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I say something like this at the bottom of many a PM cycle, but this time the opportunity is so doggone delicious, it merits a special graphic. 

Don’t worry, I’m not going to beleaguer you with multiple charts tonight, as today is a travel day and I’m beat like an unwashed fifties-era poet.   Let this one suffice, as it is, after all, my favourite stock in the PM universe — SLW, Silver Wheaton.   And you luck-dawgs have been able to grab it a deep discount as of last week.  Who knows? You may even be able to get a bit of a re-touch this, week, but alls the better…

What I really wanted to point out was the rarity of this cycle low, and it’s attendant rewards.  Have a look see at what SLW did the last time it came this close to touching it’s 200-day EMA:

That’s right, there was a 59% move up from the last lows to the next sell off, and even more after that selling consolidated at the 50-day EMA.

Now here’s the even better news… SLW’s more volatile brothers, EXK and AG had even greater surges after their most recent visit to the deep lows.   For EXK, the move was from approximately $5.50 to all time highs of $12.50 — an 127% move, while AG took it’s last deep cycle lows of approximately $10.50 to almost $27.00 — a 257% increase.   Keep in mind that these more volatile juniors will be more painful to hold over long periods of time.

Nevertheless, one should learn to live with such fruitful pain.

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I have my 5-year old to thank for giving me the Derby winner on Saturday.  He liked the name “Animal Kingdom,” so we played him across the board.   I must say, however, that I  attribute my choosing the second place winner, Nehro, in the exacta box parley (paid $330)  to my chance conversation with Nehro’s trainer, Steve Asmussen, in the Dallas airport after last year’s Derby, which ended with my decisive judgement that he was “a good guy.” 

So you can see, there’s a lot of science that goes into these Derby picks.  It’s quite amazing.  But truthfully, Animal Kingdom is a noble beast, second only perhaps to officially endorsed iBC show horse Banned, who won decisively the day prior.  Read more about Animal Kingdom here, and cheer him on for the Preakness, won’t you?

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For those of you who hoovered silver with abandon last week, God bless, am I with you.  We will know relatively quickly whether or not we’ve made a wise move “buying the blood.”   My aim is to dump a lot of the AGQ I purchased last week on a break back above $40/oz. or perhaps earlier if the situation warrants.    I think there’s significant chance of a retest of last week’s lows, however, before that happens.  In fact, I would welcome a successful retest as a sign of a more healthy bottoming from this recent artificially created sell-off.

But let’s be limpidly lucid about what happened last week.  There were a lot of cowboys knocked off their horses.   Whether that was a move by the big boys to clear the decks for further ascent — or at least for proper physical delivery — will be apparent by the end of this month, and perhaps even by options expiration day.  

In the meantime, I stand with some dry powder left, but a much smaller amount than at the beginning of last week — less than 10% of my total portfolio.  It’s unlikely I’ll be purchasing anything new unless I see something just ridiculously mispriced in relation to the rest of the market. 

Let’s see what Monday — and the London bankers — brings us.  Carry on.

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33 Is this a dagger which I see before me,
34 The handle toward my hand? Come, let me clutch thee.
35 I have thee not, and yet I see thee still.
36 Art thou not, fatal vision, sensible
37 To feeling as to sight? or art thou but
38 A dagger of the mind, a false creation,
39 Proceeding from the heat-oppressed brain?
40 I see thee yet, in form as palpable
41 As this which now I draw.
42 Thou marshall’st me the way that I was going;
43 And such an instrument I was to use.
44 Mine eyes are made the fools o’ the other senses,
45 Or else worth all the rest; I see thee still,
46 And on thy blade and dudgeon gouts of blood,
47 Which was not so before.

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Sure, we’re all getting a little bit MacBeth-paranoid here.  In fact, many are in full panic and I can understand your feeling.  It was no fun trying to concentrate on track business today (literally) whilst glancing at the ever plunging price of silver, and then gold.

That said, we are in extremely oversold territory here, which should allow those of us who are too nervous to hang on (aye, if the inevitable D-wave is here, we should all be nervous) to exit into the sharp rebound. 

I am still of the mind we are in a severe, if blood-freezing correction, brought on by a number of factors which can only be ascribed to government-regulatory cronyism.  Sorry, I calls ’em as I see ’em.

Take a look at our friend $Silver again after today’s close:

The oversold condition is unmistakeable.  Same goes for AGQ another Bollinger Band crash victim that can make one money right off.

I haven’t seen a stock this oversold since the days we played in IOC, and remember what fun that was?  V-King remembers.   Well, cheer up, it can be fun again, and we can grab some gains here, even amongst the carnage.

Be well, and be attentive, me swabbies — SLW and EXK  look sexy slimmed down like this.  Small bites along the way is how I’ve been re-accumulating monster AGQ.  You may wish to look to that path for any of the stocks you are currently stocking.

I’m tired beyond all belief and Derby is two days away.  Not sure I’ll make it.  More tomorrow.

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The Goonch will speak now, and you will listen…

Mr. Jake has gone for his annual Feast of Bipeds Cheering for Quadrapeds.  Let me explain.   Mr. Jake goes to get drunk and forget about life for a while. (The Goonch heard these words from a magic box that was crammed with singing humans.  The magic box was owned by two fat fisherman who once were noisy above Goonch’s sky, but now make no sound in the Goonch’s belly.) 

The Goonch is cross with Mr. Jake.   Mr. Jake goes to watch delicious healthy quadripeds with funny names run around in a clockwise circle while he cheers and sips brown crazy water.  The Goonch feels this is a tragic waste of healthy delicious quadripeds and would much rather Mr. Jake lead said delicacies down to the shores of the Ohio River where the Goonch is waiting patiently.

No matter, the Goonch’s belly is full this day, anyhow.  Many many piles of silvery and gold pastries were strewn about the Goonch’s lowland parlours and the Goonch did not allow those opportunities pass by uningested.  Restraint is not the Gooch’s bag, for the most part.  

So today, the Goonch supped well on AGQ at $232.66.  It was delicious, if filling.  He also had his fill of AG at $17.47, and SLW at $36.30.  On the gold side, the Goonch was grateful for the bits of ANV floating at his meridien at $36.05.   Most propitiously, The Goonch was grateful also to chance on some scrumptious EXK at $9.56, between his usual fare of drowned puppies and kittens.   The Goonch thanks all dumpers, large and small.

Be assured, the Gooch still has ample appetites, and if you refuse to bring your small children, or your healthy brown quadripeds close to shoreline where I might show my lip, then I will be pleased to ingest more silver-that-is-not-fish. 

Most corpulent good health to you all.

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Addenda:  For those of you fretting about the CME increasing margin rates on the silver markets, I again ask you — why do you think they are doing this?  As the most astute Jesse from Jesse’s Cafe Americain points out — why didn’t they raise margin rates during the dot com bubble, or mortgage rates during the real estate bubble if they were so concerned for investor’s safety?  Is the CME some sort of sainted brotherhood looking out for the small investor?

Ummm, no.   As I’ve mentioned on these boards before, and Jesse, to his ever-lovin’ credit independently corroborates, it looks like those sneaky bastards are running out of silver.  

I just found Jesse’s blog tonight, while researching this unprecedented fourth (no! 5th!) margin raise in two weeks by the CME.   Tell me — who acts this crazily expeditious in such measures?  Can you imagine the Fed raising short term rates four (strike that, five!)  times in two weeks?

Is this not a sign of panic?  Occum’s Razor,  my friends, shave with it!

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Here I am off on a pleasant fishing trip, and some of you are already gnawing your neighbors’ fingers to the third knuckle in white-eyed panic.

Please, sirrah, leave aside your neighbor’s foreleg and listen here.  Have a shrimp cocktail.  Read a pleasant romance novel.  Present your spouse or beloved with a surrepetitous boss upon the lips and pronounce yourself arduous.   But for pity’s sake, let’s not loose our bowels here over a nasty couple of days draw down.

Noted, this speech is not for ye varicose vets who have been with me since we began back in May of ’09.   Most of you wise folke have stacked piles of coin in your garage and pantry to the point of bringing alarm to your neighbors.   Such would be true had you been moderately disciplined, and kept your core close whilst raising cash at opportune times when the rivers were high and the bloodlust roiling.

For those of you new to the scene (and it appears there are new folke popping up all the time on my site), I implore you to take care here.  Do not self immolate.  I would rather you slice, stack and eat 17 bologna sandwiches while you wait for this pullback (one in a long line now) to quiet rather than seeing you sell in a convulsive panic.

In the meantime, my own patience grows thin, and I was even audacious enough to begin adding to my AGQ horde again today.   What of it?  It was only some 20% of my peak shares and it was at $261.80 a share — a good $120.00 off the recent highs!   Might I get some more even lower tomorrow?  I sure hope so.  

I’d better be nimble though, as this thing has come so very far, so very fast.  Remember my silver commodity chart from last night?  Where I’d hoped for a tag of the 50-day EMA?  What haste we’ve made toward that goal just today:

What’s more this fast tracking has given silver’s double ETF — AGQ — a premature visit to the 50-day EMA already.  As a result, I’m not sure AGQ has much left to give here:

Will we hammer that 50-day one more time tomorrow?  Odds on, I’d say it’s likely.  But then again, I was never quick, so I’m just going to take this slowly, and with aplomb.

I also bought back some more EXK today, at $9.89.  I’m back to a 75% position in that stock from my core of 50%.  You see how this works?  It’s a little sloppy, a little messy, but in the end, it makes for great gains.   I also grabbed more AG today, at my early price of $18.01 (again, on a GTC order in place for two weeks now) and later a little more below that in the upper $17’s.  I’m near to a full position in that stock a well, but have one more “lunker bait” order in there in the lower $16’s.  

One gold stock I love, despite it’s recent oxygen robbing action, is ANV.   I’ll let you guess where my orders lie for this one, tomorrow:

Cast your nets upon the waters, friends.   Captain Bernanke has promised many fish, via multiple dynamite stick detonation.  Sure it’s not fair, but should we turn up our noses at free cod?

All the best.

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Brad McLeod, Former Navy SEAL

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If you plan to ride a massive bull, you’d better make sure you’ve got your callous-horned hands fastened tight to the cinch-rope my friend or you are going to get “bucked” like the most worthless of chickens.

Buck-buck-BUCK!

And let’s face it, it’s still all about the buck, and the relative elasticity of it’s deceased kitty carcass as it bangs off sub-$73 levels for a brief fight with gravity, guts askew and a-twirl.  

But despite what I’ve been telling you about silver’s nosebleed status, you still take to sack-cloth and ashes, warning that finally, the Apocalypse is upon us at last, in full penitential glory.  But please, put the cat-0-nine tails away for a second and take a look at where silver really is this evening:

How long do you think that dead cat buck is going to bounce and our silver salient going to fall?  Maybe til next week or so?  Okay then, so let’s make a compact.   This week, we’ll talk about Derby and Oaks horses, because I’ve done almost zero homework on that subject (I’ve been busy), and we’ll just forget about “the life” for a while here, capiche?

Presumably, you have some dry powder ready, as you’ve been “taking some off” the last couple of weeks or so.   Allright then, let’s just wait til we see that RSI lever get to oversold (should be any day now), and then hope to the Jenny Craig Goddess of Skinny Lattes that we get to that 50-day line up there, where we can back up the truck once again.

In the meantime, put some low ball bids in, just for kicks.   Scatter them about.  Today, two of my low (and lower) balls in one stock (EXK)  were picked up in the course of a few scant minutes.   Same went for a low bid on SLW.    Tomorrow, I hope to garner some AGat egregiously low prices, and I may yet throw a “stabber’s bid” at old AGQ back at the sub-$300 level.

You just never know what you might end up with there, Forrest.

God bless, and relax.

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