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Some prefer to chart the mathematical spreads between petroleum jelly and its tasty chemical equal, petroleum margarine (I can’t believe it’s not butter!), all the while poking a charred oak barrel stave into the entrails of a freshly killed hedge mole for further signs of rain or drought.

Me? I’m a man of simpler methodologies and observations. And over the last ten years, there’s rarely been a more able indicator than the following monthly view of this pathetic store of national goods and services:

Note that we’ve recently breached one near term support.  I don’t expect the dollar will be done keening into the night until we reach that second basing area, well below $71.00.

Luckily for us, that means we can still make some lemonade and Jack out of these lemons and white corn.  Despite the opprobrius doomsaying of the terminal top pickers, I’m coming across a number of charts that do NOT look like the now-cliched blowoff top we’re all expecting in the physical commodities, and specifically, the precious metals.   In this case, the miners have become “the tell” after lagging the physical commodities for some weeks now.

Take for example one of my finest stalwart Jacksonians, ANV.  Remember this set-up chart from mere days ago?

Pretty measured flag and pop formation right?   Now look again, mere days later… Does this methodical ascent give you pause to believe we’re pricing ourselvs to oblivion here?  Not me:

I get the same frisson from a number of other names that have pulled back and consolidated while the commodity metals themselves have gone somewhat bonkers.   As a result, these babies have room to roll for at least another goodly ascent to the stratos.  Consider AAU, which I’ve accumulated quite a bit of in these last weeks.  Recall this weekly chart from just before Valentine’s Day?

Now look at what has taken place just these last two days:

Does that chart scream out “exhaustion” to you?  Me neither.    

Last, let’s not forget some metals which aren’t so much “precious” as they are scarce.   Because of that concern, we can see moves and profitability in names like REE and AVL like we’ve seen with some of our precious names.   My favorite of the moment continues to be QSURF, which broke to new highs today like it was hocking silver on the side:

Go get ’em, tigers.  

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[youtube:http://www.youtube.com/watch?v=lyl5DlrsU90 450 300]________________________________

I don’t know what to say.   Silver is even higher over it’s 200-day EMA  (53%!) today and yet AGQ continues to sally forth, like the great Black Knight knocking aside rivals like tin pots, only hours before losing all his arms and legs to a timorous King Arthur.

The winds blow here and the lights flicker, and yet the rancorous dollar is not held aloft.  It’s a rag, a pliant kerchief, a spoiled cabbage.  What do make of it but furthur substitution in proper specie?

Listen, I havn’t a lot of time.  My lights have flickered once, and the next blow will likely break my server from the Interwebs.   Therefore I give you my “best idea of the night,” in the form of one of my favourite (sic) Jacksonians, mighty ANV.  Like RGLD the other night, this looks ready to be purchased here and now.  Now is the time for gold to begin to catch it’s mercurial brother, methinks.

Due to last night’s technical difficulties resulting from tornadic activity, I will not chance furthering this message, but be on the lookout for a number of gold names breaking out like BAA did yesterday.   My best to you.

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[youtube:http://www.youtube.com/watch?v=Fo48YpNOesQ&feature=related 450 300] _______________________________

Ugh.  I cannot bloody believe it.  I just had a perfectly wrought lengthy post with graphics and witticisms galore… I pressed “Publish” and “voila!” I got the screen of zero tranquility.   Apparently my entire post was wiped save for the foolish youtube video I’d downloaded earlier and “saved” to make sure it was showing up.

These are the petty frustrations of the financial blogger my friends and they are enough to drive one mad with righteous anger.   So forget about the witticisms and the re-boot of my day of travel.  Just know that I believe silver is becoming dangerously overvalued here at 52% over its 200-day EMA, while gold stays strong but humble at only 11.4% over it’s same metric.

I didn’t sell anything more today because I was either driving or talking or talking and driving the entire trading session.  Had I seen these things, I would’ve dumped more silver miners.   I’ll probably do that tomorrow.   In the meantime, two friends have shown progress.   The first we spoke about mere days ago.  

Look what XG has done since:

The second is our beloved Grandmama… asleep these many months, but waking now to a new day.  Just as I predicted AGQ would rise to $300 this year, so too did I prophesy that RGLD would reach $100.   I think today was a significant step toward that goal.   Grab it on the retrace:

Note, this is a weekly chart and that’s one big grandmother of a consolidation…

I also like RBY here… stay well, my friends.

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The first day of corn-back dollar trading started out promising, but ultimately ended up in a failed “pop” over the 20-day EMA ceiling. Late news out of Central Illinois informs us that the Fed’s newest Moline Corn Repository, while heavily fortified against human intervention — a la “Fort Knox” in the days of gold-backed currency — was most unfortunately sited next to a large hog farming operation. What happened next was true Bernankian justice…

Apparently the sus domesticus hordes resident next to the Corn Repository were overhwhelmed by the late afternoon corn-fruit scent coming from said Federal vaults, and that lure, excacerbated by an early Spring hormonal rutting urge, had the neighboring porcine hordes rending the outlying electric fencing and within moments, consuming the precious American staple (and currency backing) with piggish glee.

By late afternoon trading, one third of the Federal Reserve Currency-backing outstanding was in the belly of some of the nation’s most desireable pigs. The following daily chart illustrates the day’s action — especially the failure of the corn-dollar to break back above resistance– with heat-seeking stoat-like acuity:

That’s two days now that the corn-dollar has closed below $76.00.  Not good news for you dollar bulls (cough! cough! Cain Thaler! cough!).

However, there is a glimmer of optimism available as well.  Late tonight an emissary for the Fed mentioned that since most of the most recent reserve backing is now in the gut of some prized Illinois sows, Chairman Bernanke would announce soon the official newer and stronger “pork belly bacon fat-backed dollar,” later this Fall.

As a sop to certain liberal constituencies, the Chairman has also acceded to locate the new Federal Repository on 125th Street in New York City, next to Sylvia’s.   No further devaluation is anticipated.

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Carry on… most likely with ANV, which has been a star in my portfolio this week, as all Jacksonians should be.

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[youtube:http://www.youtube.com/watch?v=Et02g9OQ-LM 450 300]

The Witch Tells All, at Last

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As I write this, silver is up another buck.  You review the above and you have to say to yourself — “What if all this bullshit about JP Morgan is really true?”

I said to the Monsieur tonight that I had largely discounted all the rumours (sic), all the tall tales.   But, my gosh, what the hell is going on here?   Silver has all but broken free from it’s traditional dollar anchor. 

What’s more, silver’s broken free of it’s golden companion.  This is very interesting… but is it sustainable?

Truly, I know not, to be honest with you.   I know that silver has been historically undervalued, most recently as a result of the great photograpy scam.  If you follow the industry news, the effect from a switch to digital photography has been largely absorbed.  

So is this the final breakout we’ve been anticipating for so long?  I dunno.  I’m leaning towards “no, not yet.” 

But this is why we are holding on tight to the core.  Prices are out of synch, and the dollar is near bounce levels.  We’ll know soon enough whether we ought to shed anything. 

Right now, it’s a day to hold your tickets and enjoy the show, no matter the direction.  I continue to like everything I’ve already mentioned, and more.

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Relax, have a smoke with a glass of fine bourbon, over rocks.    Yes, I realize that the price of silver was up almost 5% today, despite both U.S. and Canadian stock exchanges being closed for President’s Day and Family Day, respectively.

Yes, I realize that, were those markets open today, anyone holding AGQ would be running around, madcap-style, kissing their latest brokerage statements in adulatory dis-belief, handing out shiny new dimes to children and mendicants as is the right of all wealthy individuals.  

But savvy AGQ veterans have seen this kind of thing before and so, rather than spending the night on the Best Buy website outfitting their newly excavated man-cave with 126″ laser-guided 240 mhz 1080dpi 3-d LED moon-scaped wall displays, they are instead hunkering down and preparing for a temporary blow off spike in the precious markets, which may join equity markets in a pull-back tomorrow, no matter what the U.S. dollar does.

I will likely wait unti 10 a.m. to do anything at all, which would include eating a number of samiches (sic), lightly salted, lightly peppered.    As yesterday’s SLW illustration showed, I am expecting a run for that stock back to the old highs, and then a pullback, either at, or slightly higher than those levels.  If  we break old highs, I expect the pullback to be shallow, if we are turned before breaking to new highs, I expect we may find ourselves right back at Friday’s close when all is said and done.

You will find that if you watch these things over many years, you will get a sense for their trickery.   One would think that in a relatively consistent bull market like we’ve had for the last ten years in PM’s, riding this trend would be relatively simple.   Nothing could be farther from the truth.   They are evil wood sprites, as a rule, and they take pleasure in your pain and indecision.

They really love leaving you behind as well.  Yes, I am talking to you, PM skeptic.   If you have been watching this blog for any amount of time, you have no doubt kicked yourself enough times to form a large callous on your own buttocks.   Do not be chagrinned, I carry a similar leathery ass, and it’s simply the lot of all PM investors and traders.   The wood sprites are simply too crafty to allow you to take every trade profitably.

That is why I have urged you to always “keep a core,” and trade around that nucleus like the best Fermi Level Physicist in the CalTech Senior Laboratory.

Tomorrow we shall observe with anticipation and trim like expert barbers if necessary.   For now, we enjoy the anticipation… along with a finely rolled Dominican Cigar and only the best bourbon money can buy.

Best to you all.

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