We haven’t had a real equity pullback since 2012. There were fake ones in 2013, but let’s be honest; 5% broad moves in the indices in this day and age are just white noise. It hardly counts as a real pullback.

If we get a real move lower, it needs to be good for 10% or so. That’s a string of 300 point DOW days, red as blood.

I welcome an equity pullback. If we got a real scare, I have just enough cash to make a good show of it. And TSLA would probably catch a stick to the eye, filling my losses from the remaining puts as fast as my portfolio could otherwise correct.

Still, no need to get ahead of ourselves. Let’s just see what happens here.

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My NRP coal partnership got blasted to the tune of 17% after announcing the coal market continued to weaken in 2013, against their expectation. In response to the weak sales of power production and metallurgical coal, NRP’s board announced a 36% reduction in distributions.

This hurts, as I guessed that $20 would average the low mark in the name. Clearly, I was wrong.

I am not selling NRP, though (not yet, at least). My primary reason for buying into NRP was more predicated on coal being a very inexpensive sector to get exposure to and the medium term unlikelihood that the US or global economies will be able to pivot away from coal quickly.

I’ll ride this out for a little bit and see where it goes. There’s been long speculation that NRP may have to cut its distribution, because their debt level is high and their board has ambitious goals to diversify their royalty stream into a variety of commodities, such as raw materials for glass or gas and oil.

The board has reaffirmed they don’t think the partnership is at risk of violating bond covenants, and I think the five year forecast distribution is more likely to contain upside surprises.

NRP is sinking me ~1.5%, which is actually being generously offset by gains elsewhere. NRP was a smaller position than, say, CCJ or BAS. For the day, I am down just ~.5% so far. But we’ll see if NRP doesn’t bleed out hard into the close

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I sold out the entire BALT position for $6.22, a 15.6% gain. I followed the Fly into the position in December.

However, I have learned over the years not to get attached to positions that didn’t originate from my own ideas. This was the Fly’s grunt work, and while I liked the position when I did my own inspection of it, and am quite pleased with the gains, it doesn’t necessarily fit into the larger picture I’m painting here. There are bound to be blind spots I have to its intimate nature, and the variance it exhibits probably won’t mesh well with my other holdings.

With the market slowing down here, this adds 12% to my cash position, and is generally the right move.

I hope those of you still in BALT make a killing. Let it run to $10.

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It’s nothing too severe – less than 1% – but I’m getting wacked to start off 2014 nonetheless.

The selloff in my account is led by HCLP, as mediocre fund managers caught padding their positions, trying to save their unspectacular careers, let go the Potemkin equity stakes.

Silver caught a nice bounce into the first of the year, but we have been here before, have we not? I’m mentally prepared for silver to go to $0.00…being shelled out for free at every street corner. Why not? It has no utility, after all…excluding all its utility.

My positions are AEC, MAA, NRP, HCLP, BAS, CCJ, RMCF, UEC (small), BALT, physical silver, and some TSLA puts (a third of which are about to expire worthless on the 18th of this month).

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BAS has imploded 15% in a week. I always pare back that position opportunistically when I can, precisely because I cannot trust it. Sadly, I added on to quick, down 10%, and now have some losses to show for it. The stock is owned by cowards of the lowest caliber.

HCLP is also disappointing me, down off a resurgence from the backs of the frack sand article that made rounds last week.

I was getting excited about TSLA’s selloff, but that has shored up, and is pushing higher. My expectation is the first round of put options expire worthless. I have high hopes for the longer expiration dates.

CCJ though is looking promising. Silver is also pressing higher – I would love a precious metals price recovery for Christmas.

My portfolio is flat on the day. December is young, but time is short, and it appears that I will merely perform with the market this year. A grand opportunity to broadly defeat the indices, rallied from my huge RGR trade in the beginning of the year, was wasted, sadly.

But, maybe Santa Clause will deliver a holiday special for Cain. He has plenty of times before.

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Long ago, when I first purchased CCJ, in the midst of a nuclear reactor melting down on a coastline in the Pacific, I told you that there was more to this than the panic being cultivated by professional fire-alarm pullers.

And there were two primary reasons at that time which I gave. The first, and most obvious, of course, was that one does not just restructure the load production of a country’s power grid over night. Watching Japan struggle with prices as they import the coal needed to replace that energy has been an exercise in this concept.

Across the planet, other nations that declared their intentions to wean off nuclear energy are also realizing how difficult this task will actually be.

But the other main reason I gave why Japan, specifically, would not be divesting itself of nuclear assets was not economical. It was military.

Japan’s hardship is that it is an island nation with weak natural resources. And Her ancestral rival is a massive half a continent, sporting more than one billion people and rich natural resources just a short ship ride away.

In a peace time environment, Japan may have taken her sweet time (and much wasted money and hardship) restarting the nuclear energy program. The Japanese are a notoriously conservative culture, and if you have ever worked with a Japanese company, you know just what I mean by that.

But even Japan, with her slow, careful processions, has limits of patience.

Japan’s greatest threat is a blockade of supply routes. A steady flow of resources into the country is necessary to maintain it. These supply routes, not unlike the UK’s in World War 2, would prove a great headache and cause of domestic problems in a military conflict.

It’s bad enough importing food, goods, raw materials, munitions, etcetera. And having your nations power grid at the mercy of getting boats past enemy naval fleets is just one extra pitfall that Japanese military leadership will not want to deal with.

This was one of the main reasons Japan decided on the nuclear path years ago to begin with. A nuclear reactor carries enough fuel both active and in storage to supply full power for around 3 years.

Compare that to a coal plant, which under full load can require a delivery of about 15,000 tons of fuel a day. This approach requires a constant flow of fuel and also very large holding sites, both of which become attractive and hard to defend targets in wartime.

I bring this up because just recently, Japan’s leadership has reaffirmed the country’s commitment to safe nuclear power. A recent report from Cameco management issued guidance of a sizable fraction of Japan’s total nuclear assets beginning to come back online. This same report detailed that Cameco has observed Japan to be net buyers of nuclear fuel at this point in time.

This should be seen as reducing the uncertainty surrounding Japan’s fuel assets. One of the many worries supplying downward pressure on nuclear spot price has been that Japanese utilities may begin selling off unused fuel. This does not seem to be the case.

In the same presentation, Cameco also reassured audience members that Cameco will not be entering into any long term fuel contracts at these prices, which Cameco considers unreasonable. They are waiting for the market to set rates higher, and have instead dedicated themselves to shoring up the balance sheet and controlling costs to bide the time.

For the moment, the uranium market remains cold. But Cameco is committed to outlasting the cold spell. I remain very excited in the prospects of CCJ, and it remains my largest position at this time.

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