Investment Theories, Gold and Silver, Cro Magnon Winners, Genius Losers

I've been looking at some charts for gold and silver all week. I don't get into specifics, other than I like to look at the standard patterns, primarily double bottoms in stocks for a floor or short term resistance levels for metals. Charting I think- is far more significant for short term traders and people playing with time sensitive options and futures contracts. Since I tend to be a long term investor and have exited options, I am not too concerned with daily fluctuations. Having said that, I am strongly considering getting back into options, which is why I have been paying close attention to gold and silver charts. Let me meander just a bit here to illustrate a point.

I never take a position or bet without asking one simple question. What am I hoping to achieve?

Having said that, I am going to let you in on a secret of mine. I nearly always make trifecta plays at the horse racing track. I put together exotic wheels that always allow huge scores. I key live longshots in all three positions and I build 36 dollar wheels. I look for very contentious races where almost anything can win. The more confused the betting public is- the better off I am. If you habitually key favorites on the top of trifectas, I can almost guarantee this will be an excellent strategy for losing.
Contrarian investing works in the markets and it damn sure works in horse racing. So I am always looking to reap big results. If I can't, I pass. Simple as that. If a puzzle is so obvious that the whole world sees it- it becomes a non starter, a non play for me. There is no money to be made. I am hoping to achieve significant results. I don't invest in anything, horseracing, stocks, or metals without asking that question and pulling the ripcord when my results have been achieved.

I also don't delude myself into astronomical projections, silver trading at 500.00. I have read that. That may happen but I don't expect it soon or in my lifetime. The stock market at these levels is a non starter for me. I missed the boat. Any move in now means I am shorting. Currently, that is suicide until Bernanke runs out of funny money. So I am just goofing off in metals.


The charts seem to back a theory that I have- one that has rarely failed me. When people double their investment, they sell. That's why people who bought silver at bargain prices, say 6-8 bucks an ounce, sell around 15 to 16 bucks. Those people buying at those levels start looking for the exits around 30-32. If the fundamentals remain intact, buyers at the 27 to 32 levels will start looking for the exits around 60. Those levels shake out supply and sellers. A certain amount of sideways trading occurs as the metal is absorbed. Thus those daily fluctuations. There may be a second wave of absorption before the metal begins to ramp up again. I am not overly concerned with these sideways moves in either length or duration if I am simply holding the physical asset. In the next two to three years, if the fundamentals still remain in place, I expect to see silver trade to 55 before meeting all the resistance it has met at 27-28 levels now. I am very comfortable owning silver and buying it at current levels. In fact, yesterday, silver traded up while gold traded down. Silver has been consolidating and it may continue to consolidate here for a while. Or it may have worked through supply. We'll know in the next few days and weeks.

Gold looks significantly weaker to me although I believe it is doing the same thing silver has been doing. Taking a breather, consolidating, sideways. Just on a larger scale. If it continues to consolidate at these levels and trades sideways for quite awhile and the fundamentals remain in place- I expect to see potential dips as low as 1100 and change through the current price. When the upside ramp occurs I think sellers begin in earnest around 2300 or 2400. That is my 2-3 year time horizon and I think it is doable.

Fundamentally speaking, the markets for gold and silver have never looked better. Many of us are betting that our government simply lacks the spine to effectively cut the size of government, spending, or fictional money creation. Because we know that the bankers run this place. Debt is money in a fiat currency system such as ours. Without debt, there can no wealth effect or money creation for the bankers. That's why they hate deflation so much. They get their asses kicked. They have only one bet. More debt. Inflate incurred debt away. Inflation is their only play. Metals love inflation.

If you know what your adversary has to do before he does it- he becomes completely transparent. I'd never lose one thin dime if every poker player showed me his hand before we made our bets. Wouldn't you love to play poker with a guy like Bernanke who only has one option available to him? Under those circumstances, I'd put my "Cro Magnon" brain against the Bernank's 1600 SAT brain- any day. Wouldn't be surprised to see some long metals trades in the Bernank's adjunct portfolio. Really.

Judge Vinson's Logic Wll Make No Sense To the Supreme Court Statists

I was reading through Judge Vinson's ruling on Obamacare. Vinson said that compelling individuals to purchase something is an unprecedented act on the part of the Feds. He makes a pretty funny argument here that makes a lot of sense.

But Vinson says he can’t find any Supreme Court guidance on this particular question because Congress has never regulated inactivity before. If judges allow such a novel form of regulation to stand, he writes,

Instead of attempting to control wheat supply by regulating the acreage and amount of wheat a farmer could grow as in Wickard, under this logic, Congress could more directly raise too-low wheat prices merely by increasing demand through mandating that every adult purchase and consume wheat bread daily, rationalized on the grounds that because everyone must participate in the market for food, non-consumers of wheat bread adversely affect prices in the wheat market. Or, as was discussed during oral argument, Congress could require that people buy and consume broccoli at regular intervals, not only because the required purchases will positively impact interstate commerce, but also because people who eat healthier tend to be healthier, and are thus more productive and put less of a strain on the health care system. Similarly, because virtually no one can be divorced from the transportation market, Congress could require that everyone above a certain income threshold buy a General Motors automobile — now partially government-owned — because those who do not buy GM cars (or those who buy foreign cars) are adversely impacting commerce and a taxpayer-subsidized business.

I can see it now. Had the Democrats retained both houses we might very well have had a law demanding that we all vote Democrat and buy sushi on the way to the polls. It's for the good of America- the statists would argue.
 

Remember that 20 Billion Dollars BP Put Aside for the Spill?

Yea. Out of 91,000 claims, BP has paid just one (1). And they are refusing to disclose who that went to. It's a secret, don't you know? Why the secrecy? Well, you can bet it's some politically connected crony outfit, the article says it's a BP partner. Love to follow that money trail.

More fine government efficiency. http://news.yahoo.com/s/ap/20110131/ap_on_bi_ge/us_gulf_oil_spill_claims

The date of the spill? April 20, last year. http://en.wikipedia.org/wiki/Deepwater_Horizon_oil_spill We are going on one year and BP hasn't paid jack shit. All of those desperate people will probably settle for a fraction of what they should have gotten by now. They'd have been better off telling government to screw off and just went about their business. At least they'd have some money and a better bargaining position. This shit is criminal and purposeful. That's how the thugocracy, kleptocracy, crony government works. Hijack 20 billion for political expediency, then make life miserable for the little people that got damaged.

US Markets Shrug Off Inflation Causing Riots, Levitate on Schedule

Over the weekend, I noticed a number of commenters on various sites, wondering why futures for commodities were not up. Particularly gold and silver.

Quite honestly, Egypt just doesn't get the pulse racing. They are not significant oil producers, they are importers of wheat and other grains. That's not meant to minimize their struggle. In America, people are still buying gas and swilling beer. We won't care until...it costs Billy Bob 150 bucks to fill up his pickup and a six pack of beer costs 20 bucks. When that moment arrives, expect complete Armageddon.

I continue to expect the stock market to to ramp up as funds try to make some sort of return in an environment where there is no return anywhere else. The unintended consequences of QE2, and the effect Bernank is after, is runaway inflation. He prefers that to deflation and it is no small matter that our government wants the Chinese to de-peg their currency to ours. That is the real war that is raging, not Egypt. So far the Bernank has been quite successful at putting the screws to the Chinese. The Chinese will have their turn. I am sure of it.

Judge Roger Vinson, In Upward Mobility Ending Move, Tosses Out Obamacare

This is the government's position. "We don't have a health plan, we will invent one and not read it, we will not tell anyone what it is, and we will make you all pay for it. Well at least those of you who we don't like- we will make exceptions for ourselves and our friends." What could go wrong with that plan?

Everything.

Thank gawd there are still some rational people out there with a spine. Thanks Judge Vinson for doing the right thing. We shall soon see if the Supremes are capable of similar, rational thought.

http://www.foxnews.com/politics/2011/01/31/judges-ruling-health-care-lawsuit-shift-momentum-coverage-debate/

Hey! Thanks For Bailing Us Out Suckers, How's Our Backside Taste?

A proud day in America. From the fine folks at Deutschbank, a J.P Morgue/Stanley subsidiary, and a few other zombies we were forced into bailing out. 

http://finance.yahoo.com/loans/article/111958/reservist-in-war-against-foreclosure?mod=loans-home

The Best Piece of Work I Have Read In a Long Time... on Jobs and Jobs

You won't find this in the pollyana mainstream media. You sure as hell won't hear it on CNBC which is owned by GE. Because Obama's new jobs czar, Jeffrey Immelt of GE- absolutely loves China. And like every other greedy bastard in this country- he can't get enough slave labor here and he damn sure doesn't wanted to get priced out of those fat and juicy margins in China.

You will love the snip on Apple. I had no idea they built all of those Iphones in Asia. Or that they could do it here and still make a profit of 50%. I am going to have to rethink my fondness for Apple and for Steve Jobs.

At any rate, this is what you get when you have an inexperienced man as a President-one that presents a job killing piece of health care legislation at the precise moment when we need jobs the most. The law of unintended consequences is on display here.

Five stars to naked capitalism for this piece- the best I've read this year. http://www.nakedcapitalism.com/2011/01/john-bougearel-claims-the-job-market-will-boom-are-entirely-unsubstantiated.html