Drill and win?

2:29 am (Hawaii) For what it's worth, Tanzanian Royalty Exploration Corp. announced its review of drilling results in Australia. See details here. What's interesting is this: TRE hasn't traded a share in premarket yet, but is priced 50¢ higher at 7.64.

One small morsel at a time

4:35 am (Hawaii) The sky is black and hungry baby birds are starting to sing. The air is cool and the early morning has brought no rain, no humidity ... just a pleasant and cool, and quiet, time of day. Maybe the best time of day, all things considered, in this pit of traffic and overcrowding. Yes, Honolulu is still picturesque. It just ain't what it used to be. Sometimes, you just can't go back.

I have yet to turn on the TV, being satisfied with my place in bed and the aforementioned solitude. But the indices are down due to abysmal manufacturing numbers. Senor Turd notes that this shouldn't be any kind of surprise to the market, but one result is that gold shot up 10 bucks.

That's good for my small portion of DGP (+1.1%), bad for most of my Metals list. At one point after the opening bell, 78% were in the red. Now it's only 71%. ZSL and FAZ have taken turns leading the way. FAZ was at 44.14, dropped to 43.85 and I thought maybe a rally was underway. But really, there is no rally coming this morning because there just isn't any good news for now. So FAZ is now up to 44.32.

Gold is hanging in there. NGD is up a half percent, GLD is fractionally higher, and even PALL is still green. But DUST, the gold miner 2x bear, is still up 0.8%. It's tough sledding for gold plays today. It's much rougher on silver plays. ZSL is up 2.6% while AGQ struggles to stay above 200. AG, EXK, SLV are all down. So much for slightly bullish hammers on yesterday's charts. Just goes to show, technicals mean nothing in the face of economic thresholds.

Rare metals (MCP, AVL) are being hammered, as is LNKD, which is now below 79 (-3.5%).

The one, buoyant leader is AAPL, which is up 2.3% to 350. It was at 337 yesterday early, then sat at 343 for hours after the news about next week's presentation featuring Steve Jobs. AAPL closed above 347, then traded today above 352. Major show of strength. Question is whether it can sustain this move while the rest of the market is in the red. Though my metals list is bleeding, my regular watch list (non-metals) is 76% red.

Update 4:53 am (Hawaii) FAZ now 44.55. It appears not everyone in Greece is geeked up about austerity measures. Still. Once again, Euro possessors seek refuge in gold.

AP: Greek banker dismisses euro exit as review looms (June 1 2011)

Reuters: Stocks fall as manufacturing slows (June 1 2011)

Turd: ADP vs. BLS (June 1 2011)

Update 5:16 am (Hawaii) This would be known as a Viagra.

This, even more so.

Update 5:33 am (Hawaii) Metals list is now 56% green. That was quick. Most silver plays went straight up, lower left to the upper right of their charts, in the past 30 minutes or so. Many of them are green now, or close to it. This is a daytrader's joy ride.

It's called a Sweet Spot

11:58 am (Hawaii) Right now, Extorre Gold Mines is in a sweet spot. They're a young company, an offshoot, actually, of a larger mining corporation. They mine only in Argentina, but the lode is motherlicious. They have (seemingly) transparent leadership and communication, reporting the news of each new minute in a smooth, aesthetically pleasing stream of video that hits the internet every two weeks or so.

Not coincidentally, perhaps, a new XG video hit the air yesterday, and today, more news about the busy new mine (Cerro Moro) was released. (This vein was first reported last year.) On a day when Spot Gold was flat to lower, XG ranged higher to 12.00 before pulling back on a near-perfect 50% retrace. 50% is not an ideal retrace; the classic 38.2% retrace (Fibonacci) would be preferred, but in a sector that was somewhat flat, 50 is acceptable. I got out and I'll look for another entry point. 11.30 or so would've been sufficient, and XG closed at 11.42. If gold miners flatten out, I'll be waiting for another opportunity at a lower price. More than anything else, miners are about price. They don't fluctuate forever upward or lower. It's a matter of managing emotion and sticking hard to price points, much like buying physical.

Here's the man, Yale Simpson, talking about Extorre Gold Mines.

X marks the spot

3;57 am (Hawaii) I got in XG on Friday at 10.67 and out at 11.79 this morning. Might have gotten out sooner (and closer to 12.00), but this stomachache and my consequent preference to trade from bed got the better of me. Couldn't get the wireless to work for a few minutes. Not a bad profit ($550) for a small position. I don't know if the stomach ailment has anything to do with anxiety or what. But it's starting to go away, if that's a hint. Still have a small position in DGP with no expectations of a big move either way right now, but you never know.

From what I saw before the opening bell, silver and gold spot were ragged all up and down. Best to sit tight rather than get spooked out (or in) by the puppetmasters.

XG continues to market its good news so well. I admire that company and its smooth (slick?) delivery of news. But I'm glad I got out on the pop, which came on news about the new mine. XG already down to 11.28, still up 6%, but well off its high of 12%.

Golden armor

10:03 am (Hawaii) Opened a partial position on XG at 10.73. If it slips to 10.43 or so, I may add a few more shares. I'm expecting a gradual gain in Spot Gold this week with so much uncertainty in Europe and so much bullishness on PMs in China and other global markets. Unlike Gold, Spot Silver is not QE-proof, and until there is evidence of more POMO funds going into the market, silver will diminish gradually with the equity market ... unless today's Shanghai news is just the tip of the iceberg.

I'm not hoping (well, yes I am) that the news (and anticipation) of Shanghai's silver futures market (due to open in December) will send the spot price to the moon. I'm hoping that we get more consistently higher prices that will counter any CME Mafia attacks. I do NOT believe in using margin, but I am NOT against it either. Free markets should allow leverage as long as borrowers make good on their debts. Goes both ways, so more power to the borrower and hopefully he doesn't get blasted when volatility hits. (And those of you who rely on leverage, you know anything that is overhyped is going to be too good to be true; nothing is an automatic home run.)

So, 1. I don't expect Hong Kong gold futures or Shanghai silver futures to kick spot gold to 2000 or spot silver to 50 (or 100), but 2. I do hope that these additions will keep the market stable without losing volatility that traders like me want to play in. Otherwise, I'm staying in cash.

Imagine tens or hundreds of millions of Chinese citizens trading paper gold and silver ... while also owning a ton of physical silver and gold. The central bank there could pull a mafia move with major margin requirement changes on any spot peak price ... but just getting to that peak would be astronomical in height and speed.

The Australian: Chinese demand keeps gold soaring (May 23 2011)

Forbes: You should know what the People's Bank of China is up to (May 23 2011)

ETF Daily News: Will the gold bubble burst or is it buying time? (May 23 2011)

Larry Edelson: "I expect silver support ($32) to soon give way" (May 23 2011)

(video) Tony Segami: Dumpster diving for Japanese bargains (May 21 2011)

(video) Tony Segami: A tale of two central bankers (Apr 9 2011)

Update 11:25 am (Hawaii) Dennis Gartman on the euro and gold during Fast Money:

"Absolutely, I've said it for months and months and months. You want to own gold but predicated in non-US dollar terms. You want to own gold in euro terms. You want to own gold in sterling terms. You want to own gold in Swiss franc terms., and if you take a look at it, even if gold in US dollar terms is not making new highs, gold in euro terms today made new highs. Gold in sterling is making new highs. Much more impressive to be long of the gold market in euro terms, in sterling terms, in Swiss franc terms. I was impressed today that gold traded higher on the day. Even in US dollar terms, as crude oil was down at one time 3 dollars, and most commodities were going down. ... People are moving out of the euro and they're moving into gold as the other currency. It's a very logical trade."

Update 1:17 pm (Hawaii) A few thoughts from James Turk via King World News:

“I think this summer is going to surprise a lot of people. Many are thinking this is going to be another typical summer where precious metals prices are weak, but it doesn’t always happen that way Eric. Sentiment is set up this way because it has been 29 years since we have seen a big rally in the summer. Back in 1982, the Mexican debt default lit a fire under the precious metals and the gold price nearly doubled over the next six months.”

I noted the other day that Spot Gold has meandered in the past two summers before spiking up later in 2009 and '10. But things are different now, aren't they?

King World News: James Turk interview (May 23 2011)

Update 1:45 pm (Hawaii) Hugo Salinas Price interview with James Turk back in February.

Update 3:28 pm (Hawaii) Some stuff I watched and read this afternoon while procrastinating. Spot Gold is climbing, now 1518 with Hong Kong open. Spot Silver up, too, now 35.14.

Dan Norcini: Gold strength in euro and British pound terms firming up (May 23 2011)

Chris Martenson: John Rubino interview

(video) H1INC: Why you can't crash JP Morgan by buying silver (May 13 2011)

Sean Brodnick: The golden bottom (May 20 2011)

Daily Bell: Hugo Salinas Price on the nature of money (May 23 2010)

Don't cry for me, Argentina

9:42 am (Hawaii) XG finally pulling back from enormous new high (11.26). XG was at 9 last week, and when I eyeballed it on Thursday, was in the 9.50 area. I still didn't pull the trigger like I wanted on Friday, though I was bullish enough on gold to get a little bit of physical.

From Friday's closing price (10.17) to today's high (11.26), XG is now 10.76. It has already retraced 50% after touching 10.72 a few minutes ago. Interesting level. Sure, maybe Brian Kelly is right and the Fed will roll out some press conference news that will stabilize the Euro, etc. Maybe gold will cool off tomorrow. But overall, there is no real happy solution for Greece and the PIIGS and the US currency crumble-thon.

That's what makes XG compelling in a strong market for the yellow metal, especially with the rest of the market generally in the red. All three indices are more than 1% down after rallying a bit earlier. I'm inclined to wait this out and let XG drop more, but a partial position might be a proper approach. Extorre's execution in Argentina the past several months have been very good. In fact, with a fourth mine on tap, the price may stall out here. The $2 move in the past two sessions means a stall-out could result in normal profit-taking and a move back to 10.50, so there's no rush to to all in.

And there goes XG ... now at 10.66. By the closing bell, this could be at 10.40. I will wait and watch. Still 100% cash.

Posted this video last week, but worth watching again. This is exploration success and marketing at its finest. No hype, just facts presented in a fluid, informative fashion.

Update 9:55 am (Hawaii) From Thursday's close in XG of 9.60 to today's high of 11.26, a 50% retrace is 10.43. Not a strong or overly bullish sign when anything gives up 50% of its gain, but not bearish either, of course. A retrace of 31.8% and no lower would tell me this is still on fire. XG came down to 10.66 a few minutes ago and is holding ground there (10.73). Tough call.

Weekend library

12:04 am (Hawaii) Mostly new stuff, but the piece at Fortune about JP Morgan, Afghanistan, gold mines, almost no infrastructure, poverty and the relationship between Western and Afghan interests ... a tremendously great, if long, read that I'm enjoying. I'm reposting the link. That's how good it is.

Fortune: JP Morgan's hunt for Afghan gold (May 11 2011)
PBS: Munarriz on Liberty Media, Barnes & Noble (he thinks its dumb) (May 20 2011)

(video) China, Russia to trade non-dollars for Saudi crude? (May 20 2011)

AP: Once bullish, contrarian Jim Grant likes cash now (May 22 2011)

From May of 2010

Good digs plus marketing

3:15 pm (Hawaii) I don't know jack about mining, but I confess I am always entertained by the PR videos put out by Extorre Gold Mines (XG). Maybe there are a lot of other small miners with this kind of recent drilling success, but I don't know of them. XG has new videos quite often. It's good marketing. I don't own a share, but that could change. XG has been up two days in a row since Monday's news.

Soaring over hump day

11:06 am (Hawaii) Nasdaq up 1.1% today. S&P 500 up 0.9% and Dow up 0.65%. My Metals List is 72% green and still active after hours. XG with a huge 12.6% move out of the blue. I hate it when my favorite metal stocks move without me. Gold and silver plays moved well. GPL (3.04, +8.9%), AGQ 173.29 (+7.3%), EXK 8.89 (+6.2%), UCO 48.06 (+5.1%), SVM 10.50 (+4.8%), AG 17.73 (+4.5%). Just a lot of miners on the big-plus size, but is this based on a dead-cat bounce or fundamentals? Does it matter.

Not really. For silver fanatics, best that the sector rallies modestly each day than with huge swoops higher, lest the CME Mafia bust all kneecaps again. With margin requirements as is, plus the fear of CME built into the collective big brain of retail and hedgies, I'm not expecting a crazy fast move by metals.

AAPL up 1.2% to 340.09. It was below 331 yesterday and Karen Finerman on Fast Money said she bought in. I still love AAPL. It's the one stock I have a crush on. But volume today was relatively light, so I'm not in. Yet.

Made a late-day trade in AGQ (after waking up). In at 172.33, out at 171.66. Naturally, AGQ rode higher and got back to 173.50 or so after hours. I don't regret cutting the trade with a tiny loss. There will be more opportunities.

Update 11:35 am (Hawaii) XG is up more than 9% after hours, but there is no news anywhere. The news that did affect the stock was out Monday and Tuesday. On Monday, end-of-Q1 holdings showed that hedgie Eric Sprott allocated a new stake in XG, among other miners.

Sprott can say Spot Silver is going to $100/oz and convince most people that he's bullish as ever, but you can't fault the guy for playing the market. He sold a chunk of PSLV shares recently to acquire more physical, or that's what he said publicly. I believe him. I'd do the same.

Gold is going to run, probably not bigbig, but it's overdue, and demand is not waning among central banks globally. Even with a delay in QE3, gold will be more stable than most plays (other than cash). Kick start QE3 and silver will vroom up again, with gold in the sidecar churning higher, as well. That's my guess.

But what made XG move from 9.46 (today's close) to 10.36 after hours? News of approval for a mine development at Cerro Moro was positive, but that news was out yesterday (Tuesday).

Sprott: New stake in XG (May 16 2011)

Marketwire: Extorre receives approval for Cerro Moro (May 17 2011)

Update 12:56 pm (Hawaii) The afterhours price of XG has been fixed and is now back to 9.46. Glad that was straightened out!