_____________________

What happened in the markets today?  Are you kidding me?  What do you think? Let’s not quibble about what is what.

We know what.

But today I have something different.   A piece from a brilliant work of historical fiction I’ve been reading whilst on vacation.  The book is called Glory in the Name by James Nelson.  It’s about the Confederate Navy in the Civil War and I recommend it highly.  Anyway, the one part I’d like to recreate here (with the indulgence of the author) is a description of the “model Southern Gentleman” circa 1861, just as the shells were lobbed at Fort Sumter.  

The words are from a patrician gentleman from Charleston, SC, who was educated at the U.S. Naval Academy, but who saw his duty with the Southern Cause in the final decision to attack Fort Sumter, in his city’s harbor.  In his own words, a Southern Gentleman speaks of his hometown:

It was where Samuel had learned to be a gentleman, and more to the point, a Southern gentleman.  Courteous to the last.  Studied, urbane.   Personally disciplined — a gentleman, he was taught, did not show womanly weakness of any sort.  Passionately loyal to his country and his state.  Unwilling to suffer even the hint of insult.  Tolerant of the lower classes, appreciative, even, of their labor, but always aware of their place, and his.  Kind to slaves.  These were the things that that made the Southern man, and the instruction was so thorough that those traits became a part of Samuel Bowater as much as his height and the color of his eyes.

Is that not the Monsieur?  How long as the South been awaiting his steady presence, I ask you?  Be thankful, small plebs, that he is kind to slaves.

______________________________

Mein gott, I cannot say enough about how well we’ve done today.  Let’s speak no more about it, as it may be seen as “bragging.”

Best to you all, Jacksonian stalwarts.

_________________________________

 

Comments »

[youtube:http://www.youtube.com/watch?v=Gi1WXYHHc2s 450 300]

___________________________

Welcome to the other side of the Catherine Wheel that is this current Precious Metal Bull Market.   This is the side that crushes your limbs and threads your guts around a spindle-rod of molten steel.  This is the side that dares you to jump to end the pain.

Seems a long way from last week, doesn’t it — when airy elation suffused your soul as a result of of daily 6-10% moves northward in your positions.   You felt inner calm, you felt invincible peace.  You  priced Gulfstreams  650’s from your cubicle.  You went out and were fitted for a new flowing robe of purest white ermine, with matching albino alligator sandals.   ‘Fess up!

Well, get used to this queasy sea-change, ladies and gents, this is The Life of the PM Investor.   Not everyone is cut out for it, as it takes a modicum of steeliness and cement-headed self-assurity.  We are dealing with extremely volatile chemicals here, and it is only our good fortune that in this particular cycle they so often explode upward, instead of directly into our face.

The main tenet I’ve learned from this almost decade long period is that these things are almost impossible to trade, save at very extreme cycle beginnings and endings, which we will attempt to identify.  Therefore, if you want to attempt to trade, I would advise keeping a “happy pile” of perhaps 15-20% of your stash, and using it to try to add to your more significant long term investment pile — your “treasure pile”  for want of a better term.

Today’s move was unnerving, and unsettling.   The good news is, we are quickly advancing to oversold on the major index — the Amex Gold Bugs Index, or $HUI, which I use as a guide for entry purposes.   As you can see from this daily, we are perhaps a day or two away from a bottoming indication, as illustrated by the RSI stochastic:

We are also approaching support at the $535 level, which you may remember offered considerable resistance some weeks back.   Now it should serve as a brake on our descent, just as it acted as an intransigent lid in the past.

Another indicator I watch closely in exigent periods like this is the U.S. dollar.   It too is approaching a critical point in the RSI reading, this time on the overbought side.   It looks like it will be very difficult for the dollar to break through $78, at least in the near term.   You will note that that level also coincides with the dollar’s 50-day EMA, which has served as a resistance level in the past.

Dollars will print, my friends, until the Bernank thinks we are out of the deflationary woods.  There are already too many out there, but no matter.   Hang on, my various Sloopies.

Comments »

_____________________________________________
The dollar finally bounced today, and in a big way.  As mentioned in my last post, the longer term dollar trend line held at just below $77.00 on the $DX-Y Index.  Gold and silver also bounced today after being somewhat bludgeoned the day prior.  Certainly this drama prattles on in more curious and curiouser fashion.

Like my friends Gary and Le Monsieur, I want to believe the precious metal bull is done consolidating and is ready to take off.  However, today’s considerable bounce in the dollar and certain things I’m seeing in the $HUI Goldbugs chart continue to give me pause.

Luckily, I think the question will resolve itself soon, as the $HUI is approaching serious resistance on the daily charts.  This resistance, if broken, will give me all the assurance I need to jump back in the market long and strong:

Now, I’m not one for advocating dandruff-shampoo formations, but the combination of approaching resistance, and the 50-day EMA give me enough pause to wait one or two more days to see how this all shakes out.  Again, if this is the C-wave finale, we’ll have plenty of room to banque large coin before it’s run its course.   The good news is the 200-day remains a rock solid buy-point, as it has throughout most of this long bull run for the miners.

On a happier note, today one of loyal reader Teahouse’s favourite stocks — FRG — got swallowed up by a hungry major, again illustrating why we like to buy and hold (even in diminished capacity) the junior miners in this bull instead of the larger miners. 

 In an increasingly active M&A market, you want to be holding buyout upside, not acquisition upside for the simple reason that,with the days of Cisco and Fifth Third Bank’s long acquiring sprees behind us, there’s just not much upside to owning an acquiror.  And in owning the juniors, you know there’s always a chance of even a crappy company waking up to a 25-50% price pop.   Play the odds that lie in your favor, I say.

In honor of Teahouse’s alert (I owned FRG but had never blogged about it until Employee 8 brought it up here), I will also feature another of his favourites tonight, MVG — a nice little silver miner.  He gave me some crap for selling the $12.50 February calls a couple of weeks back when I was hedging the portfolio, but that trade has worked out, and I still own all the MVG I had purchased down in the $6-$7 range as a result (I’ve since covered the calls at short pennies).

I thing MVG is not far from a bottom on this pullback, if it has not bottomed already. Moreover, it’s a relatively low risk play from this point on:

Congrats to Teahouse and all my other fellow FRG holders, and let’s get out and get the next one.  They’re coming for sure.

_________________

Comments »

 

________________________
This end of the year is something else, no? You can feel the bull flows as they pulse through the market, and yet, they are driven much like all else, by the destruction of the dollar.

A destruction that is — seemingly — ahead even of my own most draconian schedule.  But I must have proof, I must have evidence before I send my portfolio over the cliff of hard asset liquidity.

Some of this action seems just a bit too pat for my tastes, and I am most assuredly nervous, and buttering my rye bread three times before slapping my slices together with fresh arugula, holland tomatoes, and thinly sliced roast mutton.  I will eat many samiches before making a definitive move.

I note that the dollar is sliding off a cliff again, and gold is heading to new highs whilst silver has already achieved them ($30.77 as of this sitting).

Yet the $HUI (my favored “Gold Bug Index“), and more important, my silver stocks still lag their early ecember highs. True PAAS is acting a champion and EXK is inching towards old highs (though selling off this afternoon).  SLW, too, is not close to $42, and this gives me pause.

I have decided to leave it up to the dollar, and these two charts (weekly and daily, respectively) will give you all the information you need.   The lines of resistance on the weekly are quite clear, and brought to you by Signorelli Fibonacci himself.   These weekly fibs tend to hold up quite well, which doesn’t bode happy news for our greenback:

Like the 200 week EMA in the above weekly chart, the daily provides us with an adequate signal — the 50 day EMA — which should prove conclusive given the already oversold condition in the daily:

  

 If we get a rebound, I will hold onto my hedges on my PM positions.   If we see further declines — and especially through these resistance levels — I shall be taking them off, and most likely piling back in aggressively.

That is all, really.

__________________________________________

Comments »

[youtube:http://www.youtube.com/watch?v=REYOJDANQ0k 450 300]

(Remember when Kanye was witty?)

________________________________

We’ve finally done it…  we’ve broken into “free air” on the Miner’s Chart — the venerable $HUI Gold Bugs Index.   Come see it for yourself:

I did a lot of things today in celebration of our free air moment.   First, I covered quite a few of my hedges in ANV and SLW and GDX, some at a loss some at break even.  The ANV was particularly egregious, but we’ll try not to dwell on that.  I still have about a 20% hedge on SLW and about 30% of ANV still hedged.   You’ll note the overbought stochastics and relative strength indicators on the above chart, I’m sure.  That’s my reason for retaining a little hedge.

But let’s not kid ourselves, the dollar is busted, and headed all the way to Target #4 without even a passing “hey howaya?” to Target #3.  Cheggitout:

Sure, we may get a little bounce at $77, but look at what happened after that last bounce.   No, I think the dollar is dead as Jacob Marley on burnt toast.

So please, get out of any silly short positions you may be contemplating “holding out” for.  There’s far more easy hunting out there than going after an Alaskan grizzly with a plastic butter knife.

In addition to releasing most of my hedges today, I also doubled down on an initial IAG long call position (DEC $17.50’s) at $1.60 a piece today.  My original purchase of 80 was at 90 cents each.   I expect IAG to be over $20 before Santa arrives.   I also added a touch more EXK, which was gluttonous of me.  I now own more of that than I even do SLW, though the share price is lower.

Of course, I think EXK will be the next SLW, so there’s a method to my sleep deprived madness.  I also really like RGLD here, and it looks like it’s ready to launch once again.  

My best to you, and to yours.

___________________________________

Comments »

________________________

The $HUI, he is glo-rious. 

The Fly, he is un-der the bus.

The Man, he is Chuck Nor-ius.

You’ll lose teeth if you

Neglect to floss.

________________

Be at peace if you have no gold

This might not be the time to hold

Y’see…

The oscillators all grow old

And all my calls have since been sold.

__________________

Check the graph if you have the mind

To see the $HUI crescent’s very rind

That’s flashed to me the warning sign

To take my nuggets off the line,

Chunk my Barca-lounger…

lever, and… recline.

___________________

Now, as a caveat, I’ll have you know

If the buck stays under the weekly low

Price at $80’s recent undertow–

Then I’ll be next to risk a throw

On Sainted Saxon Knight…

Lord Ivanhoe!

_________________________

Good day to you, sir!

_____________

Comments »