Bill,
Great WIR as always. Enjoy the beach today. You deserve it. For the record, I like it when you toot your own horn. You deserve to be proud of your accomplishments and knowledge and I, for one, will never be upset to hear that you were right on the money.

Cheers.

Rob.

An excellent recap of the problems still posed to the financial system by CDS in your WIR, Bill. In case you didn't see it, an article from Chris Whalen available at "The Big Picture" that amplifies and compliments your view with precision.

Bill, thanks for the CDS (Wikipedia) link. I must admit I knew little or nothing about CDS's however I am now reading up. CDS Index trading as well.

Dab

In my attempt to understand the CDS thing, I found this at seekingalpha - Salmon doesn't think it's 'fair' to blame the meltdown on CDS.

http://seekingalpha.com/article/104600-the-downside-of-cds-demonization?source=feed

Now, I don't yet understand this stuff enough to draw my own conclusions, but after all the articles that I have read, the thing that isn't addressed, and that continues to bother me the most, is how the speculators in CDS are walking away big winners. How can the government allow the players in this shady market to leave the casino with their pockets full while the US taxpayer bails out the casino? Is this too simple a view?

finger lakes said:

"It's very interesting how the government immediately writes blank checks to their favorite banks but makes the Automakers beg for 1/20th of the money given to any one bank."

Rob,

Your statement above alone accurately demonstrates to even the casual observer who is truly in control of the U.S.

Bill
No need to respond to a very small (minute) minority of whiners. Your forum is open and your opinions etc. your own, if someone reads your material and doesn't like it they can take a hike. If I have learned anything it is that there is a certain constituency that always wants something for nothing and then has the gaul to complain about the 'something'. Go for a swim and enjoy the day off you deserve it. I speak for many when I tell you, you provide a terrific place to learn.

finger lakes
You may want to check this out from Jonathan Weil at Bloomberg
'Goldman, GE, GM Invite Us to Play a Rigged Game'
http://tinyurl.com/674zbd

Take your protein pills and put your helmet on!

Averaging in on APWR at 3.55...good presentation the company made at a recent Investor Conference:

http://www.4shared.com/file/72418545/bd282a6c/apwr.html

Bill,

Just a line to thank you for another great WIR.

Enjoy the beach.

Cheers!

re " minority of whiners"-

no one in this world exists without his/her detractors (people even complain about demanding infants, for crying out loud)...if we were to respond to every one of them, how would we get any work done?

I posted this on the Friday discourse but didnt want anyone to miss it:

"Fed Pledges Top $7.4 Trillion to Ease Frozen Credit"
http://tinyurl.com/6pv77f

Now can the usd crash and gold/silver rise?

ToddinFL,
So true. Now we just have to figure out how to protect ourselves and hopefully make money from that knowledge.

I see the best protection against banks as not having any debt and not needing any loans. We're working on that part.

So, with the banks running the show and with Geithner the new king which asset classes will they want to rise? They'll want their own prices much higher of course. Do banks favor a strong dollar or weak dollar? I think banks like low interest rates. I would also assume that banks wouldn't want Gold and Silver going too high and competing with their currency.

Rob.

Sold my FAS that I bought at 13.3 this morning at between 18.50 and 19.15.

Now in pretty large on APWR at 3.53 average.

yvrapx,
Great article and so true as well. One of the reasons I've been so fearful of going short since DOW 10500 is the stacked deck against us that often plays out on the Friday options expiration day. Up until September I made most of my money shorting and buying puts. Since then I've switched to going long and buying calls and it's been mainly out of fear of the hidden agenda being sprung on my portfolio by the interventionists.

Rob.

Also, we can kiss mark-to-market accounting goodbye now that Geithner is in charge.

Now we'll never know the cards anyone is holding. That's why it will be as important as ever to figure out where the banks are going and follow them, unless they go down the toilet bowl like they should.

Rob.

So while happily counting my chips from my GG buy, I'd like to challenge the whole successful reflation concept here.

We're in this mess because of CDS, sure, but at the root of that issue is the drop in housing prices. The drop in home prices creates underwater homeowners, and underwater homeowners default on mortgages, and that causes the mortgage securities to fall in value, triggering losses in the credit default swaps.

Home prices rise in a normal environment at the rate of inflation. So, absent another housing bubble, what will get these homeowners out of their underwater mortgages?

I mean, if we had a massive principal reduction to current asset values for all underwater homeowners, that would likely solve the problem, but would HB&B give away that kind of money to regular people? I'm thinking not so likely.

Right now we're just throwing equity into banks, without addressing the bad mortgages on their books, which are likely to stay bad - and probably get worse - for years to come. That equity will be eaten away as losses continue from the defaulting homeowners, because the housing market will stubbornly refuse to "recover" (i.e. move back up to it's bubble values).

Well that's my storyline anyway and that's why I'm thinking the reflation we're doing now is unlikely to work, although it will fix the problems the banks have for a quarter or two.

IWM straddles for November expiration: it looks like every position bought any day or any time during the month would have been profitable, up until early afternoon of last Friday. ROIs ranged from +10% to over +800%.

http://shockedinvestor.blogspot.com/2008/11/straddles-report-for-november.html

The same thing happened the previous month (October expiration), and it seemed unthinkable that it would happen again in November.

Cara 100 Update (Final):

WMT - Upgraded to Outperform @ William Blair

WFMI - Downgraded to Market Perform @ William Blair

INFY - Price Target Lowered from $30 to $28 @ Kaufman Bros.

davefairtex,

it is painfully obvious that they will not bailout home owners on the same scale as banks. maybe several hundred or several thousand here or there. but nothing like the handouts given to banks.

same shit, different version. sorry for my explitive but its the truth. we live in the matrix, where nothing will change for the greater good of the people. we are all slaves. just have to use this knowledge to get a small piece of the pie.

i am almost getting paranoid that as Billcara.com grows, the powers that be are using it to trade against us.

Gold up $37 after being up $50 on friday. Is it too soon to say we're done with the de-leveraging yet?

Finger Lakes
Yes, you are unfortunately correct. Citi would(could?) not fail:
The US Treasury Department’s bailout of Citigroup is the morning’s top story, one that has US index futures pointing to a higher open. Late last night, the US government announced a guarantee of more than $300 billion in impaired debt on Citi’s books and, at the same time, provide a $20 billion capital injection into bank. Surprisingly, no management changes were stipulated as a condition of the agreement (possibly because Obama advisor Robert Rubin is on Citigroup’s board). Citigroup stock is indicated to open higher by more than 25% and the Dow by 140 points at time of writing. These positive signs come in the wake of a strong rally late Friday on news that Tim Geithner, currently New York Fed governor, will be announced as the new US Treasury Secretary, possibly the first time a bureaucratic appointment has been the sole driver for a market jump. President-Elect Obama is set to announce his full economic team today at 12:00EST. It is also expected that a US economic stimulus plan will be unveiled, to be put into law the first day of the Obama presidency, that will amount to at least $500 billion in fiscal spending.
Thankfully Western society is reasonably civil because if it weren't the thievery going on would prompt some pretty vicious violence. Being robbed at gunpoint for your wallet is one thing, fleecing you for your retirement savings is another.

davefairtex - I fully anticipate government will take action to stop the housing price slide, averting disaster. It will be expensive.

BTW the prior piece should be in quotes from a Morning Call piece at Blackmont Capital.

While all the charts are telling me that we have decisively reversed the short-term downward trend I'm not going to chase anything here. I've put in some buy orders in case we pullback from this morning's highs. I've also raised my stops on positions I took on Friday.

bought some C on Friday - it capitulated at RSI 7 day <10. It's posted on my Twitter log.

Buy limit EEV 77.37. If not executed by 12:30, pull it.

Bill,
First, get to the beach and have a good enough time for all of us. It's frickin' cold here today....

Second, human nature doesn't change.

I have yet to find an exception to the rule that people judge others by their own morals and standards. My suggestion is to not waste one breath on other's low standards. All you can do is set a good example.

I think the quality of discourse here is the true indication of your example.

Note to Congress - Opaque balance sheets are unacceptable when it comes to where I park my money. Give me a transparent balance sheet and I'll consider it. Meanwhile, you park your own money there.

will Obama move markets when he speaks?

Chickenpookie -

Heh I agree that they'd like to do this, but how? Blow another bubble? Seriously, I just don't see it. Current policy is to rewrite them using teaser rates, etc which will just "kick the can down the road" and not address issues of long term affordability and/or ability to sell to move to a new job, divorce, etc.

Bill,

re: WIR 11-23-08 (edited repost from Sunday)

In the past you have invited a discussion of your weekly review, so with that in mind, there were a couple of points which bothered me.

I don't think we should look at what is a major change in the U.S. economy as an "overnight" one. As you pointed out in the second paragraph you warned about it two years ago. Also, CDS are only one aspect of the deterioration of the U.S. economy. Perhaps the most urgent issue, due to the 70% dependency on consumer spending, is the loss of jobs.

This has also been occurring for years, even decades.

Our city of 150,000 has lost more than 10,000 manufacturing jobs since the passing of NAFTA. Replacement jobs are of lower quality.

It first began to disintegrate in the mid-1980s when outsourcing went to Asia for some of the simpler items. The end of the Cold War took many of the military jobs and the computerization of the world made national and client loyalty a part of history.

I began to see it in my illustration and design business as companies cut back in order to meet foriegn competition.

PageMaker, Power point, Photoshop, stock photos and art on a disk became universal, company publications disappeared from my list of projects as the bosses' secretaries became my chief competitors. Mine was only one of a long list of jobs the computer made obsolete or less rewarding monetarily.

With the spreading of internet usage whole categories of previously local jobs went to the lowest bidders in the modern world. The computer and internet are major deflationary forces attacking job quality here.

Too many people want too few jobs. For want of ability or desire, too many products are finding no buyers.

All this leads to another point in today's WIR — "...there will be no depression." In my view depression is a purely economic condition and is becoming more evident. The conditions I have just outlined seem to point to a possible depression. It may just be too soon to make that call.

Take my word for it — when you lose your job, your benefits, and dip into your retirement early — it is definitely depressing.

I know 59 people who have been working multiple part time jobs, shouldering the cost of health care, and their vacation is now the time between jobs and spent looking for one.

You pointed out a few weeks ago that even during the 1930s there were bullish market periods in the midst of the Great Depression. It will likely be so again.

Some of us are fully aware of what the term reflation means. And it is apparent Bernanke will continue to do his best to reflate, but...

• What if no one wants our debt at any rate of interest?
With the dollar becoming a dirty word globally, why should anyone buy?

• More importantly, what if they can't buy due to domestic conditions?
I suspect banks are not loaning not because they don't want to, rather because knowing (or perhaps not sure) how much exposure they have to the subprime in all its toxicity, they are functionally insolvent.

• Individuals in the U.S. are being faced with personal indebtedness to that same insolvency point.
When they cannot buy — our economy is dead. How does printing more Monopoly money make things alright in any way? Will restoring the ability to take on debt solve anything?

• Unless and until we make something here, that they want there, passing out more paper seems meaningless.

Craig, don’t know if you saw it

CHS Inc. Reports 2008 Earnings of $803 Million; Fifth Consecutive Record Year

http://tinyurl.com/5s7fgk

ALOHA !!

Bill ... I see no doom and gloom, only "reality". I do not judge whether "reality" is good or bad, because that is judging whether the sun rising in the East is good or bad. Who cares? You just play the hand you are dealt and make the best of it.

The reality is EMPIRE dies and that is a proven historical fact. The reality is FIAT always fails and that is a historical fact. The reality is WAR is ALWAYS inflationary and that is a historical fact.

The fact is DEBT IS NOT WEALTH and that is the mistake that Americans have been making since I was born! Those who purvey that DEBT are in trouble for all the reasons that EMPIRE and FIAT always fail ... it is human nature. If you hand a human being a blank check they will always cash it with as many nines as they can!

REVOLUTION NUMBER 9 by the BEATLES was about that!

I never apologize for speaking the truth as I see it! The truth is and always has been that REALITY RULES!

The AMERICAN DREAM is DEBT and basing one's future on DEBT is fantasy not reality! It is that simple!

QUESTION AUTHORITY !!!

OBAMA - When in doubt hire the guy who created the entire mess to advise you on how to make it worse! REWARD FAILURES! Its the American way!

Why isn't Rubin and Greenspan in jail?

Why do we still have a US FED?

This is from RON'S BLOG ...
READ ON:
Rubin, of course, was President Clinton's second Treasury Secretary (1995-99) and his key economics advisor (perhaps even Secretary-in-waiting) as head of the National Economic Council during Clinton's first term. During the 1990s and into this decade Rubin was credited as the key architect of Clinton's economic turnaround and economic expansion.

The Times article notes that in the 1990s, Rubin played a key role helping "loosen Depression-era banking regulations that made the creation of Citigroup possible by allowing banks to expand far beyond their traditional role as lenders and permitting them to profit from a variety of financial activities." That part we know. And it's fair to note that there was a broad, though very ill-judged and ill-fated, consensus in favor of these reforms at the time.

After leaving Treasury, Rubin signed on as a director and senior advisor at Citigroup, an entity he had helped to make possible by advocating the aforementioned deregulation. Rubin was also, along with Alan Greenspan, a staunch opponent of regulating derivatives.

$cpc dropping.

dave

Deleveraging isn't even close to being over (3rd inning, maybe).
Look at the tape today. With exception of the pm miners there is little volume and the majority of asset classes are going up. Bond market and the usd are down.

Money is re-flating for a trade or a bull trap. We are due for a meaningful rally.

I wouldn't call for the usd to collapse just yet. Last time I saw we still are the place for safety. The dollar is probably over bought and needs to retrace but more shoes to fall soon.

Pm looks good for a while but eventually the deleveraging will start again.

SiO2:
Tx for your post today and your periodic posts on straddles and the educational article on your site.

I have a question of mechanics for you or anyone else who can elucidate - in particular, to a Canadian trader.

I use the discount brokerage platform available from RBC; and while I can buy one sided options, I can write - only with broker assistance (tho' at discount rates) - and they do not offer combo's; so in order to place a straddle, strangle, spread, I have 2 orders; and if one is a write, I must await a body.

E*Trade will let me write without intervention; but again, I believe the combo's are a 2 order system.

SiO2/others: do you put these option combo positions on with 2 (or more) trades? or do you use a platform from which combos can be selected?

I'm sure that the banks running the government will buy any amount of treasuries needed even if no foreigners buy them. I believe that is one of the main reasons for the Geithner appointment: to ensure the government can sell any amount of treasuries.

The main problem the banks will have is keeping the world on the dollar standard while they keep expanding our debt.

Rob.

re:C. In at 3.80, out at 6.05

out of AMG/SPWRA. 10% gains.

Chickenpookie said:

"I fully anticipate government will take action to stop the housing price slide, averting disaster. It will be expensive."

Please explain to me if you will/can how the govt. will be able to keep housing prices from continuing to fall.

IMO, ultimately in the long run, the free markets will trump govt. interventions, when the govt's policies do not align with those of free markets.

That is, the govt. can (and has) certainly create short term situations where prices are pushed in the direction they desire, but if those policies do not mesh with free market capitalism, then they will ultimately fail.

Bill said in his most recent WIR:

"No, no, no. There will be no Depression. You heard it here first. Because of globalization, economic depression is not an option. Reflation, which is the printing of money by borrowing on the credit of our sons and daughters, and their sons and daughters, is the only option."

OK, I really want to believe that there will be no depression, or severe economic displacement.

But I fail to grasp how the govt. can fix a problem of egregious over consumption and under/(total lack of) savings by reflating.

At some point (I think we're there), the U.S. has to come to terms with the idea that years and years of over consumption using uncollateralized debt ultimately leads to a point where those debts have to be paid.

I fail to understand how we can just "kick the can down the road" and push these debts onto the next generations, (even if we want to do that) without more serious economic dislocations taking place in the next relatively short period (6 months to 3 years) of time.

JMO, as always.

Thank You Seamus, Scottrade only had the headline.

davefairtex - As mortgages fail, banks loose money (vicious spiral). Government can either keep funneling money into banks, work to resolve root causes, or all of the above. So far, the process is being executed in serial fashion, instead of parallel.

Root Causes:
1) Lack of banking oversight.
2) Opaque balance sheet accounting standards (further masking oversight efforts)
3) Loose lending practices - created a large inventory of at-risk and failing mortgages.
4) Conflicts of interest throughout.

Anyone else see the disaster that is NovaGold this morning? I guess this is just more proof that in a credit crunch, it does not matter how quality your properties are unless you have some existing cash flow to back them.

Todd, somewhere around the time of Bill's bull call, he gave us his idea of the timeline involved and that we would be kicking the can down the road. And let's not forget the TOG, which is a bet on higher treasury yields....pretty much verification that a game of serious can kicking is in progress.

Bill...

As far as I'm concerned, you can even "ka-ching" a time or two.

Shark, too, I guess.

BillySundance, what a sorry story NovaGold is. I think excellent geologists, poor managers. I bet a lot of long term holders wish they'd accepted Barrick's offer.
Disclosure - long NG - thought it had bottomed earlier this month :-(

Have any of you viewed the Zeitgeist movie on youtube that Bill has referenced? The ideas expressed in here some might say are far-fetched or conspiracy forwarding. It was an eye opener for me.

Comments on validity? Kaimu?

toddinfl - 1)"Please explain to me if you will/can how the govt. will be able to keep housing prices from continuing to fall." 2)"if those policies do not mesh with free market capitalism, then they will ultimately fail.

1) Short version: Renegotiate real estate mortgages to stop the hemorrhaging. I've laid it all out in previous posts, along with external links. Government enabled many of the problems we're facing today by adoption of poorly conceived policies, and unfortunately were asleep at the wheel while the bus was careening from ditch to ditch. They can take steps to dampen harmonics within the economic system, and will. It will take time, and will be quite expensive.

2) Who's to say what free-market capitalism wants? I think it wants this financial mess to go away, and will work with government to resolve the issues. I don't understand how you can believe governments aren't an integral part of free market capitalism. They are, they are supposed to represent the people, but that trust has been bastardized and the free market is in the process of correction.

rugger09,

i watched in full this past weekend. while many points are good in the film, i do not think it is realistic. at one point they say that money is man made and we have enough technology today to feed the world and heal most of the sick, and that money & a profit system is one that promotes scarcity, which means there will always be sick, poor, and wars.

It is probably true that we have the technology to heal the majority and feed the world today. but that technology only was made available by competition and the profit system. the corrupt system and corporations allowed the technology to advance this far this fast.

i found the film entertaining but pointless because the system we are in cannot be stopped without a full out aramgeddon, and i do not want that.

i guess my analysis is, i now know the truth, trade the lie, and get a piece of the cake myself.

re: Gold shares

Will checkout Novagold. Heads up on Minefinders MFN for the gold bugs out there. They filed a preliminary shelf for up to $200M (current market cap $200M).

The latest from TD this month:

Negative – Minefinders now has just $6.5m un-drawn in their credit line with
$2.5m in cash. The continued delays have left Minefinders in a vulnerable
position with limited cash and debt available, and positive free cash flow
likely months away. We believe the company will need to raise additional
capital in the very near future...
We are now assuming a $30m financing at C$4.00 per share, which results in an additional 8.4m share
dilution (or 17%) in our NAV valuation.

meanwhile back at the ranch,

closing FAS position. long at 12.50, out at 20.7

sticking in a bid for BGZ at 86

bsi87:

What's you're rational for BGZ? Gone too far too fast, and sell the news on Obama's team. (Maybe he's irish? O'Bama)

NYUgrad, I apologize for not being more specific...

The video I was referring to was in Bill's last week in review, the second set of links in the bonds and yields review. It is a 5 part series that describes the advent of the central banking system and the federal reserve. It then delves into the assumed real reason it is in existance, the assumed overall plan and the evidence of such assumptions.

I think the videos you were referring to were the vids on debt and how it came to be the value in our monitory system?

Respectfully

Shannon

BGZ 10 day ATR is 15.50. Move of this magnitude this early is extreme, trading at bottom of 10 day hourly Bollinger Band, Obama Admin happy rap, C rally, etc,etc,etc

my mistake rugger09

long FAZ at 108.5

CP

"Renegotiate real estate mortgages to stop the hemorrhaging. I've laid it all out in previous posts, along with external links. Government enabled many of the problems we're facing today by adoption of poorly conceived policies, and unfortunately were asleep at the wheel while the bus was careening from ditch to ditch. "

The problem with this idea is forcing banks to actually write down losses. I don't think the government has the illusion that they can avoid this write-down process, but their idea is to do it as slowly as possible to prevent severe economic disclocation.

The FED just helped put a bunch of Citi's toxic crap in a specially backstopped vehicle. This stinks for the taxpayer, sure, but imagine what would happen if the government made them write down the toxic assets right now?

1st, Citi equity would be wiped out. Then there would be a CDS settlement unwind of unknown proportions (similar to Lehman or WAMU CDS settlements just bigger!). Who knows how much swap protection was sold on Citi - seriously who knows?? no one knows! In order to settle these obligations it would require more forced selling of all liquid assets. Forced selling of all liquid assets would then reinforce more real estate devaluation. The equity value of companies like BAC, MS, JPM, GE would fall, increasing possibility of future CDS unwinds. negative feedback loop.

I think the real answer to the real estate problem is to create more enticing conditions for someone to actually own a home! I have been sitting on the real estate sidelines for years and its still not looking attractive!

What would help? One of the biggest problems with real estate are all the liabilities of home ownership which are not significantly going down! High property taxes, high cost of home improvement, high utility costs, etc. We need to bring down the fixed costs of home ownership to give people a fighting chance and bring in new buyers. How can we work to decrease property taxes?

Sadly, attempts to make companies write down these mortgages now would really be attempts to make the US taxpayer pay even more for this mess because we all know Citi can't pay for it! The US taxpayers would just get a bigger tab.

Is it remotely possible that at least some of these CDS contracts be voided? It seems odd to me that with all the unprecedented actions taking place on the backs of the taxpayers, that we can't void the contracts that are putting the most stress on the system. Are my glasses too green here?

BillySundance, you have hit the nail on the head. You are on the sidelines because prices are STILL not low enough to make owning more attractive than renting. What does that suggest will happen to the real estate "recovery" people keep hoping for?

You make interesting points in the rest of your article too. Avoiding triggering CDS defaults sounds pretty important. It's a pity we can't wipe out Citibank common without triggering a meltdown. They sure deserve it, seems to me.

Foz - I just don't see how that is possible. While the CDS system has been haphazardly created and horribly abused, its original intent was to protect in the even of credit default.

So, if I am a pension fund that owns a bunch of Citi debt and I purchased a CDS to protect me in event of default, how can you deny me the protection I have purchased? How do you pick and choose who deserves protection and who doesn't?

joey, I am also on Direct Investing, those are two orders indeed. Indeed not the best platform. I do not write, I only buy, sorry, so can't answer on that.

Billy - "The problem with this idea is forcing banks to actually write down losses. I don't think the government has the illusion that they can avoid this write-down process, but their idea is to do it as slowly as possible to prevent severe economic disclocation."

Agree with you on this. I think we could keep shorting the market into earnings for the next 2 years or so....

Billy: I don't mean all of them, just the raw speculators; those who made fortunes pushing this paper around without any real stake in the outcomes. Some of what I've read has framed it that way and I wonder where the justice is. It seems to me that innocents are paying an immense price while perpetrators leave the scene with their pockets stuffed.

I read over on the TickerForum that the Lakota nation are opening their own bank based on Silver and Gold currency only deposits.

http://press.freelakotabank.com/

From their website....
"At the Free Lakota Bank, we issue, circulate and accept for deposit only AOCS-Approved silver and gold currencies. Silver & gold are a store of value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Since we deal only in real money, we do not participate in any central bank looting schemes."

Very interesting in these troubled times. I wonder how long it will be before the US Fed Govt declares it illegal for US citizens to have deposits here.

wow..novagold...what a shame.

Chickenpookie said:

"I don't understand how you can believe governments aren't an integral part of free market capitalism. They are, they are supposed to represent the people, but that trust has been bastardized and the free market is in the process of correction."

I don't think I ever said (or implied) that the govt. should not be a part of free markets.

What I do believe is that when the govt's actions promote irresponsible borrowing of money (which they did for the past 5-8 years), for those who have little or nothing in the way of savings or tangible assets to justify that borrowing, then at some point the pigeons come home to roost (debt repayment - or bankruptcy).

Billy - agreed picking winners with CDS would be arbitrary, but since we're already in the business of picking winners here (anyone who gets a bailout is a "winner" while those who don't are "losers") why not let CDS only remain in force for trades where one side of the trade actually holds the underlying debt issue.

Boy wouldn't that ruffle a few feathers.

Mr. Cara, I am the one who posted the comment you are referring to and just as I wrote it where all can see so I would like to apologize if it offended you where all can see. I enjoy your article.I read your article at dailymarkets blog feed.

[Bill Cara note:

Donald's letter was one of two I received about the same time. I chose his because he came right to the point whereas the other one delved into trades, etc, and I wanted to quote in context, so I took Donald's entire letter.

Anyway, here was my reply:

Donald,

I had another letter on the same point, so I felt it was important to address the matter. If 2 of 1000 write within minutes on the same day on the same point, then I figure there were a couple thousand people thinking the same thing. I try hard -- I don't always get it right -- but listening to people is something I think I do get right. Thanks for your letter. Here is what I wrote to the other person (id kept anon).

Best,

/Bill ]

Also, Obama's nomination of Geithner to treasury secretary does little for me to induce confidence that anything other than what has already been done (or proposed) by Paulson and his clan will be changed for the better.

It will likely be more of the same, as Geithner was right there on board with Paulson as the original (flawed) plan was put into place.

Rewarding bad behavior, and more to the point, bad lending practices by throwing taxpayer money at the situation in an attempt to "get the economy going again" will only lead to far larger dislocations not far (much sooner than our grandkids) down the road.

As has been said here before, "it all works until it doesn't."

JMO

[Bill Cara note:

Geithner would not have been my choice either, but the banks would not have accepted Summers or Volcker, and this volatile cycle bottoming process would have continued. In that respect, Geithner is a good choice. Proof will be in the pudding. Let's see how the man operates before we judge. From what I have seen, President-elect Obama has made some wise moves. He should be afforded every opportunity to do the job that will be painful for many people. But there is no reason that the job cannot get done. With globalization and open trade today, the whole world depends on it.]

Foz -

I see your idea but I am skeptical about how we could go about such a plan. After all, weren't the banks themselves as guilty of being raw speculators as those who they sold default protection to?

The sellers of protection rawly speculated that there could be no credit default event of such proportion that would prevent them from meeting potential default obligations.

The buyers of protection rawly speculated that for an agreed upon price, they could insure the quality of their debt portfolios.

One might argue that the true raw speculators are those who bought debt protection on debt that they did not own. I would counter that by saying the bank who sold the protection rawly speculated that they would be able to hedge the other side in a default event.

Both sides were rawly speculating!

Thanks, Dave - that's what I'm talking about. It just seems like a common sense thing to do.

Correct me if i am wrong.

Is potential double bottom forming on SLW?
http://i37.tinypic.com/wbq4bl.jpg

Bill..........GOLDCORP .......GREAT CALL...:)

Thanks for your guidance and education.......

I wonder how many professional analysts missed GOLDCORP?????

Bureau of Indian Affairs....tobacco sales, fireworks, liquor, gambling, now real banking.

They aren't technically on American soil or under Federal law, so it would be interesting to see the gubmint try to stop investment in a "free market" system.

davefairtex... however enticing it may be, I still can't see how you can unwind the chain without hurting the original debt issue holder. Each trade has two sides; no matter how long the chain is, originator of it is still at the beginning of this chain, and as you start taking out protection of farther links, you will arrive at the first pair that did the very first trade. Leaving the counterpart with no protection you will inevitably leave the debt issue holder with no protection and doom him to failure... unless I miss something (which is quite possible considering how complicated whole structure has become)

RE: SLW

NYUgrad

If SLW can close at or near the top of its range for the day on continued heavy volume, then you might get validation of that formation.

davefairtex

As I mentioned in my last post, selling default protection against an asset for which you can not actually hedge teh likelihood of default is just as immoral as buying protection on an asset you don't own.

Cancelling CDS for people who don't own the assets would just be a freebie for the banks who sold protection. Another dose of moral hazard and a reinforcement that Uncle Sam will make everything okay if the bank messes up.

thx todd, the money flow out is still concerning me on slw.

BTW - I am not trying to sound like a doomsdayish jerk - just saying that it is a two way street regarding who acted morally/immorally regarding the CDS market.

Bloomberg: The real figure for the bail out and guarantees is $7.5 trillion (yep, with a T) and if you layed 7.5 trillion dollar bills end to end it would reach to Pluto, just outside our solar system. A fact Dr. Cosa will love....

NYUgrad

There are quite a few precious metals stocks like GG, AEM, ABX, GOLD, KGC, EGO, etc. that did not get low enough to form a double bottom.

They formed a bottom, pulled back (but that pullback was above their earlier low), so they are inherently reflecting more strength.

I'm not saying SLW can't/won't rally from here, just that the others mentioned above displayed more technical strength.

http://tinyurl.com/6d39xs

CP,

The cost of reflating housing to where deflation is no longer the big worry is going to give "new meaning" to the word "expensive", IMO.

On CNBCW last night an asian economist said it would take $1 trillion of stimulus to bring our economy back to the black. That's one heck of a big number.

This rally in stocks like COF, SPG, DFS, etc. allows those who like to short another opportunity to establish positions in the expectation that the rally ultimately fails.

Not a recommendation to short, just an observation.

JMO, as always.

Billy - You are of course right about the moral hazard issues here. And you don't sound like a jerk of any kind either. :)

I was just trying to reduce the size of the CDS exposure to the actual size of the debt market being protected, so we could perhaps not be so terrified about bankruptcies. But then again my understanding of all this is fuzzy since I don't trade those things. A CDS just struck me as puts on the debt and so all I was suggesting was a way to reduce the put open interest to the actual total underlying market cap so we can bound the aggregate exposure, while still providing the owners of the underlying some measure of protection.

I'm not suggesting this proposal has any real moral high ground. It's just another kind of bailout, with the only real moral motivation that of protecting society at large at the expense of an unlucky bunch of naked shorts whose counterparty is naked long. It would be one big "mulligan" for them.

The one positive thing about this societal risk bailout is that the taxpayer doesn't have to write any check. Wouldn't that be nice for a change?

I know, I know, there would no doubt be unforeseen consequences from this, probably a bunch of hedge funds would go broke, there would be more forced sales, and who knows what else. Simple and attractive solutions are often deceptive that way.

what happened to the volume from this am? everyone waiting to sell into the last hour?

long BGZ 86.76

trailing another stop at 91 to accumulate more.

Bill Cara wrote:

"[Bill Cara note:

Geithner would not have been my choice either, but the banks would not have accepted Summers or Volcker ..."

So Bill confirms that we are essentially being held hostage to the whims and desires of the banks. Something that most readers here already knew, but were hoping would change, if even just a tiny bit.

This is exactly what makes people uneasy, and take pause. As long as "more of the same" continues, we'll get results accordingly.

There has been no real "change" with the election of Obama (and I voted for the man). Not that anyone with a brain expected as much. It's just more of the same.

So then, how can a reasonable person expect a correction of poor policies, and a return to sound economic policy if the same type of band-aid, patchwork ideas continue into the new administration ?

American-style capitalism has brought on the war for supremacy now being waged in the USA, the adversaries being the US government and HB&B. All power in government emanates from its treasury for no legislation is effected without financial consideration, and taxation gives it a powerful and controlling influence over its citizens. Presently, HB&B has wrestled control over the Fed and the Treasury while the bought-and-paid-for legislators posture and equivocate but dare not stand up against their masters. The pretext for this war was hatched by HB&B with their complex CDO/CDS creations being no more that a strategy to generate a crisis where HB&B is “Too- Big- To- Fail”. The end game is to turn taxpayers into the new depositors who are only necessary to service debt and fuel the new lending which will be controlled by HB&B. Capital markets are to be crushed because it is only through the financial market mechanisms of lending that HB&B can control the future of all capital and all government policy. In other words, shareholders will become an extinct species if HB&B has its way. While taxpayers are losing the battle for control of their nation’s finances at present it is only a shareholder’s revolt that will offer any hope of restoring power to the people. Everyday people with savings and pensions must let their voice be heard – even if it requires civil disobedience. Legislators must be made to understand that they are capitulating to the enemy and what is needed is non-intrusion into government by HB&B and legislation that addresses the fraud and wrong-doing by the masters of HB&B and takes them quickly to task under the rule of law.

I have some GG I bought at 17.70, now trading at 25.60. The Dec 27.5 calls are trading at $2. I write some covered calls, make $2, wait the 26 days. Either I keep my GG and make $2 a share or I get taken out at 27.50 + $2 premium and make a total of 68% in a 40 day period. Thoughts?

i just dont understand how the usd is not tanking.

NYUgrad,

re: the U.S. dolar

Be patient.

I dunno Bill. I just checked the weather forecast on the Nassua Guardian website - it's not pretty! Did you really go for a swim?

I've just found your website Bill and I'm impressed. Please don't burn yourself out, cause this looks like the beginning of a very good learning curve for me!

Thanks & cheers
Les
Switzerland

what is the play if you expect the dollar to collaspe? is there a bear $ etf or puts on TLT? Also, what does HB&B represent?

HB&B = huge bank and broker

In terms of $USD strength, I think we need to stop stressing the comparison against other currencies (which are also being printed like mad).

Perhaps the rise in gold over the last two trading sessions is more appropriate?

USD is down 10% against gold in two trading days! Thats some hefty USD weakness in my book.

rlogan1301,

You can always short UUP if you expect the dollar to collaspe.

FAS is moving up nicely. I just don't know when to sell it and move into FAZ. Maybe at the end of the day.

NYUgrad

Patience, it's coming. Agree with Sundance on weakness vs gold as some see through this.

As for what's keeping it up with other currencies, note following from today's Daily Pfennig, courtesy of Everbank:

"The Fed has set up currency swap lines with more than a dozen other central banks. Some of these arrangements, including those with Europe, Britain and Japan, are open-ended, allowing the Fed's counterparts to draw as many dollars as they need. The US has also established individual $30 billion swap lines with Brazil, Mexico, South Korea, and Singapore. These currency swaps are one of the items which has been propping up the value of the US$."

Last Friday's ideas:

>>C Dec 5 strangle: - 5 calls for .90, 2.50 puts for .67

Now: 5 calls $1.60 2.50 puts: $$0.21 (total: $1.76, vs $1.57 then)

>> JPM is also crumbling, trading at $20. Dec strangle: - 25 calls for 1.50, 15 puts for 1.80

Now: 25 calls: $4.70 15 puts: $0.60 (total: $5.30, vs $3.30 then)

>> Finally, BCE trading at CAD 32. CAD42.75 buyout deal closes Dec 11. Deal or no deal? 33% gain if yes, you can hedge with a put. at ~10% of the US cost.

Now, BCE: CAD $38.00

---

3X ETFs: FAZ -34%, FAS +34%.

its just evident the only way our govt knows how to get out of this mess is bailing out everyone, spending to "jolt" and printing more money, creating more debt.

I will hold onto my slw and when i get some dry poweder, get into some gold as well.

"is there a bear $ etf or puts on TLT?"-> TBT

What follows a TRILLION?
Oh well, it's only a guaranteed future transfer of wealth from our great grand-children to the rich greedy bankers that are running this country.
Can the working poor become any poorer in America?
Where is democracy? Can the taxpayers have a vote on these corporate welfare schemes?
Watch out for the Goldman rescue!

b0ss said:

"You can always short UUP if you expect the dollar to collaspe."

There's a double top in the UUP daily chart from October 27 to November 21.

how ironic would a "gold-man" rescue, triggering a flight from usd & rush to gold for safety be?

Opposite of UUP is UDN, i.e. Us$ DowN vs Us$ UP

who is selling slw? 12M shares traded. new low of the day.

someone remove me from my brokerage acct. i can only cause harm to myself.

Shorting here looks "too logical".

After trillion comes quadrillion. Its not far off if you are looking at derivative exposure.

BTW, the first "millionaires" I think were in France in the late 1700's when they replaced gold with paper currency called assignats, and inflation went wild.

I just came back from my morning routine and have the time now to make some posts. :) This morning, during breakfast, I sold my remaining 560 shares of GG at $26.18 (which had about the same average cost basis), since I saw GG coming down from its earlier highs and also felt that the strong two-day move it had qualified the sale as "sale into strength." Just placed a buy limit order for 500 shares of GG at $23.

Then, just now, I saw that SLV is above $10 but SLW has not moved nearly as much. So I just bought 1000 shares of SLW at $2.92.

SLW was up like 0.50 earlier today. Dunno why it dropped, seems odd with silver itself up 0.90.

slw: its because i own it. as soon as i sell it is surely to go beyond all resistence.

Here is a great article about historical stock market performance from John Hussman's team:

http://www.hussmanfunds.com/rsi/badnewsbulls.htm

Here are some key ideas from it:

"The case for stock prices moving lower into 2009
usually rests on two arguments. The first is that
corporate earnings will fall sharply as the economy continues to slow. The second is that the labor market will continue to deteriorate, eventually sinking consumption further. Both may happen."

"There's almost no correlation between year-over-year earnings growth and stock market performance. Based on the average decline in earnings during the early stages of a bull market, operating earnings for the S&P 500 could fall to $57 next year even if a bull
market was to start today."

"Even if the unemployment rate is fully expected to increase significantly, investors should not conclude that stocks will persistently decline. Even if the labor market contracts to a greater extent than is expected, forcing the unemployment rate to 9 percent, it would still be consistent with the first two years of the bull market that started in 1974."

*****

This article changed my expectations so as to assume that the lows for the stock market will occur before December 31. They may have already occurred. If the cash on the sidelines does not move into the market soon to overwhelm the hedge fund selling (hedge funds have received $400B in redemption requests as of Nov. 14, which they must execute before December 31), then the stocks may make new lows. If any of the big 3
automakers declare bankruptcy in December, then all bets are off -- stocks can take a big plunge. But if it doesn't happen, then the widely held belief that stocks will make new lows in 2009 based on bad corporate earnings only gives more support (in my mind) to the fact that people have already acted on this belief (say by extracting money from hedge funds and mutual funds), and the effect of this belief will play out by December 31.

So my "updated" strategy for handling this bear market is to close my put options if S&P 500 falls to 700, without waiting for it to hit 600, which it may in fact never hit. At the same time, I'll still buy some more stock index puts (as insurance on my portfolio) if S&P 500 rises to 850-860 in the next few days and then reverses, since a failed rally before December 31
will kill many hopes and might result in new lows for the stock indexes.

SiO2:
re option straddles

Tx for your response. I remembered your posting before that you traded with RBC Direct; and I was interested in knowing if you found their platform adequate for your purposes.

Mindful of Bill's encouragement and accepting the appeal of these option combo strategies, I would like to wade in...but taking on another trading platform would really slow me down...another obstacle for me, as I'm a bit of a luddite, with very undeveloped computer skills.

regards
joey

There's a ton of resistance on the chart for COF between $31 and $35.

ToddFL

that's "Humongous Bank & Broker"

I gots me a funny feeling that this years lows for the Nasdaq were put in Friday afternoon.

I'm reading the NQ daily chart, and it seems to be showing the decision to reverse being made no later than Tuesday morning, and the rest of the week being created to allow buying 'on the cheap' for the manipulators.

The other three big 'drop and reverse' days since (and including 10/10) were bigger and much more ferocious than Fridays and the ease with which the NQ passed back up through resistance set on 10/13 and 10/18 seems to be implying something different is going on here. At least that is what my gut is telling me and I usually pay attention to my gut, if for no other reason than it's sheer size. I'm afraid it might kick my arse if I don't. Take care.

Chris

Humongous= huge

pretty much the same thing

Todd: don't disagree, just giving you the phrase that Bill uses

Re: SLW money flow.

Pascal Willain's Effective Volume indicator (http://www.effectivevolume.eu) shows continuous large-account selling since it was in the 10's. Every gap-up or price increase has served as a base from which to carry out more large selling.

The selling is very pronounced since Nov.21 mid-day onwards.

A similar weakness pattern can be observed in the December silver futures contract, but it is not so pronounced. Other silver producers (SSRI) and the SLV ETF fare better, but none of these instruments is actively under accumulation.

The obvious explanation is yet more forced selling, taking advantage of the higher prices for the day. This, assuming no hidden issue lurks in SLW. I believe as a community we've thoroughly checked for this possibility a while ago, but this continuous selling is unnerving.

One possibility is that when the stock dropped below $5, it became an unload candidate from distressed institutional portfolios that have a rule of not owning anything below $5 and *must* raise cash or deleverage now. But this is just speculation on my part. Fact is, someone big still sells.

how sad. on a 470 pt up day i am sitting on a 2% gain on slw.

2nd
here comes your 1000 pint rally?

where are all goom and doom TA anakyst?

Analysis

Bill,

You said, "...but the banks would not have accepted Summers or Volcker..."

What did you mean? Why should the banks have anything to say about presidential appointments? What could they do if they didn't like the choice?

NYUGrad - about a month ago I seem to remember SLW strangely sitting out a PM rally one day only to make it up and then some extra the next day, going from 2.80 to close to $4 in one day.

2nd_Ave,

I'm using UDN to short the dollar.

Grym:

They would have tanked the market

2nd_Ave,

Earlier I used the mutual fund RYWJX inverse dollar which paid an 18% dividend this year. I sold it shortly after that and have been waiting to go back in and using UDN for short term in & out trades.

Grym,

hope history repeats itself. i am at a loss of words. everything i touch has been turning to ashes.

Nemo,

Thanks. OK by me if they'd go with it :-)

We need to stage a Boston-type tea party in the banking district.

I still own SLW. Bought at higher levels. However, I think that one has to start to consider whether there is a "hidden" problem in the company. There has been absolutely no strength in this stock for some time, despite higher silver prices.

Still some big HF selling out there - GOOG, POT, SLW all negative on the day. At some point they'll play catch up.

Grym:

They'd have the SWAT teams after us. We'd have to dress up though with all the surveillance cameras everywhere these days

NYUgrad

slw: its because i own it. as soon as i sell it is surely to go beyond all resistence.

So its you... Thank goodness... I thought it was my fault.

I'm floating in the most peculiar way.... The stars look very different today.... port up 12%!

Meanwhile back at the trough...........
http://tinyurl.com/5vrtr4

SLW - Yikes 15m shares. gotta go back far for a distribution day like that.

in comparing the early nov move from $2 to $4, rsi was in oversold crossing up thru 30. cmf was rising, and no heavy selling.

compared to today, which slw has its largest distribution day in 6 + months on heavy volume, despite Silver being up and major indices being up.cmf is going delcing out of the stock. never reach oversold area on rsi.

thoughts anyone?

NG - Current resource base of 22.8M ozs of gold-equivalent and 4.5B lbs of copper measured and indicated resources and an additional 5.9M ozs of gold-equivalent and 2.1B lbs of copper
inferred resources - all with a ~62.5M market cap suggests to me that all is not lost on this one for a calculated flyer. Buyer Beware & Happy Trading

A little before the close, I bought some IWM January puts with a strike of $43 as some extra insurance on the recent gains in my portfolio. S&P 500 retreated from the day's highs and closed right on the important $850 level. If the market goes down tomorrow, then it will look very much like a failed little rally, which might invite new lows for stocks.

SLW

Maybe Bill has this one on his list for a thorough research report.....

[Bill Cara note:

Great idea. I'll start working on it next. But I'm not planning to publish another report until early January. I need to take a break.

Btw, I think silver prices will continue to edge higher, and I'll be buying the dips.

"Fred" asked me to explain debt monetization and what the ramifications would be -- other than for much higher silver prices. I wrote him as follows:

Hi Fred,

The answer is at Wiki:
http://en.wikipedia.org/wiki/Monetize

The govt issues bonds to raise capital. There may be too few buyers of the bond because of the extreme amount of the bond issue. The Fed would have to buy the bonds. The Fed bank that actually organizes that deal is the New York Fed under Tim Geithner who is now to be Treasury Secretary. He knows that the Fed does not have the balance sheet to be able to buy the bonds, and the commercial banks under the Fed have insufficient funds to buy them, so the govt must recapitalize the Fed. They do this by devaluing the existing currency by printing money. The $USD then sinks, and $GOLD soars. I suspected all this was going down on Wednesday when I saw the price of gold spike in minutes from 735 to 760, then was driven down. I suspect that was the moment that Geithner was told he would be Treasury Secretary, and then the Fed had to sell gold to immediately drive the price back down, while they put a cap on the leaks. I started to prepare my mind for the Trade of the Generation call at that moment. When I saw gold continuing to edge higher a while later, I issued my call. The thing is that if you watch markets as close as I do you spot fraud, and that spike was clearly insider trading. If I were SEC head, no politician would stop me from investigating and reporting my findings. That stuff has to stop. I do happen to hold the view that President-elect Obama will have the integrity to run as clean a shop as is possible under the circumstances. As to the future, I figure the bail-outs and debt monetization will be maybe $10 trillion, which will drive the price of gold above $2500/oz. Higher interest rates on future government bond issues will be required to pay off the added debt. Higher interest rates means higher inflation, which means higher property taxes, higher income taxes on inflated wages and salaries, etc. I believe Obama will work hard to keep the taxes down, but he'll be off the hook when he will be able to show the rising personal and corporate incomes. Everything's relative. The average income in Philippines is under $4,000 but only about 20% of the people are considered under the poverty line. In Toronto, I remember paying 6 cents for a bottle of soda pop, living in a $10,000 house, etc, which made my Dad's extremely low wage income livable without my Mom having to work, and our family being considered solid middle class. Your kids are going to be living in million dollar houses on average and that can of pop from a dispensing machine will likely go to $3 or more. Without automation and efficient transport that can of soda would have been $6. And, as I say, that gold coin will soon cost $2500. But, thanks to Henry Paulson's efforts (give credit where credit is due), we can all see that every G-20 government is committed to reflation. I think the photo session with all the leaders came soon after the Fed and Treasury just gave those leaders the Monetization word, and they didn't like it at all. None would even look at him as he walked across the stage, which is a pity since he is only partially responsible for this financial crisis. Yes, Mr. Paulson is the biggest culprit. You recall I called it Paulson's Folly all through the past 18 months that this crisis reached the financial system breaking point. I hope you give the next President your full support until if, as and when we see him stumble.

Best,

/Bill ]

Fidelity investments

Could lose big if General Growth falls

(Crain’s) — If General Growth Properties Inc. collapses under its heavy debt load, no outside investor stands to lose more than Fidelity Investments.

The giant Boston-based mutual fund manager now faces the prospect of seeing that investment completely wiped out as Chicago-based General Growth ponders a bankruptcy filing and tries to avoid defaulting on $900 million in loans that come due Friday.

Affiliates of Fidelity own a 13.8% stake in General Growth, more than any other investor besides the founding Bucksbaum family, which controls 24% of the shopping mall owner’s common shares.

http://tinyurl.com/5q77om

SLW: the only potential problem they may have is if any of their partner mines decides to shut down temporarily because of the low commodity prices. Otherwise, they will have no problems meeting their debt payments even if silver drops below $8/oz for 6 months (and then rises above $8). So if anyone want to call up all their partner mines and find out if there is any scenario under which any of the mines will be shut down (these mines have been in a continuous operation for more than 100 years), that will be helpful for calming fears about SLW.

SLW

has to hold $2.56. i really cant make heads or tales of this. Spot silver is up. Just not sure why SLW wont track along with the price of the metal.

http://i35.tinypic.com/23mofns.jpg

Bill or anyone else?

SLW: Might this be a reason

http://www.fool.com/investing/dividends-income/2008/11/24/how-the-grinch-stole-lundin.aspx

HudBay Minerals buys out Lundin Mining.

HudBay gains five new operating mines, including the Zinkgruvan zinc mine in Sweden. Zinkgruvan boasts silver reserves of around 35 million ounces, which will be sold to Silver Wheaton (NYSE: SLW) by prior arrangement

NYU - SLW price action looks VERY bearish. I agree that the 2.56 level is a big price to watch.

If you hold some I would suggest buying the $2.50 Dec Puts.

I decided to sell half of everything I own into the close today. Too much of a move up on news that the largest bank in our country (at one point) was getting bailed out...

NYUgrad:

SLW.... I have been a buyer of SLW (CDN) in the past(2005) and again starting this past Oct.27th.

I am accumulating in the $3.70 area, buying as the price comes back from its recent highs. I have sold some during this period but generally establishing a longer term hold.

I see short term support at 3.30... Daily lows of 3.30 on Oct.27th, 3.32 on Nov.13th, 3.32 on Nov.20th and 3.33 today... Bought today at 3.71.

Longer term I am using a weekly close of 3.67 as a mental stop and even longer term (5 year monthly charts) a monthly close of 4.20.

I believe it gave an RSI Buy Signal on Oct. 29th.

I will more than likely maintain a position in it unless there is drastic price movement.

[Bill Cara note:

I think you'll have a double by the time I can issue my CTAB Report in early to mid-January. Please read my comments above about debt monetization.]

i appreciate everyone's comments. My entry price is 2.86 USD. Hopefully it wont go to zero before Bill's next report in January, if he decides to pick SLW as the next subject.

i'll gladly sell if the community pays me a fee to remove my hex on it. :)

btw - reading pros and cons from the members here, and Cara notes throughout the day is very very soothing. even when i have a gash in my arm of bleeding profits. it keeps me sane.

thank heavens for a blog like this. thanks again to Bill C and the discourse community.

[Bill Cara note:

Thank you NYUgrad. I think everybody got the message that I closed the WIR on Sunday morning with. Now they see the results.

-----------------------------------------------------------------------
Have a good one.

Should, in fact, be a good one. Thanksgiving is a time for celebrating the harvest, which for many of you has not been so bountiful. But, the Obama message is one of hope. This will be a week he introduces his A Team.

The Obama Team will be encouraging us to plant our seeds now so that next year's harvest will be a good one. He hopes, I hope, we all hope.

Posted by Bill Cara on November 23, 2008 09:48:05 AM | Category: Cara Week in Review

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

NYUgrad,

re: the U.S. dollar

Huge flows of money out of other countries. Once this stops and it will, look out below. Hopefully, from an international perspective this happens sooner than later.

[Bill Cara note:

Debt monetization in the US will be bigger than in any other country. Forex traders are not stupid. They hit the buy/sell button in a flash. Friday they sold it down from its spike top on Thursday, which I noted at the time was my expectation. Today, they sold $USD down -2.2%. They bought the Euro up +2.6% and the Cdn Loonie up +3.0%. These are major moves. The strong $USD trend was stopped in its tracks. I don't think most of the G-20 member country chiefs were very pleased when they got the news at last week's G-20 meeting in Washington. With higher interest rates in Washington, they will have to raise their rates too. It's a jungle for the competition for money.]

SandraT: you are probably right that the HudBay acquisition of one of SLW's mines is the reason behind today's poor performance of SLW. But, as you have quoted from the news, "Zinkgruvan boasts silver reserves of around 35 million ounces, which WILL be sold to Silver Wheaton (NYSE: SLW) by prior arrangement." So SLW does not lose anything from this transaction. So should we say that today's drop was a great buying opportunity?

David: Maybe investors don't like the fact that SLW will be adding more debt in a credit crunch.

I know I bought today at 3.68 CDN... which I think is an amazing price, but could have bought even more had I waited. I still can't believe these prices.

David: SLW - I sold at 4.13 this morning, and never thought it could go down all the way to 3.33.

These swings are amazing buying opportunities.

Off Topic: I had a dream a while back. Showing me a chart Prediction: Gold & Peak Oil goes parabolic in 2009 (no date).

Hope it comes true

Monetizing debt...

Deflation would give us an opportunity (last resort) to monetize debt, it wouldn't be as inflationary as we may think. Especially if all prices (deflation) are going down and the futile attempts to have not worked yet...

In a period of deflation what is going on?
We are in a period of decreasing credit. No credit, no money.

The debt monster took a quarter century to build and created over 1/2 trillion dollars worth of derivatives.

Can we possibly believe government stimuli is going to re-flate the globe?
They plan on adding stimulus to offset lack of consumer consumption, ok that is good but it still doesn't fix the balance sheets of Consumers/Businesses that have been suckered into taking on risk/debt over the past quarter century.

Housing/other asset prices aren't going to snap back anytime soon.

What is a derivative?
WIKI - "Derivatives are financial contracts, or financial instruments, whose values are derived from the value of something else (known as the underlying). "

OVER 1/2 trillion dollars worth across the globe... if that statement doesn't wow you, i don't know what does but more importantly "value of something else" (wow). "Value of something else" scares the heck out of me. As asset prices continue to fall, so will the value of derivatives...

There was a rumor from Markman about Buffetts bet on the Markets 15 years from now. The trade was ran through Goldman Sachs and potentially the reason Goldman got capital from Berkshire was because they needed to have collateral for Buffets trade.
from Barry's site http://tinyurl.com/5f4t5y

Weapons on financial destruction.... yeah maybe but they will be if assets continue to go down.

Scared and seeking opportunity, learning lots though!

[Bill Cara note:

Now that Debt Monetization is on the table and to be fact under Obama/Geithner, you can see why the US tried so hard for the past two years to get the Chinese monetary authorities to break the peg to the $USD. They wanted China to pay a large part of the tab because all the current US debt liabilities (denominated in USD) would be repaid in 50 cent dollars. But maybe the Chinese authorities were not as stupid as Washington figured. By keeping the Yuan fairly tight with the $USD, they get repaid in yuan-dollars. The forex problem will hurt the Chinese economy in the future though because if they keep the Yuan too low, they will be inviting inflation by having to over-pay for goods like oil, metal, food, etc. So, in for a Dollar doesn't necessarily mean in for a Yuan. ]

SandraT: why did you say that SLW will be adding more debt in a credit crunch? I didn't see any stories about them planning to buy production from any other mines...

I know not why but my previous sign in ceased working. Interesting up day but I'm unconvinced this rally has anything more than hollow legs...

[Bill Cara note:

Maybe your e-mail address has something to do with it? Maybe you spammed another site? I wouldn't know. TypeKey is the party that stops sign-ins. I have zero to do with that. Under the Drupal platform that we are getting ready to switch to, nobody will have to go through TypeKey -- but you will have to give us a full name and valid e-mail address, and we will be on the look-out for spam for the first dozen of your comments unless you already have dozens on file. Your e-mail address will be kept in confidence unless we get spammed. ]

David,

My thought was same as SandraT's. Hudbay's release says:

"which will be sold to Silver Wheaton (NYSE: SLW) by prior arrangement"

So SLW has to buy the silver, but often i believe the agreement is not simply for SLW to 'pay as you go', but rather they fork over $X million dollars for the right to pay $3.5/ounce going forward.

David: SLW has not released any news on this. Maybe the fall today has nothing to do with this.

Just found this news - thought it might be connected.

TCK was a disappointment today as well.

I don't see Lundin being sold causing any large payment from SLW, but I did see that according to the 2007 annual report SLW has agreed to pay $3.90 per oz for Zinkgruvan silver. Perhaps the problem is the price of zinc and copper which the mine also produces.

Depending on the ratios of the different types of ore, if the prices of the base metals are too low, it may not make economic sense to mine, or perhaps the pit design needs to be reduced to go after only the higher, more profitable grades, either of which would reduce royalty paid to SLW.

Just thinking aloud. There must be some rational reason for someone to want to sell that badly.

Question...

If China and Japan own roughly 3 and 1/2 trillion dollars worth of our treasuries... In theory (i say theory) two things, isn't that effectively their reserves (savings)?
also haven't they made an investment in the USA so what benefit would they have if their investment lost massive amounts of money?
They own over 30 Plus Percent of the USA debt plus Fannie and Freddie bonds too....

IMO -
If we go, so do they. It has seemed to be very difficult to diversify away from the USA on planet earth. .. hmm....

CDS with AIG

From Ritholtz's blog.

"Few observers outside Wall Street understand that the hundreds of billions of dollars pumped into AIG by the Fed of NY and Treasury, funds used to keep the creditors from a default, has been used to fund the payout at face value of credit default swap contracts or “CDS,” insurance written by AIG against senior traunches of collateralized debt obligations or “CDOs.” The Paulson/Geithner model for dealing with troubled financial institutions such as AIG with net unfunded obligations to pay CDS contracts seems to be to simply provide the needed liquidity and hope for the best. Fed and AIG officials have even been attempting to purchase the CDOs insured by AIG in an attempt to tear up the CDS contracts. But these efforts only focus on a small part of AIG’s CDS book.

Where did all the AIG money go, into paying out CDS at 100%. Effectually wasted and that is why AIG needed more money.

You see, there are trillions of dollars in outstanding CDS contracts for the Big Three automakers, their suppliers and financing vehicles. A filing by GM is not only going to put the real economy into cardiac arrest but will also start a chain reaction meltdown in the CDS markets as other automakers, vendors and finance units like GMAC are also sucked into the quicksand of bankruptcy. You knew when the vendor insurers pulled back from GM a few weeks ago that the jig was up.

And many of these CDS contracts were written two, three and four years ago, at annual spreads and upfront fees far smaller than the 90 plus percent payouts that will likely be required upon a GM default. That’s the dirty little secret we peripherally discussed in our interview last week with Bill Janeway, namely that most of these CDS contracts were never priced correctly to reflect the true probability of default. In a true insurance market with capital and reserve requirements, the spreads on CDS would be multiples of those demanded today for such highly correlated risks. Or to put it in fair value accounting terms, pricing CDS vs. the current yield on the underlying basis is a fool’s game. Truth is not beauty, price is not value.

The government is now in a rock and hard place. Let GM go Bankrupt and take out the CDS market and everyone else goes down with it or bail them out and hope people will still buy treasuries."
END --

[Bill Cara note:

They'll buy Treasuries because the prices will be way down and the yields way up. Monetizing the debt will do that. Everybody pays. Individuals and corporations will have to pay much higher interest in the future every time they take out a bank loan.]

Triangle Trading system
=====================

While browsing a blog, I came across wnat was called the triangle tradng system.

Does anyone know how that works and how to generate buy and sell signals ?

The site was pointing to a paid charting site. I little expensive.

Apparanetly, not all stocks are the same. For some stocks, system based on daily prices works better than weekly.

Any suggestions ?

Re SLW
It seems that in many cases SLW is buying silver which is a byproduct of the mining of base metals. If the price of the base metals falls so low that it is no longer economical to mine, where's the silver? Well SLW no longer has to put out $3.90 for it, but they've already paid up front for the "call" in that silver at $3.90. I think I remember that some of that up front payment was borrowed, so the debt persists while the call becomes worthless. So what can they do? I've no idea, but I wish there was an easy way to go long lawyers.

RE: SLW and the LUNDIN merger with HUDBAY

There is a story here; and this is it, imo:

http://tinyurl.com/6d894j

The silver production from the LUN mine ( for which SLW has probably made a significant upfront payment) is an important inventory stream for SLW's 'buy for $4/oz; resell at $9-10-11+' model.

Fact: LUN is a very troubled company, owing and needing to refinance $100's of millions; and is probably having a challenging time impressing lenders with its cash flow at current base metals prices.

Hudbay, with its megadollars in cash, has come to the rescue with a merger proposal.

Now, we have news that influential HBM shareholders view this as a very bad deal and are trying to block the deal.

If the HBM/LUN merger does not take place, Lundin (imo) is toast. And who then will honour LUN's contractual commitment to SLW? Will SLW ever take delivery of all that income generating silver inventory which it was to receive from LUN?

I believe this uncertainty could affect SLW's share price.

just out of curiosity, what if instead of using tax payer money to buy up CDS assets at face value, the global financial industry were to simply void all existing swaps? why exactly would that result in a crisis worse than we are headed for now? who gets hit the hardest, and do tax payers end up worse off than they are now? if a 1922 bookmaker on the streets of Chicago had lost his entire collection of chits for the week, a few people would be seriously shaken up, but what else?

Bill, Vadym, 2nd_Ave, SiO2, CP, and so many others:

I've been following this blog for about a year now and I'd just like to relate my thanks to you all for the great educational experience. The combination of technical and fundamental insights we get here is unparalleled. Ability to filter noise (i.e. news), identify value, and understand price movements in the various asset classes seems to be improving. While still down, slightly, YTD, good decisions are starting to be made on a more consistent basis. For example, some of the insights I have gained from Bill's timely dancing through the US$, Gold, and equity price movements/relationships have more than repaired the portfolio from the damage done by some questionable trades made in Sept/Oct.
Thanks all!

[Bill Cara note:

I will speak for "all" and thank you for thanking us. This is a strong community getting stronger by the month.]

#@$%^& company retirement plans. Taking forever to sell my bond fund and buy gold fund. Of course, in the meantime the sector goes nuts and is up 4 days in a row...

Bill enjoy the time off and thanks for all that you do for us. I have learned so much about the markets and about investing from you and the community!!

MCM

2nd

if we were to void them, refunds?

No refunds - pretty unhappy campers out there...

they won't bail out big auto because the bankers could be on the other side of the CDS trade.... later bank's earning report, who would of thought the demise of the big three auto causes the banks to profit as joe6pack loses his job. They get all the perks. no?

Someone explain to me how keysnthem polices are "smart" now?

It seems that the talking heads have gone to sell the story that we can allow the gubermint to get away with what polices that they are doing... I can understand instilling confidence to some of the people but we are continually rewarding the wrong people.

Crap - this time next year all the banks could be owned by we the people. Lets see here.... CITI just went NEXT?

We can wait because there will be more and when it happens it probably won't be pretty.

keysnthem??? how and why?

Better yet, how is "good gubermint debt" going to fix the problem.

We are taking out more good loans on bad loans already!!!!!!!!
Good loans got us here from the deficit spending, bad loans got us here.... here is an idea lets issue more good loans!

RE: Lundin Mining

hyperbole on my part to write that LUN owed $100's of millions...maybe only about $200mill; but at risk of losing their credit facility, as their cash flow is in a free fall...

the following extract from an RBC research note which I just read:

"Lundin In Critical Need of Cash: Despite suggesting on its Q3/08 conference
call that the company had readily passed its financial covenants, and explicitly
stating in its Q3/08 release that Lundin "has sufficient capital availability from
internally generated cash flow and its $575 million revolving credit facility to
fund operations and projects over the course of 2009," Lundin is apparently in
dire need of cash to remain a going concern. Comments on the LUN/HBM
conference call suggest that Lundin is at risk of losing its credit facility, $387
million of which was still undrawn as of the end of Q3.
• Investment Rationale: We are maintaining our Sector Perform
recommendation. HBM's closing share price on Friday, November 21, implies
a value per LUN share of C$1.24. Our fundamental analysis suggests an NAV
of as much as C$6.37. However, obvious short-term liquidity concerns point to
the possibility of insolvency without a proposed HudBay deal or similar
transaction. As a result, the downside risk to LUN could be 100% versus an
upside potential of 18% based on HBM's closing share price on Friday,
November 21."

MCM,

Company retirement funds - I hear ya! I've been trying this since January: My monthly contributions go into money market, matched by company - kind of a war chest. Only when I am absolutely convinced that deep value is available somewhere do I move some out. e.g., as a Canadian investor, when the Can $ was at par but showing weakness and equity markets looked weak, I plopped a bit in Global Govt Bond fund. That's a keeper in a diversified portfolio with its negative correlation with equities and I bagged it at a good price. What we do in funds like that and what we do in our unregistered accounts is quite different...

norm- no, void as in whatever was shelled out as a bet (that should never have happened) gets written off...is there some way to structure the losses so as to punish only those who attempted to profit from them? not unlike foreclosing on speculators on real estate...in both cases, it's (hopefully) mainly those who should have known better that take the hit...

Financial Post reports:

Royal Bank of Canada warned Monday that fourth-quarter profit will be (only!) $1.1-billion, down 15% from $1.3-billion a year ago due to "certain items relating to the market environment".

OMG!! Selll!!! Sellll!!! Sellll!!!!

I love Canadian banks :P.

[Bill Cara note:

Canadian banks are the most prudently managed banks in the world. Cara 100's Royal Bank of Canada and Manulife Financial (a near bank) had dropped terribly with the Citi problems and then enjoyed quite a lift immediately after the US Treasury agreed to protect Citi with the full faith and credit it can muster. That told me that these three companies are joined at the hip. Citi is very strong in Canada -- no bond department for some reason, but very strong otherwise. Citi was a Cara 100 and favorite of mine until I couldn't look away from the problems I saw coming. What was the price of the stock when I bailed? Whatever; it was a lot higher than the pre-announcement of a bail-out that I say will cost $1 trillion when all the dust has settled.]

Mackinaw- likewise...

speculators IN real estate...

2nd,

RE: voiding CDS

Presumably many of the CDS are held by employee pension funds, etc that hold lots of debt backed by C, GE, GMAC,etc and bought insurance on their holdings. Cancel all outstanding swaps and the debt is unprotected, right?

Seems to me a CDS cancellation would cause situations where (already underfunded) retiree pensions would have to be taken over by the government due to insolvency.....

I am no expert on CDS but this is what I have come to understand

sundance- i would prefer bailing out a few retiree pension plans to bailing out the banks..

You don't think pension funds have dabbled in CDS's do you? My impression is that it's insurance companies playing with their floats that are the prime culprits (e.g. Fairfax in Canada and AIG, Berkshire-types in the US). Oh and, of course, the HB&B crowd. Heads should roll if its found that pension plans ended up on the wrong side of any CD swaps.

If it could somehow be done with minimal damage -I would prefer that option as well.

I imagine that if they could ever pull something like that off, AIG stock would fly as it would literally erase CDS payment obligations!

Perhaps some sort of cancellation process could be sorted out but I fear that it might be even more morally hazardous than our current plan of action .......

Thank you Mackinaw. I don't deserve to be in such company. Many people here are real pros and many contribute so much to this community. The sharing of knowledge, starting with our host, is indeed just amazing.

[Bill Cara note:

You sell yourself short my friend. As a PhD in Communications Technology, a well-known Ottawa-based technologist, the Cara Community organizer of the skype chat, and the first Caraista to get on BNN-TV for effective trading strategies (options straddles), you are no slouch in the knowledge department. I thank you for your valuable contributions. I agree that it is indeed exciting to see the sharing of knowledge here. I mean we have people from general managers of major mining companies to members of various options and futures exchanges to leading bankers, authors, you name it. People in their own time just being people because they know they can contribute to a better society on their own and without pushing an agenda. As long as contributors show self-respect and mutual respect, I am confident we as a community will grow a lot too.]

"Safe Havens in Real Estate"

http://tinyurl.com/56h44n

BH- Lancaster's tops the list:

"Known as an Amish cultural hub, the city is also home to a diverse group of industries, including printing and food processing. This helps keep the local market stable and unemployment low, as losses in one sector aren't devastating to the overall economy.

"Locals say Lancaster is a conservative lending market, which limits foreclosures."

Mackinaw - I think pension funds are more likely on the RIGHT side of the CDS trades - trades they may have made to protect their own investments in all kinds of debt....

This would explain the FED desperation to keep AIG afloat in order to pay them.

Glancing at the Asian markets tonight, it seems some of us might be faced with the following unfamiliar problem: finding a good entry point to increase our long exposure if this rally really takes off (not an altogether unpleasant problem and distinctly different from some of the problems we've been dealing with recently). Seems that a "Vadym" IF-THEN is in order: If the markets are exhibiting weakness, sell on strength, buy on weakness with firm stops. If the markets are exhibiting strength, buy on weakness, sell on strength with firm limits.

academia support: http://tinyurl.com/6gzzna

[Bill Cara note:

That is a serious problem only for the greedy who expect to get everything at a cost lower than anybody else without taking the risk that many others do. Put yourself in my shoes calling the Trade of the Generation or the A-Team Rally. It's like I say, being out in front of more than 100,000 people without my clothes on is not something easy to do.

On the lighter side, if anybody tonight watched the Keith Olbermann MSNBC show that had Go. Palin going on and on in front of a turkey killing machine saw the comedy act of the year. That was FUNNY. I hope somebody posts the youtube link. If so, don't miss it if you are up for a real laugh.

A little more serious was the youtube video of President Bush and Treasury Secretary Paulson walking down some steps in Washington where the President gave a short speech before the President-elect introduced the A-Team. Paulson's body language (posture and gestures) spoke volumes. Hunched over, looking down, blinking, darting his eyes from side to side like he was looking for a grassy knoll shooter -- this was tough for me to watch, but funny nonetheless since his days in power are numbered.]

http://tinyurl.com/6eorqq
Page 55

Zinkgruvan/Lundin 2M ounces
Goldcorp Luismin 7-12M ounces
Goldcorp Peñasquito 2-10M ounces
Yauliyacu 4.75M+ ounces
Stratoni 1-2M ounces
Mineral Park 0.4-.65M ounces

Out of 15.5M ounces, Lundin makes up 13% of SLW inventory or available silver for sale.

If Lundin has cash issues, wouldnt a cash rich takerover by Hudbay be positive prospects for SLW?

[Bill Cara note:

Tonight in Asia-Pacific markets, it's The Return of The Risktaker. Commodities should fly. I don't like these forced sale deals at crucial turning points of markets. Too many greedy hands get involved and the shareholders lose out. Please keep us informed.]

re: SLW

Jaguar Financial JFC.TO have requisitioned a special meeting of shareholders of HudBay pursuant to section 143 of the Canadian Business Corporations Act. The purpose of the meeting is to replace the existing board of directors of HudBay with nominees proposed by the Shareholders prior to the completion of the Business Combination.

Jaguar believes that the business combination between HudBay and Lundin Mining Corporation ("Lundin" and the "Business Combination") is not in the best interests of HudBay's shareholders. In Jaguar's view, such a combination would dilute HudBay's shareholders by 50%, provide Lundin, a nearly insolvent company, with a cash bailout of $136 million, and force HudBay to take on debt of US$240 million.

Furthermore, the board of HudBay is attempting to deny HudBay's shareholders the opportunity of voting on the Business Combination. Jaguar believes that the Business Combination is a defensive anti-takeover device by HudBay and Jaguar questions its legality. Jaguar believes this defensive tactic impedes rather than creates shareholder value and breaches the fiduciary duty owed by HudBay's directors to HudBay. "Swallowing Lundin would provide HudBay with an effective poison pill; however, we question whether it is legal or appropriate, particularly as HudBay's shareholders are not being afforded the opportunity of voting on the Business Combination," stated Vic Alboini, Chairman and Chief Executive Officer of Jaguar.

If the Shareholders are successful and a new board of directors of HudBay is put in place, HudBay will not complete the Business Combination with Lundin.

On Friday, November 21, 2008, Jaguar announced its intention to make an offer to purchase all of the issued common shares of HudBay, which will be conditional on, among other things, the Business Combination not being completed.

with compliments to the Wizard...

Palin's take on thanksgiving...
http://tinyurl.com/5e9kyq

[Bill Cara note:

Thanks, but please somebody find the Keith Olbermann version. He makes it sooo funny.]

Palin pardons a turkey...

Here it is Bill:

http://www.youtube.com/watch?v=eYxn2vlhtWo

Priceless!

Glad to make a contribution when I can!

MCM

http://tinyurl.com/672zce

Olbermann + Palin + Turkey

Suffering through a previously recorded webinar on the TWS introduction for Interactive Brokers platform, clutching a Wild Turkey in my right paw. ugh. I was hoping it would help set this thing up. Does anyone use this platform? If not what do you use? I've been pretty happy with the IB reliability and broad spectrum of trading vehicles but it has to be the worst interface in terms of user-friendliness. I plan to keep it and need to learn to use it because I hope to use the CTA service in the future. Anyone have any tips or reference to third-party material for setting up this trading platform? I also use Schwab which is easy to use, but more expensive and less versatile. Any comments appreciated...

MCM

Kaimu,
ASX Metals & Mining index up around 10% so far today.... oh so nice. With your USD down overnight you should be making good money.

proudPapa: SLW has already made a while ago an upfront payment for the right of receiving silver from Zinkgruvan, so no new debt was taken on as a result of this sale.

thriftybob: I called SLW a few weeks ago and they said that when commodity prices fall, the partner mines start going for the higher-grade regions, which actually INCREASES the volume of silver received by SLW.

joey: your interpretation of the reasons behind SLW's fall today seems very logical. I was not aware that Lundin is a "nearly insolvent company." I'll try to get in touch with an SLW representative tomorrow and find out what they think about the chance of Lundin shutting down. As a quick check, out of the $39 million SLW earned on its silver sales last quarter, only $5.4 million came from Zinkgruvan, so the 10% gain in silver price today almost compensates the possible loss of Zinkgruvan.

That Palin video - absolutely priceless... Olbermann says just what you are thinking as you are thinking it...

That WKRP episode is one of the funniest of all time.

Mackinaw: why look at the Asian markets tonight? They are just responding to the today's rally in the US market. The US futures, however, are down right now, so tomorrow might be a down day in the US. Then you might have an even harder choice: to buy on a dip tomorrow thinking that a medium-term rally is in place, or buying puts tomorrow thinking that the rally has failed and stocks are starting to plunge again.

Wasn't Citi's market cap just $20B just last week? It's still under $45B!

SLW CONTRACT WITH LUNDIN and INCIDENSSE ON SLW SHARE PRICE

In December 2004, Lundin Mining entered into an agreement with Silver Wheaton Corporation ("Silver Wheaton"), whereby Lundin Mining agreed to sell all of its silver production from the Zinkgruvan mine to Silver Wheaton for an upfront cash payment of US$50 million, in addition to 6 million (post-consolidation) Silver Wheaton shares (ticker symbol: SLW on the Toronto Stock Exchange), and 30 million Silver Wheaton warrants (ticker symbol: SLW-W on the Toronto Stock Exchange), plus a per ounce payment at a price equal to the lesser of (a) US$3.90 (subject to a consumer price adjustment after three years) and (b) the prevailing market price per ounce of silver. Each 5 warrants plus a payment of CAD$4.00 entitles the holder to purchase one Silver Wheaton common share up to and including 5 August 2009. As part of this arrangement Lundin Mining has committed to a minimum of 40 million ounces of silver to be delivered to Silver Wheaton over a 25-year period. If at the end of the 25-year period, Lundin Mining has not delivered the agreed 40 million ounces, then it has agreed to pay to Silver Wheaton US$1.00 per ounce of silver not delivered.

kaimu - We're going to need another large stimulus package!

[Bill Cara note:

Did you see where Steve Forbes, the Forbes Magazine CEO, stated his view that Henry Paulson was the worst Treasury Secretary in modern history? Having broken the ice, others are now going to pile on, as I said they would. It was about 18 months ago that I made the Paulson Folly label, and I have hammered away at this man constantly. Some of you preferred I had lightened up. Now look at the mess. I said books would be written about his failure to perform, his biases, and his possible personal agenda. I cannot imagine a worse Treasury Secretary. But he was paid well for about 30 months work. His $200 million capital gains tax relief was a bonus after he sold his GS stock at $150/share, watching it to fall to a low of $47.41 this past week.]

David, you comment about SLW's partner mines experiencing the commodity price shrink and responding by high-grading; it is a fairly common practice in the mining industry (some think it is not too bright, mind you). The key notion going forward is: how long do you high-grade? By mining the deposit out of sequence, it can very seriously hurt the economics of the operation when the price starts to rise again. When you are speaking to SLW, you may want to aim some of your questions along those lines.

Best Regards

wow. what a priceless piece by olberman...that interview is hilarious.

SLW:
Silverstone Resources has a similar business model. They just took a big writedown because Lundin shut down a mine:
"Net loss for the quarter ended September 30, 2008 of $39.6 million or ($0.32) per share as a result of recording an impairment charge of $39.4 million on the Aljustrel silver contract due to Lundin Mining's decision to write down the Aljustrel mining assets and subsequent decision to put the mine on care and maintenance."
http://tinyurl.com/59st4g
Disclosure: Long SLW, no position SST.V

ALOHA !!

CP: I told you guys I was waiting for the $10tril mouse clicks to start! What's after $7.5tril? One thing is for sure Americans are now getting jaded to the monetary term "TRILLIONS" ... next is QUADRILLIONS! I first heard QUADRILLION mentioned earlier this year when the BIS used QUADRILLION to describe the total value of the global derivatives market. $1.16 QUADRILLION!

CDOG: YEP!! Still buying. SRL at $0.46USD today!

BILL: Keep pounding on Hanky Panky! I take it one step further and say get rid of the US FED and its member banks! Quite frankly people who want you to let up must think FAILURE and FRAUD are acceptable for them and their kids. If we do not act now then this will all be dumped in future generations laps! Just like it was dumped in our laps ... and on and on ...

ON ICELAND
Icealnd is in a monetary crisis. While the people are literally rioting in the streets right now they still miss the main culprit. They came mighty close today by demanding that the head of the Iceland central bank step down. What they should have demanded is that the central bank step down!

Here is a bit of an article about the Iceland street protests and a comment from one of the protesters: "Gudrun Jonsdottir, a 36-year-old office worker, said: "I've just had enough of this whole thing. I don't trust the government, I don't trust the banks, I don't trust the political parties, and I don't trust the IMF.
We had a good country and they ruined it."

He failed to mention "I DO NOT TRUST THE MONEY!", which is what his entire country's banks and finances are based on. In reality they never had a good country just a lot of DEBT! They like Americans, bought the DEBT=WEALTH scam ...

Apparently the Iceland government is frozen. What happens to government when the people do not want it around and refuse to obey?

It all came down to the "C WORD" in Iceland and the CONFIDENCE is gone!

RIOT ON GUDRUN!!! What could be more patriotic than a good old fashioned street riot? Our country was built on revolution!

QUESTION AUTHORITY ...

ALOHA !!

Here is the entire ICELAND article ... Americans pay attention! This is a monetary crisis! In this article take a look at the tactic the UK used against Iceland banks(towards the end of the article)! I did not know "anti-terrorist" legislation could be so versatile!

READ ON:
A near-riot and parliament besieged: Iceland boiling mad at credit crunch

Published Date: 24 November 2008
By Omar Valdimarsson
in REYKJAVIK

THOUSANDS of Icelanders have demonstrated in Reykjavik to demand the resignation of Prime Minister Geir Haarde and Central Bank governor David Oddsson, for failing to stop the country's financial meltdown.

It was the latest in a series of protests in the capital since October's banking collapse crippled the island's economy. At least five people were injured and Hordur Torfason, a well-known singer in Iceland and the main organiser of the protests, said the protests would continue until the government stepped down.

As crowds gathered in the drizzle before the Althing, the Icelandic parliament, on Saturday, Mr Torfason said: "They don't have our trust and they are no longer legitimate."

The value of the Icelandic krona has been cut in half since January.

Four Nordic countries, as well as the International Monetary Fund (IMF), have pledged to lend the country a combined $4.6 billion to help revive its deflated economy. The loan would be the first by the IMF to a Western nation since 1976.

One young man climbed on to the balcony of the Althing building, where the president appears upon inauguration and on Iceland's national day, and hung a banner reading: "Iceland for Sale: $2,100,000,000" – the amount of the loan the country is getting from the IMF.

A separate group of 200-300 people gathered in front of the city's main police station, throwing eggs and demanding the release of a young protester being held there.

Police in riot gear used pepper spray to drive back an attempt to free the protester during which several windows at the police station were shattered. The pro-tester was later released after his fine was paid.

As daylight began to wane, demonstrators drifted away into the nearby coffee shops. Here, as currency tumbles, the price of a cup of coffee has shot up by about one-third since before the crisis struck.

The demonstrators accuse the government – elected last year – of not doing enough to regulate the banking industry and have called for early elections.

Iceland's next election is not required until 2011.

Opposition parties tabled a no-confidence motion in the government on Friday over its handling of the crisis, but the motion carries little chance of toppling the ruling coalition which has a solid parliamentary majority.

Gudrun Jonsdottir, a 36-year-old office worker, said: "I've just had enough of this whole thing. I don't trust the government, I don't trust the banks, I don't trust the political parties, and I don't trust the IMF.

"We had a good country and they ruined it."

BACKGROUND

ICELAND'S three biggest banks – Kaupthing, Landsbanki and Glitnir – collapsed under the weight of billions of dollars of debts accumulated in an aggressive overseas expansion, shattering the country's currency. Iceland's government seized control of all three institutions in early October.

This week, the North Atlantic island nation, which has a population of only 320,000, secured a package of more than US$10 billion (about £6.7 billion) in loans from the International Monetary Fund (IMF) and several European countries to help it rebuild its shattered financial system.

Despite the intervention, however, Iceland still faces a sharp economic slowdown and surging job losses while at least one-third of Icelanders are also at risk of losing their homes and life savings.

Geir Haarde, the Icelandic prime minister, has promised that the government will use the IMF money to bring back a flexible interest rate scheme and rewrite financial laws, particularly legislation relating to insolvency.

Iceland was the first country to ask the IMF for help as the turmoil in the credit markets in October hit home.

The UK government used anti-terrorism legislation to freeze money deposited by UK savers in Icelandic banks in order to ensure that their money was protected.END

Like I have said before do not pay attention to inflation/deflation debates on TV that can be debated until forever, because it seems everyone has their own private definition of "money" as it pertains to "money supply"! I only follow what Hazlitt defines as "money". A house and a stock certificate do not qualify as money! Think about it! If you want to use JAPAN as an example of deflation then be prepared to go broke on inflated consumer prices. Been to Tokyo lately? In actuality Japan joined WW2 because of a US oil embargo. Japan imports much of its oil and back then the USA was exporting oil to the World ... WEST TEXAS CRUDE! Now the USA imports oil, more than Japan does and has GDP based on imported goods. So US consumers make up 70% of US GDP, where do they get the vast majority of the consumables? DUH!! China exports 23% to the USA and the USA exports 7.5% to CHINA! That's a trade deficit paid with IOUs! Japan's economy never depended on consumers for 70% of its GDP ... The Japanese are savers and producers. Americans are paper shufflers and spenders! That mentality needs some severe overhaul! OBAMA? Hand us a shovel! Its that thing you make holes with in the dirt! Dirt? Oh, uh, dirt is that stuff that is underneath the concrete and asphalt you walk on! WALK? Uh, walking ... your legs do most of that! LEGS? Yes, unknown to career politicians and academia ... those are the two things you use to stand up with! Define the word "UP"?

Speaking of SHOVELS and "UPity" politicians! The Russian Navy is in Venezuela and the Caribbean again! Some things never change! KNOCK ... KNOCK!!! WHO'S THERE? PUTIN! PUTIN WHO? PUTIN MORE MISSILES IN CUBA AGAIN!!! I think OBAMA will understand PUTIN'S point! Now all PUTIN has to say when asked why they are deploying missiles in CUBA ... To protect CUBA from Iranian nuclear missiles! HA!! Of course that's the excuse the US government uses as to why we have missiles in Poland! HA!! Who thinks up this stuff and how much are they paid? I could do better than that and probably save the PENTAGON at least half ... I'd say to Russia, "We have missiles in POLAND to protect us from POLISH ROMAN CATHOLIC MUSLIMS!"

We cannot continually violate the COMMON LAW at our whim! There are natural consequences and there are brewing some military challenges to America's supposed superiority. I don't know IRAQ didn't convince anyone we are still a super power and neither did Vietnam! We can't seem to find the exits?

The BIN LADEN'S of the World are just playing to our Achilles Heel! Bleed the EMPIRE dry by starting money fires everywhere! Two jets into the WTC and we're broke! A RPG-11 that costs $800 can take out a M1 tank worth $5mil! Do the MATH! It's called DEBT ATTRITION! That's how ROME fell ... So BIN LADEN is not using any new technology! Bush and Cheney fell for it hook, line and sinker! They should have read GEORGE ORWELL'S ... SHOOTING AN ELEPHANT!!(Orwell was true genius and one of my favorite writers in my youth) ... All about the ego of the British Empire! EMPIRES! Can't live with them ... can't live without them!

Now I have to ask ... Is there really going to be a BABY BUSH Presidential library? Anyone know who Bush has pardoned yet? I think he should pardon himself and Cheney for starters! Can he do that?

IT ALL WORKS ...

Olbermann is the WORST journalist on TV. How can anyone watch him? Will he lose ratings and his job now that the Holy One will be in the WH? What will he say?

[Bill Cara note:

I happen to like the O-Team. I liked Dr. Ron Paul too, but, you know, in life, ratings count, performance counts.]

http://tinyurl.com/6adfsj

Who created the problem? The ones charged to fix it.

Caisse sells billions in stock last 2 months
http://gold.globeinvestor.com/servlet/ArticleNews/story/RTGAM/20081124/wrcaisse25/stocks/news?back_url=yes

Nemo,

My first response to your statement "They would have tanked the market," was OK — they'd go down too. BUT...as we all know, they are about as down as anything can go.

HOW could they "tank" the rest of the market? What can they do and for how long. Do you literally mean the banks OR the elite team Paulson, Bernake, etc. who are already tanking it while covering for each other?

Mackinaw:

"My impression is that it's insurance companies playing with their floats that are the prime culprits (e.g. Fairfax in Canada..."

Could I ask please that you elaborate on your impression that Fairfax is a culprit playing with its float?

What positions has it taken which might cast Fairfax as a culprit?

Bill - agreed - I like Ron Paul as well but my comments were directed towards Olbermann..what will he tell his viewers now the Democrats run WH and both houses?

Good morning.

Here are your Cara 100 Ratings Changes:

BDK - Upgraded to Buy @ UBS

ADBE - Downgraded to Hold @ Argus

joey,

Don't misunderstand, from what I understand, Fairfax has profitted handsomely with CDS's. When I listed AIG, Berkshire, Fairfax, I just named a few off the top of my head that are involved with CDS's. - some taking different sides and each in quite different amounts. "culprits" was perhaps not the best word.

$cpc plunging.

Mackinaw,

great to hear it starts paying off. If you make it to Bahamas in April will be great to meet in person!

RobG, Olbermann, being a journalist, will report the news, with an entertaining twist. So will Rachel Maddow. It's MSNBC, not FAUX. Besides, Bill O practically works full time producing fodder for Olbermann everytime he opens his mouth. That's what they make remote controls for....

For Kaimu from Colin Twiggs:
"This may be wishful, but I think in the next year, two years, five years, you're going to see both political parties floundering...... They're still trying to prop up the marketplace vision and make it work again. It's over. I think events will demonstrate that. So if they're not willing to change then we need to change the politicians. And that's all a bloody process and doesn't happen quickly. But that's why I'm optimistic."

~ William Greider in an interview with Bill Moyers

Mackinaw:

I agree that 'culprit' was not a good characterization - not in my opinion, anyway.

I follow the company and believe CEO Prem Watsa and colleagues to be very canny and cautious investors and I am admiring of them.

You are right that FFH has profitted hugely from its CDS positions by waiting for the inevitable house of cards to collapse. They took positions on 'good solid' companies like Bank of America; and just to be sure that their ultimate recovery would be collectible, their swap agreements required that additional security be posted by BAC if/when the creditworthiness deteriorated.

They have a huge cash stash - having positioned themselves for survival even if - in Prem's words - there be 'a hundred year event'.

http://tinyurl.com/596kwj

Craig - Olbermann and Maddow report the news? Really? Is the news only negative GOP and positive Dem news in your world? cmon...

Craig - if Olbermann and Maddow reported the news, wouldnt they report both sides?

Rob...you haven't been watching.

what have they reported that was negative towards Dems?