Gold, Gas and Greenshoots...
I just got back from a very interesting conference and I'll
have a couple of detailed posts about that over the next
few days.
Just a couple of quick thoughts on this market...
Looks like earnings are now bringing the DOW back into
reality, as the Kool-Aid effect of the greenshoots story
is finally wearing thin.
Gold's hanging tough into a broad market correction. The
GDX is re-testing that key pivot point at 36ish. The HUI
gold stocks are once again attractively priced to gold,
and the HUI is still holding it's positive uptrend.
Silver's looking real cheap to gold (in fact, I bought some
more physical silver today). And silver stocks look especially
attractive.
The bet here is whether the economy will begin to recover
in Q3, and if it doesn't, whether there will be a 2nd stimulus
package before year end (a trial balloon that Laura Tyson of
the Obama administration is presently floating).
The danger here, is in the market rolling over and taking
gold and gold stocks with it... sans any further stimulus,
or quantitative easing from the US Fed.
While the Chinese and the Russians have ratcheted up the
rhetoric about replacing the US Dollar as the global reserve
currency, the reality is that they are more concerned about
Bernanke printing money to buy Treasuries in order to keep
US interest rates capped, to put a bottom under housing, and
to aid in the economic turn around.
That pressure from our lenders to end quantitative easing,
and from the American people to end stimulus spending that
goes to bigger government and not to jobs... may lead to
greater short term pain, but also greater long term gain.
So you can't rule out a broad correction taking gold and gold
stocks down with it here. The easy trade was going long gold
and gold stocks into the face of a $787 billion dollar stimulus
package and the Fed announcing the monetization of Treasuries.
If we don't get another stimulus package, if the economy fails
to recover, if job losses continue, and if the Chinese and
Russians are successful in pressuring the Fed, it could be
a tough road ahead for gold.
...so don't rule out that possibility.
I'll get some charts and thoughts about gold up in a day, or
so. But, I did put together some thoughts on what I feel is
the most compelling commodity play right here, and that's
natural gas.
I sold some more puts, and bought an initial long position in
UNG today. Here's some thoughts and charts on nat gas...
sliderontheblack.com
SOTB |
