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.
Sorry I haven’t been around to keep company. I’m being kept by many companies. At first glance, if you look at my favorite universe, it seems like it’s hand holding time. However, I’ve looked over my long term charts tonight and I can’t believe how cheap some of these miners are trading right now. SLW has held up reasonably well, but AG and EXK are Christmas presents here. Get them for your kids. RGLD continues to take hits, but mein gott it’s tasty here. I like AUY and even BAA, as well.
I held off the whole month of January, and did not spend any “year end funds.” That changes tomorrow. I’m getting more of “all of the above,” but will keep some dry powder for further Crazy Eddie liquidation sales. Everyone is printing folks. Every one is racing to the bottom. If you think that will hurt the precious, you need to have a look at how much Blackrock and Fidelity own of RGLD, and how much they’ve accumulated recently. If you think they are the dumb money, well… God bless.
Breaking away for a second to remind you to pay attention here. We are headed into Santa Claus territory, and I don’t think it will be coincidental when we see the gold and silver elves coming out for their annual drunken bacchanal.
I am hoping that on Friday I will have moved a large amount of money from “here” unto “there,” and then will have some time to sport about with you, old time style, half-inebriated and full of fun. Until then, GDX, GDXJ, and yes, even NUGT will be attractive in the Christmas season. On the silver side, those of you who have cursed and gnashed your teeth about EXK can consider this the time to “make your bones,” or whatever other ethnic cliche you’d like to use. AG is still my favorite silver dog, and SLW and SIL my core recommendations for the noobs. That said, PAAS and MVG can be berry berry good to those of a speculative bent.
More speculative than any of those, however, is AAU and TC. If you have 2% of your portfolio that you reserve for dice throwing at 3 AM in a dirty alley laden with crack whores and vein poppers, then those are your available plays. Do not cry to me if you are blackjacked, but please remit 15% to the Salvation Army if you do bank coin.
Best to all of you, and hoping to spend many days of merry and bright with you in the latter part of this month…
Soon, soon I will be a plunger yet again. Morsels are looking tasty already, and I don’t think gold and silver have too much farther to go here. There’s a lot of support for physical silver at this $31.80-ish level and I may choose to nibble there tomorrow if we get one more rip to the downside. Then stuff will be on sale like you read about. SLW at $37?, AG at below $22? RGLD at more than 15% from recent highs? Are you kidding me? These are the times when men can be gluttonous, in a sippy-cup kind of way (small sips, gradual like).
I will have time to speak about the recent Obaminations when I’ve got ten minutes to assemble my thoughts. Needless to say, last night was more revelation. I think I’ve come to the reluctant conclusion that the guy is just not very bright after all. The consistent throwing of constituency after constituency under the bus…. when will it end? Last night, he gave up Virginia by blowing up Newport News and its naval stronghold. Ah well, who needs those bayonets, save our own guts?
Maybe he’ll talk about how he hates Buckeye nuts, next? One can only hope… (for change?)
_______________________ In the end, “Robocop” was too kind.
Forgive your loyal, unpaid servant, but not only was I trying to send out a hastily assembled marketing book for one of the finest companies I’ve ever had the privilege of introducing s, but I also had a long scheduled string of appointments in Michigan this week as well. Nothing like starting in beautiful, well capitalized, conservative Western Michigan on Monday and then working one’s way across the state, only to end up in moribund, corrupt and ultimately failing Detroit in Eastern Michigan. It’s not overly exaggerating to compare the two sides of the state to West and East Germany… they are that different in their economic viability.
Detroit is a wreck, and it’s a damn shame. There are hundreds of thousands of very smart people populating that Southeast Michigan region– engineers, technicians, deeply skilled manufacturing personnel, etc., etc. What hope have they, however, arrayed against the institutional, long embedded machine politics-corruption that destroys the rule of law and therefore any hope that a level playing field might be established for investment capital? Let’s face it, you’d have to be nuts to try to start a business in Detroit. There’s more atmosphere on the moon.
That said, I had a great time meeting the private equity personnel operating in that region. And the Tigers game was fun too. But nothing was as important– or moving– as my meeting with the esteemed, venerable Detroit Patriarch, Mr. Cain Thaler. It took a number of phone calls with his “people” to arrange a meeting, but let me tell you it was worth it. It’s not often you get to meet one of the guys who hung with Edsel Ford and the Dodge Brothers “back in the day.”
I had to wait outside the Marriott Motor Access area for half an hour as Cain’s preliminary security ran through their checks. They were nice guys, but pretty obviously ex-Special Forces, so I kept the chat to a minimum. When Mr. Thaler himself rolled up in his stretch Cadillac (of course) limousine, I was on pins and needles. When the door was opened by his personal bodyguard (a flat-faced Mongolian giant, six-ten, and about half that wide), rich, sweet and thick Havana-based smoke billowed from the back seat for what seemed like ten minutes but was probably more like 30 seconds. Finally, a gnarled, liver-spotted hand clutching an ivory headed cane (hint hint?) pushed out from the back seat. It was the man himself, the Legend.
Our discussion will remain between us, but let me tell you that he imparted generational value to me… business advice that I will cherish and pass to my own children, God willing. Thanks you sir, for your good will and your patience. I wish I could impart some of your wisdom to this crowd, but I will hold off, affording you the discretion you’ve earned.
I look forward to the next time we might share some bourbon whiskey, and some tales of the good days, when Detroit was America’s engine. My best to you.
I actually bought a farkakta load of SLV Leaps today. 2014′s and 15′s. A humbug schitload. I think silver is going to go berserk here, but the ride will be violent. SLW, EXK, AG and maybe SVM if you’re bold, SIL if you are not. God bless we are in trouble, but I take heart that there are still men like Cain Thaler — who remember that commie asshat Roosevelt — to help guide us back to the righteous path.
It looks like Argentum Silver is leading the PM hordes forth again, most likely as a direct predecessor to another dollar break here. Up over 2.5% as I type and outpacing it’s usually more lively cousin, Aurum Gold, which is up only one-tenth as much.
I think this is a good sign, even for you non-PM investors, as silver is the more sensitive to the “commodity” and “industrial” sectors, and it’s rise here should be good news for all of you commodity speculators, whether you be earl rustlers or coal bandits. I will continue with my investments in refiners until they stop making sense, however, even with a rise in earl. I continue to like WNR and PSX, for instance. HFC as well.
For silver bugs, I went long(er) today by adding to my AGQ position, for the short term trip to the 200-day EMA, at close to $50 right now. I will likely sell this additional piece off when we reach that mark, however, as I don’t like to be too heavily leveraged in this volatile metal. At least, not for any length of time.
I also like EXK here, despite it’s continue pokiness compared to jackrabbit AG. SSRI also seems to be re-gaining ground, if you are of the speculative sort. As always, SIL and SLW are the formidable base of my silver horde, and I recommend those for any toe dippers.