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We spent all day tightroping the edge of the knife, with the dollar up over $81.15 at one point, and looking to scratch it’s way back to another resistance level at $82 (see yesterday’s chart).

I am eating samitch after samitch whilst trying to get transactions done in my real-world job before the arrival of Santa and his hated Year-Ending Elves.  These elves are characterised (sic) by their size 15 purple Chuck Taylor sneakers and black leather jackets.   The come to destroy your year end payouts by crashing deals or worse — extending them over the dreaded January 1st barrier, where goblins dwell, stretching their cold emaciated hands out to offer only sauer kraut on cool buns — and no dog, hot or otherwise.

But I won’t bore you with all that trouble.   Suffice it to say I’m busy, and I don’t like what the tragically unhip North Koreans have been doing to my dollar, especially combined with the large selling on strength in the SPY’s that we saw today.

Right now the dollar is banging once again at the $81.00 level, even after it fell off in late day trading today to flirt with the high 80.60’s.   I’m afraid I won’t be quite right until I see it disappear below the waves of $80 for good, which may not be for another week now, given the friskiness the mentally challenged greenback bulls have exhibited here.

So I may actually dump my calls for reals tomorrow, but I may also eat a samitch.   Whatever the case, given today’s selling on strength, if I see the dollar threaten rain again, I will be clearing out of almost everything but my PM positions, with the exception of MON and UPS.  

When it rains we must be ready with the bumbershoot, wot?

Bless you and keep you.

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[youtube:http://www.youtube.com/watch?v=WM1RChZk1EU 450 300]

The Greatest Hip Hop Video Of All Time… Do you Dispute it?

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And so appropos, no?   Can you dispute I got a million ways to get it?

Who holds the Jacksons, still?  Which of you?  

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I took some silver off today, specifically SLW, PAAS and EXK.  My positions in these were fecund and preposterous.  They were an insult to God, they’d grown to such metastisitic proportions.

So I reset on some.   But I keep all of my SVM, MVG, and SSRI, with an eye on adding again to all of them.

And even more so with the gold juniors.   Some have asked me, “what of IAG?” 

More of it here, good sir?

Yes, good sir, yes, yes.    And NG and IVN at any scant opportunity.   But above all, constantly feed RGLD. 

Outside these of the Precious, only MON, UPS and ANDE are attractive to me right now.  

Go on now, I’ve given you enough! 

Go!

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Not my Yanks, that’s for sure
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Drawdown days are a bitch, I don’t care how well hedged you are. Some of my positions took 7 and even 8% haircuts today, but mostly that was the small ones. The bigger ones were hedged, so the bleeding was not entirely egregious. I was almost entirely out of my AGQ with only 400 shares left, so that was not a horrible caining I took even in that double slammer today, given I formerly owned 3k shares.

Word to the wise, the $HUI index is oversold already on the deep dive it did today, so I would not dwell long in the land of shorting this gold bull.  You are far more likely to receive  profitable thrills by waving your junk at a basket filled with hungry ferrets.

Of all the single precious issues out there, I like IVN and GSS to rebound first.  Don’t ask me why, just attend to my Spider Senses.   I also like almost precious REE, if it ever comes back down to earth again.  

In the non-metals world, I still love the Trannies and their strength here, relative to the scaredy cat sell off.   I especially love UPS, and you should look to add to this core holding if it can dip just a little below to it’s 50-day EMA at $66.60 or so:

RGLD is another core hold  you should be looking to glom here.   I will be adding to it, to ANV and to SLW very shortly. 

Watch the dollah!   More tomorrah!

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You probably remember this post from the last Thursday  where I posited that the $TRANNIES and their superstar leader $UPS were on the cusp of either breakout or break down.

Here was Thursday last’s potential bull flag on the UPS weekly chart that I thought might bode well:

Well today’s action may have “told the tale,” as good earnings news from UPS seems to have incurred one of it’s biggest single day moves in a year.   Look at the breakout from the handle pattern now;

Next stop is $65 and then some pull-back as per the mind of The PPT.   I think pullbacks on this belleweather should be bought however, as this is a significant move, and augers well for the late summer and early Fall market fireworks.

My best to you all.

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“Heart Attack on a Plate” — Nom! Nom! Nom! Nom!

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Seared, medium rare dry-aged New York Strip (12 oz) is very good for a special occasion.  As are gargantuan prawns with hot hot blazing hot chunky horseradish cocktail sauce.  As are “tomatahs and motzz” (sic) w. heirlooms and hand made mozzarella. 

And let’s not forget a flagon of ruby red claret to wash it all down.

But only every once in a while, or that stuff’ll kill ya.

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Speaking of “you only live once,” (I know you just said it), I think that’s what we’re looking at here in this late summer coiled up rocket rally.  It may flare out and die, but I think it’s just as likely to continue to unfold into the early autumn (!!), and here’s why…

We’ve talked sentiment, and it was hang over the banister and puke ugly here about two weeks back.  As ugly as it’s been since before the March ’09 phoenix run.    Sentiment is still bearish — note how many skeptics there are, even among the storied stock pundocracy? 

We’ve talked dollar, and it continues to melt here.  Down another 22 cent (sic) today, to $83.43, I don’t think we see relief til at least $82– the 200 day EMA.

Now let’s talk our market leading Trannies ($TRAN).   They continue their stealthy moves after the non-confirmation of the February lows a few weeks back.   Now the weekly has them taking out a significant fib line — 61.8% — after bouncing at the 50% retrace.

If we hold above that fib line this week, we could be heading all the way back up to the top again on this coil explosion.

And let’s not forget the Grandaddy (Mammy?) Trannie — UPS, the Men in Brown.  This is another long term hold of mine, and it’s like XOM or CHD — always reliable.  Check how it’s testing the handle formation here, and keep an eye on where it goes.   Given the similar stochastic formulation to the $TRAN above, I see a similar breakout coming:

In other news, the PM’s just stood there, which is fine, and MON is busting the heck out, up another 4.5% to $54.61.  I may have to look at this one again for you, with gladness in my heart for those desperation buys in the low fitties and high fowties (sic).

I’ll be busy all day tomorrow, but will try to check in.  Best to you.

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I got a question in my comments section yesterday about two smaller Canadian juniors — RBY and BAA  — that we’ve discussed in the past, and which look to be ready to turn back north, or disappear down the drain for the duration.  

Note, even in this wildly successful bull market for gold and silver, there are still doggy outliers with such grandly incompetent management (or who have the misfortune to operate under the purview of such confiscatory national governments) that they have not benefitted in the “rising tide.”   

I often cite the South African DROOY, as an example of said phenomena, but even poorly managed HL and CDE can be placed in that category.   The difference between DROOY and Idaho-based CDE and HL — where I would not invest in the former, but have done so in the two latter — is in nationalization risk.   In this rising tide, CDE and HL, though managed ham-fistedly, might actually become buyout candidates thanks to their assets in the ground.  

DROOY on the other hand, increasingly becomes a nationalization candidate as it’s home nation (South Africa) slides further into the traditional socialist morass under the leadership of the ANC.  Happy World Cup, by the bye, fellahs.

Back to our two small Canadians, who are, again, very low nationalization risks.  With Canada’s strong support for it’s PM industry, they maybe even lower risk than the gold miners of the United States (lol!).   I will show the weeklies to illustrate the long term trends, as usual.    BAA, which just a month back raised over $130mm at $2.05 Canadian (or $1.98 U.S.)  a share, is showing a possible bottoming here, which is not atypical a month after a major dilutive action.

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One quick aside on the major risk of juniors in a gold BULL market (the major risk in a non-bull being that they are actually held accountable for their crappy earnings, lol!).  In a non-nationalizing State environment, the greatest risk to junior investors is in dilution.   Many many many managers of these juniors (rightfully) see an increasing stock price (thanks to speculation) being an opportunity to raise cheap capital.   And even if the capital is not so cheap, the market will assign a discount to it upon a dilutive offering anyway.   Hence, in the case of BAA, we had a large new issue of equity sold at $1.98, but saw the stock pull back (this week!) all the way to $1.61 — a 19% discount from the original offering price.  That’s HUGE in a bull market for gold.

The good news is that BAA is now going to be a much smaller dilution risk going forward, and in fact, one might even say we can take that risk off the table for up to 24 months… which may mean all the way to the end of this bull.  With such a capitalization under their belts, BAA also gains more leverage in an M&A scenario.  Because of the fresh capital, they will not be forced to accept a low bid to monetize their assets, as this offering gives them additional dry powder to do so internally (for the time being).   

Long story short, if you owned BAA prior to this dilutive event, you  are pissed about the set-back (although, if you are like me, you are long used to it in these juniors).   This is one reason to greatly diversify your junior picks, either through a large group of names (as I’ve done) or via ETF’s like GDXJ and SIL (less bang for the buck, but a greater diversifier for those w. smaller accounts).

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The good news is that now that BAA has taken the dilution risk off the table, this may be a good time to begin accumulating at these prices… Note our weekly chart:

We could see this thing drift down another 10 cents or so (which is a lot, admittedly) if there is a consolidation of the latest gold pop, but I think the I-bankers at CIBC World Markets (the underwriter of the shares at $1.98) would be catching a lot of grief were it to descend much lower than the $1.55 range (a 22% discount and home to much chart support).    I may add to my holdings come Monday.

Note:   a large part of BAA’s holdings are in The Democratic (hah!) Republic (ha-ha) of Congo, so there is nationalization risk, but less so, thanks to BAA‘s being a Canadian-resident company.  Ironically, foreign companies– especially those based from Western NATO allied countries — are more immune to nationalization in rogue states, whose loosely held governments are dependent on their income to survive.  In fact, because SA is not a rogue state (i.e., essentially government-less), it actually poses a greater confiscatory risk, thanks to the Dunning Kruger effect posed by imagined competancy  (see Venezuela as a great example, or even the Obama and Bush Administrations), than the tenuous ex-Zaire of DRC.

Also, please keep in mind that while BAA may not be subject to nationalization risk, there’s still higher political risk due to the fighting going on within it’s host state and on it’s border states in the Congo.

Rubicon Minerals’ (RBY‘s) position is a lot more secure, with most of their assets residing in Canada and the U.S.  That said, they too have had a sharp pullback from highs (see chart below).   They had their big dilutive offering (they bought back debt too) in 2009, with over $210 mm in “bought deal financings,” which are essentially privately placed public equity (like PIPES here in the US).

I also like the chart, which seem to indicate a cup and handle, with a subsequent breakout.   Now it seems we are consolidating that breakout and it may be time to “nibble” once again.   I may also look to RBY on Monday.

 

Note, I will be increasingly selling down my non-gold & silver  movers, save for a couple of small positions in UPS and MON and perhaps CREE.   I think we are getting to a point where a concentration in PM”s may be again warranted.  This will be especially true if the dollar starts to break down here, as I think it may.

Best to you all, and I will try to get a piece in on the TRANnies before weekend is out.

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