Nom Nom Nom
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Here’s why I’m eating sammitches.  Watch that dollar, it’s still overbought… and I can’t tell if the Trannies, and especially United Parcel Service, Inc. [[UPS]] (their leader, as I’ve mentioned), is leading the SPX, or vice versa.

FWIW, it’s supposed to work — according to Dow Theory — with the Trannies leading.   Let’s see what we can see on a weekly basis.   First SPX, looking very indecisive:

Now, have a look at United Parcel Service, Inc. [[UPS]] , which has shown great relative strength these last few weeks…

And last, most curious of all… the Dow Jones $TRAN Index  itself … curiously, already above its 200 week -EMA.   To stay?  I know not… hence, my sammitch eating:

I hope to have more tomorrow for you… including a closer look at the dollar, which remains ridiculously overbought.   I am staying with everything as of this evening, however, including [[TBT]] and all my $HUI friends.  

Best to you all.

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Omm Nom! Nom! Nom!
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Looks like Mr. Limm and kin are trying to take away our punch bowl.   Not bloody likely, I say.

You see, the Chinese really only have one way to cauterize the inflation wound they are already seeing in their economy — and that’s by removing themselves from their peg to the U.S. dollar.  They can make all the noise in the world about raising reserve requirements and dampening loan growth, but they will will still strain to be heard over the “clack-clack-clack” of the U.S. Mintex 3ooo Printing Robots in the basement of Ben Bernanke’s Transylvania Castle.

I say, if the Chinese refuse to de-peg their currancy and let the Yuan run free, naked and untethered, they ought to just continue to get drunk and buy stocks.    It’s the only rational thing to do when you are allowing your currency to be devalued right along with that of the Great White Ghost across the Pacific.  

And let’s face it, there’s only so much iron ore, coal, copper, lead, zinc, chromium and every other heavy metal for industrial usage left in this globe.   Outside dredging the Hudson River, that is, but even that reclamation project is years away.   The Chinese know all this and realize the only way to keep those prices cheap to them is by miming along to the dollar prop story.  

Again, raising Chinese reserve ratios is not going to do that if Helicopter Ben is easing quantitatively as fast as his machines can print, purchase and store massive haystacks of U.S. cabbage like he is.   We all know (and yes, the Chinese leadership knows) that fast cash to you is just heading right back into the Chinese economy via click-bought and big box consumer goods purchases (oh, and look here, retail sales are strengthening… wonder where those goods are coming from?).  What’s more, that money, once washed up on the shores of the South China Sea has to go right back into the commodity markets as the Chinese continue to build out infrastructure and purchase raw materials inventory.

Here me now and believe me later — The Chinese cannot “whip inflation” by themselves while they are tied to the dollar, and while their growing economy is tied to our consumption.   These are infrastructural realities that are not going to change because the Chinese CB has decided to take a stern line on lending reserves.  So sorry.

My take?  Eat a samich (sic) this morning until at least 11 am to see where the market settles out.    Gold is currently down only about $16 (less than 1.5%) and silver, as usual is taking it harder, down 44 cents (2.8%), with the DXY at a current $80.64.   I continue to believe this is a shakeout, and that the dollar will not continue much higher than here, despite all this “nooze” circulating to keep it propped.  If we break much above $81, however, I will be forced to reassess, and perhaps take a little off some of my riskier metal plays.

Best to you all.

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Update:  I notice in my haste to get out this morning’s post that I neglected to give you a run down on yesterday’s purchases (which were recorded in real time on The PPT, of course, as were today’s).   Yesterday I added to the following positions:

2k Petroleo Brasileiro SA (ADR) [[PBR]] @ $40.60

4k Exeter Resource Corp. [[XRA]] @ $8.46

2k Eldorado Gold Corporation (USA) [[EGO]] @ $12.66

2k Thompson Creek Metals Company, Inc. [[TC]] @ $12.67

10k NGAS Resources, Inc. [[NGAS]] @ $1.62

1K Sociedad Quimica y Minera (ADR) [[SQM]] at $37.06

This morning’s purchases (also “adds”):

2k [[PAAS]] @ $21.75

4k Gold Fields Limited (ADR) [[GFI]] @ $11.75

 

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[youtube:http://www.youtube.com/watch?v=vimZj8HW0Kg 450 300]

Ahm gonna take this itty bitty world by storm…

And ahm just gettin’ warm….

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Just in case any of you are thinking this recent pullback has been anything but a dollar play, have a look at this piece by ETF Trader (and by extension, The Financial Times).   Yes, that’s an $8 billion plus short on the Euro, and that’s only what we peons are seeing.  It could be a lot worse, or it could be all for show.  

What we do know is that the Euro is just another failed fiat waiting to happen.   Whether it occurs before the dollar (likely) or after, they all meet the same end, in tears.  Right now, the dollar is strengthening against it, after dropping to test support at the $80.09 level, and back to $80.34, after opening at $80.40.  

As you know, I think anything over $80.20 is a bad sign, and that combined with the large selling on strength from Fridays trade (some $675 million in the SPYs), we may be in for testing that 1,035 level on the [[SPX]] after all.    The silver stocks, after showing some promise this morning, are tipping their heads in obeisance to a further weakening in the POS (currently hanging above it’s $15.03 open at $15.11) and even the POG (currently $1,065.60).

I will be focussing on opportunistic gold plays today, as I’ve gotten quite a bit of silver in [[AGQ]] and Silver Wheaton Corp. (USA) [[SLW]] the last couple of days, and only got half my [[GDX]] calls on Friday.  I’ll be looking at some of that under $41 and Allied Nevada Gold Corp. [[ANV]] on any more weakness like this morning (which I missed, dammit).    I may bend for more [[EXK]] as I still have room for another 2k shares in that name.

The overall word is caution, but be ready to jump on an alert, because if Soros or some other whale wants to squeeze these Euro shorts, it’s going to be five alarm time for the PM’s.   Same will be true if the Euro really cracks, although I’m not sure the effect on gold will be as harsh as the effect on my poor silver horde.

Best to you all.

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Stepped up the buying today, in the teeth of the downdraft.  I see these fat white bloated English bodies piled high, but stand firm in my resolution that we are approaching an oversold bounce in the precious market.   [[GDX]] gives me more than a ray of hope with it’s action today:

Note the 61.8% retrace hit on this weekly chart.   That’s a very significant level, which will usually put up a ton of support from the underside (as well as resistance on top).   Now we may get another tap of this level tomorrow, but I think this is the place we should all be accumulating our PM’s of choice.

You know I have.

Today, I added another 2k of Silver Wheaton Corp. (USA) [[SLW]] at $14.03, and yet another 40 June 11’s of the same name, this time at $3.90.   Don’t ask me why I keep buying 40 contracts at a time, there’s probably some internal fibonacci mechanism at work here.  I also added 2k more of Allied Nevada Gold Corp. [[ANV]] below $13 and another 4k of [[EXK]] at $3.32.  Last I put on 1k more CDE at below $15-.   I think that’s it for me in that name.

I also added significantly to my [[AGQ]] net weurth (sic), with another 800 shs at $51.52, give or take.   I now have 2k shares total.   I will add, but cautiously, to this bucking bronco.   I think that the dollar — [[DXY]] may scoop to $80 here, which could some additional pressure on the PM’s.

It will all be temporary, I aver.  

On the hedging side, I dumped another 50 of my [[SPY]] puts at a nice profit, which generally means that there will be a waterfall decline tomorrow morning.

You think I’m kidding.   I’m not.   I have 100 SPY puts left, and am still “full up” with 14k [[BGZ]] and 10k [[QID]] .   This has cushioned some of my long losses these last few days, but I can tell you verily that I look forward to blowing out of these positions.

I think we approach that time.   Keep in mind silver is trading right now at one sixty seventh the price of gold.  That’s nuts, and could presage a gold drop to $1,030-ish.    Even there the POG is still well over 60x the price of silver.  

Short summary — silver is already sold.   I don’t feel it has a whole lot farther to go.  Trade accordingly.

Best to you all.

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[youtube: http://www.youtube.com/watch?v=rMjAf8Nwohs 450 300]

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No, I’m not speaking of Mssr. Le Fly counting his Broken Robot Coin in his Counting House, whilst tossing flaming egg-nogs at his trader servant, Mssr. Le Cratchet.

I’m talking about the classic The Year Without  A Santa Claus double production numbers from those brothers of Sun and Snow, the Heat and Cold Misers.

This piece is actually a cover by Big Bad Voodoo Daddy (an RC favourite, no doubt).   While I prefer Dick Shawn’s Snow Miser in the original version, I have to give the overall production medal to BBVD, as they are large, bad, magical, and also your father.    Besides, Heat Miser is a mite too drag queenish in the original…

As I suspected, after a month’s worth of work,  the market [[SPX]] tipped over the 50% fibonacci line today at $1121.50 or so, and is now seemingly out of the box like a busted robot and headed to $1227, where awaits our Golden Ratio of 61.8%.   As I’ve mentioned, I think we will eventually get there, but not before a pullback, which could be quite gland-challenging.  

With [[TBT]] breaking out quite convincingly here, equities have been put on watch that their discount rates will continue to increase.   As well,  the dollar pullback, as shown by DXY and [[UUP]] today has also been de minimus.    Maybe all the rules of finance will continue to be suspended in honor of Santa and Rudolph, but I wouldn’t bet my Christmas gelt on it.   

That’s why I haven’t yet jumped in the molten gold pool yet, either, as appetizing as Royal Gold, Inc. [[RGLD]] and Silver Wheaton Corp. (USA) [[SLW]] are looking today.   I could be wrong, but I don’t think the dollar is done shagging with us yet.   No real worries, though, my Pagans.   Santa Ben will soon take up his ink stamping device and all fans of the continued mass portraiture of the Inventor of Electricity will be appeased.

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May all your families have a Merry Christmas and Happy New Year, even if it may be Pagan, or whatever.   It’s all about the kids, and what you make of them in the end, anyway.  

Best to you all, and thanks for your well wishes and support in 2009.

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Bonus Clip, Humour Division:

[youtube: http://www.youtube.com/watch?v=X6yUCbqAGrg 450 300]             

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I see you!
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Despite the best laid plans of mice and men, not to mention Time Magazine weasels, physics still work and even fiat currencies bounce.   We are experiencing a necessary breather here in the nine year plunge of the dollar, otherwise known as The Potemkin Bull.

Here’s a hint as to where I think we’ll be going in the near term on the dollar proxy [[UUP]] :

 

Before you get all excited about your extra-ursine activity however, just know that this is not likely to last for very long.   Give it a couple of weeks, tops, before Time’s Genius of the Year  presses the one button he’s made available to himself to guide us all to economic Valhalla. 

That would be the button that attaches to the dollar printing presses.   For those of us who’ve been following the path of Jackson, that will be our signal to start buying miners and royalty plays again, this time in size.   In the meantime, I’ll be over here adding a little more [[SPY]] puttage, maybe some [[TZA]] and a couple of dollops of [[DUG]] for (just) deserts.    If you are in The PPT already, you will see the purchases first, as you have been.  

If you are not, then “a ha’penny will do,” I guess.     Off to listen to the sounds of “fap-fap-fap-fapping” coming from the Dope Slope.   At it’s crescendo, I will be buying gold, glorious gold.

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