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I sit here and sip my newly distributed Pappy Van Winkle 15-year (rocks, a couple), and reflect on the consequences of today’s market shaking Presidential press conference.  Despite the obsequiousness of the White House Press Corps, some important truths were uncovered, many of them centering around basic math and fundamental civics.

For one thing, the President is either being extremely forgetful, or dishonest about the makeup of our current deficits.  As some of you may recall, Mr. Obama is quite fond of blaming our current fiscal deficit situation on either the “two wars” of Afghanistan and Iraq that he “inherited,” or “the Bush tax cuts” of 2003.  Let’s leave aside the fact that federal revenues have risen considerably—as a result of tax cut driven growth– since the days prior to the Bush tax cuts.  Let us also confirm (by Mr. Obama’s own declaration) that the war in Iraq is “over,” at least for now.  That means that the “causes” Mr.Obama loves to blame for spiraling deficits are, save for a war in Afghanistan that he has escalated according to his own plan (see below), are not really material to the gargantuan deficits we are facing right now.   So what is, then?

Well, some of you may recall the “emergency stimulus” that was signed into law in 2009.  A great bill totaling $831 billion in hand-outs via allocated spending (most of which was distributed to states to keep their own governments running) and “targeted tax cuts” which usually took the form of some sort of credit for jumping through some gov’t preferred hoop.

Any “stimulus” spending is arguably a problem because it’s top-down gov’t allocated spending, considered mostly “one size fits all” for the citizenry, and by that standard alone grossly inefficient.   The even greater problem with regard to such programs is that they raise the baseline spending in these categories permanently, unless specific cuts are made in those areas where spending was increased that first time.   This is what is causing our budget deficits to balloon far past what we had seen in the allegedly horrible “Bush Years.”

 

 

 

 

 

 

 

 

 

 

 

 

As you can see, the problem clearly is not revenue, and it’s not even overseas spending (although Mr. Obama has seen fit to increase that spending too).   The problem is domestic levels of spending that show few signs of abatement any time soon.

Today, the President suggested that an additional $1.6 trillion dollars in tax increases – levied wholly on the heads of the investing and producing citizens of the economy  (otherwise known as “the evil rich”) – will help solve this crisis.   But even allowing the Bush tax cuts to lapse will only produce another $75 billion a year.  How is that going to help attack the deficit?  Answer, it won’t at all, and what ’s more will likely become counterproductive as capital hides in inefficient and economically non-beneficial havens.

Fly’s tax attorney and others like him will be grinning wolfishly if this benighted “plan” comes to fruition, but only those spinners’ children will eat better, while the rest of us will have to contend with cold salt pork and beans as we continue to endure The Obama Winter.

The only answer is restructuring my friends, and that will entail some significant spending reductions and – yes! – entitlement reform.  Barack Obama still has an opportunity here to salvage his legacy.  If he can play “Nixon Goes To China” and pull off the hard work of entitlement reform, he will be forever after revered as a Sainted President.   If he’d rather continue down the path to perdition and Obamacare folly, well….

Many Bollinger Band Crash Trades were triggered in the PM segments this afternoon, and I believe I may partake in some rebound shooters (perhaps in GDX and GDXJ) to reap the reflexive bounce back due those names.  I think SLW and SIL are also prime candidates and if I see a “wash and bounce” tomorrow, I may even grab some NUGT and or AGQ.   We should be very close to done with this pain, however, so hang on at least, even if you don’t feel like trading.

Best to you all

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Soon, soon I will be a plunger yet again. Morsels are looking tasty already, and I don’t think gold and silver have too much farther to go here.  There’s a lot of support for physical silver at this $31.80-ish level and I may choose to nibble there tomorrow if we get one more rip to the downside. Then stuff will be on sale like you read about.  SLW at $37?, AG at below $22? RGLD at more than 15% from recent highs? Are you kidding me? These are the times when men can be gluttonous, in a sippy-cup kind of way (small sips, gradual like).

I will have time to speak about the recent Obaminations when I’ve got ten minutes to assemble my thoughts.  Needless to say, last night was more revelation.  I think I’ve come to the reluctant conclusion that the guy is just not very bright after all.  The consistent throwing of constituency after constituency under the bus…. when will it end?  Last night, he gave up Virginia by blowing up Newport News and its naval stronghold.  Ah well, who needs those bayonets, save our own guts?

 

Maybe he’ll talk about how he hates Buckeye nuts, next? One can only hope… (for change?)

Best to you all.

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In the end, “Robocop” was too kind. 

Forgive your loyal, unpaid servant, but not only was I trying to send out a hastily assembled marketing book for one of the finest companies I’ve ever had the privilege of introducing s, but I also had a long scheduled string of appointments in Michigan this week as well.  Nothing like starting in beautiful, well capitalized, conservative Western Michigan on Monday and then working one’s way across the state, only to end up in moribund, corrupt and ultimately failing Detroit in Eastern Michigan.  It’s not overly exaggerating to compare the two sides of the state to West and East Germany… they are that different in their economic viability.

Detroit is a wreck, and it’s a damn shame. There are hundreds of thousands of very smart people populating that Southeast Michigan region– engineers, technicians, deeply skilled manufacturing personnel, etc., etc.  What hope have they, however, arrayed against the institutional, long embedded machine politics-corruption that destroys the rule of law and therefore any hope that a level playing field might be established for investment capital?  Let’s face it, you’d have to be nuts to try to start a business in Detroit.  There’s more atmosphere on the moon.

That said, I had a great time meeting the private equity personnel operating in that region.  And the Tigers game was fun too.  But nothing was as important– or moving– as my meeting with the esteemed, venerable Detroit Patriarch, Mr. Cain Thaler.  It took a number of phone calls with his “people” to arrange a meeting, but let me tell you it was worth it. It’s not often you get to meet one of the guys who hung with Edsel Ford and the Dodge Brothers “back in the day.”

I had to wait outside the Marriott Motor Access area for half an hour as Cain’s preliminary security ran through their checks.  They were nice guys, but pretty obviously ex-Special Forces, so I kept the chat to a minimum.  When Mr. Thaler himself rolled up in his stretch Cadillac (of course) limousine, I was on pins and needles. When the door was opened by his personal bodyguard (a flat-faced Mongolian giant, six-ten, and about half that wide), rich, sweet and thick Havana-based smoke billowed from the back seat for what seemed like ten minutes but was probably more like 30 seconds.  Finally, a gnarled, liver-spotted hand clutching an ivory headed cane (hint hint?) pushed out from the back seat.  It was the man himself, the Legend.

Our discussion will remain between us, but let me tell you that he imparted generational value to me… business advice that I will cherish and pass to my own children, God willing.  Thanks you sir, for your good will and your patience.  I wish I could impart some of your wisdom to this crowd, but I will hold off, affording you the discretion you’ve earned.

I look forward to the next time we might share some bourbon whiskey, and some tales of the good days, when Detroit was America’s engine.  My best to you.

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I actually bought a farkakta load of SLV Leaps today.  2014’s and 15’s.  A humbug schitload.  I think silver is going to go berserk here, but the ride will be violent.  SLW, EXK, AG and maybe SVM if you’re bold, SIL if you are not.  God bless we are in trouble, but I take heart that there are still men like Cain Thaler — who remember that commie asshat Roosevelt — to help guide us back to the righteous path.

Best to you all.

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[youtube:http://www.youtube.com/watch?v=6yD43OrcjDI 450 300]

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Overall thumbs up to the RNC.  Some lame moments, but this is the Republicans, after all.  They are the opposite of slick.  Unlike many, I enjoyed Clint’s off the cuff rambling.  He’s like your crotchety grandfather — the one you got your sense of humor from, the one who could always make you smile.  Rubio had the second best speech of the convention, after only Ryan, and his tying his own immigrant roots-story into the Euro-style socialist policies of the Obama Administration was as spot-on as it was rhetorically brilliant.  To whit:

“These (Obama policies) are the ideas that people come to America to get away from.”

Brilliant.

Mitt was better than I expected, if only third place (Christie was terrible, IMHO, btw).  He humanized himself, I thought, and connected with the women’s vote, which will be crucial.  His economic versatility can be taken for granted, and it will be what helps save this Republic, but he’s not going to get that chance without “the womenses.”  Unlike Obama, he’s not just another pretty face.

I’m reasonably upbeat about the prospects of the GOP ticket going into November, but much work remains to be done.  Despite Obama’s Jimmy Carteresque record, he’s got major dollar-equivalent support from the likes of the major networks and wire services.  The good news is the American populace is discounting these propaganda organs substantially in the 21st Century.  The Obama-Reid-Pelosi abysmal record is there for those who want to review it,  and it’s our job as intelligent arbiters of our own republic to make sure the truth is not buried under slander, spin and misdirection.   God bless us all.

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I think yesterday’s downspike may have presented an opportunity, market-wise.  I may start to step back into some of my sold off SLW and SIL positions.  I also like SLV for the duration here.  Those of you who have not done so may even think about physical silver.  I think we’re done pulling back and getting ready for the (longer term) move back to the 2011 highs.  We’re back above the 200 day EMA (and pulled back to it yesterday at $29.40).  We may pay pull back to fill in some gaps in the recent rise, but I don’t see SLV getting back below $28.50 any time soon.

For those fleet of foot and young enough to throw some bones on a play, I think BAA presented a nice opportunity yesterday on that big pullback.  If you look at this five minute chart, you’ll see a bunch of buying in the last hour of trading, all at that magic $4-dollarish mark.

I think this thing is headed back to $5.00 at some point before year end, and that’s 20% from here. Keep in mind this is a risky one, and against my usual gold miner picking strategy as it’s got tonnes of political risk, being in the “Democratic”(hah!) Republic of Congo. Keep your finger on the “caution” button for this sucker.

Another beaten down stock I was asked about (by Ragin’ Cajun, it turns out, sorry I took so long RC!) is rare earth miner MCP — Molycorp. I don’t own any of this but looking at the chart, it seems like this would be as safe buy with your stops set below the close on the 28th ($10.75).  I think yesterday’s action was typical back and fill volatility, and MCP is ready to join the re-inflation party Chairman Bernanke is about to touch off in pursuit of “four more years” for he and Barry.

Best to you all.
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You guys know me by now, I hope.  Therefore, you are well aware that I am about as conservative a person as you are going to meet, this side of the ossified gentlemen mouldering away in the leather chairs of the University Club, NYC.  And with some quirkly exceptions, I’d say that conservatism marries both economic and social philosophies. I am pro-life for instance (both ways).

Despite all that, and despite my pro-life advocacy, I must join the growing multitudes calling for the resignation of this confused individual, Todd Akin. Truth be told, I was not really following this Missouri race until the bizarre controversy stemming from this man’s odd analysis of rape (“legitimate” or otherwise!) and pregnancy bubbled up this past Monday evening. You can read more about it in the attached article.

What I do know about Missouri is that Clair McCaskill was/is not well loved, as I’ve friends in various parts of Missouri, including St. Louis and some of the more rural areas. As far as the recent well contested primary (11 bidders!), however, I knew nothing.

I’ve since learned that Akin rose above the horde to win narrowly in the primaries, with the help of statist religous Huckster Mike Huckabee. There are few “Republicans” I loathe more than Huckster, who mingles self-righteous smarm with typical statist RINO “do gooding,” courtesy of the taxpayer’s dime. The fact that Akin is associated with Huckster immediately puts him in the negative column for me, no matter what his dopey views on pregnancy via rape. Moreover, his views, whether misstated or not, do nothing but cast a very serious position off the moral high ground. For that alone he should be interred in the “foot in mouth” Hall of Fame, and summarily dumped. Missouri deserves better than McCaskill for sure, but they do not deserve this dope.
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On the matter of Peter Thiel, the FaceBook Sour Grapes and the Cramer Clown Show… I will say merely this:

Peter Thiel took considerable risk by pledging a substantial amount of his (then) small VC fund to the then little-known idea of “the Facebook,” which was at the time being dwarfed by MySpace and other rivals. He waited some five years to get liquid on that investment, which for a VC is typical-to-lengthy. Almost 100% of VC’s have a business model that states “sell at the IPO” as a matter of fiduciuary duty (they are not in the stock asset managment business but the new venture business). That Thiel did what he told his investors he would do when he raised his funds, thereby fulfilling his duty to them is quotidian. That Facebook was valued at a very high multiple of current (and future!) earnings was a combination of cultural knowledge and market hype. There is no arguing these facts, this side of logic and sanguinity.

There has been some talk that perhaps Thiel should give up his board seat as he has released his investors from their Facebook venture investment (they are of course free to buy the company on the open market, but that’s not venture investing). I might agree with this, given Thiel’s only remaining investment is his own, at 5.6 million shares (oh, you missed that piece in all the invective, did you?). That said, he was an original investor in the company, so the board may value his perspective and advice at this point. Whatever the end, however, it is certainly a board decision as to whether Thiel remains or not. Thus far, he has conducted himself rationally and like a gentleman, all noxious statements by Daytrade Cramer aside.
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This temporary pullback in the miners is a mere bag of shells. I am carrying on with my trades as described.

Good day, sirs.
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It looks like Argentum Silver is leading the PM hordes forth again, most likely as a direct predecessor to another dollar break here.  Up over 2.5% as I type and outpacing it’s usually more lively cousin, Aurum Gold, which is up only one-tenth as much.

I think this is a good sign, even for you non-PM investors, as silver is the more sensitive to the “commodity” and “industrial” sectors, and it’s rise here should be good news for all of you commodity speculators, whether you be earl rustlers or coal bandits.  I will continue with my investments in refiners until they stop making sense, however, even with a rise in earl.  I continue to like WNR and PSX, for instance.  HFC as well.

For silver bugs, I went long(er) today by adding to my AGQ position, for the short term trip to the 200-day EMA, at close to $50 right now.  I will likely sell this additional piece off when we reach that mark, however, as I don’t like to be too heavily leveraged in this volatile metal.   At least, not for any length of time.

I also like EXK here, despite it’s continue pokiness compared to jackrabbit AG.  SSRI also seems to be re-gaining ground, if you are of the speculative sort.  As always, SIL and SLW are the formidable base of my silver horde, and I recommend those for any toe dippers.

Best to you.

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