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Some of you get a tad nervous and that’s understandable. You haven’t been sailin’ the seas lo these last ten years with a chest of silver and a chest of gold amid-decks, watching the waves break over your port bow and the rigging whip up under many a Jamaica squall.

‘Tis a pity, as it’s rendered many of ye as feckless and gray-faced as a feral stoat during the slaughtering season when it comes to any down-draft in ye positions. 

If there’s one thing I could keep in your mind it’s that the PM”s are a volatile lot.   Like a powderkeg in a burning fireworks factory, ye shall be shaken about before ye’re borne to heaven.

But your time is not yet, and neither is it the hour for hand wringing.   There may very well be one last shake of the lamb’s tail before we ascend over again into the high surf and the sun scuppered seas.   I say “may” because with silver’s recent strength leading the prow, it’s just as likely we take off like a shot tomorrow, mimicking the dolphins of tech like CREE and VECO, the latter of which blew out it’s numbers tonight and should offer boundless booty to ye faithful who stuck with her.   As well, POWR should benefit from that triumph.

As usual, I think it’s the weekly charts that give the best perspective, and the weekly of $GOLD should be no exception.  Look here on the direction I think we should take in the coming month.  That short dip may very well be our last gasp at these levels, and if so, I’ve amasse some dry powder to partake in more ANV and SLW in the coming week.

My best to you all, as ye make yer way through the shoals of Uncertainty.

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Of my favourite (sic) PM positions there are quite a few that are “almost there,” for an optimal buy, according to my weekly (ie, “long term”) reviews.

And then there are two that I like for tomorrow. They are PAAS and ANV. I will look to add tomorrow morning. There are a couple that may need one more day (and it may not even be a full day) like SLW and EGO. If you can get RGLD below $43, you are one blessed by Fortune.

As for “rippers” that will be taking advantage of any continuing up move in the regular markets, CREE and VECO, the LED twins, are taking off again. I expect POWR will be not very far behind them.

Attendez!

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“Dollar Bill,” the Three Legged Horse 

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The formidable monster dollar days are as done as well oiled-Gulf cod, with a side of Pelican mashies.   The Euro may continue to break down and every paper currency in the universe could go the way of all tinder, but I do not think any of it will help our much abused dollar.

Nope, you see Bernanke caught that acrid whif of deflation over the last fortnight, and he knew exactly what he had to do.  And he did it — he opened lines of credit for crappy multinational and Euro banks to stabilise (sic) their burgeoning debt crisis.   He used our bucks to help sterilise (sic) bad Greek and Carpathian debt like it was mere Fannie Mae mortgages or something similar.

And what a time to do so — when the dollar was as healthy as a three legged horse in a horse amputee ward at the veterinarian hospital.   Heck, you might have even ridden that horse, were you forced too.

To the abbatoir.

So Bernanke saved all the legless horses in Europe with his three legged horse and guess what… the bill has come due and it’s stipulates right here in ten point Hellenic script: “more legs.”  

More legs down as the printing presses continue to fly and whirl and shuttlecock and do all things printing presses do whilst churning out fresh greenback, further diluting their wirth (sic) to one an all.   Note how in the weekly, we’ve got a two week breakdown in the works since our tumultous “third top” high back in early June….

As you can see $85.00 is my near term goal, and that should coincide with a nice spike in the overall markets (not just the PM’s though they should surely benefit too) after we work off the overbought high so adroitly noted in The PPT .   

You can see $85.00 makes sense on the daily as well:

$85 is very close to our 50-day EMA as well, which further reinforces that target as a resting point, if not a full rebound target.

What will happen as a result of this continuing dollar meander down?   I’m afraid that in the intermediate term, it’s bullish for the markets — even if only artificially so.   Luckily, one can better guard his well-earned profits by placing them in an operating company that measures its assets not in dollars, but in something more substantial.  

That’s correuct, “the precious” is just that substanital asset, and mining operators have that, and leverage too.

You know my favourites as they never fail to please… ANV, SLW, EGO, IAG, and PAAS for now.   Keep a firm hand on the best, and you will have ample “excess capital” to play with the rest, like the other evenings’ offerings (BAA and RBY).

Gun to my head best immediate picks :  TC, TCK, CREE, ANV and IAG.

Stay safe, my friends.

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I got a question in my comments section yesterday about two smaller Canadian juniors — RBY and BAA  — that we’ve discussed in the past, and which look to be ready to turn back north, or disappear down the drain for the duration.  

Note, even in this wildly successful bull market for gold and silver, there are still doggy outliers with such grandly incompetent management (or who have the misfortune to operate under the purview of such confiscatory national governments) that they have not benefitted in the “rising tide.”   

I often cite the South African DROOY, as an example of said phenomena, but even poorly managed HL and CDE can be placed in that category.   The difference between DROOY and Idaho-based CDE and HL — where I would not invest in the former, but have done so in the two latter — is in nationalization risk.   In this rising tide, CDE and HL, though managed ham-fistedly, might actually become buyout candidates thanks to their assets in the ground.  

DROOY on the other hand, increasingly becomes a nationalization candidate as it’s home nation (South Africa) slides further into the traditional socialist morass under the leadership of the ANC.  Happy World Cup, by the bye, fellahs.

Back to our two small Canadians, who are, again, very low nationalization risks.  With Canada’s strong support for it’s PM industry, they maybe even lower risk than the gold miners of the United States (lol!).   I will show the weeklies to illustrate the long term trends, as usual.    BAA, which just a month back raised over $130mm at $2.05 Canadian (or $1.98 U.S.)  a share, is showing a possible bottoming here, which is not atypical a month after a major dilutive action.

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One quick aside on the major risk of juniors in a gold BULL market (the major risk in a non-bull being that they are actually held accountable for their crappy earnings, lol!).  In a non-nationalizing State environment, the greatest risk to junior investors is in dilution.   Many many many managers of these juniors (rightfully) see an increasing stock price (thanks to speculation) being an opportunity to raise cheap capital.   And even if the capital is not so cheap, the market will assign a discount to it upon a dilutive offering anyway.   Hence, in the case of BAA, we had a large new issue of equity sold at $1.98, but saw the stock pull back (this week!) all the way to $1.61 — a 19% discount from the original offering price.  That’s HUGE in a bull market for gold.

The good news is that BAA is now going to be a much smaller dilution risk going forward, and in fact, one might even say we can take that risk off the table for up to 24 months… which may mean all the way to the end of this bull.  With such a capitalization under their belts, BAA also gains more leverage in an M&A scenario.  Because of the fresh capital, they will not be forced to accept a low bid to monetize their assets, as this offering gives them additional dry powder to do so internally (for the time being).   

Long story short, if you owned BAA prior to this dilutive event, you  are pissed about the set-back (although, if you are like me, you are long used to it in these juniors).   This is one reason to greatly diversify your junior picks, either through a large group of names (as I’ve done) or via ETF’s like GDXJ and SIL (less bang for the buck, but a greater diversifier for those w. smaller accounts).

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The good news is that now that BAA has taken the dilution risk off the table, this may be a good time to begin accumulating at these prices… Note our weekly chart:

We could see this thing drift down another 10 cents or so (which is a lot, admittedly) if there is a consolidation of the latest gold pop, but I think the I-bankers at CIBC World Markets (the underwriter of the shares at $1.98) would be catching a lot of grief were it to descend much lower than the $1.55 range (a 22% discount and home to much chart support).    I may add to my holdings come Monday.

Note:   a large part of BAA’s holdings are in The Democratic (hah!) Republic (ha-ha) of Congo, so there is nationalization risk, but less so, thanks to BAA‘s being a Canadian-resident company.  Ironically, foreign companies– especially those based from Western NATO allied countries — are more immune to nationalization in rogue states, whose loosely held governments are dependent on their income to survive.  In fact, because SA is not a rogue state (i.e., essentially government-less), it actually poses a greater confiscatory risk, thanks to the Dunning Kruger effect posed by imagined competancy  (see Venezuela as a great example, or even the Obama and Bush Administrations), than the tenuous ex-Zaire of DRC.

Also, please keep in mind that while BAA may not be subject to nationalization risk, there’s still higher political risk due to the fighting going on within it’s host state and on it’s border states in the Congo.

Rubicon Minerals’ (RBY‘s) position is a lot more secure, with most of their assets residing in Canada and the U.S.  That said, they too have had a sharp pullback from highs (see chart below).   They had their big dilutive offering (they bought back debt too) in 2009, with over $210 mm in “bought deal financings,” which are essentially privately placed public equity (like PIPES here in the US).

I also like the chart, which seem to indicate a cup and handle, with a subsequent breakout.   Now it seems we are consolidating that breakout and it may be time to “nibble” once again.   I may also look to RBY on Monday.

 

Note, I will be increasingly selling down my non-gold & silver  movers, save for a couple of small positions in UPS and MON and perhaps CREE.   I think we are getting to a point where a concentration in PM”s may be again warranted.  This will be especially true if the dollar starts to break down here, as I think it may.

Best to you all, and I will try to get a piece in on the TRANnies before weekend is out.

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[youtube:http://www.youtube.com/watch?v=DgwJJ3pXvOw 450 300]

(Appropos of nothing, really)

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I don’t even know why I attempt to suggest other varietals.   Is it the desire to be au courant?  The obligation to entertain?  Devil-may-care hair in the wind type stuff?

I don’t know, but really… it’s just plain silly.  There’s a single bull market at play here, and this is what we are about.   I had a bunch of positions take egregious losses today, most notably those in the “hot but not” LED space, like CREE and (worse) VECO.    POWR hung tight, but I can’t imagine that nasty Friday WSJ article will leave it be, either. 

I even took a small bit of VECO off today, in the mid-33’s, because I figured it would be a while until I saw that position back in the drivers seat.    No matter, as I bought more AGQ with the proceeds and promptly saw it rise a buck and a half (to $60 a share).  Is there anything more exciting than having one’s steed cut down from underneath one in the midst of pitched battle, only to find a stronger charger at the ready?

That is why I was not down today, despite egregiousity in the above names and even some other hard metals like TC and TCK.  It was all due to the gorgeous strength of our gold and silver portfolio.    I speak primarily of the silver miners, including SLW, PAAS, EXK, SVM, MVG, CDE, SSRI and HL.   But the gold’s included prized champions like RGLD, ANV, EGO and IAG, who were stalwarts too.   

Note how the $HUI index held up today on the weekly:

Am I wearing cats’ pajamas or is that thing looking like it wants $520?   You tell me.

Then there’s one of my favourites, ANV.   She’s just been a trooper since we picked it up just under $6 last year, and is seeming to have no trouble moving on three times that size.  Note that strong weekly consolidation?

 

And the daily looks just as promising, after a decent pullback:

Another promising pick, and one I should leave alone and go macrame a duvet, or something “crafty” like that.  God knows I’m only dangerous going outside my “comfort zone” in the PM world, and He surely sent me a signal today.

May be time to re-assess and de-stress.   Real money is coming back into vogue once again.

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We may get some pull back here in the golden markets, as — ironically — the dollar declines and the Euro strengthens. This reversal would be a sign of diminishing panic, and may be taken as a cue for traders to offload some “bunker assets” like gold and silver and lovely platinum, the precious platypus of heavy metals (much like the late Ronnie James Dio, R.I.P.).

But as I said to a faithful reader today — do not forsake the bull for the distress of  an uneven ride.  Bulls can be ornery and force one to pour over the Yeller Pages for the solace of a chiropractor, but they are in the end, powerful avenues to wealth for long term trend traders. Until much further notice, we are in a PM bull, and all eyes should be focused on the quality names.

As a result, I must fall back to Allied Nevada Gold Corp. [[ANV]] again, despite their recent capital raise that has their stock back on it’s (round) heels. Still the weekly path could be no clearer here for those still waiting to participate:

The daily is a little more hairy but describes some nice entries.   I like the 20-day here ($18.64) , but only if it holds like it has been since March.   It’ll be worth waiting for, I think.

On the silver side, I liked [[EXK]] ‘s action today, but I still love Silver Wheaton Corp. (USA) [[SLW]] for the long haul.   Here’s a look at the weekly chart and SLW’s quest for a more tolerant planet:

And here, again, the considerably uglier daily chart, which I believe is still under voice-command until further notice:

In short, I think opportunity will be knocking soon, in it’s best Vince Sham-Wow “Limited Tyme (sic)” pitch guise.   There will be others (for example Cree, Inc. [[CREE]] and Veeco Instruments Inc. [[VECO]]   who shined through today) but these are my two current foundation plays.  

I am leaving Royal Gold, Inc. [[RGLD]] out only because it’s a different royalty animal, but I’d get any of that that was available as well, should we dip on the PM side.

Stay strong, despite the mugfuls of black charnel soap bubbling in your Campbell Soup Kids’ cawfee bowl.

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