end this downdraft.

So be it. 

Yesterday, I took it up a notch, as reported in my comments section.  Not only did I add yet again to my Silver Wheaton Corp. (USA) [[SLW]] call horde, with 40 more June $11’s at $4.10, but I also began to purchase my old friend [[AGQ]] , with 600 shs at $53.77 and later in the day, another 600 at $55.11.    I may add to that double silver horde again this morning if I can get this post done.

(It’s troubling to me that sometimes the blogging gets in the way of trading and other weurth(sic)-while endeavours (sic).)

For those of you watching at home, I’m almost back up to my total pre-December concentrated position in Silver Wheaton Corp. (USA) [[SLW]] with 18k shares.  Another 2k will finish that hording.   I am also up to 14k on the smaller [[EXK]] , and 7.5k on [[CDE]] .    Because of the selling I did in December, I still have a lot of dry powder, which I will employ if we get one more push to the $1,030 area in gold.   As it is, however, we may not get past the $1,075 I’d mentioned earlier in the week.

The important datum in this scenario, however is the ratio of the prices of gold and silver — right now, the price of gold stands at a nosebleed 65.75 multiple of the price of silver.   As I’ve mentioned before, recent historical price ratios are normally between 40 and 50 times.   So yes, gold may drop from here, but even in a drop to $1,030 from here, gold is still at near-nosebleed 61.6x the price of silver (with silver at the $16.71 an ounce it’s at right now).

So yes, I’m accumulating silver, in the sixteen tonnes range — it’s a value play at this point, and indubitably so.   As one of my colleagues in The PPT explained yesterday “I had a dream where everyone’s future wealth was determined by how large of a silver belt buckle they wore.”

I also added 2k of [[PAAS]] yesterday in the $21.65 range.   That was a standing buy order that just got hit.   That’s been happening a lot lately. 

On the gold front, I will look to add to Eldorado Gold Corporation (USA) [[EGO]] and perhaps some Allied Nevada Gold Corp. [[ANV]] today, as I got my IAMGOLD Corporation (USA) [[IAG]] position up to 10k shares as of yesterday as well with a buy in the low $14’s.     For the record, I am not adding any [[SLV]] or [[GLD]] here, as I still have half my positions left over from the December sales. 

If anything, I will add more [[AGQ]] today, and judging by it’s price, that may be soon.

Best to you all.

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Update:  Sorry for not mentioning the banks, which continue to look good, even as the Great Bankers (Geithner and Bernanke) continue to look bad (and mad) before the dopes in Congress.  Odd, no?

  BB&T Corporation BB&T Corporation [[BBT]] continues to be a top pick, and even the stalwart sons of the Confederacy down at Sterne Agee and Leech(es) have given it a “buy” with a target of $33 (my target is $38, as you know).   Thanks to The PPT for that bit of information.    

I also like Pacific Capital Bancorp [[PCBC]] on this weakness, just remember it is a lotto type pick, and go lightly, Holly.   Fifth Third Bancorp [[FITB]] and Huntington Bancshares Incorporated [[HBAN]] continue on the Crosby Still Nash & Young theme of “Four Dead in Oh-hi-oh” — as Nat City and Provident are already dead, and these may survive, AND MORE.

Best.

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Busy, Busy, Busy.   Yeah, you got nothing today, but I threw some calls down in The PPT, because theys mah peoples, and theys payin’ the bills.  So sorry.

I bot some  more Silver Wheaton Corp. (USA) [[SLW]] calls — 40 more June $11’s at $4.30.   That brings my tote up to 160 in that class.   Yeah, there might be some more pain in this name, and in my other precious plays, but you know what?

I’m not going to get overly concerned. 

 I’m shrugging off this “Volker scare.”

I say here for you — it’s bullshit.   Rhetoric.  Albumen.

   I knew we’d have some sell-off and the PM’s were way ahead of the rest of the market in this cycle decline, which means that they will likely be done before the rest is too.

I’ve been adding tons here on Friday and today, and as I mentioned I was actually up at Friday’s close.    Not so much today, but that’s only because my hedges “gave back” some of Friday’s wins.    Those are the kind of losses I can accept.  I consider that the equivalent of paying off Sal & Tony for “protection.”    If we go bull green from here, I’ll be happier than Harpo at the Thai Masseuse convention, and I’ll sell those hedges at a loss, if necessary.

But now, they stay, even as a I load up on 4k more [[EXK]] at $3.45.    2k more IAMGOLD Corporation (USA) [[IAG]] at an unfortunate $14.31 (again, I’m not worried), and 400 more Royal Gold, Inc. [[RGLD]] at $44.52.

Between today and Friday, I’ve been loading up on PM’s and banks.   I didn’t add any banks today, but I think I may take a third swipe at Pacific Capital Bancorp [[PCBC]] and BB&T Corporation BB&T Corporation [[BBT]] .   One other playah that I bot last week is Fifth Third Bancorp [[FITB]] .  I may add this one as well tomorrow.

I may  look at coming out of my final [[GDX]] and [[SPY]] hedges tomorrow as well, as they are option hedges.   My only other remaining hedges besides those are [[QID]] and [[BGZ]] , which I will likely hold until I’m sure we’ve turned back to the green.

Make no mistake, I’m extremely bullish on the continuing inflation trade here.  Bernanke will remain, and so too will the continuing flog of the dollar.   Play that game by buying select equities and precious metal bangers.

Bless you all, and I mean that.

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No, it’s not what you think.   I’m talking about  a jump to value ovah heah.  

Getting ready to add even more Silver Wheaton Corp. (USA) [[SLW]] this morning at $14.87 (announced on The PPT yesterday) as I have a longer term buy-stop in at that level.   Also liking Allied Nevada Gold Corp. [[ANV]] at these ridiculous levels as well.  

The one thing that’s great — and horrifying – -about these PM miner markets is that  you are never really “out of the game” until that final ridiculous blow-off top.   There’s almost always an opportunity to grab shares cheap thanks to the high volatility, and more important, low float aspect of these markets.

I am hoping for a nice hard sell off into the 10 o’clock time frame.  Hard enough to make one’s kidney’s seize up like they’ve got hold of a spot of rancid hot cawfee.  

I want to buy into that fear this morning.   I am putting on the armor of steely determination now.   

For your bennies, I’ll be looking at the gems — not only the above mentioned two, but Eldorado Gold Corporation (USA) [[EGO]] , Royal Gold, Inc. [[RGLD]] , [[EXK]] , [[PAAS]] , IAMGOLD Corporation (USA) [[IAG]] and yes, Chanci, even [[SVM]] for the first time for me.

Don’t forget also about the bank stocks I’ve mentioned — BB&T Corporation BB&T Corporation BB&T Corporation [[BBT]] , PNC Financial Services [[PNC]] , Pacific Capital Bancorp [[PCBC]] , Huntington Bancshares Incorporated [[HBAN]] (watch for earnings on this last), and the two LED sweeties — Cree, Inc. [[CREE]] and Veeco Instruments Inc. [[VECO]] .

Last, note the ags are again on the march.  My favourites here are The Andersons, Inc. [[ANDE]] , Sociedad Quimica y Minera (ADR) [[SQM]] and of course, the Franken-Corn Friends at Monsanto Company [[MON]] .

I hope to have more for you later….  Hit ’em low and hard.

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