"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


Wednesday, September 19, 2012

HUI looks strong - Following S&P 500 Higher

The mining shares are seeing some very good inflows of speculative money. The result has been an advance for 8 out of the last 9 weeks. The chart shows the index blowing through resistance levels with relative ease with the next Fibonacci retracement level within striking distance.

As the trend is higher, we would expect dips in price to be bought. Initial support for the index is down near the 50% retracement level that comes in near the 505 region. AT some point longs will decide to take some money off the table after a run of this nature but as to where and when this will occur, we will need to watch the price action to get a clue.

If the index were to somehow close a week above the 555 level, it is very likely that we would see the index scoot rather quickly to 600.

Global markets are all being jammed higher as Central Banks are orchestrating a tidal wave of liquidity. The reality is that none of this will do a single thing towards dealing with the ROOT CAUSES of the problem but that is what Central Bankers do in response to any financial or economic crisis - they ramp up the money supply in the hope that it will spur borrowing and lending.

I maintain that it will not  - not without an environment in which jobs are being created and borrowers feel somewhat confident that they can actually afford to make those loan payments. I have said all along, that if the Central Bankers are intent on providing funding for the banks in the hopes that they will loan the money, they are mistaken. Heck, if the feds are hell bent on printing money, instead of basically getting it into the hands of the banks, why not just send a check to each taxpaying household instead! If you are going to deliberately debase the currency, at least have the decency to give some of it to the people whom you are counting on spending it!

Let's call this the Trader Dan stimulus plan. I think that they should start with a government check in the amount of $10,000. I could use some new tractor accessories.


  1. Yes, gold and the miners are showing exceptional strength today.

    I believe that the run up today is being fueled by more "Jawboning" out of TPTB by cajoling OPEC to announce that they are ready to pump more oil, and there is plenty of spare capacity, and if necessary, an infinite supply of "Short at Market" NYMEX order tickets can be printed at will to drive down energy prices.

    So the miners are benefitting from collapsing input costs, as steel, CAT equipment prices are near rock bottom now and energy costs continue to sink regardless of what is going on in the Middle East.

    So at least for now, the shenanigans perpetrated on the commodity markets are actually helping the gold market right now.

  2. Did not realize you were a farmer as well as a trader!

  3. i can only imagine what obozo the redistributionist would have to say about giving money ONLY to taxpaying citizens.

  4. Hi Dan,

    You're one of the good guys.

  5. I support your proposal. If you ran for President, I’d vote for you!

  6. "Heck, if the feds are hell bent on printing money, instead of basically getting it into the hands of the banks, why not just send a check to each taxpaying household instead!"

    Who would gain? Would someone buy a Nissan Leaf or a Chevy Volt? Asia might be the biggest beneficiary.

    1. David Rosenberg's on your side. He says there's a 57% correlation between the "wealth effect" and spending, whereas there's a 75% correlation between personal income and spending.

  7. "How much is $40 billion a month? Try $128.20 per US citizen. With my family of three, perhaps the Fed could have the Treasury send a $385.12 check every month instead.

    Remember the extension of operation twist? (How can one not giggle?) Current printing amounts to $85 billion a month; perhaps a $1309.41 printing check could be sent to a family of five."


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