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

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 The empty suit video above aside, I’d like to direct you to an excellent Wall Street Journal article that reviews the scope of our Entitlement State circa 2012.  It’s not that we have reached an unaffordable precipice (we most certainly have), but that the extent and volume of government fund transfers both in dollar terms and in terms of the percentage of the citizenry receiving transfers has begun to transform our own national character.  The article is appropriately called “Are Entitlements Corrupting Us?”

A lot of U.S.-based  and foreign leftists tend to complain whenever anyone brings up the subject of American Exceptionalism, but I wonder how many of them are enjoying this current slide into mediocrity, and how many will be happy when we’re just another European-type welfare state?  I think quite a few of them have a niggling feeling in the back of their head that something is slowly being lost, much as the rest of us on the other side of the aisle have done.  I don’t think one can help it.  I also cannot believe that the majority– even on the Left– sense this will be a net positive for the world.

But who really knows? Spite and schadenfreude are powerful emotional succors.  One never knows where a person, once corrupted, will get their kicks.

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The dollar continues to tumble overnight, but draws near some major Fibonacci support at the high $80.80’s region.  Don’t be surprised if we get a bounce.  Perhaps a weak one, but maybe enough to deflate this current gold and silver run up for several days or even over a week.  I’m cautious here, only because I saw a lot of euphoria last week.  I’m about 60% invested on my PM positions, and will be patient here.

Best to you all.

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Awakening by the Sea

(by a kid I know)

the glaring sun, already high,

the sky a namesake blue

the sea, a  mirror, floating by

reflecting azure hue

 

the sun comes in, the night that sped

to cover all has passed

so creeping in and on my bed

light reaches me at last

 

at first not knowing where I am

I slowly raise my head

Then memory breaks confusion’s dam

And brings joy in its stead

 

I do not think that there can be

in the mornings early light

many better things to see

than that ocean shining bright

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Nothing more becalming than the fresh lyrics of the 15-year old English student, no?  Well, to each his own.  I thought that was good enough for publishing anyway, and I needed some becalming after the day my port endured, even with only 60% exposure.  Almost all my high fliers got hit, but I think I see some relief in at least the near future as both the dollar and the miners ($HUI) run into key resistance and support levels.

First, the dollar, which this daily $USD chart shows has hit that resistance level again today and has backed up below $79.80 this evening.  If it continues to fall, we should see a tradeable bounce.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second is the $HUI weekly, which I showed last night as approaching the channel bottom.  Well we hit that bottom and bounced this afternoon.  If we stay in that channel and get a rise back up, we should be good for an extended period.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I bot some EXK at the close today and a large pot of TC as well.  I might wade in for some AG and possible NUGT too if I think the bounce has legs.  Best to you all.

 

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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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Please do not take my lack of attendance here as proof that I do not love you.  The truth is, I’ve never left you…

All through my wild days…

My mad existence.  

 I’ll keep my promise, if you keep your distance.

(and scene). 

PS — Anyone who watched WPIX-11 as a kid in Noo Yawk knows that song by heart, if only by dint of it was the only commercial that ever played weekday afternoons between the Brady Bunch and Star Trek.   Ah, teevee, my beloved babysitter!   That’s what’s wrong w. kids these days, btw.  Not enough teevee.

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A quick repair to the dollar charts.  It seems as if old man dollar is trying to ruin everyone’s Mardis Gras by busting a move here, late Monday afternoon.  Problem is, he’s got nowhere to go.   Gold, silver, frankincense and myrhh have all sold down the last couple of days, just in time for the U.S. dollar to finally make it’s last hurrah, and look!  …

Nowhere to go:

 

 You want to fight City Hall run by the Bernank? You might as well try to fight Madonna with Whitney Houston’s Baftub.   Your arms are just too short.  Let’s see… $HUI is just about done cycling down, and the dollar’s got a date with $79.80 or so.  

As far as I’m concerned, you have your instructions.

Best to you all.

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Monument Circle, Indianapolis, Complete with Super-Classy, Monster Roman Numeral Decor

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The precious metal sector has gone HAM, as we’ve discussed ad nauseum here these last few days.  I’m not a big crower, as I take the “That’s Life” Sinatra-version view of this crazy stock picking game.  In fact, if anything I’m ticked that I got caught with only 60% exposure to my favourite stocks in the PM sector, and having ditched my two internally leveraged stocks (AGQ and NUGT) only the day before this anti-grapist surge.  That said, my port is still well above even my Seven Samurai picks (currently at +11.4%) as of the first of the year, so things are good.

I also think I called the dollar top to within pennies (one of my predictions was that the dollar would fail at $81.50).   I think it has a bit to go, even as it may take a rest here to bounce on the support that has now become resistance (#2):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I think we may get a bit of a pause here, but not much.  I will be adding on pullbacks and all the usual names will be good.

Let me take this opportunity, then, to point out my two “A” and “B” best PM stocks for the current moment.  I’ll do “B” first and admit right off that Banro — BAA is in fact, a Congo miner.  I make an exception, at least temporarily, to my rule about not taking too much political risk by noting that it controls over 2500 square kilometers of rich African resource land, and that it was incorporated (and still resides) in Toronto, Canada in 1951.  That’s a lot of embedded expertise and a lot of paid off pols in the Congo.  Consider it barrier to entry.

In any case it’s the chart I like, and when it gets back over $5, it’s going places:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Yamana (AUY), my second attractive Toronto-based player, seemingly breaks my rules because of its size (over $12 bn market cap), pointing out that it may be more an acquiror than acquired.  I like it’s benign Latin American exposure, however (Mexico, Brasilia, Colombia, Chile, etc.) , and think that it’s got one of the more promising charts (this one a weekly)  thanks to a long term breakout from a lengthy consolidation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I’ll be trying to take these two in the next couple of days at $4.80 and $16.70 respectively, if I can.   My best to you.

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[youtube:http://www.youtube.com/watch?v=xvz8tg4MVpA&feature=related 450 300] [youtube:http://www.youtube.com/watch?v=n8YCd9-Xtc8&feature=endscreen&NR=1 450 300]

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We talked today, so you know what I was doing this afternoon.  I liked the way the miners and even the silvers hung in there today despite the savage sell-off in the morning at the POG/POS level.  It convinced me to add another 10% or so to my 60% position.   I added SLW, AG, and GDX (two silvers and a gold).

To some extent I’m justifying my “Hang on, Sloopy” act over the last week or so, and I have to admit I was surprised to see that sudden cut below $1600 on the POG today.  However, when I noted that the $HUI was bouncing off long time support even as the price of gold (and silver, yeesh!) was still plummeting, I was pretty sure we were not far from the final washout.  That’s what I’m betting on now and for the remainder of the week.

If tomorrow we see a continued bounce (off of the $500 floor) in $HUI, then I will add more to the above and perhaps go have a sandwich in a park with some homeless people for the next couple of days.

It beats Christmas shopping.

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I mentioned I was going to say a word on that execrable and stupid Henry Blodget piece from the other day, the one in his Business Insider blog extolling this new bizarre left wing theory stating that it’s not entrepreneurs after all who create jobs but the  concept of  “demand.”

Suffice it to say, I’m shocked that such a jejune theory could be promulgated by a guy who at one time was actually hired to analyze stocks for a major Wall Street firm (albeit a guy who has since been banned from ever working on that side of the game forever).

Saying “Demand” causes job growth is a little like saying “oxygen” causes job growth, in the sense that if there were no oxygen, we’d be too busy gasping for air to bother to create jobs.

The whole idea is intentionally denigrating in the tradition of the political Left in that it implies that there is no credit due to entrepreneurs for having an idea, risking capital, and pouring hard work into a new enterprise.  Blodget’s crazy claim is that all those factors don’t matter, because — get this — if there weren’t the cash and the desire (which equal “demand” to him) to buy the product or service, their would be no revenues and therefore, no jobs.

In Blodget’s world, the chickens are slave to the egg!  But is that really the case? That without a consumer “demand” present, we’d have no production economy?  Well let’s go back to a hypothetical pre-history to find out:

On a primitive island, where most sustenance is derived from the indigenous banana trees, people traditionally spend most of their day searching about for banana trees which they can climb and then painstakingly harvest bananas by hand.  Local smart guy Oog rigs a scaffolding platform one day out of bamboo and cane rushes and finds he can harvest four times as many bananas as the typical islander can using the old method.  Oog soon finds he has a surplus of bananas, which he finds he can trade for other foods, clothing and perhaps a concubine or two.

Soon Oog realizes that he can make the scaffolding platforms for other islanders, which he does, in exchange for more trade items, and perhaps a plot of land for a new house.   This distribution leads to a massive increase in productivity on the island, which leaves the other islanders with more time (ah the essential commodity!) to commit to other useful tasks, perhaps in seeking alternate foods (the local javelina look tasty, but they were hard to catch and bananas took less time to harvest).

In the meantime, Oog has hired a couple of young men to help him construct his scaffolds and to develop a sharp new projectile or two to help with the javelina hunting ideas he’s been working on.  He pays them in a portion of the goods he obtains in trade for his invention.  They in turn have excess goods with which to trade their fellow islanders, who now have time to continue developing this micro-economy outside the initial “firm” of Mr. Oog’s.  A cycle of job creation has begun.

Now in the above case, “demand” is nothing more than common sense.  Mr. Oog, through his ingenuity, has devised a time saving device for his fellow islanders, and they quite sensibly recognize the value in “purchasing” an item like that to free up their own lives for other activities.   What they pay for the device is irrelevant, as Mr. Oog can take many forms of specie — from trade goods to service — in exchange for his invention, were it mutually beneficial for him to do so.  Blodgett’s “demand” is a red herring.

In the same way so is his insistence that no one would buy Steve Jobs wonderful iPhone were it not for “demand” from the mindless consumer masses in the form of desire and cash.  But don’t the last three years put the lie to such inanity?  In some of the worst economic times in modern history, iPhones have sold faster than Carl Lewis on crank.   That’s because consumers saw the value in an entrepreneur’s idea, risk and execution– not because they just happened to have a few extra hundred bucks they weren’t using.

To act like an economic system is not one of choices and decisions which lead to rewards and penalties is to perpetrate an invidious lie that would suggest we are all powerless as individuals.   I can imagine only one purpose for promulgating such nonsense, and call me cynical, but it’s a dark one, ending in death and slavery for all but the very few.

Best to you all.

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