Joined Apr 19, 2009
721 Blog Posts

The Shame Of Prejudice

Dont Hate Me!
Don't Hate Me!

I don’t have a lot of time to mess around today, as I’ve got to catch a plane to Noo Yawk for a weddin’ this weekend.   I”ll have you know that I come from one of those “wide & deep” Irish families, and as a result have about 2,326 first cousins on my mother’s side, which also means most of my “vacations” from spring through December consist of going to a wedding somewhere.   Ah , well — you live with these things for family.

That said, I wanted to comment on a bit of prejudice against the purchase of silver and silver miners that I encountered on the PPT the other day — coming, to my surprise, from one of our better known bloggers (he shall remain nameless for dignity’s sake)….



(cough! cough! ack!)

Anyway, I wanted to leave this note for those who might be concerned about this lack of discretion, and warn you not to take heed.   This is the absolute best time to be accumulating silver and silver miners, as the Blees Rating (large money accumulators) is over 90 (out of 100), and the government is destroying our currency at a rate matched only by the rapidity with which ACORN has signed up phantom voters for the next election.   

Most important, you must not heed the prejudicial rumours (sic) posted by some that accumulating silver will give evidence  that you may be one of these:

Not that there’s anything wrong with dressing special on one’s free time.

And, yes, other stocks are doing well here and some better than the JCH.   That’s a good thing, and you should take this opportunity to convert some gains into harder assets.   Because believe me now and hear me later — when the time comes, silver will take off without warning, just as it has in the past — leaving many gaping in its wake.   You want to have set aside your store of acorns for the winter.

For review, I like PAAS, SLW, SSRI, SLV and a smidgeon of EXK and AGQ…. and please don’t forget get some hundred ounce bars of the physical as well.   Same goes for gold coins, and EGO and RGLD look nice here as well. 

Be well all,  and I’ll check back in tonight or via Crackberry earlier.


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New Jacksonian Core Holding: I Am Gold

"I am Gold, am I not?"
"I am Gold, am I not?"


Not a lot of time for explication on this one, as I’ve got a lax game to get to.   I’ve owned IAG (NYSE) (PPT: Buy) on and off, and have had a small amount since the $HUI started looking good again, back in March.   I went back in and got some more today on this consolidation breakout, at around $9.25.   I will probably will wait for a test of that zone to get any more.  

 In any case, I’m officially putting this one in the Jacksonian Core, as I believe it’s “all grown up” now, and ready for long term hold.   I think you can see from my notes on the daily and weekly, why I think it’s an emerging power.   I like stocks that break out from long consolidations, especially when the market favours (sic) their sector.

IAG Daily Chart
IAG Daily Chart

And the Weekly:


 Important: Special thanks to Cap and his Joisey Harem for posing for today’s illustration.   Best to all.


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In the Glow of Jackson’s Glory

Money is power, and in that government which pays all the public officers of the states will all political power be substantially concentrated.    — Andrew Jackson

What a great day for the Jacksonian Portfolio, no?   I felt like the Great Man re-born, breaching the lines of villainous (shorting) Redcoats with my trusty white charger, cutlass slashing down upon their ridiculous feathered bonnets, calling for my Horsed Kentucky Rifleman Sharpshooters to release another volley of musket upon their pasty-pale visages.  Triumph!

And what’s more it’s a triumph over fear, as well, for with our solid Jacksonian Core Portfolio, we know that these wins are not only for today, but will be substantiated again tomorrow.  For when the fickle winds of Washington change course again, and blow against our frail banking system’s walking corpse, rather than hold it aloft as it has, we will be prepared.    Hard money and assets will be our stores of value, no matter what our increasingly Zimbabwean central government  shall make of our paper printed with the General’s startled masque.

Today’s “core” wins — “early” wins, I call them — include PAAS (+6.82%), GDX (+5.97%), SLW (+ 3.03%) RGLD (+3.93%%), NRP (+3.68%), SLV (+2.89%) GLD (+1.46%)  and newcomer to the Core Portfolio: SSRI (+6.62).  

Of the Core that was involved in earnings tonight, we have TSO giving back strong wins from today (currently – 1.52% @ $17.53 in AH) and Mr. Anderson — ANDE — up large after hours (currently +13.95% @ $20.10 in AH).  You will recall that I sold the $17.50 June calls on TSO two days back, as I felt it was getting overextended.   I will likely close that position tomorrow, at profit.    I still retain my unhedged position in ANDE.     Other Core holdings that were down slightly today include MON (-0.88%) which needed a breather, and TC (-0.91%), whose 7 cent pullback today was also not unexpected after many days of gains.

Other non-core silver and gold plays I am currently invested in include EGO (+3.69), ANV (+3.82%),  and EXK (+4.85%).    Last, recent recommendation ATHR (-1.16%) was also off a bit.    On the oil front, I bailed on all but a stub of my triple earl ERX (+10.71%) at just under $34.00, as that was where a significant fibonacci line lay, and I’ve learned to respect the fibs on these fast moving triple ETF’s.  

 I am still bullish on our friend Earl, however, as I have been since Fly cursed his name.   My two “core holdings”  — which may soon be nominated to the Jacksonian Core — are PBR (+2.93%)  and OXY (6.66%) , the best of two nations, in my humblest opinions.

I must admit to revelling in some of Fly, RC and CA’s crazy picks today (among them SONS, and FLOW), and I even jumped into one of my own (ABK)  — it is fun to make hay while the SONS is shining, after all.   But make no mistake, these discretionary picks are a tiny portion of my portfolio.   For like the leaves of summer, these high flyers will soon fade, as will our newly reinvigorated “saved” banks.   We must always be girded with our Jacksonian Core to withstand the coming tsunami, and we will continue to build on that foundation as we jog onward.   My best to you all, and keep building! 

Important: Hat tip and my thanks to Trader Caddy and to Chanci for the suggestions on SSRI and EXK,  respectively.  

Aside: If I could tell you to get into one sector in the coming weeks, my friends, silver would lessen my worries for you and yours.


UPDATE: I decided it would be almost hypocritical of me to urge silver on my blogreaders w/out taking at least a small position in AGQ (Proshares Double Silver) .

Or that could just be me rationalizing my inner Yukon Cornelius.  

You make the call.     That said, I’m picking up some AGQ here @ $42.87.

UPDATE:  Picked up a little more at $ 43.55  

Caveat:  VERY VERY VOLATILE!  If you buy any of this crazy stuff, there’s a 73% probability you will be drafted to become intergalactic Herald to a very large planet eating sub-god, with little sense of humor, and you may lose your pension.


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Tammany Hall, Washington, D.C.?

There are many reasons that we must prepare our portfolios for more stormy weather, Jacksonians, and the increasingly dangerous interplay of our Federal government in the formerly “private” sector, whether it be for alleged “stimulus” or “rescue,” is one of the most foreboding.

Case in point — there has been a lot of back and forth on the iBC blogs recently regarding the Chrysler re-organization plan, and the Federal Government’s role — reaching all the way to the White House — in “negotiating” the terms of the deal.    For sure the Republicans opened the door to this heretofore unprecedented interference with the perfidy of Lex Luthor (remember him?) and his banking pals, but the Obama Administration has really gotten into the swing of things, pirouetting from control of the financial institutions (ie, “the TARP losers”) to attempting to rig the already down on it’s heels U.S. auto industry.   

 In the latest news we hear that Obama’s people are attempting to “cram down” senior Chrysler bond holders in a less than typical fashion — by inserting unsecured creditors– specifically the UAW labor union — in front of senior bond holders.   There’s a very heartfelt — and angry — attack on this land grab found in this article, written by  “Evil Hedge Fund Manager (TM)” Clifford Asness of  ($20 bn) AQR Capital Management, who is not a party to these proceedings, but has a pretty good idea of where such machinations will end, and so has stepped forward in print.   Here’s a cogent excerpt from the piece (highlights mine):

Bankruptcy court is about figuring out how to most fairly divvy up the remaining assets based on who is owed what and whose contracts come first. The process already has built-in partial protections for employees and pensions, and can set lenders’ contracts aside in order to help the company survive, all of which are the rules of the game lenders know before they lend. But, without this recovery process nobody would lend to risky borrowers. Essentially, lenders accept less than shareholders (means bonds return less than stocks) in good times only because they get more than shareholders in bad times.

The above is how it works in America, or how it’s supposed to work. The President and his team sought to avoid having Chrysler go through this process, proposing their own plan for re-organizing the company and partially paying off Chrysler’s creditors. Some bond holders thought this plan unfair. Specifically, they thought it unfairly favored the United Auto Workers, and unfairly paid bondholders less than they would get in bankruptcy court. So, they said no to the plan and decided, as is their right, to take their chances in the bankruptcy process. But, as his quotes above show, the President thought they were being unpatriotic or worse.

Let’s be clear, it is the job and obligation of all investment managers, including hedge fund managers, to get their clients the most return they can. They are allowed to be charitable with their own money, and many are spectacularly so, but if they give away their clients’ money to share in the “sacrifice”, they are stealing. Clients of hedge funds include, among others, pension funds of all kinds of workers, unionized and not. The managers have a fiduciary obligation to look after their clients’ money as best they can, not to support the President, nor to oppose him, nor otherwise advance their personal political views. That’s how the system works. If you hired an investment professional and he could preserve more of your money in a financial disaster, but instead he decided to spend it on the UAW so you could “share in the sacrifice”, you would not be happy.

Asness goes on to mention how damaging such action can be to the fabric our capitalist system, and not just specifically to the non-TARP lenders who are holding out against the Obama Plan.   If the “government” starts taking sides in otherwise quotidian corporate restructurings, what trust will the private sector — not just hedge funds, but any large investor pools — have in any government or union associated businesses going forward?   

And how will that affect the pricing of their securities?   

From the standpoint of M&A valuation, unions are already anathema to private capital and tie a huge millstone around the neck of even the best companies who are saddled with organized labor.    This kind of side-picking will only drive those businesses’ long term equity values — and subsequent ability to grow — down even more.   

For a test — just ask yourself: would you buy a car built by a company largely owned by the Federal government and the UAW?   Even if you were sympathetic to the Obama Administration’s aims?  

 In the 1930’s this sort of corporate-government collusion led to fascism in a number of the “enlightened” European countries.   I’m not saying we are going down that path, only that we are looking at another major strike to the economy if we allow the government to continue to treat the sources of private capital as second class citizens, their legal standing be damned.  

Because the first tenet of capitalism is “Capital is Mobile” my friends, and it will fly to other pockets of investment where the risk-return parameters are more in balance if it feels threatened on these shores.      The President may discover this principle too late, much to his chagrin, and our own.

In the meantime, Jacksonians, as small investors,  all we can do is listen to Fly’s Goat’s singing admonition, and “be prepared*:”

 [youtube:http://www.youtube.com/watch?v=-nJOY0P84v4 450 300]


*(TBT, GLD, SLV, SLW, PAAS, EGO, RGLD, NRP, etc., etc., etc. )

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In the Blast Furnace

Very busy today, but I wanted to let you know what I was doing on the stock front, just in case.    Jacksonian Core Holding favorite TBT is butting against an intermediate term significant fibonacci line (61.8%) at right about $50.35, so I am trying to sell some calls against that position.   I like to go “next month out” on those, because it gives me the benefit of some time decay without being so far out that a nice move down doesn’t demolish the actual price like I would like.   I chose the June $51’s, which I got some sold at $2.05, and am looking at the rest at about $1.90-ish.  

 If you are not familiar with options, I’d recommend a number of these, but tops on the list would be McMillan’s book, and then John Murphy’s.   Murphy covers other things besides options as well, and he’s a decent writer.

Remember that if you are a true options rookie, you should be sure to get the proper authorizations from your broker before attempting to trade.   Don’t worry, there’s no IQ test, and I’m thankful for that.   

 All that said, covered calls —  the name of the above described strategy of selling calls against a position you already own — are the least risky of options strategies, as you already own the stock to “give back” should the call writing go against you.    For myself, whenever I write a covered call, I must be sure that I am willing to sell that stock at “price X” — which is the strike price plus any premium I received for selling the call.    

So you see a covered call’s upside is income (taxable at regular income rates, unless you sell LEAPs  and hold them more than a year), and their only downside is a sale at less than your optimal price at the point of expiration.    Since you are selling your stock at a price higher than it is today, your “loss” is only an opportunity cost, though you might find it just as painful as taking a loss on a poor stock.  

You can also sell put options if you are looking to purchase a stock but you believe the price is likely to go up.    If you sell at a good enough premium, you may end up purchasing the stock at a lower price than the strike you sold the put at.   Take the example of the June MON 90 puts, currently being bid at $5.20.      If you have sufficient margin to buy 1000 shares of Monsanto, you may want to sell those 10 puts today.    You will collect $5200, less commissions today.   Throw that in your bank account.   If MON continues to rise, and is over $90 by June expiration, you keep the money.   

However, if  MON is between $84.80 and $90 —  you have a nice choice in front of you.   You can purchase the MON shares at a discount — because you can now put your $5200 premium to work in lowering your total 1000 share buy price, or you can simply buy the put back prior to exercise, netting the difference in your premium (plus a bit of interest on the carry).    Not too bad, no?    Of course, you start running into losses below $84.80, but if you were planning on buying MON anyway, you’ve got $5200 as your down payment.

Again, be sure to read up about options before jumping into this pool, but the above are reasonable ways to use options to your long term advantage, without taking a ridiculous amount of risk.   Be sure to consult with your financial advisor before taking that first decision, though.

Updates:  I added some ANV (PPT: Sell) today on this pullback, and am looking hard at EXK (PPT: Buy)  (thanks Chanci) and some SSRI (PPT: Buy) (thanks, Mr. Sachs) as well.    I am almost embarrassed to add that I jumped on some ABK  (PPT: Sell! Sell! You fool, seeelllllll!) in the low 1.30’s too, just for a lark.  

Caveat:   If you follow me into any of the above strategic plays, there’s an off chance your vintage Swatch collection will be confiscated by the Ebay Internal Security Forces and tossed into the smelter.


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Glorious Mundi!

Sic Transit Gloria Mundi!
Sic Transit Gloria Mundi!
What a glorious day for those on the Jacksonian path today.   And for those who may also dabbled in the Necromancer Fly’s Black Arts of Sub-$5 Stocks, it was even more glorious.   I must admit I dabbled a tiny bit in UYG, SONS and AMKR, just to keep my “Dark Wizard” hand in play, but for the most part,  the combined 4.6% return on my two portfolios today was the result of strong results in stable, inflation fighting names like those I’ve already mentioned (TSO, NRP, GLD, SLV, RGLD, SLW, PAAS, ANV, MON, ANDE, etc.) and some I have yet to go into detail about  (but nothing I haven’t mentioned on iBC and the PPT).
These are the names with which we will retain our fortunes, Jacksonians, because let’s face it — we are not all afforded the flexibility, nor the trader servitude of the Fly or some of the other full time traders present on this site.   No, we must remember that we are building wealth here, and that’s a work-a-day, two steps forward, one-step back type of existence, not a glamour (sic) job.  
So on this day of accelerated heartbeats and happy returns,  it is good for us to remember the (non-pun) original phrase in the above caption, which translates:
“So Passes the Glory of the World.”
In other words, this great day, too, will pass into memory, and there will be Not So Great days ahead, no doubt.    Let’s try to keep in mind, then, that old cliche about being in a marathon here, and not a sprint– no matter how exciting it can get on days like today.   We’re still in acutely perilous financial times, and I think only a meth-head would believe we are “home free.”    We must continue, therefore, to shore our houses against the tide of corrupted money that will come sluicing out of the Federal Reserve and Washingtonian gates as deficit builds on deficit in the sham names of “stimulus” and “relief.”  
So if you banked some coin today, good for you.   Now go buy some physical money (gold, silver, platinum bars or coins) with it, or at least a few hundred shares of GLD or SLV.    In the meantime, we will continue to look at companies that have assets compatible with our strategy of sound money and lasting value.    Cheers — and congratulations — to all, indeud.
From the JakeGint “Great Movie” files:  You think you get tense at work?
[youtube:http://www.youtube.com/watch?v=Vog2Iu9xZh8 450 300]

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