extraordinary time indeed to be launching CTAB..all the best...

Maybe you can advise the Chinese on their future diversifcation strategies---

*U.S. has plundered world wealth with dollar: China paper*

BEIJING (Reuters) - The United States has plundered global wealth by exploiting the dollar's dominance, and the world urgently needs other currencies to take its place, a leading Chinese state newspaper said on Friday.

The front-page commentary in the overseas edition of the People's Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies.

A meeting between Asian and European leaders, starting on Friday in Beijing, presented the perfect opportunity to begin building a new international financial order, the newspaper said.

The People's Daily is the official newspaper of China's ruling Communist Party. The Chinese-language overseas edition is a small circulation offshoot of the main paper.

Its pronouncements do not necessarily directly voice leadership views. But the commentary, as well as recent comments, amount to a growing chorus of Chinese disdain for Washington's economic policies and global financial dominance in the wake of the credit crisis.

"The grim reality has led people, amidst the panic, to realize that the United States has used the U.S. dollar's hegemony to plunder the world's wealth," said the commentator, Shi Jianxun, a professor at Shanghai's Tongji University.

Shi, who has before been strident in his criticism of the U.S., said other countries had lost vast amounts of wealth because of the financial crisis, while Washington's sole concern had been protecting its own interests.

"The U.S. dollar is losing people's confidence. The world, acting democratically and lawfully through a global financial organization, urgently needs to change the international monetary system based on U.S. global economic leadership and U.S. dollar dominance," he wrote.

Shi suggested that all trade between Europe and Asia should be settled in euros, pounds, yen and yuan, though he did not explain how the Chinese currency could play such a role since it is not convertible on the capital account.

A two-day Asia-Europe Meeting (ASEM) of 27 EU member states and 16 Asian countries was set to open on Friday. Though few analysts expect much in the way of concrete agreements, Shi said it could prove momentous.

"How can Europe and Asia grasp each other's hands and together confront the once-in-a-century global financial crisis sparked by the U.S.; how can they construct a new equitable and safe international financial order?" he said.

"The world is waiting for this Asian-European meeting to achieve big results in financial cooperation."

(Reporting by Simon Rabinovitch; Editing by Ken Wills)

[Bill Cara note:

I agree with the Chinese position. In a way, they are locked into the USD because they hold so much of their foreign reserves in USD-denominated securities. If they sell US bonds, the interest rate will skyrocket, which would have grave consequences for the global economy, and if they raise the level of the Yuan too quickly, the $USD may crash. So, they are in a position not dissimilar to AIG, which is at the mercy of US lawmakers to change the system. US bankers are fighting that because, right now, they have got the world begging to give them money to resolve their past indiscretions. China and the rest of us would love to be in that same situation. I have said this for over a year that a G-20 General Agreement on Currencies is needed, and central bankers need to be dismissed from the negotiating table. This is a problem that the world's finance ministers must resolve on behalf of the people, not the bankers, of the world.]

Good morning

The past week witnessed mounting evidence that the world economy was facing a sharp downturn, causing unrest to engulf financial markets. Stocks and emerging-market currencies and bonds remained under heavy selling pressure as risk-averse investors rushed to liquidate positions, with the US dollar, Japanese yen and developed-market bonds providing perceived safe havens.

The list of well-known names identifying value on the US stock market at current levels is growing by the day and includes the likes of Jeremy Grantham, Warren Buffett, John Hussman and Barry Ritholtz. Even perennial bears such as James Montier and Albert Edwards are increasing their equity exposure, albeit only for the short term.

I am still of the viewpoint that stock markets are in a multi-month phase of bottoming out that will see relief, and potentially profitable, rallies from time to time. But stock market valuations, in general, are still stretched when considering an environment of economic and profit recession, arguing that a secular low may not necessarily have been reached. Any ideas?

Read all about this in my weekly “Words from the Wise” review: http://tinyurl.com/694qp7

That’s the way it looks from Cape Town.

[Bill Cara note:

Prieur, with respect, rather than just positioning your blog here to attract an audience, as this community constantly writes me about, would you kindly comment on what this community, including myself, have been discussing. Just to be fair. Thank you.]

80% bullish. still waiting for my wave. might be this week. Was that not the 1st panic sell overseas? that may be the signal for me. too much global pain for something positive not to happen soon.

Best wishes for a wonderful start to CTA (Bahamas), Bill.

I'm looking forward to becoming a customer and utilizing your services in the not too distant future.

Nibbled IWM, new 52 wk low.

Good morning.

Here are your Cara 100 Ratings Changes:

SWK - Downgraded to Sell @ Deutsche Securities

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

A little market music from Bob Dylan:

"Now there's a wall between us, somethin' there's been lost
I took too much for granted, got my signals crossed.
Just to think that it all began on a long-forgotten morn.
"Come in," she said,
"I'll give you shelter from the storm."

http://tinyurl.com/5jr4qs

You're in no-man's land Craig. Good luck. Maybe some support back in 2003?

Will we see another amazing PPT rally today?

what does the Fed do tomorrow (or even today)? what do we do at home when faced with a crisis of confidence? i can, of course, see them cutting rates below 1% (which is to say everyone in your family expects you to do what you've always done)...but what's the minority position-> get out of your armchair, take the helm, raise rates, and cause havoc? no, there has to be the 'right' move: what about closing global markets for a week, communicating (in a clear and comprehensible manner) to the public the full extent of troubled assets, ensuring accountability on the part of executives involved, demonstrating leadership and resolve by detailing what needs to be done and how/when it will be done, followed by the immediate (and intelligent) use of the 700b we handed over? there has to be someone capable of doing this...

Yep, 03 lows. There's a little support right here and yes, I'm in the middle of the river....
Bigger support at 40. I'd be out before that.

looking at the commentaries of the losses on the euro exchanges it seems there is not the same level of panic as some time ago, but rather resignation to the notion it will change soon. Most people seem to now hold on rather than sell. I might be wrong but it is almost as if sentiment is soo bad that it can't get any worse anytime soon. Comparing europe to asia, europe is doing a lot better today. Maybe that bodes well for the US too.

Oh man...shutting the markets would be a huge confidence killer.

"communicating (in a clear and comprehensible manner) to the public the full extent of troubled assets, ensuring accountability on the part of executives involved, demonstrating leadership"

Do we know ANY leadership that has this capability? When this person or persons appears on the scene and prepares us for something of this magnitude then I could entertain such an idea.

The ironic thing is, judging from the weekend headlines, it might be Sarkozy that is this person. I'll leave it to everyone here to decide how that would go...

Kaimu.

Treasurer Wayne Swan has ruled that BHP Billiton and Rio Tinto must share haulage railways in the west of the country with other companies, in a major win for Andrew Forrest's Fortescue Metals Group.

Mr Swan said today the rail lines in the Pilbara iron ore mining region of Western Australia must be available for third parties to use for the next 20 years.

"On consideration of the evidence presented, the NCC determined that all relevant matters for declaration are satisfied and therefore recommended the services be declared,'' Mr Swan said in a statement.

"I accept the NCC's recommendations and I am declaring the services ... for a period of 20 years commencing on November 19, 2008.''

Mr Swan said some parties raised concerns regarding the potential costs arising from third-party access.

"However, on balance I consider that these are outweighed by a range of benefits, including increased competition, avoiding inefficient duplication of facilities and reducing further adverse impacts on native title rights and the environment,'' he said.

A spokesman for Fortescue said the company is "very pleased with the outcome" but realises the rails are now open to commercial negotiations.

But Rio Tinto, which owns the Hamersley and Robe lines, expressed disappointment with the decision.

"Rio Tinto is very disappointed by the treasurer's decision to allow third-party access to its infrastructure in the Pilbara,'' Rio Tinto iron ore chief executive Sam Walsh said in a statement.

"Far from producing a clear benefit to Australia, the decision brings a significant risk of revenue loss to the national economy, resulting in a present-value cost to GDP of up to $30 billion.''

The railway issue refered to last week.

A little help...
I am probably missing something here, but what I don't understand is how can the U.S. avoid a lengthy recession. I can see how Paulsen plan to put 1.5 trillion dollars in the economy can boost the general market. However, what I can't see is the average american taking on more debt. Thus starting a decline in the retail sector which moves outward to manufactures and so forth.
Thanks for you help

Re: China, the Dollar, and Currencies

China and their lapdog Shangai professors can go sell crazy someplace else. Anyone trying to understand the current monetary foolishness need look no farther than Tokyo. The years of near-ZERO percent Tokyo lending infected nearly every currency and financial instrument, from Iceland to CDOs and beyond.

To use a bad analogy, world financiers have acted like pimps and pushers and took advantage of a lot of people--both at home and abroad. But, like all pushers, they needed "supply"-- ie. nearly-free money--and Tokyo played a fantisticly large role in feeding the currency speculators and derivitive creators.

craig- i would shut the markets down-> it prevents investors from acting out their emotional impulses...

unless i knew exactly what i needed to do and was prepared to act immediately..but (like you) i just don't think we have anyone in that position right now..

(the other scenario is they DO know exactly what they want to do and have been carrying it out...which is even worse)...i haven't heard anything from the Fed (or outside the Fed) that assures me they have a handle on things and the economy is in good hands...

Agreed 2nd. My worry would be that traders couldn't exercise their fear...until the markets opened again....we have no idea what would happen then. It could generate an even bigger panic.

PPT just showed up?

Prices are moving...

over the last weeks there have been strong intraday rallies in european indexes that professionals explained as being fueled by sudden buys in US futures. Out of nowhere, on no news. PPT must have an early shift too...

Stance:selectly bullish.

Scanning for stocks with RSI 7 day<10, Max pain expiration minimum 20% above current prices, and current price above 5 and preferably 15 or better.

I've been asking myself, "Is this idea that the government printing money leads necessarily to inflation true?" It seems to be a given, but there are many who think we are headed for deflation. How to get a handle on this dichotomy: Which is it, inflation or deflation that we are facing? Well, I just read yesterday, Roubini's answer to this, and it seems pretty convincing. We are faced with deflation, or rather "stag-deflation". He claims that there is a vast difference between monetizing debt (printing money, in effect) as opposed to using government funds to inject liquidity, ie, ultimately putting the cost on taxpayers, as in the current $700B bailout. He claims that the liquidity injections we have so far can be "mopped up" by the Fed later on, thus avoiding inflationary consequences. There are other pertinant arguments made for his stag-deflation scenario as well.

This question is important, because the prospect of future inflation is why many of us are buying gold and PM stocks. Yet gold has been dropping and even the technical charts of gold give pause. For Roubini, the drop in gold is just one more signal that we are faced with deflation. His recent blog is the clearest argument I've seen on this score and worth looking at. Incidently, this has nothing to do with what Bill has been saying about trading this market. It just has to do with shedding some light on the question of inflation or deflation. Roubini's blog is free, but you may have to become a member to read this:

http://tinyurl.com/5pevx2

Bill,

Best wishes to you and your team at CTAB!

I'm looking forward to getting information about your products.

Sarah Hadassah

europe is up 2% from its lows earlier today. Is it because the USD is dropping a bit from it's highs?

when we start to see massive layoffs due to mergers I expect the bottom to be put in,,,JMHO.

Dab

Don't they have to not only off-set losses in hard assets like RE, but also re-liquify enough to carry-on normal lending and business as usual?

To me that would indicate much more supply than deflation.

And "easily" mop up?....I've heard that before too. We had a little discussion about Paul Volcker the last couple days, it would be more of the same IMO. Although clearly I'm not as qualified as Nouriel Roubini.

Bill,

Congratulations on the opening of Cara Trading Advisors. I can't imagine anyone more trustworthy of one's investment dollars.

It must be a real thrill to see your dreams become reality.

Now, if you ever start accepting small accounts from po' boys from Podunk.....

Wishing you all the best.

[Bill Cara note:

I am one of the people. CTAB takes on accounts as low as US$50,000. We have been flooded with inquiries from much larger accounts, though, because they are the people who have serious wealth on the line. For years they stuck with the mainstream advisors and have now come to the logical conclusion that fees without performance are unwarranted. The biggest names in asset management, like UBS, Deutsche Bank, Merrill Lynch, Morgan Stanley, etc, are losing billions weekly in AUM, in some cases. The main service that I provide is an alternative. Pretty soon, Vad Graifer will be offering a CTAB trading school because I believe that every advisor today needs to communicate better with clients, and the best way to do that is to have the clients' knowledge and trading sophistication raised to a higher level. No longer will the public accept the conventional "trust us with your money" proposals. Clients now demand results and they will get them if they know how to communicate. There are many good trading advisors and financial planners in the world who are worthy of your business -- if they can only build a bridge to the public, or have one built for them.]

aucourant,

I also read the latest from Roubini. It's by the far best argument I've heard for deflation over inflation, but where I would question him is on this part:

"Third, wouldn’t central banks be tempted to monetize these fiscal costs - rather than allow a mushrooming of public debt – and thus wipe out with inflation these fiscal costs of bailing out lenders/investors and borrowers? Not likely in my view: even a relatively dovish Bernanke Fed cannot afford to let the inflation expectations genie out of the bottle via a monetization of the fiscal bailout costs; it cannot afford/be tempted to do that because if the inflation genie gets out of the bottle (with inflation rising from the low single digits to the high single digits or even into the double digits) the rise in inflation expectations will eventually force a nasty and severely recessionary Volcker-style monetary policy tightening to bring back the inflation expectation genie into the bottle."

So the threat of inflation in monetizing debt will be heeded, despite that being the easiest thing to do? While the world screams deflation? Given Bernake's background and everything he's ever said on the public record? I doubt it, I think monetization of bad debts is exactly what's going to happen. Thus, deflationary scare (which in retrospect was more deleveraging than deflation) followed by inflation. The timing, though, is tricky.

The last trade idea came in for an almost total loss, but I'll jump back in here soon for long dated warrants and calls on precious metals. Looking at SSRI Jan 10 calls at 3.0 and Yamana Dec 09 warrants (YRI.WT.C) strike at 10, price 0.60 or so.

Good luck all.

Cara 100 Update:

SNDK - Upgraded to Neutral @ Cowen & Co.

2nd_ave said:

"... communicating (in a clear and comprehensible manner) to the public the full extent of troubled assets, ensuring accountability on the part of executives involved, demonstrating leadership and resolve by detailing what needs to be done and how/when it will be done, followed by the immediate (and intelligent) use of the 700b we handed over? there has to be someone capable of doing this..."

What the markets are saying is that there's a small chance of any of that happening effectively. The people in control of the bailout money and the banking system have a huge conflict of interest. There's largely a lack of trust, such that anything other than those in control continue serving their own vested interests would be a surprise.

The equity markets are partly reflecting the chaos, confusion, and lack of leadership (from the U.S. govt.) that has been on display for all to see.

The equity markets also see that the huge contraction of credit worldwide will cause consumers to cut back spending to only those things which are necessary to exist.

The markets are waiting to see and hear what course of action (what I expect to be) President Obama will take. He and his administration will be tested right out of the gate.

I continue to believe that there is no need to rush in and buy equities that are believed to be "bargains". What appears to be cheap can always get cheaper. This is a time to watch prices and formulate lists of good companies that you may want to buy once the markets stabilize.

It should be interesting ...

Just one person's opinion, as always.

add COF, HBAN, NTRS and STI to the club:

http://tinyurl.com/5bladh

note that XLF is poised to open green...

Bill, congratulations on your milestone. And thank you for continuing this forum, the quality of the comments from you and the regulars here has only gotten better as the markets have worsened.

El-Erian on Bloomberg doesn't seem to go with Nouriel.....

Bernanke: While we are warned to not fight the fed, we also have to pay attention to what Ben has said as opposed to what he has then done.
This Fed, while touting transparency, will do what it takes to hide their true intent or they would be played like a fiddle and the markets would continue to bully them like they did earlier.

The Fed it not going to telegraph or talk inflation at all costs...including lip service, lying and obviscation. Just go back to their previous moves and mistakes. I think they'll avoid those PR errors again but the presses are running and the helicopters are dropping, or soon to.

Sentiment: Extremely Bullish.

Interesting that people have been quoting Roubini today. Have just been reading an article on his current prognostications, currently on Drudge. Funny, it seems that Bill has these economists picked like a boxer's nose, Roubini admits he hasn't bought a security in his life,he's been feted non-stop around the world on, I imagine well paid speaking engagements. The Rock Star/Economist of the modern age. Good luck to him. Let's all do the Roubini Rock.
I think sometimes people forget that the business of the USA, is business, they are a business. They need income, ie tax receipts coming in all day every day or the machine seizes up.I imagine a lot of people here have been in or are in business. Ask yourself the question, what would you do to keep things going?

Rafish said:

"Ask yourself the question, what would you do to keep things going?"

For starters, get rid of the corrupt people in government who serve their own interests exclusively, instead of serving the people.

"after Nov. 3, when the Sun aligns with Mars, as the current combination of Saturn and the red planet is inauspicious. ``That will be a very good time to buy stocks,''

http://tinyurl.com/64u7ff

[Bill Cara note:

Tell me vinod since you are a computer guy, how do the stars line up for IBM?]

this is the second trading day in a long time where the gold miners didnt have a huge gap down and display inordinate weakness in the face of broader market weakness.

it may just be a short term anomaly, but with gold holding the low-mid 700 level i wonder if the slow grind is starting to turn for the mining stocks.

USD is still making new highs every other day it seems, will a 1/4 or 1/2 point rate cut really be the straw that broke the camel's back?

[Bill Cara note:

The FOMC might decide on a 75 basis point cut. I'd like to see that along with a statement that as soon as the macro-economic data firms a bit, that the rates will start to rise.]

ToddinFl

Amen,no argument there mate.

Dr Cosa
I wouldn't count on it,. Hasn't the market factored in at least a 1/2 point cut? I would watch the yen-euro cross. I think gold may move when the carry trades are completely unwound.

I'm trying to find a pattern in this market.
Or maybe just a sign to justify why I'm holding so many losing positions.
I tried to build a table to show the weekly changes in the last few weeks (and YTD) for some sector ETFs and Eur/Usd. Maybe this week will be the good one for XLE? Well, I bought some DIG on the opening on Friday, and at present it's the only + sign that I see in my portfolio...
http://www.box.net/shared/71bfok5j0b

IWM...up 4+%....plenty of room for profitable stops.
A small bite of SLV PM, up nicely Dr. Cosa...
There is hope!

Bill
I do not understand or follow star alignment.
I show this article at bloomburg and posted here
to show how different culture view movement of market?

[Bill Cara note:

Was pulling your leg, vinod. Sorry.]

stance: Decaying exponential (Bear) - There aren't enough positive indicators to make me believe conditions are apt to improve. My portfolio position is in opposition to my feelings, placing me in a zone of confliction.

There are too many Bears shouting from the crowd for me to feel comfortable, indication a huge disappointment near term.

Looking forward to watching this mess fade in the rear view mirror.

Roubini doesn't buy stox? Isn't that a plus, conflict-of-interest-wise?

Thanks Vinod

I was about to hit "buy" with both thumbs, but then I saw this statement in your link:

"Investors say using the orbiting of planets around the sun to predict future stock prices isn't a guarantee that the markets will align."

Rats!

Bought a bunch of SLW at 3.23-3.25. Will try to hold it this time.

Hopefully the world won't end. If it does, I'm gonna turn off the screen so I don't have to watch.

Talked to my Mom last night. She said she can't look at the statements or TV. My sister has been doing the investing since my Dad passed away because they don't trust me, probably due to my fetish for gold the past few years. My Dad always used to call when the market was at the bottom before. I wonder if my Mom is my new bottom indicator. Its good that she refuses to look, now, I told her. I hadd asked my sister to reduce equity exposure last year, and again at Christmas, but they didn't want to hear it.

Sure could be.

But if you are asking directions to Profitville, don't you want them from someone who has been to Profitville before?

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.
– Thomas Jefferson (1802)

i have two friends who work for IBM; one works as a managing consultant from home, the other manages a manufacturing division in san jose..they're not worried.

IWM: stopped out w/4% profit. Waiting for the cat to come back....

Crude at $61 a barrel. Wowser.

Mark Zandi from Moody's on Bloomberg.

Doesn't seem like a rash individual....agrees with Bill's 3-5 year time horizon buying bargains here.

looks like i spk too soon on the miners,
taking a dump again.

looking to reload on the HGU in the low 4's should we get another thrust down this week.

First post have been lurking for couple years.
Interesting scenario maybe developing for next week.
End this week with.
Extreme bearish sentiment.
At lows daily weekly monthly on tsx,indu,cdnx,+??
Start next week with new lows then look for "CHANGE" on Tuesday.
Then possible technical reversals starting to show up.
Wishful thinking.

As I continue to hold the stocks in my portfolio I’m reminded of Major Kong in Dr. Strangelove.

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

First post have been lurking for couple years.
Interesting scenario maybe developing for next week.
End this week with.
Extreme bearish sentiment.
At lows daily weekly monthly on tsx,indu,cdnx,+??
Start next week with new lows then look for "CHANGE" on Tuesday.
Then possible technical reversals starting to show up.
Wishful thinking.

yvrapx - I wonder if Jefferson felt similarly towards religious organizations?

Bill, Congratulations and all my best wishes for the success of CTAB.

Was Kong George C. Scott's character?

jstep - Welcome! Looks like you've hit the ground running!

Congrats on CTAB Ltd. Bill. Please make sure to let us know what services you will provide and who would be eligible to attain those services.

Slim Pickens

my list for today. SNDK SHLD DGP CRL TWI MAC CVH AEM LVS

I see either bullish engulfing candlestick patterns or RSI capitulation.

I may or may not hold a position in the above. Do ur own homework.

2nd, none of my busness of course, but curious -what are you doing lately?

You indicated a few weeks back that you were all in, so are you just holding on now until things come up to your buy-in level (or beyond?).

I see a lot of tempting prices - IBM, DE, CAT, BA - but as I have watched most of my own positions (mostly refiners, some tech, and AA) drift slowly southward over past 4 wks, my appetite to hit the BUY button has been severely reduced.

Like you, I don't know what to do at this point but wait for the eventual uptick. (but I really wanna buy IBM).

Slim Pickens rode the Nuc down, Kong was GCS.

Chickenpookie,
Jefferson was a 'big brain' for his time so I would surmise yes. Was interested in a PBS show on the US Constitution last night. The gist of it was most US citizens have no concept of the meaning of the Constitution and that apathy is driving much of todays bastardization of the documents intent.
Being a Canadian, we are generally apathetic and tend to ride on the coattails of US security while sanctimoniously and piously throwing rocks at our neighbor to the south.

Stance: still in bear camp.

Long time lurker Bill. Your blog is very educational. I look at the trend and the trend is down. I use technicals like ADX di+ di- (50) to see the trend and 14 day stochastics (to determine when to buy or short). Almost every stock is in a negative trend. I think KR would be a good short right now at $26.40.

You realize of course that movie is one giant potty joke....

i was curious what the groups thoughts would be on the impact of POG would be if the gov't either 1) confiscates or 2) makes ownership of the metal illegal

goldbug58 - Have you thought about placing a ridiculous stink bid on Big Blue?

gb58- that's right, doing nothing (and taking what little solace i can from the thought that if we're all getting blown back a few thousand feet, at least i started from a higher elevation...of course, if we all get blown back far enough, it won't matter)...

GCS was General Buck Turgidson

Re Galleon Energy GO.a.TO

Here’s an extract of interest to those following Hruska’s top pick from several weeks ago – Galleon Energy – or other Cdn Jr O&G companies…extracted from RBC Dominion Securities Market Commentary, dated 27OCT:

Canadian Junior Oil & Gas Exploration & Production: Est. Exchange Rate Sensitivities & Financial Leverage
RBC CM has examined exchange rate sensitivities of the Canadian Junior Oil & Gas coverage universe, as well as highlighted current credit capacities. The recent (last few weeks) depreciation of the Canadian dollar (relative to the US$) is partially offsetting the drop in commodities that has taken place over the last several months. With each US$0.01/C$ change, the RBC CM NAVPS estimates move by 1.5% - 2.0%. As the C$ has fallen from US$0.95/C$ to US$0.79/C$, using the same WTI and Henry Hub assumptions the foreign exchange move has increased cash flows by approximately 25-30%. Although this does not completely offset the impact of lower commodity prices, it has provided a buffer to the downside.

RBC CM estimates that several juniors will be almost fully drawn on their existing bank lines by year-end 2008 including: GO.A, SEO, AXL and ITX, although the effect of reserve additions from capital spending in 2008 is likely to improve their borrowing base. Given the market volatility and increased credit risk, RBC CM is currently recommending companies with: (1) balance sheet strength; (2) quality assets; and (3) solid management teams. Companies in the universe that have these characteristics include: PXE, GTE and VRO.

Question for the group:

Has part of the FED/Treasury plan for the bailout been to knock down global equity markets to insure that the FED bailout money can be invested on very favorable terms? Wouldn't this help to increase certainty that the bailout funds are eventually returned?

If this is the case, should we expect to see a lot of the bailout capital enter the markets as convertible debt financing rather than more traditional financings?

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

Separately, did anyone see the 60 minutes piece last night on T. Boone Pickens? He confirmed that BP Capital was down around 50% over the last year, totaling losses of around $2B...........

Just goes to show that its not just mom n pop getting hurt in this environment.

[Bill Cara note:

Re Boone Pickens, I have in these pages made a few comments regarding his losses, and the losses made by many hedge funds, including many run by Big Belt Buckles from Texas.

Re the Treasury/FED bail-out comment, I have frequently made the comment that at the top of the market, the share buy-back plan didn't make sense except to insiders who wanted out at the top only to return at the bottom. I think the process started with a few companies and then took on a life of its own as more insiders saw the probability that Wall Street could not keep the Bull going forever... But, at the bottom here, I think the Treasury/FED are conscious of the damage that even lower share prices might have. Penny saved would be a pound foolish at this point. I don't think they are pushing markets down. People are frightened, and are tightening up on risk exposure. ]

CP - last stink bid that hit for me was CHK at $12, dumped it 2 weeks later at $17. (I myself could not believe I bought it for $12)

I think the prices for AA, VLO, SU, DE and lots of other stocks are ridiculous right now, no need to stink-bid any of them, I believe theyre already on the cheap.

I do worry about the blue-chippers JNJ, IBM, et al - they seem to be the last ones being taken down - and if we're headed further down, who knows how low they might go?

I'm with 2nd, I will wait out this next 2 weeks to see what happens - if we go up, we should all make money - if we go down, well, another chance to buy at lower lows, right?

Ah yes, Turgidson and his hot pin-up girlfriend...the only female character in the movie. And was a pin-up in real life.

Not to be superstitious but Oct 27 is the date of most crashes.........
Agree the miners/oils etc are very cheap. At some point the USD will top out and these co's will pick up hard to the upside.

RE: IBM

There's pretty strong resistance at $84-$85.

I would not touch that stock right now from the long side.

When would you go long IBM, Todd?

http://www.imdb.com/title/tt0057012/

Pickens was "King" Kong.

goldbug58

I would wait for markets to stabilize before committing money to the equity markets in size, and I haven't seen enough to convince me that we're there yet.

IBM could easily see the lows of July '06, which is near $70. In this market and economic environment, there is little incentive to guess where a stock will go. Just watch prices and be prepared.

Just my opinion.

In at $4.64 on SOL. small position

Todd, that's a fair opinion and one that I kind of agree with. Personally, I'm not committing in size, but rather initiating smaller positions in stocks I like that I can add to later.

Problem lately is...I see too many stocks that I like at current prices, and I'm not a big fan of ETFs (prefer to trade 7-10 companies that I can track and manage).

Doubled the SLW bet at 3.04. Should have been smart and dumped it when it broke below 3.20, but noooo, lol.

Bought some NGD and RBY again on what appears to be the cheap.

dfinvest - I think you're bring up an Armageddon scenario. 1)On what basis could an inert material be considered illegal? I really don't believe that could happen, especially in coin form. US - There are no IRS taxes on Capital gains made by trading Eagles. 2)Confiscation - Highly unlikely to impossible, but keep your gold in a safe place where you can still barter with it.

Bill:

I think your theory was that since banks now have funds, they will start lending and get the economy back on track. Mish has a different perspective.....I think either situation is possible. Pulled this off of Mish's site.

It was Oct. 17, just four days after JPMorgan Chase’s chief executive, Jamie Dimon, agreed to take a $25 billion capital injection courtesy of the United States government, when a JPMorgan employee asked [on a conference call] “Chase recently received $25 billion in federal funding. What effect will that have on the business side and will it change our strategic lending policy?”

[Dimon Responded] “What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.”

Read that answer as many times as you want — you are not going to find a single word in there about making loans to help the American economy.

[Bill Cara note:

Mish is terrific. He, David Jackson (Seeking Alpha), I and a couple others made a successful move from "Wall Street" to blogging. I think highly of both gentlemen.

The answer from Jamie Dimon is the one you want to hear, and it's believable. Treasury-injected funds will go to buy control of the weakest banks. To do such a deal with the stronger banks that are being funded, like JPM, those other banks -- the weak ones -- will have to write-off all their bad paper. Their shareholders (and maybe bondholders) will lose. The residual assets (or entities if that's what JPM ends of buying) will be great deals. The instant improvement in the asset base of JPM will permit the firm to do what it does best, which is make loans. Because of economic and market circumstances, the terms they work out with clients will be better than the ones they worked out say 2 to 6 years ago.

I think this bashing of banks is over-done. We all know the culprits. We know we were lied to about this "$700 Billion" package supposedly not being a bank bail-out, and on and on. But, the bottom line is that Treasury has decided which ones will be the Top-tier US (international) banks, which ones will be the second-tier (regionals), and so on. The banking industry is going through a total make-over except for the culture, which is really a function of the people at the top. What we now need to see is a new Congress that will restructure the US financial services system and the regulations over it. Then we will see a change of culture because the senior bank execs will have to conform... We need to see the whole of the G-20 nations do the same. We need the lawmakers to protect the capital markets for the safety of the owners of capital because clearly these bankers are predators whose job it is to transfer risk from their corporate and government clients over to the public. The public needs to be protected. Let the banks be banks, but take away their self-regulatory status and push the Fed and all central bankers back into the private sector. Eliminate conflicts of interest. That's the message I want out there. I won't waste my time wondering if banks are going to be lending money as before. With more accent on prudence, I know they will.]

Check out GS....

Jeffrey Saut, Raymond James has another interesting "weekly investment strategy" piece at http://www.raymondjames.com/inv_strat.htm

He's also calling for a turn about now using different criteria. And then one of the quotes he used -- "And then there is this Manny Friedman quote: “When the market wants to bet that the world is coming to an end, the safe bet is to take the other side and bet the world won’t come to an end. After all, what have you got to lose?”

Government confiscated gold in 1933, well, at a price of like $20 an ounce (the exception was numismatic pieces; then of course they turned around and "fixed" the value of gold at $35 an ounce).

I remember my father selling $1 silver certificates for like $1.75 at coin stores in 1968.

The idea of gold and silver coins in circulation is an idea so removed...imagine getting a $5 Indian gold piece in your change? I haven't seen a pre-1964 silver quarter in change since the 1970s...

Kevin A. Hassett and James K. Glassman published “Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market.”

Mr. Glassman prefers not to comment on the financial markets now under secretary of state for public diplomacy in the Bush administration. Apparently, there is life after Dow 36,000. The jury is still out on life after Dow 8,378

Checkout DB...at $32 and change now...

for all the doom and gloom at the start of the day from asia and then europe, futures down big, the current levels aren't that bad I think. Am I missing something?

goldbug58 - If I'd bought CHK on a stink bid of $12, probably would still be holding it. The market could do anything at this point, a million dollar question. These prices are pretty low but if buying here makes you uncomfortable in any way, then just wait until the weather changes. A lower price tomorrow looks likely to me, and day after even lower. Maybe you'll pick up IBM at $50 on the way up from $30...

RE: GS

That's another one I would not touch from the long side right now. It could quite possibly see lower lows before the market stabilizes.

Just my opinion, as always.

I heard that GS and C may merge
does any one have this news?

mvnni - keep watching, I think the next act will be a shocker. There's just not enough intensive panic yet...

when (or should i say if?) we come out on the other side, it might be smart to look at some of the cash balances on these large tech companies relative to their market caps. i know the market is saying DELL is going bankrupt, but it does have over $8 Billion in net cash. AAPL has $24Billion. MSFT? A cool $30 Billion.

is today a end of the day down big day setting up turnaround tuesday?

GS: Think it breaks $74? I just saw it teetering and thought I would point it out....could short it, but it is volatile these days...

I'm bullish for the 6 month + time frame. But am maxed out and holding at losses from longs entered since late Sept. Will not sell at these prices except some for tax loss purposes next month or so.

I know there are some stock whoes stock price is lower than their earning in 2008 or cash on hand
don't know how to find them

Bill Cara: congratulations on your trading/investment business break through, another milestone and a new chapter in your life. And considering current market conditions there's probably never been a better opportunity in terms of timing within your lifetime for starting such a venture. Because from current levels the intermediate and longer term trend seems pretty obvious.

Too damn many Bulls! A big drop event is the most probable but I'm still holding because I don't trust my own instincts. Tell me that's not stupid!

i'm betting on a big down draft at the end of the day with a turnaround in sight for tomorrow.

but based on my trading account results, i'm betting my bet is wrong!

ToddinFL:

I'm with you... my thoughts: get your housekeeping done now, be prepared when the moment arrives. Selections made, portfolio balanced to your own comfort level, be ready to pull the trigger...

Entering Long GS

I've read the Mish article. Looks like he is blaming the T's and C's of the federal aid that is causing the likes of JPM to go look for other purposes of that money rather than lend it out to the public/corporations. As a bank thay may make sense, but as the public - not so much

So if we sell for tax loss purposes, we have to wait 30 days to buy back, right?

Craig

The time to short GS was obviously at higher prices, primarily at around $132 back on September 29, and then again on October 22 at around $119.

That said, the brave traders may look to short if the stock rallies back to the $108-$110 area. It would not surprise me whatsoever to see the stock break $74. Watch the volume.

I prefer to watch and wait for market stabilization to surface.

Just my opinion.

In regards to the dramatic increase in people opening on line accounts, perhaps the tide is turning and mutual funds will see less business, i personally know many people who are fed up with how their money is handled and expect better. With the amount of etf's that are offered now it takes a lot of work out of peoples hands and allows them sector rotation or just the option to follow the market up or down and for the most part beat the funds return. I am just wondering how many would have sold as the market was going down if they didnt accept advisors advice to just ride the ups and downs out, usually they get back to you a day or two later when your emotions are calmed a little. Finally some good news, just received confirmation dates for mri's required to knees, sick and tired of walking with pain, sitting with pain, pain pain pain

long SHLD.

Congratulations Bill,

I know that it has been a long process for you, let the next chapter begin!

I'll bet you are pretty happy with the timing as well.

CP,

u can buy now, wait 30 days, then sell the first position.

If you want the capital gain//loss, you have to wait 30 days after selling before buying back, otherwise its just a "wash" sale.

LOL! Oh, I'm not shorting GS here....
$135 would have been great, but $250 would have been better!

tgifbipo - Knees and hips; there are replacements available for both, right? A friend of mine had his knee(s) done and the results were fantastic!

Food for thought on betting on the "turn": the amount of liquidity that's been and is continuing to be injected into the markets is completely unprecedented! No other historical time period compares to this in that sense. That single measure, in and of itself, is the wild card in my opinion in this environment. Shortly this massive liquidity injection will begin to forcing a reverse to the downside panic momentum. Once the panicked are sold out and are safely in cash on the side they will realize there is no future in < = 1% or so returns, that's when all hell is going to break loose!

tgifbipo
Online accounts last surged during the tech wreck and look how many 'investors' fared in that debacle. The sad fact is most people don't have the wherewithal to learn to trade and end up gambling it all away, doing it online just makes the rush to the bottom quicker. Sector rotation and EFT trading are advanced strategies to the average investor fraught with plenty of risk. If pro's are getting creamed, amateurs have little chance.

net.fishing - "all hell is going to break loose" you mean hell up or hell down?

DB yield is 12.6% at $32+ a share. I have to stop trying to call bottoms...bought 25 @ $32.32, will build to 100 shares at some point later...(u can see how chicken I've become).

net,

some stocks have already bottomed, some are in the process, and some will bottom.

The key is to be able to determine what phase any stock is in.

Chicken

Yes they are available, will get the results and consult with specialist, hope it doesnt go that far cause complete recovery time to return to my type of work is six months but if it is the only option then i will get them replaced.

Once reality sits in and this liquidity injection takes hold, and people begin to realize the world hasn't ended after all, momentum will reverse to the upside.

bsi87

And I don't disagree with your assessment... but looking at it from more of an long investors point of view as opposed to a trader, I don't think indivual stock picking will be as important as just being well allocated and making sure that you are ONBOARD for the ride.

Thanks for the tax-loss primer(s), now I've got something positive to ponder... Hmm... An opportunity to mitigate liabilities from earlier real estate transactions...

yvrapx

Points well made, i was trying to offer an explaination and am speaking from personal expieriences, it is nice to have sites like this that actually try to teach and also offer comments from a wide variety of taders and mom and pops alike.

net.fishing

I think most everyone operating in the equity markets would be happy if prices would just stop going down. At some point that will happen, and markets will go sideways for awhile, and a new base will be built for the next bull phase.

net,

being "well allocated" didn't help in this sell off. It appears non correlated asset classes became all correlated. MO, liquidity just spilled over from one class to another.

More important is to not lose capital than being onboard.

Personally I'm watching the SPX weekly MACD to turn to the upside for a broad mkt long signal.

Otherwise I'm just plunking cans.

tgifbipo,
Agreed and so's not to seem like I was jumping on you, the freedom to trade is a great thing but my experience is most folks lack the knowledge and discipline to trade successfully. Scarred from working at a discount brokerage in the late '90s and watching folks get killed by inexperience and greed.

SRS - Up 125% in the last four weeks... Congrats to those holders!!!

ToddinFL

I agree... I'll just add that, in my opinion, we've not experienced this type of intervention (global liquidity injection) in the markets before... this results in an artificial muniplation of what would otherwise be a normal correction (to whatever the depth). The current intervention "WILL" have a very definate impact at some point on final results. And it "may" stem the depth as to how far the other shoe falls. Or may not, I think it will.

ALOHA !!

This is where the rest of the World is headed whether the USA has more nuclear bombs or not! The complete "fraud" that the US Dollar has become due to the abuses of the US TREASURY and the US FEDERAL RESERVE instigated by the endless promises and spending of both the REPS and DEMS have created the largest debtor Nation in the entire history of mankind! Here in AMERICA we believe DEBT=WEALTH and it seems we will go to any and all lengths to prove that!

In reality outside of the CNBC SquakBox and outside the guarded doors of the US FED and outside the view of the Rotunda is the rest of the World, who really sees things differently. If we as Americans have decided to let our elected officials sell off our manufacturing to China and India then be prepared for the consequences when our creditors come knocking on our door. This article speaks to that scenario. Can you imagine how fast the USDX will fall if even a hint of what this article speaks of comes true? You can hang your TA charts at that point!

Clearly the USA has squandered its role as the World's Reserve Currency just as our Founding Fathers predicted over 200 years ago. Its only the human condition that's at fault here and that's all the current global fiat currencies are based on. America could have chosen the high road here but we chose the $700bil LOW ROAD! The World was watching ...

Harsh realities are in the eye of the beholder ...

ALL OUR BEST THINKING GOT US HERE !!!

READ ON:
The effects of low interest rates and credit contagion are not limited to “bottom line” considerations. As Marketwatch’s Thomas Kostigen points out, monetary policy can be a death sentence for poor people across the planet who are invariably it biggest victims:

“The harsh reality of the economic fallout isn’t that Joe the plumber can’t buy his business or that people’s retirement funds are being lost or that unemployment is rising; the harsh reality is that people will die.

Already, since food prices began to rise 100 million more people have been pushed into poverty, according to the World Bank, with as many as two billion on the verge of disaster. Almost half the world’s population, let’s remember, live on less than $2.50 per day. Millions die annually of hunger and starvation, and more than a billion do not have access to fresh water.

These numbers are poised to rise dramatically with population growth, dwindling natural resources and higher consumer prices across all goods and services. So as the stock market tumbles and the world economy falters, it’s important to remember that it’s more than financial losses we are talking about, it’s the loss of life.

And increasingly it isn’t just people in far-off places around the world who are succumbing to such extreme hardships. Note this: Job losses in the state of Indiana have caused the child poverty rate there to spike 29% since 2000. The wealth gap in the United States and around the world is at record levels — and it has serious consequences.

The Organization for Economic Cooperation and Development reported this week that the gap between the rich and the poor is getting bigger around the world, and that the U.S. is experiencing the biggest dichotomy.

We are experiencing the largest wealth gap in history. Further erosion of the economic floor will only send more people plunging into destitution.

This is why it’s so important to fix the economic crisis — now.

We’re all linked.” (MarketWatch)

The Bush administration has called for an economic summit to be held by the 20 largest economies sometime after the presidential elections. US and EU officials are hoping to stitch together another Bretton Woods wherein control of the global economic system was delivered to those same nations. It’s likely, however, that the outcome will turn out considerably different than anticipated. Already, under China’s leadership, 12 Asian nations have agreed to set up an 80-billion-dollar fund to protect their economies from currency-runs, capital flight or other financial disruptions. China has the world’s largest reserves at $1.9 trillion followed by Japan at more than $1 trillion. Clearly the two richest nations will set the agenda and play a central role in deciding how best to deal with the global recession.

The November summit in Washington could produce some unwelcome surprises which were hinted at by Thailand’s Deputy Prime Minister, Olarn Chaipravat, who told Bloomberg News: ,

“The message of this initiative is for China to consider whether or not China would open up its banking system and allow the strongest currency in the world, which is the Chinese yuan, to be the rightful and anointed convertible currency of the world.”

Surely, the present financial malaise which has its roots in Wall Street and at the Federal Reserve, has demonstrated that the dollar must be replaced as the world’s “reserve currency” and that America must be deposed as the de facto steward of the global economic system. Leadership implies responsibility and the US must be held to account for its failings. It’s time for a change.END

Our creditors will be meeting in Washington DC on Nov 15th and I have a feeling they will give us the BILL!

Watching the talking heads on CNBC, Rick Santelli continues to be the one person who cuts through the noise and tells it like it is.

yvrapx

Dont sweat it, i have big shoulders :), and i didnt take it that way, i really do appreciate you sharing your expieriences though because there are a great many of readers here who are mom and pops and im sure that they will keep your words in the back of their minds.

best/worst (of the 31 morningstar) industries in October:

tobacco only down 7.6% (since 9.30 close)
drugs down 18%
food and beverage 23%
utilities down 24%

energy down 36%
specialty retail down 36%
leisure down 37%
manufacturing down 38%
materials/construction down 38%
automotive down 42%
real estate down 44%
metals and mining down 47%

Perhaps those who'd quit smoking have lapsed, cushioning the tobacco industry ...

ALOHA !!

Guys ... look! Quit speaking as if intervention in markets is some sort of phenomenon of the Bush Regime. It is NOT ... Free markets DIED in 1913 when the US FED was born and then they died again in 1971 when NIXON took us off the gold standard forever! Its been downhill ever since for "free" markets! You cannot have free markets so long as the currency that those markets are based on is a fraud! Its that simple!

Only a "free floating" currency based on the "faith and credit" of governments would allow for a $700bil US Bank BAILOUT to even be considered much less passed by CONgress!

There's your problem and I think the WORLD is seeing that more and more each day that goes by as they watch trillions thrown at insolvent banks worldwide!

We VOTED for this ... We approved this consequence by voting the same corrupt two party aristocracy into power over the past nine decades! WE VOTED FOR THIS OUTCOME! And In November we will go vote for it again! I WILL NOT!!

OUR FREEDOM RESTS WITH HONEST MONEY ...

QUESTION AUTHORITY NOW!!!

regardless of which way the market moves, i would say the important thing is listening to yourself...if you get caught up in listening to too many voices, it will get you no where...

bsi87

Understood, the trip down was completely indiscriminate, everyone was slaughtered! But once things reverse the trip back up will be indiscriminate, at least to a degree. In my opinion. I think if you are setting up to position for a portfolio of longs when things reverse that you should consider equal positions in small caps, large caps, both value and growth as well as internationals and emerging markets. 2-3% positions with a broad palette of some of the really good company bargains that are out there now. In this environment there is no sense in creating additional risk by selecting anything but solid companies… because virtually there all the same price. Go with quality.

ALOHA !!

Jock ... Can you find stats on BOOZE and PAIN KILLERS? HA! I would suspect those sectors are actually showing a huge rally along with the USDX! HA!!

Net,

I'll make it even easier. Buy VT,TLT,and GLD and rebalance annually.

bsi87

Sounds like you have a plan... and that's the most critical element... cause if you don't have a plan, what do you have and what are you doing? Gambling maybe?

outof GS long ..thanks for the tip Craig!! Your timing is impeccable as always!! :)

I would think that for people holding US dollars right now, pick up Canadian O&G majors would be a great deal. Look at the price differential between NY and To! Assuming sanity returns to currency pricing, $C should rise from here.

Is it just me or do the daily charts of the indexes look a lot 'spikier' than usual? Usually they look like waves or the alps, today they look like the Rockies... weird.

Kaimu:

I think the stock in Smith & Wesson is probably up too

Congrats EEM! I've been doing that pretty much daily on GS, sometimes a few trades.

Gotta make our lunch money somewhere...

Jock,

Thanks for the numbers...hope you've been on the right side of your TWM strategy...it's up 30+% since you pointed it out.

Best Regards,

Number of shares hold by institutions are up from 54% to 60% according to Google finance

Number of GG shares hold by institutions are up from 54% to 60% according to Google finance

GLD is catching a bid.

ALOHA !!

I am buying only companies with real wealth that are producing now with huge assets in the ground. Huge global producers are now selling for what you can buy some Canadian junior explorers for!

I wouldn't touch AAPL or any MS with your ten foot pole! Use the currency crisis now in effect to your best advantage. Go to the countries where hard assets are now on sale! Go to bullion and buy COMEX prices if you can find someone crazy enough to sell at those contrived levels!

We are in uncharted waters and as each day passes the unchartedness gets ever more uncharted! None of us alive today has ever seen anything that compares to what is now happening. Not only are banks imploding but entire countries are inploding at the same time on a global scale none have ever seen! We are witnessing the unwinding of the greatest DEBT EMPIRE that ever existed and any other country in the World who bought into the "DEBT IS WEALTH" concept. this time all global currencies are DEBT based ...

ITS THE EMPIRE STUPID !!!

Kind of sounds like something you would hear in a STAR WARS movie!

why is the gold spot price so warped? $739 last I looked, yet if I want to buy an ounce, they're selling for over $900 ???

ALB - bulk provider of the ibuprofen pain med may be a good one in this climate of pain & agony. LOL

Europe - Ramped up onto the close and then sold off to end with small losses. Will the DOW follow suit?

Out of GS.

Maybe not...see UUP is down and PM's (except SLW) are stronger.

Bill

Much success with Cara Trading Advisors.

TRUST...(definition)..firm belief in the reliability,truth,ability,or strenght of someone or something...(OXFORD DICTIONARY)

Bill.. we the people have lost trust in these historic economic times and now you have the opportunity to change that...congratulations!

LEAD THE WAY BILL....:)

SV

My watchlist has been slowly inching up on low volume.... may be a trap.

Bill,

Best wishes for CTAB!

Cheers!

goldbug58 - The spot and physical POG aren't the same thing, where and what are you looking at when you say $900?

Gold Bulls... you'll find an interesting perspective here:

http://tinyurl.com/5npzzk

A few thoughts on SLW. These are more fundamentals based as opposed to technical - but important issue I have not seen discussed here is their financing.

The company currently makes money on the spread between spot silver and their long term contracts at $3.90 but in order to stay liquid in the meantime with access to cash they have $500 million worth of bank loans / credit lines.

The interest rate is not a major concern as it is like 1-2% higher than LIBOR, the bigger worry would be whether this financing could be pulled at some point due to the obvious credit issues.

Here is an excerpt from the Q2-2008 report on the details of the bank loan:

"On July 24, 2007, the Company entered into a syndicated credit agreement to borrow $200 million under a nonrevolving
term loan (the “Term Loan”) and up to $300 million under a revolving term loan (the “Revolving Loan”). The
Revolving Loan and the Term Loan have 7 year terms with the Term Loan requiring equal quarterly principal
repayments (together with accrued interest). Silver Wheaton has committed to pay down the Revolving Loan, within
61 days after the end of each fiscal quarter, by an amount equal to 90% of the increase in cash balances reported for
the quarter. The Revolving Loan can be drawn down at any time to finance acquisitions or investments, with $10
million being available for general corporate purposes.
On June 9, 2008 the Company entered into an amending agreement to increase the revolving bank debt available by
$100 million, bringing total revolving debt to $400 million. The Company paid upfront costs of $0.7 million in
connection with the increase, which were expensed during the period.
Amounts drawn incur interest at LIBOR plus 0.875% to 1.75% per annum dependent upon the Company’s leverage
ratio. Undrawn amounts are subject to a 0.2% to 0.45% per annum commitment fee dependent on the Company’s
leverage ratio. Under the credit agreement, the Company is required to maintain a Debt Service Coverage Ratio
greater than or equal to 1.25 : 1, a Leverage Ratio less than or equal to 5 : 1 (decreasing to 3.5 : 1 on September 30,
2009), and a Tangible Net Worth greater than 80% of the Tangible Net Worth at June 30, 2007 plus 50% of Net
Income for each fiscal quarter thereafter. Both the Term Loan and the Revolving Loan are secured against the
Company’s assets, including the Company’s silver interests and long-term investments. During the three months
ended June 30, 2008, the Company repaid $7.1 million (six months - $14.3 million) and $51.9 million (six months -
$78.3 million) of the balances outstanding on the Term Loan and Revolving Loan respectively."

Depending on what happens to silver prices (anybody's guess) the Bank could probably make up some reason that SLW is in default and yank the credit line - that would severely impact the share price / solvency.

Just my two cents.

TED has crawled up to 2.74 (+2.339%), but the VIX has dropped to 72.39 (-8.518%)

CP, have you tried to buy physical gold lately?

The comex spot price is what, $745, yet the price for coinage is over $1000.

soulek1 - Thank you for the SLW post, I had not seen that information anywhere else.

no turnaround tuesday tomorrow it seems. i thought we would have that, but with todays action, which smells of a late day fade, the set up doesn't look like a down big early turnaround tuesday...

Craig

Most buy gold from coin shops and private dealers.

Scotiabank sells at a variable closely based on the london fixes in US $. If you buy coins, you pay manufacturing cost, numismatic value and tax. Not so with bars and rounds which are tax-free. Problem is, they don't have any gold. I bot 12 1-oz bars recently and that was all the main branch in Ottawa had, at about $850 (drat it!). I cleaned them out. They had a couple "five-nines" maple leafs (as opposed to the usual "four nines") but they were $1,050+ at the time. The situation is worse for silver - Scotia doesn't even handle silver now, they can't get a dependable supply.

This is not helpful but it is all I know.

VLO earning tomorrow

The prices I have seen (when the gold is there) is not quite as dramatic as you say. I got a quote today for Krugerrands at +80 over spot ($740) and 1oz bars for $45 over spot.

They do sell out rapidly, but they get new shipments in every few days.

Lest we not forget……

"I, as President, do declare that the national emergency still exists; that the continued private hoarding of gold and silver by subjects of the United States poses a grave threat to the peace, equal justice and well-being of the United States; and that appropriate measures must be taken immediately to protect the interests of our people."

"Therefore, pursuant to the above authority, I hereby proclaim that such gold and silver holdings are prohibited, and that all such coin, bullion or other possession of gold and silver be tendered within fourteen (14) days to agents of the Government of the United States for compensation at the official price, in the legal tender of the Government. All safe-deposit boxes in banks or financial institutions have been sealed pending action in the due course of law."

President Franklin D. Roosevelt April 5, 1933

Dave

I bought day before pog began falling (of course!) more than two weeks ago. It was a decent price at the time.

Question: SLW

SLW and AUY are both momentum stocks, and they are trading at pretty much the same price along the way. Now SLW is at around $3, AUY $4. Given that Silver fell more than Gold, I don’t think SLW is doing anything special. Why it seems there is concern that SLW is at risk of insolvency?

Thanks.

Soulek1,

Thanks for the post on SLW. You answered the question I asked yesterday, when I quoted figures of SLW's debt and monthly cash flow, and said, "Am I missing something?" Never occurred to me to investigate their loan agreements. Nice analysis! Perhaps that is why the price is dropping. Someone on this blog recently said that he would not touch SLW with a barge pole. I sold my shares this morning at $3.22. At this point, I'm afraid to buy anything at all, though I am letting my penny stocks ride. I feel that this is like the great depression where you think you see a bottom at each drop and then stocks drop further. Basta! I said to myself.

POG - Large bars from Kitco are selling at spot+$5... If they actually do this when physical is near $1000, they'd loose big-time in a hurry. Kitco is buying coinage near spot.

True, coinage is priced near $1000 by some shops, but then again a payday loan goes for 400% in some cases. It is cause for concern, and we'll just have to wait/see what happens....

401kmatters - What happened to those that didn't turn in their gold but buried it instead? Did their investment pay off?

Chickenpookie

Still searching for my grandfather's gold...wish I could have found it around March 13 this year.

Jock, others re SLW

Soulek1's post on potential insolvency is very disconcerting. Are you or anybody else in position to verify whether the risk is real?

It's true that in terms of damage SLW has suffered the same as say SSRI, but better safe than sorry (even at 50% loss)

How we close will determin if i am keeping my position open.

Hey, if I'd have had a good feeling for where we'd be now on POG, I would've been buying and selling every $100 swing and made out like a bandit. My problem is when it breaches $900 I get scared.

I like the action guys. after Asia meltdown, U.S Markets held serve. quite remarkable. now to watch Europe tonight. Hope i didnt speak too soon. 33 min to go

SLW: Let's say someone is able to panic themselves enough to sell....why wouldn't they wait until the fed announcement?

Could be the time to head for an Australian vacation or at least lock in prices for lodging, etc. Take a look at FXA MONTHLY chart representing their currency vs the dollar.

Kaimu has a point about some of those stock prices "down under"

disappointing getting into the close here.

miners down again off their open, S&P up a hair.

still waiting for a definitive sign of strength in miners.

401k - "Still searching for my grandfather's gold" yea, I could really clog Bill's blog with my stories but refrain out of respect. Suffice it to say, I WILL leave something for family even if it kills me.

An excellent article on gold and silver manipulation, sorry I mean markets...

The futures markets have completely divorced from the physical markets for gold and silver as two or three U.S. banks continued to savage those who would take the long side in futures. These miscreant banks continued to reap (rape?) obscene profits from their short-selling domination of the paper contract markets, but COT data shows their positioning and therefore their ability to influence the market is growing smaller now.

It is difficult to imagine a more egregious abuse of trading power than that shown by the two large U.S. banks holding over 78% of all the net commercial short positioning in the small COMEX silver market on October 7. An enormously dominant position that, once allowed by regulators to be taken, the banks were compelled to defend. They have been relentless in that defense.

You can bet that if any two entities took a similarly large long position the howls of protest by the short side to the CFTC and the SEC would put an end to it pronto.

Why are such overwhelmingly large positions allowed for the hedgers and short sellers and not allowed for speculators? Because presently the rules of the game favor one side over the other on the COMEX. The rules allow position limit exemptions for the very largest traders which can claim they are hedging other offsetting positions, whether they are or not. That has to change before we will be on a level playing field in the paper bullion markets. We can all help to effect that change in the coming months and years with our actions and with our own voices.

In a year when just one ETF added the equivalent of over half of the entire COMEX inventory of silver, because of more buying pressure than selling pressure, it is extremely difficult to justify a drop of over 50% in the price of the metal.

We are repeatedly told by some captive analysts that the plunge in the prices of silver and gold stems from the forced selling by funds and panic selling by investors during this crisis of confidence in financial markets. Sorry, that argument is not supported by selling pressure in the largest, most liquid and most transparent markets for gold and silver. The gold and silver ETFs. (They have been adding metal consistently which indicates increasing demand, not distribution.) That argument is not at all supported by the real physical bullion markets for gold and silver. Every bullion shop everywhere has three things in common right now and have had for months and months. Virtually no inventory, intense demand and the highest premiums for actual metal in many years. That is not a sign of liquidation, it is a very real sign of strength.

http://tinyurl.com/5dsdpp

Anyone want to call the close?

Green or red?

We'll close down another 145 points as usual.

Good point Craig re SLW - watching the price tank here, minutes after these last postings, I wonder if our discussion has also something to do with it. After all, this is a much-followed blog.

Rate Cut -

Given the market's lack of action, is the rate cut priced in or are traders being suspecious? Will this be the "buy the news" as opposed to "sell the news" come Wednesday?

Prior to confiscation, gold was pegged at $20 where it had been for many years. 3 months after confiscation, gold was adjusted upwards to $35 - or rather, the dollar was devalued with respect to gold. So those who were able to retain their gold made a quick 40% on their money.

Seen differently, those who turned theirs in lost 40% of their purchasing power with respect to gold.

Supposedly, a large number of gold coins were shipped off to Europe, where they sat for many years until Nixon allowed US citizens to own gold again.

SLW: the order flow is quite big (lot size) - this is not retail action - someone large is dumping shares - I'm just curious who's buying them?

LUN was rumoured to have a large stake in SLW as were many banks/hegde funds. Am thinking it is margin calls.

SLW hasn't hit my stinky bid yet.

XTRATA on the day, London Close
As at 27-Oct-2008 19:38:48
709.000 -68.50 -8.81%

Damn bears...

good call chickie

im starting to think that even $800-$900 gold will barley move the miners forward. they keep moving down more aggressively than the rest of the market.

theres nothing i can see that is flashing signs that things are turning around for the better IMHO,
all i see is some degree of lessening of the crashing velocity in the broad markets, but its still falling.

I bet SLW hit your stink bid. Quite an expensive lesson for me.

That was fun. I ended up closed my SOL for the same price i paid. 4.64. but i lost the commission obviously. i would have made 4% but i was on the road from a client meeting. oh well.

Today was lower volume and i would have said it was a great day since we didnt crack after the serious fall in asia last night. but that close was pretty ugly.

Sorry, I meant down another 180 points. I've really got to sell into these rally's but don't want to be the only one here doing that...

BRKB closed at $3520 today.

Pressure on Warren?

S&P held above 840-842 1st support,,, and dr.cosa election day is coming...

that close erased the days gains...not good

2nd
went to 25% cash this motning
YTD down 10%

Chickenpooks-goldmastersusa.com, check out their buying//selling spreads on Eagles, Maple Leafs, Kruggerands and then compare with spot price to see what I meant. They're reliable but I think their prices may be out of line? Also I am dealing more with Apmex lately for physical.

Consumer confidence numbers out tomorrow. Could be a big move in either direction... or not. How's that for tech analysis ;-)

Carl Icahn apparently hasn't enough to do beating on Yahoo! 'United Shareholders of America'
http://www.icahnreport.com/report/2008/10/100-million-rea.html

All the pm related got slaughtered, not just SLW, although in % terms it is nasty.
Doesn't anyone think this is fed related?

Afterall, how do pm's get the boot while UUP sits there? I don't believe it.

Chickenpookie:

blog clog....ouch! But thanks, as I really do need to get back to trading this market.

SRS at 200 **choke*choKe*

Hey, brace yourselves friends, DOW 7000 coming up. Pray we don't break it too far.

GLA

sergio,

Re SLW I'm at a loss (metaphorically and literally speaking). The only positive aspect is that all miners suffered the same (SLW's parent, GG, too) so this may have been margin call related.

just cashed in all of my long positions and holding AAPL puts. short term i'm expecting a whoosh down to the July 2002 lows at the very least.

my optimism is fading at most likely what will be the bottom, for what its worth.

I dont know. would anyone be suprised to hear consumer confidence is at lowest levels. i think that is priced in. only shock would be a turn up in confidence. just my 2 pesos.

IWM still selling off AH...

Bill,

A 75 basis point cut would be good for my US Treasury bonds and fund, but I have been reading disturbing articles warning that when/if the biggest holders of US debt (China) begin to dump it will de devastating to Ts.

Could this happen without an FOMC rate boost?

What do you see as the way this would work out?

Sorry. it's JMO, not gospel. Sorry about that.

Think we've only had 4 up days the entire month.

re:all the pms got slaughtered.
maybe the feds are the ones buying these on the cheap?
new gold standard coming up and ft knox is empty?

2nd,

I'm firmly in the second scenario you mentioned — they know exactly what they are doing.

With Paulson in control they have a powerful advocate. He has been instrumental in setting up this sting, and while not as good looking as Paul Newman, has played it like a real maestro. Barney Frank as chairman of the committee is like the inspector a Peters Sellers movie.

Paulson went to congress and got the OK to go with 40:1 leverage. His claims of disbelief that it could be so widespread have the sound of a kid disclaiming his misbehavior.

Now their talking of allowing the banks buy other banks using taxpayer money. Real cozy.

Bill, you said, "What we now need to see is a new Congress that will restructure the US financial services system and the regulations over it."

If the outcome hinges on such a change, we are doomed.

Members of Congress are either too economically inept, or shrewd enough to talk it to death and then say they fixed it.

Those few who would like to change it have no clout.

Nemo,
I load my own ammo and can tell you Obama's 500% ammo tax would be a killer to a target shooter. The price of lead, even with a downturn in commodities at x 500 is something I hate to think of. I wonder if he'll tax our Bibles as well.

i dont think the elections or central banks or any of this stuff makes a difference at all.

markets continue to grind lower. its in the charts, we can all see it. USD still moving higher. at least gold is not going down.

NYUGrad said: "I dont know. would anyone be suprised to hear consumer confidence is at lowest levels. i think that is priced in. only shock would be a turn up in confidence. just my 2 pesos."

After the new home sales numbers out today, I wouldn't at all be surprised at a bump in consumer conf.

I live in one of the "better" RE markets, and there is NOTHING selling. Heck, there's a new home across the street that's been on the market for a year. Not only is it not selling, open house after open house goes unattended. There's ZERO traffic.

I have friends who've had their place on the market for more than a year now with nada traffic, let alone offers.

Not sure where that bump came from... maybe some "bad asset" purchasing.

tsx comp...down 758 points

canadian market got crushed

SV

seamus

market is back where it was in the spring of 2003 ... lower highs, lower lows since 20th ... new 3 day, three week, three month low ... and below 20 day ma ... darkest before the dawn?

Real estate. I may be naive, but I don't see prices low enough yet and I don't want to buy a home - which is a VERY illiquid investment - in a declining market.

Example: found a house in MD listed at $305K, marked down from about $315K. The home sold last in 1998 for $198K. We made the owner an offer at $270K which he declined with no counter-offer. Its still sitting out there for $300+ since last September. Stubborn, I guess.

I sold my SLW immediately when I saw the post above. Live and learn.

Man, I tried to ignore the markets for 1 day to get some more work done... I checked at 3:30 just to see what happened, and things looked flat.

I got a message from a friend at 3:58, and I looked to see what was going on and noticed the sheer cliff at 3:45!!!

I thought SLW was a bargain at ~ 4.50 - 5.00, But my small position at 4.75 has lost almost 45% of its value :/

As for everything else I own long, totally and utterly destroyed. In mid-Sep, I was up 15% on the year, now I'm down some ridiculous amount I don't even want to calculate.

I think I may have to start hedging by placing short plays here.

TSX Composite has a ways to go to hit 5683 if it goes there and doesn't hold..........

I think we're all in the same boat since Sept. I was up 33% on the year to date 23 Sept. Went long beginning 26 Sept and I'm down 25% since then. On the other hand. I've picked up some great companies at prices not seen in many years. So for the long haul, I'm not that worried. It'll pick up in time.

What is a concern fro this Canuck is the clear lack of capitulation. It is never 'different this time' and until we get a massive flush this market will continue to drop, methodically, but drop all the same. The good news is there is a younger generation that hasn't been beaten to a pulp, yet. My sense is we have a lost a lot of folks who will not be involved in the equity markets ever again.

Geezus, more idiocy. How on earth, if they actually were proposing this idea, would they tax self loaders? Grym, come on you are way smarter than this. Don't post NRA propaganda here, it's crap. BTW, I'm a gun owner, shoot targets and trap and I'm not the least bit frightened that anyone can do a single thing about the second amendment.

If anyone reads their Bible as recklessly as they read this NRA story then it wouldn't matter if you taxed it either.

I would prefer links to back these silly stories or that Caraistas maybe check their own stories beforehand so we can stick to something resembling the facts. When you see the lead blog carrying this story is Sean Hannity, you can pretty much assume it's BS, or at the very least there is a massive other side of the story, that may actually be logical and truthful.

THE FACTS from The Washington Post:
"The NRA video shows a Virginia hunter and Iraq war veteran, Karl Rusch, complaining about the high cost of gasoline and accusing Obama of planning a "huge new tax" on "guns and ammo."

"Where is this guy from?" Rusch asks. "He's probably never been hunting a day in his life."

"The video cites a decade-old clip from a Chicago newspaper to support its claim that Obama favors a huge new gun tax. The December 13, 1999, article in the Chicago Defender said that Obama, then an Illinois state senator, supported a "500 percent" increase in the federal tax on the sale of "weapons he says are most commonly used in firearm deaths."

"It is unclear from the article exactly what weapons would have been covered by the proposed tax. Most of the article deals with proposals by Obama to "increase the penalties on gun runners who are flooding Chicago's streets with illegal weapons." Even if Obama did support a big tax increase on the sale of certain types of assault weapons back in 1999, that is hardly evidence that he will move as president to tax the "guns and ammo" most commonly used by hunters such as Rusch."

"The NRA video also accuses Obama of voting "to ban virtually all deer-hunting ammunition" and supporting "a ban on shotguns and rifles most of us use for hunting." The deer-hunting claim is based on Obama's support for an unsuccessful Senate amendment by Sen. Edward M. Kennedy (D-Mass.) that would have expanded the definition of "armor-piercing" ammunition. The other claim refers to semiautomatic rifles and pistols covered by the assault weapons ban, which expired in March 2004."

"Contrary to Rusch's claim, the Kennedy proposal of July 2005, SA 1615, was not aimed at "virtually all deer-hunting ammunition." Instead, it would have authorized the attorney general to define types of illegal ammunition capable of penetrating body armor commonly used by law enforcement officials. During the Senate debate, Kennedy said that his amendment would "not apply to ammunition that is now routinely used in hunting rifles," a point contested by the NRA."

yvrapx - I agree. In this cycle I do not think recovery will happen until everyone despises equities, and would rather own anything but.

When it gets embarrassing to tell your friends you bought a stock, then the stage will be set. Not to say that a rally is not in the works (Treasury checks started to go out today), but this is smelling like a big set up.

PS: Congratulations, Bill, on the culmination of a year's work.

LOL! The Post is rating these stories.

Here you go:
THE PINOCCHIO TEST

While it is true that Obama favors tighter gun laws, it is a huge stretch to argue that he wants to take away the guns and ammunition most commonly used by hunters. The claim that he favors "a huge new tax on guns and ammo" rests on a confusingly worded nine-year-old newspaper article that has little relevance for Obama's platform as a presidential candidate. The NRA misfires on this one.

THREE PINOCCHIOS:
Significant factual errors.

Stance: selectively bullish.

Observations.

Couple days of trading before EOM effect kicks in. Doesn't make it anymore pleasant.

Entries are very tough. One likes to get long in the lower third of the daily price range. Had an early sell off but by 10AM, all the averages were down only a bit. Market keeps getting Ma and Pa shook up before the open, then reverses to the upside before taking them down in the last hour.

It appears that a safer entry is to use the 3PM price + 5% of the 10 day ATR as a buy stop and putting it in around 3:30PM EDT.

This assumes one has screened for upside potential and that the stock has capitulated

Why is Maria Bartiroma pushing pro-Republican agendas? Why are she cutting down Obama in all of her discussions? Maybe because she's making over $250k and is one of the less than 1% of the population affected by rising taxes (which by the way aren't going to be excessively large raises)?

Doesn't she understand that a small redistribution of wealth might actually mean more to the 99% of people making less than $250k? The average person doesn't really get offended by a redistribution of wealth because they aren't making that much money and are being taken to the woodshed by the actions of people whose wealth is so astronomical. Perhaps it is just cause for the terrible situation the elite group of Americans put us in...

Just something to ponder next time she does a biased interview or summarization of what is going on.

As it was announced in early September that the FHA down payment assistance program was coming to an end on 10/1, the subsequent marketing rush to close prior to this deadline, most likely contributed to part if not all of the August-September home sales numbers. That these numbers are being trumpeted in the mainstream press probably has more to do with pre-election spin than any real positive change in the real estate environment.

yvrapx

Could it be that the markets are just retesting their lows, i understand that some people here follow the pm's and are taking losses greater than the broader market and was just wondering if this may not be clouding the bigger picture ?

yvrapx, what would capitulation be, for you?

At investopedia, I looked this up the other day:
"In the stock market, capitulation is associated with "giving up" any previous gains in stock price as investors sell equities in an effort to get out of the market and into less risky investments. True capitulation involves extremely high volume and sharp declines. It usually is indicated by panic selling".

With the S&P down 31% month over month, under a series of punishing high point loss days punctuated by panic, and the VIX riding at least a 50 handle since October the 6th, I think we must be witnessing capitulation. Whether it's a short term or a long term event is another thing.

I think you're right about many being flushed out of this market for good. That keeps bringing the word 'capitulation' to the forefront of my mind though.

For the past two years or so, the annual average was one Chicago public school child was killed by gunfire every week. Haven't seen the latest stats, but it hasn't slowed down listening to the news. It may even have increased.

Today, police found the 7 year old nephew of actress and singer Jennifer Hudson with a bullet to the head. This one doesn't appear to be a gang banger situation.

http://tinyurl.com/5chkym

SLW’s market cap is $580M at today’s close of $2.59. Book value per share is $3.6. It is the leader in spot silver market. Also, mining industry is going through consolidation. For example, GG has $1.4B in cash.

It almost looks like someone is setting SLW up for an acquisition or company buyback deal. That or someone was really hurt by margin today.

WPeyton I agree w/you, shame has away of changing one's positon
tgifbipo no doubt we are plumbing lows here but given a 10 year chart (caveat: I am not a Technical analyst) the TSX Comp looks to be going to the 5900 level it is at 8537 currently.
Dave Hyde in my experience capitulation is where the DOW limits down and curbs are put in like the post 9-11 market etc. there are still too many bulls out there (if you can believe it). All of the liquidity that is being pumped by central banks will make a difference but it will take time. BTW I think we will be through the worst of this my mid -November as Q3 numbers are finished Q4 guidance is pounded into the dirt and tax loss selling abates. Remember the wash rule funds follow.

"New home sales rise 2.7 percent, prices at 4-year low"

I wonder if "New Home" has been redefined and we're just not aware of the change (but banks are), or everything's being re-priced based on push out past 4-year averages + uncertainty factors?

We sure don't need firearms to shoot ourselves in the foot...., we've got plenty of irresponsible selective regulation to accomplish the task.

A nice chart for a change, FDG, energy-related (coal):

http://finance.yahoo.com/echarts?s=FDG-UN.TO#symbol=FDG-UN.TO;range=1y

Now, take a look at the IWM chart, huge transactions in the last minutes:

http://www.prophet.net/analyze/sc.jsp?symbol=IWM (select '1 day' timeframe)

BTW IMO there are terrific bargains out there but you will need to have guts of steel to hang onto positions when all around you there is panic.

VMW held up very well today. good earnings and revenues despite all this mess.

its now on my watchlist for the next bull phase. whenever that arises.

SiO2 FDG disappears by weekend w/TCK buyout, not sure why it spiked today .

Re: Share the Wealth

Due to my limited ability as a trader and speculator, I will be lobbying Congress for a bill providing that the top 1% of traders share their trading proceeds with the rest of us. It's only the top 1% that would be affected, and Congress would never change it to the top 10%, 20% or more as time goes on...should be a good bill.

Maria should make way more than 250k. On wall street, a 2nd year analyst makes 250k. Anyone whose title is v.p. makes that much. well not anymore.

Dave Hyde - My definition of capitulation includes a complete across-the-board throwing up of hands and no new buyers. That means no daily rally's such as we've been witnessing. When daily rally's stop, and the seasoned veterans give up, that's capitulation.

Too many Bull horns out there, when they stop blowing we're getting closer. These are extreme times and the capitulation I'm expecting will make the situation seem literally hopeless; dire. We're nowhere near in my interpretation...

Case, et. al. SLW

Anybody out there with good financial analytical skills: what do you think?

One post on SLW's high level of debt; another on SLW selling (at today's close) at 72% of book value.

Otto noting silver:gold ratio historically low, and looking like inverse head-&-shoulders forming: http://tinyurl.com/55evnv

I'd love to hear a smart financial guy's take on this. I can't believe SLW isn't a huge bargain, but I'm always open to evidence.

"Maria should make way more than 250k."

For sure! And, when in doubt, I assume that most people will vote (and think) their pocket-book.

Few people (at least in this country) see beyond that; they convince themselves that what is right for THEM, is right for everybody.

Excellent article on forces at play for COMEX gold.

http://www.safehaven.com/article-11677.htm

Confirms advice from veterans advocating holding the physical.

Blowout: Is it right that Warren Buffett's secretary (or anyone) pays more tax as a % of income than he does? He says she does.

Is it right that anyone here working for a paycheck have income taxed at a higher rate than LT cap gains or dividends? How about simple savings accts? Isn't THAT wealth redistribution?If we aren't going to redistribute, then shouldn't it be across the board and let's kill all the loopholes, income adjustments and just have a flat tax for all income? Otherwise taxing savings for poor people while giving investors 15% divs and LT cap gains is wealth re-distribution too.

We can all notice that since Reagan the regular work-a-day person has been paying more and more and making less and less while the wealthy paid less and less and made more and more, until we are now back where we were in the roaring 20's.

Why wasn't that wealth redistribution?

As I understand, we will know equity markets have capitulated when the average investor gets out of equities and expresses a thorough disinterest in EVER getting back in.

Active traders should be more resilient since they must focus on process as much as result.

Jock, I think BC said last week he asked SLW mgmt about risks, but I don't recall seeing more on it after that. Sorry, I haven't read the SLW lending agreements to know what terms are potential trouble, but do know that in the bankruptcies I've seen, if that were to occur, shareholders are last to recover anything, and book values get discounted. Mirant was the one I lived through, and the assets were double the liabilities. After that one, I try to steer clear of anything with that kind of risk.

[Bill Cara note:

I was unable to take any time to ask SLW management about the risks, or even to look deeply into their situation. I have now asked one of my associates to put in the call because I am sorry but the day only has so many hours and there is only so much I can do here. The issue is important, however, so I pledge to get to the bottom of it. If any of you happens to know an industry analyst who follows this company and can send us their report(s), we would all appreciate it.]

Oh, and let's not forget the cap on social Security/Self Employment tax.

Regular folks pay the full load while there is a cap for those making over a certain amount.
Why not flat rate there too for all income?

Who gets the cut-off? That's right, those who can buy income redistribution from politicians.

bsi said:
being "well allocated" didn't help in this sell off. It appears non correlated asset classes became all correlated. MO, liquidity just spilled over from one class to another.

In a panic, all correlations go to 1. That was the lession that I learned reading about the LTCM fiasco.

RE: SLW

Soulek1's comments earlier about its debt and balance sheets seems right on.

Here's an excerpt from the Merrill Lynch analyst's take on SLW after the June 2008 quarter:

"Investment Thesis
Silver Wheaton generates its revenues through the
sale of silver that it has purchased at a fixed cost
under long term contracts. We see the company
selling 13 to 15 Moz of silver in 2008, growing to 25
Moz by 2010. Silver Wheaton's unique model
provides for strong upside potential with an element
of downside protection. Our main concern is the
quality of Silver Wheaton's balance sheet, which is debt laden."

Obviously, there'll be even more concern about its debt load NOW with silver prices in the toilet and the overall horrendous credit conditions. I can only blame myself for not doing better due diligence -- for some reason, I didn't appreciate how high their debt load was...

However, at $2.5, I feel like SLW shares are priced like long-dated call options -- only without having to worry about theta, or time decay. It'll either be a home run in a few years or insolvent. I'm not planning on adding anymore though -- too much risk of insolvency at this point.

Question for the board:
I may not want to put more into SLW but any thoughts on other silver miners with perhaps better balance sheets which will likely survive through this deflationary period?

Thoughts on PAAS? (The same Merrill Lynch analyst - Michael Jalolen - has a Buy on PAAS with a neutral on SLW). PAAS' balance sheet looks a heck of a lot better.

slw

Is there a 5 dollar threshold for institutional holdings?

Jock, In the SLW 2007 annual report it says that for every $1 silver declines, it will reduce revenues by about $15 mm in 2008. It also has a section on the bank debt. I really couldn't say if there is any danger of any of the limits being breached or not. I put a call into their IR number and will post what I find out if they return my call.

6. BANK DEBT
On July 24, 2007, the Company cancelled its undrawn $25 million revolving loan facility and entered into a credit agreement
with the Bank of Nova Scotia and BMO Capital Markets, as co-lead arrangers and administrative agents, to borrow
$200 million under a non revolving term loan (the “Term Loan”) and up to $300 million under a revolving term loan (the
“Revolving Loan”). The Revolving Loan is for a period of 7 years and the Term Loan is to be repaid in equal installments
over a period of 7 years, however, prepayments are allowed at any time. Silver Wheaton has committed to pay down
the Revolving Loan, within 61 days after the end of each fiscal quarter, by an amount equal to 90% of the cash flows
reported for the quarter. The Revolving Loan can be drawn down at any time to finance acquisitions or investments.
In order to fund the Peñasquito transaction, the Term Loan was drawn in full and the Revolving Loan was drawn in the
amount of $246 million.
Amounts drawn incur interest at LIBOR plus 0.875% to 1.75% per annum dependent upon the Company’s leverage ratio.
Undrawn amounts are subject to a 0.2% to 0.45% per annum commitment fee dependent on the Company’s leverage
ratio. Under the credit agreement, the Company is required to maintain a Debt Service Coverage Ratio greater than or
equal to 1.25 : 1, a Leverage Ratio less than or equal to 5 : 1 (decreasing to 4 : 1 on September 30, 2008 and to 3.5 : 1 on
September 30, 2009), and a Tangible Net Worth greater than 80% of the Tangible Net Worth at June 30, 2007 plus 50%
of Net Income for each fiscal quarter thereafter. Both the Term Loan and the Revolving Loan are secured against the
Company’s assets, including the Company’s silver interests. The Company has paid $2.5 million in debt financing costs
relating to the credit agreement which was capitalized to the cost of the Peñasquito contract. During 2007, the Company
repaid $7.1 million and $19.0 million of the balances outstanding on the Term Loan and Revolving Loan, respectively.

I don't know if this is a question that can be asked or answered here because of regulatory reasons, but does Bill have a published track record on managing other people's money that is available to see?

[Bill Cara note:

Your question is unacceptable to me. You arrived here 26 days ago with dubious intentions. First you pointed people to a blog you find more acceptable to you and now this. What does my professional work have to do with this blog? I will ban every commenter who creates an incident like this. The problem I have, sir, is that nobody knows you. You started here getting personal and you leave here doing the same. Go back to your own blog. Thank you.

Published:
I believe Bill is wrong that it is the start of a new bull. Just ask yourselves: Have hous... Cara's Commentary & Commu... 2008.10.01

Published:
Extremely bearish news in the short and medium term in my opinion. GE is "AAA" rated, and ... Cara's Commentary & Commu... 2008.10.02

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Bull:Bear 20:80 Fundamentals reason for my bearishness are often found on the following b... Cara's Commentary & Commu... 1 day, 4 hours ago

Published:
I don't know if this is a question that can be asked or answered here because of regulator... Cara's Commentary & Commu... 11 minutes ago

You all know me as a person of great patience: you will see that in some matters, I have none. In future, anybody who tries to draw a link between my professional work and what I do for this community will be instantly banned. Enough said except that I am disappointed to see that I will have to get a censorship board involved here.]

Seamus,
The ASX is dominated by miners and bankers so has sold off more heavily than many other bourse. Just about the entire resources sector is down between 50-90% from the '07 highs, eg BHP from 50 to 24 (-50%) or in USD from 42 to 15 (-64%) given the 'temporary' appreciation in the USD. So as Kaimu says now is a 'oncer' to get set in these strong miners before your dollar takes a dive as well it should but then again logic has become a contrarian now, where the link between reason and outcome has vanished.

The key to buying miners is current production and cash holdings.

Craig,

I said I load. Think about it (and watch your mouth). The only "idiocy" is any thinking that a massive tax on ammo would prevent crime. (Maybe we should just tax illegal drugs.)

They'd simply tax any and all components used in loading, along with factory ammo, and bypass the need to confront the Second Amendment issue.

If you've read stories to the contrary, I guess that settles it.

You have a smart mouth. I guess it ends there. Are you as cavalier about investing?

Speaking of junior miners, NOT.V certainly bucked the trend today with a gain of 19%.

I'm guessing the big gain is somehow related to the annual meeting of shareholders to be held tomorrow. As a shareholder, I received a proxy circular recommending a vote for director-nominees by Rousseau Asset Management Ltd. The nominee group is headed by one Patrick F.N. Anderson. I haven't read through the entire document, but would be interested if anyone knows what is going down at Noront. Takeover bid ?

[Bill Cara note:

I have at least one associate who is going to attend that meeting, and report to me. I will report to you all.]

I just called an investor relations director at SLW and he told me that they need to pay approximately 17 million in quarter to meet their debt obligations. He also said that if the silver price stays at $9, then they will be able to meet all their debt payments. However, if silver drops below $9 and stays there for six months or more, then they will have troubles meeting their payments and will need to make some special arrangements. He said that they will talk more about it during their earnings release on November 3.

[Bill Cara note:

Thanks David. I think many people here appreciate your contribution. One of my associates just sent me these notes:

“A quickie report... I phoned IR at SLW shortly before 5...Brad whomever...got a voice mail...left a message...as you know, head office in Vancouver...no return call yet... not holding my breath...

Comments:

SLW did tank about 25% late this afternoon...on twice normal volume ...8million+ shares... I think it's hedge fund or institutional liquidation.

Quarterly financials are to be released Nov 3; and there will be conference call on that day. I will listen in.

SLW does have revolving/renewable financing; but they have deep pocketed well-connected backers; and a rogue bank pulling credit would be seriously ostracized or punished, imo, by the Goldcorp circle.

Less than a month ago, SLW bought another silver stream from another junior miner for $50million. Would they have expended that money if they saw trouble coming?

In sept, SLW pulled in $130million, as I recall, on a warrant exercise...inducing warrant holders to exercise early in exchange for a small percent...so , another recent stash into the till to help.

Also, attached S&P notes dated Oct25 - pretty fresh, eh? They aren't Exxon; but they aren't broke - debt about 30% or so.

The S&P notes include ratings on SLW for the following:
BMO Nesbitt Burns
Canaccord Capital
First Associates Investments
GMP Securities Ltd.
Genuity Capital Markets
Macquarie Research Equities
Merrill Lynch Research
Raymond James Limited
Salman Partners Inc.
ScotiaMcLeod, Inc.
Sprott Securities Ltd.

The analyst ratings this week were 2Buy, 6 Buy/Hold and 1 Hold. That is a strong measure of support from investment analysts.

Quantitative Stock Report: Silver Wheaton Oct 25,2008… NYSE SYMBOL:SLW

Wall Street consensus vs performance:
For fiscal year 2008, analysts estimate that SLW
will earn $0.43. For the 2nd quarter of fiscal year
2008, SLW announced earnings per share of
$0.09, representing 21% of the total annual
estimate. For fiscal year 2009, analysts estimate
that SLW's earnings per share will grow by 47%
to $0.63.

There was a negative mention about SLW in a Seeking Alpha article last week - Oct 23, as I recall, but nothing that would provoke a liquidation.

I saw the post to your blog by souvleki...I went looking to find out where the fuss was coming from...interesting post...a speculative suggestion...but a little like yelling fire in a crowded theater...innocent people get scared and hurt...had I seen it I wouldn't have been motivated to sell my underwater positions in SLW.

Hope this helps… Will report further, as new info emerges.”

I will send the Oct. 25 S&P report on SLW to anybody who requests it. Send your mail to Bill [at] BillCara.com. Put SLW Research in the subject line. Thank you.]

look like FEd fund may go to zero
did it ever happen where fed fund rate is zero?
I think it did happen in Japan

Well Craig:

You don't think anybody can do anything about the II Ammendment. Let me tell you about Massachusetts.

About 5 or 6 years ago the then Attorney General decided that guns and ammunition can be regulated under the consumer safety regulations of the state, which fall under his jurisdiction. He mandated that that ammunition and reloading components (themselves classified as ammunition in Massachusetts) cannot be shipped to private citizens within the Commonwealth.

As well, he mandated that any handguns sold within the state had to be manufactured with a specific set of features and specifications.

So, in Massachusetts, there are now only a few models of handguns you can purchase. One brand that you cannot purchase is Glock(the most prevalently used brand by Police departments across the country), among many others. I haven't been in the market for any handguns, but I believe H&K is also one not sold here. The AG knew most handgun manufacturers weren't going to change their product for one state, so he effectively outlawed all but a few models of semi-automatics.

I don't know about my mouth, but I can read. I don't think being *accurate* is cavalier. If it doesn't pass muster for quality on this blog, and it didn't for several good reasons, then it deserves criticism. You can try to defend it or comment on my mouth if you can't, but it's the facts you have trouble with. Address the facts, I did.

Read the story again.
The Post does all the work.
1. It's about a NINE YEAR OLD attempt to slow the sales of ammo that can pierce police vests.
It doesn't mention conventional or hunting ammo in any way. It also doesn't outright ban the ammo either. Do you oppose that idea or do you think the cops are open game and anyone should be able to buy armor piercing rounds freely?
2. Show us this proposal in his Presidential platform or where he has commented on it within the last 9 years.
3. address the facts presented in the Washington Post. I didn't write them and my mouth wasn't involved.

As far as taxing ammo, it is completely unrealistic and undoable, especially for a loader. I think I know about this.....for obvious reasons. A few of my weapons fire NATO ammo (of which I already have a little) and as long as there is a US military and countries like Iraq there will be billions of rounds of NATO ammo, brass and lead.

There is no way to put the ammo genie in a bottle anymore than your precious guns, metals or God forbid, drugs.
You pretty much answer it with the drug analogy.
Bans don't work so stop worrying.

It's a big boogie man to scare paranoid voters in the last week though....like the 6'3" black guy in Pittsburg that supposedly assaulted the little woman the other day.....until that was exposed as BS too and she was arrested. This story is the equivalent.

So far we have a ficticious ammo tax and race baiting...what next? Oh yeah, income redistribution and socialism!

Regarding SLW's debt:

A quick search of SLW's financials show these:

http://www.reuters.com/finance/stocks/ratios?symbol=SLW.N&rpc=66

Quick Ratio = Current Ratio = 0.79 --> SLW has no inventory, it sells everything; Sector quick ratio average is 1.07 --> SLW is relatively weak to cover it's short-term liabilities (but only in percentage terms, see below);

SLW's LT debt to Equity = 57.55%, Total debt to equity = 61.09%; Sector average is 40.05% and 68.51%, respectively.

This also implies 3.54% of SLW's debt is short-term --> times total debt of $492.78M (Yahoo) = $17.44M. SLW has #36.63M in cash.

If these data are up to date, it says SLW is taking LESS debt than its peers, it has more cash than needed to cover it's short-term debt, and have MORE of its debt in long-term debt, which supposedly can't just be "yanked" at lender's discretion.

Perhaps these data from Reuter and Yahoo are not correct, otherwise I don't see SLW's insolvency. It's high leverage seem to be sector specific, not company specific.

Bill,

I just saw your response to my post early today. Thank you for taking time to address my question.

Regarding Bill:

Quite the Blogslam on that fellow, Bill. Do you think Bill is one of those 2nd Foundation guys about whom Asimov wrote? :)

Craig:

As I said, in Massachusetts, components are considered "ammunition." If you do not have a firearms license you could be arrested for having a spent shell casing in your posession.

Another comment on SLW: they are currently making both principal and interest payments on their debt, and the interest they are paying is calculated now as LIBOR + 1.65%. Now note that LIBOR has been coming down steadily for the past 10 days, and historically it has been about 0.25% above the Fed funds rate. Once the Fed cuts its rate on Wednesday and LIBOR approaches it, their debt payments will be much smaller, and so they may even be able to meet them with silver at $8 or below.

Bummer about Mass. How big is Mass? I think I saw a story about folks crossing state lines there for fireworks. My suggestion, do the same. Did they confiscate all previously sold firearms or those lawfully moving in with people from other states? I'll tell you one thing, if they even mentioned the idea in any western state all hell would break loose.

Some of my friends think brass and lead are precious metals and they collect them like some here collect silver and gold. :>)

Are you kidding? Are they sending police units to the woods, firing ranges and citizens basements to police ammo? Are they limiting ammo or just making you have a license? Does it say you are part of a well regulated militia? LOL!
They have the funds for all that harrassment? I bet not.

Not that I am making light of your situation.

nemo,

"Blogslam" - I like that!

2nd Foundation - I think it's time to reread that series. What a great escape Asimov's writings provide. I need to escape the daily watching of these markets. Something is seriously wrong here. These charts are abnormal in any time-frame.

re: Capitulation

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

"Too many Bull horns out there, when they stop blowing we're getting closer. These are extreme times and the capitulation I'm expecting will make the situation seem literally hopeless; dire. We're nowhere near in my interpretation..."

So if we go down another 50% from here but never have a rally-less down you'll still be calling for lower lows?

Let's face it, forced liquidation isn't going to produce capitulations here. Look at the one-month chart of the S&P over two years, and if that doesn't qualify as capitulation, then the your concept of "capitulation" is meaningless to me.

Does that mean free money vinod?

Apologies about my comment on stinky bid for SLW since there are lots of holders here. Didn't hit my bid though. Maybe tomorrow.

Looking at the market prices it seems that someone is spraying the indexes with shrapnel rather than targeting individual companies. Amazing to see that exactly at 3:30pm was when things deteriorated for SLW. Seems to indicate a large institutional trade was scheduled.

Must have been someone big... here's the top owners of SLW.

http://tinyurl.com/6bffo6

Aletheia is exposed to this bankruptcy of Worldspace.

" It listed assets of $307.4 million and liabilities of $2.12 billion."

Aletheia Research & Management Inc., owning 37% percent,

http://tinyurl.com/6hjyyy

Pyramis and Fidelity are the same (?), which means they own(ed?) around 10% of the company.

http://tinyurl.com/5ogo44

"Fidelity's Diversified International Fund, the company's second-largest fund with $38.6 billion of assets, had lost 45.8 percent for the year through last week."

Both Goldcorp and Silver Wheaton followed a pretty similar chart pattern over the last few months, so wherever the selling is going on it is probably happening in the Goldcorp family too.

Maybe shareholders are picking the mother ship rather than its little silver brother.

http://tinyurl.com/6hg27t

TD Newcrest cut forecasts of gold and silver last week. Silver forecast was halved for next year. If someone had this info on Oct 20, they sold down from 5.77 to 2.59 a difference of.... 50%.

http://tinyurl.com/5e7ks3

If the company is solvent then it could be a good play at these levels, but don't fight the trend and no point calling bottoms.

The Fidelity Diversified Fund (the 10%'ers) have probably diversified out of SLW by now, but who knows. Here's the Yahoo board for Fidelity.

http://tinyurl.com/6cgr97

It ain't pretty.

[Bill Cara note:

My associate added some info from SLW. I hope you find this useful. I am now including research from RBC and Genuity, dated the last three weeks in my mail to those who are underwater this stock. Common sense must prevail here. We don't need to add matches to the fire.

Bill:

Brad Kopp from IR returned my call at about 8pm.

I asked if he had a theory about volume and price action today - notably, just before the market close - and he said it most certainly would be institutional selling, probably involuntary. I asked if they have been observing institutional selling in the past few months; and he said, absolutely; and reminded me that about 65% of the SLW shareholdings have been institutional.

I told him I had read speculation that SLW might be debt challenged and in danger of losing financial backing...Brad said that the present debt is about $360-$380mill. Everything is in good standing and manageable; but if silver prices stayed at their current level or lower for a prolonged period, then SLW could be in danger of breaching loan covenants - as they now stand - in about 6-9mo time. However, this is a sufficiently long lead time to put other or modified arrangements in place, with lots of possibilities and options being open to SLW.

We talked about the Alexco deal earlier this mo; and Brad said SLW paid $15mill only of the $50mill price, with the balance having a long deferral. SLW received about $120mill on the warrants exercised in sept, all of which was used to pay down debt.

Brad said SLW is not contemplating any more purchases; the plan is to hunker down and apply any cash flow to reduce indebtedness. The only purchase opportunities which SLW would entertain would be those purchases of silver production immediately accretive to cash flow.

Brad said there will be more discussion about this challenge during the conference call next Mon, Nov 3.]

Craig: You can't have a Massachusetts firearms license and purchase firearms in any of the surrounding states unless it is shipped to an FFL dealer within the state, where you can pick it up on your way home.

Oh, and the issuance of a Firearms license is up to the discretion of the local police chief. You can be a law abiding citizen without even a parking ticket, and if they don't want to issue, they don't have to. Now, you have the right to take them to court with all the time and money that entails.

The AG just threatens to sue any companies or commercial entities that violate their mandates.

"I need to escape the daily watching of these markets. Something is seriously wrong here. These charts are abnormal in any time-frame."

Mackinaw- From the perspective of maximum frustration (which, IMO, is the predictable result of investors trying to game each other), the charts may simply represent the level at which the game is played today-> streaming real-time quotes, one-click trading, immediate access to technical analysis indicators, more sophisticated players, more sophisticated technology...

in the end, the level of sophistication really doesn't matter-> it's the players that make the market...fear, greed, despair, euphoria-> all still required, and the majority of players will still predictably experience frustration...

so today's charts probably won't look like yesterday's charts, but they reflect the same underlying emotions...the war rooms and battle plans of the 21st century probably bear little resemblance to those of the 19th century, but the emotions and objectives behind the plans would surely be recognizable...

More info on silver, the metal.

http://tinyurl.com/niv3

Interesting SLW comment in Q2 2007 transcript.

"Our cash margin for the second quarter of 2007 was over 70%, again due to a strong silver price and a fixed cash cost of only $3.90 per ounce and the fact that we structure our contracts to pay zero income taxes."

http://tinyurl.com/5nkthf

Some more info from last year.

"If the investor would like a little more diversification in other metals I may recommend Goldcorp if they otherwise like the Silver Wheaton story. That’s because Goldcorp currently owns 49% of the shares of SLW. This will also make the shares hard to obtain for a company of Silver Wheaton’s size and may help to drive up prices if enough mutual funds take an interest in the shares."

http://tinyurl.com/63adrz

So why own risk of single name SLW when you can own holding company Goldcorp? (who's fortunes are tied to SLW too)

[Bill Cara note:

Here are comments on SLW from two research analysts:

RBC Analysis of SLW –published Oct 15 ($5.72)

Investment Thesis – Exercise Of Warrants Will Provide Some Breathing Room
In our view, Silver Wheaton has pioneered a new transaction type for the minerals industry through its purchase of by-product silver production streams from established and proposed mining operations. Within the past two years, Silver Wheaton can already consider itself among the largest primary silver producers in the world, with what we view as one of the better growth profiles looking out the next few years. It can also lay claim to being the purest play among the silver equities, as it is the only stock we are aware of with 100% exposure to silver (no contribution from other metals such as gold, copper, lead, or zinc).
Silver Wheaton shares are currently trading at a P/NAV multiple of 0.69x, slightly ahead of the silver producer group averaging 0.56x. Our target price for Silver Wheaton employs a 1.75x P/NAV multiple and 17.5x forward CFPS (lowered from 2.25x and 22.5x previously), which remain near the upper end of our new target ranges for established silver producers (1-2x NAV and 10-20x CF). Beyond strengthening silver prices, we see acquisitions as the most important catalyst for Silver Wheaton in the short term. With significant growth unlikely to be realized until H2/09, we look for flattish quarterly results for the next several quarters. While the cash constraints on Silver Wheaton have eased somewhat with the early exercise of warrants, we maintain our view that any significant acquisition would require new equity financing, as the company’s capacity for additional debt is limited in our opinion.

Genuity Analysis of SLW –published Oct 6 ($7.70) 12-Month Price Target ($11.00)

Investment thesis

• The silver price has retracted 27% since we launched coverage of Silver Wheaton (SLW) even weeks ago, underperforming gold by 26%. The underperformance is largely due to silver’s greater exposure to the weakening economic conditions stemming from its industrial applications, and the greater supply response expected from silver over the next five years.

• Silver ETF holdings have increased by 12% in the last seven weeks, however, this compares to SPDR gold holdings up 15% over the same period. This confirms our belief that "safe haven" buying has not boosted silver to the same extent as gold.

• SLW has declined 35% since our initiation seven weeks ago, underperforming spot silver by 8% and performing in line with its silver producing peers despite its fixed cost structure. SLW has underperformed its royalty peers, including Franco Nevada (FNV-T: C$18.55, Not Rated), which has increased by 1% over the same time period.

• Based on the current silver forward curve, the recently announced $50 million Keno Hill silver stream acquisition requires three years of resource additions to be NAV neutral. Overall, we question the rationale of increasing the company debt load for exploration upside given the current market environment.

• We expect silver sales of 12.8mozs in 2008, modestly below company guidance. Sales improvements are expected in late Q4/08 with higher grades from Luismin and Yauliyacu. A revised mine plan/reserve update for Penasquito is expected in December.

• We are revising our target price for SLW from C$18.00 to C$11.00 per share to reflect the recent downdraft in the silver forward curve. Our target is predicated on a 1.0x multiple to our C$11.67 per share operating NAV estimate, utilizing a 5% discount rate and assuming silver forward curves, minus C$0.70 per share for investments and net debt. Based on the implied return to target, we are maintaining our BUY rating. ]

i also have to admit, as much as i dislike the pounding my portfolio takes with each leg down, i have no problem with the market imposing penance on us (referring to society as a whole) for our excesses...as i've said previously, there is nothing wrong with a recession; we need one...

Speaking of penance, unrelated to markets but this looks like a really neat audiobook to own, even if you aren't religious.

"Johnny Cash: Reads The Complete New Testament "

http://tinyurl.com/6bsb9c

heard it on the news today.

Now if we could only get the Ted Nugent reads Apocalypse Now audiobook...

http://tinyurl.com/6d2x6z

Oh man... I actually got this post to relate to the markets.

"Ted Nugent on the Dow sell-off"
http://tinyurl.com/642lvd

lol. Fedzilla. Drugged out hippies with credit cards.

Git up early and chop wood! yee haw!

Thanks for research reports Bill. Here is one I found from RBC back in Jan, targeting 19/sh.

http://tinyurl.com/6agtd3

"Meanwhile, Curran and Morton warned that, "As time progresses, and/or SLW's share price rises, we see increased risk that Goldcorp may look to crystallize some or all of its shareholding in SLW (108 million shares), as many consider the holding a non-core asset for Goldcorp." Vancouver-based major gold miner Goldcorp owns a 49% interest in the silver company."

Mentions SLW's stake in Augusta's Arizona property, Rosemount Copper.

http://tinyurl.com/5tntg7

Maybe this is political-related selling?

"Congressman Grijalva Condemns Bush Plan To Open Public Lands To Mining - BLM Announces New Rule For Land Withdrawals "

http://tinyurl.com/5scm46

Mining the Grand Canyon for Uranium... I'm sure Ted would approve.

2nd
No doughty that market will come back and will be back with vengeance, but, it is taking too long a time for it?

"Release of an initial environmental impact statement on the proposed Rosemont Copper Mine in the Santa Rita Mountains southeast of Tucson is running behind schedule and will be delayed eight months until November 2009."

http://tinyurl.com/5qssf7

"Subject to the finalization of the structure of the transaction, including tax considerations, Silver Wheaton will pay an upfront cash payment ranging in value from US$135 million to US$165 million to acquire 45% of the payable silver, or US$240 million to US$320 million to acquire 90% of the payable silver, produced for the life-of-mine"

http://tinyurl.com/599v7g

They chose the 45% option, though upfront payments are based on milestones so not sure what exposure this leaves them with...

My present 401k RESULT
Personal Rate of Return from 01/01/2008 to 10/24/2008 is -42.0%

Nice work on SLW guys. It is much appreciated.

Lordie, 2nd.

get a hair shirt for yourself. I'll pass.

Back on 10/10/08 the NYSE had thousands of stocks that were making new 52-week lows. Today only about 750 made new lows yet the S&P price is about the same at 848 vs. 840 back on 10/10/08.

This is a stealth improvement in the health of the overall market; that is, while the market averages were trading on the close today for about the same price as the 10/10/08 low, the number of very weak stocks was over 2,100 less than on 10/10/08. So the weakness is in the averages while the broad market is much less weak compared to 2 1/2 weeks ago.

We believe the market can rally nicely now, especially since we are reaching month-end and because the market loves to rally into Fed meeting policy announcements (Wednesday, 2:15pm ET). Stay tuned!

JWibbs
http://www.2globalmarkets.com

p.s. Bill, congratulations on your CTAB launch!

muzie - "So if we go down another 50% from here but never have a rally-less down you'll still be calling for lower lows?

Let's face it, forced liquidation isn't going to produce capitulations here. Look at the one-month chart of the S&P over two years, and if that doesn't qualify as capitulation, then the your concept of "capitulation" is meaningless to me."

This explains the concept of capitulation I was attempting to convey. It's an emotional experience that I have yet to experience but I'm imagining a fatal car-accident type of sensation:

From Wikipedia:

"Market capitulation: In a severe down trending market there may be a certain threshold after which large numbers of investors can no longer tolerate the financial losses incurred as a result of the current downturn. [25]. This majority group of investors then capitulates (gives up) and sells in panic or finds that their pre-set sell stops have been triggered thereby automatically liquidating their shares of a given stock. This dramatic increase in the number of sellers causes a further increase in the speed and severity of the stock's price decline. Margin calls and mutual fund and hedge fund redemptions significantly contribute to capitualtions[26]. In other words market capitulation occurs when there is a sudden steep decline in price caused by high volume selling[27], "

2nd - "i have no problem with the market imposing penance on us (referring to society as a whole) for our excesses."

Looking around me sometimes I begin thinking I live like a damn church mouse. True, I don't sit around a firepit at night and sleep in a tent like a Bedouin... I've got running water and two flush toilets but I paid cash for it all... Made plenty of mistakes too, but always took full responsibility.

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

First of all I would like to congratulate Bill on another of your accomplishment, CTAB.

Secondly, I would like to express my deepest appreciation to Bill and the community. I learn a lot (and am still learning) about the market from everyone here. I especially treasure the selfless contribution of everyone here, which can be clearly shown with SLW info sharing and discussions today. I mean, where on earth we can get so much valuable information in such a short time, free. All my financial adviser cares of is her commissions. On the other, I'm sorry that I have less to contribute, and also asking foolish questions at times.

Have a nice evening.

re: Massachusetts
There are 49 other states to choose from!
Mine has no income tax. And no ridiculous gun laws that violates the right of a citizen to protect him/herself and family. State sales tax approaches 10% but I'm not a big consumer. That's why I hang my hat in Tennessee...
MCM

Re: Capitulation.

There are two important things to keep in mind about this concept.

First is, bottoms are not always being formed by capitulatory selloff (V-shape). Sometimes it's a slow grind shaping as a dish; sometimes even with caputilation it's still not that easy - initial bounce leads to a second drop into lows and double bottom, however nice the formation is, has second bottom LOWER than first one, so early buyers still get shaken out.

Second, and most important to remember. You probably noticed that whereever you find the description of the concept, it's still just a concpet - meaning, there is no measurable component to it. There is, to my best knowledge, no percentage of the drop that quialifies selloff as capitulation. Name any, and you will inevitably find a whole lot of cases where it was exceeded. There is a good reason for that: if there was a certain measurement for capitulation that guaranteed ultimate low, everyone would be insanely rich waiting for it and buying it... and no one would be buying a second earlier. But then again, why would anyone sell at that ultimate low which has been already proven to be an ultimate one?...

Thus, capitulation is either:

- can not be computed as it's an emotional state, panic, total disarray leading to a freefall - but not being quantifiable, it's in the eye of a beholder, which meakes "getting a read" on it quite discretionary;

or

- can be computed to a certain degree IF you somehow know the amount of shares that were held by different stakeholders, and see roughly that amount being traded in a very short period of time (again, discretionary component) during very steep selloff (once again, steep by what standard? on what chart?).

No doubt, sometimes experienced traders get it right by gut feeling which is a product of vast experience. By no means it's a fool proof process for any of them, and you will always see arguments about whether this particular selling already constitutes capitulation or not yet, whether capitulation is going to be the case in this particular bear market or not. This concept is necessary to understand, but it doesn't mean that once you understand the concept you can spot the capitulatory type of bottom.

goldbug58 - yea, sniffing around this weekend I saw coinage somewhere for ~$800/oz range. Big spread, hard to trade the physical though. Hey, if Comex fails then I'll just take delivery at rock bottom and add it to my stash... I'm a stubborn ol' cuss (or so I'm told). I've also seen 5-nines for less than 4-nines on the same site lately... Shop around, but your concerns are definitely mine too.

Thanks for the discussion of Capitulation everyone. It is very educational.

Vad - yep, I'm thinking in terms of the severe definition because of my perception of this situation. To me it seems more severe than everyone imagines.

wavesmash
re:SLW and Goldcorp. I believe Goldcorp exited their 108 million share position at $14.50 sh Feb 08, used it to retire debt from Glamis acquisition.

This could be the bottom too (Implementation), which is a manufactured event.

http://biz.yahoo.com/ap/081027/financial_meltdown.html

Capitulation
Vadym I concur with the definitions you laid out but cannot see a retest of the lows as we haven't hit a definitive low yet. No one immediately referred to the 9-11 sell off as capitulation but in hindsight it clearly was. I am not seeking the bottom but an entry point I can live with. SLW beinf a great example or even TCK. Botht looked compelling at much higher levels but continue to violate lower pricing structures, almost intra-market. I remain supportive on Bill's call of the bottom even though we have went lower since. I suspect a lower level and snap back in the next 4-6 weeks. The lower the commodity stocks go the more violent the upswing.

MCM:

Must be Nashville, huh? Yeah, well, I have certain family responsibilities in MA (raising nephew). Anyway, gun law, financial laws, all the same, they figure out how to play games with them.

Someone had remarked, and probably this was one of Bill's points on the charts, that many of the stocks haven't returned to their 10/10 lows-well yet, anyway.

Now, seemingly Bill is hanging his hat on rate cuts on Wednesday and other economies' "follow-the-leader-cuts" to follow (see Trichet comment).

However, going back to Kaimu's "C" word, how much more hedge fund dissolution to come is unknown, nevermind when people get their 401k and mutual fund statements next month, how many more of them will be headed for the exits?

The "C" word will be further tested by the myriad bailouts to come. Of course there's the 700..1.2 trillion...2 trillion bailout...now insurance companies...car companies. Of course there are the homeowners B. F. (Barney Frank) has prommised, with more likely in the offing as credit card debt collateralizations and more homeowners become endangered, the pool of bailouts is likely to expand. Where, and how, can they draw the line? Which means more money printing? When, if at all, does all that money printing further shake confidence in the system?

nemo,
more money printing indeed. That is why I think this whole deflation vs. inflation argument is ridiculous. Once this "deleveraging" reaches critical mass, how can the tide not turn to favor resources, precious metals etc. I've placed my bets for that...and if they they don't play out, we're all in trouble and it may not matter...
NashVegas it is. But if I lived in MA, I would still exercise my constitutional right to bear arms, so it probably doesn't matter. You only have one life, and it is yours to protect...
MCM

Guns, guns, guns
For those of us who live overseas we cannot see why American's are so emotional about their right to own guns. In my country and many others the gun owning population is miniscule, likely a fraction of 1%. Albeit there are more stabbings since our government banned guns, except for those in locked up gun clubs, farmers and other necessary occupations. Can someone give me a rationale for gun ownership beyond the above criteria in the US today? Why is it necessary in the US when it is not in most other 1st world countries?

BC and others, thanks for the SLW detail info. And yes, I think GG sold their SLW stake a while back.

Its always been the "goto" silver equity as far as I was concerned because it doesn't have the problem of rising costs everytime steel, rubber, fuel, labor or electric costs rise, and those factors always seem to kill the regular mining companies of late.

Of course, of late you could pick any or all as possible reasons why miners are being crushed to the silly point. I added a bunch yesterday, all below book value, and all trades in the red tonight.

ALOHA !!

seadog ... The US CONSTITUTION provides gun ownership so that government will think twice about enslaving a well armed citizenry. In fact back before the US Military became the global superpower it is today defense of America was relegated to the States and not the Federal government. One reason Third World dictators can easily overrun the populace and create genocide is that the citizenry of those countries have no weapons in their possession to defend themselves. Imagine if those who were butchered in Rwanda had Glock40s or even a bow and arrow! If the dictator is the only one with weapons the chances are he is going to use that advantage! Now you may be saying to yourself ... "Come on mate, those are Third World countries with corrupt politicians and are not the same as OZ and America!" Well, true enough for now! The German's, just prior to Hitler's rise to power, were saying the same thing! I still prefer a well armed citizenry, because I trust the US CONSTITUTION, but I wouldn't trust the current US government further than I can spit!

I used to build prisons in California when I was a contractor and I always liked talking to the guards. I always asked them why they work at the prison since they always face the risk of violence every day! Their overwhelming reply was that its more unsafe outside the prison because you never know who has a gun on the streets. You can walk down the street as a cop and anyone can walk up behind you and end your life in a split second! BANG! I personally like my local police and military thinking about that! It keeps them honest and humble for the most part!

The governments of Saddam, Stalin and Mao ruled over unarmed citizens ... look how many died!

Politicians do not spend a lifetime struggling to attain power and then not use it once they have attained it! Its human nature to abuse power and America's Founding Fathers wisely admitted that and made that part of the Constitutional rights of WE THE PEOPLE! The right to bear arms ...

I do not doubt many in the First World will disagree, but then they never lived under the rule of the British Empire in 1775 ...

When I lived in Perth the police station was just two houses down the road. Even though I rarely saw any Aussie police with guns they did have them very close at hand. I did experience violence on my personage in Australia when I lived there, but it was mainly from local surfies! But then again, I was well trained for that aspect from my Newport Beach crew ... Hawaiians got that same local attitude in spades!

When I was going to school in Perth I recall learning about how the British had a bounty on Aboriginal ears during the early years of settling Australia. In those days the British Empire represented the cream of Western civilization and still does. Of course American history is filled with violence against Native Americans and Native Hawaiians were also violated by the US Military as well, in no uncertain terms! Nowadays EMPIRES don't waste their time with "ear bounties" ... now its called "Shock and Awe". Who were America's allies in Iraq? Who was America's ally in Vietnam? I don't recall that Sydney lost their WTC on 9/11 ...

Can you really trust your politicians in desperately desperate times? I believe the US military is already assigned "street duty" in America in anticipation of possible civil unrest. See, most people see "civil unrest" as something vile and primitive, but many of the First World countries, including the USA were civilized via civil unrest! Its only when the benevolent dictator fears for his life and that of his family's that he relinquishes power and becomes humbled by the masses again! We outnumber them and I doubt no politician goes to bed at night in America now who does not think of his safety for the next day! American politicians in particular have a LOT to be remorseful about, if only they knew that word! But that thought lives in them, it may be in the back of their head but it is there ... it is surely there!

Whats the US CONgress approval rating now? Is it NEGATIVE yet? Keep voting in the same dysfunction ... If you are wondering how things got this bad in America ... consider that for a moment!

GOVERNMENT IS ONLY AS HONEST AS ITS MONEY ...

Almost every component of the German DAX gets hammered, except Volkswagen which reached 1000 Euros during the mother of all short squeezes. It now has a market cap of 300 billion Euros and a P/E of 100. Not bad for a car maker. ;-)

http://tinyurl.com/vow-dax

kaimu,
A wonderful discourse but I remain unconvinced. It's pretty sad when your police can't walk down the street without concern for their lives and every politician is worried for their safety. I notice that some skinhead nut cases got bailed up in the US today on a conspiracy to eliminate Obama. We vote in boring politicians who send us to sleep rather than to the armoury.

Here's to a better day tomorrow, whatever a better day means. My options trader is keeping me ahead of my other hole in the ground punts for the moment so I don't mind if it goes up or down tomorrow as long as it does something. Bula Bula

Some more comments on capitulation. These are from Jason Zweig at The Intelligent Investor:

There's a belief that the market can hit bottom only when vast numbers of investors finally capitulate, throwing in the towel and selling off the last of their stock portfolios. In theory, if you could spot this moment, you could make a killing buying at the bottom.

There are two problems here. First, capitulation is almost impossible to define. Second, even if you could get a positive ID on capitulation, that might not do you any good. Market lows aren't necessarily marked by tidal waves of frantic selling; just as frequently, stocks bottom out in a dull and lonely atmosphere as trading dries up and most investors no longer even care. Bear markets often end not in capitulation but stupefaction.

"The idea is, 'We'll know we've hit bottom when the fat lady capitulates,' " says finance professor Robert A. Schwartz of Baruch College at the City University of New York. "But she could just sputter instead, or capitulate more than once, or slowly slide around along the bottom." Warns Prof. Schwartz: "On the way down, you get a lot of faux capitulation. And how do you know, until after the fact, whether it is friend or faux?"

Oddly, even market pundits who believe in capitulation admit they can't define it. "Capitulation is a state of mind, without any specific definition," says Al Goldman, chief market strategist for Wachovia Securities. "You can't measure it; it's best identified in hindsight." Hugh A. Johnson, chief investment officer at Johnson Illington Advisors, says almost wistfully: "I wish I could quantify it for you so I could say, 'Here, this is capitulation.' But a lot of this is anecdotal. Talk to enough investors and you get an idea of whether we have capitulation." END

If 'everyone' is looking for a capitulation and holding off then perhaps 'everyone' is wrong, there will be a slow fizz instead!

capitulation- some traders are able to sense capitulation as it happens...but identifying it (as noted above) can only be done retroactively...

bsi87- LOL...OK, penance was a poor choice of words, but you know what i mean-> the spoils of credit were just unsustainable...especially here in the bay area, it went over the top-> all you had to do was drive down the freeway, and wonder if the entire population had suddenly become the 'millionaires next door.' everywhere you went, people with no visible means of doing so were speculating on real estate (some while making car payments the size of house payments in other states)...so i'll go back to the overused "unwinding of the excesses" as the more appropriate phrase...

Stock Alert - This is currently (I think) a Val Line stock with reportedly NO subprime (on the books), and a reasonable div, but the timing for a Buy remains to be seen. I've put it on my watch list because when the tide rises for banks, hopefully stronger banks will go rise farther. Comments?

HCBK Hudson City Bancorp
http://tinyurl.com/56nyn3

Seadog;

It's not a matter of being convinced. The Roman's used to say, "To live in Peace, prepare for War."

The first line of "The Tao Te Ching" states "Nature is unkind; It treats creation like sacrificial Straw Dogs."

When entering any authentic Taoist Temple, the first exhibit to greet the visit is one of weapons and battle standards to remind the patron of this principle.

Look, in many ways we are slaves; social doctrines are developed to quell dissent and civil disruption-to keep the sheeple quiet. Now, you might think it extreme, but it is the final option to go to that extreme that provides for the "pursuit of ...liberty." Of course, one could say it is better to live a slave than to die fighting for freedom, but without that ability, sanctioned within the Constitution, there is no option for the slave.

By the way, did you know every male citizen of Switzerland is required to own an assault weapon?

re:HCBK

Hasn't reach a Triple RSI buy point or a RSI capitulation.

Nov max pain 15, Dec 20.

No position.

Seadog: Our politicians have whipped up a frenzy over two topics that Americans have a hard time wrapping their heads around...guns and abortion, both nearly unsolvable constitutional issues.

They purposely do this to divide us on something none of us can truly solve to anyone's total satisfaction. Otherwise we would all clearly see they are all on the same team to screw us over and the game would end.

Women will always have the basic constitutional right to control their own bodies and the second amendment will never be stricken or amended further, at least not without people in the streets and gunfire....but we persist in stupidly trying to control one another and restrict each other's liberties.

Here's my view. I don't have any desire at all to decide about the contents of *other* people's gun safes or uterus', it's none of my business and it's no one else's as to what I do in my life either. The Constitution and Bill of Rights guarantees me and everyone else those choices.

The principle is that the people decide how to live their lives, not the government, no matter who wants to use big government for their own purposes, right or left.

It is wrong to divide the people over the most basic constitutional rights.

It is wrong to use government to impose one's own personal morals and restrictions on other free citizens.

It's wrong to purposely whip up people's emotions knowing fully well you are only manipulating and dividing them.
That's my opinion and that's why I responded as I did to the false NRA post.

(had no time Mon. for blogs, sick child & wife and all that good family stuff)

Mon. bought initial position 200 units in DAYYF DAY-UN.TO. This was just part of the continual rebalancing of my long energy trust / short XLE spread, which I try to keep about neutral.

I still see no end to the debt debacle collapsing just about everything, but want to be decently hedged if it does end suddenly.

Am starting to bottomfish a "trophy" position in SDVKY (SAND.SE) Swedish Sandvik in the range $4 - $5, it reports Oct. 30. By "trophy" I mean a few hundred shares, which & I'll keep even if it goes to zero. It has been downgraded a lot recently. Note JPM recently downgraded it to "reduce". JPM is one of the big 4 owners, it has 9%.

Bought a "trophy" positon in SLW also.

Mostly still in puts (IYR, XLY, XLU, XLP) & cash.
IYR & XLP are now biggest positions.
Thinking IYR has no bottom, and XLP does but will "crash" last of all.
Thinking uts are best "investment" as long as $USD is going up. The we shall see . . .

Nemo: Thought this might interest you....some of my really most left friends formerly for gun control (not hunters or enthusiasts) have since decided they need guns to defend their freedoms ala Kaimu's post above.

Of course they are thinking of defending attacks from the right and the right fears the opposite....

America is a paranoid nation.

Yeah...it's pretty funny, well...wouldn't it be funny if the right and the left united against the government...and they unite over guns. HA! (Can Kaimu trademark that?) I have a way left friend who's constantly defending Chavez and what he does for the people. I said, wait until the price of oil drops and see what happens.

The whole conversation puts me back to that C.S. Lewis quote I posted last week:

Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience.

~ C.S. Lewis

bsi87 - HCBK. Thanks for the comment.

I'll be watching the RSI levels also, but with so many stocks currently in the "zone", perhaps the place to look for value is the list of stocks that are NOT in the "zone"? Just a thought. No position in HCBK.

Oh Craig:

On the 2nd Ammendment: I think you might see some interesting laws if the Dems control all three branches of government and have a veto proof majority in the Senate.

Spot,

I would papertrade your strategy first. The RSI 30 crossover has not been working. RSI capitulation, RSI 7 day < 10, has.

Good morning.

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That's a good one alright.

I would rather we unite over an understanding of the Constitution and liberty.

One can't help but notice how this is about control. Those with no interest in firearms want to control others interest and ownership and many of those worrying about abortion don't even have a uterus.

The answer is the same for TV programming....for crying out loud, change the channel, don't buy a gun and if you don't want an abortion, don't choose one.....but hold your tongue about what others choose and leave them alone....or they will be after your rights next.

bsi87 - I hear you and won't dispute your strategy, but I wasn't trying to state a strategy for trading but rather for possibly looking for relative value by a juxtaposition to all those stocks that ARE in the AZ now. Then, just as you use a screen to find a list of stocks, I might use a "value" list (within the meaning stated above) for my list, but again - just a thought.

BTH, wtih regard to screens. "Stuff" really started to hit the fan about 69 weeks ago. I've been looking through a list of stocks produced by screening for current wkly closes above the close 69 weeks ago. Theory being that any stocks that have maintained or improved their price during the last 69 weeks have little to no debt crud.

No trading advice for anyone.

re Sandvik, note that it pays 9% currently.
As with most all Swedish companies, the dividend is paid once yearly, in the spring.

The only other Swedish co. I'm watching is Atlas Copco, but think too early, it has to come down more.

Craig,

You have a 9-year old article of your choosing and are free to stick to it. I am not about to try to convince you of anything. You can believe whatever you choose. You have my opinion.

Your logic, on the other hand, is based on wishful thinking.

"Bans don't work so stop worrying." Bans don't prevent crime — but they do work against those who obey the law.

Nemo, (who this was originally addressed to) has more than enough specific info to convince me this will be an ongoing issue for liberals — city, state and national.

Seadog,

Sounds like you may be in Great Britain. Watch out — they will be after your knives next.

Last time I was in London (mid 1990s) there was an article in the paper of execution style killings with a crossbow. Eventually they may try to ban rocks. :-)

I'll just add a bit to Kaimu's comments:

It was put in our Constitution due to the experience of the revolutionists having had British troops billeted in their homes.

Two countries come to mind that have not been overrun lately — the US and Switzerland — both with a large number of guns in the hands of civilians.

Craig,
I think you are right. As the CEO of Intel once said "only the paranoid survive" but then again he has since gone....