Sit, Midas, Stay!
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I was away on business in outer Lobos Lobovia today (somewhere in the untracked wilds of the Midwest), when I received a cell phone text from my dog, Midas (above). She’s been trained to faithfully call me whenever I’m away from the screen and there’s a significant opportunity in the precious metals… especially the miners. She’s to do this no matter how busy I am, and mein gott have I been busy. Still, she has her training… so…
“Roof!” She said, “roof, urf, roof!” Loosely translated, this meant “buy MVG,” but that’s of little consequence when you could have bought anything in the PM sector today (save maybe PAAS) and you’d have made a crop of coin. So who says dogs are smart, right?
Anyway, MVG was up 6% including after hours today. AAU was up 12.7% today. Guess what wasn’t up so much today? If you said “BAA” you get a prize. It was flat most of the day, only to trade up a shade under 3% in after hours. Can you guess what I’m going to be buying tomorrow, time allowing?
My dog Midas knows.
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Again, my apologies for being away from you, friends. It’s truly been one of the busiest weeks I’ve had since I was a gruntling analyst fresh out of my white shoe training program. And shit, it’s only Wednesday.
That news in itself should be somewhat indicative to you. Money is moving people, on both sides of the balance sheet.
Given this pace, I may not even make it to the weekend. So if I don’t, let me share my outlook. I think we should be aware we could be on the cusp of a cataclysmic move in the PM’s. The dollar has broken that support at $76, and as I type it’s at $75.89 on the index. Gold has responded, and is above $1700 again. I think we’re on the way back up, and am cautiously adding to my piles as time allows.
Silver’s been something of a laggard, but I may take advantage of that by adding to my AG and EXK tomorrow. If my readings are correct, we’ve still a ways to go in those names. I may even indulge in some AGQ. Juniors in the gold sector should also be considered. Grab GDXJ if you don’t want to choose. Take care, and I will try and drop in on you tomorrow.
Best to you all.
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great ideas! getting my list ready to launch…
AUY, too.
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U rock Jake!
Welcome back.
so business is rocking jake?
i guess obama’s economic plan is working for some!
LOL. It is, in a way.
Everyone is scared shitless of the economy, so they are bailing!
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What do you think of hedging the possible downside with a short in UNG?
Why UNG?
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Because it’s trailing most of the commodity and fuel plays. Also it seems to not really care when the inflationists get rolling.
Thanks again Jake for introducing me to the PMs a couple of years ago.
I didn’t wait for your report, but it makes me feel better knowing that you and I are now both coming to the same conclusion. This move has the potential to rip for some time.
That’s impressive training JG. Is that part of the Ceaser Milan advanced training?
Yes, they get real fussy in the midst of the
gold casting.
You definitely need the Ceasar training for that.
Love Ceasar by the way. Wish he was my next door neighbor. What a guy.
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JG,
Did you see this story yet? It lead to sharp declines in AUY and especially XG yesterday…
http://www.foxbusiness.com/markets/2011/10/26/argentina-orders-oil-gas-mining-firms-to-repatriate-export-sales/
Love stories like that. 😉
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So you don’t see it as much of an issue?
This is what Louis James of Casey’s Research had to say about it. (I couldn’t post just a link as it was a part of an email, sorry Jake, hope you don’t mind)
Argentina Takes a Turn for the Worse
By Louis James
Yesterday – just two days after our modern-day Evita got re-elected president of Argentina – Christina Fernandez Kirchner’s government announced a change in rules for mineral exporters; they will be required to repatriate all sales revenue to Argentina. Apparently certain unpatriotic exporters didn’t want to bring cash from abroad back home and convert them to rapidly inflating Argentinean pesos – how strange.
Prominent Argentina plays promptly sold off. Many investors evidently concluded that Canadian mining companies operating in Argentina would not be able to get any cash out of the country to the benefit of shareholders. According to our legal contacts in Argentina, however, this view is incorrect.
There had been a 30% repatriation requirement for oil and gas and no requirement for miners. Now, 100% of the money made from every ounce of gold and silver, every pound of copper, and every barrel of oil equivalent produced in Argentina will have to come back to Argentina and be converted to pesos. After taxes, Argentinean subsidiaries will be able to convert pesos back into dollars (or other currencies) and send them abroad again in the form of earnings dividends. Our sources tell us that Chile and Brazil, among others, already have similar requirements.
Why the change? Many reasons, official and otherwise, are possible. Prominent among them are reducing the flight of capital from Argentina, and perhaps a hope that forcing exporters to purchase pesos with the money they earn abroad will prop the peso up.
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So, this move in and of itself is not “mining Armageddon” for Argentina, and yesterday’s sell-off could be seen as a contrarian opportunity. However, it is clearly not a friendly move by a government that has already broken its “no new taxes on mining for 30 years” promise. Further, this is a “spending is the way to cure the economic crisis” regime, already experiencing inflation rates so high that economists and journalists who publish inflation figures that contradict government figures risk criminal prosecution.
Time to Head for the Exits (No Rush, but Get Out)
We don’t trust CFK and her government. Things will probably settle down and appear to be business as usual for some time now, and exiting now may seem like overreacting to this elimination of an exemption to an existing rule. However, it’s not about the rule change: It’s about the government itself, and we expect ever-crazier moves as they become more desperate.
Let me stress that there is no need to rush to get to the exit first. In fact, I wouldn’t sell now at all, while shares are recovering from the scare. Rather, I’d wait for the next day that gold goes screaming upwards or one of these companies announces positive results that generate both liquidity and higher volumes.
We exited Peru earlier this year for similar reasons – before the current populist president won the election – and have been very glad we did. And this is why we continuously monitor political conditions in mining jurisdictions around the world.
I should have taken the word “advertisement” out of there before I hit send. There was an advertisement in there, and I did manage to get that out. 🙂
Thanks for the news. Oftentimes these things are overreactions, although political risk is always a factor when investing outside of N America.
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For sure. I plan on getting out of everything that is not in North America going forward.
The whole space is wacked out enough as it is.
On a lighter note, I posted this on my shiny new blog via the Fly Network. Thought it was amusing:
A driver was stuck in a traffic jam on the highway outside Washington, DC. Nothing was moving. Suddenly, a man knocks on the window.
The driver rolls down the window and asks, “What’s going on?”
“Terrorists have kidnapped Congress, and they’re asking for a $100 million dollar ransom. Otherwise, they are going to douse them all in gasoline and set them on fire. We are going from car to car, collecting donations.”
“How much is everyone giving, on average?” the driver asks.
The man replies, “Roughly a gallon.”
I’m blogging as
http://ibankcoin.com/survivethis/author/cmcyclist/
for what it’s worth.