Re: Dollar Intervention

Now and futures.com has a page on dollar intervention which seems like a blogger spat:

http://www.nowandfutures.com/articles/20080815dollar_intervention_dubious_blogging.html

It shows clear evidence that dollar intervention occurred due to the sale of euros from the Exchange Stabilization Fund. The collapse in the oil price would have caused a rally in the dollar, but the sale of euros in the billions supported it.

A lengthy discussion at iTulip on the subject is here:

http://www.itulip.com/forums/showthread.php?p=43042#poststop

Buy 100 Shares of TSO
Details Filled at $18.3578

Nokia:

Nokia’s current stock price looks extremely undervalued at these levels. Picking up some shares of NOK under $24 might be one the best opportunities available in the tech market today.

http://tinyurl.com/0

Who's Going to Bailout the U.S. Government?
http://tinyurl.com/0

WisdomTree’s New Active Currency ETF

WisdomTree announced a new currency bundle, coming near the end of September. The new ETF will carry the symbol CEW under the title The Emerging Currency Fund (CEW). It will be the first actively managed currency fund on the market.

http://tinyurl.com/4x22m3

gold sector's looking good...strong open, pulled back a bit, hoping for a strong finish...

hope you're right, 2nd. USD index now @ 79.31, and the EUR/USD is back over 1.40, at 1.4127.

this recent dollar strength has been so violent, so quick. As long as the USD index stays under 80 and the EUR/USD stays above 1.40, i'll be holding DGP for the next couple of days.

Re: Monthly Gold Price

On the monthly chart since the low in the gold price in April of 2001 of $255.00 to the high in March of $1033, we now have an almost exact 38.2% retracement.

Cara 100 Update (Final):

INTC & LLTC both Downgraded to Neutral @ AmTech Research

Of course, I'll dump if we get a baby-out-with-the-bathwater situation, but hopefully that probability is remote for a day or two.

yIKEs:

562 platforms evacuated, 93 rigs evacuated, 1.26M barrels oil shut down, +6.9Bcf NG.

Exxon shut down Baytown (-560kbpd)
Valero shut down (700 kbpd)
BP shut down Texas City (475 kbpd)

Earlier today bought ALL October puts (insurer to the potential damage).

AIG on death watch, moved to my no. 1 as short holdings in $.

long tbt--on a wing & a prayer

jk484 - Check your 9:34 link "Who's Going to Bailout the U.S. Government?"

It wouldn't work for me...

Try to open a large collar on ESLR and the MM won't meet me yet.

Patience.

TSO - Vinod strikes a gusher, as usual! Congrats!!!

Dont feel bad for Lehman Brothers...here is one of my favorite stupid moves by management this year...temporairly cost me over $5 in a short term positive move in the stock while I was short...glad I stuck with it...

http://tinyurl.com/3lf9hx

XAU about to re-take 120...only ten trading days ago it was in the 150 range...

For those interested the CFO of ESLR will host a 30 min. open conference call with investors to answer questions today at 1 p.m. EST.

Conference call Dial-In Instructions:
Dial: 888-846-3889
Access Code: 219884

vinod,

What triggered you to buy Tesoro this morning? Was it technical or news related? I already own it...just wondering what your thought process was.

Hammer1
I do not know technical
there are some stock I follow and I am in and out of it a lot.
it was news that storm is going to be bad

Flexibility is a necessity in our trading business. I like Gold, and like to watch it along with most everyone on this blog, BUT had one (unfortunately not me) been smart enough to trade into UUP ($Dollar Bullish ETF) in July, he would now be UUP in profit by about 11.5%. Not bad.

BTW - my comment is not a recommendation to buy UUP at this point, it might be overpriced, but I might look at UDN for what might turn out to be a possible "dead cat" coming next week for FOMC and Expiry.

Also, BTW, I certainly am not complaining over the possible Dollar interventions going on. The cash in my account has increased in purchasing power by 11.5% (at least for a while, maybe) and if it keeps going for a while longer, I might even be able to afford a trip to the Bahamas, 8^) .

vinod,

Ok, nice call on that one.

Thanks

Interesting on SKF/UYG today. One would think SKF should rebound after yesterday, and did early on, but the hohum attitude on financials seems to be taking over and UYG is aking up most of it's loss today from yesterday.

Does anybody think the market will rally big if Lehman is acquired by some entity without the backing of the Fed?

I want to take a moment to say thanks to Bill, once more. You're at the top of my list and hope to meet you someday so I can shake your hand!!!

2nd
If market goes down a lot I may buy oex call
usually they will cook up something in weekend to
help LEH. this time will play small.
also option expiration is next week so market will act like chicken with their head cut off

Hammer1:

Probably would. Doubtful that would happen. Could a buyer go in without the backstop if they're not sure what Lehman owns? Unless they can audit the risk, I doubt they could do it without the fed.

CP, re "Who's Going to Bailout the U.S. Government?"

don't know what happened to the link, here is the new link for the article from seeking alpha

http://tinyurl.com/459qrq

Thanks for the postings on GG. I tend to be short-term oriented so although my exit point is probably premature, I'll take a snappy 7% any day of the week.

2nd - Having a non-margin account may have saved me from buying too much FRE...

2nd, I'm thinking of starting a position in CHA & CHL

what is your take on above companies & China ?

thanks

ESLR- did it hit 6.42? don't see it...

Yes it hit 6.42

jk484- you should log on to skype cara china and ask either jason (veteranwang) or nvr2fast...they both trade the chinese markets...my trading's been limited to CAF...

CHA and CHL are both in the Cara 100, of course...and a Buy Alert was triggered in CHA 5 days ago...

good luck

in case if you haven't seen it

Bill's article in Seeking Alpha

Now Is the Time to Be Buying Goldcorp

http://tinyurl.com/3znkej

nemo- i mean i don't see it reflected in the intra-day chart?

2nd:

It was at 10:19

taking another ride on the (good ship? fingers crossed) WAMU.

Many CEOs see more pink slips ahead

Nearly one-third of the country's top executives expect to cut payrolls in the coming months as companies cope with a weakened economy dogged by housing, credit and financial problems.

http://tinyurl.com/4agj5b

Hi All,

Recently found Bill's blog, seem's like mostly nice folks / good traders here, have been lurking a few days.

Have been watching XLY consumer discretionary, was thinking today it might finally break down after the poor retail sales, but the US markets are still galvanized apparently.

However, markets seem nervous, wider swings appearing intrady here and there.

Regards,

long PDGI at 10.17. Entry sucked but I saw capitulation.

Bill..

"A true story is that when I worked at Dean Witter (now Morgan Stanley) over 20 years ago, we had a mining analyst in New York who, if he put out a new Buy report, we would sell into the bullish order flow"

This NEVER happened did! I can't believe this!!
wink, wink!

[Bill Cara note:

Actually Clarence Morrison knew his stuff, but his timing was dreadful. Perhaps his big accounts got hold of his reports before they were published for the staff -- I can't say -- but whenever they came out, I'd call my clients and tell them to ignore them, that likely the market would be moving against Clarence. In his defense, Clarence probably thought my record was nothing to speak of -- if he even cared. But the deeper point I am making is that all these HB&B components have some terrific staff and the some who may not be so good, and seldom do these people see eye to eye. The problem is that the legal and compliance departments will not let their key people speak out against the others because they think that will bring forth lawsuits from clients. At the heart of this issue is conflict of interest and the sorry need by HB&B to protect it. Anybody who reads this blog or has read my book realizes that I speak from experience. It's a real problem for professional staff at HB&B, many of whom as I say are really truly experts. Another true story along this line happened here in the blog about two years ago. UBS legal and compliance staff discovered an e-mail from one of their wealth managers to me that was counter to the published research opinions he was sending. They hauled him onto the carpet and told him to cease and desist emails to me, but allowed him to continue sending research to me. Then somebody at head office discovered that I was linking these reports in my blog, and not knowing how I was getting them (real-time almost) and publishing them ahead of their own staff able to deal with them, their big kahuna of the legal department sent me one of those nasty legal letters--we're shutting down your blog yada yada. So I called him and told him that the legal department had approved it. Exasperated, he told me there was nobody higher in the legal dept than him and he demanded to know who the person--one of 75,000 on the UBS team--was that was helping me. I declined to go any further than to say that I would agree to remove anything he was offended by. There are so many conflicts in these firms that the left pocket has no clue to what's in the right pocket. The system of bank-broker-dealer-prop desk-advisor-etc-etc is broke. We know it, but they know it. Much of the fees they charge are to pay themselves to protect themselves from themselves. From where I sat on the inside, it was hilarious watching it. It's no wonder why I feel so badly for the really good people who I know are employed by Lehman Brothers for example.]

jk484 - funny article, thanks for the chuckles.

pappdjavul - Welcome to Bills blog!

Follow up from yesterday-bought all the gold stocks I mentioned (plus GG at 25.6-better lucky than good). All have moved up nicely and taken out yesterday's high. Since I'm still not crazy about the charts, I will short GLD against the position at 74.38 and ride it. That position is something i want for an intermediate term (6 months) time horizon. Will add and trade around this strategy. Long gold stocks, short gold arb should be a very big winner over time according to the historical relationship between the two over the past ten years.

Thank you Bill for giving the green light couple days ago. I stand corrected!

By the way, the RSI system has risen above 30 for a lot of the gold stocks that were in the accumulation zone.

Forgot to add-the prices I bought yesterday represented the top of the opening range, a level ofter tested and one that should hold if a trend is to emerge. A good place to buy because you can define your risk-yesterday's first hour low.

RSI on GDX close* 28.20 day 21.04 week 19.35 month 31.93 Buy alert (trig. 1 days ago [on 2008-09-11 at $28.20, +0.00% chg], after a 5 day AZ)

GE is down over 5%...good to watch.

Nemo,

Would we think reasonable seems irrelevant these days. I bumped up my stop on SKF and got out at 115.

I suspect there is some expectation of Fed or SEC intervention or an announcement benefitting the financials.

But could just be people taking recent gains.

Bill -
Is this the small bounce in gold you predicted? Like you said, with the USD up there has not been a huge rush to gold. We still haven't capitulated. Are you looking into entry points in the end of September?

[Bill Cara note:

For day-traders and short-term swing traders, there was some quick profits to be made, I felt. For intermediate-term traders, say from 1 or 2 months to a year, it would have been appropriate to establish a 1/3 position; and for long-term oriented traders, a 1/2 position would have been ok. For those who are basically in and out once per long-term cycle (4 to 5 years), a full position would have been ok (eg, selling at 45 earlier this year and buying back at 25 this week). For those who buy-and-hold, there are dollar-cost averaging solutions that might be effective; otherwise there is no hope. The point is that it's harder to write something for people you don't know than do something for people you do know. But, yes, I like GG here for the long-run, and will trade in and out for the short-run. There will be downgrade re-ratings after lower metal prices are factored in by HB&B analysts, which will impact the market.]

CP,

What is the TOG you refer to?

PNRA down 6 bucks. Looks like that 55 resistance is holding.

What the heck happened to CMG? Somebody get a rat in their burrito? Told you.

CSX up a little. Being short feels a little lonely, since there seems to be about ten thousand articles touting CSX that have appeared since eyesterday. But it's still clearly in a downtrend, so I'm good here now.

Nemo,
Gains on SKF I meant.

I am precisely defining my risk buying gold/silver miners by buying calls (on Tues). Calls on SLW RGLD GG SLW KGC GOLD are doing great so far....will sell when $XAU gets back up to 135.

Where to hide, as in cash?
Probably no-where is really safe if things get out of hand.
50% in gold & 50% in "cash or treasuries" (but whose?) is the old
depression-era advice.

The odd thought for the paranoid, Swedish Myntverket.se has a legal tender
SEK 2000 commemorative gold coin for sale with just about exactly SEK 1760
(12g. @ .900 pure) of gold in it at the current spot price.
Only fairly reasonable combination of "both gold & cash" in one object that I know of currently
But you do pay them a c.a.15% premium for the pleasure.
Max 5000 coins will be sold.
Yes, I bought a few this spring.

pappdjavul ...welcome. As to "seem's like mostly nice folks / good traders here" I must be a nice folks cause I sure ain't no good trader. Added to SRS! which is still uw.
Peace from north puget sound

T-Bill rate is down big today, 8.5%, but market is holding up = divergence.

When are the financials going to get sold again?

Short PZZA.

Hear you grym. And I mean reasonable for the times. Could be profit, no doubt, but I don't think SKF will have the conviction of it's recent run unless the feces really hit the ventilator. I think it might be rangebound with UYG for a while until a new crisis hits. Banks failing aren't new anymore. Eh! mental self-gratification.

ESLR @6.42 was a blip ... the MM fleecing someone placing a market order, no doubt.

The option MMs are not budging off their bid/ask. That usually signals they expect a sharp move.

n2son:

It was about 260k shares in that minute which was the largest volume spike sine the 300k pre-market at 8:30. So, big break...UP???

Saw this comment by London Banker on Roubini's forum last night. Scared the dickens out of me. London Banker is one of the most respected contributors to this blog.

I was briefed on the proposed US financial reforms which will be shoved through with minimal review. Short version is that the Fed wins an explicit "financial stability" role which gives it powers and secrecy to do pretty well whatever Tim Geithner chooses to do for his capitalist crony clientele. The role will include comprehensive, global data collection which will give the Fed visibility of all open positions. In the wrong hands, this insight could be used to selectively induce volatility and margin calls which would selectively hurt some and advantage others. That could help the Fed's friends over time.

The FDIC will be stripped of financial supervision and prudential intervention powers in favour of the Fed. That makes the Fed totally unreviewable and unchallenged by other authority in the USA.

Additionally, the SEC will be forcibly reformed to be more like the CFTC - a service entity for the interests of those who pay good money for bad regulators. Instead of fixed rules, SEC regulation will become "principles based" which will mean that no one is ever held accountable for breaking the law unless they have done something to break the code of omerta and anger their peers.

Federal law and regulation will pre-empt all state laws, and states attorney generals will be stripped of authority to investigate or sue. That means no more inconvenient Elliot Spitzers to get in the way of Wall Street excess.

This may not meet Professor Roubini's recommendations, but the deal is going through with little review so far because the cries for reform are only going to be met with this one pre-agreed proposal. After all, who in Washington or Wall Street would ever suggest that Geithner, Bernanke and Paulson didn't have the best interests of American and global investors at heart?

Mmmmmh. I wonder if gold might be getting a bit of a lift from some of the recent buyback announcements in the Ags and infras. I compared GDX and GLD to MOO and DBA, and the correlation LOOKS pretty consistent. Not sure it means anything, Just got me to thinking because POT and FWLT went turbo today

out of TBT--was lucky on that. Does anyone know what is going on in the long bond market. is it TOG time?

Anyone see GE rolling over? It couldn't make it anywhere near its 200 day MA on the rally.

* aucourant - DO you have a link to the Roubin's thing.

* Weird! The VIX is just off it's high for the day... yet the markets are GREEN!! Hmmmmm

I opened up a position in SSRI this morning at $16.36 - it is doing a nice stairstep move today and is advancing on rises in silver but stabilizing when the metal declines. Doesn't appear to be much volume available from the price action.

If silver can work its way towards $11, SSRI looks like it could add a couple bucks on the day. Planning on holding this for awhile though.

Darn - was traveling yesterday - was going to buy some gold majors - any thoughts on chasing GG, AEM, etc... here?

ST07 - take a look at the monthly chart on $XAU. I did and decided yesterday to take a very large position, so I'm nicely positive thus far.

I also think we have more room to go up, but may get some pullback after this big move today. On the monthly chart, the recent decline held right at the uptrend line going back to October 2000.

Dave

Shark, others, I need some help with WM.
An aquaintance yesterday told me he recently bought some WM at $5. He sounded surprised when I said they are going under.
Are we pretty much agreed here that this is a corpse about to float to the surface? Should I suggest he bail right now, or does anyone see a positive scenario that might boost the stock.

Somebody was talking about Paint-it-Thursday-before-options, yesterday. What do you think is the implication for next week?

WM -

They are trying to sell assets, so it's possible that they pop back up but rumor is they are going to get taken out by FDIC next Friday. Risk is too high here for me. I would salvage what I could rather than risk it all on black. There are so many bargains popping up - stick to the Cara 100 and avoid the dogs with fleas (financials).

northforker - Getting closer but IMO Bond TOG isn't here yet, I need a firm bottom first and the FED keeps delaying.

Anybody going DUG for the weekend? My little ones won't let me.

Paint-it-Thursday? I think the implication is that the market was taken down and puts sold in the first few hours and then the market could start rising to max-pain. Unforeseen news can make this manipulation a loser.

Grantmi,

I'm not sure how to make this link "live" but I did do I tinyurl for you. I hope it works. You may have to log in to Roubini's blog.

http://tinyurl.com/3etj6q

Has anyone looked at a 1-year chart of the USD vs. AUD (australian dollar)?

http://tinyurl.com/3s8tp4

Chart looks primed to give some back in the short term. If I were set up to do so, I would probably diversify some US cash into AUD.
Also, Australian ADR gold shares like LIHR seem attractive as their decline seems accentuated by the USD appreciation over the last 2 months.

Does anyone who follows currency markets or perhaps the Australian economy have more light to shed?

Depends. You say your friend is unaware of the financial plight of the company. In that case he should probably sell. But if he is more daring, tell your friend to set a stop that'll get hit on the way down. Somewhere where if it gets hit it will mean either they're going out of business and everybody knows it but before all the value disappears, somewhere around a buck seventy or so.

VIX rising + T-Bill yield plumetting today = smart money knows something or is something else going on?

GE getting drilled is another rat.

Pookster:
Nice shine job for Bill on Sinking Alpha

Moab and Shark,
Thanks, will pass on.

hoping for a short squeeze on ESLR...

Darn you 2nd, it looks like you caught the bottom on ESLR yesterday. In the meantime, I've been suffering one of the worst drawndowns of my trading career.

I envy and hate you. ;)

Moab! Yea.. noticing that too. my program keeps lighting up new highs.. on the VIX!!

Bill - "I wish I had the time to address comments"

We'll try to forgive you somehow....

2nd
Buy 2,000 Shares of FRE
Details Filled at $0.50
some day it will go back to old high and I will retire

Looks to me like they are trying to keep indices propped w/ GM today up 7%. They are doing a fairly good job of masking the 23% decline in AIG!

Talking Heads were definetly working overtime yesterday to spin a potential LEH deal into a market positive. They also seem to be ignoring the fact that AIG's market cap is losing billions by the day.

shark - That's the same strategy I used to become a UAUA majority shareholder a few days ago. I sold into the afternoon rally though, because I'm allergic to lead.

On Bloomberg TV this morning they pointed out that for the last three days, 1/3 of the days volume was traded in the last 30 minutes. Why?

ESLR- out at 6.33...(basis was 5000 shares at 5.55 yesterday, so the six-year-old is now way ahead, and he's playing his entire FRE position with 'house' money)...;)

FRE, btw, has now hit our original target of 0.50 (and then some)...

CP- my thinking: we may see a bit more upside on long bonds, but highs of Jan. & March might hold-- as SWFs try to unload some of their long treasuries, realizing there is no way in hell they will see it back in real terms. additionally, that article about moving to 91-day treasuries (instead of holding longer term issues, where they may become longer than you wished) has me wondering about efficacy of long bonds. we are all waiting for a last leg up in long bonds to go short. but will we get it? IMWTK

somebody just turned a dial on a computer (not up to eleven, yet) and the black boxes trade some more.

nemo - Sneeking Alpha - Just stating facts and exposing that which goes unsaid. Please lay the blame not on me if Bill should somehow benefit.

re:ESLR

7 day RSI at 23.82 at this time (20 min delay on stockcharts.com). If it breaks above RSI 30, it could rumble further.

ave cost 5.60.

Markets in Hong Kong, China and South Korea will be closed for a public holiday Monday. Markets in Japan will reopen Wednesday.

http://tinyurl.com/4etddo

We all think this LEHMAN thing was not done on purpose for this week/weekend!! Yea Right!!

U.S. needs damage control before the Asian markets open in 3 days (4 for Japan)

Just funnin' Pookster. We're all on the same side.

Frankly, now that I think of it. Don't tell anybody about Bill or his book (Sorry Bill) Then everybody will want a piece of the GOlden Goose. I'm Greedy.

re:ESLR.

project volume about 50% higher than 10 day ave. We'll see what happens. Next hurdle is that 6.42 spike.

Grantmi- thanks for the reminder...

northforker - You have a good point, as long as those yo-yo's at the fed don't do us a butterfly. I think they'd like to get a rally going but my confidence in their abilities is waning of late.

[Bill Cara note:

Joanne Hruska is on BNN TV right now -- for an hour. she will discuss several good junior picks in the Western Cdn oil and gas group.]

IRX down almost 10% right now. Didn't Bill comment a couple weeks ago to watch for treasury yield plummeting as forewarning of banking and IB collapses?

Could this mean no bailout for Lehman?

On tickerforum.org there are many first hand reports of gas shortages in the south with 10 gallon limits and price increases.

miners- taking profits on all of it (GG/SLW/GDX/SLV/WGW) right here...not to be mistaken for a negative take on the sector...good gains on the sector for the week, so taking them...

VIX spiking!! over yesterdays HIGH!

nemo - I'll bet oil will rally into close, are you ugree?

IRX declines are usually a flight to cash so if you chart it against equities, they usually correspond to equity selloffs.

long SRS here. mall vacancies increasing

Billy Sundance, your 12:01 -- The Australian currency is turning up, as you mentioned, but is subject to "Carry Trade" moves. The Canadian Dollar FXC , is also moving up currently but is not, as far as I know, subject to "Carry Trade". In any case, these moves might be short term with FOMC next week.

Last FOMC, they did NOTHING, but the spin (outrageous) was that because they did not lower the rate as expected, thus, the pause was "good" because it was the same as if they had raised the rate ... and the $US moved up on that crap!

Optionoracle,]
thank for sharing your gold trades yesterday and today on your 10:57 post. Would you please explain your long gold stocks short gold arb for us not so exsperienced?
Thank you, Bear E

I hope some from the forum share their oil sands moves, I can't get BNN but will join that party at some point.

[Bill Cara note:

Anybody in the world can watch BNN on their monitor, and can review the past videos of selected guests.
http://watch.bnn.ca/

Joanne Hruska's top 3 junior Western Canada oil & gas picks today were:
1. Nuvista Energy (NVA-T)
2. Orleans Energy (OEX-T)
3. Breaker Energy (WAV.A-T)]

2nd, thanks, followed you out. thinking of getting out this afternoon. got $ 8/ps profit on my FCX

I'd like to revisit the crude trade after Gustav.

I was pounding the table over three posts for using the storm oil price runup as a place to set up short oil trades for the post-hype letdown.

Someone asked which way it play it and I thought just out of the money crude puts were perfect. At 115.50 close the Friday before the storm, that would have been the 115 strikes. I also made some notes on cheaper, further out of the money strikes.

I scribbled down some price notes to revisit, as I wasn't going to make the trade (no capital available.) Here they are. All are for Oct CL strikes.

Prices here are Pre-Storm, Pre-Labor Day Friday close then one trading day later (Tuesday) and then today.

115 - 4900/9600/12,500 (they have pulled back on todays crude pop)

100 - 650/1120/1620
102.50 - 980/1480/2920
107 - 1890/3960/6820

I realize holding overnight has many of you shaking, crying and wetting the bed. But after a trade like this, you can load up with new 800 count Egyptians.

These storms are so clearly a setup for the short trade to follow. Until they aren't, I guess.

But to me, any pop from Ike is just an entry for a $90 oil trade.

How many days before FRE/FNM get delisted?

Yeah, I got pulled away. Oil up. Could somebody get a list on that BNN interview. I'm trying to watch it on BNN through the web, but it's not on what I can access.

[Bill Cara note:

Go to BNN on google (you'll see www.bnn.ca). Then to the archives. Search Hruska and you'll find her prior interviews. In a couple hours, BNN will upload today's interview. If you watch, you will see for yourself that she's the consummate professional -- my idea of someone everybody should be listening to.]

CMG down 14, @ 56.90

jk484- nice move on FCX...it's easy to think today's move in miners keeps going, and maybe it does, but it's usually a sell signal for me...the next pullback then becomes a buy signal...

SMBL

With the spike in VIX, the general (GE) taking a hit, a couple of clues, taking 14-20% profits in small cap SMBL previously mentioned.

speaking of which, XAU now at 125...that would have been a sell target for me...so i was early

my take is as Bill's, oil is still in bear mode and is going down down down . . . US nat. gas is a different ball game, but will likely get dragged down with oil.

Am watching US trusts & canroys, looking to buy back eventually, but not just yet. DMLP my favorite, still have a small position & some ITM calls. Advantage with US trusts is they are passthrough entities and have no debt at all, will think twice before buying back the canroys, which are oil co.'s in disguise and have major debt leverage. That may be a killer these days.

note, XLE may hold up next week because of opex, even if oil tanks. Don't get fooled by the fake bullishness, if that is what it really is.

also XLU utilities should be a good short anywhere above 36.

[Bill Cara note:

Agreed. When I point to Joanne Hruska for example, I am saying that the value is there now in her picks and opinions, but if oil prices sink to 80-85, the junior and senior stock prices will go even deeper in value. If you believe, as I do, that the next few years will be one of economic expansion and the ending of the war effort, hence a period of declining inflation, perhaps some deflation in places, and continuing fiat money degration, and generally a period of growth in economic wealth, then the prices of oil & gas, metals and precious metals will rise, and these stocks will rally. The time to zero in on your long-term picks is NOW.]

UNG/USO- every spike up is met with supply...where would they be without Ike? guess the smart play was gasoline...next play will be gaming the aftermath...those satellite photos show Ike cutting a wide swath...

000
WTNT44 KNHC 121456
TCDAT4
HURRICANE IKE DISCUSSION NUMBER 46
NWS TPC/NATIONAL HURRICANE CENTER MIAMI FL AL092008
1100 AM EDT FRI SEP 12 2008

RECONNAISSANCE AIRCRAFT AND MICROWAVE DATA INDICATE THAT IKE HAS NOT
DEVELOPED A TIGHT INNER CORE AS ANTICIPATED. ONCE AGAIN THIS
REEMPHASIZES THE DIFFICULTIES IN FORECASTING CHANGES IN THE INNER
CORE STRUCTURE OF A HURRICANE WHICH LEADS TO CHANGES IN INTENSITY.
AN ELEVATED PLATFORM...122 METERS...400 FT HEIGHT NEAR THE CENTER
REPORTED SUSTAINED WINDS OF 109 KNOTS EARLIER THIS MORNING WHICH IN
COMBINATION WITH DATA FROM BOTH NOAA AND AIR FORCE RECONNAISSANCE
PLANES SUPPORT SURFACE WINDS OF 90 KNOTS AS THE INITIAL INTENSITY.
IKE CONTINUES AS AN UNUSUALLY LARGE HURRICANE PRODUCING HURRICANE
FORCE WINDS ABOUT 105 NMI TO THE NORTHEAST OF THE CENTER. THERE IS
STILL A CHANCE THAT IT COULD BECOME A MAJOR HURRICANE BEFORE
LANDFALL...BUT BASICALLY THIS IS IRRELEVANT SINCE WE ARE ONLY
TALKING ABOUT A 10-KNOT INCREASE. IKE SHOULD WEAKEN AFTER
LANDFALL...AND IT IS FORECAST TO BECOME EXTRATROPICAL OR MERGE WITH
A FRONTAL SYSTEM BY 72 HOURS.

THERE HAS BEEN NO SIGNIFICANT CHANGES IN THE STEERING FLOW AND IKE
CONTINUES ON A WEST-NORTHWEST TO NORTHWEST TRACK AT 10 KNOTS. THIS
GENERAL TRACK IS EXPECTED TO CONTINUE UNTIL LANDFALL ON THE UPPER
TEXAS COAST WITHIN THE WARNING AREA AFTER MIDNIGHT TONIGHT. THIS IS
IN AGREEMENT WITH THE DYNAMICAL GUIDANCE WHICH UNANIMOUSLY HAS THE
HURRICANE CROSSING THE UPPER TEXAS COAST IN ABOUT 12 TO 18 HOURS.
ONCE INLAND...IKE SHOULD REACH THE WESTERN EDGE OF THE SUBTROPICAL
RIDGE AND TURN NORTHWARD.

ONE SHOULD EMPHASIZE THAT IKE IS A VERY LARGE HURRICANE AND
REGARDLESS OF WHERE THE CENTER OF THE HURRICANE MAKES LANDFALL...THE
EFFECTS WILL BE FELT AT LARGE DISTANCES FROM THE CENTER.

Thanks Bill

CNBC relayed a report from American Banker that JPM is in talks to Buy WAMU. Stock was up 1.5% at the time. Now up 13%. Unbelievable....the only value in watching this nonsense is to take advantage of these irresponsible news releases.

[Bill Cara note:

HB&B and their colleagues at CNBC have turned the market into a circus and casino. Pathetic, isn't it?]

Any nat. gas / commodities futures experts willing to comment on this? (Was on Bloomberg a few days ago.)

My first thought is, what will happen when this "brilliant arbitrage" suddenly stops working?

``The short open interest on natural gas has increased whether the price has gone higher or lower,'' said Peter Beutel, president of energy adviser Cameron Hanover Inc. in New Canaan, Connecticut. ``It has to be a hedge fund that is long something else. My guess is it's an over-the-counter swap, or it's long crude, short gas, or long equities and short gas.''

. . . .

``This trade isn't in isolation because nobody could sit through that many thousands of contracts short'' as prices moved so quickly up and then down, said Beutel. ``Someone has figured out a brilliant arbitrage with this and it has been impervious to multiple-dollar moves higher and lower. It's not a position spanking anyone because they'd have gotten out of it.''

Bear E-according to various charts I've seen the XAU/GLD ratio is one of the lowest on record-this means either the price of gold has to fall relative to the mining stocks, or the mining stocks will rise far faster the precious metal. By buying the the mining stocks at areas of support and selling gold short against it you are betting the stocks will rise and also the stocks will rise faster than the metal will go up. Conceivably you could make money on both sides. With this strategy I can take advantage of dips in gold and buy in some of the short position or can just hold the trade until the ratio reverts to a more normal level.

Here's a Skype transcript of a summary Joanne's comments, if you can decipher it.

http://nexalogic.com/joanne.txt

As Bill, says, you can watch the whole thing on BNN.

Question: If oil comes of on a Ike-much-ado-about-nothing result, does Gold and Silver tank? (PAL was up 10% today)

Hold the phone....now CNBC David Faber says they are not in talks....stock flat again....no integrity at all.

I must confess: (Haven't gotten rid of all the Catholic) I thought BNN was Bloomberg...DENSA!!

"Hold the phone....now CNBC David Faber says they are not in talks....stock flat again....no integrity at all."

Criminals!! all of them!

Some poor bugger just paid $3,29 for WaMu!!!

Mooooooooo!! Oink Oink!! (Insert Pink Floyd music here!!)

NO...insert Ned Beatty in Deliverance!!!

Blood in the streets: Buy Russian stocks

Whoa! Bill got savaged on that SeekingAlpha site. Even though he was wearing a tie! Even though Pookie defended him. A prophet is not unhonored except on his own blog.

I mean, I would have weighed in for him, but realistically speaking, that's not too much weight.

Schleppy... last line is even better:

CNBC'S FABER: JPM NOT IN DEAL DISCUSSIONS WITH WM, NO TALKS OF SIGNIFICANT NATURE, BUT 'THAT COULD CHANGE'

No need to comment.

That's why I call it Sinking Alpha

Hey Beard,

How was that spelled: Kommitet Gosudarstvennoy Bezopesnasti

Optionoracle,
Thank you for the XAU/GLD clear explanation of your strategy. I am going to do some thinking on it :^)
Bear E

Mmmmmh...eslr...if oil resumes southward after Ike, think eslr does too?

Almost perfect nemo

Cara 100 Russian stocks: VimpelCom and MTS (tickers VIP US and MBT US)

nemo- Deliverance..great movie..and damned glad i didn't get around to watching it until AFTER a year of hitch-hiking around the country...

Should have sounded the alert about Russia yesterday...VIP +14%, MBT +9%. Both mobile providers and both HUGELY oversold...along with just about the whole Russian market. So many bargains right now it's unbelievable....

I had more experience with the Stasi. Anyway, 2nd...just considerate it cultural exchange. I think they actually filmed it on the Shenandoah in Virginia.

David- 1130am PST...XAU looks like it's going to try a 125+ close...TGIF and it looks like you got up on the right side of the bed...;)

No proof of this thought, but beware the BNN effect. Buying by viewers after the program. Wait a day or two, as I am sure you all will.
Bill what other O&G analysts on BNN do you respect. John Stephenson (sp) seems to make sense always. How about mr bow tie? Do you know him?

n2s- is your son flying down this weekend?

2nd, thanks for asking. He returned to NOLA on Wednesday.

looks like they're pouring into GDX and HGU.to!

GG/GDX/SLW up 12/10/11 %...XAU 126...

With oil breaking 100 today, mega-saving deals this weekend for LEH and WM, and JC crying for a fed cut of 0.50%, and current stock prices well below max pain values (except SPY), perhaps long positions may be warranted for next week, or at least straddles.

However, premiums are very high today on options. It is a good day to sell options. For example, both UYG and SSO calls , which I have been trying to buy, are very expensive. I have sold all my September puts and kept some of the October ones.

This is probably the biggest move I've ever seen in Russian ADRs...

Watch! They're going to goose the close!! (Again!!)

Spot - thanks for your thoughts on the USD/AUD observation I made. Definetly looks like yesterday may have been a short term top for USD unless the FED has another secret wrench to throw.
Paulson's insistence that the FED won't backstop Lehman might be the last wrench for the FED to throw for now.

I'm not very convinced that Paulson is serious about not providing a backstop - seems more likely they are just pressuring LEH to get the wheels turning on a deal. Ultimately, I think LEH is too entangled in the derivatives mess for the FED to follow through with that threat and thus more risk to the FED balance sheet is coming in one form or another.

DJIA will close in the green...

"While shareholders in Fannie and Freddie suffered deep losses, the world’s biggest bond fund saw its highest ever one-day rise against its benchmark index on Monday, benefiting from the bet made by Mr Gross on mortgage bonds issued by the agencies.

Mr Gross had made a big shift out of US Treasuries and corporate bonds over the past year and into agency bonds, betting that the government would support Fannie and Freddie Mac. By May this year, more than 60 per cent of his $132bn fund was in mortgage debt.

On Monday, the fund rose by 1.3 per cent, or $1.7bn, its biggest one-day rise ever against the Lehman Aggregate Bond index."

Also, I can expand on the report earlier of gas shortages. My wife and daughetr are in Charlotte for the weekend. She just called and said they are short on gas and limiting the amount you can buy. The station she went to only had premium left. It was $4.19/gallon vs. $3.90/gallon here in Cincinnati.

airlines don't seem too concerned about Ike...look at the one Cara 100 airline i can think of- GOL, up 11%?

Dapoopa:

It'll be interesting to see if there's any pullback on VIP MBT on Monday.

Bennett Sedacca has been saying that the bear market low will come when deals can't get done at any price. It feels like we are getting closer.

USD index fell below support at 79. If this becomes resistance, we could be seeing the long dollar trade starting to unwind.

Long DGP!

Nemo: We will all be interested to see where we are on Monday....all I can say is that Russia has been POUNDED in the past couple months and is now BY FAR the cheapest EM on an earnings basis. I was way too early in my buying of Gazprom, Rosneft and Uralkali but haven't sold since these stocks will eventually rebound big time. The word is that large institutional accounts (Fidelity, etc) haven't been selling Russia because they see value and the EM alternatives have been performing almost as poorly. Most selling has been local margin calls and redemptions from hedge funds that weren't properly hedged. Otherwise I have never seen such bargains since the dark days of 1998-99, and that's no hyperbole.

vinod- good luck with those 2000 shares...;)

just an observation- it's been difficult to make money betting on any trend lasting longer than a day...betting against a trend at the end of each day has worked quite well..using OEX options would have (maybe for you, has) paid off quite well..

Dapoopa
I think Russia is getting pounded because of their actions in Georgia.

Putin put another exKGB agent in as the CEO of Norisk Nickel. They created a government grain cartel that will control roughly half the grain output of Russia. The KGB shook down Rupert Murdoch's office in Russia and he is pulling out of Russia because the confiscation risk of having your business taken from you is high. Ask Shell and BP how their Russian ventures went AFTER they spent the money.

Putin is using commodities as a strategic weapon. The markets are beginning to figure it out, much more so in Europe than here.

poor oligarchs . . .
and what a cheapskate finance ministry.
the Russians probably don't have a GS alumni as their finance minister - yet.

__________________________________

Moscow facing lending crisis
By Catherine Belton in Moscow
Published: September 9 2008 20:56 Last updated: September 9 2008 20:56

. . .
Bankers say Russia is facing its worst crisis since the August 1998 default. The Russian stock market has plummeted more than 40 per cent since May. A flight of capital estimated by analysts at up to $20bn (Ђ14bn, Ј11bn) since the start of the conflict is drying up liquidity. The Russian Trading System index fell another 7.5 per cent on Tuesday to its lowest level since June 2006.

Bankers and analysts said real estate and retail businesses were being hardest hit by a slowdown in lending. “There are real estate developers who can't finish projects. They can't get money from anyone, state banks included,” said one senior banker in Moscow speaking on condition of anonymity.

“No one was ready for the lack of cash to manifest itself so quickly,” he said.
. . .
“All the oligarchs that are over-leveraged are being forced to sell off,” said Sergei Sidorov, head of capital markets at Unicredit in Moscow.
. . .
In a sign of the growing squeeze however, Russian banks submitted bids for $3.5bn at a cash auction on Monday, while the Finance Ministry made only $2.4bn available.
. . .
Alexei Kudrin, the Russian finance minister, attempted on Tuesday to limit the damage. Speaking at a Reuters investment forum, he said the conflict with Georgia had reduced Russia's political risk by eliminating the potential for further military escalation, while the recent resolution of the dispute over the Anglo-Russian energy venture TNK-BP was a sign that Russia was trying to improve its investment climate.

But bankers are unconvinced. One banker, however, said: “Investors are . . . likely to ignore Russia. Companies are not going to be able to issue on international markets.”

Copyright The Financial Times Limited 2008

I keep thinking that Chairman Hanks purpose is to help the banks raise money (via debt or equity) and to help them MAKE as much money as possible. With the dollar fading today, I get this feeling that the Fed is going to cut interest rates on Tuesday. Should be bad for US$, good for gold, and good for banks. Am I just having a conspiracy moment here?

2nd
I got out of FRE cost me commision
also out of everything and now 100 cash
miss out on gold miner stock, now i do understand little about gold miner

Learner2,

You will see the "markets" get back into Russia in a major way because that's where the growth is so compelling. Granted, the Georgia conflict raised the ERP, but that will fade in a couple of months and meantime the fundamental upside is SCREAMING at this point. Filter out the political noise that you're hearing in the Western media and you're staring at a monumental buy opportunity. Remember, as Bill says, trade the prices, and they have definitely been coming to you lately in Russia.

Leaner 2

"Putin put another exKGB agent in as the CEO of Norisk Nickel."

True. And when questioned he ONLY replied: "There is no such thing as an ex-KGB agent."

Dapoopa

I posted something about Russian mkt a couple of nights ago fro Moscow Times. Gov't was trying to prop up, which was a clue everything would fall out of bed. IMO.

yesterday market went up over 100 point in last 20 minutes

What's the real risk of holding cash right now? It wasn't too long ago where the opinion was that the dollar was on its way straight down. All of a sudden, weakness in Europe (esp. UK and Germany) and the dollar's retraced a large portion of past 4 yrs slide.

Its not just the US financials that are volatile at the moment - everything seems volatile: commodities, oil, currencies.

Is there stability anywhere in the world?

Comparing the failing US securitized mortgage debt world monopoly with the
nat.gas distribution world monopoly the RF is building up via Gazprom gives
one pause.

I hope everyone has noted that the new RF president Medvedyev was the
Gazprom CEO.

"Few took note that when he formally bid farewell to the Gazprom board of
directors at a ceremony in Moscow on May 27, Medvedev took immense personal
pride in pointing out that during his eight-year stewardship, Gazprom's
capitalization skyrocketed by a factor of 46, and one fifth of Russia's
budget is today derived from Gazprom's activities. He concluded, "I want to
say in my turn that we will have the chance to see each other and discuss
things in working meetings. So, nothing is coming to an end. It's only the
beginning."

I am sick and tired of Catherine Belton at FT and her negative slant towards Russia. Luckily Charles Clover at FT seems more open to a different, perhaps more balanced view. Or at least that's my impression the past two times he's called me asking for an opinion on the local market.

Again, the media is NOISE...trade the PRICES

"Is there stability anywhere in the world?"

Right here at BillCara.com

goldbug58:

"Is there stability anywhere in the world?"

you could try Sweden, a rather sleepy backwater . . . ;-)

not to say the Swedish market is not volatile, it is.

these wild swings without any apparent cause behind them are signs of a very nervous market.

i'll second that...the Seeking Alpha post was well-timed-> where else in the ethernet was a buy on Goldcorp sounded just prior to a 13.6% gain?

[Bill Cara note:

You know it and I know it, but there are a couple slime-ball no-name commenters on SA who disparage anything I do. These people will never show their face. We all know that society has misfits, including envious bloggers. Accept it. Doesn't bother me in the least.]

It is downright amazing to see AIG, LEH, MER, WM cratering and yet see many other financials and consumer discretionary hanging in there. I still remember the Barron's cover on AIG being a good buy at 46. More like goodbye.

Are they going to bail out AIG and MER too? I don't think anyone can think straight anymore in this market.

Yup! Here comes the Goose!!

Vix and Trin heading down!!

They're so predictable!!!

vinod- no worries, you will have plenty of time to get in on miners...the sector is still at a bottom (and may further to fall), so your timing couldn't be better...

per Bill's Tuesday suggestion in the Commentary, my initial short positions this week in REIT's, insurance and financials:
AGO @ $19.67
TROW @ $55.93
MSW @ $9.30
looking to add homebuilders more of others next week!

You know what describes this market and economy: Putting lipstick on a pig!

Bought SKF an hour before close, made a quick $1 then bought UYG into the close made a quick $0.20. Doing my best to fight PPT

60 seconds to a green close...

2nd
brought AIG at 11.60

WGW up 19%...

Unloaded 40% of my DGP position, (some margin) @ the close. Holding the remainder, and a bit of cash. Have a great weekend, everybody!

I have just returned from my morning routine (taking my son to day care, doing shopping, etc). Just before the close decided to sell 1/11 of all my SLW shares at $9.20 -- those I purchased at $7.75. Raised the sell limit order to $9.95 for the next 1/10 of my SLW that I purchased at $8.34.

Also, decided to close my MER options, which have more than tripled over the past few weeks. Too bad I didn't invest more money into these options and into the LEH puts I closed for a similar 200% gain.

To my surprise, my SKF is stubbornly staying in place and is not moving up. I guess we'll have to wait for the earnings season for SKF to start moving...

Why did NEM underperform? Sometimes I think they TAG MY SHARES
http://finance.yahoo.com/q/bc?t=1d&s=NEM&l=on&z=m&q=l&c=GG%2CABX%2C+AUY
I was going to buy GG AUY ABX but they were up 7%, so I bought NEM up 4%

LO AND BEHOLD GG AUY ABC go up ANOTHER 5-7%, NEM a lousy 2%,

vinod- LOL, so it's 99% cash? i'm >100% cash, as the FRE position is now a casino comp...;)

most everything seems to have been "parked" at major fib levels, resistance, etc., for the weekend.

like QQQQ at 43.46

the real world is not being paid attention to currently, do the real companies behind the ticker symbols have to actually go belly up before the OPM crowd will take notice?

"I have just returned from my morning routine (taking my son to day care, doing shopping, etc)."

i had a feeling you were living right...can't say karma has no effect on trading...

Question - how often did you guys got kicked out of a short position by a broker telling that it can no longer borrow shares that you sold short ? This happened to me half a dozen times now at scottrade and they give only one day notice to cover the short like a margin call (usually happens at the wrong time).

This time they forced me to cover XLY short that I use to hedge the core holdings. (I've swaped it for deep ITM puts).

occam_razor
haven't had this happen to me (yet( at TD. and I have been shorts dozens of energy and materials stocks over past several months

Sold off a couple hundred shares of FRO at profit, anticipating more downside coming there. Got a wad of cash coming for the next power play and some powder I found in my pocket yesterday... Still got the FRE, letting the price come to me.

Also, I have just noticed that my sell limit order was triggered for WGW at $1.45 just before the close, for the shares I purchased at $1.20. That reduced my WGW position by 1/6, so I still have some left. :)

I do take my hat off to Bill for his prediction about GG -- I didn't think it would jump SO MUCH on the first sign of positive news for the gold sector. I was piling into WGW instead because I felt it had a much larger upside (and maybe it still has, as it can rise from $1 to $4 if GG rises from $26 to $40). But today, the percentage move in WGW was only somewhat larger than the one in GG -- congratulation to those buying GG yesterday!

well, i lost all my profit from my tbt trade with my srs trade--and still holding the bag on it--glub glub! long bonds really tanked today. i will try to buy tbt again on a pullback. perhaps russia is selling Tbonds...

What a jump in VLO today! It does prove the point that most VLO refineries are safe and VLO benefits from higher gasoline prices. I still have about 8% of my portfolio in VLO, after the put options I sold were exercised and the shares were given to me. The strike price of those puts was $37.50, so I placed a sell limit order on VLO at $37.50 so as to effectively pocket the $2.50 premium I got when selling those puts (which was my original intention).

Re: GG up 15%
How can anyone invest? THEY TURN everyone into traders to make more TRADING profits.
Wall Street MAFIA

David,
VLO refineries aren't all safe. They have a big one in Lake Charles LA, another biggun on the Coast near Houston, and one of their largest one in Corpus Christi. All but the CC one should see very high winds and big surge. They need lots of electricity and nat gas to operate and I would be surprised if they are not offline for at least a week. You might try Tesoro or Frontier, they are no where near there. Just my 2 cents. Also, VLO also has a HUGE retail store presence in the Houston Metro area which all have a lot of glass area.

BNN with Joanne Hruska was worth the time to view. I have a question being a U.S. based investor....how does it work with many of the stocks listed in Toronto?

I saw an interview with Soros recently. He's pulled out of Russia too. Putin uses the mafia management model.

Galveston: IKE 200 miles away and the sea looks like this? Whoaa!

http://tinyurl.com/4kwrfv

If VLO drops again as it did prior to this week's action, its a good long call option play (Jan 2010 LEAPs - at least its worked for me). Caught it at 30.50 earlier in the week, got out a tad early with stk at 33, but still ok for an overnight trade.

Opened a very small position in AUY at $7.51 - will look to add more.

Thought about puts on TOL, but the stk lately seems to have some upside momentum.

Volatility and extreme momentum chgs - seems to be the only plays in this market.

Swedish bikinis are all ok by me, ppapdjavul.

Thanks to all for the insightful posts.

Have a great weekend and an even greater trading week...

"Putin uses the mafia management model."

I predicted here two years ago that Putin would confiscate assets when the time suited him. As a Hungarian, Soros should have known this.

HEARD ON THE STREET, by Thorold Barker
from The Wall Street Journal.

At this point Bank of America could scrape up Lehman Brothers for loose change. But perhaps the more important question is whether Ken Lewis should wait and see if he can snap up an even bigger prize: Merrill Lynch.

http://tinyurl.com/4rsh4h

MOAB:

Soros hates America so much he fell overboard on Putin's early rhetoric.

Thanks, Lerner2. How do you then explain the fact that VLO was up more than TSO or SUN today?

how much is Lehman worth?

http://tinyurl.com/3vazdm

Mmmmmh. Interesting page on Ms. Hruska:

http://www.stockchase.com/Expert-sl--slq-ID-slv-Joanne--A.--Hruska,--CFA.php

Refiners today HOC up the most.

http://tinyurl.com/4zderl

The biggest problem with Russia is it's non-diversified economy and this has direct effect on government structure. The main function western-type "democratic" government is an arbitrage between conflicting business interests. In today's Russia there is very little need for arbitrage therefore autocracy fits just fine.

"Soros hates America so much he fell overboard on Putin's early rhetoric."

I thought we were trying to stay away from the politics?

Like it does in Saudi Arabia etc.

MOAB:

Hatred and love are not political opinions

I think Russia is more a feudal model.

It was. Now it is a fascist autocracy (in a wider Mussolini definition).

I want to emphasize that I am not any attaching ethical/moral sense to these definitions - purely economical.

Soros hates America is conservative propaganda, and rather transparent. He funds many "liberal" causes around the world, and that brings emnity from conservatives. He has done more to promote Democracy in Eastern Europe, even providing more money for programs, than the US government. As a Hungarian he experienced the tide of Fascism and Communism first hand and wants to help build societies that can resist these forces through free speech and democracy. Its a lot better and cheaper than fighting wars.

David,
People know VLO as a diversified refiner and they are located all over the USA. But the Port Arthur Refinery (295000 Barrels per day) and Texas City (245k bpd) are right in the bad area. They did sell the Lake Charles refinery so that reduces their risk some. But I did a retail outlet search for Houston and it gave me 30 locations within a 6 mile distance from downtown Houston. Just FYI.

I believe anyone who has made a good amount with the help of Bill's gold call, or any number of outstanding calls on this blog, should do a nice thing and buy his book, the link is on the homepage.

I used a variation of the options strategies on page 275:
"If you are moderately optimistic: buy stock, sell put" so starting Wednesday I bought GDX stock, bought short term calls, and sold medium term puts. I covered the short puts today to manage risk and free up margin.

Could be MOAB, then again I don't trust either party. Cow theory.

Re: US-based Investors For Canadian Stocks

BNN.CA

http://watch.bnn.ca/#clip91994

For any of the stocks mentioned, you can do a symbol lookup with finance.yahoo.ca, and any Canadian listed stock will have both a Canadian listing and a listing Stateside listing. You can buy any American listed stock without any extra fees by buying its pink sheet or OTC equivalent. Sometimes a Canadian listed stock will be co-listed on the AMEX or NYSE.

Example: Crew Energy:

http://ca.finance.yahoo.com/lookup?s=crew+energy&t=S&m=US

Iteration Energy

http://ca.finance.yahoo.com/lookup?s=iteration+energy&t=S&m=US

Encana

http://ca.finance.yahoo.com/lookup?s=encana&t=S&m=US

What I want to know is:
A while back it was postulated that there would be a rally back up in gold, then a final plunge and that would be the buying opportunity.
Still capitulation to come in gold and gold stocks or are we on our way to $1500?

One of the best discussions of a hurricane's impact on the oil bidness is at
http://www.theoildrum.com/

Matt Simmons has even been known to show up.

Thanks FranSix for the info

Re: Puke Point

Still anticipating a puke point in Gold prices and stocks for next week sometime, since the RSI(14) has not yet gotten to 30 on gold prices on the weekly chart. For a massive downside capitulation, as in the dollar, the monthly chart would have to comply with an RSI(14) of 30.

Some stocks in the junior golds which have bottomed are already seeing their gap down, high volume day without a rally.

49-days into the collapse of the broad measure of the money supply, with the RSI(14) @30 on the weekly chart:

http://tinyurl.com/4xmg5z

(Gold will have to clearly differentiate itself on this chart from the rest of the commodities, so far it hasn't.)

Fran6:

WADR!! why do you think that Gold monthly has to hit 30 on the RSI... it hasn't hit that level since 1999!!

http://tinyurl.com/gold-Monthly

If you are correct! Then you think the Bull in gold if done yes? no?

I don't trust either party as well, and the founding fathers didn't trust politicians either. Power corrupts, no matter who you are.

Grantmi, don't know. My feeling about that is that we're not at a point where the monthly RSI(14) has to hit 30, though we are at 50 now, which is quite significant. Many of the requirements in a gold price correction have been filled out, but we won't know exactly if we are in a calamitous crash for at least a couple of weeks' time. Suffice it to say that we can see a day at $730.

I am relying on my fellow senior gold bugs. They have been right about the fundamentals, but as far as the picture has filled out, the gold sector has been the most difficult to invest in, rather than a flat out commodity play, or liquid large caps.

One person who I look to for a cogent comment is always Carlyle Dunbar, who writes for the Investor Digest Of Canada. He is of the opinion that we are in a mid-term correction.

We COULD theoretically go down to ~$550/oz. and still be in a bull market. But there is no saying that a mining company will be indexed to the gold price because that relationship fell apart since last January.

This correction is far more serious than people realize, because of the declines across unrelated sectors. So much money has been pumped into the oil sector that a crash in oil prices will take out just about everything related and unrelated.

Thanks for the feedback Fran6..

i get Investors Digest too! I'll look it up!

Yup! You're right! In a BEAR market.. they take them all down! Everything. .. but I think there's been some rotation here.. and the big boys GS, JPM and Mer.. we're shorting the hell out of oil and old recently, and long financials. I think that PLAY is off! (maybe!)

Looking at the vol. action on HGU.to and GDX today... there was definitely some institutional buying today. (or covering shorts.. lol)

have a great weekend.

Colin Twiggs' latest (from yesterday):

"Recession - Coming To Your Neighbourhood Soon"

http://tinyurl.com/54qccl

"The Dow is testing a band of support between 11000 and 10700. Failure would signal a decline to the next band of support, between 10000 and 9700. A Twiggs Money Flow fall below recent lows at -0.02 would signal selling pressure — and increase the likelihood of another primary decline.

"China continues to report double-digit growth in GDP, but the Shanghai Composite Index warns of a major slow-down. Short-term support at 2300 has failed and the index is headed for a test of 2000 — a fall of two-thirds from its peak at 6000."

"Why Ike Could Be Texas' Worst Nightmare"

http://tinyurl.com/4m4j3d

didn't realize Houston was "the fourth most populous city in the United States."

Billy Sundance, the Ozzie economy is in much better shape than the US. The mineral boom has created jobs and a multiplier effect through the whole economy, albeit there are some states enjoying the boom more than others. The boom is very dependent on the expansion of Chindia as most of the growth is in basic minerals not precious. I suspect the AUD/USD movement is a consequence of official intervention in propping up the dollar. Given everything that is happening over there the dollar should be in free fall. My own view is once your presidential election is over the dollar will be allowed to float/sink back to its true traded level then commodities will start to appreciate and along with that the AUD.

FED holds emergency meeting...

The Federal Reserve Bank of New York held an emergency meeting Friday night with top Wall Street executives to discuss the future of venerable firm Lehman Brothers Holdings Inc. and the parlous state of U.S. financial markets.

The meeting, which began at 6 p.m., was called by the New York Fed in an attempt to find a solution to the problems plaguing Lehman. The group, which consisted of the heads of most major financial institutions, is expected to meet throughout the weekend to see if it can agree on some way to rescue the ailing firm, according to a person familiar with the matter.

http://tinyurl.com/4xkyfp

ALOHA !!

WELL ... lookie here ... Look what surfaced this weekend with LEHMAN'S name on it! I just did a post here about the McAllister property that LEHMAN holds the bag on, so now their other properties have filed "involuntary bankruptcy"! Just the losses on one property, McAllister is $235mil. This could be close to a $1bil bankruptcy where LEHMAN or any entity buying LEHMAN ends up holding the "bag 'o debt"!

READ ON:
The records of the U.S. Bankruptcy Court for the Central District of California show the full name and case number:

LBREP/L-SunCal Master I LLC - Case No. 08-bk-15588-ES

Involuntary bankruptcies were also filed by the same lead creditor against the following entities, whose case numbers are shown:

LBREP/L-SunCal McAllister Ranch LLC - Case No. 08-bk-15637-ES
LBREP/L-SunCal McSweeney Farms LLC - Case No. 08-bk-15639-ES
LBREP/L-SunCal Summerwind Ranch LLC - Case No. 08-bk-15640-ES

All of the cases have been assigned to Bankruptcy Judge Erithe Smith in the court's Santa Ana, California branch court. All of the alleged debtors are listed as having an Orange County, California address.

The sole petitioning unsecured creditor on the "Master I LLC' case is Grammercy Warehouse Funding LLC as Agent Pursuant to Credit Agreement dated 1/19/08.

The petitioning unsecured creditors on the "McAllister Ranch" case are John D. Scripter dba Mason Plus, Klassen Corp. and Grammercy.

The petitioning unsecured creditors on the "McSweeney Farms" case are Pacific Soils Engineering, Southwest Equipment LLC and Grammercy.

The petitioning unsecured creditors on the "Summerwind Ranch" case are Pacific Soils Engineering, Pacific Advanced Civil Engineering and Grammercy.

The lawyer for all of the petitioning creditors is Daniel H. Reiss of Levene, Neall, Rankin & Brill in Century City, California.

Each docket contains only the involuntary bankruptcy petition, alledging that the party against whom the case has been filed has not been paying its unsecured debts as they fall due. No "emergency" pleadings have been filed and no hearings have been set as of the close of the court's business on 9/11/08.

Undoubtedly, the major concern for SunCal and Lehman's management, in the filing of these cases, is the potential impact upon the main entity, LBREP/L-SunCal Master I LLC. The court files do not described any assets owned by that alleged debtor or disclose any other information about its business or affairs.

Each of the other three alleged debtors appears to be the owner of one of the three large residential subdivisions encumbered by syndicated A&D mortgage loans managed by Lehman Commercial Paper, Inc. The McAllister Ranch project is near Bakersfield, California and the McSweeney Farms and Summerwind Ranch projects are in Riverside County, California. Those loans are presently scheduled for foreclosure on September 12, 2008, barring an extension of those foreclosure dates by Lehman. For further details on those foreclosures see recent articles in the Wall Street Journal, the Riverside Press Enterprise and the Bakersfield Californian.END

ALOHA !!

2nd_ave ... When I lived there in the 1980s it was the fifth largest city ... Hummmm, its growing!

ALOHA !!

There's only one sector that has done worse than the gold stocks or the juniors on a long term basis. Try to outperform the losses on the XLF on a ten year chart!

Link: http://tinyurl.com/47pz29

There is a major competition for your funds, whether it is the money in your wallet or all that cash you have been saving up in your 401k or the inheritance from your rich Uncle. The US financial sector wants it all! The US financial sector needs it all and then some! The US financial sector is in deep, deep trouble and had there not been a full on intervention into commodities and gold(tied to oil)then the US financial sector would have sunk into a bottomless abyss along with the US Peso.

The HUI, the XAU, the TSX charts look bad but not near as bad as the XLF. Doesn't that tell you something about the timing of this commodity take down? What happened to commodities and gold HAD to happen. First there needed to be a correction but more important the US FED needed the US Treasury to help save the US financial markets and the timing of the FNM and FRE dismantling was at the least suspect. Imagine if there was an actual "free market" in the USA and there was NO bailouts or interventions? There would not be a US Bank standing ...

I wouldn't talk too ill of Russia's markets since ours are something right out of Orwell's 1984!

ALOHA !!

Looks like what I posted yesterday to MikeNYC has come true! Lets hope the geniuses that dumped Strategic Oil Reserves onto the futures markets to bring oil prices down have some left to actually use in case of a REAL emergency ... like THIS ONE!

I can't wait to see how this will be spun into a lower oil price! WOW ... look at all those refineries being shut down!

Looks like the US government and Wall Street will have a lot more pressing problems to paper over than LEHMAN come Monday! Unreal ...

IT ALL WORKS UNTIL IT DOESN'T!!!

READ ON:
Ike Forces Shutdown of 19% of Refining Capacity, Limiting Fuel

By Jordan Burke

Sept. 13 (Bloomberg) -- Hurricane Ike, which will make landfall along the U.S. Gulf Coast today, caused more than 19 percent of the nations refining capacity to close and may limit fuel deliveries across the country.

At least 13 refineries in Texas were shutting down as Ike approached. Gulf Coast refineries and ports are the source of about 50 percent of the fuel and crude used in the eastern half of the U.S. Plants operated by Exxon Mobil Corp., Valero Energy Corp., ConocoPhillips and Royal Dutch Shell Plc were affected.

Gasoline shortages may occur across the southern U.S. up to Washington because of the closures caused by Hurricane Gustav and now Ike, Kevin Kolevar, assistant secretary for electricity delivery and energy reliability at the U.S. Department of Energy, said on a conference call.

``We expect to see constrained supplies of refined products,'' he said. ``The administration will utilize every tool at our disposal to lessen the likelihood of limited fuel supplies,'' including tapping the Strategic Petroleum Reserve.

ALOHA !!

I have to ask ... Does the USA have a "Strategic Gasoline and Military Fuel Reserve"? Because if refineries are shut down then only a Strategic "Petroleum" Reserve isn't going to do us a lot of good! I find it hard to believe that there are salt caves filled with flammable gasoline and jet fuel hidden somewhere in the swamps of Louisiana! Where is the hub for the gasoline futures markets? Is that in Cushing,Oklahoma also, like the crude futures hub is?

I own XOM and CVX but not the futures contracts!

Re: Dollar Intervention

The sale of Euros from the Exchange Sabilization Fund is the first volley in Paulson's bazooka.

I would say watch for more sales of foreign exchange holding to raise cash and lend the proceeds to HB&B.

Posted by 2nd_ave: "it's easy to think today's move in miners keeps going, and maybe it does, but it's usually a sell signal for me...the next pullback then becomes a buy signal..."

That's how one misses most of the 100-200% move during a sharp bull market. :) This is a great strategy for the flat and down market, though. So I would ask myself: do I believe we are close to the bottom in miners for this year? Yes, I do! I was fully invested in miners, ESLR and SLV (and 8% in VLO) as of yesterday, and now I will be trading with 1/4 of my portfolio and keeping the other 3/4 until my positions break out to new highs (they are down by a factor of 2, 3, 4, ... up to 9 from their highs).

From Bill's note: "If you believe, as I do, that the next few years will be one of economic expansion and the ending of the war effort, hence a period of declining inflation, perhaps some deflation in places, and continuing fiat money degration, and generally a period of growth in economic wealth, then the prices of oil & gas, metals and precious metals will rise, and these stocks will rally."

Bill: how can we have both declining inflation and a fiat money degradation? I thought that deflation increases the value of paper money. The precious metals rally during inlationary periods but do not do well during disinflationary periods, as we had between 1980 and 2000.

If Bill is busy, can someone else explain this? Thanks!

http://tinyurl.com/4so5qa

Saturday Morning Coffee: The World Gone Mad

Excellent synoposis of the gold sectoral decline:

"Hulbert accused the "gold bug" fraternity of using arguments that "sometimes involve disingenuous logic", captured in the attitude of "Heads I win, tails you lose."

http://www.mineweb.net/mineweb/view/mineweb/en/page33?oid=62115&sn=Detail

Re: Monthly Oil, Gold charts

Ok, so if we are seeing a deflationary bear market hastened by the sale of foreign currency from the Exchange Stabilization Fund, it will likely continue as the momentum has built into a capitulation.

I like to believe that the sale of Euros was in preparation for further interest rate cuts. The hurricane season will not have the same impact this year on the oil markets as last year, and probably the Fed's last bullet has been fired.

The only way to reverse inflation would be with higher interest rates to soak up all of the extra currency, but since interest rate declines have been so precipitous and prolonged in the US, they only have recourse to dumping their foreign exchange.

If you are invested in commodities, then a short lived spike in the dollar would be a great relief, otherwise, the sale of foreign currency may have just touched off a massive deflationary wave.

The irony in all this is that the oil market would have seen its day anyways and would have come off on its own.

So where do prices have to go before we declare the bull market in oil and gold to be finished?

You're not going to like this.

Oil at $60

WTIC stockcharts.com

http://tinyurl.com/5yq3xu

Gold at $550

stockcharts.com

http://tinyurl.com/4gk3qs

David - Thinking about the difference between deflation and declining inflation - Perhaps these aren't the same thing?

Declining inflation is a slowing, or decline in the rate of inflation, where deflation is a negative inflation rate.

Although I'm not 100% this is correct, this is the conclusion I derive.

David, Pookster:

$.02 Obviously, the money supply has increased (as I hear Kaimu bouncing around in my brain)which is inflationary to the pieces of paper in that they'll be worth less. However, it seems, the financing excesses of the past few years have abated leaving a much smaller pool of individuals able to access leveraged capital, which is economically deflationary 1) because they can't get the money, and 2) there are less people able to buy what they used to buy. Which leaves them focused more on buying what they have to buy with pieces of paper that are worth less because there are so much more of them. So, I guess it's how does the algorithm balance out in the aggregate (oh, seeing Kaimu chasing pigs).

Pookster: Is it semantics or is a declining inflation rate actually deflation. It's kinda' like the democrats definition of budget cuts.

Good morning all!

A question - could Russia's market woes prompt them to dump US$ denominated assets? I think of that as a possible trigger for the next leg down.

BTW - a previous Ike used the threat of a currency dump to end the Suez crisis. History reversed & repeated in Iraq?

re: Hurricane Ike - Basell and Total also have major polypropylene plants directly in the path. A shortage could hurt a lot of businesses that depend on plastic parts.

Re: ARU.TO

Investors who invested in the company prior to the run-up should be glad they got what they did, because the company was affected by politics, not economics.

Kinross may be incredibly schrewd, but they still have to deal with the same political scenario. Barrick nearly got away with the same in NovaGold. They may find that Ecuador is simply not a good place to do business at all, but then again, investors simply threw their money at the Congo as well. Moto Gold has an amazing deposit, but where is the share price now?

Aurelian investors are not the only ones caught up in the rout. They should look themselves in the mirror and question their own expectations, instead of resorting to calling other people crooks.

Was the situation mismanaged in some way? Yes. Can anyone say they made the decision to sell at $50 instead of waiting for a buyout? Was the buyout rationale a good one to depend on in this situation? Would you buy Kinross or IAMgold knowing the political nature of Ecuador?

I don't know Ecuador from a hole in the ground, but I would say expect more of the same. Why governments are intervening in gold mining situations when they don't do the same to a zinc mine leaves one to ponder the whys and wheretofores.

Folks, its time to wise up. Governments and NGO's are ganging up on the mining industry, with their special attention focussed on gold mining.

I think I'm going with Bill's call and load up on PM major miners like GG, which I SHOULD HAVE DONE two days ago. I'm not, however, going to put all my peanuts in this bag, as short oil still looks good while researching minor oil producers.

"That's how one misses most of the 100-200% move during a sharp bull market. :)"

David- i understand your point, but weren't you the one asking me two days ago why i was buying if gold was headed to the 600s? my reply was probably some version of starting to scale in on extreme negativity (where the odds are good), in the expectation of selling on strength...by EOD thursday, i had accumulated only a 60% (of allocation) position in the sector, and was anticipating further weakness...instead, buyers started streaming in friday; earlier than expected, but really no surprise...and being a contrarian, i sold into the buying frenzy (been that way all my life...is long hair in? then i'm cutting mine short...everyone kissing up to the BMOC? then i'm hanging out with the guy in the corner)...

so firday afternoon we're both up 10% for the week on our gold holdings (not bad), and i'm cashed out...for some reason you have now decided that gold has bottomed...i'm not so sure, and i really don't care...

here's the thing: from the link posted earlier by F6 (which i will re-post here):

http://tinyurl.com/4batoj

it's probably fair to say the average listed gold stocks has lost 60% of its peak value...that's a pretty big hit...

so simply due to lack of interest we've both been spared a 60% hit in the sector to begin with...

that's enough reason for us to celebrate (setting aside your complicated relationships with UXG and SWC for the time being)...if gold keeps climbing next week, i'll buy you coffee, and if it drops, i'll buy more gold ;)

Bill asked - "There are people in this community who feel the junior equity market in Canada is at a crossroads?

Assuming he is referring to jr. PM miners, IMO, claim jumping seems to be alive and well (water-filled vertical cave) in the 21st century. I don't intend on stepping into that hole just to discover I've broken my leg.

weighing in on the semantics-> declining inflation would be deflation...a declining rate of inflation would still be inflation...

I think if oil comes off after Ike, then that day the sell off will take the market lower.

As optionoracle has pointed out, G.TO saw its puke point lately on a daily basis. Weekly RSI(7) has seen its crossover.

A far more stringent measure of RSI(14) and CCI(8) on the weekly chart says this is an entry point.

make that 'when' the odds are good, 'i've' cashed out, listed gold 'stock,' and i'll buy 'gold again'...still waiting for the $20 Mr. Coffee to do its thing...

WAG makes a competing bid for LDG:

http://tinyurl.com/477k4n

i see LDG stores everywhere in the bay area EXCEPT in the city of SF, where it's all WAG...that's a pretty tight lock on an urban market...guessing it may be union-related...

Colin Twiggs:

"Asia Retreats"

http://tinyurl.com/54qccl

"The Dow continues to consolidate between 11000 and 11800. Long tails and higher volume indicate support at 11000, but Friday's hanging man signals selling pressure. Expect another test of 11000."

"The Nasdaq 100 is testing the new resistance level at 1800. Twiggs Money Flow declining below zero warns of selling pressure — and the index is expected to make another test of primary support at 1700/1670. Failure would offer a target of 1400, calculated as 1700 - ( 2000 - 1700 )."

"The Shanghai Composite is headed for the medium-term target of 2000; we can expect support at this level. Twiggs Money Flow (21-day) falling below recent lows signals rising selling pressure. The index warns of a sharp down-turn in the Chinese economy — that is likely to affect commodity-driven markets like Australia."

inflation = prices going up
deflation = prices going down
disinflation = rate of inflation is going down, or rate of deflation is going up (if current environment is one of deflation)

re the 'Emergency' Fed meeting-

there will always be smug participants watching the proceedings, opportunists waiting to capitalize, and a few actually willing (and able) to help...it's usually clear someone has to finally do/accept something they've been putting off, and the rest is negotiating what role the others will play...so i think the purpose of the 'emergency' meeting will simply be to conclude an ongoing discussion among all participants, and one of the rumors floating around will play out..

Taking another stab at this:

"a period of declining inflation, perhaps some deflation in places, and continuing fiat money degration"

a period of slowing devaluation, perhaps some valuation in places, and continuing fiat money devaluation.

Where devaluation may also be called inflation, declining inflation is not deflation but a slowing of inflation, and fiat money degration also qualifies as inflation.

Conclusion: continuing inflation, but at a slower rate, and actual deflation in some aspects.

Force Majeure Declaration with Respect to Deliveries of September 2008 and Any Remaining August 2008 NYMEX Natural Gas Contracts

"In consideration of the impact of Hurricane Ike, a Delivery Committee panel (the "Committee") convened, Friday September 12, 2008, to review deliveries in progress related to the NYMEX Natural Gas (NG) Futures Contract for the September 2008 contract month.

The Committee noted that Sabine Pipe Line, which operates the Henry Hub facility in Louisiana, shut-down all facilities connected to Sabine and issued a Force Majeure declaration that became effective at 9:00 p.m. Friday September 12, 2008 for intraday 2 cycles."

semantics:

"disinflation": declining inflation, which is however still inflation, i.e. still positive, just it's rate of change has gone negative (first derivative).

"deflation": the true negative of inflation.
(the rate of change (first derivative) could be anything.)

then there are:

"monetary" inflation (Bernanke printing overtime)

"cost push" inflation (less oil being found)

"demand pull" inflation (more Chinese driving cars)

google these and you will find everything you never wanted to know about inflation.

A new Hurricane is coming!!!!

_______________________________________

Alt-A Mortgages Next Risk for Housing Market as Defaults Surge

By Dan Levy and Bob Ivry

Sept. 12 (Bloomberg) -- For Dean Nessen, the choice of a mortgage was easy. By agreeing to pay only interest for three years, the self-employed salesman didn't have to show proof of income and landed a rate of 6.25 percent.

Now, four years later, Nessen's industrial coatings business has gone belly up and his rate has jumped to 10.6 percent. He can't afford the payments and may have to move his family out of their home in Commerce Township, Michigan.

Homeowners lured by low introductory rates to Alt-A mortgages, which typically require little or no proof of a borrower's income, may fuel the next wave of foreclosures and further delay a recovery from the worst housing decline since the 1930s. Almost 16 percent of securitized Alt-A loans issued since January 2006 are at least 60 days late, data compiled by Bloomberg show. Defaults will accelerate next year and continue through 2011 as these loans hit their three- and five-year reset periods, according to RealtyTrac Inc., an Irvine, California-based foreclosure data provider.

``Alt-A will be another headache,'' said T.J. Lim, the London-based global co-head of markets at Unicredit Group. ``I would be very worried about anything issued in the last half of 2006 and the first half of 2007.''

About 3 million U.S. borrowers have Alt-A mortgages totaling $1 trillion, compared with $855 billion of subprime loans outstanding, according to Inside Mortgage Finance, a trade publication in Bethesda, Maryland. Of the Alt-A borrowers, 70 percent may have exaggerated their income, said David Olson, president of mortgage research firm Wholesale Access in Columbia, Maryland.

http://tinyurl.com/4lrcxy

those Fed meeting stories are all over (as they were not for BSC)...the fact that they've tipped off the media to the meeting, and that they use the word 'emergency,' skews your thinking towards another bail-out..what if they're just playing poker in the NY Fed building waiting for the taxpayers to soak up the headlines?...

re: inflation

It is my understanding that price inflation of a good or service can result from
a) increasing demand or decreasing supply
b) increasing costs of underlying components
c) inflation of money supply, resulting in the decreased purchasing power of the currency

It is important to know why prices are increasing or decreasing when discussing price inflation. There are powerful forces acting on the money supply right now. The multi-billion dollar write downs and write offs and the decrease in the velocity of money are highly deflationary; however, in the long run wage inflation in Asia and decreasing supplies of resources with increasing populations are price inflationary. I have read that the large infusions of credit issued by the Fed (which would normally be inflationary) are sterilized so that they will not add to monetary inflation.

I think of it as a tug-of-war between two very large forces, both increasing in strength. I don't know which will dominate. Right now we are seeing the effects of deflation on asset prices. In the long run I expect to see price inflation in commodities because the supply and demand pressures are significant.

Much of the inflation generated by our monetary policies was exported to developing nations. Will the US and other developed nations try to increase money supply to soften the blow of a deep recession? Will China and other nations continue to absorb extra dollars in order to keep their floating currency pegs while fueling inflation at home? It can go on like this for a long time but eventually it will have to stop. When it does, expect a crisis.

Fransix - Ecuador, Aurelian

The run-up after Aurelian's discovery was one thing; the way Aurelian dealt with Ecuadorean politics quite another.

Aurelian immediately accepted an offer 1/3 the in situ per ounce price of comparable buyouts, while the politics of mining in Ecuador was getting BETTER.

I read drafts of the mining law, and it's FINE. Everyone who studied the situation knew this. Kinross said they knew it. A high Ecuadorean official just spoke at the Denver Gold Show, and the reviews were good.

Patrick Anderson must have had his own reasons for accepting a "stink bid" for his company, but he certainly wasn't looking out for shareholders.

Anderson has just joined the board of Colossus Minerals in Brazil, a company I'll now stay away from ! - It's a matter of an executive who isn't committed to his shareholders.

Grantmi- let's fast-reverse four years...the economy is booming, developers are bidding millions of dollars for the right to raze old restaurants so they can build yet another urban housing complex, people are borrowing against their homes to buy next year's SUV...hey, Mr. Nessen's job is EASY; companies are calling HIM to hand him his next sale, and he can't keep up...

what does he do? he applies for an interest-only loan...i can't make too many assumptions, but i just don't think he made prudent decisions about his mortgage, and it's hard to believe he's waited this long to deal with it...if he had used the money he was making in the good years to pay off the mortgage and shift into a 30-yr fixed as late as last summer, he'd be OK...

he may as well be one of those guys who stayed behind in Houston...

David, FranSix,CP, Nemo,,

re: deflation/money supply

From Northern Trust/Paul Kasreil*, August 15, 2008

"In the three months ended July, the CPI-adjusted M2 money stock has ontracted at an annualized rate of 7..32%—the sharpest three-month contraction since early 1980..."

I think a lessening of inflation is also called disinflation.

The one I hate is "dis-savings" which I see as dis-intelligent :-)

*I had a chance to speak with him a year ago after his economic outlook presentation. He has been unhappy with the Fed for a long time and NT has been careful to avoid the subprime contagion.

LOL...maybe we can just ask Bill to answer David's question..

I think if Aurelian had its discovery in a less contentious political environment, then it would have fended off any takeover bid. But as it stands, the majority shareholders sold fait accompli.

Canadians are no-goodnick profiteer robber barons polluters of mother earth when it comes to mining. That IS their reputation.

The combined impact of situations like Aurelian in Ecuador, Northern Dynasty in Alaska, Gabriel in Romania, Ivanhoe in Mongolia, and to a smaller extent, Barrick attempting to take over Novagold, all no good for the mining sector. And yet, these are the largest deposits in the world. All of them controversial.

I look at my small gold mine in development, seeing its tailings pond declared a fish habitat, and throw up my hands in despair. Nobody wants a mine. Everybody hates mining. Like they hate logging. But they'll whine and complain about the price of gas for their SUV when they go buy groceries, and why aren't they drilling wildlife preserves in Alaska?

If the mining sector is corrupt, then so be it. Shall we mention the banking or energy or telecom sectors? BUT WAIT! So are the gub'mints!!!!

Sheese! Now I'm sounding like kaimu.

:0

re: SKF

I got out for the weekend. (Paulson's favorite surprise time.) The Alt-A is sometimes called NINJA, I think. (No Income, No Job, No Assets)

The 1-yr SKF chart looks like a sustained move above 110 or so, could lead to a longer up move. The last trough to peak was about 85 days and figure it's about 70 days now.

Any TA gurus out there?

Grym,
Why not switch rather than fight... GG should be on a roll here, and oil is still falling....

2nd- Ave! True up!!

It's happening here in Canada too.

Buddy of mine built a home last year.. and his builder just told him that a larger builder them him who bought a whack of lots for $430K each... (12 of them), is NOW trying to off load them for $380!

Guess what! NO TAKERS! Even for the lots.. with no homes on them. (He's stop building!)

But Canada was immune to all this!!!

F6 - It's like trying to choose between the lesser of a range of evils. The evils are necessities which the human saga continues to perpetuate, propagate and nurture.

"The one I hate is "dis-savings" which I see as dis-intelligent.

Yuk, downright distasteful, I'm not ready for that kool-aid either!

disinflation
Definition

A drop in the inflation rate, i.e. a reduction in the rate at which prices rise.

This content can be found on the following page:
http://www.investorwords.com/1487/disinflation.html

Okay?

Hi,

Hugo Chavez has expelled the US Ambassador in a fiery speech, you can see here:

Chavez quote: "Vayan-se al c**** yankees de m**** que aqui hay un pueblo digno!".

http://www.youtube.com/watch?v=XJNiBOpKwgU

Now, in the US, the news came out as: US expells Venezuelan Ambassador.

http://edition.cnn.com/2008/WORLD/americas/09/12/venezuela.us/index.html

Now, talk about spinning the wheel....

My comment; the boiler is heating.

Cheers mates!

If I was invested in Ecuador and saw this news reel today, then I would be very uncomfortable about getting my money out:

http://www.youtube.com/watch?v=z7x_pIEUeWE&feature=related

The Venezuelan diplomat got off easy by being shipped home. I imagine the Chinese or European or Middle Eastern diplomat will have a much tougher time if their countries decide to disgorge their U.S. dollar foreign exchange reserves.

I never did enjoy Boolian algebra, and neither do I care for double-negatives. An unsaid rule of mine is to convert double negatives prior to expression.

Perhaps my mind was permanently damaged by being one and zeroed to death by boolean expression, and could be compared to an automobile which has been through a baseball hail storm.

I do like XOR logic though (no, not a ticker reference)

Hahaha, I just found a Canadian micro XOR.V, looks like a junior energy penny stock.

then we won't use them no more...speaking of which, could one care less or not care less...sometimes it just sounds better when you say it the wrong way...;)

2nd - HB&B was feeding on greed and excess. I know a few who went full hock into real estate and are now way underwater on their ARMs just because they were told they couldn't get a fixed rate. It's BS, and the HB&B cancer therapy needs to go chemo. level 10.

Yes, I shall not use them incorrectly whenever possible.

kaimu said "WELL ... lookie here ... Look what surfaced this weekend with LEHMAN'S name on it!"

Another floater? Sheesh, I'm glad I wasn't drinking kool-aid from that punchbowl.

"..damage from Ike may be less than feared"

http://tinyurl.com/58dpug

"
The eye of the hurricane missed the center of Houston, as well as the largest concentrations of oil and gas refineries, Johnson said. The storm surge and rainfall in Galveston, Texas, were also weaker than predicted."

"Galveston, however, remains flooded and refineries as far east as Louisiana have been affected. While preliminary estimates put the damage at $8 billion or more, the storm isn't over.

"It will be sometime before we have any damage estimates," said Mike Siemienas, a spokesman for Allstate Corp. "Our focus right now is to get into the hardest hit areas once it is safe to do so."

Last week Bill posted a link to this video and said it is a "must see" and it is worth the 5 minutes it takes to see it. make sure you folks are sitting down. As you will see the anti-ARU-K forces are passionate and well organized with probably over 250 members on one internet discussion group alone on Agoracom.....Aurelian ARU

HERE IS THE VIDEO LINK
http://www.youtube.com/watch?v=TDKRLfeo6N8

David- "for some reason you have now decided that gold has bottomed...i'm not so sure, and i really don't care..." just to clarify, as in "it doesn't matter which way it moves, as i'm ready to play it either way."

Just in today from John Embry from Sprott Asset management

"TGR: What would be in the top ten holdings?

JE: Aurelian Resources Inc. (ARU:TSX) is an interesting one—arguably the best find in the new century. It has a minimum of 10 to 13 million ounces. Because it's in Ecuador they’re having all the problems with Correa’s government. Kinross has put in a bid to take them out. The bid has given the stock a lift, but it’s a remarkable asset and I hope this deal doesn’t go through.

"Fast forward to this year, and Aurelian is being sold to Kinross Gold Corp. for half its peak value. Mr. Zerb is a little bitter that the price is so low, and that a rival bid never emerged.But in his opinion, the biggest disappointment is that Aurelian's sale is an anti-climatic letdown that affects the entire junior mining sector."

Also note this video of Andy Hoffman of the Globe and Mail and his gloomy review of the Denver Gold Show this week.
http://watch.bnn.ca/#clip91678

late evening risk thoughts.

what is better, sum total:

holding SRS, puts on IYR, or puts on URE?

If you look at the holdings for SRS, you see
mainly "DJUSRE SWAPS". No short futures, short stocks, etc., just "swaps" and some cash (about half as much cash as the swaps are worth).

I did not find any info on the counterparty, but yes, a mention of potential counterparty risk.

Suppose those swaps were with - Lehman?

Do you feel warm and cozy holding SRS now?

Leaving the risk of the options exchange defaulting aside for the moment.

As far as I can tell, puts on IYR are priced essentially equivalently with puts on URE, but are more liquid.

Now, URE contains some real stocks, but also some "swaps" to produce that double leverage.

So if the swaps default, it would also take a big hit, though exactly how big one I can't see, one would have to figure it out, which I have not done.

So, anyway, puts on URE might have that extra little edge in a big meltdown?

Assuming no "force majeur" is declared by the options exchange of course, in which case no options might be fully honored.

comments?

re Aurelian, I am reposting what I posted here in August:

The more I look into this deal the more it stinks. Before the deal Kinross's stock was pumped and Aurelian's dumped to make the deal look better than it was; just look at the charts. Aurelian's website was scrubbed - apparently in April - of all the detailed drill information that was there. And then one month before the deal management awards itself a large chunk of options. Worst of all, all other miners in Ecuador were and are saying that the political risk is minor and the new mining law will be favorable, except Aurelian management, which changed it's position when the deal was announced and doesn't want to wait to sell the company until the mining law is made public. And then they make a financing at $4.75 part of the deal even when Aurelian does not need financing for another year.

I pity the participants in the last financing - $40 million at $9.25 - who have been fleeced.

This deal stinks to high heaven. Management better pray this deal goes through or most of them will be thrown overboard in a mutiny. The retail investors are seething and eager to get the word out to a wide audience via press and youtube.

-------------

The individual investor has a thousand forces against them in the markets. What I don't understand is why the large funds went along with this charade. The markets are not going to be regulated properly until every single individual investor stands up and demands that they be.

Stay far away from Patrick Anderson as he will knife you in the back.

n2s- re ESLR...as you know, neither stock prices nor wealth accumulation move in straight lines...i do my best to straighten things out (at least emotionally) by using small(er) position sizes and taking positions off on strength (which works with any time frame)...i can recall posts where you added to your position on weakness- why not try lightening up on the position on days/weeks when it outperforms? might get the same performance with less stress...

And the real founder Keith Barron, who stepped down from the BoD in March or April (can't remember when) tendered and walked away with over 50 MILLION DOLLARS.

The rest of the BoD was selling some months back as well. I think the political risk was a cover. I never saw political risk except from a former mines minister who was taking orders from his wife who was one of the country's top radical environmentalists, but he quit many months ago.

Correa is merely trying to develop a mining industry by bringing order to the previous free for all. I saw no problem with that but apparently some N Americans are upset because they can't rape and pillage the country leaving nothing for the people as per the way things were done under Noboa the Bonita Banana Baron previous President.

So this so called "political risk" was used over and over in order to keep the ARU share price down, especially after good news came out upon which an anti-mining story always came out only minutes later written by a Reuters reporter...who ALSO writes for the Environmental News Network....anyone suspicious LOL? Who was accumulating shares during this anti Ecuador campaign?

People are saying that $60/oz. equivalent is highway robbery.. Well you've got companies out there trading below $20/oz. The biggest takeouts have paid ~$100/oz. equivalent for undeveloped mines.

$60/oz. is a good deal considering the negative politics of the region and the horribly negative market. In a better world it would have fetched double that.

Considering this to be the hurricane season and the controversy surrounding the biggest gold/copper porphyry deposits in the world, I though this video would be approrpiate:

(warning: 'Trailer Park Boys')

http://www.youtube.com/watch?v=Pvm-n6gwPCY&feature=related

the 401(k) wars:

http://tinyurl.com/6rk7kh

Clearly the Aurelian buyout was not in the best interests of ARU shareholders. Kinross CEO Tye Burt is a businessman, and buying ARU on the cheap is what a businessman is supposed to do. Patrick Anderson is a different story. His actions were something less than those of an honest man.

The reason ARU has a Shareholders Rights Plan is to prevent any predators from buying the company at a low valuation, whether it is caused by political risk, a bear market, or any other factors. ARU had the means to defend itself, and instead under the "leadership" of Patrick Anderson, embraced a stink bid.

When major gold companies cannot replace their reserves, there is no reason to sell an enormous high-grade gold deposit for $60/oz, when other recent transactions have gone for much more than that.

Next month the Mining Mandate will end, and ARU will be back at work. Ecuador is about to pass a new Constitution and a mining law to resolve the political uncertainty. Instead of waiting a couple of months, Patrick Anderson sells the company at the worst possible time, in the middle of a steep market correction.

There is no law against a CEO being stupid, and there is no law against him being a coward. But I would like to hear from the institutional investors. What did Kinross tell them? How did Kinross convince institutional investors to sell this company for next to nothing?

I would like to see the OSC review the trading of ARU and KGC prior to the offer to see how the valuations of those stocks were determined. I'd also like to know why insiders were dumping shares before the news of the buyout became public. I'd like to know why the officers of ARU issued 2.3 million stock options to themselves. Was this a reward for a job well done?

Now that it clear that the game is rigged, this episode will certainly discourage me from holding any junior mining shares in the expectation of a buyout. Now the directors of Aurelian have taken their loot and scattered, only to turn up on the boards of other mining companies, and the con game will begin anew.

As far as investing in exploration companies, why go through all of the storms when you know there is no pot of gold waiting at the end of the rainbow?

http://tinyurl.com/6h2c9j

He Ain't Heavy, He's My Banker...

Lengthy talk on YouTube from an investor on ARU:

Part One

http://www.youtube.com/watch?v=vD8nTFASuBw

Part Two

http://www.youtube.com/watch?v=242fg0X9cY8

A lack of ethics and business seem to go hand in hand. Point well taken.

ALOHA!!

ON MONEY SUPPLY
Look since 1913, when the US FED was officially open for business they have done nothing but expand money supply. The US FED is in the business of leveraging the US money supply. They are in the LEVERAGE BUSINESS. In order to create more loans from deposits they have devised "fractional reserve banking". Why? Well, the more loans they make the more money banks make off interest received. A fiat monetary system as we have today is perfect for this scheme since there is technically no limit on spending. It allows an EMPIRE like the USA to spend and spend beyond its means. Yes, our elected leaders we keep voting into office take full advantage of that strategy and they have truly been "expert spenders", but now you have to define the nature of their "spending" in terms of quality! To put it in layman's terms ... THEY SUCK AT QUALITY! They are experts at building bridges to "nowhere" ...

Go to this chart as it includes all the factors of TOTAL MONEY SUPPLY. You just can't only count actual "cash" in savings or in circulation. Loans are money too! Not just loans for a home but we all know the BIGGEST loan addict on this Planet is the US GOVERNMENT! Let your freak flag fly! THEY'RE FREAKY ... SUPER FREAK! The US government SPENDS on behalf of its constituents and supposedly we US TAXPAYERS have government representation, otherwise we would have "taxation without representation" and in the past without representation you got the BOSTON TEA PARTY!

THE CHART ... Here is a chart that shows the "rate of inflation". You'll notice there is NO DEFLATION. This chart goes back to 1970 when we had the lowest rate of money supply growth of 2%. In 1971 Nixon shut the gold window and the US Peso defaulted on its gold standard obligations. Officially the USA announced it was 100% out of the gold business! That was the goal of central bankers since the US FED was created in 1913. Now we have money that is "faith based"! Backed by the "credit and faith" of the US government. This is where the "C WORD" comes into play and why it is so monumental.

Keep looking at the chart and follow that green line up and down. Does that green line ever go to 0% or $0? NO ... in fact that chart looks like it is ready to explode to the upside. Remember that M3 lags by 12-18months.

Now look at that black line and at the very top follow it over to the left hand side of the chart and tell me what the dollar amount is ... Lets just say it a CRAP LOAD! Do we have 60 trillion of anything on this Planet? Maybe grains of sand in the Sahara Desert, but do we have 60 trillion widgets?

So the rate of TOTAL MONEY SUPPLY growth NEVER STOPS! It might be 4% one year or 20% another year but is never at ZERO! You cannot have true DEFLATION until that rate of growth falls to ZERO or BELOW!

Just because some people lost a CRAP LOAD of money in the TECH BUBBLE or the CREDIT BUBBLE or the REAL ESTATE BUBBLE does not mean that money supply stops growing. Obviously, because in 2000 the rate of money supply growth was at 6%. How is that deflationary?

Nothing in the entire past of the US FED suggests they will opt for "deflation" as a resolution to our monetary woes. Nothing in the US EMPIRE'S past suggests that we will ever stop our military adventurism and World Police. We have military bases in 134 countries around the World!!! In fact now with Russia and China in Venezuela and the teetering of regimes all through Central and South America along with the new COLD WAR I doubt we see "deflation" until the entire US EMPIRE and its financial system collapses.

Go to this chart and look at the Reagan era in the 1980s. Recall Reagan was touted for his fiscal restraint. Sure the "rate of inflation" fell but look at the debt side. He did not stop spending one bit! That's the crux ... As long as the US government "spends" the debt will grow and so will the interest on that debt. How can the US government stop spending? When it collapses and our money becomes worthless, which we are very close to worthlessness! There you have my BIG PICTURE argument for a monetary collapse! This is why I keep saying a monetary collapse is coming. Historically EMPIRES always COLLAPSE! There is just no way around it! The bankers, like JP MORGAN himself, back in the early 1900s new full well what a fiat monetary system would lead to. They knew that if a human being had a blank check that they would write that check for as much as they can! That is human nature ... That defines every government on the Planet, but especially the US government! That is "FIAT"!

US VOTERS do not have the intelligence to understand enough about money and finances to elect the right people to make a true CHANGE in the course of our Nation. US VOTERS are mesmerized by the likes of Oprah and The View and Mad Money and O'Reilly and Monday Night Football and the WWF! There is no time in the lives of US VOTERS for "REALITY"! Hence we get "unreal" politicians year after year to govern our taxes.

Bailing out the entire US financial system will only cause the monetary collapse to arrive sooner. Throwing money onto the US financial system solves nothing. The "rot" is still there! Americans have been throwing money at our problems for longer than I have been alive and it has made no difference. We are still on the path to moral and monetary ruination. The only missing part is "WHEN"!

CHART: http://tinyurl.com/6eyybw

Peter Schiff — the effect of FNM/FRE bailout
of interest to all who have been short financials

from: Last Gasp of a Doomed Currency

"In the latest example of financial market madness, the recent government “bailout” of Freddie Mac and Fannie Mae has perversely resulted in a sharp rise in the value of the U.S. dollar. If the markets were functioning rationally, the transference of staggering new liabilities to the U.S. Treasury would have been immediately seen as catastrophic for the dollar. Instead the markets have ignored the obviously negative long-term implications and have remained fixated on the more immediate effects. However, rather than solving the problems, the government’s actions merely confirm my worst fears, and increase the chances for a hyper-inflationary outcome.

By transforming $5.5 trillion of suspect mortgage-backed securities into seemingly bullet-proof Treasury bonds, the move has sparked a relief rally in the dollar as foreign investors no longer have to worry about defaults or markdowns. In fact, to holders of Fannie and Freddie debt, it no longer matters what happens to the housing market. Home prices can drop another 50%, every single homeowner can default on their mortgage, and bond holders will not lose one dime. This has emboldened foreign investors, and temporarily increased demand for both dollars and Freddie and Fannie debt."

http://tiny.cc/IFo6Y

CP,

GG is on my things to do Monday AM list, thanks. After reading the Peter Schiff article I just posted here, I'm considering moving back into the Rydex Inverse $ fund RYWJX. Early this year I had a good cap gain plus an 18% dividend.

Hi again!

Just found a blog that seems to have quality information about oil, and the real impact of Ike:

http://www.theoildrum.com/

Cheers!

ALOHA !!

I will take Peter Schiff's comments one step further and say that the foreigners are playing their new found ACE ... In the past the US EMPIRE forced foreigners to pay tribute to us, the World Reserve Currency. Now we are being forced to pay tribute to the foreigners because they are our largest creditors and if anyone knows anything about human nature creditors will at some point strong arm you if they feel insecure. How long can a US government guarantee last? As long as we can click a mouse and get ... MOUSE MONEY! Our creditors will ride this free money train until the train derails itself!

IT ALL WORKS UNTIL IT DOESN'T !!!

First Aurelian, now Full Metal Minerals

After finding the largest and richest gold deposit in YEARS, and while Ecuadorean policymaking is IMPROVING, Aurelian gets a bid for 1/3 the in-situ per ounce value of comparable deals.

How could CEO in his right mind rush to accept such a bid? What risk in saying "thank you" for your interest, and seeking additional bids? Plenty of potential reward, because that is how you gauge a market - by getting competing bids!

I expected the system would "throw the bum out" in one way or another. But, it seems the system can't be trusted to get CEO's to act in shareholder interest, EVEN in the case of small, new companies!

I wrote the Company, wrote the OSC, and chalked it up to experience. I had to conclude that Anderson, and his major shareholders, had other agendas from that of the small public shareholders.

And now Full Metals! This "project generator" was down to $2M cash, and had planned to sell the bulk sample from newly reopened Lucky Start mine to investors to raise $9M thus totally avoiding dilution. This would have funded them for 1 year.

By chance I spoke to the CEO last week, and asked him about progress re the plan to sell their bulk sample. He told me they had a better funding solution.

Turns out that "better solution" was a private placement with their stock price at a 3 year low. ALL his investors had come in at higher prices! Units include 1/2 warrants at 1.00 - surely higher than 95% of his investors' entry price.

And the CEO, Bruce McLeod, comes from a renowned 3-generation Canadian mining family. Can't you even count on mining royalty to look after shareholder interests?

Full Metal Minerals - correction

CEO is Rob McLeod, brother of Bruce (who is chairman of Sherwood Copper).

ALOHA !!

maromatics ... Thanks for that report. Man, there is an awful lot of "red", meaning "damage requiring repair"! I am sure this will all be downplayed come Monday morning. Problem is it will be hard to downplay gas prices and gas lines! That's 30% of US production there ...

As an electrical contractor I used to do some bid walks over at the Shell refinery in Martinez,CA and shutdowns just for inspections could be lengthy, never mind actual damage that required repairs! Hummmm ... no info on estimates regarding time until full production capacity? I guess that won;t be known until the damage is fully assessed. Hummmm ... Well thats two "Hummm s" ... I'm done except to say I am interested to see what global WTIC does tomorrow(Sunday). Hummmm ... HA!!

kaimu - Any news re: Lysander (still strong or down the Aurelian path?)

Thanks Bill Cara for an even-handed and comprehensive introduction to discourse on the Aurelian disaster.

Above it is said that $60. per oz for gold in the ground is ok under current circumstances. Given the phenomenal potential of the FDN deposit, well-exploited by the Aurelian BOD, that is arguable. But regardless, the political situation will be clarified very shortly, again very well-known to the BOD, and the cash position was ample to ride out the interim and then some. Absolutely no need to give away the farm for a pittance.

It has been said that Patrick Anderson and Keith Barron, as geologists, were taken to the cleaners. They were, but not without making sure their own pockets were filled and overflowing first. But what about the other high-powered Board members who on paper had all the savvy necessary to put the brakes on the give-away? Were they all mesmerized too? It's a sad day for Canadian mining enterprise. After this, who in their right mind would put money into any Canadian junior mining prospect, no matter how amazing it might look?

Kaimu,

;-)

The spin is already coming in, as the media is reporting that "the worst case scenario did not materialize"...

Nevertheless, accodring to the above mentioned blog:

Quote:

"97.5% of the oil production and 94.4% of the natural gas production in the Gulf has been shut-in; Personnel have been evacuated from a total of 596 production platforms, equivalent to 83.1% of the 717 manned platforms in the Gulf of Mexico; Personnel from 101 rigs have also been evacuated--this is equivalent to 83.5% of the 121 rigs currently operating in the Gulf; that staff has been evacuated from 452 production platforms (63.0%) and 81 rigs (66.9%) – (95.9% of the oil production and 73.1% of the natural gas production has been shut-in as a precautionary measure for Hurricane Ike.)"

In a real world, POO would reflect this, but nobody can say what will happen in this la la land the market has become, so it may even be an excuse for POO to melt.

The market is expelling investors.

The outcome of that can not be good.

How can the market function without investors?

Cheers mate!

Well, this market is a trapped market as far as I'm concerned.

Fransix said:
If I was invested in Ecuador and saw this news reel today, then I would be very uncomfortable about getting my money out:

The Venezuelan leader is a lose "cannon" unfortunately his actions cause much uncertainty for his neighbours in CA. As for Ecuador and Corra they seem to be slowly walking away from Hugo and his rants' while trying to develop relationships with other countries like China and Canada.
Skylane.

In terms of Ecuador, the US is intolerant of a pro leftist government of any sort and will foment unrest until politics changes.

This is why Bolivia is having riots and Chavez expelled US diplomats. Expect the same for Ecuador.

Aurelian Resources

As an investor I clearly would have "liked" to have seen Aurelian sold for a higher valuation than the recent Kinross acquisition, but the issue with this particular offer is not the final offer price, but the actions of the various players associated with it, and whether the Board of Directors of Aurelian fulfiled their fudiciary duties to the shareholders, or simply decided to give up and get out as quickly as possible, or whether in fact their actions where part of a longer term plan. In the section below I will outline a summary of activities that is not my opinion, but simply a summary of facts that can be obtained from publicly available information, and as such I am sure that there is more to this story than I have summarized here.

The other thing that must be considered in this offer, is that at the time of these negotiations Aurelian was well capitalized, and as such had no pressing financial need to sell out at the depths of the Junior Mining meltdown, and weeks(as it turned out, days) before clarity was to be received on Ecuador's intentions toward mining and the much feared WFT. Furthermore, they had significant funds available to complete an upgraded 43-001 resource estimate, something that according to their press releases dated as far back as Sep 2007, was a top priority for management. Clearly such a resource upgrade would be a major value driver in any negotiations that they would undertake in the future.

Oct 07: While it appears, from the Director's circular, that Kinross and Aurelian had meet various times to discuss the Fruta del Norte discovery, Kinross once again approached Aurelian, 3 days after the release of Aurelian's first 43-001.
Nov, 2007: Kinross was granted acces to Aurelian's "data room". This appears to have been done without any serious attempts to hold discussions with other interested parties, and clearly was not done after the normal engagement of an outside party to "evaluate strategic alternatives".
Dec - April, 08: Various meetings where held between the 2 parties to discuss Kinross's findings, once again in the absence of any formal "strategic review".
Jan 30, 2008: Aurelian posts an article on their website regarding Ecuador mining and how "big players would not be affected by mining changes" apparently to downplay fears of risk with Ecuador.
Jan 31, 08: Aurelian insiders begin a campaign of selling over 1.7 million shares over the 2 month period from the posting of the article and the enactment of the mining freeze in Ecuador.
June 11, 08: ARU and Kinross management "met to further explore generally a variety of possible transactions involving the companies, including both a possible combination with Aurelian by
Kinross and a possible reorganization of Aurelian pursuant to which Kinross would acquire a 50% direct or indirect interest in Aurelian or its assets"
Jun 16, 08: 3 business days after the meeting where Kinross confirms their desire to move forward, the Aurelian Board grants 2.4 million stock options, some to Directors who had only been on the Board for less than 3 months.
Jun 25, 08: Aurelian grants Kinross an exclusive negotiation period, once again after no apparent attempt to find interested parties, or a formal "strategic review"
Jul 3, 08: "A further meeting among the representatives of Aurelian and Kinross was held on July 3, 2008, during which Aurelian management indicated that the preference of the Board of Directors in respect of the various transaction alternatives previously discussed was for an offer by Kinross to acquire 100% of the shares of Aurelian." Under this scenario ARU insiders would clearly be able to dispose of their options quickly, espesially in light of a later decision, declared in the Director's circular , that would allow the accelerated vesting of all options, including those granted just weeks earlier.
July 24, 08: Kinross makes public their offer for Aurelian, and it is stated in the Directors Circular that "Except as disclosed in this Directors’ Circular, there is no information that is known to the directors or senior officers of Aurelian that would reasonably be expected to affect the decision of the Shareholders to accept
or reject the Kinross Offer." This statement was made DESPITE the fact that there had been NO public release of drill results from the Fruta del Norte property for the past 5 months (since the time that the Kinross negotiations appered to accelerate), even though it was well known that there had been a significant number of drill holes completed on the property prior to the April Mining freeze. This lack of drill result disclosure also opens up the question, how could BMO and Dundee possibly do a fairness opinion without the disclosure of this information when the valuation of a junior miner is almost 100% driven by the size, catagory and grade of the deposit they hold.
Aug 19, 08: After many requests to Aurelian by various shareholders Aurelian finally realeased "some" of these drill results and stated that others would be made available as they became available. Interesting given that all of the drilling had been completed prior to April 21, 4 months earlier.

In Bill's very thoughtful discourse, he asked a number of very pertinant questions and I believe that the actions outlined above clearly show a pattern of behavior that, at a minimum, deserves a closer look by the OSC and TSX as to whether any reasonable attempt was made to negotiate a deal that was in the best interests of the Aurelian shareholders, or simply in the best interests of the Aurelian Board and Kinross. The fact that Kinross appears to be the only party ever engaged in this deposit since 2006 begs the question of the intent of Aurelian from the beginning.

Public companies, and the funds they attract, where not designed for the sole purpose of developing risky deposits for specific parties, so that once the risks are minimized those parties can share in the bounty of the deposit. In order for the Junior Mining market in Canada to work and flourish, the risks taken by outside shareholders must have the potential to promise big rewards for those who take the risks, and they must be protected by the very Board of Directors whose sole purpose is to protect ALL shareholders. This is why so many, large and small investors alike, are questioning this deal and the effect it will have on the Junior Mining market in Canada, and why the actions of all parties involved must be reviewed by both the OSC and TSX to ensure that shareholders interests where in fact protected, and the actions outlined above where not what they seem.

Hi again, again,

More from Houston:

The sister of one of my best friends is an emigrant worker in Houston where she is serving as a director in an oil company.

She called a couple of hours ago using a satellite phone saying that most refineries are shut down, and electricity is out everywhere.

They are expecting to only be able to be back in the office by mid next week.

As for the refineries and rigs and platforms, she basicly said that even if there are no significant damages, it will take them about one week to be back online.

Cheers!

I am glad to have predicted the strength we're now seeing in the dollar.

I am glad to have predicted that $1000 was the high in gold for then and then to have recently stated that gold's going "way lower" than $860 on a recent discussion.

Finally, I am glad to report that my personal use has increased significantly since finding a good, steady source for some ULTRA high quality macadamia nuts.

Bill - Business with Hommel? you were joking right?

[Bill Cara note:

Actually, I was just asking who the person is. Somebody wrote me about his idea to set up a silver market. Strikes me this would be a major undertaking for somebody who has never been been a registered professional in capital markets, but I'll take advice from people who know him as I don't. If I had the time to do my dd, I would; but I'm packing.]

[Subsequent note: Jason just sent me an email, so I'll look into it Monday. The reason I was interested btw is that I believe there is a rationale for a market for gold and silver outside the NYMEX and the other markets controlled by HB&B. No where more than physicals should traders and well-funded producers need to be outside the credit ring.]

"David- i understand your point, but weren't you the one asking me two days ago why i was buying if gold was headed to the 600s? my reply was probably some version of starting to scale in on extreme negativity (where the odds are good), in the expectation of selling on strength..."

My point in saying "That's how one misses most of the 100-200% move during a sharp bull market" was that IF you believe Bill about gold being in a long-term Bull market THEN it would seem to be more profitable to start scaling into PMs and miners now and sell only a fraction of them on strength while keeping the rest at least until gold breaks out to new highs. That is, IF you believe that gold bull is not dead, then how far away from the bottom can we be right now? The reason why experts do not suggest placing too much of one's portfolio into commodities is because they are very volatile. But, given the extreme sell off we had recently, the inherent high volatility will most likely be to the upside from here, so it actually pays to load on the most volatile miners (e.g, WGW instead of GG).

"for some reason you have now decided that gold has bottomed...i'm not so sure, and i really don't care..."

I didn't decide it -- I just wanted to point out that IF one thinks that we are in a long-term gold bull market, THEN one should think that we cannot be too far from the bottom right now. For my part, I am just gambling and hoping that we are in a long-term gold bull market, but I don't have a convincing line of argument about it. My hope derives partially from the research of US Global investors, who are traveling extensively in the BRIC countries and are observing 10-20 year government infrastructure projects setting up (worth hundreds of billions of dollars), which will provide a long-term support for commodities.

"that's enough reason for us to celebrate"

That's right! My portfolio was up 14% on Friday, since I was fully invested on Thursday and my Canadian miners (AZM.V, PNP.TO, ECU.TO. GIX.V, NOT.V, WHY.V) were up A LOT. I am taking my family out for a sushi dinner tonight. :)

"(setting aside your complicated relationships with UXG and SWC for the time being)..."

Well, my relationship with SWC is not that complicated. I traded it a number of times in 2007 between $8 and $10, but then it ran away from me. In 2008, I bought it initially at $11 and sold it at $12. Then I bought it at $12.60 after seeing it close higher than any point between the two double bottoms it made. That was the first time when I deviated from my strategy of buying on weakness and decided to rely on technical analysis, which suggested that it was a bullish sign. We know what happened to SWC after that. However, even before it fell below $9, I traded it two more times, catching a $1 move each time. So it is as if I started scaling into SWC at $9. Then I traded it about 5 times already between $6 and $8, so my losses in SWC are minimal at this point, if there are any. UXG is a different story -- it is the biggest hidden potential in my portfolio. :))

"if gold keeps climbing next week, i'll buy you coffee, and if it drops, i'll buy more gold ;)"

Actually, I would prefer for gold to fall to $700, for SLW to fall back to $7.50 and WGW to $1.2 (so that I could reload fully), and then have another day like on Friday. :) But if gold starts climbing next week into a new bull phase, then we can buy each other coffee and celebrate, somberly, the end of active trading and the beginning of buy-and-hold. :)

maromatics,

With refinery shut down, this would be a bad news for VLO, but good news for refineries elsewhere. Right?

In regard to the Aurelian Kinross affair, most of the frustration of the "Retails" we call ourselves, is that we are in the minority and feel shabbily treated by the whole sale process. Adding to the above comments, yes I feel Aurelian was set up as a fire sale, even when they had something like $100+ million in the bank and yes I feel that the "deal" was agreed and planned by the ARU and K boards of directors. I feel the Money Managers participated in the "staged" sale as the whole event looks and feels "undervalued" and carefully scripted. At the close of the initial share offer over 70% plus tendered to the first offer and from my reading, most investors interested in maximizing their return never tender on the first unless it is a bona fide superior offer. At $60 per oz in the ground, sets the bar very low for other Junior take outs that are coming. It begs a further question - has one or the other Majors condoned this low ball offer, with a hands off non competing offer, plus the bonus that they can now use the $60 in situ number as the new "bar" for value? All speculation but for sure, information that was available to Kinross was not released to the Public and for sure not to shareholders. Many drill holes not released since the April 18 cease of operations, plus a poorly attempted news release throwing away these drill holes as not "good enough" to move up the 43-101. Most were infill holes I believe but only because of the ruckus from the Retail community screaming for information to try and make sense and validate the offer from Kinross.

As for the Securities Commission, someone is asleep at the desk here. Perhaps all takeovers should have OSC approval prior to final conversion. Now after the fact, they will be chasing the guilty parties who may move offshore before the final judgment is rendered.

My last point is, at the AGM in the summer, nothing of this offer to come was disclosed - just business as usual. Disclosed at the AGM was the fact that the Government of Canada pension plan was one of the largest 5 shareholders in Aurelian. I cannot figure out why they would let the ship sink to a low ball offer when the blue sky of $1000 plus gold is only years away. Our pension plan probably has done well on their (and all Canadians) portfolio but why was the offer take it or leave when they most probably invested way before the glory hole and the risk then was much larger for a payback.

[Bill Cara note:

I happen to be pretty busy at the moment, but I will ask my friends if they can impress the OSC to look into this matter. I happen, btw, to like Patrick Anderson, and as some of you know I worked as a student in CA many moons ago with his CFO. I did attend their AGM after the discovery, and saw that step out drilling was likely to produce superb results. I have also opined in the blog that, like Guyana, I think that Ecuador is another Nevada for precious metals. But, frankly, I am not more involved than that. I have no axe to grind. But this overwhelming sense by shareholders that something is really amiss here should never be ignored by regulators and investigators. If the retail trader loses confidence in junior markets, then risk capital will become very difficult to come by, and shows like PDAC and Cambridge will die, and Toronto-Vancouver-Calgary will lose its place as the world leader in junior resource company capital finance. That would be a shame, not just for Canadians but for anybody in the world who wants to trade these markets.]

Thanks to all who pointed out the difference between disinflation and deflation. My point was that if we have a low inflation rate, then it is the worst climate for PMs. As I read, PMs do best during high inflation (which I can explain) or during deflation (which I can't explain -- can someone please remind us of this?). During low inflation, however, PMs have traditionally not performed very well, and it seems like we are heading into the low-inflation period.

I do agree with Bill about the next commodity bull market being economically driven -- the population growth is beginning to be more noticeable and the government infrastructure spending (which were very slow in the past 20 years) are ramping up now. This would make a case for a long-term bull market in base metals, but precious metals is another story. They may feed off the base metal bull market, but wouldn't it be better to invest into base metals during an economically driven bull market?

Re: ARU

Look at it this way. The CEO is a geologist and is ignorant of how markets work. He's also seen his share of market collapses and got very spooked by the price decline in gold.

He'd be brilliant if the gold price continued to slide below $700, but look pretty bad if the price rocketed at this point above $1000.

Anybody here got any bets as to where the gold price will be next week?

Bill - oh okay. I don't know him personally, but I have read his missives over the past few years - why I don't know, though I stopped wasting my time on it about 6 months ago - now it's the odd source of entertainment for me. I will say this, whenever you mentioned silver crazies, I assumed you knew that the craziest of the lot, was him.

All I can say is please read as much of his site and email alerts that you can if you decide to work with him. I think you will come to much the same conclusion.

Front and center on his webpage you noted:
"I've followed the principles of Biblical Capitalism...."

"The total value of all the paper money and bonds in the world is about $100 trillion, and all the gold ever mined in all of human history is just under about 5 billion ounces. So, world money, divided by world gold, gives a figure of $20,000 per ounce!"

You might enjoy his kitco/perth mint rants and run-ins not to mention the baja mining dialogues with management - throughout which he blasted emails to thousands of subscribers while he in the heat of the moment:

http://silverstockreport.com/ssrarchive.htm

[Bill Cara note:

Maybe kaimu knows him? ]

Posted by 2nd_ave: "David- "for some reason you have now decided that gold has bottomed...i'm not so sure, and i really don't care..." just to clarify, as in "it doesn't matter which way it moves, as i'm ready to play it either way.""

I was baffled initially upon seeing such a statement from you, since you always try to be kind to people. I decided to give you the benefit of the doubt, and now it is nice to see it clarified! :)

Grym, thanks for the link to "Last Gasp of a Doomed Currency!" This is a good argument for favoring precious metals over base metals. For diversification, however, I will start accumulating a long-term position in base metal miners (e.g., FCX) when oil drops below $90 or if it shows a convincing sign of reversal at $100.

Fransix - Aurelian

If Patrick Anderson is ignorant of how markets work, he shouldn't be CEO of a company responsible to shareholders.

He accepted an offer 1/3 the in situ per ounce price of comparable deals - without even seeking other offers.

Whether next week's gold price is at $700 or $1000, that was an irresponsible decision.

Re; ARU

"He'd be brilliant if the gold price continued to slide below $700, but look pretty bad if the price rocketed at this point above $1000."
------------------------------------------
Actually, given a price equivilant of $60/oz (under $40/oz if the resource, as expected, comes out being north of 20M oz's once complete) he would not actually be "brilliant" unless gold slid below $500, but look pretty bad if the price stabalized anywhere above $700.

Does anyone think that gold is about to tank for the long term.

Also the main issue is their behavior in developing this offer as much as the final price accepted.

RE: Chavez
We may be seeing some sabre ratttling by our current administration in hopes of raising our security fears, so that we will elect a war president, cause everybody knows how we love war.

Fransix - Ecuador is not Bolivia

And the US is not Canada. Every country is different.

Bolivia (where I lived for a year) has oil and gas riches in the lowlands, populated by descendants of the Spanish. The national government is in the Highlands, populated by Aymara indians, most of whom don't speak fluent Spanish, and who have been oppressed since colonial times.

The lowlands are fighting against the central government for a greater share of tax revenues from oil and gas exports. There have been ugly racial overtones, and there is a virtual separatist movement, which which the US ambassador had been meeting. That's why he was declared "personal non grata". (I have read that he was one of the US "diplomats" in Kosovo, shortly before that situation fell apart.)

There is no such strife in Ecuador.

Chavez sent the US ambassador packing for his own reasons, including solidarity with Bolivia. Most South American governments made strong statements in favor of the territorial integrity of Bolivia.

There is widespread suspicion in the region of US intentions. The President of Honduras yesterday delayed receiving the credentials of the new US ambassador to that country, also out of solidarity with Bolivia.

David - I can understand where you're coming from on PM's lack of performance during low inflation periods, we should also consider the following in our analysis:

1) PM miners currently set to rally
2) North American energy producer rally
3) USD and gold parallel rally
4) Bond prices falling
5) Economically driven equities bull

These are all things Bill has put forth, and I don't necessarily have them in the correct order. I'm trying to understand the sequence and event drivers but as yet to no avail because the pieces don't fit what I've learned from HB&B programming.

look lke weekend meeting is not producing any workable solution but one involve an agreement among Wall Street players to keep trading with Lehman as the bank seeks an orderly liquidation

Aurelian - This sounds like helicopter or pigeon flight of fancy. If management has accepted a "bum" deal and does not care to provide reasonable explanation of his (their) rationale, then I think one could safely assume it's a big ripoff.

I know it's none of my business, but sometimes I can't resist pointing out the obvious.

vinod - LEH - It works until it doesn't. My bet is soon it doesn't work.

"I am taking my family out for a sushi dinner tonight. :)"

David- that's great, man...the one Caraista i've had the pleasure to converse with in person (veteranwang) was over a sushi dinner...

speaking of restaurants, the one i had in mind when commenting earlier about developers buying out old ones was Lou's Village on West San Carlos in San Jose:

http://tinyurl.com/6p8fgr

they sold out in 2006...some of the best seafood dinners of my life, hands down...

enjoy your evening, you earned it!

kaimu - I have found CONFIDENCE. I am confident that LEH will cease to exist.

killer whale - I can tell you one thing, and that is any political party attempting to leverage security concerns without presenting verifiable and refutable evidence in the same release will become my newest enemy.

I'm paying very close attention to what's going on in Georgia, and it's beginning to look like the Republican party is lying to us again. Still waiting for confirmation from the Dem's, I did hear one Dem claim Russian aggression, but he has quickly muzzled.

"IF one thinks that we are in a long-term gold bull market, THEN one should think that we cannot be too far from the bottom right now."

David- just highlighting three comments from bill's WIR:

(1) "I now believe the junior oils of Western Canada – the ones with strong balance sheets and solid reserves – will be the ones I personally buy. As this Bear market ends, there will be many bargains available for those who managed to save their ammunition.”

(2) "Yes, I do feel that Crude Oil will drop to the 80-85/bbl level, which is still a rather large pull-back; but I’m not negative on the shares of the high quality Oil & Gas industry companies, which I believe will lead the commodity price turn-around – as they usually do.

"In fact, there may even be a rapid descent to the cycle bottom for $WTIC, supported by protective puts and calls by the players who would put it there temporarily to clear out the negative vibes, and get the market set for the next Bull phase.

"This phase could be like a dramatic 1987 plunge scenario in the oils – although it really would be happening in the Financials if the US Treasury Secretary were somebody not named Mr. Moral Hazard."

(3) "In fact, I don’t want to see traders chasing gold and silver here. The Friday entry was a short-term move for swing traders and a part position entry for intermediate and long-term traders – but that’s all. The cycle low of 739.80 set on Thursday for $GOLD will likely be tested soon. If Crude Oil sinks to that 80-85 level, I feel confident that $GOLD will test 700 before the long cycle ends."

each by itself would be reason enough to keep plenty of cash on hand; all three taken together should make you think twice about being 75% invested at this point, even if positions are LT...just think there's still too much faith in gold, and from personal experience i know how hard this sector can fall; it may not, but since you have plenty of time to play the long side, why gamble the bottom is close enough not to cause serious pain should a real panic ensue?

Chicken - if I'd venture into the realm of conspiracy theories I'd say that events in Georgia were prearranged in close cooperation by Russian and US war parties. The events will swing US towards a electing another war president, allow Russians to complete it's transition to a totalitarian state plus justify more funding for defense agencies and industries in both countries.

For those of you who follow Chris Martenson's "Crash Course" video series on economic issues, Chapter 18 is available. It is entitled "Environmental Data" but is in reality an examination of "peak everything".

For those of you who were into the inflation discussion earlier today I would recommend Chapter 10. I like the entire series.

http://www.chrismartenson.com/crashcourse

re Bill Miller, it just gets worse:

http://tinyurl.com/588mrr

"...Mr. Miller was buying up boatloads of shares in Fannie Mae and Freddie Mac, even as the shares were cascading downward. According to Eric Dash in The New York Times today, “Legg Mason disclosed it had bought an additional 30 million shares” as recently as last week.

“I am shocked how they missed this, and why, when it became clear that the problem was snowballing, guys like Bill Miller doubled down,” a short-seller named Douglas A. Kass told Mr. Dash."

talk about getting dissed:

"In the last few years, however, his fund has stumbled badly. Indeed, there are those in the investment community who whisper that Mr. Miller was never really a truly great investor. Rather, he was akin to the guy who flips a coin and it comes up heads 15 straight times — a product, that is, of randomness rather than skill."

one hell of a contrarian:

"Shocked? I’m not even surprised. His Fannie and Freddie purchases are very much a part of Mr. Miller’s modus operandi. The reason he beat the market all those years is precisely because he liked to bet the rent on stocks that were not just out of fashion, or a little downtrodden. He embraced stocks that the media and Wall Street had openly turned against. He wanted stocks that other people were panicked about. Most famously, he bought Amazon right around the time that a Lehman Brothers bond analyst put out a widely publicized report that the online retailer was running out of cash. But he made tons of bets like that.

During the time we were reporting the Fortune story in 2001, Mr. Miller was eagerly buying Nextel, which had dropped from $80 to $9; Corning, down from $100 to $10; Comverse, from $122 to $24; and AES, down 65 percent. His essential belief was simple: the media, and Wall Street, always thought the sky falling. But it rarely actually fell. In his view, things were almost never as dire as they were being portrayed in the business pages, so making the contrary bet was a winning strategy."

bottom line?

"Mr. Miller’s problem is that he doesn’t seem to have a Plan B — even though Plan A has gone up in smoke. He was the ultimate bull market investor, and this ain’t no bull market we’re in."

apologies to CP for the double negative...

LEH talks are quite critical at this point...

Because the consequences of not doing a Lehman deal are so grave, though, people with direct knowledge of the deliberation say both sides will begin to compromise on Sunday. One Wall Street executive involved in the meetings put it this way: "I'm thinking logically; if they do nothing it's Armageddon. That means they do a deal. It will be announced at 6 p.m. (ET) Sunday."

http://tinyurl.com/5etxhx

Sorry to keep mentioning Roubini, but he is good to read in conjunction with Bill's blog, my two favorites. A fascinating article on Lehman. We are currently about to be gobbled up by an economic black hole:

"It is now clear that we are again – as we were in mid- March at the time of the Bear Stearns collapse – an epsilon away from a generalized run on most of the shadow banking system, especially the other major independent broker dealers (Lehman, Merrill Lynch, Morgan Stanley, Goldman Sachs). If Lehman does not find a buyer over the weekend and the counterparties of Lehman withdraw their credit lines on Monday (as they all will in the absence of a deal) you will have not only a collapse of Lehman but also the beginning of a run on the other independent broker dealers (Merrill Lynch first but also in sequence Goldman Sachs and Morgan Stanley and possibly even those broker dealers that are part of a larger commercial bank, I.e. JP Morgan and Citigroup). Then this run would lead to a massive systemic meltdown of the financial system. That is the reason why the Fed has convened in emergency meetings the heads of all major Wall Street firms on Friday and again today to convince them not to pull the plug on Lehman and maintain their exposure to this distressed broker dealer."

He then goes into detail. I sold my gold this week thinking it might drop to $700 but now I'm wondering if I shouldn't buy it back before the open of the Asian markets.

I see you point now, 2nd_ave, in the light of this WIR. There is one more Bill's comment that supports your current strategy:

"The longer the nonsense goes on in Washington, the more that people will want to hold commodities. Smart traders, however, will likely wait for the $USD strength to play out before jumping back to commodities. At that point, it could be back to a 320 level for $CRB and an 80-85 level for $WTIC. We’ll have to watch it though."

I didn't sell a lot of my miners on Friday because I felt that USD had a huge move recently, and the pull back should bring SLW to at least $10. Bill seems to think that way too:

- "There could easily be more of a short-term rally – say to 800 to pick a number."
- "Europe is still saddled with a shockingly bad economy relative to the US, so I think the Euro has more downside. It was up Friday, but that was hot money at work. A couple days of rally maybe, but I wouldn’t count on more."

So we may have a couple more days for PMs to rally, which should take gold right up to $800. Therefore, I am increasing the size of my sell limit order for SLW at $9.90 to cover all shares I purchased below that price: at $8.30, $9 and $9.50. Similarly, I will sell at $7.20 the SWC shares I purchased at $6.20, and then at $7.80 the shares I purchased at $7.20. At that point, I will open I will buy put options on FXE.

I am glad we straightened out our plans!

Re the Aurelian business, about which I know nothing, there is the question of whether investing in any public trade stocks - at all - is a good idea.

There are some very good reasons (such as self-preservation) why extreme growth companies such as Ikea have never ever gone public.

_____________________________________

QUARTERLY LETTER
July 2008

Meltdown! The Global Competence Crisis

Jeremy Grantham

"Nobody up there understands American capitalism." Hyman Minsky

. . .
Most dangerously, all of these factors interact, creating
a broad based - even global - vulnerability in the
financial system. Given the growing perception of
incompetence that is broadly distributed throughout
the system, we run a serious risk of a meltdown in
confidence in leadership totally unlike anything we
have seen since World War II. And with substantial
justification! Why should we trust the financial
system the way we used to? We should distrust the
general competence of financial management: of
governments and of corporations and of all bankers,
whether commercial, investment, or central bankers.

. . .

But this time really is different, and the problems will be deeper and
longer than
most investors even now expect. By the end, capital equal
to a third of all the financial capital that existed in June
2007 may have been written off. At this level of reduced
equity, the banking system could not function effectively.
I believe that realistic investors should have held back
from investing in weakened financial companies and
mostly still should. But we all need the financial system
to survive and function effectively, and to do this it needs
more capital. We have all benefited from the generous,
if misguided, investments that have already taken place
and the increasingly reluctant ones that will continue to
be made. So, to all you sovereign funds, private equity
funds, Bank of Americas, and shareholders who threw
your money into overpriced banking stocks to provide
new capital, a heartfelt "Thank you!" from all of us.

To put some longer term perspective on the inflation theme than most today are accustomed to:

Even in a formally PM-based system, it is profitable for the guvm'nt to debase in small steps, as the "sheeple" only gradually catch on.

The Medieval Swedish Kings had a good thing going, basically skimming off the top of the silver content of the coinage, and kept it running for 250 years.

It's when the elites get too greedy, I suppose, and push it too far too fast that they get into trouble.

During the Great Power period that happened in Sweden also, with recurring currency crashes over a period of more than 100years.
Very interesting times for numismatists.

_______________________________________________

"The fine silver content of the Swedish Mark was gradually reduced during the course of the Middle Ages. This debasement took place over a long time (Figure 1). People were aware that the fine silver content of the coin often was reduced. Therefore, they often specified the exchange ratio between the currency actually used and the stable silver Mark (mark lödig) that was to be applied in each particular economic transaction.

Figure 1. The fine silver content (in grams) of the Swedish Mark (mark penningar), 1291-1540

(see the original doc. for the graph. The silver content is gradually decreased from about 58g to about 7g over a period of 250 years.)"

A Consumer Prise Index 1290-2006 (Sweden)
(available through a link at Riksbank.se)

I think I finally understood what Bill is saying about the future of PMs. Until the next bull market in stocks begins, their price will be based on the real GDP growth. PMs do well during high inflation because the supply of paper money increases faster than the economic wealth (real GDP growth is negative if a true measure of inflation is used rather than what the government tells us now). PMs don’t do well during low inflation because the economy usually grows fast in such periods (faster than the supply of paper money and hence the real GDP is positive), as was the case between 1980 and 2000. In the medium term, Bill is saying that despite inflation slowing down, the nominal GDP growth will slow down even more, and so the real GDP growth will be negative. John Hussman, incidentally, keeps repeating that he expects a large drop in the stock indices once the market realizes that a recession (negative real GDP) is inevitable even using our current underreported measures of inflation.

So basically we just need to wait a little longer until USD rebalances with the Euro (Bill seems to think that the rebalancing will be finished when oil falls to $85 and CRB falls to $320), and at that point, as Bill said, it will be understood “that Europe’s politicians are just as prone to spending money they don’t have as is Washington. So ALL SIDES are printing the stuff FAST. That means that Gold, which has been for centuries all over the world a storehouse of value, must trend higher.” So at that point all eyes will be on the negative real GDP growth once again.

Then, after several more quarters (or years) of recession or “muddle-through economy” as John Mauldin calls it, the next bull market will begin, which will be economically driven (in Bill’s words). That’s when the observation of Frank Holmes (from US Global investors) about huge infrastructure projects that are currently being set up for the next 10-20 years will come to the forefront, and we’ll have a repetition of the 2002-2008 bull market in metals once again. At that point, incidentally, the concern about the rate at which oil exports are falling from the main oil producing countries will also come to the forefront (John Mauldin discussed this in one of his previous letters, saying that there is only about a 10-15 year lag between the point when a country’s oil production peaks to the point when it becomes an oil importer rather than exporter, and Russia, for example, has reached its peak oil production around the year 2000) and oil will run above $200/bbl on peak oil concerns.

So the good news is that commodity investors have more pain for them only in the short-term (while Euro is rebalancing with USD). After that, however, PMs will keep rising while the major economies are in recession. After that, when the new economically-driven bull market begins, the base metals and oil will probably outperform PMs once again (since economies will need them for expansion but the supply of base metals and oil is not increasing as fast as the world economies need when they are in a full speed mode), but PMs will still rise in sympathy as happened between 2002 and 2008.

How does this sound? If you think I missed something in this picture – please post your comments for everyone’s benefit!

WSJ on Granthams current thoughts:

Sat, Sept. 12th
R.O.I.
By BRETT ARENDS

Ignore Your Instinct to Flee
Too many people rush into shares when prices are booming, and run away when they collapse. But the smart approach is to go about things the other way. Some of the smartest money managers today are starting to see value in the market.
September 13, 2008 7:23 p.m.
One of the many paradoxes of the stock market is that the worse it gets, the better it gets – at least, for those still able to invest.

Too many people rush into shares when prices are booming, and run away when they collapse. It is the natural human instinct. But of course the smart approach is to go about things the other way.

Warren Buffett, in conversation with me at Fenway Park earlier this week, said he was starting to see value in some places in the market. That would be, of course, partly as a result of the collapse in prices across the board. Now comes Jeremy Grantham, the frequently bearish chairman of Grantham Mayo Van Otterloo & Co., to say something sort of similar.

His firm now believes that if you invest in "high quality" U.S. equities and tuck the shares away in a drawer for seven years, you will probably find when you look at them again that you have, over the course of that time, earned about 5.6% a year on top of inflation. Or, to put it more simply, you will find that for each dollar you put in you will be able to take out about $1.50 – in today's money.

He also thinks that over the next seven years a broad investment in emerging market equities will earn about 4.8% after inflation, turning each $1 into about $1.39 in today's money. Small cap international equities (3.7% a year, after inflation) and large cap international equities (3.0%) also come out several points ahead of inflation in his model.

This is particularly interesting because Mr Grantham has traditionally been on the most skeptical and bearish end of the recent bull markets. And, as a recent article in The Economist pointed out, the forecasts he made about 10 years ago have turned out remarkably well. In 1998 he urged people to shun dotcoms, and indeed the broader Standard & Poor's 500 index, and instead invest in emerging market equities, real estate investment trusts, emerging market debt, international small cap stocks, and TIPS, or inflation-protected US government bonds. Those turned out to be the five best homes for your cash.

Today, there are plenty of reasons to be nervous. Mr Grantham continues to warn that the U.S. market may fall further, that times may get tougher, and that there is a risk of a stock market crash. And, separately, one of the best managers I know has been busy in recent weeks selling shares and raising cash levels above 40% - partly because he cannot yet read which way this market is heading. It is never a good sign when the market slumps right after Labor Day.

But that is also why some of these asset classes are starting to look more reasonably valued when you take the long view.

Wall Street types may treat the stock market like a casino, but for most people it is much more important: It is the only place they might conceivably be able to accumulate enough money to send their kids to college, buy a vacation home, or live well in retirement. In order to do that you need a lot of things, including some money to invest, nerves, discpline, and time. But you also need assets to be good value when you invest.

C3,

I am not playing the refinery game here: too risky for me, and to be honest, probably too "intervened" to make any sense.

One good advice is to follow the strategy above outlined at the WIR about oil.

Cheers!

Hi!

Below I will quote some comments published last night at The Oil Drum Blog. I know little about this blog, and have no idea who is behind it, but it seems to have quantitative information about the impact of Ike in the oil production, and so far it is the only quantitative data agregator I have found.

The blog post I will be quoting parts of can be read in full here:

http://www.theoildrum.com/node/4526#comments_top

Now, I have cut parts of the text and picked what I find are relevant parts of the quote, but, please DYODD about this information, and go back to the blog if you need to read the full text, because I do not know these people,

Quote of parts I have selected of large a post by titled "implications of a ten day refinery outage":

"Implications of a Ten Day Refinery Outage

Insight 1. Even before Hurricane Ike hit, inventories were very low. According to EIA data, gasoline inventories the week that Hurricane Gustav hit were the lowest that they had been since 2000, amounting to 187.9 million barrels, or about 21 days supply. Quite a bit of this inventory is needed just to keep the pipelines filled.

Insight 2. Friday, September 12, before Hurricane Ike hit, there were already gasoline shortages in some parts of the country. These occurred primarily because of the earlier impact of Hurricane Gustav. Gasoline traveling by pipeline from Texas to New Jersey takes an average of 18.5 days to make the trip, so it shouldn't be surprising that it took 11 days (from September 1 to September 12) for the Hurricane Gustav shortage to start to be felt.

Insight 3. Since Hurricane Gustav hit, there has been a drop in refinery output of 1 to 3 million barrels a day.

Insight 4. It is likely that we will have product shortages for at least the next three to four weeks, because of shut in refinery capacity and reduced refinery runs. Adding 10 days to the date of the hurricane (September 12) brings us to September 22. If it takes an average of 18.5 days to get product from Texas to New Jersey by pipeline, it will take until approximately October 10 before supplies are back to normal. It could be a little shorter than this, or quite a bit longer.

Insight 5. One of the biggest refined product pipelines, Colonial Pipeline, is now reported to be shut down, because of lack of refined product input.

Insight 6. The lack of refined product (gasoline, diesel, jet fuel) is what is driving pipeline outages.

Insight 7. Areas with pipeline disruptions are likely to experience shortages of all refined products, not just gasoline.

Insight 8. Regardless of whether price or some other type of rationing is used, someone, somewhere will need to go without refined product, if it is not available.

Insight 9. If 5 million barrels of refinery production is taken off-line, this is equivalent to a little over 25% of US refined product usage. It will be impossibile to make up this huge shortage with imports of refined products from overseas, or the use of winter grade gasoline in summer. Because shortages are likely to vary by part of the country, depending on pipeline service to the area, it is quite likely some areas will experience shortages of 25% for several days, even if loss in refined product declines to "only" a shortfall of 2 million barrels a day, which equates to 10% of current usage. At 10% of current product usage, there would be a shortfall of gasoline of about 900,000 barrels a day.

Insight 11. The lack of diesel, gasoline, and jet fuel is likely to cause feedbacks to the rest of the economy."

End of quote.

Now, it would be nice if someone here could validate or invalidate this data by using hard quantitative facts.

If this is to be confirmed, then it is a big deal, actually a much bigger deal than what you would be imagining by reading the financial entertainment media, which is saying that "it was much better than expected"..

if this is real, hoarding could happen of all sorts of goods, not just oil.

Keep cool,

Reading the WIR, in the materials sector I could suggest a Swedish specialty materials/steel co. Sandvik (SAND in the Swedish market, I believe SDVKY.PK in the US).

Do your own dd of course.
(I do not own any, and will never buy any Swedish stocks, as I have exposure to all things Swedish anyway through my various fixed pension plans here.)

It has long been considered by many to be, all categories, the best kept secret of the Swedish market.

Sandvik from 1862 has a very interesting history, the founder was 1858 actually first in the world to commercially produce steel with the Bessemer process.

from their site:

"Sandvik's business concept is based on a unique competence in materials technology. This has resulted in a world-leading position in three core areas:
Cemented-carbide and high-speed steel tools for metalworking applications and blanks and components made of cemented carbide and other hard materials.
Machinery, equipment and tools for rock-excavation.
Stainless and high-alloy steels, special metals, resistance materials and process systems.

For you miners, along the premise that in a mining boom, invest in the co.'s that provide the picks & shovels, you could look at also Swedish Atlas Copco, a world leader specialty co. in mining equipment.

I know less about it than about Sandvik, have no current info. dydd.

Commodity Roundup: What To Be Bullish On Now

silver and gold prices drop to below many producers' production costs, it is now near bottom, thus time to buy some of the most heavily punished gold and silver players

http://tinyurl.com/6d5zvo

Sunday Morning Coffee: The Bernanke Doctrine

http://tinyurl.com/5tvtv4

Re: ARU.TO

"If Patrick Anderson is ignorant of how markets work, he shouldn't be CEO of a company responsible to shareholders."

We're all ignorant of how markets work. I have yet to see a mining company run by geologists to succeed in their efforts without major structural and manegerial drawbacks solely out of the lack of expertise in developing a mine and creating a player in the mining industry. Aurelian had a deposit large enough to become a competitor, but not to become a world player.

Kinross was your white night in the most precipitous correction in gold prices in years. Secondly, Anderson might have sold seeing the previous CEO walk away at the top of the market, and him left holding the bag.

Felderhof walked away with $80m. and had nothing in the ground and was still exonerated. Anderson looks like he capitulated, but speculators in Aurelian are expecting far too much given the wider markets.

You'll never get $180/oz. in situ value of the resource unless the price of gold heads north of $1800/oz. or the mine is developed with a mill standing idle worth hundreds of millions and there's no question as to the political nature of the country you are investing in. At $760/oz., you're getting close to fair value. So, if Kinross topped people up with $16/oz. cash, it would be really fair at this point, considering the politics of the situation.

Thirdly, you're still dealing with a market psychology that looks at gold as being a bourgeois trinket for well to do women, and does not regard gold as money. There are very few investors in Aurelian who are not also investors in base metals and do not see any difference between the gold mine and say, a copper or zinc mine. Tell me what's so special about this mine that would require Kinross to invest a premium over market?

And lastly, the NI43-101 rules will always work in favour of the larger players and banks, and not the miner, because the rules for estimating a resource have become so astringent, that only the best quality mines look good. Even still, you have miners overestimating their resources under these rules overpromising and underdelivering. The only way to know just how good the deposit is, will be by obtaining the head grade throughput after bulk sampling.

David,

I have recently read a couple of articles which support Bill's economy-driven commodities on the horizon.

One indicated that China, though slowing their rate of growth, (dis-expansion? :-) will continue at a pretty strong rate and has a long way to grow.

As an aside to this: I remember a PBS special about twenty years ago (I think it was called Dragon something.) in which a group of Chinese were sitting around a table sorting screws manually. It wasn't that they didn't know there are machines to do this, but the need to keep people working. (A billion idle hands would be one hell of a "Devil's Workshop".)

Even more necessary now that they have tasted consumerism. They will keep building.

The second point is that even with their record earnings, XOM is producing less as are others. It takes about a decade to build a refinery and I've heard of no new ones in the works except — Saudi Arabia who is considering refining their own oil.

Agriculture is now our greatest export opportunity, I believe. Recycled steel has done well the last several years. (SCHN 2003-2008)

Killer Whale,

re: saber rattling/war

The danger in view of anti-Iraq/Viet Nam effect, may be as Mark Twain pointed out, "A cat, once he has jumped on a hot stove, will not jump on a cold one, either."

Or, "The Boy That Cried, WOLF!"

I doubt anyone who has been in combat is anxious to do it again — only those who cut out on their agreed upon obligation to serve — like W.

Mumbai (PTI): Demand for gold is expected to increase following a downward trend in prices during the forthcoming festive season, a top industry official said.

"Gold demand will go up during the forthcoming festive season. The downward trend in gold prices may also help increase demand," Bombay Bullion Association (BBA) president Suresh Hundia said here.

The demand for gold revived as prices fell sharply in the last one month from an all-time high of Rs 13,764 per 10 grams as on July 15 to Rs 11,415 on September 13.

The fall in prices brings relief to local consumers in the festival season. Demand has improved significantly ahead of festivals and is expected to continue.

At the beginning of the month, traders and jewellers alike anticipated a sudden buying fever amongst the consumers, owing to the festive season ahead and also the fall in gold prices. But demand in the early stage of the month did not increase as expected.

Demand for gold in the Indian market picked up only after the second week, National Commodity Exchange of India (NCDEX) Economist Manasee S Gokhale said.

Gold price may hover between Rs 10,800 to Rs 11,800 by Diwali, Hundia said adding that in view of rising demand, import of gold has improved to 98 tonnes in August 2008 as against 69 tonnes in August 2007

Here is what Kaimu wrot

"ALOHA !!

Lets analyze some GLD metrics here as we look back to when the POG was moving up some $200 from Jan 2008 to March 2008 when it peaked at $1,030USD ... Obviously the POG was going up as fast as it is coming down now.

From Jan 1, 2008 to March 28, 2008 POG moved up $200USD plus and GLD added a net 6.49 tons of gold to inventory per their own website data.

Okay ... fair enough, now lets see a $200USD decrease of the POG and see what happened to GLD inventory in that time span. I am referring to July 1, 2008 to NOW, Sept. 11, 2008. The POG peaked in that period at around $960USD and went down to $750, so that is a little over $200 down, yet look how much gold inventory GLD sold off. During that time period by their own data they sold off a net 44.34 tons of gold."

so GLD sold 44.34 tons
and Now India may be buying 98 tonnes
May have impact on gold price?

Dr. Cosa,

Gold will go much lower than $860 prior to resuming it's upmove.

Posted by: shark_attack at August 5, 2008 10:04 AM [link]

Conclusion aboot ARU.TO

My conclusion about why ARU.TO got sold off is that the resource estimate was somewhat inflated and Kinross presented evidence of the fact.

Just wait till Treasury Secretary Phil Gramm tells VP Palin there's a financial crisis going on. She'll shoot first, and ask questions later!

Dear Caraistas,
Back in 2006 we went through a similar period with precious metals. Some of the old timers will remember the support and help provided to those who were in various states of panic over their holdings, many new to the spurious volatility of the forex related metals.
I remember a few Caraistas happy they listened to Bill and the general list discourse and held their gold through the pain of $575.
It's good to see that same spirit is still strong and the discourse is of the same high level of knowledge and support.

shark- do you care to weigh in on when gold returns to 4 digits?

we have at least one number with a date on it from jim sinclair:

http://tinyurl.com/58ollh

whereas rob mcewen offers a wide range of prices over an unspecified time frame (2000-5000 in the next few years)...

i'm happy with anything in 4 digits in the next 1-2 years...

GOLD:

I am ready to weigh in again on the price of gold. While it's true that we'll "know it when we know it" regarding a turnaround, it's good to remember that gold is a very emotional, irrational market. And I do know that if Lehman goes under this week as I have been predicting it will for months, gold, stocks and bonds will all move a lot to reflect new realities, in one way or the other.

I'm too dumb to tell you now which of hose reactions might occur, but mercenary enough to jump on whichever side appears likely to win.

I am lately LOOKING long some metals stocks now.
AUY, NXG, SWC, GSS all look promising. I will buy them when/if gold continues to rally and/or it they begin to rise. PAL looks potentially good too. Need to see more volume/liquidity coming into these names before they're "tradable".

Any return to 4 digits will be welcomed, most particularly by one particular "farmer" who stands to become the next King Midas if/when a crisis of confidence in this nation and it's finances becomes manifest.

FranSix:
Your comments in regards to Aurelian and Ecuador appear like you are more interested in finding conflict than finding the truth. It is obvious your knowledge regards to Aurelian and Ecuador are lacking.IMHO
Skylane

Hurricane Gustav/Hurricane Ike Activity Statistics Update -
September 13, 2008

http://www.mms.gov/ooc/press/2008/press0913.htm

Bill, you said, "Lehman might cost double that, and frankly the public will not put up with it."

Not sure what you mean. It seems to me that of the 10 to 20% of the people who pay attention to the goings on in the market, the majority swallow the popular media/government data and commentary.

I spent years naively thinking that I could have an effect by contacting my representatives. Nothing came of it except the frustration of canned, form letter replies.

For those of us who are outraged at what the Fed and Treasury are being allowed to do, what would you suggest we do?

Here are two incredible posts from Thursday.

In addition, Friday saw the dollar basically hit Fib 50% resistance at say 81.75 (high of 92.5 from Nov 05 to May 08 low of 71).

The posts are:

If anyone is interested I'm looking to buy NEM @36.85, ABX @26.6, AEM @45.45. While the action MAY have been climatic and constitute a key reversal the jury is still out. Trading ORB's can be very profitable though on a very short term basis so I'll give it a go. The miners have resisted the downside bias of the underlying metal the past few days and that is a positive divergence. What I don't love about the trade is the stocks didn't quite get low enough to hit my targets-thus only taking a small (25%) position. From all I read the XAU/GLD ratio is at historic lows so if the equity side seems to stall I will short the GLD against the miners. Today's close will be important. Good trading to all.
Posted by: optionoracle at September 11, 2008 12:53 PM [link]
XAU intraday low 110.70? that has to be close to a bottom..
[Bill Cara note:
This really is the most interesting market I have ever seen. As for $XAU, watch the bottoming of the Euro -- any day now. Any major bank failure in the US, may bring about that Euro:USD reversal for the intermediate term cycle. Any short, intermediate or long term trader could make good money with the metals and precious metals producers after that. The junior explorers and developers will come back, but they also could drop another 10-20% from here, so the mid and long-term oriented traders will do well there, I believe, but the short-term traders may want to wait for oil to fall a little further. Also, the faster/further oil falls here, the sooner the next Bull market starts.]
Posted by: 2nd_ave at September 11, 2008 1:34 PM [link]

I spent my morning with Bill's WIR, two cups of coffee and a plate of hot buttered groat clusters. After all, we gnu chickens aren't the only cannibalistic animals to graze American praries.

Grym - As it appears mom&pop are being duped yet again, I'm prepared to join protest on the DC mall at a moments notice and am about two shakes away from initiating a controlled yet personal protest there just to get the ball rolling.

THANK YOU Bill!

Grym: "For those of us who are outraged at what the Fed and Treasury are being allowed to do, what would you suggest we do?"

vote with your feet, as a;ways, what else?

but wait, if you haven't already done that ahead of time, you may get outvoted by other feets stampeding for the exits - if Roubini is not a year or two too early again:

"It is now clear that we are again – as we were in mid- March at the time of the Bear Stearns collapse – an epsilon away from a generalized run on most of the shadow banking system, especially the other major independent broker dealers (Lehman, Merrill Lynch, Morgan Stanley, Goldman Sachs). If Lehman does not find a buyer over the weekend and the counterparties of Lehman withdraw their credit lines on Monday (as they all will in the absence of a deal) you will have not only a collapse of Lehman but also the beginning of a run on the other independent broker dealers (Merrill Lynch first but also in sequence Goldman Sachs and Morgan Stanley and possibly even those broker dealers that are part of a larger commercial bank, I.e. JP Morgan and Citigroup). Then this run would lead to a massive systemic meltdown of the financial system. That is the reason why the Fed has convened in emergency meetings the heads of all major Wall Street firms on Friday and again today to convince them not to pull the plug on Lehman and maintain their exposure to this distressed broker dealer."

Grym- i've wondered about that myself, and i like the 'journey of a 1000 miles begins with one step' approach...

once in awhile i wake up in the morning and just can't get going (let's say the power's out, dirty dishes in the sink, tax forms to finish, kids need to get dropped off, and i promised my wife i'd clean out the garage)..what works for me is to just start somewhere (dishes), and before you know it, the momentum generated feeds on itself-> by mid-afternoon you have not only finished the taxes and the garage, you've managed to complete a report you've been putting off b/c you couldn't find the motivation to do it...

when it comes to fighting corruption in the markets, you can start by no longer buying into what they're selling (including buy-and-sold, i mean buy-and-hold), making a few winning trades, educating friends and family, blogging here, and maybe before you know it, you've made a real difference and some kind of critical mass in public awareness starts to create real change...

never too early to start gaming the FOMC:

http://tinyurl.com/6qd884

"The retreat of energy prices could be temporary, of course, but policymakers will be quietly popping the champagne during the closed-door meeting of the Federal Open Market Committee on Tuesday. The last thing policymakers want now is to be compelled to raise overnight interest rates to fight inflation. The FOMC announcement should come around 2:15 p.m. on Tuesday."

"No one expects the Fed to change policy at the meeting on Tuesday, but the statement's language could change, reflecting new economic realities since the Aug. 5 meeting, when the members concluded that their next move would probably be to raise rates."

"My conclusion about why ARU.TO got sold off is that the resource estimate was somewhat inflated and Kinross presented evidence of the fact."

Think so? I know you are wrong. Kinross would be lying about this in order to get a better price. If you look at the drill holes here on Google Earth you can see many of them bottomed in mineralization.
www.corebox.net/ge/Aurelian-condor.kml

This isn't the place to debate this but if you want to go over to Agoracom.com Aurelian board you are welcome to ask your question there

Breaking News 1:12 PM ET: Barclays Backs Away as Lehman’s Options Begin to Run Out

Sorry here it is in hyperlink form
http://www.corebox.net/ge/Aurelian-condor.kml

I don't know if anyone has taken up Jim Sinclair's $1M bet, but it sounds like a great hedging opportunity.

Unable to find a savior, Lehman Brothers appeared headed toward bankruptcy on Sunday, in what would be one of the biggest failures in Wall Street history.
The N.y times

Greenspan on Lehman:

http://tinyurl.com/5a8j6h

"He would not make a recommendation about what to do.

"I don't know enough of what is going on. I would have to have very detailed information of what's on the Lehman Brothers balance sheet ... and what the repercussions would be with any particular solution," he said.

"The government has acted aggressively in taking over the struggling mortgage companies Fannie Mae and Freddie Mac in addition to the Bear Stearns rescue. The fallout from risky investments is dragging down companies such as American International Group Inc., the world's largest insurer, and Washington Mutual Inc., the nation's biggest savings bank.

"Let's recognize that this is a once-in- a-half-century, probably once-in-a-century type of event" -- the worst "by far" in his career, Greenspan said.

"There's no question that this is in the process of outstripping anything I've seen, and it still is not resolved and it still has a way to go. And indeed, it will continue to be a corrosive force until the price of homes in the United States stabilizes. That will induce a series of events around the globe which will stabilize the system," he added."

pretty strong language...about the only thing left out would be the policies (and the policy-maker) behind the "once-in-a-century" event...but all of that occurred during the Greenspan Period, which might as well be the Jurassic Period...we are now in the Cretaceous Period, and we all know about the once-in-a-million year event that ended that one...LOL

"1:06 p.m. Nymex crude tumbles below $99 a barrel"

.. and you know what pisses me off more then anything about Greenspit now!!! HE CREATED MOST OF THESE PROBLEMS!!!!

Now he's like a Monday morning Quarterback.. saying.. well I would have done that play different!!!

He will go down no doubt as the "Maestro of Misery!!"

2nd - "ain't no bull" is fine. :) When dn's become double or triple nested, confusion becomes a vector of magnitude.

today on trading started at 10 a.m
and oil down $2
gas down 0.14c
gold up

"1:27 p.m. Deal structure would require Barclays shareholder vote - WSJ
"1:26 p.m. [LEH] Barclays could return to bid, sources say - WSJ"

wow...are they texting from inside the room or what? LOL

Looks like we go into Monday with LEH toast!!

Unless Barkley's can call everyone of their share holders today!!

Off of WSJ:

BREAKING NEWS:
Barclays claims to be walking away from a Lehman deal but could return, sources familiar with the situation say. The current deal structure would require a Barclays shareholder vote. Government reluctance to provide funding remains a deal hurdle. More details to come.

CP- it's a good thing i understand your first sentence, and only need to kind of nod at your second ;)

Grantmi- yes, that was my point..he was the policy maker behind the policies that lie behind the once-in-a-century event...

2nd
Good opportunity in market if we play it right
I was 100% in cash around 3.50 on friday but last monment got 300 AIG and at 4.00 p.m got OEX put
monday will be fun

vinod- so you're playing it both ways...best guess is you get to sell the AIG pre-market, then stack up more OEX puts at the open..

look at this series of posts:

1:35 p.m.
[LEH] Barclays could return to bid, sources say - WSJ
1:35 p.m.
[LEH] Barclays walking away from Lehman deal - WSJ
1:34 p.m.
[BCS] Deal structure would require Barclays shareholder vote - WSJ
1:06 p.m.
Nymex crude tumbles below $99 a barrel

can you imagine the price swings trying to trade those press releases during market hours?

All were crook, wanted deregulation in financial industry and they sold their Idea and Ideology as free market capitalism.
Bulldoze everyone who came in a way and label them liberal
Went wild doing M&A and made billions. Acquire the company cut expense (employee benefit) lay off people and replaced them as temp worker without benefit.
Their kind of free market work for a while
Now is the time to pay for it
Allen greenspan was their god father

2nd
I am not playing it both ways
some time I do not know what I am doing?
too much information clouds my judment

vinod- we rented a DVD a few weeks ago, and i can't recall the title...opening scene was a train wreck in india-> flash forward to somewhere in the northeastern US, where an indian engineer who survived the crash starts a family with his indian bride (who has a little trouble understanding what to do with a box of cereal ;)...nice film with a sad ending, you might enjoy it...you'll find it in the new releases section...

vinod- maybe you're right...you simply opened two positions on weakness, so in fact you made one play...

re AIG

http://tinyurl.com/6mebeu

"The company had been preparing for a major reorganization announcement on Sept. 25, but on Friday the Wall Street Journal reported on its Web site that the company may hold a conference call for analysts on Monday during which it could announce asset sales."

LEH-

http://tinyurl.com/566g2u

prospect of a private-sector 'only' solution not looking good...

2nd
It is not good to play OEX now, vix is high and premium for option on oex is very high because of high vix
Market can go up 100 point vix go down and oex call premium will not move

AS WE PONDER THE UPCOMING ELECTION

Fred Reed tells it like it is regarding this election.

http://www.fredoneverything.net/Election.shtml


From out of a Rotting Log

Reflections on an Opera Bouffe Election

September 13, 2008

Just dragged my scrawny carcass in from Washington, the heart of darkness, with the usual sense—usual now—of having visited an asylum. I figure Salvador Dali designed the government. Or maybe Ionesco or Someone deeply twisted with a sick sense of humor.

In the airports, the same obedience training—take off your shoes, belt, watch, fillings, prostate, so we can to learn to respect the authority of low-IQ federalized renta-cops with the psyches of school-yard bullies. God save us from the congenitally unimportant. From PA systems came the same pointless security-babble having nothing to do with security, in the same over elocuted I-wanna-lick-the-microphone female voices. Well, it’s not quite pointless. We must condition the rubes, give them an inspiriting sense of danger so they will do as they are told. It’s awful. I’m going to apply for a change of phylum.

It got worse. I discovered that America is about to have an election. Why? Every time they do that, no good comes of it. You’d think they’d learn.

Ass usual, the election is a popularity contest run for dimwits. And to elect a dimwit, which is worse. We’ve got this woman Palin, an angry Betty Crocker, absolutely unqualified for the presidency in case McCain goes tits up. She’s ignorant of foreign affairs, at best moderately bright, a whackjob Christian, and a “pit bull.” This is said admiringly.

Oh good. An aggressive ignorant dull-witted-pit bull. How is that better than a passive ignorant torpid pit bull?

Oh god, McCain. A senescent replica of Bush who says he wants to stay in Iraq a hundred years. Actually, the idea has its appeal. Why doesn’t he go there and get a start? A perfect match for Palin, another pugnacious dunce, bottom of his class in boat school—the Naval Academy, I mean. He says he plans to “confront Russia.” Now there’s a plan. It seems that American policy is to make enemies of everyone who has oil or nuclear weapons. Or doesn’t.

Meanwhile the Pentagon prepares for war with China. Is it something in the water?

Next we have Obama, whose only qualification is that he’s maybe a tad less bellicose than the rest of these Oprah Neanderthals. His veep, Biden, is a grey nonentity, a cipher with no characteristics. Well, that’s better than the other three. I mean, he’s as close to no candidate as we can come.

What are we doing? The country has gone nuts. If a giant squirrel began collecting us and storing us for winter, I’d understand. Three hundred million people, and these factory rejects are the best we can do?

Actually, I do understand it, barely. The undergirding of American politics is the seldom-stated but always audible cry of “You ain’t no gooder’n me!” We have government by inferiority complex. The last thing the great burger-chomping, reality-show-watching mental vacuum out there wants is anyone who might make reglar folks feel inferior. The cloth of the country is woven of resentment. The public wants a regular guy, comfortingly stupid, who watches NASCAR and in broken English as if recently concussed. Few would select a cardiac surgeon from a bus station, but it’s how we do presidents.

You probably can get elected holding a chain saw and a severed head, but not if you know words of three syllables.

It’s getting scary. The more angry and miserable things get at home, the more people want to smack hell out of someone. It doesn’t matter who. The American attitude toward the world is, “Not only can I lick anybody in this bar, but I can lick all of you at once.” Before I said that, I’d want to be real sure who was in the bar.

At least two of these gong-show dregs, Palin and Bush, blame their personality disorders on God. Yes. They think God wants them to blow hell out of more or less everybody. We’re talking wars of religion, boys and girls. Christian loons in the US, Jewish loons in Israel, and Moslem loons widely distributed, all wanting to blow people up because God told them. I want a signed affidavit from God. Or a drink. Whatever happened to grownups?

I babble, but it’s hard to think straight when contemplating nuclear-armed kindergarteners. In Washington, I saw about ten friends, many of them biochemists, lawyers, programmers, freelance screwballs, what have you. Sitting at the Zoo Bar one night (so called because it’s across Connecticut Avenue from the zoo, not because of its clientele) a dismal epiphany struck me, kersplat, like a sock full of hog kidneys:

I don’t know anybody who isn’t better qualified to be president than anyone who is or is about to be.

Of the ten friends I mentioned, the baseline IQ is close to 140 and goes up, often lots up. All of them are well read and many have spent a lot of time overseas. All speak and write good English and, some of them, foreign languages. They aren’t geniuses, just upper-middle-brow. But they are way better than the rabble running for the White House.

I don’t get it. For president, I want somebody lots brighter than I am, who knows history, who speaks a few languages, maybe spent time in the military without being an officer and therefore a warped buzz-cut Boy Scout. They exist. I have friends who knew where South Ossetia was twenty years ago, and why, who know the military and military history and what works and what doesn’t and why. I’m not like that. Not smart enough. But they are. Yet we get candidates who could probably run a small-town hardware store. Reglar folks, though.

Democracy is a bad idea, I tell you. Granted, we’ve never really tried it. >From Jefferson to our current bumbling mutant, the trick has been to let people think they have power without really trusting them with it. For a long time we had rule by a high-WASP elite that actually had some sense of noblesse oblige, tempered by sufficient corruption to keep them in gravy. The Roosevelts for example. You can disagree with their policies, but they weren’t penny-ante pickpocket proles with learning disabilities.

Today we get grasping zeros who would embarrass a trailer park in Arkansas. Ah, but they are of the people, and don’t make anyone feel inadequate. In everything that counts, which means involving money, we have rule by corporations, through legalized corruption far more lucrative than Latin America could dream of.

I have a theory that countries deserve what they get, at least when it’s internally generated. Belgium didn’t deserve to be overrun by Germany, but Belgium didn’t elect Hitler. It’s going to be a funny eight years.

LEH//BSC//AIG

anyone ever wish you could know last year what you know today?

possibly, a few of you did...

CP, 2nd_ave, pappdjavul,

While I appreciate your responses, I don't think there are enough of us to outweigh the mutual funds, ETFs, pensions and 401(k)s out there. It's like pissing in the ocean.

This will not stir enough people to organize a march any more than it would start an armed revolution.

A few years ago Robert Goodman argued in his book, "Independently Wealthy," The shareholders own the company and if they don't like board policies they can change the board."

He had decades of economic experience, but not an once of practical common sense. This just is NOT so anymore. With a small company and closely held shares it may have been doable, but no longer.

There is virtually no influence for any group smaller than a "special interest group" like the NRA.

Grym: move your assets to someplace else, outside the corrupt markets, where you do have a say. Like investing in a private company, for example.

things getting interesting.

ISDA Statement on Lehman Brothers Bankruptcy Trades: Full Text

By Scott Lanman

Sept. 14 (Bloomberg) -- Following is a statement today from the International Swaps and Derivatives Association:

``ISDA confirms a netting trading session will take place between 2 pm and 4 pm New York time for OTC derivatives. Product classes involved are credit, equity, rates, FX and commodity derivatives. The purpose of this session is to reduce risk associated with a potential Lehman Brothers Holding Inc. bankruptcy filing. Trades are contingent on a bankruptcy filing at or before 11:59 pm New York time, Sunday, September 14, 2008. If there is no filing, the trades cease to exist. These trades are subject to a protocol which is being distributed by ISDA (International Swaps and Derivatives Association). Traders should execute the protocol and return to ISDA.

4:08 Bank of America & Merrill in merger talks per WSJ

2nd - What I really wanted to do was cut the soles off my shoes, sit on the beach, and learn to play the flute. Turns out learning to trade the market has been more interesting.

Next week I'm going to attempt buying into some equities at a discount from Bill's entries, if possible.

Bank of America Said to Walk Away From Talks to Buy Lehman

By Margaret Popper and Yalman Onaran

Sept. 14 (Bloomberg) -- Bank of America Corp. abandoned talks to buy Lehman Brothers Holdings Inc., according to a person with knowledge of the matter, less than three hours after Barclays Plc said it wouldn't buy the faltering investment bank.

Bank of America, the biggest U.S. consumer bank, and Barclays, the U.K.'s third-largest lender, had been among the leading candidates to acquire all or parts of New York-based Lehman.

The two potential bidders pulled out amid a third day of emergency negotiations led by the U.S. Treasury and Federal Reserve, Leigh Bruce, a spokesman for London-based Barclays, said in a phone interview today.

The U.S. government is racing to find a solution for Lehman before markets open tomorrow, two people familiar with the situation said. Barclays walked away because it couldn't get guarantees from the government or agree on a private-sector deal to mitigate what it called Lehman's ``open-ended'' trading obligations.

Led by Chief Executive Officer Richard Fuld, Lehman may be forced to liquidate unless buyers step up for all or part of the 158-year-old company, U.S. Treasury Secretary Henry Paulson and Tim Geithner, head of the New York Federal Reserve, told the chiefs of Wall Street's biggest firms at a meeting Sept. 12. Paulson said he was reluctant to use government money to rescue Lehman.

To contact the reporters on this story: Yalman Onaran in New York at yonaran@bloomberg.net.

Last Updated: September 14, 2008 16:01 EDT

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Grym - I understand your point, it's hard to know what's necessary when we've got Mr. Moral hazard pissing down our backs while telling us it's raining.

Can someone comment on the effects they think a Lehman bankruptcy would have on the markets tomorrow. Would we get a crash?

IMO - We won't know till way into the world trading day! Most of the Asian markets are closed tomorrow. Japan is closed for 2 days till Wed.

Watch Europe I guess!

I think we are on the tipping point of heading down BIG TIME!!! (Personally! I remember Oct. 1987!! It was brutal)

i have trouble believing the FED will allow LEH to fail the day before the FMOC announcement.

this is really interesting to watch.

i wonder if gold will jump on the news, or if this will turn dollar positive because of a mass migration to treasuries...

Are any of you worried over the knock on effect these IB going bankrupt will cause the the brokerage firms.

My long-term, short-term and retirement accounts are with RBC Direct Investing (Canada). What would happen to my stocks in the event this firm should go under. It seems my Oil Sands equities are in RBC's name not mine.

However, if I order the certificates, then I can't trade them (sell on strength, buy on weakness).

I just don't want to loose my life savings.

I haven't called them yet, but I doubt they would tell me the real deal.

Would like your comments on this, if possible.

Sandra

Per NY Times:
"Bank of America is in advanced talks to buy Merrill Lynch for at least $38.25 billion in stock, people briefed on the negotiations said on Sunday, as a means to preserve that investment bank while Lehman Brothers looks likely to collapse.

A deal, at between $25 a share to $30 a share, could be announced as soon as Sunday night, these people said. Merrill shares closed at $17.05 on Friday.

Bank of America, the nation’s second largest bank by asset size, had been mulling buying Lehman, perhaps in a consortium with other financial players. But with financial aid from the government looking unlikely, Bank of America has moved on to Merrill, these people said."

As Lehman began to totter in recent weeks, investors feared that Merrill would be the next victim of the credit squeeze. Shares in Merrill, which has already reported tens of billions of dollars in losses, have plunged more than 68 percent over the past year.

BREAKING NEWS:

American International Group plans to disclose a comprehensive restructuring by early Monday morning that is likely to include the disposal of major assets including its aircraft-leasing business and other holdings. Full story coming shortly.

CP- learning to trade the markets may in fact be the ideal post-retirement pursuit...it's cerebral, any and all life experiences are relevant to succeeding, and maturity (be it in the form of emotional restraint, self-knowledge, understanding of human nature, or the ups/downs of life) gives one an advantage difficult to replicate...

lessons i've either learned from/applied to trading include:

(a) it is always possible to prevail- you just need to find the right path

(b) as long as you remain in control, the outcome of any trade is entirely up to you

(c) regardless of the situation, you can turn it to your advantage

hard lessons indeed, whether you learn them living life or on a trading platform, but absolutely not bull----...which is why when i find myself in a 'bad' situation, i remain optimistic i can turn it around and often find it becomes a springboard to an even better outcome...there are as many different ways to exploit this 'truth,' if you will, in life as there are people in the world, as each of us learn to apply it in very individual ways...a simple example from an earlier post: whenever i seemingly get up on the wrong side of the bed, i am actually energized by knowing that negative starts like that usually result in finding the motivation to complete tasks i've been avoiding for awhile...but that's just me...everyone will have their own bag of tricks for slipping out of handcuffs and getting back above water...;)

I'm rethinking now about Bill's DOW 10k target.... Perhaps LEH is the trigger?

Sandra- unless you're entirely invested in the stocks of financial services companies and one or more of them go bankrupt (and based on your posts i would be surprised if you own any), you're not going to lose your life savings...the turmoil is good- (a) the unwinding of the excesses of the last 10-15 years has always been inevitable, and it would actually make sense to allow bank/brokerage failures to occur, and occur quickly; and (b) the resulting market drop (which will be relatively short-lived in the context of any investment [as opposed to trading] time frame) will give you an xlnt entry point into many companies...

Hi,

Looking at it from Europe, it seems that Black Monday may me in the cards:

- LEH fiing for bankrupcy
- Ike closing 20% of US refining capacty for 9 days
- Mer and and BoA in merger talks
- AIG dumping assets
- Wamu credit default swaps sky high

Black Swan?

Maybe.

Let's keep a cool, clear head today and our eyes on the ball.

Cheers.

Breaking news on Bloomberg TV scroll - No Lehman Bankruptcy, netting of trades to be cancelled. Then next scroll said bankers, brokers start preparing for possible Lehman bankruptcy. That was strange. Checked it again. Had it on TIVO.

A short podcast of a panel discussion with Danielle Park and others in Las Vegas yesterday.

http://www.kereport.com/audio/0913-04.mp3

cnbc: "Sources told CNBC that Federal Reserve officials are pressuring Bank of America to do a Merril deal. Merrill is considered the firewall of Wall Street now that most are concluding that Lehman will fall into bankruptcy.

Merrill's merging with a well-capitalized bank like Bank of America could prevent a broader fallout because most executives feel that Merrill's shares would have tanked after Lehman's decline. It is widely believed that would create a massive fallout int he overall market."

2nd: No financials, but aren't any of you worried that your brokers go under. Your money and stocks in your trading accounts (Etrade, etc..). I know they are insured, but so is the FDIC. (LOL)

Does anyone know what happens to your stocks if a broker goes under, I guess that's my real question.

Never underestimate power of HB&B
they may find a way to take market higher monday?

I would be more concerned about the ETFs which are capitalized with obligations and swaps if LEH went under.

per NY Times @ 5;55
"Lehman Brothers will file for bankruptcy protection on Sunday night, according to people briefed on the matter, in the largest failure of an investment bank since the collapse of Drexel Burnham Lambert 18 years ago.

Lehman will seek to place its parent company, Lehman Brothers Holdings, into bankruptcy protection, while its subsidiaries will remain solvent while the firm liquidates its holdings, these people said. A consortium of banks will provide a financial backstop to help provide an orderly winding down of the 158-year-old investment bank. And the Federal Reserve has agreed to accept lower-quality assets in return for loans from the government.

But Lehman’s filing is unlikely to resemble those of other companies that seek bankruptcy protection. Because of the harsher treatment that federal bankruptcy law applies to financial-services firm, Lehman cannot hope to reorganize and survive as a going concern. It will instead liquidate its holdings.

It was not clear whether the government would appoint a trustee to supervise Lehman’s liquidation, or how big the financial backstop would be.

Lehman’s broker-deal subsidiaries would not be a part of the bankruptcy filing. Those entities must file under Chapter 7 rules, which are the procedures for liquidation, under the assumption that it is the best way to protect customers. The Securities Investor Protection Corporation would handle the liquidation of such brokerages, and bankruptcy lawyers say that customers are likely to receive their holdings back.

Moreover, changes to the bankruptcy code mean that counterparties to Lehman’s credit-default swaps can seize their collateral at any time, posing an enormous potential risk to the entire financial markets. Investment banks, hedge funds and other financial players labored throughout Sunday to offset their exposure to Lehman, moving their contracts to other firms.

Lehman has retained the law firm Weil, Gotshal & Manges to prepare its bankruptcy filing. The firm’s restructuring head, Harvey Miller, also worked on Drexel’s bankruptcy back in 1990.

Eric Dash, Ben White and Michael J. de la Merced"

Sandra- i would spend as much time worrying about a financial meltdown that destroys the savings of all americans as i would a nuclear war that destroys the american landscape- ie, it could happen, but if it does, we would all have more to worry about than our bank accounts...

2nd: Thanks. You're probably right. I'm reading too many Doom and Gloom websites these days (LOL)

USD index down 78.44 from 78.92 but spot gold hasnt moved...
i must be missing something...

Dr,

NY access market for gold futures opens in 20 minutes.

BUT, you can already check forex spot prices.

Spot gold gapped up to 772.

You can check it out here:

http://www.igmarkets.co.uk/

Cheers

WSJ:

BREAKING NEWS:
Source: AIG to shift capital from regulated insurance business to holding company. Measures involve $40-$50 billion. Complete story to follow.

????

another update.. looks like MER might get bailed!!

BREAKING NEWS:

WSJ:
The Merrill-BofA deal is moving closer but could still falter. A deal is expected at $26 per share or higher. Meanwhile, AIG is set to shift capital from its regulated insurance business to a holding company. Complete stories to follow.

Sandra, about a third of my holdings are with RBC Direct Investing as well. I think you have nothing to worry about as RBC is an ultra conservative (read dinosaur) entity. The other two thirds (never keep all eggs in one basket) are in money market (!) with other institutions (and have been for quite some time). With RBC itself I am 2/3rds short 1/3rd long. You are not allowed puts on registered accounts, but luckily they allow the ultra shorts like SDS and SKF which are great hedges.

Having said that, I have a number of outstanding orders at stink bids which I am canceling or lowering even more tonight as it may be difficult to get in online tomorrow.

I think there will be tremendous opportunities in the days ahead. There will be many quality companies in the AZ and Bill has provided quite a few names.

S$P500 futes down 37.20, NSDQ100 down 42.50...but vinod is right, it could all be green anytime...

Maybe tomorrow will be Black Monday #2

http://en.wikipedia.org/wiki/Black_Monday_(1987)

I doubt it.. since they have put in measures to stop the huge decline in computer program selling.. but... with the Asian markets closed tomorrow.. makes you wonder if this was not timed for this weekend. Me thinks it was! This way it might elevate a world wide panic in the markets.

Grantmi,

I agree no one will know until it happens. There are just too many unknowns possible from government intervention. When the rules keep changing and all the big boys have a "Get out of jail FREE" card, the rest of us are in limbo.

I'm not jumping into anything tomorrow.

SiO2: I agree there will be juicy opportunities ahead, after this carnage. Things in the US financial sector seem to be happening at breakneck speed, dominoes falling one after the other (week after week), which is a bit scary and also quite exciting to watch at the same time.

pappdjavil,

If I were young enough and had enough capital, yes, that might be a good idea.

What I really was asking, however, is what Bill actually thinks the public can do which would have any real effect on the outrageous Fed and Treasury Sec. action. (Based on his comment, "Lehman might cost double that, and frankly the public will not put up with it.")

I ran my own business for over forty years, buy with economic conditions like we have in the U.S. today — much higher taxes, a collapsed dollar, high health care costs, and cheap foreign labor rather than domestic competition — I could not have done it.

SiO2: I think I need to spread my account to a few other brokerages in Canada. Does TD sound good?

Thanks

Grym/Grantmi- in the event of a drop (with 14 hours to go, plenty of time for new developments), i agree with waiting..with all the stops in place, finding the bottom will take more than a day (especially in the shanghai market, where daily moves up or down are capped at 10%)...

"..and also quite exciting to watch." agree with that also...i would take the sidelines over the field for a major failure...

Tomorrow looks like a wild one with all the LEH, MER, BAC, AIG, news, and $USD index. Anything could happen including that capitulation everyone's been loooking for as well as PPT working overtime. But will the PPT show up in the early a.m. premarket or wait 'till close if they have any bullets left?

VE Noticed that tragic train accident in the LA area Friday has been blamed on human error by the train engineer. 25 dead, 135 injured, 40 critically. Engineer was a contract employee from VE (transport).

http://tinyurl.com/5mjy99

Si02 correction to the fast paced skype discourse--that's IMO in which XOM has a 70% interest (as Bill reiterated) not ECA.

I would avoid CIBC, since they are the most frequently quoted in the press with problems associated with derivatives and ABCP. Also, Disnat is a part of Desjardins which is the largest player in ABCP.

2nd
Mer closed at around 17.00
BAC may buy or merge with BAC at around 27
So market might take this as a positive
AIG restructuring might be taken by market as a positive
Also oil is going down
I am just trying to be careful about this HB&B
They may take us for a ride for betting wrong on direction on the market
Ihave 300 AIG at 11.60
And 10 OEBVL and 6 OEBUL

vinod- what's interesting is that FOMC is tuesday...they could easily spin any drop in rates as necessary for the common good (SiO2 throws out 50 basis points as a possibility on skype- entirely possible)...in which case financials and bonds rally...

...not that the Fed needs to restrict itself to FOMC for an emergency rate cut...

Riddle me this Batman!!!

Where is BAC getting all this money from.. didn't they just buy Country Wide.... and don't they have all that Alt-a crap coming due soon in the next couple of years??

U know what! The FED is going to cut rates on Tuesday! Watch him!!

and don't forget, no short selling may be back?

Re. Canadian brokers. ETrade (Canada) and TradeFreedom are both owned by Bank of Nova Scotia. Who do we have:

TD (several flavours right?)
ETrade
Tradefreedom
QuestTrade
QTrade
RBCDirect Investment
Disnat D.
IB (no RRSP)
Options Express

Who else is missing? Can you help compile a list? Thanks.

2nd
If fed cut rate what will happen to TBT
will it go down and its time to buy?

2nd, the movie you're referring to is "The Namesake," I enjoyed it also.

USD index down, & spot gold back up btwn 775 & 780. We'll see if this pullback becomes the unwind of the long dollar trade, (if it continues this week). Still holding a sizeable chunk of DGP, got rid of the margin I used to get back above water last week. expecting to hold for another day or two... But if the USD weakness continues & gold holds over 775, this seems like it could run for a few days, up to 800.

That USD rally was quite violent... starting to have some downside.

Aig is going dispose of major assets
AIG's new CEO said he was going to do this some time ago. What took so long?
Only time they will move their ass of the chair is when sone one light fire under chair?

Oh, and if the Fed signals that it's getting more worried about growth on Tuesday, just more fuel to the gilden fire this week.

Some interestings thoughts from:

Mike Morgan Behind Enemy Lines

Dead Fish Bounce for Housing - Fish don't bounce, and neither has housing or commercial property. In fact, dead fish get pretty stinky. And that is what is happening in housing and commercial real estate. You can listen to clowns like Jim Cramer or Lawrence Yun talk about the bottom . . . over and over and over. Cramer has called three or four bottoms, and now he has decided to peg the bottom out 300 from now. This gives him lots of time to change his mind and to blame it on any number of things. But it's not just Crazy Cramer.

The Hype - We keep hearing about all of the fixes to the system. Unfortunately, the only way to fix the system is to allow the free market economy to work. Bailing out Fannie, Freddie and other banks is not going to fix anything . . . other than to take care of investors who should have known better. The system worked on the way up, as people demonstrated how prices can sky rocket when greedy demand is fueling the system with free money from the Fed. We saw foreign governments and investors pour money into mortgage back securities because of huge returns . . . even though the writing was on the wall. So the only way to fix the system is to allow the free market to take home prices and mortgages back to where they belong. If that means there will be losers, so be it. There were a lot of winners on the upside, and I don't see any of them giving back the profits and huge bonuses in the tens of millioins. Since we are NOT allowing the free market system to work this out, the bottoms we are seeing are only in the minds of the guys manipulating the system for their own financial gain. Eventually, the markets will work this out, but it will be very ugly when the market "fixes" the "fixes" put in place by thieves like Paulson.

The Players - No need to talk about Paulson, Bernanke, Greenspan, Yun or any of the other culprits, since everyone is talking about them. I'm sure you've had your fill. I'd like to share a peek into what some of the silent players are doing . . . or not doing.

Hedge Funds - The hedgies I speak with are split. Some are buying simply for the short term trade. Technically, the home builders have taken it on the chin, and it's an opportunity for the hedgies to rotate out of commodities, oil, gold, retails, etc. It will not last. And as we have seen in the past, the hedgies can trash a sector. Another reason the buying of the home builders will not last is . . . the "R" word. Redemptions. Unlike mutual funds, the hedgies can actually hang on to your money. Many of the hedge funds lock you up for a year or more. But we are seeing two things. Investors that were locked up are seeing their investments unfreeze . . . and they are pulling out. We're also seeing lawsuits, so the glitter of the hedge fund industry is fading. With that, we will see more unwinding of positions and more failure. The home builders and the commercial property REITs will take heavy hits. On the other side of the hedge fund factor are the hedgies that can't wait to pummel their unlucky cousins on the long side.

Pension Funds - This unlucky group will take the hardest hit as the builders fail. Pension funds own home builder stock, and they don't like selling stock. Just look at the record of CALPERs with the home builders. They've made complete asses of themselves for statements about Standard Pacific and Lennar, just to name two. But pensions funds have two more problems. First, they are also invested in the home builders through the pension fund investments in hedge funds. Second, they are invested in the home builders through direct loans for development and land banking activities. If there ever was a perfect storm to hit the pension funds, this is it . . . home builders, hedge funds, mortgage industry and REITs. More on REITs in another piece I am preparing as I tour the West Coast.

Mutual Funds - Another source of trouble for the home builder stocks. This week will be the first week the consumer will start to hear about the crisis in the financial industry. Sure . . . they've been hearing things for months now. But with the failure of Lehman, and maybe WAMU, Merrill and a few other surprises, we will start to see the nightly news leading off with these stories. We will probably also see some wild swings in the DOW, which is all the general public really knows about. As they see and hear new horror stories, they will begin to sell their mutual funds, just like the more astute investors have been doing with the hedge funds. Unfortunately, the consumer is always the last one out, but when they start pulling out, the mutual funds will be forced to sell the home builder stocks . . . and that's going to hurt. One final note here. This week The New York Times did a piece trying to convince consumers to stay in the markets. That's when you really know the end is near.

Insurance Companies - You gotta love this group. It's another double, triple, maybe even a quadruple whammy for the home builders. Like the pension funds, this group has invested in home builder stocks, land and joint ventures. What's different here, is these guys don't take prisoners. The banks have been sissies when dealing with the home builders. They realize, if they make too much of a stink about things like covenants and "true" asset value, the banks will trigger a domino effect that will shut them down months sooner than the FDIC will shut them down. So the banks work with the builders to hide and manipulate the numbers so the bankers can continue to take down huge salaries and bonuses. We're starting to see a break in the ranks between the insurance companies and the banks. The biggest break was just a couple weeks ago, when the insurance companies forced Woodside into bankruptcy. I realize that was a private builder, but the insurance companies will move faster than the banks to protect their interests. I believe we will see more builders pushed to the brink by insurance companies, not banks.

General Public - The public sucks up Cramer's Crap through a straw. They can't get enough of it. It doesn't matter that Cramer says Bob Toll is buying stock, when reality is Bob and his brother Bruce are selling stock . . . as well as other friends and family. It doesn't matter that the public is fed numbers that have misrepresented the state of the industry for the last four years. So now when the public is told the industry is bottoming, they want to be first to get in on the greed. Unfortunately, the traders and institutional traders moved the stock prices up in advance of the crap from guys like Cramer. The General Public thinks they are buying at the bottom, when in fact, they are buying at the top for 2008. We will see prices of the home builders 25-75% lower over the next year. It's basic supply and demand. The demand is not there, and what demand has been there . . . will soon be disappearing like the jet plane in the David Copperfield performance. If you're still with me . . . you know the airplane was never there. And the good news we are hearing about the housing industry is just an illusion as well.

Which Builders Stink Up First? - The obvious ones are already trading in low single digits, but there might be a surprise or two there as well. For the big boys, you need to look at the impairments they have taken in comparison to what they still need to take. You need to look at what they are selling and how. You can't do those things sitting in an office reading reports from analyst that are totally clueless, because they are relying on numbers from the builders themselves, as well as manipulated numbers from the National Association of Realtors, the Fed and the Case-Schiller Gang. The latter has been the last of the great numbers to fall, but it is starting to crumble as people realize just how off-base the Case-Schiller index is. One analyst did a great piece on the problems with Case-Schiller . . . like the fact that REOs, short sales and other distressed property is not properly addressed by Case-Schiller.

Centex, KB Homes, Lennar, Toll Brothers, Pulte and Horton all have a variety of issues. For some, there is good news. For others, there is very dark and very dire news. Clueless Cramer should not even discuss the builders anymore, because at this point he is misleading the general public with inaccurate information. Some attorneys might refer to this as negligent misrepresentation. Others might call it something else, when you consider the pumping of Toll Brothers coming from Cramer. In any event, we are short a number of the builders, while we are cautiously watching others, and pairing trades for the more conservative approach.

Commercial Property and the REIT Explosion - I am on a West Coast tour to confirm a few things we have been seeing in other markets, prior to putting out another piece on the REITs. Remember, all REITs are not alike. I am only talking about the REITs involved with commercial property and office space. I have not found enough cracks in the other REITs to warrant my time. And like I tell my clients . . . when I go to the buffet, I like to eat the lobster, not the bread. Look for my REIT piece within the next week. We are short a dozen or so REITs, and we will be increasing our REIT short positions substantially. The Street has been pumping this stuff . . . without doing their ground zero research or their research from Behind Enemy Lines.

Placing a sell limit order for 1/2 of my SKF at $129 and for the other 1/2 at $139. Hoping that both of them get hit tomorrow at the open. :)

As for the miners, I have sell limits at $9.90 for SLW, $7.20 and $7.80 for SWC and $1.60 for WGW, which should reduce my exposure to these stocks by about 1/3. The rest I would be content to hold long-term.

8:18PM

Futures

DOW -257
NASDAQ -39
S&P -30

WOW.. gold and silver taking off overseas.

http://www.igmarkets.co.uk/

Spot Silver (5000oz) 1117 1122 02:35 31.25%
Spot Gold (100oz) 784.15 784.65 02:35 18.45%

*WSJ REPORTS THAT BANK OF AMERICA AND MERRILL HAVE REACHED AN AGREEMENT; THE DEAL VALUES MERRILL AT $29/SHARE, IN AN ALL-SHARE TRANSACTION

ha ha.. i love it. Share Transaction....

Oh! I'm sure BAC share holders are going to love this. LOL!!

A lot of big headaches are getting resolved here - LEH, MER, AIG...

Great piece Kim, thank you!

vinod - TBT is inverse bond price. If market tanks, so does TBT.

"A lot of big headaches are getting resolved here - LEH, MER, AIG..."

nope.. just the beginning!!

Roubini Says U.S. Financial Industry Facing `Disaster'

http://tinyurl.com/No-we-just-getting-started

Vadym Graifer
Means BAC is buying MER for around 45B
if MER is not worth 45B. Than BAC is going to tank on monday.

AIG is asking for a bridge loan from the Federal Reserve. Unreal!

WSJ has printed all sorts of rumors regarding Lehman recently that were not true. I will believe the Merrill buyout when it is official. It seems like it is timed to keep the futures from collapsing.

WSJ's website still show a +6 points on SPX as of 8:53pm 9/14. Is that a mistake? Do you know where can I get "future" data? Thx.

I wonder what impact this news will have on market.

U.S. bank rescue fund would provide $50 bln in loans

http://www.reuters.com/article/mergersNews/idUSWAT01004420080914?feedType=RSS&feedName=mergersNews

C3...

check out bloombergs site

http://www.bloomberg.com/index_americas.html

Roubini was just on CNBC saying Morgan Stanley & Goldman Sachs will be kaput in several months, because the large broker-dealer business model is inherently flawed. Why, I'd need to do deep reading. And it's a sunday night, so I'll just stick to the CNBC / Blmbrg coverage tonight.

short seller of MER going to get hit hard if it is sold at 29
they will have to cover it at 29?

Spot gold at 782.80 right now, when it closed at 763.70 NYT on Friday. That's around 2.5% over the weekend.

What are thoughts on how this might effect the shares of miners?

Taiwan, Singapore at 52-wk lows, Australia pretty close...

TREASURIES-Rally on safe-haven rush, new Fed moves
Font size: A | A | A
9:59 PM ET 9/14/08 | Reuters
RELATED QUOTES

4:00 PM ET 9/12/08
Symbol Last % Chg
LEH 3.65 -13.51%
Real time quote.

* Yields dive as spooked investors seek safety

* Lehman reported heading for bankruptcy

* Fed said to expand range of collateral for repo

SYDNEY, Sept 15 (Reuters) - U.S. Treasury yields hit five-month lows on Monday and Eurodollars surged as concerns about the stability of the U.S. financial system sparked a rush from risk and fresh liquidity steps from the Federal Reserve.

Reports that Lehman Brothers Holdings (LEH) would be put into bankruptcy shook confidence and sent investors rushing for the perceived safety of sovereign debt.

The Fed responded by widening the array of securities it takes as collateral for loans while increasing its term securities lending facility by $25 billion to $200 billion. That was just the latest in a string of measures aimed at easing a liquidity logjam in interbank markets.

"These changes represent a significant broadening in the collateral accepted under both programs and should enhance the effectiveness of these facilities in supporting the liquidity of primary dealers and financial markets more generally," the Fed said in a statement.

For the full text of the statement, double click on [nN14779279].

Two-year Treasury notes US2YT=RR jumped 16/32 in price, driving yields down to 1.95 percent, from 2.22 percent late in New York on Friday. Yields on 10-year notes US10YT=RR dropped to 3.56 percent on Monday, from 3.72 percent on Friday.

"It's a pure flight to quality right now," said Adam Donaldson, head debt strategist at Australia's Commonwealth Bank.

"The big concern is how Lehman and other banks unwind their credit default contracts," he added. "Nobody knows how that will play out."

Bill Gross, head of bond fund Pimco, warned of a "tsunami" as derivative and swap-related positions were unwound worldwide (see [nN14655488]).

The Fed holds a policy meeting on Tuesday and traders were even talking about the prospect for a cut in interest rates, if not this week then by year-end.

As a result, three-month Eurodollars shot higher across the curve 0#ED:. The December contract jumped 0.805 to 97.245 and March next year climbed 0.260 to 97.445.

December Fed fund futures 0#FF: rose 0.14 to 98.225, implying a rate of 1.775 percent compared to the current funds rate of 2.0 percent.

Five-year Treasury notes US5YT=RR were trading 1-1/32 higher in price for a yield of 2.73 percent, down from 2.96 percent on Friday.

The 30-year bond US30YT=RR rose 1-15/32 for a yield of 4.23 percent, from 4.32 percent on Thursday. (Reporting by Wayne Cole; Editing by Jonathan Standing)

[Bill Cara note:

Travel Day turned out more exciting than I figured. I moved into a new residence today and got the TV/Internet hooked up -- then off to the Cricket Club at 8pm tonight for dinner, and now I'm off to bed. I don't think I'm up to reading Roubini. I was going to take the day off tomorrow, but there's too much happening, so I'll be back on-line -- right after I swim in the ocean.]

vinod- based on the above post, i would say TBT opens down about 4%, or close to the 9/11 low...

2nd
let me know when you plan to enter TBT

2nd
I am taking day off tomorrow

LOL...day off from trading or day off from work?

2nd
day off from work to manage my OEX put

Kim, from your lips to God's ears. I'm more short homebuilders than anything I've ever been before (other than day trades in SKF).

I'm hoping to time my exit out of them with a jump into oil / commodities at a cycle low. We'll see if it can be done!

sounds good...if you don't already have a position, then tomorrow would be a high-risk time to open one ...i'm planning to sit on the sidelines...

2nd
tomorrow will be a good time to enter new position on quality stock
we can buy them so cheap
I think best oportunity to buy will be tomorrow

vinod- i'm not so sure...all the bill millers will be out buying tomorrow...i think we get better prices in a couple of days...

The whole MER deal is how you can easily get screwed if you're not in the room where the deal is happening. I'll bet mainly retail people like us were short MER while the pros were long.

I'm pretty psyched about my SLW calls as silver looks to be up 3.6% right now.

It still is surprising to me they're throwing LEH under the bus but maybe they're finally realizing that foreigners won't cough up unlimited funds(buying Treasuries) for them to bail out everyone.

But with the current "flight to quality" underway it seems that for now Treasuries are still considered safe.

I wonder how long it will be before that's no longer true.

Good luck tomorrow everyone!! Remember Capital Preservation is the main goal. Greed or gambling can wipe people out at times like this. Keep position sizes small with your finger on the button.

Rob.

Anyone care to start putting together a buylist?

XOM
GG
SLW
TBT

What are other's suggestions?

Does anyone think that too many people expect a crash right now for it to happen. I could see the opposite happening. Remember Bear. It was trading in the 60's a few days before the end. And I know it's a tired line but we have known about Leh's problems for a long time. I credit Shark with the first call I saw on LEH.

Tomorrow could be a huge bear trap.

Rob.

I like

TCK
SLW
RGLD
SU
and DIA as a hedge

Rob.

Have any of you guys seen the dollar chart?

It's amazing how far it's fallen so quickly after hitting resistance at 80.

I'm expecting it to keep dropping as I thought this last run-up was to keep it from hitting the 60's when the financial system goes on the ropes like it is now.

Rob.

I am guessing that tomorrow will still be a down day, with money coming off financial into commodity. Dollar is down on LEH. Looking at the money flow, lots of money went into financial in the last week or so may come off next 1 or more days, into commodity and energy. I am less sure about energy stocks. They might just get sold off with oil heading lower.

I think AG stocks will trade well with gold/commodity. They have strong earning forcast and the corn yield is lower than estiamte this year, pushing up prices.

Finger Lakes, what chart are you watching for the USD?

The Aurelian Saga not yet fully written!

http://stockcharts.com/charts/gallery.html?aru.to

http://stockcharts.com/charts/gallery.html?k.to

From the above charts you will see that Kinross traded at a very lofty valuation from a historical perspective and Aurelian traded at a deep discount from its value since the discovery of the FDN deposit.
We all know the reason why ARU was trading at a discount but the worst case scenario as far as the Ecudorian mining law was already discounted as seen by the relatively stable trading value since suspension of the mining mandate.

To any technician worth their salt the Kinross chart shows that the stock had already shown signs of rolling over and the new trend was down.

The question then is WHY would our high priced management and supposedly very competent Board of Directors think that exchanging the clearly overvalued stock of K. for our undervalued
stock in ARU was a good deal for shareholders.?

And even if they claim that they never look at charts and don't understand them, surely their special committee that was supposedly giving them financial advice and a fairness opinion
failed in this respect.
Kinross hired CIBC world markets to give them advice and obviously they did a fine job for Kinross.
But Aurelians advisers failed. We as shareholders have to rely on management to assess risks , they should at least have insisted that shareholders had the option of cash or shares even if an argument could be made that ARU shares was only worth $ 8.20 . with only a few weeks left before the new mining law was in effect.

Even the so called 63% premium was a sham as they valued the warrants at an "assumed" value of $.93
We know what ASSUME stand for, it makes an ASS out of U and ME.

But the next few days will tell if Kinross get their 90% or not, otherwise the "Aurelian Saga" will be long and an example of how not to negotiate a "Frindly offer"

Bill what is your take on this!
http://tinyurl.com/58qx6k

Does anyone think AIG will actually be able to get a bridge loan from the Federal Reserve? What does Congress have to say about this? or better yet, how about the American people!

I think AIG will not get the loan and furthermore I think AIG is worth about $3/share which private groups have offered capital infusion (w/strings attached) and were rejected by AIG.

Banks trying to save themselves.

Ten banks commit to $70 billion borrowing facility

http://www.reuters.com/article/businessNews/idUSN1481504320080915?feedType=RSS&feedName=businessNews

This news, and that BAC is buying Merill at a significant premium, may be interpreted as so positive that it will overwhelm Leman's bankruptcy, and make market move against shorts tomorrow.

This week I'm letting the equity prices come to me while considering shorts like DXD, SDS, SRS. Staying away from LEH products like TLT.

The Cara 100 should be looking quite nice with a DOW around 10k, along with TBT... Might get entry on GG, staying away from WFMI, that one's a deep hole lately.

Enjoy your morning toast!

Quentusrex,

I use the one at INO.com

http://tinyurl.com/5jucge

It's looking like pretty decisive resistance at 80, especially considering the ongoing financial uncertainty and turmoil.

Unanswered financial company questions?

Wachovia?
Washington Mutual?
AIG??
GM??
F??
And LEH has 42 minutes to declare bankruptcy or the special session credit trades that took place today between 2-4PM don't count.

But maybe the dollar will keep rallying because all logic and sense points to it crashing back down to 70 and things that make sense and logic rarely happen in the markets.

Rob.

in Australia -

Newcrest up 5%
Lihir up 9%

These are the two largest gold producers listed in OZ.

Bank of America is buying Merill for $29/share when it is currently trading for $17/share.
JPMorgan bought Bear Stearns for $2/share.

When a distressed company is close to collapsing, it seems to me the victor tries to chop it's head off (like JPM), not reward it (like BOA).
Seems to me the price is being dictated so as to try to prevent the demise of all financials in the near future.

Stev...

i agree.. and it's an all stock deal. So BAC is going to get kicked in the nuts tomorrow.. and that $29/share aint' worth squat!!

BAC wants to be way too big to fail. A question: JP Morgan got Bear, now BAC gets Merrill. Won't this make it almost impossible to reinstate Glass-Steagal? Sorry if that is a dumb question.

Is the market going to actually believe that just because BoA purchased MER(with all BoA stock rather than cash) for just under double the current stock price of MER, that everything is fine in the US financial system? I mean think about it. BoA just purchased Countrywide.

It's only a deal if both sides profit somehow from the deal. What is BoA getting out of the deal if they are over paying for MER?

QT, I agree with you. But nowadays Wall Street can spin anything in any direction since they have Fed, Treasury, and SEC in their pocket. I wouldn't be surprised if they somehow turn the bad news into good ones tomorrow, it is not the first time.

Now the question is, why would BOA pay such a high premium? It doesn't make sense given the current market environment.

Something is cooking I am afraid.

IB have suspended intraday margin rate on futures contracts indefinitely; margin will be at the overnight rate. I presume other futures brokers will have the same conditions?

Babybear -

"Now the question is, why would BOA pay such a high premium? It doesn't make sense given the current market environment.

Something is cooking I am afraid."

This rings a bell in my head. FRE/FMN caved in last week. Whatever happen to Countryside Financial that BOA bought at a rather high premium? How did BOA fare with that?

Aurelian - with the largest find in a generation of the hardest of assets sells at a huge discount to peers.

Merrill - with the toxic balance sheet full of the softest of assets sells for a 70% premium.

Go figure!

Alright, let's look at this with some numerical facts to give perspective.

Lehman's Market capitalization is roughly $2.5B as of the close on Friday. They have on their balance sheet Assets around $640B and Liabilities around $615B as of May '08.

Merrill Lynch's capitalization is roughly $26B as of the close of Friday. They have on their balance sheet Assets around $965B and Liabilities around $930B as of June '08.

Bank of America's capitalization is roughly $150B as of the close of Friday. They have on their balance sheet Assets around $1,715B and Liabilities around $1,550B as of June '08.

C3,

I read it somewhere that BAC profited from FNM/FRE collapse because Countrywide Financial's value increased after the bailout.

I forgot the details, but I am sure someone here can enlighten us.

ALOHA !!

Jock ... You just hit the "real wealth" vs. "false wealth" nail right on the head! The global financial markets can mouse click money until you and I are dead and buried. Imagine if the CEO of a publicly traded company did nothing but print stock certificates day and night! That is what is happening with the US Peso ... The stability of the sovereign credit rating of the USA is teetering here. The USA is really rated "junk" by anyone who knows America's real liabilities. its just those in power refuse to announce it!

GOVERNMENT IS ONLY AS HONEST AS ITS MONEY ...

ALOHA !!

Quentusrex ... How is it you know the counterparty liabilities of these companies? How is it you know what the assets are truly worth? I am not sure even those companies know their true liabilities since none of their derivatives are marked-to-market! Have these guys even looked at total Level III exposure? Worst case scenario is their total assets are ZERO!

Why would it matter what price Bunk America is paying if they are paying in stock certificates with a no cash deal? Bunk America probably doesn't have the spare cash to spend on a toxic derivatives dump like MER! The CEO of Bank America can dilute to his hearts content ... shareholders don't matter but his bonus does! I would start looking for future deals like this one where only stock is traded! Its a win-win ... US TAXPAYERS only have to bailout the last standing BIG ASS JUNK US BANK ... for say $200tril USD! Then who will bailout the Social Security and Medicare programs whose total unfunded liabilities are already at $92.4trilUSD (per Dallas Fed Governor R. Fisher)? Its failed socialist policy comrades that's all ...

Its a monetary crisis not a bank crisis!

ALOHA !!

I can tell you that at this juncture I do not care what the futures markets say gold and silver are worth because I know neither will ever file bankruptcy like the 100 year old Lehman and 94 year old Merrill. Gold and silver have been around for 5,000 years with no liabilities ... no fraudulent CEOs ... no class action lawsuits ... no US TAXPAYER bailout ... no Greenspans ... no US Treasury ... no BIS ... Its just pure unadulterated real money. It has value and it has maintained that value for 5,000 years. What value does LEH or a US Peso have now?

I can sleep at night and these days that's a huge luxury that even the highest paid CEO of HB&B cannot afford! I'm just waiting to read about the first HB&B CEO suicide ...

GOLD is the only insurance worth holding against the quagmire of US DEBT and US BANK failures. Its the ultimate put option on the entire global financial system ... I believe even the stupidest central banker now sees that and is revisiting what plans are left to unload their last ounces! Only the ETFs will be left selling at the lows ...

ALOHA !!

Yes, there is room for a FOMC meeting where they lower the Fed rates. The US Banks need the US T carry trade and the USDX has rallied enough to maneuver some downside manipulations.

ON TAXES
I find Greenspan's remarks about how the US government can no longer afford the extension of the Bush tax cuts if McCain is elected a foolish statement. As if the US citizens CAN afford tax increase! PLEASE-E-E Greenie when will you just dry up and blow away? Your policies are what has given us this rampant fraud and major DEBT ...

Abolish the entire US FED ... What good are they?

ALOHA !!

I wouldn't even trade ECU shares for LEH or WM ... Right now my ECU shares are worth more than FNM and FRE shares put together!

I wonder how well LEH employees are sleeping tonight, especially the ones that never sold? Reminds you of the Enron employees and BSC employees ... Its going to be a cold and dark Christmas for them, but I am not going to lose sleep over their misfortunes, just as they have reveled in their gross fortunes ... it is time for humility and time for them to get a "real job"! WALMART is hiring ...

ALOHA !!

As I have mentioned in the past I do not have a TV here.

Man, come Monday morning in NYC ... LET THE SPIN BEGIN!! How many bank failures can you pretend is good for America? I guarantee you the BAC story will be the focus and not LEH!

Technically, I won the bet! MER is gone before LEH!

Lowered my GTC standing stink offers on my puts. I can't be in front of the screen at the open each morning. I only have short positions, but that's just my bias. In a bear market I look for short plays to stay with the dominant trend. Tomorrow I'll look for exits.

****

High quality Candian oil jrs: I did not see the presentation. Yet. However, this is one high quality jr that has taken a bit of an 'over-beating'

PMG.TO

Their operations are in Colombia, which is pretty much the anti-Ecuador in terms of friendliness to extractive industries. In my not-fully-informed opinion.

Here's one great feature of this company: They have both producing wells and great properties in various stages of development.

I also like the parent company a lot, PBG.TO. This company has three different oil producing divisions, each with a unique focus, and some killer oil sands technology. But it's not as hammered down as PMG, price-wise.

****

Looks like oil broke 100. RBOB jumped late last week.

I spell that CRACK SPREAD.

Refiners jumped Friday. Hardly a surprise.

RBOB futures are now falling as well, so we'll see where the crack spread heads tomorrow.

With oil falling below 99 this morning, and all those refiners still shut-down the crack spread seems likely to widen. But it seems like tomorrow will be a day where anything can happen.

****

Still short PZZA. It has nothing to do with my play, but, man, their pizza stinks.

Dear Hank,
I hear the Treasury has again lowered the standards for collateral it accepts.

I have a couple of still-working 20 MB hard drives, my old Playstation, a dog-eared copy of "Catcher in the Rye" and a beat up old six string.

Can I get a coupla bucks til payday? I'll be back to pick up that junk and hit you back with the cash real soon, promise.

Regards,

Mike

PS I'm thinking somewhere in the neighborhood of 20B in Treasuries. Cool?

Not to throw cold water on anyone's party, but I'm thinking the equity bottom & best buying opportunity should be late next summer.

We all have our key levels in key stocks. or something else, to watch. One I'm watching is the weekly 200SMA on XOM, which is around 71.50 or so I believe just now, and still moving up.

Oil did not bounce, nor even fiddle much around the 100 level. A bear market is lack of interest. watch out below.

I wonder if tomorrow may be a tradeable top in Treasuries for those looking for such things?

Puts on Treasury futures, expiry 2-3 months out, at 2 PM tomorrow, anyone?

Just thinking out loud.

Footsie & Daxie have broken below the first hour opening range, Swedish OMX just did too. That's a intraday sell signal, folks.

I'm now expecting this whole week to be down into opex.

"Options gallop" someone in Sweden once called the rare situation where the major options sellers get caught on the wrong side and are forced to panic cover in a runaway market. We may see some of that this week. watch out.

Best headline of the crisis, so far:

"Creditors May Be Able to Claw Back Lehman 2007 Bonuses" (http://www.nakedcapitalism.com)

After all, "fraudulent transfers" were one of the biggest (though false) reasons given by the financial firms for changing the bankruptcy laws.

Only they were talking about pre-filing flat panels purchased on credit cards by relatively poor people, not Dick Fuld's (un)earned bonus income.

Looks like the financial crisis will cause a drawdown in oil prices, which in turn creates a demand for dollars. This would also affect gold prices in the short term, though I think the correction in gold prices is about done.

http://tinyurl.com/58mwwu

Bachman-Turner Overdrive the key.

Interesting...I can't connect to Fidelity this morning.

Ouch, it's only 7:20 am EST and European markets look painful.

France CAC 40 4,100 -233.11 (-5.38%)
Germany DAX 100 5,977 -257.53 (-4.13%)
U.K. FTSE 100 5,145 -271.60 (-5.01%)

FWIW

S&P cash 50% retracement from 02 lows comes in at around 1174. Next stop?

Nemo, I connect to Fido, no problem, but I'm interested to evaluate their system today as the day rolls on.

Good luck to all.

Not only that, Quentusrex, but all 100 listing in the FTSE 100 are in the red.

Is there a chance for gold miners to be green? or is everything being tossed out this morning?

CP,

I think TLT is only based on the Lehman index, not their product, so should be unaffected.

Good morning.

Here are your Cara 100 Ratings Changes:

POT - Upgraded to Buy @ Soleil

---------------------------------------------------

How's the Goldilocks looking this morning, Larry?

LEH Pre-Market: 0.39 -3.26 (-89.32%)

Kaimu,

I had to get up and leave the room last night when Greenspam came on to pontificate. His best (only) defense against his culpability in the destruction of the U.S. economy is that he speaks a language open to any interpretation he wants to give it.

I went back and read part of his report in 1998 yesterday — he contradicts himself so often in it, that ANY meaning can be pulled from it.

It's like the old adage: If you must quote, quote often.

How about those freaking futures FETV heads?

How about maybe it's BLACK MONDAY YOU LAPDOGS!

yOU ARE SWINE, A DISCREDIT TO YOUR SO-CALLED PROFESSION.

HOW ABOUT THE WORLD'S COMING TO AN END YOU FREAKING HUMPS!

Mmmmmmh....I wonder if Bill with give us a pass on cursing today.

Anyway...look at oil...no wonder UAUA is holding up so well. GLD hasn't moved that much.

Astra,
"...we get candidates who could probably run a small-town hardware store."
CORRECTION: We get candidates who've never been in a hardware store. This may be closer. Picture Bill Clinton, G.H.W. Bush, Kerry, Gore, W... fixing a faucet, mowing his lawn, replacing a window screen?
Harry Truman came close to your description, but was an officer.
I think we've done best with guys who did not really want the job so bad, they'd kill for it. Harry, Gerald Ford both fit the bill.

We had a hands on detail guy in Carter who ran a nuclear submarine. Surely he went to the hardware store in Plains plenty. Builds furniture and homes now. Handy as hell.

Kerry could tear down his M-16 clean and reassemble it, I'll bet a faucet wouldn't throw him off.

Gerald Ford obviously proved himself (we could endlessly debate pardoning Nixon and the present day results)an honest guy, but he couldn't hit a golf ball for his life, so I'm not so sure....

Frankly I'm done with "regular folks" that the electorate might want to have a beer with.

Right about now I'd take a guy handy with a cigar and the office help if he could manage the people's business.