If there’s one thing this recent election has taught me, it’s that large money works, and especially so for incumbents. I have to admit, given the Obama Administration’s horrible economic performance ($16T in debt, 26 mm out of work, 47 mm on food stamps), its near-totalitarian interference in markets via regulatory and legislative fiat (EPA coal & oil policies, Obamacare) and the series of scandals so common to the Chicago Machine politics of post-electoral pay-offs (Solyndra), extra-judicial bullying (Fast and Furious) and outright criminal incompetence (Benghazi), I thought there was no way the American people could re-up for more. But I guess enough money was spent, in just enough critical counties, to sufficiently demonize a genuinely nice guy who was trying to play it “nice” (probably to his chagrin) right to the end. Kudos to the players – the pros – like Axelrod and Jarrett. They had a plan and it worked.
Mr. Romney, you will be second guessed to a fare the well, and your lack of even McCain-level support will surely continue to raise questions. Perhaps there were enough Cain Thalers out there who wanted to see the whole system washed out, the Dems hung with it, and the process begun a new. I think you could have been more aggressive in the final weeks, and you took too much from the first debate win. I will not gainsay you, however, as I know your 20 years of unpaid service to your fellow citizens stand as their own testimony.
Unfortunately, reality doesn’t need a vote, and reality is now coming on a fast track. The dismal economic performance we’ve endured these past four years– hoping they would end mercifully this past week– is now slated to continue, barring some sea change in the Obama Directive. Anyone want to bet on the POTUS changing his stripes any time soon? The President’s recent announcement that increased taxes on the employment engine were necessary for his ongoing cooperation with the “Fiscal Cliff” negotiations should be fair warning. Thus far the analysis seems to read that he has learned nothing.
I would take some solace in the possibility of a “Bill Clinton” final four years, if only the Senate had mellowed. It did not, however, and in fact got more radical with the addition of two new far left Senators from the States of Massachusetts and Wisconsin. Bewildering especially was the inclusion of Elizabeth Warren in the Hall of the Hundred Most Powerful. Apparently, after being annealed on the moral forge of vehicular manslaughter, long term race fraud was just a mere bagatelle for the majority of the Bay State’s citizenry. A “Blue State,” for sure.
Given that there will be no Gingrich Congress to arm wrestle the much more ideological Obama to fiscal discipline, I expect nothing but more fiat excess and Executive consolidation. As a result, businesses will continue to be reluctant to invest, capital will “hide,” and more unemployment, crime and municipal stress will result as our debts and long term liabilities continue to skyrocket. None of this will be good for the long term health of the Republic, if in fact a republic we still own. I know even the famed Mr. Franklin (“You have a republic, Madame, if you can keep it!) might harbor his doubts at this gray pass.
It’s ironic, I guess, that despite my despondency, I’m still reasonably well situated for this turn of events. Do I own growth stocks like AAPL and DDD? Do I own hot retail like ULTA or CAB? Do I own… (ahhh, you get the picture!). NO! I own a bunch of commodity plays that I am using as a hedge against what I like to call Bernanke’s Despair and you can call “QE (n+1).” We are staring at unfunded liabilities out the wazoo, and entitlement spending alone that outstrips current tax receipts by hundreds of billions of dollars. Bad debt and mispriced assets remain on balance sheets, particularly on those of your resident Too Big To Fail Bank (no Dodd-Frank). There is only one way out of this mess, and it’s the same thing I’ve been preaching to you for the last five years of our journey. PRINTPRINTPRINTPRINTPRINT.
You know the usual suspects, so I won’t belabor them. In particular right now, I like the way ERX looks right now (for those of you asking me about the oil plays in the last comment section). I like it better than UCO, too, fwiw, as it is bouncing right now off its 200 week EMA ($44.72). I don’t think it has many days left to pop. I of course love RGLD below $90. A gift to your grandchildren, as I’ve been telling you since it was in its low $30’s. For the speculators amongst us, keep an eye on TC… I think it’s finally getting it’s mojo back.
The next four years should be interesting… in the way of the ancient Chinese curse “May you live in interesting times.” Unfortunately, I believe China will be the least of our troubles, and soon we will look nostalgically back on the times when all we had to worry about was burrito accounting fraud.
The above is satire, of course, but let’s not laugh too hard at the funny kiddies. In certain European states, the “path to success” is through the government bureaucracies. Is the U.S. approaching that level? Food for thought.
If you have not already, you should be trimming your silver and gold positions, or at least the leveraged ones. We’ve had nice move here, so let’s not get too greedy. I’m out of AGQ, NUGT and ERX as of this morning. I’ve also trimmed between 35-50% of the remainder of my largest positions.
Have a great Friday.
Bonus Crony! This goes out to the speech stomping Jim H, (D- Croneyville).
____________________ Small plebs, I can see now why my good friend, le Monsieur de la Mosca, supported the inexperienced young Senator from Illinois way back in the day when we knew little about him other than that he sported a dimwitted hairplugged running mate that did not dog sled, rassle bear, or wear a brassiere. You see, my friend is very perceptive, and seeking a strong hand in the Executive Branch in our time of trouble, he saw the inner-Generalissimo in the fresh faced Barack Obama. He knew this guy was not going to be bothered by any such niceties as separation of powers, or heck, eveen recognition of any other powers in our triune system.
And so today, we recognize that the Monsieur’s perspicacity has won out. The drumbeat that began with an increasingly monarchial delegation of legislative power to the President’s various bureaucratic armies at DOJ, EPA, FDA, TSA, DOE, etc. has now culminated in an unprecedented display of Caesarian flair.
Gosh forbid you should not know what you are doing with those credit cards that have been around since the early-1950′s boys and girls! Don’t worry, though Papa-Doc Barack’s main man, deposed Ohio Attorney General Richard Cordray — aka, ”The Fat Ohio Farmers’ Elliot Spitzer” — will be holding your hand every step of the way. Just don’t you dare try to break that hand grip, though, boys and girls.
The real question, however, is why would an embattled President take such broad risks now, given the sordid reputation of these installed parties? The cynical answer? To create a political battle that will make the POTUS an aggrieved victim during an election year. This would be a confirmation that the President believes the economy will be of little help to him in 2012, and that the “full-populist” Chavista appeal is his only angle. Moreover, like Chavez early on in his populist socialist campaigns, the President knows he has most of the press in his pocket… at least today. But will that be enough to carry him through to November?
Whether it’s the current political imbroglio, or perhaps the “great news” coming out of the employment front, the dollar has decided to break back out of its recent consolidation-retrace and blast ahead nearly 75 cents on the DX Index. Interestingly, gold and silver are not taking this big move very hard, with most of my miners down between 1.0%-2.5% (which is de minimus in our world) and even AGQ (double silver) only down about 2%.
That said, this rebound will likely last for a couple of days given my target for the dollar here at $81.50 or thereabouts, and I will likely lighten up on some of my miner holdings as a result. I shaved a little bit of ERX yesterday and will take some more of that down as well. One doesn’t want to be holding double-ETF’s in this environment. I think I will be targeting around 50% cash so that I will have dry powder for when the dollar turns again. I’ll make my moves on any retrace of the dollar today.
Time and time again, I’ve stood here and recounted the reasons why I stay away from the large cap gold miners like AEM, ABX, NEM and even GG (though I do own a little of this one from the Wheaton Gold days). Sure, these are all fine old girls, but they often end up on the wrong side of an acquisition play which then ends up trashing their stock price in a volatile gold market.
That means these big hulks are generally buyers, for the most part, as their management team has little to do but acquire more assets in order to expand away from relatively diversified and well known properties. They need new territories, fresh blood, new meat; and the highest percentage way to continue drilling on profitable properties is to acquire them from juniors who have done the sweat work to seek them out.
Well, it seems my lonely EGO has gotten all egotistical on me and wants to be a “playah” like the big boys. No more holding it’s hand out as trade bait for the majors, Eldorado Gold is officially leaving the middle-market gold mining community in its dust and going gold speculating in Turkey, Greece and Romania.
Yes, you got that right. They’re offering $2.5 bn of their own stock in order to buy a company (European Goldfields) that is looking for gold in respectively, the next Islamofascist hot spot, the First Beggar of Europe, and oh yeah, a place known for producing pickpocketing gymnasts with facial hair and night dwelling blood suckers without.
That should work out well, fellahs. Probably very little nationalization risk you’ve paid for there….
In any case, these M&A purges usually overdo themselves, so my beaten down EGO is probably a good pickup here tomorrow morning after what I expect will be a final washout. There’s support at $12, but I’m not sure we’ll get that far. Nevertheless, I’ll place my bets in that area, hoping to catch a bounce.
Oh, and I think everything else will bounce as well. Most especially earl and gold. So tomorrow, if I get my flush, I’m going to throw down for some NUGT and for some ERX.
Don’t worry, my stops will be tight. I’m not a masochist, after all.
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.
I had a Sargent Schulz moment this morning and, as a result, ended up selling “nossing.”
As you may recall, we opened kind of weak in the miners, and I decided to hold off til my usual 10-11 am period to dispose of some stocks. But we began rallying shortly after the open and it looked like gold was trying to hang in there. Generally, I would not recommend this line of indecision and I would enjoin you, rather, to “follow your plan” at all times.
Sometime, however, my “gut” tells me that I should stay my hand. Often times allowing for a little patience, and “not trading” instead of pro-actively trading, I’ve saved myself considerable heartache and regret.
That doesn’t mean I won’t be selling tomorrow, however, even as the dollar drop today tells me it will be difficult for gold and silver to break down any time soon. What I may be doing instead is selling a portion of some of my fatter gold plays (and maybe some silver if we discontinue our current rebound) and investing in some “fast actin’ Tinactin” recovery stocks, like EEM, QLD, TNA and perhaps even some ERX (sorry Cain!).
I would be loathe to abandon the recovering baser metal plays as well in this snap-back, so I will be inspecting TC, TCK, TIE and even some AVL tomorrow. Last, take a look at two good beat-downs for some fast flash action — CREE and PBR . These are two of my old favourites which have fallen considerably OUT of favor. They may be worth a spin of the wheel.