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November 20, 2005
Silver replay, Sun., Nov. 20, 2005, 10:59 AM
Tomorrow morning the gold and silver stocks will run to the upside.
Unequivocally.
As I write these words, I am looking past the monitor on my desk top, out across the shimmering waters of Lake Ontario on a perfect Fall day, and between me and the water less than 100 feet away, a flock of maybe 50 Canadian geese fly by in slow motion, right at eye level, and I feel I can almost reach out and touch them. I marvel at the law of nature, and I am sensitive to it, because like the capital market, and the rest of life, it is all around me.
I sit back in my chair and I ponder the reason why I do this.
You don't know me, and I don't know you. So why do I write lines like the first one above?
I know it's partly because I care about people, and do this as a public service, but that cannot be the only reason. I don't know why I sat down at 5:00 am this morning and started answering mail, and researching, and writing. After all, this is my day off, and surely I did enough yesterday and the five days before that to deserve time to myself.
I don't have the full answer, but partly I think it's because I have so isolated myself from the noise in life that I can see things happening that most others cannot. I looked right into the faces of those geese as they floated by, and I felt a connection to life.
I look at the squiggly lines on a monitor, and I don't see a stock chart, I see a data series that is connected to life. It is pulsating. Because I am totally color-blind, I am hypersensitive to movement; I see meaning, when others see data.
I see meaning in the actions of others, yet I cannot in my own.
In any event, I see silver moving. I saw it back at the end of June, when I wrote about it.
And back then, on that last weekend in June, I also saw pain and death, which I too described in these pages.
http://www.billcara.com/archives/2005/06/silver_moon_tue.html
http://www.billcara.com/archives/2005/06/art_of_trading.html
http://www.billcara.com/archives/2005/06/followup_to_yes.html
http://www.billcara.com/archives/2005/06/the_end_of_the.html
http://www.billcara.com/archives/2005/06/a_great_persona.html
http://www.billcara.com/archives/2005/07/john_ciccarelli.html
http://www.billcara.com/archives/2005/07/return_monday_j.html
http://www.billcara.com/archives/2005/07/joseph_stefania.html

p.s., It's now 11:40am and more friends have dropped by " these ones landing beside me. Of course my cat assumes the attack mode" posture, and then stares at them, afraid to do anything.
Most days I am visited by at least a thousand, many of them closer than these.
One day I called the City Councillor to say that right before my eyes, maybe a quarter mile offshore, was a single stream of ducks flying about five feet above the lake, stretching for as far as I could see, which I'd guess is two miles each way. There wasn't more than three or four feet of separation between birds, so there must have been 10,000 in that single flock.
The Councillor reminded me that the park 1000 feet down the lake was built from landfill over a period of 20 years as a sanctuary for these birds.
Isn't life great, when you see it this way?


Posted by Posted by Bill Cara on November 20, 2005 10:59:25 AM | Category: Silver
Discourse
In addition I see the CBOE put/call now back to 12/2004 levels. I have always felt sentiment is not a precise timing indicator but when the cash is used up it can become important in short order. I see that RYDEX cash assets are now back down to 12/2004 levels, so that ammo for a rally is getting depleted.
The playbook to use is year end 2001 and 2002. Cash levels should be established by November month end as December looks vulnerable.
Posted by: stockman
at
November 21, 2005 9:31 AM [link]
Stockman-
I was thinking the same thing as I have been VERY hesitant to take any long positions in even the best situations that Bill has been sharing, except of course for gold, which looks like it could run to the moon. So I have been stopped out frequently. This will look a lot better to me at average PE multiples or lower than it does today with rich valuations, all this internal divergence and increasingly negative macro features.
Love your historical parallels, BTW.
Posted by: MarkM
at
November 22, 2005 7:04 AM [link]

Stock rally is increasingly selective. Easily seen with NYA vs SPX chart. Hussman makes the same point looking at new highs vs new lows, Lowry's:
http://www.hussman.net/wmc/wmc051114.htm
While this is a seasonally strong period 2005 looks more like 2001 and 2002 year end rallies. Low confidence, poor quality.
Posted by: stockman
at
November 20, 2005 9:28 PM [link]