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

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Yep.

 

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Today looked like the the long awaited respite we”ve been waiting for in the miners.  A faithful poster pointed out AEM yesterday as a possible buy.   I like it here in “accumulation size” especially with that fat 2.5% dividend (that’s phat for the miners).

 

I also hoped you joined me in indulging in your favorite quality stock purchase these past two days.  I chose SLW, but RGLD still looks great, as does EXK and AG.

Best to you all.

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[youtube:http://www.youtube.com/watch?v=dlvTGXyRRuQ&feature=related 450 300]

There’s Still Hope When There’s Still Talent and Beauty, California

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I read an excellent piece in the Wall Street Journal this weekend, about a New York-born, Cal-Berkely trained demographer, a self-described “Truman Democrat” now teaching at admittedly center-right Chapman University in Orange, California.  The piece, Exodus” href=”http://online.wsj.com/article/SB10001424052702304444604577340531861056966.html” target=”_blank”> Joel Kotkin: The Great California Exodus, has Mr. Kotkin bewailing the current state of California’s economic environment, and the effect it’s having on the middle class in that state.

I think it’s instructive, especially given the rhetoric we see being wheeled out about classical economic models of “capital investment + smart ideas = employment growth.”  The left parties in the U.S. are again using the hoary phraseology “trickle down” to describe this time-tested capitalist model, while somehow trying to advance central planning as the “hot, new equitable” thing.   But what have central planning, high taxes, and a large and intrusive government actually brought California?

Good schools?  Not anymore.

Green jobs? Not enough to make up the ones lost in traditional energy, not mention other economic sectors.

A robust public sector economy? Well, yeah, for now at least…. (except for the pensions)…

Tax equity?  Well, yes, if you mean that people making over $48,000 a year are paying almost the same in state taxes as Larry Ellison (9.3% and 10.3%, respectively)

Affordable Housing?  Well, sure.   As long as you are either  indigent, or one of the Jobs kids, given that “free” and “it doesn’t matter” are the only options available to housing shoppers in the region.

Ironically, it seems California — once the 5th largest economy in the world on a stand-alone basis–  has become our very own version of Europe.   Unfortunately, today’s California resembles more a higher tech version of Medieval Europe than it does the more modern variety.   You see, California is swiftly transforming into a place where only the extremely rich nobility, the Sheriff of Nottingham (& his henchmen)  and some very contented peasants can bear to live in anymore.  As Kotkin puts it in his piece:

A worker in Wichita might not consider those earning $250,000 a year middle class, but “if you’re a guy working for a Silicon Valley company and you’re married and you’re thinking about having your first kid, and your family makes 250-k a year, you can’t buy a closet in the Bay Area,” Mr. Kotkin says. “But for 250-k a year, you can live pretty damn well in Salt Lake City. And you might be able to send your kids to public schools and own a three-bedroom, four-bath house.”

According to Mr. Kotkin, these upwardly mobile families are fleeing in droves. As a result, California is turning into a two-and-a-half-class society. On top are the “entrenched incumbents” who inherited their wealth or came to California early and made their money. Then there’s a shrunken middle class of public employees and, miles below, a permanent welfare class. As it stands today, about 40% of Californians don’t pay any income tax and a quarter are on Medicaid.

What’s worse is that such a system, if unamended, devolves into a vicious cycle of Exodus, especially given that this “European State” doesn’t border on neighbors requiring a passport for entry.   The result is not so much a brain drain (California still commands its share of brains thanks to Silicon Valley and the defense industry) as a family drain, and a “middle class” drains:

Mr. Kotkin also notes that demographic changes are playing a role. As progressive policies drive out moderate and conservative members of the middle class, California’s politics become even more left-wing. It’s a classic case of natural selection, and increasingly the only ones fit to survive in California are the very rich and those who rely on government spending. In a nutshell, “the state is run for the very rich, the very poor, and the public employees.”

Again, I have to chuckle.  In one of our bluest states, not only is the left driving out “the middle class” that the President is so often claiming support for, but they are pushing them to traditionally more conservative states like Texas and Utah, who have now become low-tax hubs for the same cutting edge technology that made California the economic engine of the 20th century.

Circumstances such as these that afflict California and my own native New York do not occur over night, but are rather the result of a series of choices taken over many years of feasting on economic prosperity, once gladly and now grudgingly shared.   We must ask ourselves, are these once-great states merely the natural victims of their own success?  Is the U.S. doomed to fall into the same gray spiral we see now afflicting the increasingly infantalized — and seemingly helpless — states of Europe?

Serious questions which must be taken seriously and soon.  Are you game?

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I reached into my reserve stores today and bought 40% more SLW at$ 28.32, as reported in The PPT this afternoon.  I am prepared to buy more, as I think we may even see silver touch $30, or slightly below once more, like it did back in September/October of 2011.  Remember those painful times? That’s what has me salivating.

I am prepared to buy more.   My best to you.

 

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 I’m just not certain I can take it any longer.

You know I have a theory.  The theory goes like this (and I admit, up front, it’s far fetched)…  Sometime during the Cold War, certain powers that be in the U.S. and Europe decided, in the name of keeping the West free, to innoculate their states periodically with a nasty dose of tyrannical gov’t .   They did this knowing that electoral politics would eventually usher in a balancing freedom-oriented policy regime that would relax the tyrannical restraints and allow natural markets to “flush out” the body politic as it were, and restore the “classical” economy to it’s normal value-creating state of spreading prosperity.

A lot of people think that first post-War inoculation shot came with Jimmy Carter’s inept single term.  However, I believe Carter was really just the capper of a particularly loathsome trio that started with Lyndon Baines Johnson and was followed directly by Richard “Wage /Price Freeze” Nixon and his milquetoast second veep, Gerald Ford.  Those three created a cycle of war and inflation (Nixon took us off the gold standard for good as well) and stupid economy gumming regulation that culminated in the body politic crying Uncle for a respite.

In that regard, Reagan only had to do a few things, just as Romney will only have to do a few in January of 2013.  Like Reagan did, Romney will only have to undo some of the more illogical (and unrealistically ideological) regulatory burdens thrown up over the last six years since the Pelosi-Reid wagon rolled out of the 2006 electoral winner’s box.   Too, Romney will have to dismantle Obamacare, and that might get sticky, considering it’s tar-baby-like, multi-thousand page, unfunded legal status.   Tax reform will also take some hard work and many late night battles over ideology and dollars and cents (sense?)

But our economy is a funny thing.  It’s self-repairing for one thing.  In fact, ironically, all it really needs is for the beatings to cease for morale to really improve.  Everyone who ever got past elementary economics knows that does not mean blaming regulatorily-enforced high carbon fuel prices on “speculators” instead of on a police-state-level blind ideology that won’t take even the most elementary steps (Keystone is not just a great light beer, Mr. President) toward self-preservation.  Smart citizens — and even not so smart, but just not so readily blinded citizens — eventually grasp the simple basics of supply & demand, and from that can intuit where the power to manipulate markets really resides.

But the good news is that such dunce-cap buffoonery will soon be over.  The sleights of hand, the excuses and the kabuki grow wearisome for all but the most ardent of clinging acolytes.  The counter-scams and red herrings grow less comic and more maudlin.  Soon gone.

Soon.

Gone.

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SLW under $30, RGLD under $60 and EXK under $9.00 are birthday presents like not even Midas’s daughters received on the days of their betrothal.  If I get ten seconds of meeting-less, conference call-less bliss tomorrow, I may even pick up a bail of in the money options.

Bless you for your patience with me, and with our economy, ever resilient.

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Really, I’m spoiling you.  It’s not going to be like this all the time, so pay attention.  A lot of these little smoking grenades are launching right now, but not all of them (cf. the BRD is a word, a bad word, like PHUCK!).  Don’t be afraid to bring up suggestions in the forum, but right now, I’m only recommending what I’m recommending because I feel good about what the chart looks like in a rising miner environment.

Take PZG as an example.  I haven’t talked a whole lot about it in a while, but I like it right now.  Here’s the weekly, finally breaking out of a medium term downtrend:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Now check out the daily.  See how it’s right against the breakout, much like BAA the other day?  That means your decision will be relatively easy tomorrow, right?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Just wait for it to break that upper triangle line.  If it does not… well, you’ve got some more time to wait, that’s all.  You can turn your attention back to the psycho silver market which is blowing up as we speak.  AGQ, SLW, AG, EXK, MVG, heck even CDE and PAAS and SSRI are fair game at this point.   Of course, SIL will obviate any decision making, much like GDX on the gold side.

Enjoy this time, my friends.

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[youtube:http://www.youtube.com/watch?v=b8B3Vqupy0U 450 300]

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I’ve watched with some amusement recently as a few here have tried to use every gauge on the submarine dial in order to judge what direction the market is going.   Don’t get me wrong… there are people out there for whom I have enormous respect, and who have studied the markets to a fair-the-well for years, decades even.   Those same people are tying themselves in knots trying to read the latest tea leaf pattern on the bottom of their bone china cup.  They make it so hard, when it need not be, especially given their backgrounds, their educations… their knowledge of just what makes the market move.

Let’s face it folks, the market moves on liquidity.  That said, there are two things affecting liquidity in our U.S. and global markets.  The first is scarcity.  Yes, scarcity.  When I was a pup, in the 90’s, it was not uncommon to see 50 to 60 Initial public Offerings PER MONTH.  Now we are lucky if we get 60 IPO’s in an entire year.   Sarbanes Oxley and Dodd Frank are doing their work, and the private capital markets are filling in the gaping hole left by the public markets’ regulatory sclerosis.  Deals are getting financed and traded entirely on the private side.  Increasingly there are more and more great companies that you will never see as a Joe Six Pack investor, unless you get real wealthy and start investing in private equity limited partnerships.   That’s too bad, but I guess the “good news” is those slimmer pickings make for a more highly bid public market, just on supply and demand criteria alone.

The second and probably more comprehensive goad to liquidity is the loose monetary policy we’ve been “enjoying” since the dot-com crash and 911, and even more so since the Financial Crises (sic) of 2008.   I don’t need to tell you that the dollar has been used and abused for the last ten years, gaining only a brief respite as a “Safety Dance” during the 2008 Meltdown.   Recently, I’ve been calling the dollar’s dolorous decline with pinpoint accuracy (if I do say so m’self).  Look at this highlight reel:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Eschewing cycles, I kept only Ben Bernanke and the political importance of 2012 in mind, and came up with this startling conclusion: this should not be a good year for the dollar.

So what should it be a good year for?  Funny you should ask, as I called for a buy on SLW last Friday at about ten cents below it’s actual low of the day.   I don’t plan to make that mistake again, at least not with MAG Silver (MVG).  A lot of my PM charts are showing nice signs here, and MVG’s budding return to society is shown best in this weekly:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Now check out the daily to see where the best place to buy in the next few days will likely be:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I’m going to throw the order in at the north end of the range described above and close to that 200-day EMA.  I don’t want to get burned again by a dime like I did last Friday on SLW.  It’s accumulate time again, kids.

Best to you all.

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What do you know? After trying to fake me out by blasting past my $79.80 target today, the dollar capitulated and sold off deep to about $79.25 at the lows. It’s now about $79.40.

I think earl and gold are the plays here right now, and if you are not in my two “Samurai 7” earl plays, COP and PBR, then you want to really think hard about them tomorrow. That COP is just too phat at 8x trailing earnings and a nice yield to boot.

Moreover, I think it’s safe to say that SLW was the call for today.  Unfortunately, as I recounted in the comment section of my last post,  I missed my buy stop by about ten cents.  See what happens when you try to get finicky like that?  I think I’m better off just buying at market sometimes.

In any case, the PM trade seems to be back on for now, and besides my favorite silvers like AG and EXK, I would be looking to the gold juniors, specifically GDXJ (the ETF) and AXU and BAA if you can stomach the volatility.  Otherwise, AUY, GG and RGLD are looking good here, Lucy.

Best to you all.

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