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=-ERnT1X9HPw 450 300]

A Song for the Times?
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Well, so much for Helicopter Ben’s New York Times- abetted “tightening” kabuki theater act.

Did you enjoy it?  I hear he’s been studying at the New School.

I dunno, maybe the guys down at Goldman called Bernanke up last night and asked him for some help in getting out of their Euro shorts, since DXY (sorry, no quote yet — see? [[DXY]] ) had run up to about $80.30 today by lunch time, only to tuck tail and (Black?) swan dive right back down to $80 flat just in time for Benjamin’s Jawboning routine at 2:15 pm. 

That particular bit of mummery and prestidigitation must’ve in turn convinced at least one or two bag-holding kaftan merchants from Milwaukee to buy dollars again, because the dollar index got all the way to $80.10 by late afternoon, giving us all that familiar “blah” feeling at the close.

All pretense seems to have dropped away after the stock mavens went home, however, and the dollar is now (as of 12:36 am Eastern) trading back down to yesterday’s low’s at about $79.74, looking at a “next stop” of about $79.50, and then $79 even.     Party on, Garth (and Darth… Vadon, that is).

These incipient moves should be enough to get our rally on in the gold and silver sector, not to mention our other hard currency equivalents including earl, natural gas, and the specialty metals.   I was extremely busy today and I apologize, but my punishment was not being able to add much to the portfolio, although I would’ve loved to finish my Allied Nevada Gold Corp. [[ANV]] accumulation today.   I am quite sure it will be more dear tomorrow.  

I was able to add 60 more June $40 [[GDX]] calls at $5.80.   They were a standing order, and I think I may have been able to get them even cheaper, but beggars, chooser, etc. etc.   I now have total 120 of those $40 June strike calls, and I think I’m done there.  

 The rest of my exposure will remain in liquid equities, and I hope to add to positions tomorrow in the usual suspects, and perhaps some NovaGold Resources Inc. (USA) [[NG]] , New Gold Inc. (USA) [[NGD]] and Northgate Minerals Corporation (USA) [[NXG]] .   I also like Exeter Resource Corp. [[XRA]] ‘s relative strength as of late.  

For silver I may dip my toe in the Chanci selection — [[SVM]] , as I’ve admired their price action recently.  I may also look to grab some additional [[PAAS]] .   If [[CDE]] stalls in the early trade, I may also add to that one.

Platinum is reviving tonight along with its brethren, so don’t forget about [[PTM]] and [[PAL]] . 

On the non-precious side, I may grab some [[ERX]] for a ride similar to that of [[AGQ]] .   I also continue to like Petroleo Brasileiro SA (ADR) [[PBR]] and Occidental Petroleum Corporation [[OXY]] .    I also happen to think SandRidge Energy Inc. [[SD]] is undervalued here, and it is a perennial favourite (sic) of The PPT .

Last, don’t forget Thompson Creek Metals Company, Inc. [[TC]] , Teck Cominco Limited (USA) [[TCK]] and Titanium Metals Corporation [[TIE]] in the specialty metal names, and Sociedad Quimica y Minera (ADR) [[SQM]] , as their lithium is a bargain here as well.    I expect tomorrow will be a good day for we merry shipmates of the U.S.S Jackson.

All aboard!

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Canucks Took this German Bunker, Back in the Day
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Yeah, so it increasingly looks like we got head faked on Monday, and the dollar (DXY) is going to make another try at that $80.20 level we talked about last week.  The dollar is up 35 cents as I type this to $79.73, after dropping briefly below $79 earlier this week.  Que sera, sera. 

I will continue adding to [[AGQ]] , as I want to get at least another 600 shares for my “full compliment.”  I will likely add opportunistically to other positions as wel, as I still have a little under 20% of dry powder left to deploy.    The gold stocks seem to be hanging in a little better than my bastard-children silvers, but that’s to be expected.  I am extremely pleased at the results of Royal Gold, Inc. [[RGLD]] today — beating revenue estimates by almost 30% and earnings estimates by over 20%.    That should bode well for my portfolio going forward, even if we do take a bit of a “dollar bite” today.

Again, not so sound like a broken record, but I think it’s very important to concentrate on these key names at these important inflection points — which is where I still firmly believe we have arrived.   On the gold’s, Allied Nevada Gold Corp. [[ANV]] has shown nice strength, as has Northgate Minerals Corporation (USA) [[NXG]] , Exeter Resource Corp. [[XRA]] and Yamana Gold Inc. (USA) [[AUY]] should all be holding in here.   If you can get Royal Gold, Inc. [[RGLD]] in the red today, it is a gift, imho.    All silvers should be bought opportunistically, of course, and I continue to love Silver Wheaton Corp. (USA) [[SLW]] , [[EXK]] and [[PAAS]] here.  Also, you may want to keep an eye on [[PAL]] and [[PTM]] for platinum exposure.

So wear your burlap today for fashion’s sake, and maybe even add a cap fashioned out of old tuna cans for “extra penitant” effect, but be sure to sew extra pockets within your sack so you can sidle into your local gem & coin dealer and slip some cadged Morgan dollars and Canuckistanian Maple Leafs  into them as your youngest son fakes an epileptic seizure in the lobby.

Best to you all, my bunkermates.

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In fact, it may only be around temporarily this morning, but silver has dropped about 1% this morning in early trading (due to a slight uptick in the dollar) while gold has held pretty much flat. That puts our new Gold/Silver ration at a hair over 67.2x , and I So I’m going to take this opportunity to load up on some more select names in bullion [[AGQ]] — and in miners, with [[EXK]] , [[SVM]] , [[CDE]] , [[PAAS]] and yes, even Silver Wheaton Corp. (USA) [[SLW]] again.

I will not be pulling the trigger all at once, as I would like to see if we get more dollar strength in the day, but given the strength of gold in this downdraft, I don’t believe this divergence will hold for very long. Either gold will drop down to a low 60’s POG/POS ratio, or silver will rise. In either case, I think our safer bet will be silver again.

Also, I may dabble in some more [[PTM]] here, which has shown very good relative strength through this whole dollar strenghthening period, as has the platinum/palladium miner [[PAL]] .

Best to you all.

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Krull Leaves the Poker Game for a Quick Smoke Break
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Up 3% yesterday, even with all my hedges still in place, I must bow to the volcanic power of the precious metal rebound we experienced yesterday.

That doesn’t mean I’m abandoning my post on the 12th slippery rung of the main municipal sewer — the cosy seat next to the extrusion pipe but before the extrusion weld.   No, I’m still expecting a pullback today from yesterday’s Ode to Joy/Bunny Rabbit Massacre, unbounded. 

But the dollar (seen on the intraday as [[UUP]] or DXY) still continues to fall off here, and I’m wondering if we will ever get back up to that $80.10 or so pivot (on DXY)  I’d talked about as a trigger for another downturn last week.    I won’t be surprised, however, if we get another exogenous shock out of Davos, the PIIG’s or even President Obama’s recently unveiled near $4 trillion FrankenBudget. 

For now, I’m liking what works on the rebound, and thus far, it’s the fast movers of the junior golds like Allied Nevada Gold Corp. [[ANV]] , Eldorado Gold Corporation (USA) [[EGO]] and “the X-factor” — Exeter Resource Corp. [[XRA]] .   I also like IAMGOLD Corporation (USA) [[IAG]] and Royal Gold, Inc. [[RGLD]] of course, and Lindsay made a nice rec yesterday on the nicely pivoting Taseko Mines Limited (USA) [[TGB]] .

Of course silver is my true Tsar Bomba play in 2010, as it has been lagging the 2009 move in gold, along with platinum [[PTM]] , Stillwater Mining Company [[SWC]] and palladium [[PAL]] .   Right now, in this first updraft, I like the double silver play [[AGQ]] a whole lot, and of course my core group of miners — in order — Silver Wheaton Corp. (USA) [[SLW]] , [[EXK]] , [[PAAS]] , [[CDE]] , [[SVM]] , Silver Standard Resources Inc. (USA) [[SSRI]] and the lowly Hecla Mining Company [[HL]] .

All of these should be gnawed at opportunistically, as one would a bread wheel from the boulangerie, deep under the steam pipes of Manhattan.

I am still not taking down my hedges (in  [[SPY]] puts and [[QID]] and [[BZG]] ), and will happily bleed money on them here, as that insurance policy has served me well these last weeks.   Nothing could please me more than taking them down at lower balances, however, as that would mean all of my other plays are working well, as they did yesterday.

Don’t forget about the banks, here, as they’ve never really suffered much of a pullback, even in last week’s deluge.  Today, they seem to be leading the red dogs, which may turn out to be an opportunity for you.   Again, I like BB&T Corporation [[BBT]] for the longer term hold, Fifth Third Bancorp [[FITB]] and Huntington Bancshares Incorporated [[HBAN]] for the Ohio pop, and Pacific Capital Bancorp [[PCBC]] for the lotto play (stay small and remember, it’s only a game).

Best to you all, First Amendment scholars.

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He was Emo when Emo wasn’t cool.
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Stubbornly and like an ass, I sold continuously throughout  the day.    

In drips and drabs of course, but it becomes cumulative after a while.   Frankly, I don’t know how Docteur Le Fly does it.   It seems like one day he’s fully invested and then — BOOM! — He’s 60% in cash.

It doesn’t even seem to faze him.

I, on the other hand, agonize on every share sold in a rising market, even as I know deep down in my medulla oblongata (sic), it must be done.  I am at a little more than 25% cash right now and I feel as if I’ve been scourged on the wheel for a fortnight.

Perhaps I shall cut out that nasty M.O. and be shrived of my cognitive dissonance sins at last.  Who needs motor function anyway? I can always blog at you via sophisticated “eye-blink” technology, right?

Onto the shriving.   Needless to say, I bought nothing today, despite the ambulatory nature of such Ag Gems as Jacksonians The Andersons, Inc. [[ANDE]] and Monsanto Company [[MON]] , which finally broke back over the $80 barrier.    You remember the old Fly-saying, yes?  “If it gets over $80, it’s going to $120?”

We shall see.   I also like Intrepid Potash, Inc. [[IPI]] and Agria Corporation (ADR) [[GRO]] , but lower.

Sales today were across the board on the PM’s and I even took the time to sell off some odds and ends as well.

I sold some enormous Eldorado Gold Corporation (USA) [[EGO]] today — almost 30% of my stash, 4k at $13.12.     I also sold 2k shares of the enormous performer IAMGOLD Corporation (USA) [[IAG]] , one third of my holdings in that name, for $18.85.    Sawing a hunk of my shoulder blade off would’ve been less painful.

Of my 6k shares of [[GDX]] I sold 2k outright at $50.18, and then hedged the remainder by selling March $50 calls at $5.25 a piece.

Taking a dull spoon to my eyes, I sold another 4k of Silver Wheaton Corp. (USA) [[SLW]] , and then hedged 7k of the remaining 11 by selling 70 March $16 calls at $1.90 and $2.00.     Perhaps talking about it here will assuage my pain? 

I sold 2k of [[PAAS]] at $24.68 and another stray K of Allied Nevada Gold Corp. [[ANV]] at $12.16, leaving me with 4 and 10k respectively.    What will you have of me next?  My children?

Oh my, I must have been putting this one out of my mind, as I’d almost forgotten… I also sold 8k of [[EXK]] today (40%!) at $3.68.  Arthur Koestler, I know your Darkness at Noon!

Last on the precious fronts, I sold 1.5k of [[CDE]] at $21.99 and $22.03, and 4k of Rubicon Minerals Corp. (USA) [[RBY]] at $4.16.  

On the “odds and ends” front, I sold another 2k of [[BIOS]] at $7.68, leaving me with only 2k left, which I will not sell outside of Armegeddon, where I may need River Styx fare. 

I also sold 6k of Citigroup Inc. [[C]] for a rare loss (only a couple of pennies plus commish) on a complete “cautionary” basis.   I think I can buy those back cheaper, is all.    Last, I sold a stub amount (1k) of Sinovac Biotech Ltd. [[SVA]] which I’ve owned since the low $3 range, for $7.51.

Last, but not least, I booted the remainder of my [[ERX]] (1.5k) with the dividend pushout, at $38.46.

I am quite exhausted and on tenter-hooks, ovah heah, but I must trust my charts and instincts, or all is lost.   I am thinking we will see a correction at least into Turkey Week, as Tim Geithner and the Klown Kircus will be selling more yummy T-bonds into the maw of Mother Market whilst we prepare for Pilgrim Foods.

You know what that usually means by now, I expect.   If not, you have not been paying close attention, and are condemned to suffer the fate of Piglet during Swine Flu Saison (sic).    (Ostracism)

Best to you this weekend.   Off to see an Opera.

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Addenda — if you haven’t already done so, be sure to ring up your block head Senator and tell him/her that this Obamacare is a train wreck waiting to happen.     It looks like Dirty Harry Reid and the Dem Senate are taking a page out of Madame Pelosi’s book of legerdemain and are going to try to jam this through in a Saturday Night Special.   If this were a good bill, of course they’d have no need to be so serpentine.

Ciao.

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