My thoughts on trading PM, BM (base metals), and energy (E)shares, and the USD. This is a SHORT TERM cautionary call, not an intermediate one like my gold share sells of Sept/Oct, 2003, so BIG distinction, as I believe the secular trend is stronger than ever. But PM, BM, and E stocks, and especially juniors are extremely high beta. This also illustrates why I've gone to liquid AMEX names in the juniors, and low discount rate commissions.
I think the Ministry of Propaganda may be engineering a bogus US rally (or at least stabilization) in an attempt to get Bush reelected (October surprise, especially after his pathetic "debate" performance ), and to try and knock down oil prices (even if only temporarily). They may do this by pulling a positive BLM revision on job counts (big lie) out of their asses on Friday, Oct 8th.
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This may also be done in conjunction with an SPR release, probably small, but enough to cover the 500,000 bpd production lost in the GOM from Ivan.
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They will try and stem serious short term damage (as this is a difficult gambit endangering the credit and housing mania/bubble) to the bond market, by using this smokescreen to engage in serious debt monetization and monetary injections. There are signs in the last two weeks that they are back at that game (after a pause) : $1.5195 billion a week. Also notice the increased activity in the MBS, agency market over the last week, they have that ball to juggle:
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The problem is that they are also running to the end of the line on Asian money printing. Japan's inflation is breaking out,
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so the Wizards need to attack energy prices somehow, as printing money pushes energy even higher. They only have this desperate, expediate approach (lies, and manipulation) IMO.
Of course it's possible this may not happen, and if so this "step aside" would not be necessary, and I would immediate reenter my names. However, I consider this a discretion is the better part of valor situation. The cognescenti and playbook crowd will go nuts on this nonsense and it's better to just get mostly out of the way. Right now the speculators have ramped up a fairly substantial long position in gold and energy,
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making it more vulnerable to this kind of "big lie". If it did happen this will be major gift to get out of the USD, and fully into strong foreign currencies and PMs and commodities, for a huge up leg post-election. I recognize that these trading moves disrupt holding periods for LT cap gains, etc, that's why I tend to split holdings into my retirement account (more trading oreinted), and regular account (more LT cap gain) oriented. Everyone will have to look at their own situation.
Additionally there are ways to hedge against a whipsaw(opposite "weak employment" outcome of what I'm talking about here). None of us would want to "get too cute" and miss out on a sudden USD collapse that could come out of the blue, that's what makes "investing" in manipulated, lying sack of shit markets very difficult. To counter this, you could hedge (insurance) by buying out of the money calls in gold (or buy puts if you hold the shares), and/or silver pending the blowover. |
