UNG is continuing its strong run off the lows, now up 34% from the bottom. If you had managed to grab some of the individual months in futures, you’d be doing significantly better, up 70% or more.

And still, I have no interest in playing with natural gas.

There is a peculiar phenomenon I’ve observed first hand; people have this interesting habit of justifying purchases based on the most extreme and unlikely outcomes. They stare at the UNG chart and say coy things like “God if only I had thrown every penny I possess into UNG on April 19…”

Well, yeah…

But let’s keep things in perspective here. UNG is up a ton…now ONLY plummeting 50-60% from its price level in the beginning of 2011.

Now, why is natural gas rallying? Is it because power companies have successfully swapped their power generators to natural gas? Probably partially, yes.

But is it also very much a product of a reflex rally? You can’t argue no. And it is also likely a result of people like those I paraphrased saying “hey, let’s chase this trend.”

Be careful. We had an unusually hot summer, which has bordered on the unbearable. Those who would regularly have just left the windows opened were forced to rely on air conditioning. And now I’m reading the Farmer’s Almanac, and all the predications are saying that in most of the US, we’re looking at a warm winter.

The normal seasonality temperature trends are obviously not in play here.

In the presence of a warm winter, end demand for natural gas, in the form of electricity or heat, will go out the window. And then, it is very possible that spare storage capacity will become occupied like it was earlier this year. In such a condition, the front months of the natural gas futures curve would collapse again, trapping all natural gas longs in a heinous death.

I’m not saying short natural gas; that’s just as dangerous. If coal really does get replaced in energy production then natural gas is undervalued here. Do you want to watch UNG run back to $40?

I’m just saying: leave it alone.

Comments »

I cleared out of the other half of my APC shares today for $71.83. Two basic purchases, the first at $61.60 and the second at $64.06. I sold the first batch on 07/03 for $68.37. Both purchases were 5% of assets.

All these trades are cataloged within a reasonably short period of being made, in The PPT.

It’s not that I’ve stopped liking APC. I do still think they’re a great company. And maybe it would be better if I stop trying to overcompensate for their management; having instead just thrown back on the other 5%, and let the company do its thing.

But there’s enough going on in the world that I don’t want to own an oil company and do want to have extra cash on hand. I only bought this position to begin with because 1) APC was unreasonably distressed and 2) I was heavily short oil, so it sort of helped balance me out while deciding if I wanted to cover.

And of course, 12% profits on a trade inside of two months is nothing to sneer at.

Since the redemption of my oil trade, my account has trended sideways. I’m up 18% for the year, but still well off my old highs.

AEC, CLP, and CCJ are my only stocks. I sold my 5% ERY position for a 10% loss the other day. I expect each of them to double. No, more, I resolutely demand it.

Cash stands north of 36%.

That’s all from the 9th floor for this week, friends. God bless.

Comments »

Good morning, and welcome back to my cozy abode.

I’m afraid that that theme which I’ve been harping on for so long now has again reared its ugly head; and once more, Ben Bernanke has no room to make loose policy announcements.

For a moment, I thought it might be possible, with oil in the high $70’s. But in just a matter of weeks, that lull was completely erased, and oil this morning is pushing $90 a barrel.

Now, it is possible that this is an insider response of some kind to a yet-to-be-official announcement that QE3 is under way.

However, in any fashion, what we are seeing continues to be a commodity market ready and willing to hold the world hostage at the slightest hint of news it doesn’t want to hear.

“Buy commodities to escape inflation” has been programmed into the head of every citizen within reach of a brokerage account. I know that gold bugs like to pretend that, somehow, their argument is still this novel revelation which has yet to go mainstream.

“Just wait until the average citizen learns about what the government is up to.”

Look here. The average citizen is the guy who tells ME to buy PMs when I chance upon a random conversation in the street. Everyone knows how this works. It’s not a secret. There won’t be a sudden surge in PMs and other commodities as the “average retail investor” gets in on the trade, because he’s already there.

The commodity trade is probably still overcrowded – and worse, by dumb money.

So maybe now we don’t get a QE3 announcement again. I was about ready to hear one, even if I thought it was a quarter off. Will Bernanke juggle hand grenades with $90 oil about? I don’t think so. But I could be wrong.

For the moment, I continue to hold lots of cash, and a small ERY position. AEC, CLP, CCJ, APC, and physical silver continue to be a standard part of my repertoire.

Comments »

About a 4% loss taken on a 5% position.

In many ways, SLV was designed to bridge me to my silver purchase, because I wasn’t totally convinced we weren’t about to get another swift can kick. Now, things look ugly and the position is overcommitted. Gone.

I’ll run into AGQ if we get an EU bailout that doesn’t totally destroy the euro, or cooperation/independent easing from the Federal Reserve.

Silver is still a great place to put your money. This is buy and hold, with a decade outlook.

Cash position stands north of 30%.

Comments »

I spent the day in the heat, painting.

The healthcare decision was bullshit. How can you tax a product some people don’t want to buy? Fuck you very much, Roberts, I hope you choke on cancer you dirty turncoat.

If I thought Obama was going to win reelection, that’s changed now. They just threw a firecracker into an army ant nest. No amount of PR media spin bullshit is going to save the liberals from this. Democrat congressmen had better stay 1,000 yards away from any party convention center, because they’re dead.

My only solace is knowing that sometime in the next two years, we’ll experience a bond crisis, just like Europe – a.k.a. that place that we just have to be like because their healthcare is so awesome – and it will send prices soaring, effectively killing off all these jackasses I’m supposed to be insuring and driving anyone who promoted this from office.

We are very close to a purging fire. The people who pushed this are the same people who can’t balance a checkbook. We have a string of major events coming into the close of the year – the debt ceiling and the tax extensions being two of them. Let’s see how interested people are in buying bonds when they see fuckers like Rangel try and count on public television.

Meanwhile, in Europe, the old idiots are all still dumb. There was some rumor of a can kick. Okay, sure. Let me hear Merkel say it.

I guess if they want to destroy the euro, that’s fine. Commodities will keep falling, because the dollar will keep spiking until Bernanke can’t stomach it anymore. And a can kick in no way helps their economies.

I’m slowly gathering much silver for my person, almost like I have a bow tie on. Life’s grand in America now, aside from all that corporate destruction coming our way out of Europe. But the European implosion is a warning, as well as an opportunity. Commodities will continue to be eviscerated for the next one to two years – I wouldn’t be surprised if silver flirts with the teens. But it’s all a flight to safety. It always has been. After that, all I can see is the writing on the wall for the United States.

After Italy’s out of the way, the only thing staving off an American debt run is the ability of Chicago or Albany politicians, whose sole election strategy constitutes promising uneducated urban rats lots of bribes or building ponzi schemes out of public coffers, that this country is good for the money.

We are so fucked.

Comments »

I upped my stake in physical silver today, about doubling it. I retain a smaller cash position; which could be increased substantially with any sale of ERY.

I consider this purchase of physical silver as a sequal to a series of trades I made starting in 2009. This latest move has created a proven, profitable spread, as I’m back in lower – after all costs – than where I sold out in December of 2010.

Silver is stupid cheap here. In the event Europe decides to take the leap over the edge, silver is going back into the teens. But I would be buying it in the teens, too.

Some background, for those of you who were not following me then:

Generally, it is unwise to trade physical positions like I have. Instruments like SLV almost entirely eliminate the bid ask spread, which when pushing physical positions, and after shipping and handling costs and insurance, can get rather wide.

However, my original physical position was built largely on credit; I saw all too well what Bernanke was up to in the summer of ’09. So my problem was that, outside of merely having this lumbering stake of metal, I also had interest and debt to worry about.

Unsure whether or not the financial system would even be around today, at the time it seemed a good idea to have…a little bit extra lying around. Even if it was technically somebody elses – if you follow me.

But after it became apparent the system was going to survive – and being up almost 70% on the position – I decided it was a good time to sell enough to extinguish the debt, leaving me with a rather handsome legacy position which I hold to this very day. And now, having lots of cash and low prices, it seems an equally good idea to buy some of it back, free and clear.

A bit of history for you.

Comments »