$1 Trillion Healthcare plan

http://www.bloomberg.com/apps/news?pid=20601087&sid=aoQVT0QdanBA&pos=1

Apparently, the US has enough money in the bank to pay for the $1 trillion healthcare plan. Wait, I might have misspoken. I meant that the US is currently bankrupt and has no means nor plans to fund this or any other hair brained schemes that they come up with aside from printing more money and issuing more debt. Really, this is just the type of behavior that us as citizens should participate in. You lead by example right?

Hmm, I really like that Porsche 911 I saw the other day. I'll just go into the dealership to purchase it and hand the salesperson an IOU. I'll tell him I'll pay it in 10 years, but I'll probably declare bankruptcy before then. So its a win win for me. That's just the type of irresponsible behavior our leaders are promoting.

Seriously, when your personal finances are tight, do you go out on a spending spree? Or do you cut back and live within your means?

Regardless, our lawmakers will continue to drive the dollar to the gutter and propel precious metals to new highs. Better diversify while you can. That Benjamin in your pocket won't buy you a movie ticket in a couple of years.

I'll get off the soapbox now.

The train is pulling out of the station.

Today's move in precious metals surprised me a bit as I looked at the intraday chart of silver and gold just take off. The pundits rationalized this move was due in part to India buying half of the 400 tonnes of gold the IMF is selling. This doesn't really make sense to me as I read a story yesterday regarding this breaking news and did not see the market react to it. After 11AM this morning, did the gold price take off.

Is there something else afoot here? Perhaps this news story is being bandied around to cover up a larger more sinister event taking place.... Hmmm, if I was to put on my conspiracy theory hat, I could easily say that there's a large request for delivery of physical taking place, but there is no physical to be had anywhere... But that would be jumping to conclusions.

I'll just be satisfied with the fact that gold is at new highs and silver is tagging along for the ride. You can bet that there will be more explosive moves to the upside as everyone clamors to buy the limited number of metals available. Reminds me of tickle-me-Elmo many years ago.

Are you on board yet?

Waiting to exhale

The expected pullback in precious metals is finally here. I foresee gold retesting $1000 just b/c that is the number everyone is focused on. Silver will over correct as it is more volatile than gold. I would expect a bottom in silver only after gold has bottomed. Along those lines, I would like to see gold firm up at $1000. If not, a retest of $960-970 is possible within the scope of a longer term uptrend.

I already have a list of miners that I will pick up when gold looks like it has bottomed. My favorites at the moment are SLW, CDE, AUY.

I'll go out on a limb here and say that this might be the last dip into $1000 territory before we have a new bull leg up in gold.

There is a new Gorilla in the room.

China urging its citizens to buy gold and silver.

Why would China publicly advertise and urge its citizens to buy gold and in particular silver? What do they know that we don't?

I believe that there is a new 500 lb gorilla in the room. The old gorilla represented by JPM and other banks have been allegedly short massive amounts of gold/silver to suppress its price. Now the new alpha male has entered the room and has its own agenda. It's not going to sing to the tune of the old cabal. The agenda of China is to enrich the lives of its citizens and its own coffers by ensuring it owns a large % of hard assets to diversify out of the depreciating dollar.

When it is good and ready, they will strike with little warning. They will announce their intent to acquire an x% of precious metals in relation to their foreign currency reserves. This announcement alone will skyrocket the price of the PMs. But of course, they would have already acquired all the tonnage they need prior to the announcement.

Beware shorts, your day is coming.

Standing on the shoulders of giants

Here is a site I saw that allows you to track the holdings of various professional fund managers. These are the Buffets of the investment world.

http://alphaclone.com

It is quite interesting in that it allows you to clone their holdings and track the performance. They have done a study of this type of investing that outperforms the S&P500 by a considerable margin with less volatility.

I haven't done any in depth research on this, but it seems interesting enough to pique my curiosity and to read up on it.

Gold and silver train

The gold and silver train are slowly pulling out of the station. Are you on board? I am looking for every opportunity to purchase gold/silver related stocks. I'm hoping we will get a pullback... It would not surprise me that we drop from here to shakeout the jonnie-come-latelys only to resume its uptrend.

Looking at the behavior of the GBP lately has me really excited. Despite all the bad news for the dollar and other major currencies rallying against it, the GBP has stagnated. It has the smell of a good short. Two ways that I envision playing it out. One an outright short of it (or puts). The second way is to initiate a bearish spread trade with options.

Perception shift

Since my last post, I have noticed a subtle but important shift in the market. Namely that the market has started to react less favorably to bad news. Prior to this, any kind of bad news was shrugged off as the market climbed a wall of worry. But not anymore. With the release of the jobs number this morning the market is opening down. I think the S&P500 can easily test 1000 from here.

Speaking of job numbers, how can anyone be surprised that it would be negatively adjusted? How can anyone be surprised by retail numbers coming in lower than expectations? Economist/analyst are still blinded by optimism. But it seems like they are finally coming around to reality. The third quarter earnings releases around the corner might be another reality check.