Monday, June 27, 2011

RUN! RUN!


Like rats off a sinking ship the peeps are chased out of the commodity trade. Fear...the strongest motivator of all checks into the precious metals trade. All it takes is a pinch of fear from deflation...a pinch of Greek default....a pinch of contagion....a pinch of oil collapse......and ouila you have some fast margin calls and a scramble for liquidity. I don't like this at all. It scares me. Well at least it makes me kinda scared. It is the game you know.

The big boyz know this game isn't going to go on forever. At least its not going to go straight up forever. I warned you that the metals trade was way too hot when silver was pushing to 50 and needed to be reigned in. Of course there were predictions that JP Morgan was going to go broke with its silver short and the COMEX was going to default and that silver was going to go to the moon. Actually all of those could happen but you may be broke before they do. Certainly if you think that JPM (the Fed) is going broke then I guess you haven't checked lately with the ability of the Fed to print money until the cows come home. Who do you think is pumping Greece and the rest of the PIIGS right now through every back door channel?

The question that lingers is not if there is QE3.....but when and in what manner will it be implemented. There is NO CHOICE. This is what monetization is. Its not about pulling the plug on the ponzi in the middle of the game. So you have to be aware that at "some point", an 80lb rabbit is going to get pulled. Will it save the day? NO of course not. But its going to happen and its going to result in equities catching a bid. Precious metal will respond too. Gold has more security but Silver COULD linger a tad.

Miners may work their way down to the 426 area on the $HUI so use caution.

Watch the 140.80 on the Euro/usd......if it breaks then I think we will see 139 fast. The Euro is toast and eventually will start breaking like glass. But remember...once Ben monetizes, the dollar could slide back below its previous low. EUO is still in play. Also watch YCS .....its a nice short on the Yen....and they need to sell that currency soon to prop up their manufacturing. Japan is in bad shape. Stick a fork in them.....they're done unless the Yen takes a big hit.

Miners look like another dip but ANV just might do its own thing. It seems to move independently from the HUI.

Here is Clive Maund's take on silver...he see's it breaking 30 perhaps

31 comments:

  1. http://finance.yahoo.com/news/Fed-May-Buy-300-Billion-in-bloomberg-1457319130.html?x=0&sec=topStories&pos=3&asset=&ccode=

    ReplyDelete
  2. SINA and TKLC are yummy today, ALU also up right at the gate!

    ReplyDelete
  3. Do you recommend Cliff Droke's book on gold?

    ReplyDelete
  4. And fwiw, a dealer I know calling for $22.50 on silver. Thoughts? I think it's a bit overdone, but who knows?

    ReplyDelete
  5. Nancy,

    When it comes to trading/investing, there is only one opinion that counts and that's yours and yours only, since it's your money to make or lose, so do your home work regardless of what others say or do not and make a CHOICE. I give you the same response I gave to Tom couple of days ago. At least the dealer is making a call, so make a call, what's your opinion and how low do you think it's going? In life it's not good to make decisions based on what others say even if their analysis is correct. What you should do is decide what you want to do with the time that's given to you. So tell me based on your studies and what you see, how low do you think Silver is going to go?

    ReplyDelete
  6. I always like it when a bunch of people make extreme calls for a price move. It usually means my not so extreme target will be met.

    ReplyDelete
  7. All,

    What's your opinion on how low the Silver is going to go? Kli has an opinion, Red has an opinion and I do my own analysis, so based on your analysis where do you think silver is headed?

    ReplyDelete
  8. Nancy,

    See how Ken responded, that means he is doing his best to do his homework and I respect that even if his call turns out wrong. That's one of the things about this country that really bothers me which is most people always wait for others to do the thinking or homework for them and that's not good.

    ReplyDelete
  9. I am looking for a retest of the Feb lows. Anything beyond that would require a news event. After the first week in August, all bearish bets are off.

    ReplyDelete
  10. The second biggest mistake trading I made was substituting someone elses opinion for mine when I lost confidence in my judgment.

    (The biggest mistake I made was what caused me to loose confidence)

    ReplyDelete
  11. OK, I'll try this silver target (warning, this is coming from a newbie!). Looking at a weekly chart, I see the RSI is right at the 50 mark. If you draw a line back from Oct of 2010 to present where the RSI has touched, it looks like silver has just about bottomed today!! So I'm putting my money where my mouth is and I bought some GPL today (in at 5.23, so i'm already wrong). Ok, rip this about, I need to learn.

    ReplyDelete
  12. should say rip this APART. Jeez, cant spell either.

    ReplyDelete
  13. I'll take a stab! The historical average ratio of gold-to-silver has been around 47...over the past 100 years. Gold is also correcting, and as I believe you guys have stated, could drop to the mid-$1,300s or so. Say the average of 47 holds, we're looking at around $28.50 for silver. Yes, I understand these ratios often mean very little haha, but it's good to look at the problem from different perspectives.

    ReplyDelete
  14. Ryan & Chuck

    Keep your eye on YONG, seems like Morgan Stanley is starting to invest in them:

    http://www.ft.com/intl/cms/s/774fdafe-8dea-11e0-a0c4-00144feab49a.html#axzz1QUuKH600

    ReplyDelete
  15. Speaking of YONG, the CEO recently bought $3 million worth of shares in the open market paying an average of $5.40 a share.

    ReplyDelete
  16. In early June, private equity arm of Morgan Stanley invested $50m in Yongye International ( YONG), a Chinese agricultural nutrient company that had also suffered on Nasdaq under the weight of short sellers. This + CEO recently buying $3M at 5.40 in open market is not coincidence. I definitely have this puppy in my radar. A chemical company with 400 employess.

    ReplyDelete
  17. FCEL creeping down , looks like it wants to test that $1.35. lets see if it that holds, my guess is, if it hits $1.35, it probably could get a quick bounce of 6 or 7 cents, though that could be very short lived, but a quick 3 or 4% wouldnt be bad for a quick trade.

    ReplyDelete
  18. Took a YONG position.....should do very well long term......of course I'm not against a trade either. ALSO look at ANV ....only miner I have thats green.....if this thing turns up to a new high in a day or two......ooooobooy

    ReplyDelete
  19. I wonder how much of this bullish move is a small pre-earnings pop and setting up for end of month painting....

    ReplyDelete
  20. week before 4th of july seems to have bullish tone...knew I could count on google

    http://content.screencast.com/users/wprosser/folders/Jing/media/14d48884-0fc5-4854-b5b8-2a074dfd44f8/2011-06-24_0841.png

    ReplyDelete
  21. gotta luv that google.........hehehe. looks like we fold into the close.....pattern continues

    ReplyDelete
  22. Played SLV up and down for scalps today. grabbed some 33 AUG puts with the profits.

    NTAP was easy today as well. fun day.

    ReplyDelete
  23. I sold half of my RNN at 1.23 and stopped out of my final CLSN when it went under 3. Just to much risk this summer. Still holding some bio I think has potential over the next few months (PATH, OSIR).. Didn't dump on the pop LLEN, but it is a bit of a longer term play. (I should have sold it, broke a trade rule)

    ReplyDelete
  24. Honest, it's called the holiday reversal pattern. Let's see if it holds till Friday. Thanks for all the silver input. I have $33 as the 50% retrace for 1 yr. price, but it looks as though that won't hold so $28-29 looks very likely. Still holding cash for buys in August, but holding core here too.

    ReplyDelete
  25. ...if you notice 33.5ish is the bottom of the channel that began around 5/25 (talking futures not SLV) it's also the low from March Dip (almost exact) and near the low from May crash (approx). This is very strong support in other words. If it trades the channel then it swings up near 36ish in the next 7-14 days...starting with a nice green day tomorrow...been red three straight already yeesh!

    However, I did not like the way price lingered down at 33.5 (bottom channel), would have liked to have a seen strong bounce.

    This leaves me reason to believe a breach of 33.5 is coming overnight and that could take us to 30-31.5 over the next few days. If that doesn't hold then 28 would be next.

    Even though I'm holding miners I wouldn't mind if it got that low cause I don't think it would stay their long.

    IMHO

    -v

    ReplyDelete
  26. Ok, I turned on the TV for the first time in weeks and what do I hear? "the market got it all wrong"..."inflation was hurting us, the new non-inflation is now going to help companies"...."no-QE is priced into the market"

    This all sounds like a load of crap. While inflation did hurt and not having QE is effecting us, they are forcing money out of stocks and into bonds. This has not changed. 2nd quarter earning are already wrecked. We won't see real positive until the bad news all hits on earnings and we start getting good forward guidance. This will be end of summer, not now.

    ReplyDelete
  27. Joe's PM forecast is looking better and better each day hah.

    ReplyDelete
  28. We could get a bounce from here to 34, but I would just add to my short at 34

    ReplyDelete
  29. Ken,
    I'm with you in LLEN. I have a small core that I am holding at 4.77. I saw the put contracts were all red today even with the stock dropping 7% today. Is that a sign of short covering beginning? Anyway, good luck.

    ReplyDelete
  30. Ryan and Ken,

    LLEN is sure jumpy lately...

    ReplyDelete
  31. some links to peruse..

    http://www.businessinsider.com/goldman-sachs-is-firing-employees-in-the-us-so-it-can-hire-1000-in-singapore-2011-6

    http://investmentwatchblog.com/david-stockman-ben-bernanke-is-finished/

    ReplyDelete