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Not to be overBEARing, but it looks like the US Banquing sector is going to have a rough time of it in the next couple of days. Why not take advantage of that turmoil by setting aside some silver and gold for your posterity?
Besides, who wouldn’t want to kick “JP Morgue” in the teeth by buying silver, or so the old wives tell it?
I’m not going to tell you to do anything I wouldn’t do, so I’m not imploring you to go out and swamp your local numismatic dealer with pleas for hard bullion and coin. I think this should be a part of your overall portfolio, but I think there are adequate substitutes still available under our current very liquid market system. Unlike our fellows above, I don’t believe SLV and GLD are “false flag” operations designed to trick one out of one’s natural incentive to purchase physical.
I could be incredibly naive, but I trust the current rule of law enough to believe the audits of these depositories are valid. Why? Because the idea is too much of a moneymaker to allow it to be waylaid by a lack of credibility. Both SLV’s iShares and State Street (GLD‘s parent) have too much invested in barriers to entry here to screw up a good thing with a fraudulent audit. I like to use Occum’s Razor when analyzing these situations, and in this case, the easiest path to big money is to establish a creditable physical substitute. Why screw w. that?
As you know, I also believe that another liquid path to trading gains is in the highly leveraged miners. I don’t have to remind you that the most highly leveraged vehicles in that sector are the royalty financiers to those miners — namely RGLD and SLW of gold and silver concentration respectively.
After that there are many names, but if you want to act quickly, you are best throwing dough at GDX, GDXJ and SIL, which are the large cap gold, small cap gold and silver miner ETF’s, respectively. I point you to these names because liquidity will be king here, and there will be volatility on top of volatility in the coming weeks.
Be ready to snatch opportunity with these vehicles and yes, by shorting the banks as opportunistically as possible through SKF, and even FAZ if you dare. Remember to keep an extremely tight leash on both, however, for they will turn and snatch out your gizzard in the blink of an unsuspecting eye.
Best to you all.
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Thanks Jake for keeping us up to date on your thinking. I’m in!
Been long C and USB puts since 8/30…took 1/2 off on Friday, thereby effectively eliminating the possibility of gizzard snatching.
I don’t understand (can’t read) gold and silver charts so I’m scared shitless of starting positions at any point…but it’s fun watching yinz guys.
I’ll stick to shorting shitty banks (pun intended) and looking for a point to go long an index ETF for the time being.
http://www.nytimes.com/2011/09/06/business/global/german-court-ruling-could-complicate-euro-zone-decisions.html
Gold should still be in a correction but Euro Debt and potential QE3 has succeeded in propping it up for an extended wave … a positive ruling could derail this rally as most are expecting a negative or restrictive outcome.
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“A panel of eight judges at the Constitutional Court in Karlsruhe, Germany, are to deliver the decision Wednesday morning on complaints bought by a conservative politician as well as a group of professors who have challenged the euro on legal grounds before.”
“Among analysts there seems to be a consensus that the court will avoid a decision that shakes the foundations of the common currency. But the court is expected to install safeguards to ensure that decisions by the German government have democratic legitimacy.”
“How onerous those safeguards may be is a matter of speculation. Mr. Reichert of the Center for European Policy said the decision was likely to revolve around German citizens’ constitutional right to representation, as well as Parliament’s right to control budgetary spending.”
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“The best case for Mrs. Merkel, short of outright dismissal of the complaint, would be a court order requiring her merely to get approval from Parliament’s budget committee rather than the entire legislature.”
Hmmm… I wonder if this wouldn’t resolve out to legitmize greater European financial integration?
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Im all NUGT’d and Skiffled up with plenty oh cash to follow.
I agree. Here is a strategy to trade gold stocks that has made 17% a year since 1985 http://www.ripetrade.com/2011/09/trading-strategy-for-gold-stocks.html
Thanks, that’s valuable input.
Appreciated.
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“Both SLV’s iShares and State Street (GLD‘s parent) have too much invested in barriers to entry here to screw up a good thing with a fraudulent audit”
Perhaps.
A few years ago, the same could be said for Countrywide.
Nope, Countrywide had a jillion competitors.
SLV and GLD have almost none, and thanks to their huge “first mover” advantage, can simply coast here as long as they keep their noses clean.
Completely and utterly unlike the no-barriers to entry mortgage industry.
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I can’t speak to / don’t disagree with your point about the barriers to entry etc. My real point is peak to trough could be rapid if there is a loss of confidence in their business model. A fire at the theatre, if you will.
Easy to get in – and out.
Right. So in the end, you have to incorporate some confidence risk, as is true w. any paper security, including the dollah-dollah bill, y’all.
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not buyin it
What?
The selloff?
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Language is important:
LESSEN IN GOOD GRAMMAR
On his 74th birthday, a man got a gift certificate from his wife. The certificate paid for a visit to a medicine man living on a nearby reservation that was rumored to have a wonderful cure for erectile dysfunction.
After being persuaded, he drove to the reservation, handed his ticket to the medicine man, and wondered what he was in for.
The old man handed a potion to him, and with a grip on his shoulder, warned, ‘This is a powerful medicine. You take only a teaspoonful, and then say ‘1-2-3.’ When you do, you will become harder than you have ever been in your life, and you can perform as long as you want.”
The man was encouraged. As he walked away, he turned and asked, “How do I stop the medicine from working?” “Your partner must say ‘1-2-3-4,” he responded, “but when she does, the medicine will not work again until the next full moon.”
He was very eager to see if it worked so he went home, showered, shaved, took a spoonful of the medicine, and then invited his wife to join him in the bedroom. When she came in, he took off his clothes and said, “1-2-3!” Immediately, he had the hardest of hards. His wife was very excited and began throwing off her clothes, and then she asked, “What was the 1-2-3 for?”
And that folks is why you should never end a sentence with a preposition, because you could end up with a dangling participle.
lol.
My dad would have loved that one.
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You dropping PM positions if UUP punches the 200d ma with conviction?
If Dollar Index is over $76 with authoritah.
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If you want better physical ETF’s, PHYS and PSLV trade at a premium and are managed by Eric Sprott.
What does GLD and SLV trading at a discount to the metal price indicate?
All that glitters is not gold.
Because there is a management fee.
Duh.
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Jake- This is a very informative article, just facts no emotion.
JP Morgan owns shares, so you can consider conflict of interest issues with price stability attempts if you are aware of Larry Summers paper called Gibson’s Paradox. The premise was you could deficit spend as long as you could control interest rates and precious metals prices to mask inflation.
http://www.zerohedge.com/article/guest-post-gld-and-slv-disclosure-precious-metals-puzzle-palace
I find it interesting that physical premiums are going up while paper is going down. We could have a default where paper prices drop dramatically while real physical (1 for 1) goes up.
As you probably are aware it was recently stated that on the exchange 100 receipts are traded per unit on gold. That means if everyone asked for physical there would not be enough. GLD and SLV allow for settlement in cash – which means they do not need physical only paper to settle.
Thanks, I’ll take a look at it.
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Don’t forget Eric Sprott has been selling some of his ETF’s at premium and rolling into non-premium instruments
You see the action on XRA? Can’t say I’m displeased but what gives?
Don’t know… but it looks like it could be some kind of buyout rumor or something… nice pennant forming right now on the 15 minute chart.
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Just bot a scheiss load. Hold yer breath.
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Interesting video JG. Do you anticipate a divergence from the ETFs and physical?
the risk off bubble would be good for equities, no?
JG – Any take on Frano-Nevada – listing in US on Thursday. another royalty play, but looks bigger than RGLD. ticker will be FNV
Haven’t looked at them since they were bought out… they used to be smaller, but merged with someone (can’t remember who) a year or two back.
They are going NYSE listed again on the 8th. Something to keep an eye on.
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I know for a fact you just penned Gold Jake!
My, somewhat, tired eyes will have to re-read with some morning cafe to fully appreciate.
As is always the case, THANKS!