Saturday, September 3, 2011

A few shovelfuls of horseshit from its greatest purveyor


I do love putting the boots to ZeroHedge. But at the same time, it's fun to see what the doomsaying idiots are prattling on about.

Here's a few interesting articles from today:

Wikileaks Discloses The Reason(s) Behind China's Shadow Gold Buying Spree - laughingly, they also quote Casey Research. At the same time, though, there's this interesting passage:

The market cap of the entire sector of gold stocks (producers only) is about $234 billion.... Its market cap would double if pension institutions allocated just 1.2% of their assets to it.

Then there was this article, that also looked interesting:

Game Over? Senior IMF Official - "I Expect A Hard Greek Default This Year" - with the suggestion that two Swiss banks will collapse when Greece geht alles auskablooey.

As Nietzsche says: "even when the mouth lies, the way it looks still speaks the truth."

The importance of pullbacks


First, some sarcasm.

Here is a graphical depiction of gold's action over the past month or so.



Remember? It broke its upward channel. It "went parabolic". "Parabolic", from a linguistic perspective, is a backhanded compliment - sort of like an Englishman saying "well, that's an interesting idea". "Parabolic" means gold was in a "bubble".

So, everyone in the MSM started saying "blah blah bubble blah blah gold blah blah bubble".

Then you had a couple days where gold collapsed over 5% a day.

So the MSM switched to saying "WE TOLD YOU SO NYAH NYAH". They were obviously proven right, gold was teh bubble after all, and it was now only a matter of time before it crashed back down to $300 as the glut of shitty Sacajawea coins from disconsolate ex-survivalists hit the market. Soon ZeroHedge would be an empty wasteland. Like LiveJournal.

So...

Then what happened?


(I apologize for using Otto's trademarked Senor Owly, but we just don't see enough of him. I'm pretty sure that Otto's also has maracas, anyway. I prefer the one with maracas, but couldn't find it on Google.)

Apparently, now gold has pretty much gained back everything it had lost. Now it's returned to nearly the same upward slope as it was on before, when it was "parabolic" and "the last stages of a bubble".

But this little correction produces an important psychological change in the market. The old "gold parabolic bubble neener neener" narrative has been slightly discredited now. The little week-long gold headfake has made people more likely to believe that gold could revisit $1900, instead of $1200. Or even go higher.

Take shit away from people and you make them pay attention. Once they are paying attention, they start to fixate. That's recency effect. The concept of $300 gold loses just a little weight, while $1900 gold gains weight, in our little mental calculation of possible ultimate price targets.

If we soon see gold miners getting revalued for $1900 gold, instead of the $1200 gold that people like Tom Lydon say is normal for analysts, it might be because of this little August price action. After all, the bearish narrative has lost some face, while the bullish narrative has been reinforced.

As for the top-callers? That is, if you can still find any of them?


Friday, September 2, 2011

Tom Lydon from ETF Trends

Tom Lydon from ETF Trends gets interviewed by some hot blonde chick on CNBC about gold stocks.



So now that gold stocks are being pumped on CNBC, I guess Gary Tanashian will be one hell of a lot more worried.

Barron's on the gold miner breakout

Article at Barron's: Gold Miners ETF Stages Breakout; Market Preparing For QE3?

I have some problems with it. For example, the suggestion is that gold is going up because both inflation (QE3) and deflation (new recession) are bullish for gold.

Horseshit. Gold is going up because the European elite are scared their banking system and currency are going to collapse, and so gold has gone up the way the Swiss Franc or Treasurys have gone up.

However, I'd agree that maybe the news about AuRico and Northgate merging would be bullish for the actual miners.

More likely though, the elite have figured out that gold miners have a license to print money.

A few days earlier, Coleman at Barron's wrote another article about how anal ysts at BMO and RBC (they're Canadian bankers dontcha know, so they wear the stupid blue shirts with their crappy suits) are flagging gold stocks as having the most upside they've had in ages - valuations have not at all kept up with margins.

HUI - left a gap darn it

I predict that a chartie such as Gary Tanashian will point out, first thing, when examining HUI's action of today, that it left a gap from 609-611 that needs to be filled.

So if you adhere to GT's free candy past 610 thesis, there probably isn't that much need to bet the house right now. A bluesky move like this should probably produce a retrace.

At the same time I bought some Atac today thinking it was worth owning. I look at Sabina and see it's not moving the way GPR and FVI are (boy just wait til Otto gets a chance to gloat over this one). I might want some Silver Wheaton.

I might try to get back in on the FVI, but then again I already made some money on it and am exposed to some other stocks that hopefully will move fast soon anyway.

There's no point in looking on in longing as a stock you don't own begins a strong advance... not if you already own a lot of others that you can't force yourself to sell. Like, if you're banging Sarah Silverman it's silly to wish you also had Mia Kirshner.

very uick cos GT's said nothing yet

$HUI 610 has been broken through with conviction.

That means a new high. SIL is also looking strong.

Buy everything, the goldbug gods are handing out candy.

Friday videos - the rare ones always seem to have spanish subtitles for some strange reason edition

Spent frickin' hours trying to track down a real video for the Cure's "Charlotte Sometimes" instead of yet another shitty live performance with the keyboards played all wrong.

And yet again, when I finally track down this rarity, it's got Spanish subtitles. I really really really am not trying to post things with Spanish subtitles, it just always seems to happen.

Anyway, here's Los Cure:



Here. I'll prove it to you. I'll go search for a video by Mark E. Smith's drinking buddy's band.

...

OK, here it is, a good video of Los Joy Division doing "She's Lost Control". With Spanish subtitles.



And "Transmission"?



Weeeeird.

Okay, how about Los Xmal Deutschland?



OK, no subtitles for Xmal Deutschland.

How about Los Wire?



OK, they haven't gotten to subtitling Wire yet either. Speaking of which, you'd think a German audience would have a little more frickin' life to it. Whatever.

Thursday, September 1, 2011

UPDATE: The Friday video post before the friday video post

Try to figure out what the hell is going on here.



I will post the answer Friday night maybe if anyone wants it.

UPDATE:

Okay, here's the story. It's a 6 minute commercial for "Kokoro Scan", a Nintendo DS doohickey that essentially acts as a voice analyzer... or something.

Here's the same video with English subtitles.



I still have no idea what the bear's doing in it, or what that blurry thing at 3:08 is. But yes, just actually watch the video with the subtitles and everything will become clear and less strange.

I just think it's the prettiest song in the whole world.

Wednesday, August 31, 2011

status update

I'm on the road all day Thursday, and am probably busy Friday.

$HUI looks toppy, and some stocks (BTO, GUY) are showing price weakness. Because of that, I dumped my FVI for a $2100 profit and some cashing up (had to take something this week, I hadn't earned any money yet). Frankly, FVI dropping back under $6 was the bit that convinced me to take that action.

If the miners fool me and burst over 610 tomorrow, well... too bad for me, I guess. I'd rather have the cash cos I still feel $HUI is toppy. The GDXJ and SIL seem to be outperforming $HUI in fact, which makes it feel very "late stages" for me.

I'm still in the market by a fair amount, persuaded to still hold the garbage stocks (GPR and BCM) due to their continuing strength (relative to a few weeks ago anyway). But cash is always good, in case we get even just a little drop and some weakness in a few stocks.

GOZ and RIO still look good to me right now, though, as do a few others who have upcoming news.

Tuesday, August 30, 2011

My take on Rio Alto

Rio Alto moved up on very little volume today.

Oh, so that means this move was unconvincing?

Not really. Lot of people wanted to buy, but pretty much nobody was selling at today's prices. And the buyers were too sissy to pay a premium to buy the stock.

And I guess nobody wants to sell because RIO's going to come out with their first production numbers from La Arena in just a couple days. It'd be dumb to dump this stock when they're about to announce all the money they're making.

Days like today make me happy to hold 30% of my money in RIO.


tooearly on Hussman

So, Hussman's fund made a couple percent over the last month, eh?

That's because he's a permabear. So yes, he makes a small profit in down markets. Not much though.


And as this chart shows, he utterly failed to make any profit whatsoever during the previous huge bull move. In fact, he took a 12% loss during a 30% upmove.

Rule One is, "does it make a profit?". He fails Rule One. He thus is an utter failure as a money manager. That's not my opinion, that's objective fact. The trick is not to be right someday; the trick is to be right regularly. ESPECIALLY when you're managing other people's money. It's perfectly acceptable to sometimes be bearish; in fact, every investment strategy is perfectly acceptable; but only when it's the right time for it.

David Borowitz

Also just recently stumbled across David Borowitz's blog. On first glance it seems like he should be writing for the Onion.

Here's a sample article, with an economics slant:

Manufacturers of Downward Arrows Post Record Profits

Others are funny too. Go read.

oh noes! what just happened?

If you look at today's chart just before noon, you'll see silver just dove.

I've gotten used to this. When this happens, I look at gold for confirmation, and I looks at crappy silvers (BCM, or lately SBB) for confirmation.

It has become apparent to me that when you see no confirmation in either, it's just a raid on the stops.

So then you go to Kitco. Oh wow, the drop stopped just below $41, eh? So "They"* raided the $41 stops.

So? Nothing to see here, move along.

* "They" can mean JP Morgan, The Lizard People, The Joos, Bohemian Grove, One-World Government, or whatever other conspiracy group you feel like blaming your own temporary stupid misfortune on today.

on gold versus gold stocks


Since about April, gold has steadily gone up, while the miners and pennycrappers have failed to keep up.

Now, if you take April as the start of the PDAC Curse Season, maybe this makes you feel hopeful. After all, gold miners should have positive leverage against gold! At the very least they should catch up to gold - and hopefully they should outperform gold. It's just that the PDAC Curse keeps the miners down all spring and summer. No big, right?

With $HUI again challenging 600 today, that is the hopeful interpretation of the near future. The best-case scenario.

Of course, if you lived through the silver bubble only a few months ago, you might retort that the miners could be showing a negative divergence to gold because nobody believes gold should stay above 1800. Well, that is the gloomy interpretation. If $HUI fails 600 yet again, and doesn't punch through into blue sky, maybe it's because gold is a short waiting to happen?

Anyway... my own personal interpretation of today's $HUI strength is that, with the AuRico and Hathor stuff going on, people are maybe waking up to the fact that, as with Septembers past, this might just be the start of buyout season.

And, speaking of gold stocks, why has Guyana Goldfields just shaken off its chains and taken off? Gold buyout season, perhaps?

And boy I'm happy I didn't dump any FVI after the recovery from last week's low. What the fuck, eh? Some technical analyst even called a $7.75 price target on that dog.


On the longer-term doom


I'm all for gold hitting $5000 an ounce and me becoming a multi-millionaire with a Bay-Bloor condo and a beautiful young Ukrainian wife who loves me and stuff.

At the same time, I know that the "demographic trend" behind the commodity bull market does have to end sometime. This ain't the first era in history that some cruddy third-world countries have begun to shine, giving hope for a future of limitless economic growth. The other times all ended badly, and so should this one.

I stopped reading him a long time ago, but just today stumbled across Michael Pettis again - I think he was linked to in a FT Alphaville post. His article, "Some Predictions for the Rest of the Decade", is definitely worth a read. This is all way-down-the-road stuff here, nothing immediately actionable; but if you feel, like me, that we can't make money forever, and if you also feel that Jim Rogers eventually has to be proven right and the commodity boom must crash horribly by around 2016 (and Rogers is after all the guy who owns the commodity market), then Pettis' article might just be the first thing you need to assemble a long-term plan.

It puts forward a good number of theories on 1) how exactly China can collapse, 2) how exactly the world economy will get out of this particular situation and into its next one, and even 3) how the American economy will blossom again. And as for (3), Rogers' theory does hold that after 16 years of commodity boom, you get a commodity crash - and then a 16-year bull market in equities. How the fuck do we accomplish THAT? Well, read Pettis.

After you read that, you might also want to read Automatic Earth's "Et tu, Commodities?". Now Automatic Earth is an extreme gold bear, and has lost quite a lot of credibility with me by calling the recent gold bull run over and the bubble already popped. But still, just like with that worthless twit Hussman, I still leave myself open to the idea that Automatic Earth will eventually be proven right - just with the caveat that no broken-record doomsayer has ever provided anyone with truly actionable information ever.


Monday, August 29, 2011

quick note about uneasiness

Just a quick note. $HUI is starting to suggest to me that it's toppy. Yes, I know, it looks strong today. But if you were a major pennyflipper (not just someone like me), I'd suggest dumping stuff and not holding unless/until $HUI breaks through some magical number like Gary's 610. Because the way it is, this is starting to resemble the topping pattern we saw in the $HUI back at the beginning of April.

The same pattern also showed up last December, and I think back in April I posted that the similarity that month was disconcerting. I ended up being proven right. This time? Maybe I'm proven wrong. But I'd say a $HUI 610 reading would be the only thing that would make me feel happier about the senior miners right now.

Sunday, August 28, 2011

Grandich and Hathor

Peter Grandich has had Hathor on his tracking list for a while. Now that it's being bought out, he's calling it a sell at the open on Monday morning.

Now, he's been in only since May, at $2.14, so maybe he's just happy to book an 85% profit and move on, instead of squeezing the last few pennies out of it.

This information is offered just in case you have an interest in Hathor at the open. Let's see how many Grandich followers hit the bid on Monday, eh?

Maybe he doesn't have any followers. Who knows.

Nolan Watson from Sandstorm on BNN

Last Thursday, Nolan Watson from Sandstorm got interviewed on BNN. Nice ten minute segment, go watch.


GT commentary this week


I'll keep this week's commentary on today's NFTRH very simple. Not because I have any problem with the hurricane - I'm far enough away that all we have is a pleasant cool east wind and an overcast sky. More because Gary was very succinct and to-the-point today.

Regarding Sabina:

Yeah, it's too bad that it took off right when GT suggested he was thinking of adding. However, it was just an assay release. To me, and I was watching the action in SBB all week, the NR is being sold into. We could still get GT's lower target sometime soon; I don't see why Sabina should be diving the way it is, but it's looked horridly weak compared to other silvers. At the very least we get a higher low around $4.60-$4.80. To me, SBB's not worth buying until its price action stops sucking.

Most of his other miner picks look beautiful in the charts. But see below.

On the PMs:

This is the big one.

I saw an interesting news release yesterday on Reuters. Two failing greek banks are going to merge, with the financial support of big rich money from Qatar.

I think this is an important new development. To me, the recent PM play was a rich-money flight-to-safety play, out of the European system generally (banks, sovereign debt, bank debt) and into t-bills, USD, CHF, JPY, and - strangely - gold, and - even more strangely - silver. This was the only explanation I could find that had solid empirical support - T-bill strength after the S&P downgrade, CHF skyrocketing, Yen skyrocketing, and gold and silver moving in what seemed to be the entirely wrong direction.

Now sure, to the best of my knowledge, Greece is still progressing towards default, Portugal isn't far behind, Spain and Italy are teetering on the precipice, and the bond vigilantes are still very interested in pushing everything along that path.

But when things look like they're only going to get worse, they can often get better first, right? Maybe this is a macro-economic version of a "dead cat bounce" for the financials? We're now getting Qatari intervention in the unfolding disaster. And this week we also had Buffett's intervention on the other side of the pond.

I still don't think there's a hope in hell of a positive outcome - except, maybe, if the rentier class can muster enough private money to scare away the bond vigilantes. And to me, that new source of doubt, about possible White Knights coming to save the day, might be enough to drag the financials back from the brink of disaster for a little while.

Why not, eh? Tell me, why would a bond vigilante not start to feel doubt, now that Buffett and Qatar are standing in the way of his endgame?

Still, I'm skeptical that the rich Europeans who have been putting their wealth into gold and silver bullion would move the money back out. Not right now. Stick some of your money in gold bullion and it picks up a hell of a lot of inertia. But, if you can see some constructive moves in sovereign debt and/or bank CDSes, this might bring about some slight financials market recovery. T-bill yields will go down (as Grandich said, the 10-year was a screaming short below 2%, and his timing is usually spot-on). Then inflation expectations pick up. Then commodities pick up. Then Otto breathes a sigh of relief as copper backs away from $4.

(Speaking of which - the workers at Grasberg are going back on strike.)

If gold truly is a leveraged play on the real yield, it'll suffer downward pressure for the next little while. Not too much, though, because of the bullion inertia thing.

I'm saying all this because I think if $HUI fails to maintain its 570-610 over the next few weeks and dives back to 500-550, the above will be the only possible fundamentals-based explanation.

Does silver outperform gold in this case? I dunno... does anyone still treat silver as a pro-inflation, industrial play? If so, then silver should remain strong as gold falls. We'll have to see. You'd expect GSR to drop in this type of "hopeful" scenario, no?

Broad markets:

The above chat on gold gives you the only way I can see right now for the broad markets to at least re-test their necklines.

As GT noted, market sentiment is brutally bearish, and for a contrarian that makes the near future bullish. Guy Lerner has his own sentiment trading system, which you should check out - and he notes this week that market sentiment is extremely bearish, which should provide a very good market rebound.

(Or not, of course - market sentiment can often be correct, such as when the market starts diving and doesn't stop. I don't think we're there right now - as I said, new information has come into play which might prove to be emotionally supportive in the near term. But it'll take a week for the new positive outlook to filter down from the halls of power to the trading classes.)

The further future:

I guess the lesson from this week, if it plays out with a financials rebound and a fading of the trumpet of doom in Europe, is that things can happen all of a sudden that change sentiment and give hope.

But personally I think the doom horse has left the barn. There still needs to be a banking system collapse in Europe, and sovereign debt default and expulsion of Greece, and at least a bit of contagion spread to the US, before the future can be said to look better than the present.

Still, in the short-term (weeks? months?), I suspect we'll see a broad market rebound. It might not get further than the H&S neckline (though GT has pointed out on his blog that, at least in some markets, the H&S was already tested and failed).

Caveats:

It remains to be seen if the rebound weakens gold.

It remains to be seen if weakness in gold also weakens the major golds - $HUI/GDX.

It remains to be seen if weakness in gold makes GDXJ, GLDX, and/or SIL paint lower lows - which hasn't yet happened, though the charts generally look like a bowl of suck.

It remains to be seen if weakness in PM indices also weakens any of the stocks you might be holding at this point in time.

That's my very tangential take on NFTRH for this week. I'd be happy to get any comments or criticisms.

Side note:

I still am just some guy posting crap on a blog. At the same time, I find the whole "posting with humility" thing to be chickenshit. If I think I'm right I should say things with conviction, and if I don't think I'm right then I should shut up and get the fuck off of the internet.

Basically, I'm open to any sort of disproof of my theory - I have to be, because I want to stay limber and reposition myself when the preponderance of evidence tells me I should. But I'm not going to be some sort of fucking sissy and go all mealy-mouthed, either.