The last few fridays have found gold shorts being squeezed, at least a little. Today seems to be starting out that way as well, I still can't believe that anyone would be short gold with the strong fundamentals plus geopolitical backdrop that we have now.

Which headline would you expect to wake up to:
"Peace breaks out in the Middle East"
or
"US has begun taking out Iranian surface to air missles, no civilian casualties"

Probably neither, I know, but the risk of being short gold far outweighs the gain, IMO. That's all I'm sayin'.

hello from germany,

i wanted to share this "hall od fame" posting from pimco

"a new era"

this is the best explanation so far i´ve read why almost every asset class is hitting new highs.

brilliant!

http://immobilienblasen.blogspot.com/2007/02/hall-of-fame-new-era-pimco.html

have a nice weekend

G034, maybe you're right about today,too. Gold is going up again and a lot.
I just read a frightening article about the inflation/deflation we should expect. Brrr... If it's so, it's really depressing, but I'm afraid that both premises and conclusions of this article are believable. Any opinion?
http://www.321gold.com/editorials/laird/laird022307.html

Does anybody here follow or have an opinion on RANGY? I have been long the stock for some time and am considering adding to my position as the chart indicates a classic cup and handle pattern and is showing signs of flagging up. I know its a bit of a different trade due to exposure to the Rand, but I wondered if anybody had any opinions on it. Nice start for PAAS today as well.

I'm relatively new here in terms of posting and adding feedback, but I have been an observer of the site for a while. I appreciate the banter and ideas on this site from all those that contribute.

Long PAAS, RANGY, KRY, CUP, GGB

Does anybody here follow or have an opinion on RANGY? I have been long the stock for some time and am considering adding to my position as the chart indicates a classic cup and handle pattern and is showing signs of flagging up. I know its a bit of a different trade due to exposure to the Rand, but I wondered if anybody had any opinions on it. Nice start for PAAS today as well.

I'm relatively new here in terms of posting and adding feedback, but I have been an observer of the site for a while. I appreciate the banter and ideas on this site from all those that contribute.

Long PAAS, RANGY, KRY, CUP, GGB

Lelik - this scenario has been written about for a number of years now, it has happened many times throughout history, but not yet here and maybe not ever. What I'm saying is watch the tape.

Stagflation is the concern but that has been part of my investment thesis for the past 5 years, yet without stagflation actually appearing in major force - yet. But, I have still made money, but a trader needs to watch the tape, not the news. But you already know that.

If gold finishes the day strong today, I would expect another good week next week - at least the beginning.

good luck all!

Can the board tell me if the cara100 is due for a major lineup change? I'm fairly new, becoming something of a routine visitor. (Quite interested in the etf component Bill is working on, but stocks have their place too). Next stop is to put the cara100 into a data base for alpha ranking. From past comments I sensed a change was in the works.FWIW, re whole foods I was a coop member in 1974-75 of this early fledging lifestyle community before it became a business.

ALOHA !!

You can't have liquidity without the help of central banks and no bigger driver for money supply growth exists than the BIG spenders that are in power now. This applies to every G7 and G20 country on Earth. It seems as if every major power is now devoting a large part of their print and spend budgets to defense. There is a new Cold War beginning where every other day I read about some country or another being accused of a military build-up.

When the US government or any major power builds uo their military the main beneficiaries are companies like Lockheed and Boeing and Northrup. This puts a floor on spending and liquidity since no government manufactures anything other than debt, so these funds get distributed to defense contractors and the many dominoes attached to their production line including unions. If you use Ford and GM as a guideline I would say that we are in "Guns and Butter" economy only a lot less "butter" and more "guns", since I never hear Lockheed announce job lay offs lately!

One major import that drives defense manufacturing and every military in the World is ... OIL !!! The US military consumes by far the most oil and gas than any one entity on Earth.

Below are the numbers that drive this spending policy now out of control. Don't forget to manufacture one M1 tank takes a hell of lot of "metal"! Unlike Wall Street manufacturing(real wealth)requires metal not metal futures! Add in the Russian military and China and Europe and evey other country, even Japan and the liquidity boom can stay alive for a long time yet. Look what happened to US government spending after we pulled out of Vietnam and cut back military spending ... it shrank. As long as the USA is in a World Police mode this huge liquidity boom stays huge!

Read this and you get an idea of what the US military spend on just "fuel" alone ... These figures are for 2004 and 2005, but you can be assured 2006 is probably as high or higher.

Napolean once said that an army travels on its stomach ... but not any more!

How's this for inflationary pressure?

From the Department of Defense(DoD):
“The Army calculated that it would burn 40 million gallons of fuel in three weeks of combat in Iraq, an amount equivalent to the gasoline consumed by all Allied armies combined during the four years of World War I.”

The main cause for the high inflation in the late 1970s and 1980s was the Vietnam War. To give you younger readers an idea of how high interest rates were due to inflation I bought a new Chevy truck in 1984 and paid 17% on the loan!!! Can anyone here imagine what this US economy would look like now with 17% car loans? I am living proof that 17% consumer loan rates are not out of the question for US consumers! There goes the primary residence ATM!

Wars are very costly and highly inflationary ...

The US military uses more oil than just about any entity on Earth. Here are the alarming figures for 2004 and 2005 ... Why is it we need military bases in 134 countries worldwide?

READ ON:
SUNDAY, FEBRUARY 26, 2006

http://www.williambowles.info/empire/us_mil_oil.html

The US Department of Defense (DoD) is the largest oil consuming government body in the US and in the world

“Military fuel consumption makes the Department of Defense the single largest consumer of petroleum in the U.S” [1]

“Military fuel consumption for aircraft, ships, ground vehicles and facilities makes the DoD the single largest consumer of petroleum in the U.S” [2]

According to the US Defense Energy Support Center Fact Book 2004, in Fiscal Year 2004, the US military fuel consumption increased to 144 million barrels. This is about 40 million barrels more than the average peacetime military usage.

By the way, 144 million barrels makes 395 000 barrels per day, almost as much as daily energy consumption of Greece.

The US military is the biggest purchaser of oil in the world.

In 1999 Almanac edition of the Defense Logistic Agency’s news magazine Dimensions it was stated that the DESC “purchases more light refined petroleum product than any other single organization or country in the world. With a $3.5 billion annual budget, DESC procures nearly 100 million barrels of petroleum products each year. That’s enough fuel for 1,000 cars to drive around the world 4,620 times.”

That budget increased a lot over the years. The US DoD spent $8.2 billion on energy in fiscal year 2004.

“In fiscal 2005, DESC will buy about 128 million barrels of fuel at a cost of $8.5 billion, and Jet fuel constitutes nearly 70 percent of DoD’s petroleum product purchases.” says American Forces Information Service News Article by G. J. Gilmore. [3]

For some, this is not enough though. Here is what a report from Office of Under Secretary of Defense says “Because DOD’s consumption of oil represents the highest priority of all uses, there will be no fundamental limits to DOD’s fuel supply for many, many decades.” [4]

American GI is the most energy-consuming soldier ever seen on the field of war

“The Army calculated that it would burn 40 million gallons of fuel in three weeks of combat in Iraq, an amount equivalent to the gasoline consumed by all Allied armies combined during the four years of World War I.”

In May 2005 issue of The Atlantic Monthly, Robert Bryce gives another example; “The Third Army (of General Petton) had about 400,000 men and used about 400,000 gallons of gasoline a day. Today the Pentagon has about a third that number of troops in Iraq yet they use more than four times as much fuel.”

The US military oil consumption overseas and the world oil demand

According to the Defence Logistic Agency’s Web Site, as of November 2005 more than 2.1 billion gallons of fuel have been used in support of Operation Enduring Freedom (since October 2001; war on terrorism in Afghanistan).

In the May 2005 issue of the Atlantic Monthly article Robert Bryce says that “The U.S. military now uses about 1.7 million gallons of fuel a day in Iraq. … each of the 150,000 soldiers on the ground consumes roughly nine gallons of fuel a day. And that figure has been rising.” This mean in Iraq each day 40 000 b/d of oil is consumed by the US military.

Yes, something is wrong with that figure. Compare it with the one given by the Defense Logistics Agency spokeswoman Lana Hampton. Accroding to an American Forces Information Service News Article she said the U.S. military is using between 10 million and 11 million barrels of fuel each month to sustain operations in Afghanistan, Iraq and elsewhere. This makes 330 000 – 360 000 barrel per day.

This is more than double the amount of oil used in the Gulf war!

According to a Rand Corporation report “1.88 billion gallons of fuel were consumed within the U.S. Central Command’s area of responsibility during Operations Desert Shild and Desert Storm (ODS/S), between August 10, 1990 and May 31, 1991.” [5]. This makes 44.8 million barrels, or 150 000 barrels a day. Note that ODS/S lasted 295 days.

Moreover, “during ODS/S Saudi Arabia and the UAE supplied fuels without charge (1.5 billion gallons), whereas Bahrain, Egypt, Oman and Qatar charged for the fuels,” adds the Rand report.END

READ ON:

Why does the US "defense department"need 700+ military bases overseas? Read Chalmers Johnson's book The Sorrows of Empire.

MU broke a downtrend line this am

Bill,

On Fri Feb 23, the Bombay Sensex 30 was down -388.78 points (-2.77%) and not 609 points as you report above. I guess that incorrect number is taken from Yahoo which lately has been reporting bad numbers - especially for Indian indices and stocks.

You can confirm at Bloomberg at
http://bloomberg.com/markets/stocks/wei_region3.html

Kaimu - NAK (where's the emoticon when you need one!)

Hi,

Regarding Bill's RSI method of buying quality stocks when they are out of favor, I bought Chesapeake Energy when the RSI was below 30 on the daily, weekly and monthly. This method allowed me to pick practically the exact cycle bottom. The price level was also a frequent support level in the past. After an earnings bump today I am already up about 10%. Chesapeake is not a Cara 100, but their return on equity is outstanding (28%) and it was trading at only 1.5x book value. I will sell when the RSI is above 70 on daily, weekly and monthly.

Moab

Kaimu and others, here is an interview with Chalmers Johnson which gives insight into the military industrial complex of America. I found it fascinating. It will take an hour of you time. Well worth it in my opinion.

The link:
http://video.google.com/videoplay?docid=1763367318917540709&q=chalmers+johnson&hl=en

PM shares acting well here. SLW moving nicely. GRS looks like it needs to digest its gains. Time to look at the smaller names such as FRG NAK GBN.

Subprime lenders are down about 2.5% today (CFC, FED) and are approaching support levels. Bill mentioned several months ago to watch these stocks as they may foretell weakness in the broader market.

MOAB:

Did you just state Bill's methodology of entry and exit? Using rsi readings for buying low, and then selling into strength with all three readings in agreement?

re the cara100, to answer my own question, since the cara is dated 2/15/07, looks to have already been updated. Any sense on how often it is modified?

MOAB:

Did you just state Bill's methodology of entry and exit? Using rsi readings for buying low, and then selling into strength with all three readings in agreement?

re the cara100, to answer my own question, since the cara is dated 2/15/07, looks to have already been updated. Any sense on how often it is modified?

MOAB:

Did you just state Bill's methodology of entry and exit? Using rsi readings for buying low, and then selling into strength with all three readings in agreement?

re the cara100, to answer my own question, since the cara is dated 2/15/07, looks to have already been updated. Any sense on how often it is modified?

MOAB:

Did you just state Bill's methodology of entry and exit? Using rsi readings for buying low, and then selling into strength with all three readings in agreement?

re the cara100, to answer my own question, since the cara is dated 2/15/07, looks to have already been updated. Any sense on how often it is modified?

Jasper -

Bill's method includes buying when RSI(7) < 30 on the daily, weekly and monthly for quality companies. It also includes analyzing the company news and investor sentiment to help pick the cycle bottom for the stock. Trading quality companies helps to ensure that the stock is not down because the company is broken but because it is out of favor. The relative strength indicator helps to determine when everyone hates a stock and when everyone loves it. Buy the former, sell the later, stick to quality companies to lessen risk, wait for your opportunities.

the break in cfc is very significant.

after breaking the magic 40$ they went down in minutes to 39 and are now at 38,50

http://stockcharts.com/c-sc/sc?s=CFC&p=D&yr=0&mn=8&dy=0&i=t58866903516&r=9175

the last time they were at 40 a takeover rumor lifted the stock in a nanosecond.

and it looks like they have no firepower with buybacks (of course debtfueled...)left.

management is executing a capital optimization plan and the Board of Directors has authorized a share repurchase program of up to $2.5 billion. In connection with this program, the Company intends to repurchase $1 billion to $2 billion of its common stock in the fourth quarter financed through the issuance of high equity-content debt securities.

jmf
There has been huge insider selling in CFC. Big sales today. Go to www.secform4.com and punch in CFC.
Exits are getting crowded.
The ratio of inside sales to buys in the broad markets are at record levels.
Just a matter of time.

New to this great site and investing in general.
Took the plunge today and picked up some MU shares.

Near term put volume in CFC has surged today. I'd welcome other views, but I've seen this happen before when institutions are unwinding their positions.

rigdom

good point. the selling is going for month now.

the same time they have bought back shares. that smells. but to be fair cfc is and was not the only company...

more the rule than the exception. wall street at work....

ALOHA !!

I own three(3) Canadian based junior explorers with their main operations in Mexico. Today all three are to the upside. I own each of them because they each hold commanding land mass in highly productive past producing mining districts. Two are currently producers(ECU & EXN)and one is still mainly a junior explorer(CNU).

ECU SILVER - ECU.V ECUXF US OTC
EXCELLON MINING - EXN.V EXLLF US OTC
CONTINUUM RESOURCES - CNU.V CUUEF US OTC

All three have existing mines in place, so costs to construct a new mine is not an issue. The main issue for Continuum is "power" since they can only run one drill now, which I believe will be resolved soon.

Look for pull backs since all three are awaiting drill results that would propel them higher. Lately they have had significant run-ups, except for ECU which has been consolidating for the past six months which I believe will make a significant move up soon. I haved been buying more ECU shares in the $2.50USD range.

hi Kaimu,

Do you have an opinion on Exmin EXM.V? They have a huge land package in Mexico, several JV partners and seemingly experienced management.

RE: MU

btw, I don't think that Bill has said anything other than he still thinks the market needs to correct before the shares of MU come to him at lower prices.

Re: MU,

Bill's mantra: "When sellers come to me I wait until I see the whites of their eyes before pulling the purchase trigger. Even in the best companies, cycles happen. ... "

Wow, check out the whipsaw action going on in GRS NAK and AUY. Still, a nice week for PM shares. Many have been lagging the physical so hopefully they can continue to make up ground in the following weeks.

re: MU,

besides the general market correction (looming), there is the seasonal factor to consider when looking at tech. we just finished the seasonally strong period, and the summer might offer an even better opportunity.

Hi,

This is my very first posting. I've been "lurking" on the board since late December. "Lurking" then became "studying". "Studying" has become "profiting". Wow. I am sooooo grateful for having stumbled on to this site! It has had a profound beneficial effect on my financial understanding of the markets. The markets were more myth, superstition, and paranoia to me until Bill cleared many of the cob webs.

Thank you Bill.

Thanks also to all the board members.

You continue to help me gain a greater understanding of the markets and how to protect, improve and preserve my capital.

Now I have a question to Bill and/or the board...
Has anyone given SILVERADO GOLD MINES LTD (SLGLF) (OTC BB) a look a good look?

Thanks

Decent charts and perspectives on gold and currencies.

http://headlinecharts.blog.com/2007/02/23/

Gold Knows

By ritholtz on Inflation

A grudge match of epic proportions has been developing. Like Ali and Frazier, these two pugilists have been taunting each other, name calling, daring their counterpart to step into the ring and get the beating they so richly deserve.

This championship match, the Thrilla in Manilla, the Rumble in the Jungle can no longer be avoided. The contestants are fit and well-trained, the crowd is growing restless, the bets have been placed. Let the battle begin!

In this corner, weighing 195 pounds, standing 5 foot 10, hailing from Washington D.C. via Harvard, MIT and Princeton, New Jersey, wearing the M1 green trunks, the Charlemagne of Currency, the prince of paper, the bearded bard of the Fed, monarch of monetary policy, Benjamin GOLDILOCKS Bernanke!

And in the opposing corner, weighing 2046 metric tonnes -- one ounce at a time -- the shiny, precious, storehouse of value, the standard for monetary exchange, the most malleable and ductile of the known metals, that master of disaster, hailing from most of the world, that dense, soft, shiny, yellow metal, GOLD.

The battle between these two titans has become increasingly loud and volatile as of late. Bernanke, a former inflation Hawk, recently went all Lovey Dovey: He now believes there is "growth with ebbing inflationary pressures and a stabilizing housing market."

When Gold heard this, it laughed out loud, calling the Fed Chair out for such nonsense. Gold dissed Bernanke: "I know what you fear" taunted the metal. "You're afraid of the drag on growth while inflationary pressures are building and the subprime implosion is threatening the system."

Gold knows. It knows Bernanke has been painted into a corner, hamstrung by his predeccessor, Easy Al. Even if inflationary pressures spike upwards, Gold knows Ben cannot raise rates. Gold know what’s been goin’ down in the subprime market. Gold's sees his buddy Oil (aka Black Gold) at $61 bucks.

Gold know that the slowing economy would not absorb more rate hikes particularly well. Gold also knows that the FED can’t throw the economy a lifeline by easing, either. Gold thinks the Fed is full of crap, jawboning the markets with lies: That economic growth is robust, and about to reaccelerate, that inflation is "contained;" That Housing has stabilized.

Gold laughs its arse off at each and every NovaStar blow up. Gold knows the score. Reality dictates that the FED is going to sit there and get bitchslapped by whatever inflation comes our way. Thank you sir may I have another?

Gold smirks.

Want to talk re-acceleration? Gold knows that if the Fed tries to throttle inflation back down, they will launch a cascade of subprime lending implosions far beyond what we have already seen. And, if that were to occur, we might see it metastasize, spreading across the entire lending sector like an invasive economic cancer. So far, the sub prime disasters have been contained, like a large malignant tumor, confined to one small but significant section of the mortgage market. A few hikes and the entire disease could spread much further up the food chain.

Meanwhile, Gold futures edged higher earlier today, as rising crude-oil prices and a weaker dollar underpinned demand for the precious metal. Marketwatch reported that Gold for April delivery was last up $1.50 at $684.50 an ounce on the New York Merc. On Wednesday, gold closed at $684 an ounce, a seven-month high.

And the Fed? They are content to jawbone the markets.

All the while, Gold sits there, smiling.

* Posted on: Fri, Feb 23 2007 11:00 AM
* http://bigpicture.typepad.com/comments/

And in the, "take it for what you think it's worth category", Jim Cramer on realmoney.com:

"Hard to make headway with gold doing so well. I have to admit that I am willing to tolerate pretty much anything to stay long this bull except gold going higher. Think back to the clobbering the bull took last spring. That was predicted by a massive rally in gold. . .

We have to keep an eye on this. If gold goes to $710-720, I am stepping back and suggesting that things could go awry.

We aren't there yet. But I have no antidote to a gold rally. It's just plain bad for everything financial."

I think Jim Cramer has it backwards. He should be asking; "why is gold rallying?". That answer will tell him why stocks would be falling.

The problem is, all of these talking heads need stocks to go up to have a job...they don't have to have it that way, but they are choosing to have it that way.

Friday evening Kirk Report (thekirkreport.com) cites 3 laws of short-term trading, scanning of PM sector which returns a few of Bill's favorites.

Kirk seems a good communicator, and an impressive short-term position trader.

ALOHA !!

Moab ... No I do not own Exmin and have never done due diligence, but I have heard of them via other analysts ... nothing negative.

onlineaces ... Here is a link to a 2003 article on a SEC investigation of Silverado.
Link: http://www.worldnetdaily.com/news/printer-friendly.asp?ARTICLE_ID=30603

You have to read the warning flags. Any mining company that advertises on KITCO and offers little gold nugget contests and shows photos of nuggets and touts "green energy" is playing on emotions and is "SELLING" too hard! They remind me of a Las vegas schill!

Advertising on KITCO is fine but flashing nuggets is for EBay !!!

*** DUE DILIGENCE TIP ***

One of the fastest ways to weed out a CEO or a company is to do a "fraud search". You can do this by going to Yahoo or Google and type in the name of the company and then the word "FRAUD". It is my FIRST STEP in my due diligence process and I can't tell you how much time and money it has saved me over the years!

For Silverado you type in "SILVERADO MINING FRAUD"(on Yahoo)and the very first lisitng is the above link I provided.

If any articles come up then I stop. I do not care if it was in 2003 or yesterday I refuse to throw my hard-earned cash into a company that has had prior SEC investigations or has been written up for fraud.

ALOHA !!

ON CRAMER ...
Pure BS!! Look at the fantastic 2006 earnings being reported by the miners for the same time period that CRAMER points out POG crashed. The only miners in doubt are the ones who have large hedge books(hidden or not). Know any miners hedging gold at $730 last spring? Not even Barrick wants to hedge ... HELLO ... what's that say?

If Microsoft or Intel products had 20%+ and 40%+ price increases per year CRAMER would be all over that with a BOOYAH BUY !!! Somehow gold up 23% in 2006 and silver up 45% in 2006 spells "sell the miners"!!!

Recall this same talk happened when gold hit $400 and then $500.

This smells like "take-the-little-guys-out-of-their-positions" talk!!

I'm afraid the quotes that I posted from Cramer have been misinterpreted. I should have posted his headline that was, "Gold could be kryptonite to stocks". His point is that if gold hits $710 to $720, it will not be good for the market in general and he would have to reverse his bullish stance. Again his last sentence, "But I have no antidote to a gold rally. It's just plain bad for everything financial."

So he's not saying miners and/or gold are going to drop, but that the market in general is going to drop if gold continues its rise. So all he did was put a $710-720 target for where he sees the financials getting hit.

Well the fed uses gold as one of its barometers to inflation so if it runs wild it will indicate possible fed tightening IMO.

kaimu, thanks for the great advise. Reading this article helped me make my decision as well.

http://gold.seekingalpha.com/article/6195