"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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HUI still trapped below 600
Still it was great to see all the short covering today.
ReplyDeleteThe last couple weeks it's been like watching a spring wind up with all the spread trades shorting the miners.
I've gone through this enough to know if you sit tight, eventually all the losses are erased and miners head much higher.
I must have read a dozen commentaries about why the miners were lagging the metal prices. The spread trades seemed to be the result of different factors. The first being the purpose of the spread trader as risk aversion Then the beliefs by many in the market that they wanted to see the metal prices hold before buying into more of the mining shares, some profit taking especially in AG SLW and EXK which have all had good runs. Then there was the belief that there would be a bit of an increase in mining costs due to fuel, but the math didn't make that a huge issue as some seemed to like to make it. And there was a lot of talk about an end to QE2, which again, they might have tried to disguise it with some other wording, but it did fly.
Very nice to see the miners back at their old stuff.........
Two words regarding the miners:
ReplyDeleteSector.
Rotation.
If the rubber band on the HUI doesn't snap in May, then I'll buy mining shares all summer in preparation for August and September
Virtually every hedge fund had taken oil and gold stocks off the table prior to the FOMC, pushing the OSX/WTIC to new lows for the move, and SIL/SLV to record lows and GDX/GLD annual lows. Now that all markets have broken to new high ground, including the Transports, there is likely to be a huge "pell mell" run back into these commodity stock ETF's.
ReplyDeleteThey still have a long way to go but at least this could be the start of a new leg up. My guess is the miners will initially outperform the price of AG once $50 is behind us.. To me it seemed the miners were already expecting a correction in AG for quite some time. Now that that's done, and senor Bernanke did what he had to do, all is clear.. Well, that is if Blythe does not try to paint a double top near $50.
ReplyDeleteI'm not worried about chart patterns in the miners or the HUI (but that doesn't mean I want Dan to stop generating and posting them)
ReplyDeleteI think the miners are simply waiting for Silver and Gold to establish a solid base/channel pattern over some period of time- then the mining companies are going to have their valuations re-formulated against these levels and the shares are going to adjust to the appropriate levels...
Until then, I think you've got to accumulate the miners until you have reached your upper risk threshold (mine is 25% of my total portfolio value (measured in ounces of AU)
May I put in the TRE blog link here? http://tanzanianroyalty.blogspot.com/
ReplyDeleteJasper - yes feel free to do so.
ReplyDeleteDan