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I hope you took Frankie’s advice last night.  When I went to bed last evening (I had an exhausting day), there were enough people wandering the iBankCoin desert wearing hairshirts and declaring the coming of Armegeddon that I thought I’d wandered into a particularly ascetic strain of the Stinkify Wall Street protest movement. 

But I put my faith in the machinations of the Great Machine — The PPT, more than I do the easily beclouded emotions of my fellow piker traders.  You see the Great Machine runs on blood of cold nanobytes and young trader stem cells.  It cares not for your fears and your worries any more than it feels like patting you on the back in your more elated or expansive periods. 

It feels nothing but the data.  And what’s curious about yesterday’s readings was not that we came off over “overbought” levels, but that The PPT “leveled off” at a certain point yesterday, and held fast over a period of increasing trader nervousness here and across the internets.   It certainly gained my attention.  Were you watching?

And that fastness in the mind of the Machine was telling us something.  Just as Timmah and his group of Eterno-Bears were rubbing their fat little paws together in anticipation of a plump pic-a-nic basket, the titanium hand of The PPT was wheeling back to strike a sharp blow to their tender snouts.  

Not so fast, little Bears… did you think it was really going to be this easy?

And truthfully, if we look at our long term signals, there’s not a lot indicating much of a correction in store.   For example, you think the Big Boys maybe had an idea about what GOOG was going to do?   Have a look at the $NDX weekly for a clue… It’s launched this week off both up-turning primary EMA’s, the 13 and the 34 week exponential moving averages.  It’s also got a lot of room to go on teh RSI and slow stochastics before it’s overbought. 

When the techs are that lively, it’s often a sign that the bull is not done goring his fat brother bear.   Perhaps this weekend I will extrapolate, if you so desire.

In the meantime, I still hold one last third of my QLD position, which I may have been too hasty to sell (but I had a plan to sell at $86, and one must stick to one’s plan, no?).  I also still hold a  small postition in SKF, which I will hold to as a hedge, through the rest of this roller coaster ride.

I also kept all my gold and silver positions, as they showed similar resiliance — that stickiness — that The PPT showed yesterday.   Also PPT related, the silver ETF went “oversold” ridiculously early yesterday.  That often portends a shallowness in the market that will soon be reversed.

Pay attention to sentiment, folks, but above all consult The Machine in these bear-colored times.   It will guide your hand and let you sleep at night.

Best to you all.

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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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Looking over my charts this evening (no shoulder devils or broken elevators), it seems that while the price of gold is doing the Heschel Walker down the field, the metal’s miners are lagging behind like a fat man with smoker’s hack.  This gives me some pause and has me with my finger on the trigger.   Despite minor wins today in AUQ, AUY and ANV, most miners that didn’t start with “A” were having trouble addressing the field.   Moreover, silver struggled at the $40 line and gave it up by the end of the day.  As a result, despite gold being up nicely, I was still down in my miner-saturated portfolio almost 2% overall today.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I’ve seen this play before (gold up, silver and PM miners lagging) and I don’t intend to stick around to see what comes of it again.  I will likely sell some portions of my miners tomorrow morning and then hedge the rest with sold calls.  I  will also launch the remainder of my  NUGT and DGP (what remains of them) even as I’ll  likely hold on to my GLD and SLV positions for the duration,

I will then likely  spin some of the newly raised cash into a few rebound stock positions to take advantage of a bounce I feel certain shall finally come tomorrow as we test the depths of 1090 and perhaps lower.  I am again looking at QLD, TNA, EEM and possibly, quite possibly EDC again (very small ball!).

Be well and be wary, my friends.

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It’s kind of an odd feeling, really. Seeing that I’ve been ranting about the U.S. unfunded liability overhang and its one logical solution, you’d think I’d be out there wagging my finger in peoples’ faces and doing a touchdown dance as our debt is (symbolically and politically, I know) downgraded from “pristine” once again, and the rout of the U.S. dollar is on in earnest.

Instead of taking great joy in $1,700+ gold and $40+ silver I’m seeing tonight, and preparing myself to buy others’ margin calls tomorrow morning, I’m sitting here more than a little bit numb.   This is still my country after all, and it’s still a punch in the gut to see it caught in a debt trap of its own construction.   Yeah, we saw it coming, and that’s why we’ve been building a fortress of gold and silver to shelter us.

But will it be enough?

I honestly don’t know.   For all I know, my miners will get waxed along with the rest of the market (if in fact the market doesn’t just head fake completely tomorrow).   My sturdy ETF’s might malfunction, my options might turn to gruel and even my physical might be tough to transfer if the President decides to go “Full Metal Franklin Delano” on us.    Let’s face it folks, it’s all fine and good to prepare financially, but we are entering into unchartered waters here, and it’s not like we’ve got Horatio Nelson at the wheel, here.

I really didn’t think we’d arrive at this hour this quickly — in 2011.  However, the combination of torpid growth and high unemployment have hit tax collections to such a degree that the current rates of spending have blown a hole in our debt capacity well before we expected in the mid 2000-teens.  There will be painful choices ahead that will make this summer’s kabuki theater play look like the first round of Let’s Make a Deal in comparison.

I don’t doubt they will include tax increases, and likely across the whole bulk of the citizenry.   There are just not enough wealthy people with taxable income around to bring us to any sort of solvency — even with massive cuts to the Federal budget.  No, we’re going to have to go back to the old ways — where everyone contributes at some level, and there are no more free-riders.  If you try to get this done on the back of “him behind that tree,” you will inspire nothing but enmity in the capital providers, which will in turn only drive our economy to darker depths.

I am hoping this shot across our bough will be enough to drive our politicians to a serious assessment of our national dent — both on and off-balance sheet.  If instead this opportunity is squanderd and the pols decide it’s more electorally profitable to scare old people into believing they’ll be left high and dry at the prospect of any reform, God help us all.

In an event, we should have a good day in the gold sector tomorrow.  I will be looking very closely at the action not only on the physical metals themselves (gold, silver, platinum), but also at the $HUI to keep an eye on the miners, and on AUY in particular.  It seemed to take a much lighter hit last week on the pullback, and that may mean it’s getting ready to really take off after that long consolidation.

Good luck to us all.

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The Witch Tells All, at Last

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As I write this, silver is up another buck.  You review the above and you have to say to yourself — “What if all this bullshit about JP Morgan is really true?”

I said to the Monsieur tonight that I had largely discounted all the rumours (sic), all the tall tales.   But, my gosh, what the hell is going on here?   Silver has all but broken free from it’s traditional dollar anchor. 

What’s more, silver’s broken free of it’s golden companion.  This is very interesting… but is it sustainable?

Truly, I know not, to be honest with you.   I know that silver has been historically undervalued, most recently as a result of the great photograpy scam.  If you follow the industry news, the effect from a switch to digital photography has been largely absorbed.  

So is this the final breakout we’ve been anticipating for so long?  I dunno.  I’m leaning towards “no, not yet.” 

But this is why we are holding on tight to the core.  Prices are out of synch, and the dollar is near bounce levels.  We’ll know soon enough whether we ought to shed anything. 

Right now, it’s a day to hold your tickets and enjoy the show, no matter the direction.  I continue to like everything I’ve already mentioned, and more.

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A Gentleman

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Interviewed above is a man who is arguably one of the best rock and roll musicians of all time, with an indelible legacy that will never be questioned by the more serious students of the genre.   And yet Levon Helm is also indubitably a Southern Gentlemen in the truest sense.  Born to poor cotton farmers in an Arkansas town just west of the Mississippi, he was brought up with impeccable manners, respect for others, and a healthy fear of God.   The phrase “salt of the Earth” is cliched, but applies here if anywhere.

Note the patience, humility and even respect he allows the over-earnest newsdork interviewer?  A teevee journalist who, much like myself and most of my urban Northeastern brethren, reveals a contrasting self-important air of arrogance that far belies his functionary status?   It’s awe-inspiring.

Hell, I’ll say it– Levon is inspiring.    And his example and those of many of his generation is one of the major reasons I wanted my kids to grow up down here.   I wanted them to meet people with the quiet American dignity you see in this clip.  People like my children’s grandparents, and their grandparents’ kin from the Appalachian regions.   Because make no mistake, even in the South, folks like Mr. Helm are slowly becoming a rarity.

Every day, therefore,  I will strive to be more like him– not in talent, of course, but in pursuit of that humilitous honorability — as I believe that a most worthy goal.

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On the trading front, I covered a large number of my silver sold calls today, specifically SLW, PAAS, MVG and EXK, all at 35-55% profits.   I did this mostly because I think we will have a short term rebound here.   Maybe 2-5 days.   I find it hard to believe we are done, however.  

I think the noobs who piled into the PM markets in December still need to be shaken like rats running from the terrier.   What fun is a bull, after all, if it’s weighted down by noobs? 

I kept almost all of my gold hedges, not because I don’t think gold will bounce as well, but because the silvers are more volatile, and I have alloted the gold calls (sold) a bit more rope.   I will likely step out of them tomorrow morning.

The dollar is ramping, and it may return to our old mid $81 resistance levels once again.   I am preparing, and prepared.   You should be as well.

Lastly, if you are looking at the rare earth’s we’ve dabbled in recently, you should think of paring some here.  I expect a larger market correction to be upcoming, and that means the hottest stocks will be the hardest slapped.  Take note on AVL, as well as REE and MCP if you have any (I’ve neither).

Best to you all.

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