The 1,350 to $1,400 area is going to be important here. We banged against $1,400 a couple of times over the past two days and were not able to surpass it until this early this morning, when we had a quick break and then a jet to over $1,420. There was a lot of selling into that break, and so a retest of $1,400 will be increasingly important to see if this will be a failed bear flag or an actual recovery from the recent oversold condition.
We are as of this writing, trading at $1,407.
There is a possibility that we could snap back extremely hard on this recent down-plunge. There are stories all over the internet about large physical purchasing going on. This could be anecdotal (well, it IS anecdotal), or it could reflect the difference between the paper and physical markets. If the last couple of days action was a desperate move to combat an imminent physical delivery problem (as some have speculated), we could see a torching of the shorts like none have encountered since early 2009. Stay vigilant and nimble here.
I don’t need to tell any of you who were paying attention about Friday’s crater job on the precious. Coming about on the Friday before options expiration week, at at the end of a long and dreary down cycle, it certainly looked nicely timed to shake the trees loose of many golden and silver ducats. Friday was a nice day to make that first physical purchase and tomorrow morning may be even better as a result of the follow through.
I’m holding on to what I’ve got for the almost inevitable mean reversion play here. The precious miner bullish percentage index (“$BPGDM“) is at absolute ZERO. The last time we hit zero on that scale was in December of ’08, at the very nadir of the financial meltdown. What’s more the Hulbert gold sentiment rating is off the chart completely (yes, below -20, otherwise known as “uncharted territory.”) We lost another $50 tonight before the rebound, and we could even see $1400 tomorrow. Is this the time to give up the ghost? No, it’s blood in the streets time. You know what Mr. Rothschild said about the time to be looking to buy, right? Consider that the Buying on Weakness number for GLD was its highest ever on Friday at $144 mm in block trades. That’s the big boys out collecting.
The best bet right now is physical, and or waiting for the turn, with wariness and apt cunning. Fly got some AG on Friday, and while he may have been a touch early, I think he’s got the right idea. The fast flyers will rebound 20+% when this plunge is over. I also like the fat dividend alpha males like AEM and NEM here… they too have been beaten down over-harshly.
Everything’s relative, I guess, including pain. Today’s revisit to the recent lows (and no, we’re not there yet) is not as painful as, say — a bloody compound tibial fracture jutting messily out of one’s shin. That said, it sure has been a frustrating six months, hasn’t it? And yet, if you look at all the major charts, it looks like at this late point in the cycle, the worst we are going to get is a revisit to the end of February lows, which — not insignificantly– were at the 200-week exponential moving averages for most gold and silver stocks. Royal Gold (RGLD) is still my favorite here, but you’d have to be crazy not to take advantage of the yielding plays available through NEM, AEM, and even ABX — and those are large caps you’d never see me recommending in a “normal” market.
But this isn’t normal. There’s a concerted, global (read Big 8) effort to devalue currencies — and therefore reprice debt — the world over. The only way those central banks can get away with this kind of routine, and save their debauched systems, is to get it done under cover of a “deflationary” scenario. The easiest path to that is to keep their foot on the less liquid large commodity and precious metal markets. This whole American Earl Revolution is a God-send to the central bankers, because it’s bringing supply on line in a period of global currency inflation. Ask yourself why oil prices have remained so stubbornly high, however, despite the onlining of so much new supply in the world’s greatest petroleum consumer.
How much longer can this kind of thing go on? Until the little guy cries “uncle” as loud as Soc Gen just did? Given that I was expecting a retest, and the large volume bars we saw at the late February lows, I am thinking this week and maybe the next will be the final washout. I’m still holding tight to my remaining cash, however. Like in late February of 2009, I don’t expect these prices to hang around for very long once the next cycle takes flight. That said, I think there will be ample time to take part once the bull trend resumes.
Best to you all, and Go Cards!
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PS – this retrace is also an excellent time to buy some physical, if you’ve been holding off, including 100 oz silver bars and nice liquid gold coins like Maple Leafs or Eagles.
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Defense wins championships, right? It also keeps one alive to survive and advance. With Cypress pulling out the last minute levers to confiscate “excess deposits” in order to balance its public accounts, how good are you feeling about “independent” depository institutions right now?
Sure, I know. None of that stuff could ever happen in the U.S. We’ve only got $20 trillion or so in 401k assets across the country. We’re only a Bloomberg decision away from your friendly gummint deciding that asset plan could be much more “sustainable” under their “supervision.” And heck, what’s safer than gov’t treasuries after all?’
Remember, they are just looking out for your best interests.
But own some physical gold and silver anyway (now’s a great time to pick some up for the longer haul). And you know what? A Kimber ACP might not be the worst idea either.
I guess my jaw is just going to drop every day right into November 6th of this year. Yesterday, I stood agog as the U.S. National Media did not merely let slip their masques of “Objectivity” but tore them off completely in defense of their Dear Leader, The Obama. It was like we were back in the days of “Soviet Union,” when Pravda and Tass would not only mouth whatever “truths” the Soviet leadership would set them to, but also pro-actively attack dissidents of the regime in order to discredit them.
When our embassies in Egypt and Libya were attacked “coincidentally” on 9/11, and our Executive Branch Administration decided to respond with an apology instead of condemnation, I guess I wasn’t completely shocked when the MSM house organs (NY Times, Boston Globe, LA Times) buried the story well into their papers to clear room for important Romney/Ryan high school reportage. What was a shock, however, was watching the press go after Mitt Romney for – very appropriately, IMHO – condemning the wrong-headedness not only of the rioting Islamacists, but of the Obama Administration that was feeling their pain. Incredulously, I watched as the biggest media firms in the country went after Romney in a (now confirmed) coordinated attack like he was the guy who murdered our ambassador in Libya instead of being the only Presidential candidate to take time out of his day to remark upon it.
No, what was important to the press was that Romney was condemning the Obama Administration, and everyone knows that the Main Stream Media’s number one job is to advocate for the Democrat President, right?
Right?
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Meanwhile, on day four of “Jaw Dropper Week,” we hear from yet another uncompensated (well, sorta) member of the Committee Re-elect the President Again (CREEPA) — Mr. Ben Bernanke. Not two weeks after Mitt Romney all but said that Fed Chair Bernanke was likely selling pencils come this January, the Bearded Bandit decided to show just how far he’d go to keep his job.
It’s fucking mind-boggling, if you’ll excuse my French. Just stutteringly mad.
We are spitting in the face of people who hold our dollars world wide. We are saying, “See this? This hundred dollar bill? I wipe my arse with it! Have some!”
“Oh, yeah… and vote Barry so I can keep my job, eh? Thanks much.”
Anyone got a line on a wheel barrow factory I can invest in?
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As might be expected, gold (+2.11) and silver (+4.33) are screaming. More analysis of the traditionals tonight, but the ETFs are your best bet at the moment (GDX, GDXJ, SIL, GLD, SLV, even AGQ and NUGT). Go nuts, mind as well.
