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I don’t have a lot of time, as I’m “leaving on a jet plane” from Minnesota South, also known as Palm Beach County, Florida, to warmer climes in the Bluegrass region.   Also dealing with some family issues, not the least being my wife’s tolerance for “vacation” with our four kids — “not to exceed five days/nights” it read on the labelling.  Can you picture the look she’s giving me as I tap these words out whilst I should be loading the car with luggage?

Yet, it’s my devotion to my Docteur Le Fly, his magical engine in The PPT,  and my good bloggish friends that drives me like a grizzled veteran of the India campaign is driven to a brown ale at the end of a long day of patrol. 

Here’s what I’m seeing, and be sure to filter it through all my inveterate bias and natural cognitive dissonances.  I think the dollar is gasping it’s last for this time period.   It’s raging against the dying of the light in the most poetic way, but it’s punches north grow weaker and weaker, even despite all this news of imminent employment doom and Grecian tragedy.  [[UUP]] would need to stay north of $23.60 to remain convincing that the dollar possibility is still on, and DXY above $80.50.  

I think a weak employment number only weakens the dollar tomorrow, while a strong number (unlikely, as we’ve seen bruted) marches the market north.  Either way, I see “up” for our friends on the PM side.   Note how the [[HUI]] has broken out of it’s downtrend and is now looking to successfully touch both the downtrend and the 50-day EMA at $415?

I think this will be our signal to buy with both hands.

Here’s the stock I like most for those who are interested.  It’s gold, and it’s been golden to me and mine.  I don’t see why that shouldn’t continue.

Best to you all, and I’ll speak again with you after touch-down back north.

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We be coursin’ out o’ the far lip o’ the storm and here it tis at her strongest.    With the power o’ yon circlin’ vortex, it will try to drag ye to yer briny doom deep in the cold confines o’ Davey Jones’ Locker.   Take heed, lads!

Make an eye on yon dollar representative [[UUP]] — note how he’s strooglin’ and dancin’ like a half-mad murth’rous boocaneer at the end o’ a strip of fine English gallows hemp?    He’s tryin’ tah break ye lads, and his murth’rous brither, $DXY has shot all it’s grape over $81.00 as oirly as this morn!     They’re after ye traisure lads, as shore as I was born a palsied pain and boirnin’ boyle to the British Empire’s arse!

Aim yer guns down, lads, right below the waterline of yon King’s Federal Admiralty First Rater, the H.M.S. BernYankme, for her three decks are festooned with dollar cannon, ready to sink ye with all hands aboard, and yor sparkly traisure o’ silver and gold as well!   

But beware the storm that assists yon bewigged and brass-buttoned scurvy Federal Redcoats, blowin’ out of the South Mediterannean, and the Aegean Sea.   Tis driving the dollar to new highs against the warped and besotted Euro.   Fill the lifeboats with [[DRR]] and other provisions such as meat pasties and cane sugar.   Despite the dollar tide being up near a full 100 basis points, [[GLD]] and even [[SLV]] are riding the storm well, which gives me good cheer, even as my cutlass runs red down it’s fuller, and my beard sizzles with ball and gunpowder.

[[SVM]] and [[PAAS]] which were laggards last week, seem to be holding out the best in the silver circus.   [[EXK]] , Hecla Mining Company [[HL]] and [[CDE]] are next in line, with my favourite (sic) Silver Wheaton Corp. (USA) [[SLW]] taking the worst of the tsunami wave for the rest of her crew.   

The cautious among ye will await the drop o’ DXY below the $81.00 sea line.   At that point, I think even the Treasury Bane [[TBT]] will be boardable without fear of it becoming a Jonah.   Me three favourite golds, Allied Nevada Gold Corp. [[ANV]] , Eldorado Gold Corporation (USA) [[EGO]] and IAMGOLD Corporation (USA) [[IAG]] seem to be holding up in that order as well.

Hold hard mates, I see a calm horizon when this sqall be done.

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While nothing is yet set in stone, two big precious metal “tells” are indicating that, POG and POS, aside, we may have braved the gauntlet of the recent harsh pullback in the sector, and could be looking at a resumption of the secular bull.

I know this is slightly contorversial, as I am gainsaying a friend and mentor, Mr. Gary Savage of the SmartMoneyTrader, whom I respect and esteem at levels equal only to our own beloved Monseiur Le Docteur Le Fly and the crew down at The PPT.  Gary believes we are going to test at least the $1044 level on the POG, and quite possibly have nother retest of the $350-375 levels on the $HUI.

While I often find myself in agreement with his fine logic, I am not so sure he has his cycles right this time.  My current charts look to be showing something more promising:

 {Jake Closes Deal in Interrum — “And There Was Much Rejoicing!}

You probably also remember this [[GDX]] chart from the last time I posted it.  Well, we’ve tested the 61.8% retrace again this week, and held serve.  About 15 more cents, and we’ll be back above the 34-week moving average.    Whatever the case, I think this bodes well for the larger miners going forward:

Last but not least, our old friend the dollar.  The weekly view, seen from our proxy [[UUP]] seems to indicate a red doji on intermediate volume and (mostly) declining stochastics:

  Note also, price level has reached the top of the “consolidation zone.”   The week ahead will tell us if the dollar is just resting, or getting ready to lock back into it’s secular bear cave. 

Best to you all, my scurvy swabbies.

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Omm Nom! Nom! Nom!
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Looks like Mr. Limm and kin are trying to take away our punch bowl.   Not bloody likely, I say.

You see, the Chinese really only have one way to cauterize the inflation wound they are already seeing in their economy — and that’s by removing themselves from their peg to the U.S. dollar.  They can make all the noise in the world about raising reserve requirements and dampening loan growth, but they will will still strain to be heard over the “clack-clack-clack” of the U.S. Mintex 3ooo Printing Robots in the basement of Ben Bernanke’s Transylvania Castle.

I say, if the Chinese refuse to de-peg their currancy and let the Yuan run free, naked and untethered, they ought to just continue to get drunk and buy stocks.    It’s the only rational thing to do when you are allowing your currency to be devalued right along with that of the Great White Ghost across the Pacific.  

And let’s face it, there’s only so much iron ore, coal, copper, lead, zinc, chromium and every other heavy metal for industrial usage left in this globe.   Outside dredging the Hudson River, that is, but even that reclamation project is years away.   The Chinese know all this and realize the only way to keep those prices cheap to them is by miming along to the dollar prop story.  

Again, raising Chinese reserve ratios is not going to do that if Helicopter Ben is easing quantitatively as fast as his machines can print, purchase and store massive haystacks of U.S. cabbage like he is.   We all know (and yes, the Chinese leadership knows) that fast cash to you is just heading right back into the Chinese economy via click-bought and big box consumer goods purchases (oh, and look here, retail sales are strengthening… wonder where those goods are coming from?).  What’s more, that money, once washed up on the shores of the South China Sea has to go right back into the commodity markets as the Chinese continue to build out infrastructure and purchase raw materials inventory.

Here me now and believe me later — The Chinese cannot “whip inflation” by themselves while they are tied to the dollar, and while their growing economy is tied to our consumption.   These are infrastructural realities that are not going to change because the Chinese CB has decided to take a stern line on lending reserves.  So sorry.

My take?  Eat a samich (sic) this morning until at least 11 am to see where the market settles out.    Gold is currently down only about $16 (less than 1.5%) and silver, as usual is taking it harder, down 44 cents (2.8%), with the DXY at a current $80.64.   I continue to believe this is a shakeout, and that the dollar will not continue much higher than here, despite all this “nooze” circulating to keep it propped.  If we break much above $81, however, I will be forced to reassess, and perhaps take a little off some of my riskier metal plays.

Best to you all.

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Update:  I notice in my haste to get out this morning’s post that I neglected to give you a run down on yesterday’s purchases (which were recorded in real time on The PPT, of course, as were today’s).   Yesterday I added to the following positions:

2k Petroleo Brasileiro SA (ADR) [[PBR]] @ $40.60

4k Exeter Resource Corp. [[XRA]] @ $8.46

2k Eldorado Gold Corporation (USA) [[EGO]] @ $12.66

2k Thompson Creek Metals Company, Inc. [[TC]] @ $12.67

10k NGAS Resources, Inc. [[NGAS]] @ $1.62

1K Sociedad Quimica y Minera (ADR) [[SQM]] at $37.06

This morning’s purchases (also “adds”):

2k [[PAAS]] @ $21.75

4k Gold Fields Limited (ADR) [[GFI]] @ $11.75

 

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Mr. Limm, Out on A Limb
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The dollar is currently right in the “crunch zone” at $80.24 as I type this. As you recall that was right in my “Wall of Death” from the previous dollar chart, as it ran into two separate strong fib lines:

So, today, on any sign of weakening in the $USD (you can keep an eye on it at [[UUP]] if you can’t get the DXY quote), I will be adding to my [[AGQ]] position one more time.

If we break through this area on more dollar strength, I will be hedging my positions again, and likely cutting down on some of my Silver Wheaton Corp. (USA) [[SLW]] calls.

Best to you.

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Mr. Limm Likes Cash!
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We’re getting another mini-rally in the greenback, thanks largely I believe to the perceived death of Obamacare and the attendant printing those increased expenditures would have brought with them.    Of course, there are trillions in deficits rolling down the pike with or without socialized medicine on the table, so I don’t expect this dollar bounce to be particularly long lived.

Let’s have a look at  our dollar proxy [[UUP]] to see what we might expect.   First the daily chart:

As you can see, we gapped up pretty significantly yesterday, but we’ve been turning up for over a week now, stochastically speaking.   I don’t think it’s a major coincidence that the dollar rebound coincided with the increasing possibility of the Dem’s losing their filibuster-proof Senate and the markets perhaps getting the notion that spending might slow.   That said, there’s already many wheels in motion on the spending front, and I think perhaps this move reflects more “hope” than reality for the currency markets.  

As you can see, on the dailies we’re running into some decent resistance at both the $23.20 mark and then at the 200-day EMA at $23.32.   We’ll have to see if those levels hold, but looking at the weekly chart, you might think they will not.  The coil on the various oscillators seem to indicate we’re not done with this rebound yet:

As you can see, my near term weekly target at the 34-week EMA ($23.21) coincides with my above daily targets.   However, if that level is breached, it looks like the next levels of serious resistance will be $23.75 or so — which is a mile in terms of overall market, and especially commodity reaction.   

So be prepared to gird your loins if the dollar continues to strengthen.   For my part, I will be laying in wait to accumulate back more of the silver and gold names I dis-horded in December.   I added more Silver Wheaton Corp. (USA) [[SLW]] under $16 yesterday, and began buying Fronteer Development Group Inc. (USA) [[FRG]] for the first time at $4.87.    I like how it pulled back to the breakout area from the mid $5.20’s, as I had hoped it would.  

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In the mean time, it’s seems the banks really like this dollar move, as our favourite (sic) bank index (that Jeremy won’t fix the price indicator for) [[BKX]] has been cheering on this dollar move like they use them for inventory or something.

What’s wacky is that President Obama is currently jaw-boning the hell out of the banks with a threatened “extra-tax” to “pay back the American people” (despite the American people being paid back very favorably for TARP by all but the worst Congressional satraps at Fannie, Freddie, GM and Chrysler who, needless to even mention, are not included in aforesaid punitive tax).  

Could it be that everyone is whispering to one another and saying “he’s bullshitting us?”   Maybe.   Could it also be that this just today new threat from Goldman’s Favourite President about “limiting the size of banks” is going to end up yet another barrier to entry which will — soo-prize! soo-prize! — end up benefitting the largest banks by limiting competition?

Would Congress really do something like that??  (Stifling laughter)

Well, whatever the cause, the banks are off to the races like a drunken Irishman on Derby Day (or “like Jake”) in the last two days, even in the teeth of an overall market downdraft.    Check out the Index That Shall not Be Displayed — $BKX :

“What the horse,” no?

And now look at a current Jake Favourite, as I’ve been mentioning on The PPT for these last few days, Southern Powerhouse BB&T Corporation [[BBT]] :

Looking good, no Cisco?  

Here’s the weekly for the longer term play:

You can see my ultimate target on this one is $38, and if things continue as they have been, I don’t think that will be a long wait.   For the gamblers out there’s Pacific Capital Bancorp [[PCBC]] which Ragin’ Hat Tipped me towards a couple of weeks back at $1.08.   It’s been berry berry good to me.  I also like Huntington Bancshares Incorporated [[HBAN]] for the potential buy-out and PNC Financial Services [[PNC]] and UBS AG (USA) [[UBS]] for “best survivors” status.     For large banks, I continue to think JPMorgan Chase & Co. [[JPM]] will end up on top.    

Best to you all.

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