Friday, July 29, 2011

What else will they discuss?

9:54 am (Hawaii) SGS pointed out that the heads of fed are being called in for a meeting with their pimps (banksters) tonight. Can't say it's an "emergency" meeting considering all the hoopla with the unofficially bankrupt state of our state. With a few minutes left before the closing bell, I might be better served to acquire some "protection" against a debt ceiling decision (compromise, agreement, delay, etc) by re-opening a ZSL position. Or maybe some FAS if the market erupts on that "positive" news. Or some FAZ if I really believe a decision won't come until Monday at the earliest. Heck, they can't even get all this voting done by the House, Senate, etc. (including actual voting on a bill) by Tuesday.

Looks more and more like Obama will pull an Executive Order to get this done before shit hits the fan. He's taken a lot of crap lately, but in reality, the Repubs won't even listen to him. So he's stepped back, nothing really concrete has occurred, and after another day or two of this foolishness, he'll put a stop-gap measure in by EO. That will appease the market for a few weeks, days or hours.

Metals will sell off. Or will they? Too much thinking, too much analysis can cause paralysis. I'm holding DGP and XG, as well as GSVC.

Update 10:00 am (Hawaii) I re-opened a small position in ZSL (13.46). Added a bit of GSVC at 16.00.

ZSL, for me, is a stabilizer. I'm long physical silver with no paper silver (for now). It is going to end up at 50 and higher soon enough. But it will sell off with any significant progress by Congress and the White House this weekend. So, once again, when silver declines, I'll make a little profit off ZSL and use those proceeds to buy more physical silver. Yes, I like shiny metal that can gain in value by just being nothing more than itself. In our current environment, there are almost no scenarios that send gold and silver lower. The Fed and Treasury are in no position to stop printing dollars.

As for GSVC, I surmised a few weeks back during its second liftoff (to near 20) that it could pull back 50% on its gains to 15.55. I lost patience, chased at 19+, bought more at 17+, both with very small amounts. I missed today's early drop to 15.00. (Yes, I sleep through the early morning sometimes.) I added a few more shares at the close today at 16.00. Not quite the perfect catch, but I'm not swinging for home runs either. Long term, GSVC grows as Facebook monetizes to the nth degree and eventually goes public. Even if we have catastrophe this weekend and next week and the market crashes, I'm not selling GSVC because my position is small enough to absorb temporary paper losses without significant pain. I'd be happy to add in the 15s, 13s, even 10s.

Note: Maria looks great with the wind (outdoor) blowing through her hair.

Indices all in the red at the close. DJ -96.87 to 12,143.24 (-0.8%). Nas -9.87 to 2,756.38 (-0.36%). S&P -8.39 to 1,292.28 (-0.65%).

I would not be shocked by a crash in the coming week. I don't expect one, but even if the mercenaries in Washington get something together to avoid disaster, I tend to agree with Scott Blier that there is the possibility of a selloff on the news to come. I'd put that at 15-20%, so I'm not overly concerned. Aware, not worried.

Interesting that the miners stayed negative today while XG closed near its high (12.83, +0.25, +2% after hours). Spot Gold's major move today above 1625 — as forecasted by Brother Turd Ferguson — pushed DGP up 1.2% to 54.24 (after hours).

I know some traders are interested in jumping back on the AGQ express, and it's tempting. But it isn't showing the kind of action that it would if the engines were warming up and the tank was fueled up. After opening today at 218, it is now 212.80. Again, there are a lot of buyers waiting on the sideline, anticipating a selloff with a catalyst in Washington. But I have to wonder if this lack of buying will lead to a lack of selling in silver come Monday or Tuesday.

Once the market takes off, silver bugs will wonder when to re-enter the paper trade. And once the market melt-up slows, the reality of a countdown to a REAL debt crisis meltdown will ensue. And that's when gold will take off even higher, and silver will be gobbled up by thirsty, hungry citizens.

On Sunday, five days ago, I waited at my computer as the Asian market was about ready to open. Buy silver here? Or wait for a selloff? Gold? I bought more physical silver and held off on gold. Gold has gone from 1600 to 1626 (at this moment). Silver has gone from 40.17 to 39.87. Buying phsyical silver was not a bad decision. I like the concept of averaging in, though I'm not against enormous grabs. I had to deal with the possibilities in my head. I did what was best in my analysis.

Sure, I could have bought more gold on Sunday, and I could add more this weekend. But it is clearly toppy and a selloff would hit gold harder than silver at this point. As gurus like Turd have pointed out, there is far less speculation in silver now — a direct result of the five margin requirement hikes by the CME mafia — and the byproduct is less volatility than before. The $4-5 swings are nonexistent now.

Chance of buying more physical silver this weekend: Strong (80%)
Chance of buying more paper silver (bull) today (after hours): Weak (5%)
Chance of buying more paper silver (bear) today (after hours): Weak (20%) (already bought some ZSL today)

Chance of buying more physical gold this weekend: Fair (60%)
Chance of buying more paper gold (bull) today (after hours): Moderate (20%)
Chance of buying more paper gold (bear) today (after hours): Moderate (10%)
Chance of selling paper gold (bull) today (after hours): Weak (5%)

At a time when it makes sense to be 100% cash, which I have been for most of this year, I am 40% in paper. I'm 45% cash and 15% physical.

I expect spot prices to decrease in the coming week, possibly by Monday. I will be prepared to add more physical silver and sell my small ZSL position at that point. If gold sells off, I'll be ready to add more physical. I won't add more XG (no more miners). In a short-term meltup, I like AAPL and BIDU. Small-float babies like GSVC might become toys for daytraders again.

Near term, the sanest approach is limited paper and maximum cash. Long term, cash is not king unless you enjoy watching hungry termites eat your hard-earned dollars for breakfast, lunch and dinner.


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