Joined Apr 19, 2009
721 Blog Posts

Part of the Plan?

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Today looked like the the long awaited respite we”ve been waiting for in the miners.  A faithful poster pointed out AEM yesterday as a possible buy.   I like it here in “accumulation size” especially with that fat 2.5% dividend (that’s phat for the miners).


I also hoped you joined me in indulging in your favorite quality stock purchase these past two days.  I chose SLW, but RGLD still looks great, as does EXK and AG.

Best to you all.



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Welcome To The Hotel California

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There’s Still Hope When There’s Still Talent and Beauty, California


I read an excellent piece in the Wall Street Journal this weekend, about a New York-born, Cal-Berkely trained demographer, a self-described “Truman Democrat” now teaching at admittedly center-right Chapman University in Orange, California.  The piece, Exodus” href=”http://online.wsj.com/article/SB10001424052702304444604577340531861056966.html” target=”_blank”> Joel Kotkin: The Great California Exodus, has Mr. Kotkin bewailing the current state of California’s economic environment, and the effect it’s having on the middle class in that state.

I think it’s instructive, especially given the rhetoric we see being wheeled out about classical economic models of “capital investment + smart ideas = employment growth.”  The left parties in the U.S. are again using the hoary phraseology “trickle down” to describe this time-tested capitalist model, while somehow trying to advance central planning as the “hot, new equitable” thing.   But what have central planning, high taxes, and a large and intrusive government actually brought California?

Good schools?  Not anymore.

Green jobs? Not enough to make up the ones lost in traditional energy, not mention other economic sectors.

A robust public sector economy? Well, yeah, for now at least…. (except for the pensions)…

Tax equity?  Well, yes, if you mean that people making over $48,000 a year are paying almost the same in state taxes as Larry Ellison (9.3% and 10.3%, respectively)

Affordable Housing?  Well, sure.   As long as you are either  indigent, or one of the Jobs kids, given that “free” and “it doesn’t matter” are the only options available to housing shoppers in the region.

Ironically, it seems California — once the 5th largest economy in the world on a stand-alone basis–  has become our very own version of Europe.   Unfortunately, today’s California resembles more a higher tech version of Medieval Europe than it does the more modern variety.   You see, California is swiftly transforming into a place where only the extremely rich nobility, the Sheriff of Nottingham (& his henchmen)  and some very contented peasants can bear to live in anymore.  As Kotkin puts it in his piece:

A worker in Wichita might not consider those earning $250,000 a year middle class, but “if you’re a guy working for a Silicon Valley company and you’re married and you’re thinking about having your first kid, and your family makes 250-k a year, you can’t buy a closet in the Bay Area,” Mr. Kotkin says. “But for 250-k a year, you can live pretty damn well in Salt Lake City. And you might be able to send your kids to public schools and own a three-bedroom, four-bath house.”

According to Mr. Kotkin, these upwardly mobile families are fleeing in droves. As a result, California is turning into a two-and-a-half-class society. On top are the “entrenched incumbents” who inherited their wealth or came to California early and made their money. Then there’s a shrunken middle class of public employees and, miles below, a permanent welfare class. As it stands today, about 40% of Californians don’t pay any income tax and a quarter are on Medicaid.

What’s worse is that such a system, if unamended, devolves into a vicious cycle of Exodus, especially given that this “European State” doesn’t border on neighbors requiring a passport for entry.   The result is not so much a brain drain (California still commands its share of brains thanks to Silicon Valley and the defense industry) as a family drain, and a “middle class” drains:

Mr. Kotkin also notes that demographic changes are playing a role. As progressive policies drive out moderate and conservative members of the middle class, California’s politics become even more left-wing. It’s a classic case of natural selection, and increasingly the only ones fit to survive in California are the very rich and those who rely on government spending. In a nutshell, “the state is run for the very rich, the very poor, and the public employees.”

Again, I have to chuckle.  In one of our bluest states, not only is the left driving out “the middle class” that the President is so often claiming support for, but they are pushing them to traditionally more conservative states like Texas and Utah, who have now become low-tax hubs for the same cutting edge technology that made California the economic engine of the 20th century.

Circumstances such as these that afflict California and my own native New York do not occur over night, but are rather the result of a series of choices taken over many years of feasting on economic prosperity, once gladly and now grudgingly shared.   We must ask ourselves, are these once-great states merely the natural victims of their own success?  Is the U.S. doomed to fall into the same gray spiral we see now afflicting the increasingly infantalized — and seemingly helpless — states of Europe?

Serious questions which must be taken seriously and soon.  Are you game?


I reached into my reserve stores today and bought 40% more SLW at$ 28.32, as reported in The PPT this afternoon.  I am prepared to buy more, as I think we may even see silver touch $30, or slightly below once more, like it did back in September/October of 2011.  Remember those painful times? That’s what has me salivating.

I am prepared to buy more.   My best to you.



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The Blind Leading…



 I’m just not certain I can take it any longer.

You know I have a theory.  The theory goes like this (and I admit, up front, it’s far fetched)…  Sometime during the Cold War, certain powers that be in the U.S. and Europe decided, in the name of keeping the West free, to innoculate their states periodically with a nasty dose of tyrannical gov’t .   They did this knowing that electoral politics would eventually usher in a balancing freedom-oriented policy regime that would relax the tyrannical restraints and allow natural markets to “flush out” the body politic as it were, and restore the “classical” economy to it’s normal value-creating state of spreading prosperity.

A lot of people think that first post-War inoculation shot came with Jimmy Carter’s inept single term.  However, I believe Carter was really just the capper of a particularly loathsome trio that started with Lyndon Baines Johnson and was followed directly by Richard “Wage /Price Freeze” Nixon and his milquetoast second veep, Gerald Ford.  Those three created a cycle of war and inflation (Nixon took us off the gold standard for good as well) and stupid economy gumming regulation that culminated in the body politic crying Uncle for a respite.

In that regard, Reagan only had to do a few things, just as Romney will only have to do a few in January of 2013.  Like Reagan did, Romney will only have to undo some of the more illogical (and unrealistically ideological) regulatory burdens thrown up over the last six years since the Pelosi-Reid wagon rolled out of the 2006 electoral winner’s box.   Too, Romney will have to dismantle Obamacare, and that might get sticky, considering it’s tar-baby-like, multi-thousand page, unfunded legal status.   Tax reform will also take some hard work and many late night battles over ideology and dollars and cents (sense?)

But our economy is a funny thing.  It’s self-repairing for one thing.  In fact, ironically, all it really needs is for the beatings to cease for morale to really improve.  Everyone who ever got past elementary economics knows that does not mean blaming regulatorily-enforced high carbon fuel prices on “speculators” instead of on a police-state-level blind ideology that won’t take even the most elementary steps (Keystone is not just a great light beer, Mr. President) toward self-preservation.  Smart citizens — and even not so smart, but just not so readily blinded citizens — eventually grasp the simple basics of supply & demand, and from that can intuit where the power to manipulate markets really resides.

But the good news is that such dunce-cap buffoonery will soon be over.  The sleights of hand, the excuses and the kabuki grow wearisome for all but the most ardent of clinging acolytes.  The counter-scams and red herrings grow less comic and more maudlin.  Soon gone.




SLW under $30, RGLD under $60 and EXK under $9.00 are birthday presents like not even Midas’s daughters received on the days of their betrothal.  If I get ten seconds of meeting-less, conference call-less bliss tomorrow, I may even pick up a bail of in the money options.

Bless you for your patience with me, and with our economy, ever resilient.


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Finally, I’m on “Vacation”



I can finally utter a sigh of relief as I settle into a relaxing half week or so of sun and stupor on the Treasure Coast.  Tomorrow, I sunbathe and wrangle with bull sharks in aquamarine waters!

HA!   Just kidding, actually I’ve got two conference calls tomorrow morning and then another 8-12 noon job on Thursday.  Then when I get back Sunday evening, I can pack my bags for all this scheiss to start all over again, this time not in the Orange Grove State, or with any mai-tais to accommodate.

Listen pals, I know I’ve begged your mercy before, but this time I think I might be straining your good will to it’s failing point.   Listen, I know something’s wrong when my only knowledge of the public markets is via reading my e-mail blasts from Chess, RC and Jeremy (The PPT ratings).  I get all kinds of garbage through all manner of metric, but those three have been my anchor these last weeks.   Meanwhile, I’ve done very little in my own portfolio — perhaps out of stubbornness, but perhaps also because I believe that the miners are so beaten down in relation to the price of gold and silver that I think this may be the best buying opportunity I’ve witnessed since the March 2009 recovery.

Yes, you heard that right.  Every metric I look at shows vast undervaluation of the precious miners.   If you never touched these things, now is the time my friend.  I am even thinking of looking at the options market here.   Today’s divergence in the PM’s versus the overall down market may have finally revealed the truth about the liquidity that cannot be denied in these names.

And somehow, it all makes bizarre sense.   Listen — we just had a deal go out that had more bids on it than anything I’ve ever been associated with in my career, and yes, that includes my time in the white shoe world of the Fortune 500-exclusive IB’s of Neuva York.  It’s a shark frenzy out there in the private markets ladies and germs… those dudes have capital– shitte tonnes of it —  and they want to spend.  You think its twin in the public market is really going to puke it all down here?  Good luck, pal.

BAA, you sick fuggers.  BAA.  Then RGLD, SLW and UPS, and MON.  At least that.

Wish me luck, and if you cannot stomach that, then wish me survival.





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“X” Marks My Spot


The Louisville Cards went down to the infamous Junior NBA Team on Saturday evening and I have only recently discarded my widow’s weeds of mourning.  I have not neglected you, however, as my heart and my long term picks remain with you, even when my corporeal presence is otherwise occupied.

As for today, it seems the U.S. dollar is doing it’s usual plungerooni below $79 again.  When it breaks $79.60 with vigour (sic), please call me.  Until then I will be eyes forward on all of my “X” play metal picks.   Of particular interest are the siblings XRA and it’s offshoot XG (or is it the other way ’round? No matter).    XRA is currenlty up 5.5% at $2.89, and XG is up over 3.6% at $6.26.

My other X-play is on the silver side — EXK, my old favorite, up 3.8% at $9.86 this day.    For lotto type picks, I continue to recommend the accumulation of BAA and AAU, both also up today to varying degrees.  

Last but not least, let’s not forget the rare earths.  I know they are frustrating, but you will kick yourself if they take off without you.  Besides MCP and REE (the more grandfatherly of the bunch), I continue to nibble on AVL and QRM.   As always, remain cautious.  Any rebound in the dollar will negate all this good stuff, and signal us to lighten our loads.

Best to you all.





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After the Gold Rush

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Gold’s not been so hot, here, but I’m patient, and I’ll wait for it to break out of this oversold condition much like I’ve done many times in the past.   There’s been little conditional change in the broader underpinnings of this PM market.  We still have massive liquidity demand — if only for bandaging purposes on European and American debt problems.  We still have too much of our economy being crowded out by government creep (and creeps).   And earl and ag inflation, despite the recent sell-offs, are a constant threat.  

I am therefore comfortable holding my horde whilst exploring other alternatives that have been solid for me for years.  Among those, you know of UPS and MON, which I’ve spoken of many times.  I still like those for the very long term.   There are a couple of other names, however, that I have talked about much recently. 

These are stocks that I would categorize as “hold forever,” as long as they continue to carry and groom their historically strong management teams.  You just put these names away and expect the best.   Then one day, they reward you, like Markel (MKL) did this week. 

















I would encourage you to study up on Markel, some would say they are “the next Berkshire Hathaway.”  All I know is that these are very sharp guys on the insurance side… very workman-like and below the radar.  The kind of stock I like to hold forever. 

On the consumer products front, LANC (Lancaster Colony) — a name I’ve mentioned here beofre– is another gem that does nothing but grow wisely on your supermarket shelves.  It looks real nice right here: 


 Read up on LANC as well.  It’s good niche food business, with a sweet little dividend to keep things happy while you wait.  Slow and steady wins the race on these smart folks.

Last, for those of you who are jonesing for a gold pick, there  is benighted AAU, which #6 asked me about on my last blog post.  It’s looking oversold like the rest of the gold market, and it sure looks like it’s in opportune spot here resting on its 200 week EMA















 Patience will be rewarded, as it has been for a decade now. 

 Best to you all…


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