Guess Who?
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It’s very important  thaty you make your own inquiries in this world, and not rely on the expert testimony of even the chief-most of Lemmings.   There are many ways to skin a rodent, and each trapper has his own preferred signal.   One should not just adopt this ferret’s “inventory to sales” ratio, or that stoat’s “days short outstanding.” 

For example, I’ve offered you two macro-drivers that keep me optimistic in the near term:  Overall poor sentiment and the continuing degradation of the dollar.

I’ve mentioned here before that Jason Goepfort of Sentimen Trader had been warning for weeks prior to our current relief that bearish sentiment had dropped to levels equal or worse to those we saw prior to the early March ’09 market rebound.  

 That kind of bad sentiment doesn’t just provide a wall of worry for a corresponding bullish cycle — it offers a veritable Great Wall of China of Worry.   Look around the site at the posters pulling out great hanks of hair in disbelief that their prophesied market crash has yet to appear.  Remember this: the frequency of their ululations shall be your comfort.

I just hope they are not holding their breath.   Well, there’s always open auditions for the Blue Man Group, I guess….

My second contrarian-return to the mean reason for my bullishness is the fact that this current bull is powered by steam from a steam-punk unit. 

Well, er, okay… it’s either that or the fact the dollar has been plummeting since early June...

That’s quite a move in two months, no?   In fact, I for one continue to expect a rebound, and $80 looks like the right place.   That won’t mean I will discontinue laying the hot blade of lemming death to mine enemies, or lose my bullish bias any time soon.  There are reversals and then their are “corrections.”   The latter is all we’ll get here.

In fact, you all may want to take advantage of that bounce at $80, should it come, and grab some quick fire longs or PM’s you’ve been lusting after.  The way the dollar’s been trading since the Euro scare, it’s not shown a whole lot of relative strength, and even in a rebound, we may not have to wait for long.   

The charade is about up, I think, and pretty soon there will be a full fledged waterfall action on the greenback.   This is my reserved and considered opinion, of course, but one formed in the crucible of study and scenario generation.  I would advise you take similar steps to determine your own way, lest you find your next step deeper than you expected.

You know I like EGO, GFI, IAG and SLW here.   RBY is starting to move again as well, and watch for a break of $6.45 on MVG before partaking.   That may make the difference.  Oh yes, ANV is not done by a long shot, but it should pause for a breather here at $18.50 or so.  

Non-precious, I like farmer ANDE here, again.

Play on, then.

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Update! — Some interesting news from our 1.5 billion-count creditors.

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Have you been paying attention… or…?

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Let me just remind you of this post from July 8th — about three weeks ago.   In it I predicted the imminent death of the dollar, following a slight rebound.  Remember this shot?

I was scoffed at. 

Jeered.

The object of tossed day old lettuces.

The Euro was dead, right?  Deflation is our doom, isn’t it?   The dollar’s got nothing, nothing to do with this wacked out market.  

Right?

Well, it turns out I was wrong after all…

We never even got back to that $85.00 rebound target…  I think it was like $84.50, tops.  

As for everything else?  Well….

Never question my strong pimp hand, and never think there’s anything going on that can be described as “good” in this market that’s not directly ascribable to overt manipulation.  Absolutely zippo.   That also means it won’t last very long.  Best make hay whilst the sun shines, etcetera, etcetera, Peter Cetera.

GFI should be next to unfold tomorrow, my lovelies.  

Carry on.

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The M&A boom in the precious metal sector that I’ve long predicted on these page has finally begun to blossom.   [[LIHR]] supernova’d today on news of it’s rejection of egregious sexual advances from the Newmont Mining Corporation [[NEM]] and other encroaching crepuscular old men.

This will be only the beginning, as I have mentioned to you.   Large, shambling behemoths like Newmont Mining Corporation [[NEM]] , Barrick Gold Corporation (USA) [[ABX]] and even the nimbler Goldcorp Inc. (USA) [[GG]] will be hungrily seeking  small and medium sized asset-laden precious metal players like voracious toothed pelicans pursuing hapless baby ducks.  Smack! Smack! Deeeelicious!

  I expect that eventually, even the big general metal miners like Freeport-McMoRan Copper & Gold Inc. [[FCX]] and BHP Billiton Limited (ADR) [[BHP]] will get into the act, diluting themselves for my greater enrichment.  What’s up today as a result?  Better to ask what isn’t, but you can infer that the names with the greatest returns on an M&A day like today are very likely going to correlate with the names of other possible acquirees… among them:

Yamana Gold Inc. (USA) [[AUY]] , [[CDE]] , Eldorado Gold Corporation (USA) [[EGO]] ,  almost all the components of [[GDX]] and [[GDXJ]] ; silvers Hecla Mining Company [[HL]] and [[MVG]] (congrats to Employee8/Teahouse on this last one), and the two of  “the three N’s:”  NovaGold Resources Inc. (USA) [[NG]] and New Gold Inc. (USA) [[NGD]] . 

Also,  the silver cabelleros [[PAAS]] , Silver Wheaton Corp. (USA) [[SLW]] , Silver Standard Resources Inc. (USA) [[SSRI]] and [[SVM]] are all hot (and even stodgy [[SLV]] and his steroidal brother [[AGQ]] ), and let’s not forget platinum friends [[PAL]] and Stillwater Mining Company [[SWC]] .  Last, let’s not forget “X” factor, recently unspun Exeter Resource Corp. [[XRA]] .

Untroubled by today’s rush are eight PM underperformers which may only be laggards to today’s action, and therefore bear watching: Allied Nevada Gold Corp. [[ANV]] , [[EXK]] , Gold Fields Limited (ADR) [[GFI]] , Gammon Gold, Inc. [[GRS]] , Golden Star Resources Ltd. (USA) [[GSS]] ,  Northgate Minerals Corporation (USA) [[NXG]] , Rubicon Minerals Corp. (USA) [[RBY]] , and Royal Gold, Inc. [[RGLD]] .   You know that last is one of my all time buy and hold plays, so watch it especially here.

For my part, I will continue to ride the invisible neon flow of the Matrix, to the envy of my friends and the chagrin of my enemies.  I wish I could tell you all the momentous things which currently abrade my precious thread of cohesion with you all, but it would just as likely cast you into the pit of despair as lift your spirits to the heavens. 

Tomorrow is a day of Remembrance for me, and a day of quiet for the Markets.   I will try to stop in to share cause and cost with you, but if we not speak, may you all be well, and good to one another.

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Omm Nom! Nom! Nom!
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Looks like Mr. Limm and kin are trying to take away our punch bowl.   Not bloody likely, I say.

You see, the Chinese really only have one way to cauterize the inflation wound they are already seeing in their economy — and that’s by removing themselves from their peg to the U.S. dollar.  They can make all the noise in the world about raising reserve requirements and dampening loan growth, but they will will still strain to be heard over the “clack-clack-clack” of the U.S. Mintex 3ooo Printing Robots in the basement of Ben Bernanke’s Transylvania Castle.

I say, if the Chinese refuse to de-peg their currancy and let the Yuan run free, naked and untethered, they ought to just continue to get drunk and buy stocks.    It’s the only rational thing to do when you are allowing your currency to be devalued right along with that of the Great White Ghost across the Pacific.  

And let’s face it, there’s only so much iron ore, coal, copper, lead, zinc, chromium and every other heavy metal for industrial usage left in this globe.   Outside dredging the Hudson River, that is, but even that reclamation project is years away.   The Chinese know all this and realize the only way to keep those prices cheap to them is by miming along to the dollar prop story.  

Again, raising Chinese reserve ratios is not going to do that if Helicopter Ben is easing quantitatively as fast as his machines can print, purchase and store massive haystacks of U.S. cabbage like he is.   We all know (and yes, the Chinese leadership knows) that fast cash to you is just heading right back into the Chinese economy via click-bought and big box consumer goods purchases (oh, and look here, retail sales are strengthening… wonder where those goods are coming from?).  What’s more, that money, once washed up on the shores of the South China Sea has to go right back into the commodity markets as the Chinese continue to build out infrastructure and purchase raw materials inventory.

Here me now and believe me later — The Chinese cannot “whip inflation” by themselves while they are tied to the dollar, and while their growing economy is tied to our consumption.   These are infrastructural realities that are not going to change because the Chinese CB has decided to take a stern line on lending reserves.  So sorry.

My take?  Eat a samich (sic) this morning until at least 11 am to see where the market settles out.    Gold is currently down only about $16 (less than 1.5%) and silver, as usual is taking it harder, down 44 cents (2.8%), with the DXY at a current $80.64.   I continue to believe this is a shakeout, and that the dollar will not continue much higher than here, despite all this “nooze” circulating to keep it propped.  If we break much above $81, however, I will be forced to reassess, and perhaps take a little off some of my riskier metal plays.

Best to you all.

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Update:  I notice in my haste to get out this morning’s post that I neglected to give you a run down on yesterday’s purchases (which were recorded in real time on The PPT, of course, as were today’s).   Yesterday I added to the following positions:

2k Petroleo Brasileiro SA (ADR) [[PBR]] @ $40.60

4k Exeter Resource Corp. [[XRA]] @ $8.46

2k Eldorado Gold Corporation (USA) [[EGO]] @ $12.66

2k Thompson Creek Metals Company, Inc. [[TC]] @ $12.67

10k NGAS Resources, Inc. [[NGAS]] @ $1.62

1K Sociedad Quimica y Minera (ADR) [[SQM]] at $37.06

This morning’s purchases (also “adds”):

2k [[PAAS]] @ $21.75

4k Gold Fields Limited (ADR) [[GFI]] @ $11.75

 

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$1,100 gold is right around the corner and we zoomed over $17 again on the silver to rest currently at $17.22.

As a result, the miners of anything shiny from platinum to tin foil have gone Batman on us and are leaping in grey tights and high-cropped riding boots from roof to roof.

Royal Gold, Inc. [[RGLD]] must absolutley be on your “Grandmother list” and I mean not for your grandmother, but for your grandmotherhood.

You don’t think Social Security is going to keep you in tea cakes and airplane bottle of Chivas, do you?

Also, for your dining pleasure, Fly has engineered a special gold list for The PPT and left it only for those whom I favor. It’s like stumbling into Aladdin’s Treasure Cave without use of magic verse or carpet.

You are that lucky.

You can see everything I mentioned last night launched out of the park today. That’s because Gold — and [[GLD]] has broken out to new highs again, and is on it’s way to $1,250 and then higher still. In addition to RGLD and the Jackson’s you want to get hold of these top Ten Fly Listers also:

Name              Hybrid % Chg              PPT Score/5.0 

1 AUY                 43.21  %                                4.11

2 NXG                    27.36                               4.05

3 EGO                     33.55                                4.02

4 GG                        21.08                               4.02

5 AZK                     32.99                               3.87

6 GOLD                  42.64                               3.78

7 RGLD                 63.64                               3.78

8 ABX                    20.20                               3.63

9 GFI                    50.43                                 3.52

10 NEM                12.75                                 3.45 

Go! 

Be benificent to one another in this day of gloury (sic).

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Real quick, I added to two positions today.  First,  Allied Nevada Gold Corp. [[ANV]] :  Probably my favourite (sic) non-Jacksonian.   It’s pulling back here nicely, and I think getting set to take off, as evidenced by strong closing  volume today:

Note what I did with the Fibo’s on this one? Sometimes, I try to “project” a target by aligning the strong fibonacci levels with a support or resistance line. In this case, I’ve put the 38.2% retrace line (it would have to be a “future retrace” of course) right at the bottom of the congestion zone created by the price-volume bar (green box). If this method is near accurate, we should top out of this next blast off at around $10.70. Let’s see if I’m correct.

Also, I bot my favourite (sic) African continent gold play Gold Fields Limited (ADR) [[GFI]] . Luckily, I’ve already saved this one:

I just love that pretty picture, and added more today at $14.19.  Perhaps a little early, but I’m not too concerned with this one long term.

Last, we cannot ignore earl, and my latest hot shot stock in the development area Parallel Petroleum Corporation [[PLLL]] :

(Update: I’m not going to post the PLLL chart as it’s busted out and looked to be capped at the current buyout price of $3.15 or so. Good job if you were quick like Chanci and got some right away.)

Also watch Rubicon Minerals Corp. (USA) [[RBY]] which has been rambling since we last spoke, and could be trade bait at this juncture.    [[EXK]] also looks like it’s ready to start moving again.    Best to you.

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