_____________________________________________
What do I always say to you about dire times? You want to buy gold, silver… and pasta of course. What are you going to do, eat heavy metals that are far more useful worked into cheery adornments and dental hardware?
No, of course not.
In times of rising food prices, you want to eat staples that will fill your belly while providing you the carbo-rush you need to get you through those crucial trading hours between early morning sugar frosted bombs (and coffee) and late afternoon Butterfingers bar from the vending machine (and cawfee).
You need pasta to fill your demanding gut. With some red gravy, or maybe some butter, or a light slathering of pesto. You want the hot hot penne, the tri-color wagon wheels, the masticola. So, it seems, do many others, if judging by today’s nice action amidst Col. Kurtz’s “horror the horror” market show (brought to you be Procter & Gamble) will attest.
Check what this li’l beauty did today among the carnage that is all things not precious metals:
Now granted, this sucker had good numbers today… with expanding gross and net operating margins. That’s all good, but you know that the real reason for [[AIPC]] ‘s increasingly good numbers is “the new frugality.”
Embrace it, pop it in your mouth, swish it aroun your tongue. It’s the latest thing.
__________________
Not the latest thing is the relative strength of gold and to some extent, silver, in this downdraft. Yes, even with [[UUP]] threatening $25 again, and the dollar index (DXY) being over $85 this afternoon, it seems the PM’s are holding their own. This bodes very well for them on any reduction of the dollar’s recent climb.
That said, my perfomers today were [[GLD]] and [[SLV]] , Allied Nevada Gold Corp. [[ANV]] and Eldorado Gold Corporation (USA) [[EGO]] , and [[EXK]] and [[GDX]] , IAMGOLD Corporation (USA) [[IAG]] and Royal Gold, Inc. [[RGLD]] , my favourite here.
I like all the PM’s until further notice… they’ve decoupled from the dollar, and that can only be a good thing.
I also got hammered today in Monsanto Company [[MON]] and [[TBT]] , as was so kindly pointed out by my own personal troll. Amazingly, I bot some more MON just below $60, though not far enough below. I continue to like both names.
I am near exhaustion level, ladies and germs, business is that crazy. I’m sorry I didn’t get to post a new one to you intraday today, but I will try to be there, at least through the comment section, in doozy dozy days like today. Be safe, as Fly says, but look for the rebound here tomorrow.
My best to you all.
______________
If you enjoy the content at iBankCoin, please follow us on Twitter
They have decoupled from the dollar. This is a new paradigm for PM’s, which might change my mind about them. I was against them because of the see-saw action with the dollar. However, if they are going to emerge as a real currency of sorts, I am onboard.
Could be a reflection of the current fear in Euro and Yen… whereas people see the currency problem and feel like “dollars are not just enough,” and go to the safer play.
That said, if the dollar heads down from here… PM’s will boom thrice over.
(PS — you should take more of Joe’s calls… he’s very good w. the currency stuff)
_________
Ah, thank you sir. My day will be busy workin and travelin, onward through the fog!
http://www.washingtonpost.com/wp-dyn/content/article/2010/05/06/AR2010050606091.html
LT accused of rape.
Yeah, someone had that up on yesterday’s post….
I repeat “Innocent until proven guilty!”
_____
Jake please..
It’s sauce not gravy.
You are not a real Italian if you call it “sauce.”
(I am not a real Italian, but I know this much)
________
I did very well yesterday with my gold holdings – largely DGP.
Thinking through what is before us though I am getting concerned about the miners, here’s why: In an inflationary scenario you want to hold gold miners. They are leveraged to the price of gold and so will outperform as a group though they may be somewhat out of phase. I do expect we see high inflation eventually but that is not what is immediately before us. What we face immediately is a global sovereign debt crisis with gold acting as a safe haven. Not silver yet, gold. In a global sovereign debt crisis environment we will see a distrust of paper of all kinds, including equities, and significant problems in the credit markets. Both of these conditions seem to point against holding stocks but rather holding the metal or instruments tied directly to the metals price, not the miners.
Jake, I’d like your thoughts and anyone else’s.
I’ve heard this argument before. I agree that if we are headed into a major crisis, then nothing is safe, not even the hard metal. I point you to late 2008 as proof. Only Treasuries were safe then.
But if we get a debt crisis where the dollar is eschewed, then yes paper dollar denominated securities will be in trouble, but paper representing in the ground stockpiles of PM’s will reflect the increased value of those PM’s versus the paper (like they did yesterday).
Remember, yesterday the dollar was up quite a bit, and yet gold and miners held strong. I think that’s a signal that miners will be treated differently this time around.
____
Yes they did both hold strong though I note that $gold (continuous contract) rose more than $HUI. Perhaps that is the relationship to monitor over time. That is, monitor the thesis that the miners are leveraged to the price of gold and see if it continues to hold true in our current environment.
Fundamentally the gold in the ground should translate into value of the stock – no issue there. What I wonder about is if we have credit markets tighten significantly due to sovereign debt issues will that impact the miners operations – everyone needs credit to operate after all.
Thanks
You make a good point on the operational side… probably the answer is to stick with the strongest miners (balance sheet wise), which is probably why GDX did better than GDXJ yesterday.
_________
Yes. The small companies could find themselves in financing difficulties which would then reduce supply which would feed into price. The larger firms will have more of an ability to ride it out even if that means not increasing production – which of course reduces supply and feeds into price.
The bigragu puts ketsup on his macaroni.
Jake, I’m looking for a second opinion.
I see two disturbing trends on the horizon. The first is a confidence run on the dollar. The second is excess synthetic long exposure to PMs. I’m guessing that’s what SLV and GLD are primarily composed of.
If all hell breaks loose, I’m thinking that these funds will see a sudden huge run up, just before they can’t renew their futures contracts thanks to demand spurred servicing costs and limited supply, at which time they may very quickly revert to partial or even entire dollar denominated investment vehicles.
Have you given this sort of thing any thought? I know you have large investments in these types of instruments, and I’m curious what your intentions are.
Mr. Cain Thaler,
I would assume that holding the miners who actually have the gold and silver would be a better play than SLV or GLD. Another alternative for GLD might be CEF which claims to create shares based on physical gold and not futures contracts.
I own CEF, SLV and GLD… frankly, if SLV and GLD are fraudulent conveyances, we’ve got bigger problems than dollar exposure.
I have actually cut down (50%) on my SLV and GLD exposure in exchange for more miners, for leveraging purposes.
__________
I don’t think they are technically fraudulent. They claim exposure to the PMs, which is true…for a time.
I wasn’t sure if you had any special insights on the funds specifically. If such a thing is going on, these could be potential huge shorts in a run on currency confidence, post fact.
I’ve heard similar rumours and mistrust…. not sure I’m buying.
_____
Update:
Fresh Allocation 7% in various Gold/Silver/PM’s Jr’s this AM
Adjusted Exposure:
61% Long Gold/Silver Physical – Jr’s/Resources
39% Cash/ various currency vehicles
Have a great day of trade and an enjoyable weekend.
Indeed!
Right there witcha, though I do have some other minor bluebells like CREE, VECO and MON.
______
SLV up, SLW down. What gives?
Markets down quite large, SLW down a penny?
Relaaaxxxxx.
_____
Disclosure:
SLW our largest holding (both dollars/percentage).
CB 4.05 with a $25-$30 min tgt and beyond.
Sit back (breath) and enjoy the ride.
I’ve owned it since it was a tyke as well. Owned Wheaton before it became part of GG as well.
______
Ditto on the Wheaton. Not very pleased at the price it went out and made our feelings very well clear to management, yet, fell on deaf ears. Thus, sold and did not convert, which in hindsight, resulted in a very grave error. However, can’t complain as all has been made-up for in multiples.
Congrats to you!
CB (Chubb?)
I think he means Canuckistanian dollars.
____
Cost Basis
When I wrote that it was down quite a bit more… so I loaded up. Also, I trade the Canadian version which is down more, due to exchange rate fuckery. If SLV can maintain its gains on Monday, SLW will definitely move. I noticed that it often does these weird catch-up moves days after. Also noticed it seems to be more correlated with gold than silver.
hiya Jake!
A question on AWK if I may.. seems to be losing it’s fib line here.. still like it? Adding ?
many thanks in advance..
Another very long term play which I would accumulate in slow drips.
__________
thank you sir.. have been slowly under $21.00. Your “In the Year 2010” calls (among others of course) were fantastic. A restful weekend to you.
Some CDE was the only thing I bought today after cleaning some small bits of trash from my portfolio.
The recent volatility has really improved the premiums lately.
Even SLW is in play again
Sold puts?
____
Yes and I rolled up my IAG for another run
Thanks for all your picks, really paying off especially now.
A salute to you as well jake!
I raise my magarita to you sir, a favorite follower of mr anderson, i love those movies, and the actor as well. And if i won the lottery i would spend the money on a party for you sir!
To you sir go the spoils!
And riding on a chariot witj you, i would wisper in your ear, “you are only mortal”.
To the god of gold,
We salute you!!
“Memento Mori — remember thou art mortal, Caeser.”
_______________
jp morgan under investigation for silver manipulation(zero hedge), do you think there is a danger of a metals crash due to liquidation and/or improper trading…what are your thoughts on oil?
No.
Oil will be up, too.
_________