Fireworks

Wow, what a show today. Silver, gold, miners all exploding in tadem! Does anyone still doubt that bull mkt?

Still waiting for a pullback which I am expecting to happen any day now. If not, it's just a sign of how strong the sector is. Regardless, I am happy with what I have.

Time to go all in...

Waiting for one final pullback in the metals to be all in. This is when I push all my poker chips into the table.
Silver close to yearly highs, gold a smidgeon away. Many miners already there. Juniors getting bought out. Lots of action and excitement in this space.
But interestingly enough, still no major participation by the masses. My friends still don't own any. Don't know many that do. Oh well, when Joe Six Pack starts talking about investing in this space, it will be my cue to exit the stage.

Xmas is coming early this year.

BTW, DBA is ripping higher yet again. This looks like the beginning of a bull market here.

Now a message from our sponsors

This is just a quick reminder to get into gold/silver. I believe a lift off move is imminent.
1) Bullish season coming around.
2) Central bank buying (look at Russia which is continually adding to reserves).
3) More institutional participation (but still very small numbers in terms of % participation)
4) Some unusual strength in miners (especially juniors) while general mkt is suffering.
5) Today, silver had some serious upside move after being down.

My spidey sense is tingling.

Get on board before it's too late.

Gold train is quickly leaving the station

Woo hoo! What a feeling to see the precious metals and miners take off. I've been positioning myself for this for a long time now. The folks like Roubini calling for bubble in gold will look like fools if they haven't already. This bull market is clearly not done yet. If anything, this will be a big move up in gold as it just cleared new highs relative to the dollar.
I expect some correction here on gold at this level. Once again, this is an opportunity to buy. $1300 is my next target, then $1500. Silver should retest the prior high of $21 set over a year ago. And the miners will obviously rip higher as was seen today - these guys are leveraged to any move in gold.
I direct your attention to a few names that are clearly rocketing up and are good candidates to accumulate on dips.
EGO, IAG, SLW, ANV, SVM, SA. Even the blue chips like GG, ABX, NEM are moving.
For those with access to the Canadian exchange, check out RBI, SMF, EAS, III, and OSK.

 I don't plan to sell until friends who I've been telling to buy precious metals for a while now, call me and ask how they can get some gold. Or maybe if the cleaning lady tells me of her favorite gold stocks. It will be the NASDAQ bubble all over again.

Choo choo, ALL ABOARD!!

Market outperformance

The time has arrived in which I believe precious metals will now make a new bull leg. This past week has showed that gold/slv has diverged from the negative correlation associated with the dollar. Dollar has rallied, yet gold/silver has also rallied. This buying has been in the face of loss of confidence in the euro. The dollar is no longer the safe haven that others seek. I believe people are starting to realize that the dollar is just as vulnerable as the euro and any other fiat currency. People want hard assets that will maintain its value in any currency devaluation.
Better yet, the miners has showed signs of life. Many miners I mentioned in the past has broken out strongly and look to continue to rally in the months ahead despite a general market downturn. Look at EGO, ANV, SLW to name a few. The miners look a bit overbought at this point, but the next dip must be bought. This might be the last opportunity before gold takes out it's prior highs.
Here is some late breaking news that the Dept of Justice will investigate the silver mkt for alleged manipulation by JP Morgan. This will just add fuel to the fire. Click on link below to listen to the news.

http://www.kingworldnews.com/kingworldnews/Broadcast_Gold+/Entries/2010/5/1_Ted_Butler_on_the_Metals_Market.html

I hope you are as prepared as I am to ride this bull mkt to new highs!! Woohoo!!

Miners outperforming...

Perhaps this is the beginning of the next upleg in PMs that I have been waiting for. I haven't been posting for over a month as I have been in a waiting pattern. Finally last week, the PMs and miners started to catch a bid and I judiciously added to resource stocks that I thought were strong.
The 2 names that I mentioned from the last post (SWC & TIE) have made new highs for the year. EGO is another one that seemed to bounce off key support and is now looking great.
The general mkt has been relentlessly grinding up and looks to me to be overbought. I favor the miners as I hope they will play catch up, having been dead money for a couple of months. Longer term, I think they will outperform the rest of the mkt.
An idea of mine would be to hedge my longs in miners by buying put options on the S&P. S&P is hitting a key resistance level at 1200 soon and I'm looking for a turn down from there. But I will play it by ear, since 1250 is also another potential upside target. Ideally, I would like to see a gap up for me to get better prices and have the mkt close down. Some good earnings news would probably trigger this, followed by selling after the news. This is typical mark up by the smart money who are selling into up moves.

Let see how this plays out.

Oh, here is an interesting article I read on the demand for silver eagles. Makes my ears perk up.
http://news.silverseek.com/SilverSeek/1270840329.php

Miners

I continue to nibble on miners as the market comes in. Yesterday precious metals and miners staged a rally after many days of pounding.
I'm liking ANV and a few juniors like RBI.TO and RMX.TO (Toronto exchange) that are holding up like a champ.
I've also noticed other resource related stocks blasting up and having reasonable pullbacks recently. SWC and TIE namely.
Many have predicted that this is the beginning of a new bear leg in the market. While I certainly don't have a crystal ball, I will focus on what I think is holding up best - gold. Until gold breaks below $1000, I'm still a buyer of gold and miners (and silver of course). I continue to stay away from the general market.

Option Expiration

Recently, I've started to play option expiration. I will position myself 1-2 weeks out on options that I think will expire worthless. My bet is that certain stock candidates will be 'pinned' to a particular strike. With that belief, selling options on these stocks will benefit from accelerated time decay and hopefully some sweet profits if the options expire out of the money.

What I like about this play is that the results are almost immediate. Within a week, you will know whether you are right (assuming you hold the position to expiration). Secondly, the risk/reward can be substantial assuming you cherry pick the right stocks to play. I typically look for at least 3 or 4-1 risk/reward ratio. Because the option decay is so fast this last week of expiration, the profit curve can quickly move in your favor to the max reward zone. Of course, if you are wrong, you can quickly lose your entire investment. This is where position sizing and risk management is important.

I key off of technical levels to determine where I would get out for a loss. I intend to hold until option expiration barring a stop loss so I can squeeze the max potential out of the trade. With these trades, you're either dead wrong about the zone in which the stock will end up or absolutely right within a week so it's important to be disciplined and adhere to stop losses.

Some keys things I look for. 1) Tight bid/ask. 2) Stay away from stocks announcing earnings the week of (or industry related cousins). 3) Technicals (support/resistance) has to corroborate my idea of a potentially range bound stock. 4) Nice to have open interest indicating a possible pin play.

Also, one of the ways I have found good candidates have been after a news driven event that has moved the stock. Afterwards, the stock is usually range and would be a potential candidate.

So far, my picks have been about 50% winners. For 1 unit of risk, I make about 3-4 units. If I can keep at this rate, it will quickly add to big gains.

Two candidates I have for this week was HD and APOL. Already HD has stopped out for a loss. APOL is looking good as it looks like it might pin at 60.

Resource stocks

Resource stocks have been on a tear recently. Not sure if the media or anyone else has been noticing. I haven't seen or heard much press about it.
I was hoping gold would dip below $1100 and wash some more people out but that hasn't happened. At this point I'm not so sure it will happen. Gold and silver has rebounded strongly off of these levels and looks like it wants to run to retest previous highs.
As they say, the hardest thing to do is always the toughest thing to do. So I've forced myself to buy some of the strongest resource stocks that haven't really dipped this last round. Nothing like backing up the truck, but more of nibbling here and there. The easiest thing would have been to do nothing and stare like a deer in headlights.
Here are some of the stocks I like in no particular order.
HL, SVM, SL, SWC, NXG, CEF (bullion fund).
Notice that there are no blue chips of mining like GG, HMY, ABX. I'm not particularly fond of these as they have not shown great relative strength. That is not to say that they wouldn't play catch up at some point. But it's not my cup of tea.
Another way to play the bull market is to sell some puts against stocks that you wouldn't mind owning. Due to the volatility of some of these stocks, you can earn some fat premiums while waiting for them to come in. This is a nice way of buffering your portfolio with some income.