Off to Vancouver for the day, but here is a conversation I had with Marshall Berol before I left.
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No offense intentioned Al but I did decide to get out of a few Dawgs………….
But then again, for we in Cougarland, Hope springs eternal…I would gladly give up my entire portfolio for some hope of returning to normalcy. I count myself indeed fortunate during this Christmas season for all my blessings. Best wishes to all……..
Hi Dai Yu,
My sentiments exactly. ( And that is on everything)
Big Al
Hold it, Dai Uy,
Did you say Dawgs and did I say I agreed on everything?
I was going through a car wash when I replied and I did not see the TERRIBLE comment about Dawgs.
How could I possibly agree with that!
Big Dawg Al
The markets have been going down because there hasn’t been enough monitory action, and today they react negative because they pump in too much… Any opinions?
Yep, from a purely fundamental analysis standpoint, I agree.
Big Al
today is wave two which is a modest downer after a big wave one up yesterday. this is a normal trading cycle. Santa wants the rally but too many are headed for Xmas time fun for now. Markets ebb and flow on news and volume. With a hot upday yesterday, markets rest and mildly retreat. Our one and three month scenarios are unfolding as we expected – Traderrog PS: The IMF-ECB “Fixed” Europe last night with loans in an offer “you cannot refuse” got it? –
Rog,
Word is they have already spend the funds: http://www.bloomberg.com/news/2011-12-21/european-banks-devour-ecb-emergency-funds-amid-frozen-markets.html
Hilarious!!
Keep up the GOOD Fight!
AKA
I guess you are right. It is hilarious and sad at the same time!
Is there never an end to all this?
Will Europe retain solvency?
2012 will be very interesting!
Big Al
The EFSF is also drawn down at least 25% of it’s 440 billion €. I was working on a ledger of the amounts, but it’s quite cryptic when looking at the http://www.efsf.europa.eu/attachments/efsf_presentation_en.pdf website and several others. They haven’t updated the Greek tranche amounts, nor do a good job of splitting out how much comes from EFSF and how much from it’s precursor, the EFSM. But, it’s well over 25%.
So, when you read in the mainstream about the apparently never-changing €440 billion level EFSF, and how it could be leveraged 5 times, or used as a backstop against bond sales, just remember in the back of your mind that it’s no better than 330 billion today, and it has already has additional commitments into 2012. I can’t prove it, but I wouldn’t be surprised if more than half of it is spent or committed.
Al, I agree with everything Marshall Berol has said and I would add one other reason for underlying support for Gold and Silver and in my opinion is the reason we saw the bounce yesterday. Jim Rickards at Tangent Capital has written in his book “Currency Wars”, and is saying on many recent occasions that because so many derivatives in the hundred plus trillions of dollars and Euros have been written by banks, financial entities, Pension funds both public and private between Europe and the US that the Fed will not allow the Euro to drop much below 1.30. I have not heard at what level these derivatives kick in, but Jim suggests 1.30, which I believe Chris Whalen would also suggest. The Fed probably knows the level of Euro which if breached kicks in all these derivatives, after all the Fed is JP Morgan, GS and all these big banks who have written these instruments of financial destruction. So when the Euro drops much below 1.30, expect intervention by the Fed to support it and cheapen the dollar. I think that is what kicked in the rise yesterday. Just saying as I don’t really know for sure, after all I live under a rock.
Clay, I don’t believe that you live under any kind of rock! You are much too bright.
Interesting theory about the 1.30 level for the Euro.
That could certainly be a very good possibility.
Big Al
Hi Clay, I strongly believe in your Euro/Fed theory.
It´s the best way to hide the devaluation of the US dollar and keep smiling to the Chinese.
Morning Anna,
Wow, that is sooo possible!
Big Al
Clay,
Great comment. So, the US is backstopping the Euro, and China is backstopping the USD. My, I feel better now.
Here is a must-read on the divergence between paper and physical gold and what it portends.
http://www.financialsense.com/contributors/jim-willie/2011/12/21/comex-the-march-to-irrelevance
I read that and yes amazing. By the way Jim Willie is also a statistician with similar mathematical understand as Chris Whalen and John Williams. Boy would I like to put them in the same room and be able to understand what they say.
I know Jim and John, but not Chris.
That would be an interesting conversation though.
Best,
Big Al
“Fixed” translates to prop up their banking buddies, I presume :))
Above said, all this insanity in what money and derivatives are and machinations these central banks do, people like Kyle Bass use their own WMD’s to detonate a crisis one after the other for quick profit. In this respect I think Chris Martenson is close to the truth in his understanding of the exponential function and how it impacts this insane money and asset based system per respect to actual resource limitations which are not by coincident inverse to the the debt based curves.
Evening Clay,
Exactly what asset based system are you referring to? I don’t think that there is an asset based system anywhere in the world at this point.
Big Al
Al, In this Keynesian Bizarro World, mark to make believe is asset based, at least that is what Bernanke and all his cadre think. QE is in this world liquidity to put a base under the banks and bond market, where the US is only small part of all this crazy money. If you can get the chance, I highly, very highly recommend that you listen to today’s David McAlvaney interview with Bill King, I promise it is well worth listening to. Listen to the prelude video with David first, then listen to the interview with Bill King.
But you are right, I agree. By the way that is how I know these guys at the Fed and in Washington so well, I see their larva under rocks all the time.
Hi Clay,
Isn’t that an interesting thought, mark to market value! On the surface it seems so right and simple yet it is actually so deceiving!
Thanks,
Big Al
I think there’s a good chance that we will see a rally begin tomorrow and continue into next week. There are some bullish indications. First, I noticed that gold became oversold last week (RSI 14) while silver did not. The reverse was true for the plunge in Sept. This change is bullish. Next, if we look at an arithmetic chart for gold, we can see that the uptrend line drawn from the Oct. ’08 low wasn’t broken. And finally, not only is the VIX at it’s lowest point since July, but the Dow is poised to challenge it’s 2011 highs if we see a close above the 12200 area. This would complete an inverse head-and-shoulders pattern and signal a continuation higher. There are many other technical and fundamental considerations, but I see little reason to be overly bearish in the very short term.
Well, I believe Matthew that is exactly the same way that Trader Rog feels.
Let’s see,
Big Al
Hey Matthew, I really don´t see the path to complete an inverse Head & Shoulder pattern for the $INDU in the very short, the short and the mid term.
If the Baltic Dry Index drops under the support level of 1,848-1,840 today be ready for the return of the big wave of pessimism in the markets.
Have a good day for you, Big Al, Trader Rog and all.
Anna
It’s a small pattern going back to the end of OCT. The apex of the head was Nov.25. Incidentally, there is no H&S pattern for the BDI. The setup was negated by the action of Dec. 9-12. I think we will see the BDI at 2500 before we see it at 1500.
Have a good day too.
Hi Al,
Nice upward move on RPM today after the news from court. Should be interesting to see what happens from here.
Cheers James
Just read Jim Willie’s article (link above). Extremely sharp individual, but there is one major caveat to his thinking. The “Good Guyz” he speaks of are themselves manipulating pricing which does not make them good at all. Maybe a lesser degree of evil than the “Bad Boyz” he plots them against (maybe not). His “Agent2000” is simply a broker trying to fill an order to make himself and his client money by driving down the price and getting a less than fair market value “deal”. Won’t they solely reap the profits from this? Additionally, at who’s expense, I ask? Anyone here holding positions that (if this is in case a fact) are being affected?
With all due respect to you Al, and to all of the wise commentators I have listened to in the past several years, I am getting very frustrated by all of these “buying opportunities”, and in retrospect I would have been better served if I would have ignored all such suggestions and panicked at the first glimpse of weakness in April of 2011! Instead, each time I “kept my powder dry” and “bought when blood was running in the streets”, the Resource sector has just barely rallied, then kept on grinding down. Having added to positions all the way down, I am now way underwater, and I’ll bet I am not alone. Now we seem to be waiting for some kind of miraculous event in which the world monetary system will come right to the edge of disaster, and the Central Banks of the world will flood the system with a tsunami of Fiat money and reflate our sad portfolios. Have we not thus become just like the zombie banks themselves, praying for a bailout!??! I do not joke when I say that my grandmother has done better by just holding the utility stocks my grandfather left for her 6 years ago!!
All respect is due to Rick Rule and Mickey Fulp. These cagey vets are the only , and I mean only, commentators that were unabashedly touting that they were taking profits in April. Rule is of course now buying hand over fist right now! But in order to make money in the market you must take money from the market. What a costly lesson!
James Dines, Eric Sprott, John Embry, Eric King, Jim Sinclair, James Turk, Stephen Leeb, John Hathaway are just a few of the respected voices that I listen to that I would have been better served by ignoring! (Though Dines did recommend some profit taking in April, but re-flashed his Silver buy within weeks) Perhaps I should take heart that even the best and brightest are not able to master this market. My great fear is that what we are waiting for in the form of QE3 will not come until such great damage has been done that we will be ruined by waiting. I recall almost a year ago hearing the Scottish investor Hugh Hendry say that Inflation will come, but that we will not be able to hold our inflation hedges in the meantime. His words are haunting me right now. My portfolio is a total wash, kept at net 0 for now by my precarious Bullion position. I would have been as well or better served by putting some Fed Res. Notes in a coffee can!! My “wealth in the ground” strategy appears to be burying me!!
In spite of the foregoing, I truly appreciate your show, your site, your wisdom, and your generosity, and wish all a Merry Christmas, and Happy Holidays.
HI Martin C,
If you look at our total portfolio, you will note that we are down in six positions and up in, I believe, 16 positions.
Could this change? Of course it could, but to date the numbers do not lie.
I know Mickey really well and he is a very calculating investor. He and I have chatted many time in the past and I respect his opinion. Mickey told me when gold was trading around $1K that he was siding with Paul and others who felt it would not go up from there. He has since obviously changed his position.
No one is right all of the time. I certainly don’t say that I am. If you listened to my Daily Editorial which I put up recently where I described each stock in our portfolio and gave reasons for buying and, in some cases, not selling today you will perhaps see why I am feeling okay about my past investment decisions.
Best,
Big Al
Martin: You are not alone, believe me, and yes all those people you mention are just like us, trying to figure out what is and will happen. In a sense nothing is safe, not cash, not stocks nor bonds for heaven sakes, so where does that leave us? Gold? I don’t know but one bit of wisdom I hear once in while and more so recently from Marc Faber is, Marc is saying “everything will decline” all in their own time during this major economic change. Call it deleveraging, releveraging, devaluations, inflation, deflation or whatever, but as Marc is saying the people who come out best will be those who loose less. While back I believe Marc was saying if someone lost 25% of their wealth that would be winning, but the Doom part of Marc is more now than then and recently he said if someone lost ONLY 50% they would come out the big winners. WOW 50% loss.
I have no idea if Marc’s numbers are right or not, but I do think he is on the right track. So in this respect the safest assets to loose less are likely to be the things people will always need and use, food, water, energy, hard cash (represented by gold and silver) or the vehicles which produce these things. Likewise and because so much of the current economic crisis is caused by insane debt and money creation backed by paper risk (sovereign debt, bonds, derivatives, fiat money, contracts and agreements), the things that come out best are likely to be those things with lowest counterparty risk like James Turk is saying. Nothing is without risk, even things we might think will never decline. I used to strongly believe that having some tillable good land with water available that a person could survive by growing their own food, which I have been doing. But last March when Fukushima blew up, radioactive rain fell on my land and my soil got contaminated, not seriously bad (whatever “seriously” means) but the soil did get a dose of radioactive isotopes. My family gets most of our food off our own land and we eat like kings and queens, but when we got contaminated our spirits sank into deep emotional depression. What we learned from this was a lesson from God, to never value anything more than him, not our spouse, children or gardens, because God is what we must love and value more than anything else. A very humbling lesson which tells me how much he truly loves us, all of us.
martin c,
Many people here could have written your comment. There’s a point or two I’d like to bring up for everyone’s sake (perhaps you know this already) to help clarify moments like this….
* What investment system or model are you using?
I asked myself this a few years ago and realized I was cherry-picking bits of value investing, IBD’s CANSLIM and some option trading strategies together. Mixing systems does not work (usually a subconsciously applied error). Find a system you like, or make one up, etc. But then stick to it. Some folks have been wondering about Roger’s comments, or Turk’s, etc. Roger has an investment system which his subscribers would follow. He’s very, very generous with his views here on KER, but remember his views are best applied per his investment model, not yours. There’s no such thing as universal commentary. His Trader Tracks system has its own entry points, hold times, profit and loss limits, etc.
* Why did you buy the stocks you did? Did you write notes about the purchase when you bought them?
I always like the way Prof. Benjamin Graham referred to any investment as “a stock operation”. Today, we are reminded by our brokers to meet the 30/trades per month and you’ll get trades for $7.95 each! Trading should be much more formal and planned. Write down your rational for a purchase when you buy it, along with your exit strategy. Check back often and see if it still makes sense. Sounds too formal and time consuming, but I write-up every trade I make now. If I’m wrong, (which doesn’t happen nearly as often as it used to!), I’m usually comforted to see the research behind a trade, and I learn something for next time.
* If a company made sense to buy at price x, it should still make sense at price x/3, or whatever.
That doesn’t mean hold a stock at any price. Getting out of a trade/investment at a loss limit still might be advisable if that was part of the model you used (easy to say now, I know). But if you bought properly, you should be able to see gains over the time period you intend to hold the position.
I’m not the wisest or most experienced person here, but I’ve not seen markets like this in 20 years or so I’ve cared enough to notice. Also too, the majority of people out there either don’t like or don’t think mining stocks will ever go anywhere (a good thing…someone needs to remain a buyer). And, many companies only currently list only the TSX and no US indices, which can limit the volume. I think we’ll see that as physical metals create their own market separate from paper, good mining companies today will go from cents to dollars per share. At some point then, many will list on US indices where larger funds (who often cannot buy stock below certain prices like $5 or $10/share) will be able to move the markets.
My model is to buy the best companies today as value investments, and hold for at least 5 years. I like technicals to look for entry points, but the values today for many…even if you already held them down…are unbelievable. If you bought well, they will go back up.
I had thought gold would be well over $2k by Dec 2011. But I had also felt that the Fed and EU would not let their fiats go down without a fight, predicting at one point that we could see the status quo as long as 2020 before full-blown fiat collapse, though I think I’d move that up to 2015-18 now. Note that isn’t a prediction of when, but the longest-term possibility of how long it might take to see your mining shares really pay back. Much as we’d like, we don’t have a right to make 10-baggers by next June. Speaking in technical terms, I think the run-up and run-down of the prices of many good companies from August 2010 until today has formed the left shoulder of a much bigger head-and-shoulder pattern, or, the beginning wave 1 of a long, secular Elliot Wave super cycle in mining stocks. I’m looking ahead here, so it’s hard to predict the pattern. If no one was buying physical, I’d be worried. But the opposite is true. Good companies are going to do extremely well in the next few years.
John- great advice, and I especially like your last paragraph. My thoughts had been running in the same pattern, though I could not foresee getting as far as 2020 before the “end”. So where you had a five year plan, I had a 3- 5 year plan. Perhaps we are still right and time will tell. I won’t go in to too much detail on my strategy, but the missing component has been profit taking along the way. Roger alludes to that below. Glum as I may be, I’m hard pressed to sell well managed companies at such low valuations here, but having missed the ” selling opportunity ” in April, I have little powder to keep dry for buying at these levels. Rick Rule said in april that the market had blessed him with a profit, and he was acquiescing. In retrospect, it was a valuable lesson.
God bless all, and best for the “holidaze”!
martin,
Thanks…Rick Rule and Mickey Fulp are real ‘brains’…I’m sure they’ve been through some of these kinds of markets, which is how they became so wise. Although we all know the “your investments are your responsibility” disclaimer, I’d hate to see anyone crystalize a loss when they’re so close to seeing the opposite. There’s a good chance this will happen in 2012, but even if it takes longer, PM’s and those who mine them are going to have a hey-day. The ECB and EFSF tricks are ridiculous. I think that matter will reconcile in 2012…badly.
God Bless, Merry Christmas.
I remember Tom as a canirg, compassionate, irreverent person. He loved pottery, baking, and travel. He eagerly shared his travels to China as well as techniques for a new glaze. I remember his pumpkin cheese cake (and he shared the recipe and I make it for Thanksgiving) and tri-color Italian cookies. Sometimes he wielded the torch in order to put together several pieces of pottery without having to wait a week for them to get leather hard.
We all know the story of Christmas, let us not forget to be humble and be forgiving and give thanks for being created. We all come into life with what God gave us and we leave with what we take with us, rarely do we give thanks for the first and all to often are we dead wrong about the latter.
Amen to that Clay.
I noted the other day you mentioned living in SW Oregon. Just drove through that part of your beautiful state. You wouldn’t happen to be in the Brookings area would you? Have a good friend there.
Martin is correct on taking profits. We are not proponents of buy and hold but would rather be traders. Note: In reading Anna’s comments she sounds like a pro techie or is getting close. I suspect Miss Anna is one smart cookie? – Traderrog
Hi Martin and Clay,
My fellow feelings with both of you.
I try to sieve all the informations/comments by elimitating definitely without mercy one “expert” wrong advice made in the past. Now, you can imagine that quiet a few ones are on my “experts” list. Their advices are trends to follow. You must take the time to digest all the informative sources you read and hear and after that, the most diffcult part, is to take the right decision. In my case I must say that I´m learning by doing every single day and sometimes I must admit I´ve taken the wrong path and made very painful mistakes.
I would like to share my view of the market trend for the PMs (if I am still welcome), to bring 15 years of active investment experience and hope not be contra-productive in this blog.
P.S. In Europe we are sitting on a ticking nuclear bomb. We are so broke… how is it possible to maintain all these nuclear plants in the future?
“I would like to share my view of the market trend for the PMs (if I am still welcome), to bring 15 years of active investment experience and hope not be contra-productive in this blog.”
Anna,
You can certainly keep posting by me!
PS You don’t want to say “contra-productive”. Sounds like you might be fundraising dark-ops for the CIA.
Once again, a good analysis; am somewhat anxiously awaiting for the necessary 30 day requirement to expire………………….hoping things will be sideways or lower; am in for the long term………….