…. the hard way!
Let me caveat what I am implying here by saying first that I fully expect the commodity price of gold to test the late 2011 lows of $1523, and perhaps even undercut them to really get the blood flowing. I am prepared for that, as I realize the run to $1900 — much like the run to $49 in silver, was too far and too fast, even in a fiat printing, race to the bottom, currency bubble. But with the $Gold:$HUI index approaching 2008 crisis highs, and the $Gold:$XAU index now reaching an unprecedented height, I am copacetic about holding what I have while becoming poised for a final shake out where I can harvest some of my favorite names once again.
Opportunities abound in high quality names, some of which offer dividends while one waits (I’ve already added AEM, as you know). There’s no need to stretch on speculation, now, and look for any miners doing business outside the safe zones of Canada and the U.S. and Mexico for some silver plays. RGLD at these prices is insane, and if you are worried about this pullback, please review that company’s past charts over the last ten years. All of these stocks — yes, even the quality ones like SLW and AUY — have trod this rocky path before. In my opinion, these, along with their underlying commodities, preferably held in part in the physical bullion, will help you weather the coming storm in collective currency crisis.
If however, you believe that Ben Bernanke can be the first Federal Reserve Chief to successfully inflate the economy out of a low growth, value inhibiting recession, then perhaps your trust in this new bull is warranted. In my business, and in the entire economy, I see inflated prices for everything already, so the valuations of the stock market come as no surprise. As we approach major all time highs in the SPX, I am increasingly skeptical that we can continue without a major correction, just as I was in late 2007-2008, when we saw similar overwrought behavior. I may miss the final euphoric highs, as I did last time, but I will not end up like the Capo Vito, either.
To be sure, I am not telling you to buy these miners at this bloody juncture. Even I am holding off for the turn, as I mentioned a few times over the last month. But I would also counsel you not to short a bull, no matter how wounded. Bulls are mighty, long lived beasts, and despite their weariness, can leave one singing soprano with little to no advance warning.
Best to you all.
(Slowly, slowly now… no need to be hasty, but I like RGLD and AEM a lot.)
The Signs were out there, that’s for certain. They glow more balefully–frighteningly, perhaps – by the day. Soon you will find that their light will transform into warmth, and voila! — you are out of the cold. This week we saw the $HUI:$Gold ratio approach it’s late 2008 nadir, despite the lack of any similar shade of trouble in the SPY or any other major index for that matter. For many who have been suffering through this mind searing mini-bear in the miners, it was only one more pencil in the vile jellies. For me, it was the light at the end of the tunnel.
Adding reassurance were the hairshirt boys and the plungers. The hairshirt boys talked about “$21 dollar silver” and gold “heading back to $1200″ this week. More music to my ears. Then the dear plungers. Those who can always be counted on to ring the bell at the exact wrong time were actually starting to short stocks that had been pummelled for months now, quality be damned. Again, the scent of ambrosia, the ply of relief.
Can anyone predict the future? Only in Tom Hanks movies involving haunted vending machines, my friend. But there are time tested truths for all markets, and for the precious metal markets especially. Perhaps the hardest and truest is that both the bulls and the bears will suprise the hell out of you in this space. Such is the lot of a smaller capitalized, politically sensitive commodity group not exactly known for it’s GE-like management style. But an ancillary truth resides in the recovery from both a bull and a bear… namely, the harder the band is pulled either up or down, the greater the snap back to the up or downside.
Recently we’ve seen near-unprecedented disintermediation between the price of the miners and their underlying commodity in both gold and silver. Some of this is a result of input (cost) prices rising while commodity prices are remaining stagnant or falling off. Some is the result of rational hedging, and some the result of anticipatory momentum trading. It’s this last that has brought us to our most recent state, where one might say the blood in the streets approaches the door-level on our three-step brownstones.
But make no mistake, things are not going to be “different this time.” We’ve seen this all before, and the results have been similarly spectacular. We may have one more final “terrier shake” to throw the last remaining weak hands off the bus, but I have little doubt that the Fidelitys, the Blackrocks and the other large funds are right now gobbling up even more SLW and RGLD and AEM and AUY than they were last quarter. And AG…. oh my yes, AG.
I expect one more pullback today and perhaps into early next week, but I will initiate buys in AEM at any price under $40, if I am so lucky. Get yourself a dividend while you enjoy the rebound, why don’t you? You can always use the extra beer money, no?
As for our friends in the smaller silver market, I would think next week the safer bet, but if we see some pullback today, I wouldn’t gainsay your taking some risk. After all, for EXK to get back to a mere $7.00 (!!) is an almost 21% move from here. EXK will be $10 before next Christmas, if my predictions weigh out properly.
Best to you all.
Moober can vouch for this. Woodshedder and Fly as well. Back in 2009, after one of the worst precious metal (and overall market) meltdowns in my lifetime, I started to plow back into the precious metal markets in the middle to third week of February. I was early.
Oh boyo, those were a painful two weeks plus, I’ll tell ya. But as I recall, we bottomed right around the end of the first week of March (the sixth or seventh?). It was glory days for the PM’s after that, right into 2010.
So I was feeling real good about getting back in during the first week of February. Real good. I guess I should have held off maybe two more weeks, eh? Ah well, let’s just say that we are running into the same exact kind of egregiously oversold market conditions we saw back then. Given the tenor of the rest of the market, and the gobbets of fake money-digits entering the global economy via the cake-batter hoses of the world’s central banks, this is an insane and untenable condition.
It will not continue.
I will not add here, but wait until the turn is in. I’ve saved a little something for the insanity.
You should too…
Here’s a stock I’ve purchased quite a bit of in the last week, pal. North American Palladium (PAL) caught my eye because it showed a bit of a sea change on the long term chart, and this past week, it’s established itself up above that long term trend line. Check this out:
Can it get to $3 bucks from here? Pal, I wish I could tell ya for sure. Alls (sic) I know is that’s a lot of buying in 2013 (black volume sticks), and the trend has changed. I’m holding onto my stack until at least June, so let’s see.
I also like AUY right now, and of course, you should be accumulating RGLD at these ridiculous prices, and SLW on every opportunity.
Best to youze guys.
Just a head’s up to you American football fans. My brother, sometimes seen here as “#6″ has produced a commerical running this Superbowl, for the new Crackberry Q10 product. If there are any subsequent spikes in the stock price, we take all credit here. It goes without saying that we disavow any subsequent tankage, to the point of denying ancillary patrimony.
Please feel free to place all reviews here. If there are any other commercials you favor, you may comment about them as well.
For you non-American football fans, please repair to your usual quiche and Belgian ale consumption.
Best to you.
PS — 49ers 24, Ravens 13.