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What Goes On at Jake’s Desk Whilst He’s Away
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What the hell goes on around here while I’m gone?  I mean, a man takes a couple of days to go on a top secret mission, and the place falls to wrack and ruin.   I come back and my desk is all askew… my papers molested, my fine Cuban cigars gummed and caked with salivatory drool.   What in the bloody blazes has been going on in my absence!?

What’s that?  Random Errand Boys stealing up to my desk and attempting to short the silver lode??   My impulsive young man!  Why not just go bounce on the high-tensile strength trampoline with a fistful of extra-sharpened #2 Ticonderoga Pencils??

Honestly, I just don’t understand the tendency toward self-immolation that pervades this site in my absence.  Why is it some many of you “traders” look to shower yourselves with butane and then engage in “roman candle horseplay” of the most ill-advised variety?   This is not an episode of “Jackass,” this is high-thesis investing!

Don’t you like money?

Why take the high risk trade?  For thrills, a la Beavis, et al?

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It’s nonsensical, I tell you.  If there’s one thing my compadre Gary Savage and I agree on… it’s this maxim: NEVER SHORT A BULL MARKET!

How many times must I repeat it, and still, like moths to the flame, Icarus to the sun and an Obama Voter to a Trans Fat protest march, you insist on ruining your fragile portfolios by playing with pinless grenades whilst cavorting in a cranberry bog.  And here you come again, your fingerless hand-stumps held out in silent imprecation, blaming me for your troubles.

Well, it’s true, I am here to help.   But you mustn’t be led astray again.  Remember, fading over-confidence in certain sectors of this site is almost as sure a signal as an overbought dollar.   Here’s the latest on that curmudgeonly currency, btw… note how we are advancing into significant zone of resistance on this weekly:

 

Note that I think the dollar can extend all the way back up to that0 $78.10 area, where both the 61.8% golden ratio fibonacci retrace and the rising trend line offer strong resistance.    So don’t be surprised if we pull back a touch more in both the markets and the commodities in the next couple of days as the dollar reaches that resistance level one more time.

After that re-touch, I predict that we will see one final glorious “plungerooni” in the dollar… down to the lows indicated on the above weekly chart.   At this juncture I expect the typical bull here will get drunk on cheap cherry wine and– in the the throes of sock-tongued inebriation– bury his face in the bosom of some local tavern wench.

This, I would contend, would be an ill-usage of your time.   I would rather suggest taking that period to phase out of your remaining long positions including, sadly, your precious metal miners (at least for the nonce), whilst battening down the hatchest with some choice shorts (like the Skiffles).

In the spirit of caution I of course must warn you:  should we break significantly past that $78 dollar index price marking our resistance, all wagers are off, and the window should be closed all the sooner.

My best to you, my Nuttiest of Professors.

 

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Not to be overBEARing, but it looks like the US Banquing sector is going to have a rough time of it in the next couple of days.  Why not take advantage of that turmoil by setting aside some silver and gold for your posterity?

Besides, who wouldn’t want to kick “JP Morgue” in the teeth by buying silver, or so the old wives tell it?
I’m not going to tell you to do anything I wouldn’t do, so I’m not imploring you to go out and swamp your local numismatic dealer with pleas for hard bullion and coin.  I think this should be a part of your overall portfolio, but I think there are adequate substitutes still available under our current very liquid market system.   Unlike our fellows above, I don’t believe SLV and GLD are “false flag” operations designed to trick one out of one’s natural incentive to purchase physical.

I could be incredibly naive, but I trust the current rule of law enough to believe the audits of these depositories are valid.  Why?  Because the idea is too much of a moneymaker to allow it to be waylaid by a lack of credibility.  Both SLV’s iShares and State Street (GLD‘s parent) have too much invested in barriers to entry here to screw up a good thing with a fraudulent audit.   I like to use Occum’s Razor when analyzing these situations, and in this case, the easiest path to big money is to establish a creditable physical substitute.  Why screw w. that?

As you know, I also believe that another liquid path to trading gains is in the highly leveraged miners.  I don’t have to remind you that the most highly leveraged vehicles in that sector are the royalty financiers to those miners — namely RGLD and SLW of gold and silver concentration respectively.

After that there are many names, but if you want to act quickly, you are best throwing dough at GDX, GDXJ and SIL, which are the large cap gold, small cap gold and silver miner ETF’s, respectively.   I point you to these names because liquidity will be king here, and there will be volatility on top of volatility in the coming weeks.

Be ready to snatch opportunity with these vehicles and yes, by shorting the banks as opportunistically as possible through SKF, and even FAZ if you dare.  Remember to keep an extremely tight leash on both, however, for they will turn and snatch out your gizzard in the blink of an unsuspecting eye.

Best to you all.

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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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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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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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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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