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Listen up kids, I don’t do drugs.  

No, really.

No, I get high on… silver highs.   New one’s especially.  ‘Fact, I might even OD on breaking all-time highs, but I am doing wind sprints and having my sons jump out of random closets at me— “Cato-Clouseau-style” — in order to get my adrenaline glands in good condition for the eventuality.

Cause I’m pretty sure it’s coming.   Tonight we have new 31-year highs at $33.12, which is making me very happy.  Mind you I started buying physical silver at about $4.50 an ounce, and have never sold any of it.  That’s over 630% since 2002.  I wish I could say the same for my silver stocks, which I’ve traded perhaps with over-zealous vigour (sic).  In truth, they’ve been even more volatile than the commodity price itself.  

My favorite silver play continues to be the royalty play Silver Wheaton — SLW— which does not dirty its fingernails with crude dirt-scratching but instead secures royalty payment in silver at a certain price in exchange for financing miners.   Would you screech out loud if I told you that SLW had arranged to be paid in silver at the equivalent of less than $5.00 an ounce?   That’s like taking a time machine back to 2002 and rifling the unsuspecting corner numismatic storedfront for less than appreciated 100 oz. ingots, only to return to February 2011 and have them assayed for over $33… and counting.

Can you see why I’m so excited about royalty plays?  They are, in fact, leverage for the leveraged price of the precious metal, as that is what the miners do — they allow one leverage on an increasing precious metal price.  The royalty play is one step higher up the chain of amped return.  Is there risk of default and other mining related problems?  Of course, but like a bank, a diversified portfolio will absorb some of that volatility.  

 Remember this SLW  chart from a couple of weeks ago?   The two arrows are the places where I’ve made recent buys.  We’re still not back to our old December highs, but I think we’ll be there, maybe as soon as this week.  

 Royal Gold — RGLD — is another royalty play, this time on the gold side, and with an even more diversified portfolio than SLW.   That’s another Jacksonian you want to own.

I also like EXK, AGQ (be careful with this one), PAAS, MVG, SVM, AG, CDE (small), and SSRI.  Another great catch all for all of these (or most) is SIL, the silver miner ETF. 

For gold, the old standards, ANV, EGO, RGLD, IAG, GDX, GDXJ, NGD  are recommended, and newcomers IVN and AAU to taste.  I continue to believe also that the rare earth metals will resume their volatile climbs, and I like AVL and QSURD best.

Nothing going on in the U.S. stock markets tomorrow, but the precious metal, U.S. dollar and futures markets should be fun.  Ciao for now.

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Bottoms Up! 

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On the imminent demise of the buck today, I loaded up with stupid amounts of AGQ, NGD, PAAS, MVG and SVM today, not to mention another 25% of RGLD.

The dollar is dying, I am quite confident of it.  Take advantage of all opportunities to at least mid-$76 on the DX-Y.  

That is all, really.  Short, sweet, simple

And sweet again.

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And Just the Right Colour (sic), Too!

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It certainly feels good to stretch one’s wings once again, especially after a period of soreness and chafing, when the gold and silver markets pulled back in feeble, milquetoast fashion, rendering my hedges dull and feckless, and largely a waste of my time.   Luckily, I exited the remainder of my precious metal hedges today, and for the most part in the plus column (while my short ETF hedges were not), and the whole unpleasantness was avoided save for a more optimum re-entry price on a few select names.

As I previously stated, the dollar and the Amex Gold Bug Index ($HUI) were my guide in re-entering this morning, and the $HUI preceded the dollar in breaking that “roof” at $535 that has been plaguing us for the best part of a week.  I think today’s strong candle — on volume not evident in this chart, but in the individual names — gives we longer term players the assurance we need to be back in for the final ramp into Spring:

Note that upon the strong break this morning, I piled into AGQ with the gusto of a small ravenous narwhale amongst the migratory squid, immediately purchasing my first allocation (about one half of my expected total) without a limit order.  When things are breaking out like this, you always want to make sure you at least wet your beak so that you are not left behind in a tidal surge.   I also put in limit orders at this morning’s gap — and they never came close to being filled all day.   Tomorrow I shall try again for my fills there.

As planned, apres this break,  I also added to my considerable hordes in EXK, SLW, SIL and NGD.   As early as tomorrow I expect something of a pullback, but I will be adding at each opportunity.   Next in line is PAAS, AG, MVG and perhaps even CDE and HL.   I shall be as a fat suckling pig in a candy shoppe.   And no, I will not forget Prometheus’s gold — EGO, ANV and IAG will be added to as well, perhaps with IVN and AAU.

Scratch that, I just looked at the charts.  I will definitely be adding some AAU tomorrow.

Cheerio! Wot?  Your friend, Happy Jake.

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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.

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Trust Ye Not the Evile Clamme!

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Well, wasn’t that a refreshing sell off we had today?  Will we bounce from here?   Likely, at some point.  But I wouldn’t get overly excited about it.   In fact, I’d take any rebound in the next couple of days as a welcome loosening of the steer-making device from around your sensitive bits, and lighten, lighten, lighten.   

You want to be as light as a Capezio-wearing chorus line extra dangling from a dirigible.   Because ladies and gentlemen, the Clamme  is not your friend!   The Clamme is the friend of men standing in bomb shelters poring over ruined real estate portfolios, but he is no friend of the genial Speculator. 

As good as it feels to revel in the seemingly endless supply of bubblicious liquidity flowing from the Helicopter du Clamme, you must believe that the other side of that euphoria is the long weightless drop down the elevator shaft, to which there is only one end for your portfolio.

Ker-freakin’-splat!

I love the Russell 2000 as a market indicator.   Are you going to pay attention to the Dow 30, instead?

A 10-12% sell-off will bring us back to the $72-73.00 area, where I see pretty solid support.   The 200-day EMA should rise to the $70 level here in the next couple of days, and that will offer additional support.   I don’t expect a bloodbath, yet, but why watch your portfolio shrink, or worse, get thrown in the chowder bowl when we will have larders full of opportunity in the coming weeks and months?

Patience.   It’s a most difficult virtue, but one that will pay literal dividends in the weeks ahead.

I added to all my market hedges today — SDD, SDS, and QID, to salutory effect.   I also off-loaded a small amount of MVG that I had not hedged, and sold off another quarter of my FTK holdings.  Tomorrow, I shall likely purchase some TWM and perhaps even some TZA, which I have held off on purchasing due to it’s razor-sharp canabalistic capabilities.

Best to you all, Clamme Diggers.

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[youtube:http://www.youtube.com/watch?v=4cnAfSsk2wc&feature=fvw 450 300]

A Gentleman

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Interviewed above is a man who is arguably one of the best rock and roll musicians of all time, with an indelible legacy that will never be questioned by the more serious students of the genre.   And yet Levon Helm is also indubitably a Southern Gentlemen in the truest sense.  Born to poor cotton farmers in an Arkansas town just west of the Mississippi, he was brought up with impeccable manners, respect for others, and a healthy fear of God.   The phrase “salt of the Earth” is cliched, but applies here if anywhere.

Note the patience, humility and even respect he allows the over-earnest newsdork interviewer?  A teevee journalist who, much like myself and most of my urban Northeastern brethren, reveals a contrasting self-important air of arrogance that far belies his functionary status?   It’s awe-inspiring.

Hell, I’ll say it– Levon is inspiring.    And his example and those of many of his generation is one of the major reasons I wanted my kids to grow up down here.   I wanted them to meet people with the quiet American dignity you see in this clip.  People like my children’s grandparents, and their grandparents’ kin from the Appalachian regions.   Because make no mistake, even in the South, folks like Mr. Helm are slowly becoming a rarity.

Every day, therefore,  I will strive to be more like him– not in talent, of course, but in pursuit of that humilitous honorability — as I believe that a most worthy goal.

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On the trading front, I covered a large number of my silver sold calls today, specifically SLW, PAAS, MVG and EXK, all at 35-55% profits.   I did this mostly because I think we will have a short term rebound here.   Maybe 2-5 days.   I find it hard to believe we are done, however.  

I think the noobs who piled into the PM markets in December still need to be shaken like rats running from the terrier.   What fun is a bull, after all, if it’s weighted down by noobs? 

I kept almost all of my gold hedges, not because I don’t think gold will bounce as well, but because the silvers are more volatile, and I have alloted the gold calls (sold) a bit more rope.   I will likely step out of them tomorrow morning.

The dollar is ramping, and it may return to our old mid $81 resistance levels once again.   I am preparing, and prepared.   You should be as well.

Lastly, if you are looking at the rare earth’s we’ve dabbled in recently, you should think of paring some here.  I expect a larger market correction to be upcoming, and that means the hottest stocks will be the hardest slapped.  Take note on AVL, as well as REE and MCP if you have any (I’ve neither).

Best to you all.

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