I've been twittering; Get ready for more metals movement

I have been twittering as jkings1. please follow me for up to the minute comments on the markets.

I've more than doubled my options portfolio over the past few weeks. The volatility has created a variety of opportunities recently.

Based on my study of $GLD options open interest, gold leasing rates and demand, we re at a new $1400+ plateau for gold. I see another move that will take us close to $1500 before long. Silver should hit $50 during summer. Metals will only stop if there is a sweeping dollar rally and massive peace around the world. Yes, metals are subject to pullbacks and can and shall do that, but the mega uptrend continues. This has been the on going pattern for a decade. Nothing goes up in a straight line except perhaps Netflix (one of my winning options trades this week). lol.

Overall stock market direction will be biased higher, though as I pointed out a few messages ago, the range would be fairly tight. Then the Japanese earthquake came along and threw a monkey wrench into the works,. I still see a little upward bias, perhaps a few more good rallies to go, but the air continues to get thicker - everything from Fukushima to Portugal and Libya.. I don't think people are fully grasping the impact of the Japanese quake and what it will do to world GDP later in the year.

The weirdest story to date on the Fukushima situation has been about the pink nuetron beams being emitted by the stricken nuclear complex. This situation is still playing out. Pray they really get things under control there soon.

Best,
JimK
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This electronic publication is being furnished to you for informational purposes only and on the condition that it will not form the sole basis for any investment decision and under no circumstances may any information contained herein be construed as investment advice.

©2011by The Kingsland Report.

Buckle Up

In a bizarre twist of fate, I bought SPY puts yesterday, not to profit off of the Japan tragedy, but to hedge some long positions. Since some new subscribers are on board, SPY puts go up when the market goes down. At this time S&P futures are down a whopping 28 points. It's been a couple of years since we've seen this type of action.

My favorite longs, both gold and silver, are taking a beating. Yes they are safe haven plays, but in times of market liquidation, gold and silver will drop as hedges dump to make up for stock portfolio losses. When people need money they also sell everything in sight (for now).

Not even QE happy Wall Street can withstand the overnight 16% drubbing of the broad TOPIX index in Japan. I watched the Tokyo Electric Power (TEPCO) news conference live last night on NHK TV via web stream. It's interesting that Japanese utilities can be quite evasive with the press just as any utility would be here in the US. The Japanese Press Corp was quite demanding. It was refeshing to see reporters demanding answers (no softball questions). But the problem was that TEPCO gave no answers, so NHK cut away half way through saying they weren't getting any new information. Even the Jpanese Prime is in dark wondering aloung. "what the hell is going on".

Conventiional wisdom would say that a dead cat bounce is ahead. and perhaps that might happen in Japan tonight, but the Tokyo market will be under significan pressure until signs point to the nuclear disaster taking a turn for the better. As of this morning, reactor #4 is now at a boiling point and major troubles persist at reactors 1,2 and 3.

If you are good with a minute chart and know how to look at classic RSI today is a good day to play the extremes that we will see in RSI.

You can bet that names in the Uranium sector are going to get hit like Cameco.
Multinationals that do lots of business in Japan will get slammed, like GE, Aflac.
Nuclear Industry names like Babcock and Wilcox will get clobbered.

Not every stock will fall on Wall Street. The solar group is looking strong this morning. We could see some action in exchange group with names like NYX and CBOE catching bids on consolidation rumors.

Remember the adage: You're only as good as your information. I had a bad feeling about the market yesterday and dumped my Apple shares after it failed to rally on news that IPOD2 sales beat estimates by a mile. All day Jim Cramer said the media was overstating the Tokyo nuclear problem which made me all the more uneasy. What does Jim Cramer really know? Granted, I saw him often make a nice salad at the CNBC cafeteria salad bar, but what does he know about nuke energy??? Cameco was also complicit with its conference call statements that it saw no major effect ahead for its business. what?? News radio had too many know it all guests saying that this wouldn't Chernobyl level stuff, etc.

Continue to watch the middle East. Bahrain CDS is widening where they have declared martial law.. Ghadaffi is still running around..


FYI here are the NYSE circuit breakers... http://www.nyse.com/press/circuit_breakers.html


These opinions are today. Lert's hope there is better news tomorrow.

CBS Sunday Morning Highlights Gold

Could the mainstream media be waking up? Gold was talked about as an asset and hedge on CBS Sunday morning. Imagine that: http://www.cbsnews.com/stories/2011/03/06/sunday/main20039768.shtml

Being generous with the estimates, gold is held by less than 1% of investment portfolios. Yes, gold is a vastly under-owned asset. This CBS treatment isn't a sign of a top imho, but a tacit of admission that perhaps the relegation of gold to the trash heap for all these year has been a mistake. We can only hope that some editorial authority in these traditional news organizations might be getting a clue that perhaps the constant plugging of paper products by the banking and brokerage cartels has been what one would call a BIG LIE, or put in a nicer way: IMPRUDENT. lol.

I've been a quiet Blogger of Late

As I just watch with a degree of amazement at what is going on in the world. As I've written before, it's an inconvenience for the average American family to have to pay more for a jar of Cheese Whiz than it is for a third world family to pay more for basic staples. In the third world, you can't adjust the size of a grain of rice, or a bean and give them less for more money but still make it feel like its's a value. Here, all kinds of packaging tricks have been used in an attempt to mask price rises, unless you look at unit prices, as I do. So the rising cost of buying enough food in third world countries to merely survive is quite a problem as we've witnessed in Eygpt. This will also manifest itself in other countries eventually leading to civil chaos and more governmental change.

So if you were planning to take a vacation in Pakistan, certain N. African countries, you'd better revise your reservations ASAP with Travelocity and get going.

There's talk in various circles on the web that China is aiming to raise gold reserves by another 5 tons in the near to medium term. I believe it. We are hurtling towards a new SDR scheme and being a gold power will be important, as I've said before. This is not necessarily in the best interest of the US, so this could be a drawn out affair. But clearly we're entering a period where the dollar's days are in quite a bit of trouble. I'm not going to pronounce U.S. Federal Reserve notes as dead, but a new reality is ahead. (how's that for positive spin?). If the SDR scheme works and the world reprices various assets differently, we COULD see a bit more stability enter the picture. Right now, the harsh reality is that many essential items are priced in volatile dollars. This has led to big moves higher in every thing from energy, metals and agriculture. Can a SDR scheme save the day? We'll watch for developments. I'm skeptical.

Ag remains a great place to be if you're a bull. Metals can only resume their upward climb. The pressure is building based on demand for gold and silver in China. Remember I talked about the Asian put? The US banksters and their accomplice exchanges no longer are in complete control of this game.

As for QE, it remains, Congress and its silly hearing notwithstanding. QE to infinity (orgininally penned by Jim Sinclair)? Believe it.

Friday Night Oldies

Saturday Night Oldies

From the 1965 Moview "Pop Gear". The dancers were great. Then a young Matt Munro... reserved, even a bit stiff but an amazing singing performance - kinda like a singing head. And, of course, a Beatles performance in wide screen color.

This clip is quite telling about the type of culture we had before Vietnam and the invasion of the Hippie Generation. What a concept: dresses and suits and jackets. Seems so old fashioned and quaint. lol. Today, I turn on the radio, or see music videos that promote all sorts of awful things and are quite bombastic. Never a good sign.

The Chase Attitude

It is just a small little post from a "friend" at Facebook, but a gloating little rib about how at Chase you can fly business class while the Cisco salesmen can't. (The names are redacted).
Ny response is the last one in the conversation. Sure to annoy ole David. LOL.

Did you have a nice Scoop of Unemployment Stew????

Pay no attention to the man behind the curtain. Funny how the seasonally adjusted U6 unemployment rate falls, while the non seasonally adjusted U6 rate jumps to 17.3%! Also nice the labor force participation rate drops to 1984 levels. So the 9% headline unemployment rate is a crock. This whole data series is toilet stew - the kind that comes the day after from eating Mexican or spicy Asian the day before.

Maalox Moments

Didn't Perry Como have a hit called Maalox Moments? Oh, forgive me, it was Magic Moments.

Traders will be gargling the Maalox in the morning as the Egyptian tensions flare. Classic sell the riots, buy the eventual overthrow? Look for market volatility at greater than usual doses until Hosni is on a plane to a villa somewhere. If the guy resists in the coming days, he risks being a candidate for a casket. The not running again in September idea is a non starter.

Crude and gold will be important tells in the coming days. 

When food prices rise in high per capita countries it is an annoyance since food is less than 10% of household spending. In poor countries where food costs may end up being 50% of a household budget, the picture is dramatically different. More riots to come elsewhere.  While we're able to pay up and live with more expensive Klondike Bars and Dinty Moore Beef Stew, unaffordable basic staples like rice and bread in far away places with strange sounding names is like showering the fabric of those poor societies with a flammable agent. Then it only takes a spark. Fun world. 

Dow Ekes Out 1.81 point gain Wednesday

Rising off modest weakness. It turns out that Bernanke did see his shadow in Washington. At least six more months of heavy duty QE on the way.

Wall Street Outlook

I don't mean to be sanguine, but Wall Street is a rose colored glasses kind of place.  Something will take the stock market down eventually, but don't hold your breath or bet aggressively for that day, whenever it comes.
The market is making minced meat out of the bears. S&P 1350 soon? Support held Monday, no doom and gloom. It's odd bot business as usual on the street. I don't believe in it, but you'll have your head handed to you shorting the market. Profit taking perhaps on Wednesday, but the pressure and momentum favor the bulls in spite of a future of food inflation problems and other economic woes to come (eg. pensions, states, etc).

Deficit reduction. Sham.  Washington remains so full of b.s. that all of their eyes are dark brown.  As far as I'm concerned it's a big toilet stew down in DC from both sides of the aisle. There needs to be actual debt reduction, not just spending cuts. There also needs to be reform of many systems to enable real economic growth, not this nutty federal spending stimulus that's been on going. All it has done is saved the banks for a while longer, given us tepid GDP growth with little employment gain - the list goes on and on.  The politicians are still in a spending state of mind ultimately.  Even if we saw a boost in tax receipts from a stronger economy, inside the beltway would find a way to spend any new revenue gains. Reduce the debt in the face of $100 trillion in unfunded future obligations? This cycle of unbridled spending and dollar creation will only continue. As a result I am bearish on long term dollar prospects even if we see a 2011 rally as seems to be shaping up.  My feeling is the longer the dollar is propped, the worse the fall will be when the bottom falls out.

Gold. Holding pattern to perhaps a bit lower. I will be more alarmed if $1300 area is broken.  The dollar continues to get the benefit of the doubt in times of crisis and that can hurt us goldbugs a little bit. For now it's as if the gold caravan is stuck at the railroad crossing, gates down, red lights blinking, as the dollar train takes its time moving through. Ultimately the dollar train is on a track to a big cliff, but for now it's chugging along. Don't bet against this dollar scenario. As always, I favor the hard assets. Buy rare coins. Even look at rare currencies. Speculate in the paper instruments like ag and metals futures only if you know what you are doing. The volatility presents good opportunities. ETFs of varying types in stocks, oil, commodities, also present some good plays, but know the risks well.

Coin Crazy

Some ding dong on eBay spent over $3000 for a modern silver Yosemite silver coin graded MS69 by PCGS (shame on them for grading this stuff). News of this transaction has spread rapidly. The online coin news service Coinzine was essentially the first to bring this to my attention. Today I spoke with some good friends who are luminaries in the coin industry and they too were aware that this transaction had taken place.

All I can say is do not not squander your money on this sort of stuff. Email me for guidance on real rarities. Always pay as close to bullion price as you can for something you deem as collectible.

Conditional Buy on Stocks Part 64

I realize that I sound like a broken record, or as some people would say in derogatory fashion: a QE-tard. Let's face it folks, where the stock market is concerned the game is rigged by billions and billions of dollars that are regularly deployed by the Wall Street evildoers thanks to POMO. Yes, one day it will end badly and perhaps with inadequate notice but for now the fed is your friend as we approach Dow 12,000. Woo hoo.

Believe me, I am not wearing my daughter's cheerleading outfit. I really despise why and how the market is being manipulated higher. In many ways the ongoing ascent of stocks defies all imagination and sensibility. More and more folks have been coming out of the woodwork in recent days to proclaim that doom in the market will soon be upon us. I take this almost as a contrary indicator as long as there is QE. Ben Bernanke et al are having a wonderful time thumbing their noses at the Bears, or really those who are simply seeking some sort of rational criteria for what makes stocks go up and what makes them go down. It is never a bad idea to have some out of the money puts or some other hedge against a breakdown within one's portfolio, but that would be for hedging purposes and not for the exercise of essentially stepping in front of a locomotive.

Should some sort of warning sign emerge, we'll be sure to let you know or perhaps we will be just as surprised as everyone else when/if the market becomes unglued.

Conditional buy on stocks continues

No change here. With each passing day in the markets, we will continue to see the Fed do the same thing: injecting money, funny money that is, into the financial system via Quantitative Easing. It's such a simple formula that even a young chimp could do well in the stock market. This manipulation of the markets has worked like a charm. We finished the week with the Dow up for seventh week in a row.  the key basic rule remains: don't fight the Fed. Many a short selling "pro", or hotshot has been severely tested and burned by the bald headed and bearded man in Washington. I love watching the shorts ridicule the :"QE-tards" as the shorts like to call the longs, but thus far the bulls have been winning hands down - not even close. LOL.

QE will end badly someday. Remember, I have made no secret of my disdain for QE but for as long as it goes on it's happy days down on Broad and Wall. Yes, I recognize that all good things eventually come to an end. Eventually, Wall Street's free lunch money will come to an end. But when this will happen is a great unknown. The present round of QE is projected to last through the summer. Once we get to that point I fully expect the Fed to proceed with another round of QE. As Jim Sinclair of the famed JS Mineset website would say: QE to infinity. This is a game that will last for a very long time. Trillions more of QE is on the way over the next few years, or at least until the November 2012 election,

I am anticipating that Wall Street's upward slog will continue with the requisite bumps along the way until the QE picture dramatically changes. IMHO it will take a large dose of sudden doom to derail the QE effect on stocks. Again people this is not rocket science, it is the buying and selling of stocks where certain overriding factors must be recognized.

A Floor for Gold - Made in China

There has been a scandal of sorts brewing over gold and silver short positions held by JP Morgan and HSBC. The two banks are massively short these metals and would never be able to deliver on their contractual obligations due to limited supply of the physical metals. Many a gold and silver bull has long been dreaming of a short squeeze to bring both banks to their knees. Some have resorted to a "put JP Morgan out of business - buy silver" campaign on the net.The Commodities Futures Trading Commission (CFTC) has served up a bit of bad news for those wishing for the demise of JP Morgan et al. Essentially, the commission has voted to leave JP Morgan in a cat bird's seat of not having position limits apply to the giant bank. The vote wasn't even close. It was 4 to 1 against limiting the amount of positions. So, as usual JP Morgan and friends win again. Surprised? Lol. 

Time to simply move on from that effort. The banks will win all of the time in terms of rule making in these exchanges where they hold large positions. If things don't go their way they change the rules leaving you to hold the bag. Business as usual. In these markets there is something to be said for taking profits too soon. This is why I never endorse playing around in these exchanges unless you know what you are doing! Physical, in your possession, is the best way to go. If you do not like the volatility of bullion, then it is obvious that you should invest in rare coins.

The carnage of recent days in the gold and silver markets could be worse. But here is the rub - it's something called the Asian put that will keep gold and silver from melting down; the bears will be denied. Simply stated, no matter how hard bearish interests try to pummel gold and silver those efforts will be met with buying demand from Asian investors. I believe that the bottom will soon be in for gold and silver thanks to this Asian put.

In Hong Kong, demand for gold has soared by up to 50%, according to local reports, for gold bars of the kilo size variety. This sudden increase in demand has caused local prices to move three dollars above the spot price, highlighting the tightness of the physical gold market in other parts of the world. The Financial Times of London warns however that the market could cool down due to the Chinese holiday in early February. That would only be temporary, of course, as the fact of the matter remains that gold demand in the US does not operate in a vacuum. It is actually self defeating for certain US interests to undermine precious metals prices as it only enables US competitors to buy those metals more cheaply.

Unemployment remains at over 16%

Unemployment: The real figure is 16.6% in December, up from 16.3% in November. This is the U-6 figure from the labor department that non delusionalists use. This 16%+ figure is corroborated by the Labor force participation rate plunging to a multi year low: 64.3%. Pay no attention to the fools heralding a 9.4% UE rate.

Do What Works - Commodities

This blog and especially the old subscriber newsletter (now closed to new subs) had a great 2010. In my own quiet way I endosed the commodities world. Stick with them.

Palladium vs platinum is still relatively low and that will drive demand for PA by the automakers.
Silver is only getting re-started. Gold will perform well. Ag related commodities will remain the place to be. Energy will also continue strong, Eventually even Nat gas will play catchup.

Stock gains, to be honest, were superior over recent years, BUT still woefully under performed the commodities world. Via Finvez.  The proof is in the pudding....

Stocks Remain on Conditional Buy Signal

The condition being that master financial pimp, Ben Bernanke, continues with the presto money creation. I'd bestow an "uncle" Ben, but that would be offensive to the good members of the Uncle-hood. Pimp is more like it (the harlots being his cabal of banks). LOL.

It's true dat (a little city street lingo for ya) the upward climb in the S&P 500 slowed in December to a .1% gain. And, yes, it's true that a variety of technical market indicators are flashing red signals, BUT QE is still an active force supporting stocks. Yes, I still hate QE, but it must be recognized. Just think of it, billions, trillions in new money to get an 11% gain out of SnP last year, and still gold was up nearly 30%. Nice job there Washington financial sickies.

Yes, I believe this whole scheme is going to flame out in some nasty way , but for now the market is likely to try to wiggle higher as the minions on Wall Street worship their gods at the Fed who think they are really creating something out of nothing. Let's also see, for example, if the year- beginning retirement fund shenanigans bring any additional loving to the stock market. Should the market take on a more serious wheeze this month in the face of seasonal and extraordinary props, take further action to protect your gains.

Conversely, if the Dow ratchets up to 12K in short order, I'd also be a bit concerned about the mother of all overbought situations. But hey with this QE, anything is possible.

Silver!

When I did business reports on 1010 all newsradio WINS in NewYork, I once forgot to mention the silver price. The newsroom was flooded with calls. At the time that station had several million listeners a week, so it was natural that if something bothered even a fairly small segment of the audience, the phones would get flooded,

I have no doubt that silver will be a scene stealer in 2011 and will attract more interest.

This nice little video was done $9 ago when silver was at $21/oz. So it's a little outdated, but the overall theme has not changed.

Metals outshine in 2010

They are likely to explode this year.

I was pre occupied with sounding the word on getting into gold in 2010, also in 2009 and before. Random House even let me write a book on the subject (Google: "Kingsland Metals Book"). And YES, gold more than doubled the performance of the S&P 500 stocks (more so for silver) in 2010. All I can say for 2011 is, 'you ain't seen nothing yet!'