When is the best time to panic? Let me give you a hint. Is it just after you hit the iceberg, or 3 hours after? Well, I would have like to have gotten into a rowboat well before the Titanic split in two...at least according to the movie version. I don't usually watch the chick flicks, but hey, it had a couple of good scenes.
Maybe I'm feeling a bit paranoid, but I just watched Inside Job, and it just makes me feel sick. All of the perps are still out there, leading the banks, credit rating agencies, sitting on boards, university presidents, etc.... the derivatives industry doesn't need regulation. They reduce risk. After watching the film, (warning: geeky part coming) I get the feeling that some of these bankers are really jedi masters doing the mind trick thing. You don't need to search us, these aren't the droids you are looking for, move along. The derivatives markets don't need regulation, the CDS's we bought while selling crap was not a conflict of interest, Hank Paulson doesn't need to pay tax on his stock gains as he was Treasurer, the rating agency only issued opinions, the Fed Chairman could never have seen this coming, blah, blah, blah.
What's a thousand wall street execs at the bottom of the ocean called? A good start!!!! Not one person in jail. Nada. Hell, in some communities you can be jailed for swearing in public, you know archaic rules left on municipality books. But apparently, if you push crap down investors throats by paying off credit rating agency to rate your bundled mortgage crap as gold (Triple A Baby!), then short it behind the investors back by buying CDS's from AIG, which of course you don't have to tell the investor when you do it, and finally sell it to the FED at 100% on the dollar. Well, that's all good. No crime or conflict of interest. Oh, and you can keep all your ill gotten gains in the form of you bloated paychecks and enormous bonuses and parting gifts, I mean severance pay. Tell him what he's won Johnny! You get to walk away with no criminal prosecution, and we'll give you $100 million as we know firing you is so hard on you. Seriously? Is it really a penalty that when you get fired, you get a bonus equal to 30-40 times your salary. Hell, I'd go shit on my boss' desk tomorrow if I could get a deal like that! Boss, if you are reading this, please disregard my last statement.
Fiat Doubter what the heck are you talking about? Well, let's not forget who moves the markets these days. It's all of these super bankers, and it's JP Morgan and HSBC when it comes to manipulating gold and silver. Do you think Gary Gensler (oh, he used to work at Goldman Sucks, so is it a stretch to say that he probably still uses the corporate credit card to get blow jobs up the street at the friendly wall street brothel?) is really going to put an end to manipulation of the PM"s as head of the CFTC. What does that stand for anyways? I've got one. Certain Fu**ers & Truly Cheaters? The banks make money on volatility, so when they run it up and run it down, it's easy to get your chops busted, sell as you panic and buy as you think you are left behind. Who supposed to police any concentrations that may move prices in the commodities markets? CFTC. Oh yeah, raising margins 5 times on silver on the way up to 50 isn't manipulating that commodities price at all. Gary, you are truly asleep at the wheel. Maybe you'll wake up when the wheels fall of the bus? Doubt it.
Throw off your shackles and trade! Trade I say! Don't be the schmuck I've been for so many years. Don't deny it, we've all been schmucks. What did Albert Finney say in that movie? Oh yeah, I'm mad as hell, and I'm not going to take it anymore!!
In that vein, I'm panicking early, before the bottom. Head & Shoulders. Not the shampoo, but the technical formation. Let's get to it.
GDX. So, we have a potential head and shoulders on the GDX. Neckline around 54, Giant Heed around 63, difference of 9. Take 9 from Neckline and you get 45. Do you want to ride this down to 45 from 57, or try and get to 63 before that? Hmm, small upside bigger downside, I think I'll hedge with some GDX puts or liquidate some of my positions. And that's just what I did. I sold most of the short-term winners and some losers I had.
Another tired reason to sell. The summer doldrums. The PM's usually bottom between July and August. Not a hard fast rule, but look at a chart for the last 5 years. If you look at the GDXJ chart, same formation. Look at SIL, ditto. Not as clearly defined for SLV and GLD, but the pattern is there.
Once again, this is a reason that you need to enter stocks at a good point technically. Have I sold all my stuff? No, because some are still oversold, but I did sell anything where I had a nice bounce recently. So, sell or hedge using GDX, GDXJ, or SIL puts. You can also use ZSL to short silver at 2x factor or GLL, or DUST. Just google them and you'll get a good array of picks.
I will take opportunities to profit on either side. Long or short. This market isn't going to make it easy for you. So, my bias right now is to take gold and silver profits off the table, or hedge them if you don't want to sell positions and incur realized gains or losses.
Until the next time...
Fiat Doubter
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