Bill Cara's Blog for Dec 9, 2011

Good morning.

08:30 Trade Balance
09:55 Mich Sentiment

------

COST - Costco downgraded to Negative from Neutral at Susquehanna citing three quarters of gross margin declines, EBIT shortfalls, and decelerating membership growth. Price target is $65

------

"I want to stay as close to the edge as I can without going over. Out on the edge you see all kinds of things you can't see from the center."

~ Kurt Vonnegut

"Globalisation has turned on its Western creators"
Submitted by normxyz (72 comments) on Thu, 12/08/2011 - 21:56 #101617

Agree, except for many CEOs, etc. who have made out like the bandits they are — export US jobs, boost the bottom line, collect on stock options.

Today there was good news in our local paper: China is now buying Allen Edmonds shoes made in Wisconsin. These are not cheap, so it seems to indicate that some in China are now seeking the status (or more comfort) of high-end products. Well, more Buicks were sold there than here last year.

The bad news is the same person reporting this event recently said people turned down work in his manufacturing operation because they got nearly as much on unemployment.

Q: Is this because too much "free money" is available... or a machinist can no longer make a decent wage here?

"The World is Flat" — Thomas Friedman

Grym

P.S. ip32 — I emailed you.

http://on.ft.com/siiPbj

Analysts said Commerzbank, Germany’s second-biggest private sector bank, which emerged with a capital shortfall of €5.3bn from the test, up from €2.9bn six weeks earlier, was now facing the prospect of nationalisation. The German banking association said the EBA had “lost credibility”.

“The stress test hasn’t contributed to market stabilisation,” said Michael Kemmer, general manager of the BDB association of German banks, adding that the process had been “arbritary, lengthy and seemingly chaotic”.

Commerzbank shares plunged 11 per cent in late trading as rumours of the shortfall spread ahead of the official announcement after markets closed.

(GR) Greece 10-year gov't yields rise above 35% for fresh Euro record highs

(EU) Various EU Leaders comments on Summit following working lunch

- German Chancellor Merkel: EU summit made a breakthrough for the foundation of a lasting and stable euro. Pleased ECB has suggested it will give expert support to the EFSF. Says the EU has always repsected the UK decision to stay out of the euro zone. Reiterates Germany will not boost the ESM beyond €500B.
- Spain PM: Blocking ESM will require a majority of 85%
- EU President Van Rompuy: Targets to ratify ESM by mid-2012. Disappointed that we could not get all EU27 nations to join in the treaty revisions [Reminder: 23 agreed today, 3 others have said they will consult their Parliaments, and UK has outright rejected the changes].

There is a lot of noise in this range. above 45 is bullish. below is bearish. I will likely sit on my hands until the edges of this range.

watching euro, euro banks, u.s banks, iwm, nq, aapl

good luck folks

http://tradinglog.realitytrader.com/2011/12/multi-...

jragusa,

Is there a difference between a secular bear market and a depression?

The 1930s Great Depression certainly had nice periods for "rental". Without the massive gov. programs and stimulus measures, I suspect we'd have a different picture and name for our present condition.

Grym

http://reut.rs/sAiWYP

Bill, I think that might be the Sgt Shultz defense: "I know nothing....NOTHING!!"

It became clear to me that the ECB will not print when I read this on 24 November:
Speech by González-Páramo (ECB board member)
"The ECB is a central bank, committed to its mandate to preserve price stability over the medium term. It is not the fiscal lender of last resort to sovereigns. Markets participants that call for the ECB to play this role may care only about the nominal value of their assets and the need to avoid losses. Whether or not the underlying asset – our currency as store of value – has been depreciated seems unimportant to them. But survey after survey shows that the people, the citizens of the euro area, want price stability. They care deeply about their purchasing power and the value of their savings. The ECB has been established with a clear mandate to meet these expectations."
http://www.ecb.int/press/key/date/2011/html/sp1111...
There is also this, from an ECB press conference:
"Question: Mr Draghi, speaking in Parliament you also emphasised that the ECB would ensure price stability in both directions. Does that mean that there is a fear of deflation?
My second question is, from a purely legal point of view, do you think there is any limitation on the ECB regarding the amount of government bonds that can be bought, as long as it can be justified on the basis of monetary policy considerations.
Draghi: At the present time we do not see a high probability of deflation. That is one point to keep in mind.
The second point is, as I have said many times, that the purpose of the SMP is to reactivate the transmission channels of monetary policy. As I said in the statement to the European Parliament, the SMP is neither eternal nor infinite. We must keep this in mind and we do not want to circumvent Article 123 of the Treaty, which prohibits the monetary financing of governments."
http://www.ecb.int/press/pressconf/2011/html/is111...

ECB going to print? No, not at the moment, so we are left with "renegotiation" of sovereign debt and/or bank nationalisations.

So far as the ESM (the new iteration of the so far non-existent bailout) is concerned, I read this elsewhere:
"So the existing ESM looks like EFSF except that it has 8% of the lending capacity in cash up front. Yes, 8% is paid in capital on day one. It is not contemplated that it would have more than 16% of paid in capital. Maybe the new details will be different, but I highly doubt it since the EU is big fan of providing guarantees rather than cash because the vigilantes have trouble tracking all the guarantees (once again, I ask how much has France guaranteed to the IMF, EFSF, EMS, EIB, EU, Dexia?)."
http://www.tfmarketadvisors.com/2011/12/09/esm-a-p...

Grym,

"Secular" markets explained (they are longer term in nature - 20 yrs +/-):

http://tinyurl.com/cme3tyv
http://tinyurl.com/3rd78xp
and finally, by Mr. Ritholtz
http://www.ritholtz.com/blog/2011/11/4-major-secul...

A depression in my book is just a terrible recession - like the 2008-2009 affair would have been if the US govt had not subsidized food stamps, welfare programs and unemployment benefits and Timmy G. hadn't stolen trillions of dollars to channel the toxic debt held by banks to the tax payer.

I do not know WHY such secular cycles exist. If someone does, please share.

Grym,
Perhaps such special treatment is an indication that the management of this blog under appreciates the poster. You think?

Bill,
My apologies. I intended it only as a humorous comment. Your posts are very valuable for all to read.
Regards,
Lessmore

Grym - Athan is correct. Somehow the option got disabled for you, so I re-enabled it. Let me know if you need anything else.

no one talks about uxg today? it should be a buy today.

Thanks, Bill.

Obviously Corzine is a great fan of Sgt. Schultz ;-)

I think it was Sen. Everett Dirksen who said, "A million here, a million there and pretty soon you're talking real money."

Ah, yes, the good old days when it was only millions.

Grym

Grym,

I believe you will find the 'contact author' was disabled some time ago. In fact, I was going to contact you a few weeks ago, but was not able to. This omission you have noticed is not new, or directed at you.

Regards,
pulse

p.s. More from the dark side of irregulators (who are not traitors?) who continue to loot the lives of us all. How can one think these situations are isolated? I reject this 'bad apple' nonsense. The systemic fraud and cowardly inability to stand up to this vast theft by the sociopaths is the ongoing shock to my system.

http://www.zerohedge.com/news/gold-rehypotecation-...

Where are the men and women of conscience 'trapped' within these vast criminal organizations? Somebody, please tell me. Or, perhaps I am mistaken. Perhaps some whistleblower will appear after the current bonus season.

ALOHA!!

First off let me say this for the ROB MCEWEN disciples. This is not meant to be a slap in the face to Rob. I have great respect for someone who can do what he has done. In fact I bought UXG on their first day of trading for $0.72, but I sold it all back at the $8-$9 range. I have not bought any UXG shares since then and do not intend to in the future. I just believe there are better plays out there that will bring more bang for my USD!

My only reason for posting this is to provide information to stimulate trade discussion. After all since the price of UXG is around the same price as SLR you might want to consider lightening your UXG load and moving onto the ASX with SLR, a full blown producer with cash flow and what's shaping up to be some fantastic assets.

I did mention SLR at the CTA Conference 2011 in Whistler back when the price was $2.45AUD. It closed Friday, at $3.75AUD on the ASX and has since been moved from the ASX S&P300 to the S&P200 and is rated #11 Best Performing on the ASX for share price appreciation YTD. Is there more upside? I think not only YES, but I also think in terms of M&A. That's been confirmed.

UXG
From the UXG homepage:
In Mexico the company has made an important silver-gold discovery called El Gallo. A Preliminary Economic Assessment was released February 7, 2011 targeting production of 5 million ounces silver and 50,000 ounces gold per year starting in 2014. A feasibility study will be released by the end of 2011. Twelve drills are operating on the property.

The company's Gold Bar project in Nevada is located in the Cortez Trend and situated between Barrick's Cortez Mine (35 million ounces of gold) to the north and their Ruby Hill mine (4 million ounces) to the south. US Gold is targeting 60,000 ounces gold per year from Gold Bar starting in 2014. A pre-feasibility study is due in the third quarter of this year. Currently there are three drills operating in Nevada.

Okay 2014 and you might see some production and if you do it will only be 110,000 Au oz from both Gold Bar and El Gallo, plus 5 mil ounces of Ag from El Gallo. Three years away, hummm, what could happen in three years?

For the Gold Bar property in Nevada the Pre-Feasibility Study was published in November, two months late, with not a 60,000 Au ounce per year production but a 51,000, already missing targets and it isn't even 2014 when the first ounce gets poured! Makes you wonder about the projections for El Gallo.

US Gold Announces Positive Preliminary Feasibility Study for Gold Bar Project, Nevada

Toronto, Ontario (November 28, 2011) - US GOLD CORPORATION (NYSE - TSX: UXG) is pleased to announce results of a Preliminary Feasibility Study (“PFS”) for its 100% owned Gold Bar Project in Nevada. The PFS was prepared by SRK Consulting (U.S.) Inc. (“SRK”) of Reno, Nevada, in accordance with the requirements of Canadian National Instrument 43-101 “Standards of Disclosure for Mineral Projects” (“NI 43-101”).

Highlights of the Pre-feasibility Study
(All amounts in US dollars)

Average annual production of approximately 51,000 ounces of gold over an 8-year mine life (total 410,400 ounces), at a cash cost of $665 per ounce (oz).

Open-pit mine with conventional oxide heap leach processing. Projected gold recovery of 82% after primary crushing to 5 centimeters (2 inches) and a 90-day leach cycle.

The new McEwen Mining company is being slanted away from gold and into silver and copper, claiming to be the next "Mid-Tier Silver Producer" in 2014. Without Minera Andes there would be no production, so I would say the new company is a better paper shuffle business model than the original Carlin Trend game plan for all shareholders, although the new company is more exposed to increased country risk. One thing is for sure without ROB POWER the share price of UXG would be much lower given the Carlin Trend miscalculation and the current PFS missed 60,000Au production target.

SLR
SLR is not run by any mining gurus just hard-nosed geologists and mining execs moving their "windfall" from their last WMC success at Olympic Dam and BHP Biliton.

SLR recoveries in current production are running at 95%. SLR Daisy Milano has a 10+ year mine life as Gold Bar has 8 year. Add in the many other differences including higher grades.

Lets bring in the Canadian perspective. Sprott Asset owns 9.5% of SLR whereas Rob owns 20% of UXG. What does RBC say?

If you study this report by Royal Bank of Canada-RBC Capital Markets you will see the further upside of SLR. While annual production at El Gallo and Gold Bar will just begin in 2014 SLR will be at 296,000 Au ounces annual production, not including any of the new Hollandaire super copper pit discovery at the Eelya Complex.

RBC estimates the current assays would give the Hollandaire a value of $50-$100MIL, based on very conservative projections. Please note that this does include the other Eelya Complex VMS style deposits, which tend to occur in clusters. This would account for the markets giving SLR an extra share price boost since the RBC report came out.

SLR had its IPO in November 2007 and poured its first gold bar in April 2008. UXG was still drilling, abandoning the prized Carlin Trend consolidation business model due to under performing assays and heading to Mexico. A wise move Rob made in retrospect.

From RBC:

Company Description
Silver Lake is an ASX-listed, unhedged gold producer through its ~70kozpa Mount Monger mine in West Australia. The company plans to grow production to 300kozpa by FY14E, by increasing Mount Monger to 200kozpa and building a second 100kozpa production centre at Murchison. Silver Lake is characterised by its high quality management team, the high-grade Daisy Milano and Daisy East mines, and its above-average exploration potential.

Silver Lake had its IPO on the ASX in November 2007, when the company raised A$30m at A$0.30. In the same month, the company acquired the nearby Lakewood processing facility for A$2.4m, and by December 2007, the company had begun to mine Daisy Milano. In April 2008, the A$5.6m refurbishment of the Lakewood plant was completed and the Mount Monger project poured first gold. A key milestone in the company's fairly short history was the discovery of Daisy East in July 2009, a high-grade ore body 40m east of
Daisy Milano and grading an impressive 46g/t.

That RBC report, dated Oct.24, 2011, is old news now as SLR is adding another $70MIL cash to develop the Murchison gold and copper properties. Since the RBC report on the new copper discovery the assays have boosted the copper grades up to 45%Cu not the 30%Cu RBC reports.

Latest RBC report one year target $4.50AUD ...

RBC LINK: http://www.silverlakeresources.com.au/files/files/...

SLR LINK: http://ircast.com.au/conferences/online/mrr11/pres...
"The man who never sleeps ..." - Les Davis, SLR Managing Director

So I dug around and found this comment in a trader forum from someone at IB regarding their rehypothecations. The comment is part of a thread - this is page #28, his comment (author name IB-AN) is at the bottom of this page:

Comment was reduced to the critical bits. A bit technical, but the summary for busy executives is at the end. The claim is that IB is NOT making horribly leveraged trades with client segregated funds. I'm not qualified to assess - Bill?

http://www.elitetrader.com/vb/showthread.php?threa...

A closer examination of this $16.8 billion balance reveals the following:

1. $13.0 billion represents the amount IB is authorized to pledge (largely based upon 140% of customer debit balances), of which only $0.8 billion has been repledged, largely through stock lending.

2. $2.9 billion represents the investment of customer’s cash balances in reverse repurchase agreements where the underlying collateral is U.S. treasury securities. These transactions are conducted with third parties and guaranteed through a central counterparty clearing house (FICC). $2.6 billion of this collateral, technically a repledge (i.e., part of the $4.5 billion “sold or repledged”), is not re-hypothecated and it remains in the possession of IB and held at a custody bank in a segregated Reserve Safekeeping Account for the exclusive benefit of customers. The remaining $0.3 billion represents collateral pledged to clearing organizations.

3. $0.9 billion represents short sale transactions whereby the sales proceeds have been pledged as collateral to fully secure the borrowed securities. These transactions are classified as securities sold (i.e., part of the $4.5 billion “sold or repledged”).

Based upon this information, which reflects prudently risk-managed broker financing transactions, we believe a fair-minded author would have drawn a different conclusion regarding IB and hyper-hypothecation given a minimum level of investigation and contact.

kaimu -

Holding my UXG for an expected takeover announcement. Thanks for your comparison.

There is strong evidence for a four-year cycle going back at least as long as the Dow (and probably longer). There is also evidence for a weaker 10-year cycle. The Least Common Multiple of 4 and 10 is 20. So, yes, there is de facto evidence for a 20-year cycle. But bearish and bullish 20-year cycles seem to alternate. Why this should be so, I don't believe anyone knows- just guesses. Of course, major historical forces (wars, out of cycle economic catastrophes, etc.) tend to distort these cycles, making them shorter or longer- usually shorter.

If you accept that ~1980 to 2000 was our last bullish cycle, then 2000 to 2020 is our current bearish cycle. Seems to work; but I wouldn't try to use it for trading.

For something better along the lines of explanation, see Strauss and Howe's book: The Fourth Turning http://www.google.com/search?q=The+fourth+turning&...

the national central banks pull together roughly $ 200 Billion to loan to the IMF, which will then loan back to the various governments ? Hmmmmmm,for Real.

http://tradinglog.realitytrader.com/2011/12/market...

I have posted before that I am concentrated in meteor mining and owning the product physically. It had been my belief that the Earth was showered in exploded star chunks just like the videos on the Discovery Channel. But if one sits back and thinks it through gold and silver are heavy and in a molten sphere developing they would have went with the iron to the center. In September 2011, Nature, had a great account of what must have been a second meteor shower of precious metals after the crust had formed. Their thinking is 4 feet of high value metals would cover the crust if we could get to the core and its elements. Weekend is upon us hope it is a good read.

Where does all the gold come from?

Press release issued 7 September 2011

Ultra high precision analyses of some of the oldest rock samples on Earth by researchers at the University of Bristol provides clear evidence that the planet’s accessible reserves of precious metals are the result of a bombardment of meteorites more than 200 million years after the Earth was formed. The research is published today in Nature.

During the formation of the Earth, molten iron sank to its centre to make the core. This took with it the vast majority of the planet’s precious metals – such as gold and platinum. In fact, there are enough precious metals in the core to cover the entire surface of the Earth with a four metre thick layer.

The removal of gold to the core should leave the outer portion of the Earth bereft of bling. However, precious metals are tens to thousands of times more abundant in the Earth’s silicate mantle than anticipated. It has previously been argued that this serendipitous over-abundance results from a cataclysmic meteorite shower that hit the Earth after the core formed. The full load of meteorite gold was thus added to the mantle alone and not lost to the deep interior.

To test this theory, Dr Matthias Willbold and Professor Tim Elliott of the Bristol Isotope Group in the School of Earth Sciences analysed rocks from Greenland that are nearly four billion years old, collected by Professor Stephen Moorbath of the University of Oxford. These ancient rocks provide a unique window into the composition of our planet shortly after the formation of the core but before the proposed meteorite bombardment.

The researchers determined the tungsten isotopic composition of these rocks. Tungsten (W) is a very rare element (one gram of rock contains only about one ten-millionth of a gram of tungsten) and, like gold and other precious elements, it should have entered the core when it formed. Like most elements, tungsten is comprised of several isotopes, atoms with the same chemical characteristics but slightly different masses. Isotopes provide robust fingerprints of the origin of material and the addition of meteorites to the Earth would leave a diagnostic mark on its W isotope composition.

Dr Willbold observed a 15 parts per million decrease in the relative abundance of the isotope 182W between the Greenland and modern day rocks. This small but significant change is in excellent agreement with that required to explain the excess of accessible gold on Earth as the fortunate by-product of meteorite bombardment.

Dr Willbold said: “Extracting tungsten from the rock samples and analysing its isotopic composition to the precision required was extremely demanding given the small amount of tungsten available in rocks. In fact, we are the first laboratory world-wide that has successfully made such high-quality measurements.”

The impacting meteorites were stirred into the Earth’s mantle by gigantic convection processes. A tantalising target for future work is to study how long this process took. Subsequently, geological processes formed the continents and concentrated the precious metals (and tungsten) in ore deposits which are mined today.

Dr Willbold continued: “Our work shows that most of the precious metals on which our economies and many key industrial processes are based have been added to our planet by lucky coincidence when the Earth was hit by about 20 billion billion tonnes of asteroidal material.”

This research was funded by the Natural Environment Research Council (NERC), the Science and Technology Facilities Council (STFC) and the Deutsche Forschungsgemeinschaft (DFG).

Paper

‘The tungsten isotopic composition of the Earth’s mantle before the terminal bombardment’ Matthias Willbold, Tim Elliott and Stephen Moorbath Nature

(EU) ECB's Nowotny: There are risks involved in the implementation of the summit principles; it must be quickly implemented
- Bond buying is limited in scope and longevity.
- Rumors about ECB considering expanded bond buying program is wrong. No possibility of greatly expanding ECB bond purchases.

If this part in bold is what transpires, I'll call it Seinfield rally...

Federal Reserve Bank's Bennie the B states "we are not printing money."

Moses addressing the Israelites while holding the three tablets "Here are the Lord's fifte (crash) ten commandments."

One must always allow for some adjustments given a change in circumstances.

Question "are there any absolutes?"
Answer "no."
Question "are you absolutely sure?"
Answer "YES"
Response "then that's the first one!"

Normx,

Yes, we are in the middle of a 20-25 year secular bear, IMO. I would have said IMHO but have been fortified by the link presented on this blog today by jragusa: http://advisorperspectives.com/dshort/guest/John-C.... I am into mathematics including regression analysis and it looks believable.

Strauss and Howe's book (1996) is right in line with this (Howe's Life Course website has a few updates). Howe (Strauss died) has stated that the financial crisis beginning 2008, after the unraveling of the previous 20 or so years, may be the catalyst for the long crises to follow. It seems it's a generational thing based on a span of 4 generations, give or take few years.

Not to say there will be minor bull interludes, as Bill has pointed out from the depression. Some more than minor. A trading market.

For my Canadian Friends in the spirit of the season: A fine version of 'The Huron Carol' sung in the native Huron language as it was written in the early 1600's by the Jesuit Fr. Jean de Brebeuf, who acquired fame and martyrdom soon after when he was ceremonially barbecued by members of the Iroquois confederacy, who went on to virtually obliterate the Hurons and their culture. They were encouraged in this by British colonial interests who were after control of French claimed territory, much of which was traditionally Huron. Those of this latter tribe who survived the wars were mostly absorbed into Iroquois communities. A few, however, stayed with the French colonies. Their descendants inhabit a couple of villages in modern Quebec, but their language has largely been lost. Special thanks are due to John Steckley for his help as translator and pronunciation coach.".

http://www.addictedtovinyl.com/media/cockburn94/10...

Iesus Ahatonnia In the Huron language

Ehstehn yayau deh tsaun we yisus ahattonnia
O na wateh wado:kwi nonnwa 'ndasqua entai
ehnau sherskwa trivota nonnwa 'ndi yaun rashata
Iesus Ahattonnia, Ahattonnia, Iesus Ahattonnia

Ayoki onki hm-ashe eran yayeh raunnaun
yauntaun kanntatya hm-deh 'ndyaun sehnsatoa ronnyaun
Waria hnawakweh tond Yosehf sataunn haronnyaun
Iesus Ahattonnia, Ahattonnia, Iesus Ahattonnia

Asheh kaunnta horraskwa deh ha tirri gwames
Tishyaun ayau ha'ndeh ta aun hwa ashya a ha trreh
aundata:kwa Tishyaun yayaun yaun n-dehta
Iesus Ahattonnia, Ahattonnia, Iesus Ahattonnia

Dau yishyeh sta atyaun errdautau 'ndi Yisus
avwa tateh dn-deh Tishyaun stanshi teya wennyau
aha yaunna torrehntehn yataun katsyaun skehnn
Iesus Ahattonnia, Ahattonnia, Iesus Ahattonnia

Eyeh kwata tehnaunnte aheh kwashyehn ayehn
kiyeh kwanaun aukwayaun dehtsaun we 'ndeh adeh
tarrya diskwann aunkwe yishyehr eya ke naun sta
Iesus Ahattonnia, Ahattonnia, Iesus Ahattonnia

Direct English Translation: "Jesus, He is Born"

Have courage, you who are human beings: Jesus, he is born
The okie spirit who enslaved us has fled
Don't listen to him for he corrupts the spirits of our thoughts
Jesus, he is born

The okie spirits who live in the sky are coming with a message
They're coming to say, "Rejoice! Put yourself on top of life
Mary has given birth. Rejoice!"
Jesus, he is born

Three men of great authority have left for the place of his birth
Tiscient, the star appearing over the horizon leads them there
That star will walk first on the bath to guide them
Jesus, he is born

The star stopped not far from where Jesus was born
Having found the place it said,
"Come this way"
Jesus, he is born

As they entered and saw Jesus they praised his name
They oiled his scalp many times, anointing his head
with the oil of the sunflower
Jesus, he is born

They say, "Let us place his name in a position of honour
Let us act reverently towards him for he comes to show us mercy
It is the will of the spirits that you love us, Jesus,
and we wish that we may be adopted into your family
Jesus, he is born

Be very careful with regard to the timing of secular bull and bear markets. There really are no exact time certain dates. The last 'bear' I lived through was from 1966 through 1982. It was 'only' a 16 year affair but inflation adjusted (in real terms) one lost 70% in DOW terms. The S%P 400 did a smidgen better in that including dividends, you were flat to marginally higher.

Let me collect my thoughts and expand on this at a later date but per my recollections, we lived through the bursting of several mini bubbles during that period. Offhand I remember the then tech bubble in the late 60's, the conglomerate bubble (IT%T had preferreds out to the letter K) through the early 70's, the niffty fifty and at the end of the cycle, commodities including copper, lumber, gold and oil. But during those trying times, little upstarts like Microsoft and Walmart were on the road trying to raise capital to grow.

During the bull phase beginning in August 82, we lived through the junk bond bubble, S%L real estate bubble, Mexican default bubble and AGAIN Citi went BK in 91 and was 'saved' by a bearded sheet wearing guy from the middle east who was a friend of George the First....

I guess my point is that one can make real returns no matter how one labels an era.

Herman Kahn addresses cycles in his book, "The Coming Boom" Hudson Institute 1982 and does a reasonable job of explaining long and short cycles as related to boom bust eras over the centuries. He also had a lot to say about demographics and the timing of the peak of people numbers.

Interestingly in August of 1982, the "Economist" published a 25 page or so article titled 'The Bull Jumps Over The Moon.' I have the cover page in a notebook but lost the contents. Find it if you can. Interesting reading. Like Porn, I will know the next bull when I see it.

But yes. We are still in a secular bear market. The Bill Miller 'buy and hold and average down with additional client's money' went bust around 1999. Perhaps by 2016-18 that will again become an acceptable way to build wealth. Until the markets take away the Fed's blatantly unconstitutional but politically sanctioned organized theft of the monies owed to savers and pensioners then one can only invest via the hokie pokie method; one foot in, one foot out...

ALOHA!!

Bill-Sorry if some "slag" got in the way. Now that Chris Start no longer comments here I guess I am one of the very few who comments on trading ASX listed companies here at the blog? It seems to be ...

My point was to say look towards fundamentals and time frames in valuations. Surely management is a key factor in any company, whether it is in the mining sector or in retail or any other sector. I certainly cannot complain about Rob McEwen bringing shareholder value when I was buying in at $0.72 ... Just his name alone did that the very first day! I think the share price closed that day at $1.50 and the prior day before Rob announced he was acquiring the company the share price closed at $0.35. A quick 100%+ gain in one day, even for those like me who bought in late morning. That's shareholder value!

Back in September 2005 Rob sent out his first letter to the shareholders of US GOLD, back then the symbol was USGL, if I recall correctly, as the official CEO of the company. For a CEO of Rob's stature and past track record drilling for over six years without any production is a long time for UXG shareholders to wait on a fundamental applied basis. By time it is 2014 it will be nine years to production. No doubt Rob has deep pockets and that has been good for shareholders. I am into assets and fundamentals but if I perceive a better opportunity elsewhere then I will make the move no matter how much I like the CEO. I just got a better "trade" off SLR than I did USGL, but that took moving to the ASX and an AUD; something I had not contemplated prior to 2008 as I stayed in the US and Canadian exchanges mostly.

In my opinion, especially with juniors, which is what US GOLD was when I first bought in, you can make the mistake of holding too long with under performers and quite often I also see the same mistakes in reverse where people sell off too soon. That happens a lot. I see the latter trade scenario across the board as I recall MacQuarie Bank Group sold off their Red Back Mining shares at $3AUD, leaving $30 on the table and people I know at GoldNerds sold off SLR at $1, wishing they held longer in hindsight. GoldNerds being an astute bunch of Aussies who crunch fundamentals and prices for a living. I have been down both of those roads ...

Slagging
The addition of superfluous material (SLAG) to a “news story”, the addition of which is designed to prejudice the recipient’s response to “news”, thus guaranteeing that the recipient will “comprehend” and “understand” the story correctly—in the manipulative lights of those responsible for said slagging.
http://www.urbandictionary.com/define.php?term=sla...

Korvus, Athan,

Still not showing on my posts. Where is the "profiles" setting? Are you referring to a setting at Cara Community? I been to My Account — no dice.

Do you mean something with my email set-up? My SPAM filters are set to warn an ask. I'm on Macs — could you mean "preferences" rather than "profiles"?

Yesterday my garage door remote defied me, this morning my scanner says I have a problem and should consult my "documentation", but it scans, copies and prints just fine.

I may just go split some fire wood — I'm good at that ;-)

Grym

I can see the "contact the author: on your post Grym

I watch this data every Friday afternoon. It seems to me the rig count and utilization rate has been growing for the last 4 to 5 months. I hope this will represent stable oil prices and the possibility of expansion in the future if oil prices should retreat somewhat.

http://www.ods-petrodata.com/odsp/weekly_rig_count...

Watch the jackup day rate index for Northern Europe in the next few weeks as the utilzation rate for that area has reached 100%.

Noble got the drillship Bully I delivered to the Gulf of Mexico this week.

http://www.prnewswire.com/news-releases/cutting-ed...

As I understand it losses resulting from re-hypothecations are covered by SIPC and SIPC coverage of $500,000 per account for the small investor should be adequate. If an investor's accounts at IB exceeds the SIPC coverage limits the excess can be transferred to one or more different brokerages for further SIPC coverage. The problem with private insurance is that a vast number of claims for the excess over SIPC limits can bankrupt the insurer.

This is a serious problem for all investors. Anyone with a different view should state it. This is an area where group think is helpful.

davefairtex,

This came at me with full force:

("...the custodian of none other than GLD) is suing MG Global "to establish whether he or another person is the rightful owner of gold worth about $850,000 and silver bars underlying contracts between the brokerage and a client."

After reading comments here of the possible risk in ETFs I sold all except GLD. It has been a money-maker for me for several years, but is currently down 3.8% for me. I expect Monday it may take a further hit.

Fortunately I have a very small percentage in it and can easily exit — either with a stop to take advantage of a secondary bounce following the open, or just dump ASAP.

Anyone else on the hook?

Grym

lessmore

The problem with private insurance is that a vast number of claims for the excess over SIPC limits can bankrupt the insurer.

This is key.

Interestingly, IB, Fidelity, Vanguard, and Schwab (and everyone else most likely) all have “secured additional coverage from certain insurers at Lloyd's of London”. You have to ask yourself; is Lloyd’s of London too big to fail?

I recently began relocating portions of my personal IRA to other brokers so as not to exceed the $500k SIPC cap with anyone firm. It makes self-directed investing a little more cumbersome, but considering everything that’s going on, capital preservation remains “job one”.

NY Times
"At the heart of the debate is the question of how far governments must bend or even bow to the power of markets. Mr. Obama sees retaining the stability of markets and the confidence of investors as a primary goal of government and a prerequisite for achieving any major changes in public policy. Mrs. Merkel views the financial industry with profound skepticism and argues, in almost moralistic fashion, that real change is impossible unless lenders and borrowers pay a high price for their mistakes."
http://www.nytimes.com/2011/12/11/world/europe/eur...

Lessons of the 1930s: There could be trouble ahead

http://www.economist.com/node/21541388

From The Economist

"The move to austerity is most dramatic within the euro zone—which can least afford it. Operating without floating currencies or a lender of last resort, its present predicament carries painful echoes of the gold-standard world of the early 1930s.

"In 1928 and 1929 the party ended ... [t]o defend its gold reserves, Germany’s Reichsbank was forced to raise interest rates. Suddenly deprived of foreign money, and unable to rely on exports for growth as the earlier boom [had] generated an unsustainable rise in wages, Germany turned to austerity to meet its obligations, as Ireland, Portugal, Greece and Spain have [now] done. A country with a floating currency could expect a silver lining to capital outflows: the exchange rate would fall, boosting exports. But Germany’s exchange rate was [then] fixed by the gold standard [as, now, those of the Southern EU members are fixed by the euro]. Competitiveness could only be restored through a slow decline in wages, which occurred even as unemployment rose.

"As the screws tightened, banks came under pressure. The Austrian economy faced troubles like those in Germany, and in 1931 the failure of Austria’s largest bank, Credit Anstalt, triggered a loss of confidence in the banks that quickly spread. As pressure built in Germany, the leaders of the largest economies repeatedly met to discuss the possibility of assistance for the flailing economy. But the French, in particular, would brook no reduction in Germany’s debt and reparations payments.

"Membership in the euro zone, like adherence to the gold standard, means that uncompetitive countries can’t devalue their currencies to reduce trade deficits. Austerity brings with it a vicious circle of decline, squeezing domestic demand and raising unemployment, thereby hurting revenues, sustaining big deficits and draining away confidence in banks and sovereign debt. As residents of the periphery move their money to safer banks in the core, the money supply declines, just as it did in the 1930s."

As you know, after the close of the market on Wednesday November 19, I gave you the “Trade of the Generation (TOG)”. I recommended selling bonds, and buy gold/goldminers. Amid the most extreme day to day volatility the capital markets have ever seen, that was a tough call, but one I believe in.

As one of the CTAB pro traders reported to me at the end of the week, consistent with my beliefs and trading instructions by the way, “If you put a gun to my head and said you only have one trade to make for the next year, I would short US bonds. I have shorted them for CTAB, for my trading account, my retirement account, and my parent’s portfolio. That said, manias always go further and last longer than any sane person would imagine (can we say madness of crowds), so initial positions must be small.”

http://caracommunity.com/content/week-review-49-2008

Thinking about the TOG call and why one half didn't work out. Here we are, back at the same heights TLT soared to in 2008, before it plummeted like a lame duck.

Bill's been saying it but it was an article I read last week that crystallized my understanding of the game being played here:

For those awakening to the unpleasant reality that the global financial crisis which began in 2008 has never been resolved, we have some important news for you: There are, in fact, two crises unfolding in parallel. One is phoney and in the spotlight; the other is real yet lurks in the shadows. This is because the phoney crisis is the one that policymakers want you to see: the apparently insolvent banking system in need of a bailout. The real crisis they refuse even to talk about is that economic resources have been so massively misallocated in recent years that sustainable economic growth has become impossible.

http://www.financialsense.com/contributors/john-bu...

Of course it shouldn't come as a surprise that TLT is popping once again, bonds are what investors have always reflexively turned to in the event of economic uncertainty. Yet this time it truly is different. Governments have no recourse to growth or even repairing the economic damage.

And as Evans-Pritchard points out, the currency imbalance between north and south is not addressed. Forget fiscal consolidation, the victory alluded to by Merkozy on Friday, the Latin countries can't grow their way out of this mess with the Euro as it is.

http://blogs.telegraph.co.uk/finance/ambroseevans-...

So yeh, I understand that governments are trying to flog off their debt as cheaply as possible because soon the jig will be up.

That's because I understand that the world is not going to hell in a handbasket - Bill was making that clear to us. Others are now catching on. As Puplava writes:

...the message from the LEIs is that US growth is likely to accelerate into early 2012 which should lead to demand for stocks over Treasuries and now may be the time for Bill Gross to bet against US Debt.

http://www.financialsense.com/contributors/chris-p...

This information suggests to me that I could be looking at accumulation in a couple of key areas. I'll post those charts tomorrow.

Fox1, lessmore, et al. -

"The problem with private insurance is that a vast number of claims for the excess over SIPC limits can bankrupt the insurer."

First, SIPC is a non-profit member-funded U.S. corporation under federal mandate (Securities Investor Protection Act of 1970). FDIC is a similar insurance program but an outright U.S. gov't corporation ironically created by the now eviscerated Glass-Steagall Act of 1933. Like any insurance PRIVATE or PUBLIC, if it all goes down at once, there will not be enough insurance in hell to cover the losses. That's why all insurance has an Acts of WAR exclusion. Do you really think that any sovereign default that will trigger the $100 TRILLION, yes, TRILLION, in credit default swaps, a form of central bank debt insurance, will be paid? Ahhh, that would be a big NO. So SIPC insures against 'cash' deposits/positions lost by a broker-dealer like MF GLOBAL. How's SIPC working out for those bag holders over at MF Global? Just listen to what Gerald Celente he thinks about his six-figure loss there without leverage as he was about to take physical possession on some gold bars at the COMEX:

http://www.kingworldnews.com/kingworldnews/Broadca...

The deal is that 'cash' positions in trade accounts carry risk. If you want real cash, hold gold and silver outside of the banking system. I believe that SIPC insurance is a joke (See MF Global) and cannot possibly cover losses if broker-dealers are allowed to go rogue and commingle client funds. It's a major crack in a crumbling global trading system. SIPC and FDIC have maybe 1% to cover what they have insured (someone verify?).

As Sinclair has recently suggested, hold your securities in DIRECT REGISTRATION (modern form of registered stock ownership with the company, not the brokerage) and avoid 'cash' in your brokerage account as thorough safeguard. Of course, that means going long in the bluest of blue chips like JNJ, MCD, WMT, XOM, BA plus the hard asset stocks like the railroaders and miners to cover your ass if history is to repeat the experiences of the Great Depression or the German hyperinflation of 1922-23.

Treasure hunters discover ancient coin hoards buried in clay pots every year and always dated from periods of financial peril. That's part of the biggest trend.

Cheers.

Note that this week's weekly mag, in its Market Week section, has a tabulation of the DJI for inclusive years of 1973 thru 2010 with columns reflecting index hi's & lo's, year closing hi's & lo's, year +/- % changes, book value, reported earnings, p/e ratio, divs, and % yields... such info in case anyone might be interested in that kind of historical stuff (NYU?).
Also happen to note that, for whatever it's worth or not, the Investors Intelligence sentiment readings have now reflected (+), and generally increasing differentials, for 9 consecutive weeks since mid-Oct. and the VIX has dipped below 30 for 2 ending weeks for 1st time since late July. So... just wondering... if any semblance of the European woes being rectified... any potential for a big upswing ? As usual, just a couple of perhaps simplistic observations.

Some government stats that I deem accurate.

Current retail costs to produce 1,000,000 BTUs.

Coal (anthrocite) $10.60
Nat Gas $13.00
Air sourced heat pumps $15.00
Wood $16.50
Fuel oil (diesel) $28.00
Electric resistance $34.00
Propane $38.00

The heat pump cost is a function of your latitude. It's probably accurate south of the Red River.

Of course Nuke is by far the cheapest until you add $5.00 per million BTUs just to lobby against the tree hugging Luddites...

Nat Gas isn't the ultimate Savior but it ranks up there with Popes and Cardinals. Enhanced oil recovery from old fields using new technology is VERY promising.

I suspect that including Canada that North America could be close to energy independence by 2025. We could then let the middle east tribes whack each other without any fear that the U.S. would intervene and again scorch their tails.

It will then be very interesting to observe the politics between Israel and the Arabs given that the gloved Iron Fist of America retires. It may/will be a classic case of semites vs. semites separated only by a common but misunderstood religion! Think Luther and the Pope. What the hell is the difference between kosher and halal?

Pigs don't sweat. They require wet wallows. Stands to reason then that if one is a member of an oasis tribe you might impugn the logic of a 'priest' to argue against porkers. They are also, unlike sheep, very difficult to herd.

Comparative differences of civilizations over thousands of years is a tough course to fathom. But there are lessons to be learned given the desparate types of money thought, mathmatics and religion. That's for another day.

Nat Gas will have a problem with localized seismic events. If I advised that industry, I would recommend establishing an insurance pool to repair sheet rock cracks and chimney failures in certain defined areas. The seismic center at OU can contribute an excellent base line.

In the meantime, our Howdy Doody banking regulations still hold hostage most of the bad debt that must eventually be marked to market...Or Not!!!

a friend forwarded this video to me...it's about an hour long, but gives a sense of where we (th US) as an economic/production entity stand and also where we might refocus some of our 'good old US energy/innovation'...
Enjoy

http://gartner.mediasite.com/mediasite/play/9cfe6b...

a harvard prof talks markets and innovation fascinating lecture, move cursor to about a minute and a half in to begin lecture

Leo

Ilya - "Of course Nuke is by far the cheapest until you add $5.00 per million BTUs just to lobby against the tree hugging Luddites"

I have some new property for you. It is being sold by some luddites in Futaba, Japan. I suspect you can get a very good deal from them, they're really pricing it to move.

Current estimates to clean up the Fukushima mishap are perhaps $100 billion dollars, assuming the cores don't melt down into the groundwater causing a massive and highly radioactive steam explosion, in which case the cost goes up even further.

Your nuclear power cost analysis omitting reserves for accident mitigation reminds me of AIG's Costello, selling all that default insurance without reserving for potential losses. Those CDS premiums were pure profit, he looked great and there were smiles all around - right up until it all fell apart.

Nuclear power is priced as if Black Swans don't happen.

Coal plants have accidents too. But their failure modes don't include spewing Cesium-137 into the air poisoning the nearby land area making it more or less uninhabitable for hundreds of years.

Les,

Here's a lengthy video (30 min) which backs your move to silver. The overall message is a real downer, but with enough evidence and "ring of truth" to be to some degree plausible.

"Ann (Barnhardt) explains the corruption and bluntly explains why she closed her firm down due to the crisis of MF Global."
http://tiny.cc/n3thi

I happened to be watching (and listening for a change) to CNBC when Rick Santelli had a floor trader telling how he was left hanging and totally vulnerable when trades were suspended.

I see her claim of lawlessness to be right on.
-------

Here's one which gives a positive opinion for Treasuries.

Deflation Has Arrived
A. Gary Shilling, 10.05.11, 06:00 PM EDT
Forbes Magazine dated October 24, 2011

"Virtually all financial assets have declined, with the exception of safe-haven Treasurys. Massive monetary and fiscal stimuli revived them in 2009, but financial assets are sinking again."

I have read two of Shilling's books and so far his advice has done well for me. If I see a major improvement in US jobs (My key to economic improvement) I will likely dump Ts for equities. With shrinking wages and benefits, continued pretense of mortgage loans, but falling or stagnant median housing prices — I remain in the deflation camp. (Minus food and energy).

Grym

She might be right on the lawlessness but I suspect she is a flamer and perhaps even a right wing nut. Technology is a wonderful thing and youtube vids of Ann Barnhardt describing how she lined a Koran with bacon before burning it is hypocrisy I cannot ignore, especially when she speaks of the loss of Republican ideals.

http://www.youtube.com/watch?v=aCfbYkXtHuA&list=UU...

I'll stick with Bill for my apprenticeship through 'hard times' ;)

Les,

Weird! Not in my US Army cookbook.

I wonder if she used a microwave ;-)

Grym

"Direct registration in hard asset company stock"

http://investor.shareholder.com/bhi/stockholder_se...

Could you elaborate on this please? I am interested in investing into Bill's mining company, but would like a paper trail, so to speak. From what I see we can ask a company to do this for us. Any company, or are there designated companies in the business of doing this for investors? TIA

Funny money flowing everywhere. We are all both the crack addict and part of the supply chain.

lehman
Bear
Madoff
Mf global
Sovereigns
Etc etc

Are all just smoke. The fire is growing underneath.

Bill- A very nice update on UXG from the latest WIR. You certainly write clearly and concisely on UXG and the merger with Minera Andes.
I own UXG in multiple accounts with an average cost $4.33 which is currently underwater but I expect to substantially recover and turn positive by next year. I have traded UXG frequently in the past few years and taken substantial profits. Since it dropped below $5/share, I decided to accumulate a position and hold. Obviously, I bought when it was a falling knife and should have known better if I had followed my technical readings. However, what is past is prologue.
I have spent an enormous amount of time in private conversations with McEwen and each of the executives of UXG. My research has been extensive and I have been able to compile a full checklist of questions to ask each of the executives.
I usually see them at conferences in New York City where I find it easier to talk to them for an extensive time period as opposed to PDAC where the place is flooded.
I hope that I can attend the stockholders meeting next month, January in Toronto. I'll see if it is possible.

davefairtex -

"So first you said FDIC would never pay out, and now you're saying it will pay out, but the required money printing will cause hyperinflation."

Well, it all depends on the Bernank and his QE and HOW IT'S ALLOCATED now doesn't it? I'm not reliant on FDIC insurance to protect me against a RUN on my bank. Too risky.

The German hyperinflation, like all hyperinflations, is a case of every thing working UNTIL IT DOESN'T. Velocity will rocket when confidence is lost. Overnight. That $500,000 of FDIC insurance won't buy you a postage stamp. Did you read the link from my previous post? Did you see the stamps? It may not have happened in our lifetime but it has happened many times in history. Don't go telling me to review the Weimar hyperinflation whilst you're stuck in the deflation/inflation quagmire pretending to know how the Bernank will allocate funds to insure your bank deposits.

Cheers.

Ouch after a few hours of trading in the new week we are seeing a sharp pull back.

http://www.goldprice.org/live-gold-price.html

http://www.forexpros.com/commodities/silver-advanc...

http://www.fxstreet.com/rates-charts/live-charts/

The dollar is up 0.10 @ 1.33510 and gold is trading down $21.00 Hum

Sorry Doc, hyperinflation didn't happen overnight. It makes for a very alarming story, but its simply not true. When you make claims like this, it drives me to suggest you review the actual historical record.

http://en.wikipedia.org/wiki/Hyperinflation_in_the...

"The hyperinflation in the Weimar Republic was a three year period of hyperinflation in Germany (the Weimar Republic) between June 1921 and July 1924."

It took 3 years to play out. 1000 days. Not 1 day. Not overnight.

I took a lot of history & political science in college. They broke me of my tendency for hyperbole. Usually when one makes claims like that they give you a little slap on the wrist for not having a reference for such an extraordinary claim - and then another slap for it being simply wrong. What's the line - extraordinary claims require extraordinary evidence.

As for Ben printing money to prevent deflation from bank failures, I use as evidence his track record. He's already printed money to prevent deflation, and not long ago. He wrote papers suggesting he would do it, then he did it - twice. Predicting that he'll continue to do it is just as challenging as predicting the sun will rise tomorrow. Sure - he might not, but I'll go with the odds.

And if you study the Depression you'll know that the policy move that broke the back of the then-common bank runs was the creation of FDIC, created as a part of the Glass-Steagall Act. As a student of the Depression its really clear to me that Bernanke will do everything in his power to head off bank runs. A bankrupt and unsupported FDIC would open the door to a huge rash of bank runs, so logic would seem to dictate that the Fed support FDIC in any way possible.

Its strange to me you don't see the logic that I find so clear, but - I guess two people can see the same set of facts and interpret them differently.

davefairtex -

"I took a lot of history & political science in college. They broke me of my tendency for hyperbole."

Given your 3674 comments here on this blog, that's HARD TO BELIEVE! What about obfuscating the topic at hand? Did you miss that one? The Weimar hyperinflation ramped quickly from early 1922 and went parabolic by Oct 1923. When I say 'overnight' you attack it literally and call it an exaggeration. Overnight can also mean 'quickly' as in faster than you can protect your savings.

"It took 3 years to play out."

Well, where I matriculated, it was shown that the Versailles Treaty signed on June 28, 1919, marked the beginning which led to Germany's decision to print to oblivion and ended with Hitler's suicide on April 30, 1945, some 15 years later. Many Germans realised a total loss of savings by Oct 1923 but the damage of the hyperinflation ran for more than a decade after that with the election of an extremist and WWII. Perhaps you should ask your alma mater for a refund? The hyperinflation hadn't really "PLAYED OUT" with the stabilization of the currency.

I warn of the potential for USD hyperinflation and you defend the Bernank and trillions more in some fantasy financial sector resolution to stabilize the global economy and maintain U.S. financial power via a solvent FDIC. Whatever. I wholeheartedly disagree.

The Weimar hyperinflation started as a deliberate policy to inflate away the WWI reparations Germany owed to the allies. P. Volcker showed how to nip any serious inflation in the bud- just soak up the ready money! Meanwhile, it is insane to worry about inflation when trillions of dollars are being destroyed by severe housing, securities, and wage deflation, bankruptcies, derivatives destruction, etc.!

I'm not sure exactly why you think frequent comments equate to hyperbole. Perhaps you need to look up the definition of the word: "Hyperboles are exaggerations to create emphasis or effect". Says nothing about talking too much, which I'm clearly guilty of. Had you said "boy Dave you talk too much" I would have to admit you were right.

And sure I'd be the first to admit the impact of hyperinflation lasted for longer than it took to stabilize the currency. And it had its roots in war reparations. But that wasn't the subject, was it?

The point was, hyperinflation didn't happen overnight. Nor did it happen "too quickly to take action" as you now claim. If you remember from your readings about that time, you'd recall that some people in Germany were able to profit from the hyperinflation. That didn't happen by accident. They saw what was happening, and they took action. Not only were they able to protect their assets, they came out better off out the other end. Definitely not the fixed income pensioners, they were screwed, along with most of the savers who were certain it could never happen. The certainty was the real killer, it made the people of the time blind to the eventual outcome.

As for your warning of a "potential" for USD hyperinflation - your previous words were spoken as though hyperinflation was a 100% certainty, not merely a "potential." As I recall it was $500k turning into a postage stamp, with nary a qualifier suggesting that any other outcome was even remotely possible. Well I'm not so certain. I see a range of possible outcomes - one of which actually IS hyperinflation. But to me, hyperinflation is by no means a certainty, or even the most likely outcome. And I don't think it will happen overnight - or too quickly to take action. I'm looking out for a range of possibilities. I don't want to have my mind trapped in the wrong position by deadly certainty.

I do think there's a chance of an overnight (or "over the bank holiday") devaluation if things get really bad. That likelihood rises close to certainty if I imagine myself living in Greece, for instance. But that's not the same thing as hyperinflation, where $500k turns into a postage stamp, too quickly to take action.

As for me defending Bernanke, you're making an assumption that I support him and his actions. I'm not supporting him. I'm just making a prediction. I look at a hungry dog and a piece of meat nearby, and I predict the dog will wolf down the piece of meat. I'm not "for" the dog or "against" the piece of meat - I'm just looking at the system and predicting what I think is the logical outcome.

And I was NOT suggesting the financial system would be "resolved", merely that the FDIC would be supported, and would be the last system in the US to fail.

And I was NOT suggesting US financial power would be maintained, merely that FDIC would be supported.

And I was NOT suggesting the global economy would be stabilized, merely that...ok do you get the idea?

Man, the number of straw men you construct in just one sentence is really amazing.

"So, generally, my mindset (call it bias) is that equities are going to lift in 2012, and that Bond prices will fall. Someone else I know agrees"

Carrigan says CSCO, I say look at XLK. I agree with Carrigan that this is secular bear, but it doesn't mean we have to go down. I think of Armstrong's repeated remarks that equities and commodities will lift at some point in response to degrading confidence in government fiscal competence. The C word so to speak.

With a time frame of 2000 - 2014 (14 years) for secular bear, which I read somewhere and use as a tentative time frame, XLK looks like it is raring to go in monthly time frame. Not betting on it this time round, but a good possibility of testing resistance. Look at the volume of the most recent sell off and how quickly support was found. Looks like weak hands shaken out to me, unless we're in the opening stages of a 2008 type sell off. Can't see that yet. See attached.

It's another sector that intrigues me in monthly time frame.

Seems Bill Gates is thinking the same thing Dave. He's been funding a Washington based energy company in order to flog off a new generation of reactors in partnership with the Chinese.

http://www.foxnews.com/scitech/2011/12/07/bill-gat...

Bill, I've noticed a couple of comments in your WIR related to gold. Not sure that they mean much, but can't help but wonder nonetheless.

In US International Trade data for October...… Essentially, most of the movement in the October trade data was in oil and nonmonetary gold.

Lalwani said...We lower our 2011/12 GDP forecast [for India] from 7.4% to 6.9%, raise the fiscal deficit to 5.6% from 4.6%, and feel the trade deficit will be about 50% higher this year at $155 bn vs $ 104.4 bn last year. India may be heading for its worst financial crisis in decades if the slide in the Rupee is not arrested

I relate these two comments to an increasing influence that gold appears to have on currency and trade. In particular, I noted an opinion the other day that gold imports may soon have to be restricted in order to arrest the decline in the Rupee:

Since the rupee’s value is influenced by the current account deficit – the gap between out total foreign exchange earnings and remittances before accounting for capital flows – gold is an important tipping factor in the value of the rupee.

The paradox is that as the rupee depreciates, inflation worsens since imported goods cost more in rupee terms. And when inflation worsens, it makes more sense to hold gold to retain the value of your wealth. But as more gold is imported, it skews out trade gap, contributing to the rupee’s weakness.

http://www.firstpost.com/economy/rs-2150000000000-...

Just thinking out loud in relation to your comments elsewhere that sooner or later the US is likely to legislate the trade of precious metals in the US. It seems that others may be thinking about such a policy proposal.

That "C" word cropping up again and again. I wonder how Indians will take towards suggestions of gold import quotas or outright temporary bans on the yellow stuff. I wonder if it could be silver's big break, if authorities leave the door open for an alternative inflation hedge.

I think Ann is just a mid-western farm girl fed up with wall street.

------------------------------
Richard, his son Garland, and I attended another one of Ann Barnhardt’s Livestock Marketing Schools yesterday and today. Again, we learned excellent information for making money marketing your livestock regardless of which way the prices go.

http://handnhandlivestocksolutions.com/blog/?cat=29

Really like your silver:gold chart. :)

All right, I apologize for the "insane" appellation; but not for the sentiment. When one is rapidly losing the fight against a raging fire, it is not 'smart' to worry much that we are using too much water and will flood some basements.

normxyz -

"When one is rapidly losing the fight against a raging fire, it is not 'smart' to worry much that we are using too much water and will flood some basements."

You aren't "smart" to fight the raging fire with gasoline, not water. You socialists crack me up. Maggie said your solution (socialism) works great until you run out of other people's money.