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!!
Saturday, May 1, 2010
Friday, April 9, 2010
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
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
Tuesday, February 2, 2010
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.
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.
Wednesday, January 13, 2010
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.
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.
Wednesday, January 6, 2010
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.
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.
Thursday, December 24, 2009
Deflation or Inflation
There's been lots of debate in the media whether we are in a deflationary period or an inflationary one. Both camps seems to have great arguments for their position. But it seems like everyone is missing the big picture. The label is not important, only the result.
Let me explain through my perspective. What we have seen is the Fed inject boat loads of money into the system. Shoring up the coffers of the banks has been their priority in order to save the financial system. The deflationists have pointed out that the banks have not been lending this extra money and therefore there cannot be inflation. Point well taken. On the flip side, the inflationists have argued that the act of printing money itself out of thin air is the very definition of inflation. I'm no academic to be able to argue this.
What I do see is this. The balance sheets of banks have been shored up by the printing of money from the Fed. This money did not exist before - they did a magic trick and pulled a rabbit out of the hat or ass. Unlike you and I, money doesn't just magically appear in our wallets - we actually need to put in a day's labor for it. So this waving of the magic wand generated tons of extra money in the system where there was none before. It is the perception of fiscal responsibility and living within our means as the country with the currency reserve status that is of utmost importance here. When all investors see the way with which we uphold the value of the dollar they quickly lose confidence that there is in fact any value left in the dollar. This is key and in my opinion why the dollar has been tossed by the wayside as everyone has been scrambling to anything they perceive to be a better store of value.
So to argue whether there is deflation or inflation is purely academic. It is besides the point. The fact is that you don't want to be holding all that worthless paper called the dollar or any fiat currency for that matter - not when all governments are running the printing press. Invest in something that will maintain its value through time. Act now before its too late.
Let me explain through my perspective. What we have seen is the Fed inject boat loads of money into the system. Shoring up the coffers of the banks has been their priority in order to save the financial system. The deflationists have pointed out that the banks have not been lending this extra money and therefore there cannot be inflation. Point well taken. On the flip side, the inflationists have argued that the act of printing money itself out of thin air is the very definition of inflation. I'm no academic to be able to argue this.
What I do see is this. The balance sheets of banks have been shored up by the printing of money from the Fed. This money did not exist before - they did a magic trick and pulled a rabbit out of the hat or ass. Unlike you and I, money doesn't just magically appear in our wallets - we actually need to put in a day's labor for it. So this waving of the magic wand generated tons of extra money in the system where there was none before. It is the perception of fiscal responsibility and living within our means as the country with the currency reserve status that is of utmost importance here. When all investors see the way with which we uphold the value of the dollar they quickly lose confidence that there is in fact any value left in the dollar. This is key and in my opinion why the dollar has been tossed by the wayside as everyone has been scrambling to anything they perceive to be a better store of value.
So to argue whether there is deflation or inflation is purely academic. It is besides the point. The fact is that you don't want to be holding all that worthless paper called the dollar or any fiat currency for that matter - not when all governments are running the printing press. Invest in something that will maintain its value through time. Act now before its too late.
Saturday, November 7, 2009
$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.
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.
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