Rolling In Dough

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Earlier in the week I put out an educational piece showing some historical, as well as current cup and handle formations.  These are very powerful formations indeed, and the S&P 500 just broke out a couple days after my piece was released.


If you've been reading my work for any amount of time you know my disdain for the way government is being run and all that goes with it.  You should know by now I believe fundamentally, markets should be crashing and we should all head to the hills to our cabins with our beef jerky and dog.

But it's not reality.

I obviously believe we have systemic issues that will worsen and are nearly impossible to deal with, without a major and systemic change to currencies and the system in general.

That's why I hold such a high percentage of physical metals.

That being said, I don't sit around whining day after day over why this didn't happen or that didn't happen.

It simply doesn't pay to do that.  It's hard on the head and doubly so on the bank account.

There are so many out there calling for markets to go lower and their frustration grows by the day, but the fact is markets are very powerful right now.

Why not ride the wave and make some money along the way?

There is a major trend just starting in the S&P and we are taking advantage of it.  We've been chopped around for the better part of the last two months, up and down not really going anywhere but finally our trading account did what we've been positioning for, this past week.

We are using mainly options in this account right now since they give us greater average with less capital outlay.  One of the nicest position we had was a leveraged Silver position in the form of AGQ.  This ETF we began entering luckily near the low in the $113 range.  It's traded above $145 this week.

If you know anything about options you know what kind of returns we are talking about here.  We definitely booked some profits but we also left some riding for now.  We also have other less levered trading positions in Silver, Gold, Indices and stocks which are doing well, actually their doing great!

Sorry for the ramble there, my point is as always.  Hold physical metals as the inevitable sea change is inevitable, and they will protect you.

But while you wait for that, have fun and try and make as much money as you possibly can by trading some of the rest.  We don't day trade but try and swing trade, although we can get stopped out of positions intra-day.

Isn't making ridiculous amounts of money one of the main goals in this life anyhow?

I know I know, money can't buy happiness, but it sure helps 😉

I say, position yourself for your strong beliefs in the long-term.  Then throw out your long-term biases every Monday and let the markets tell you what to do.  It doesn't always work, but when it does, it does well.  And as long as we take care of our losses, our profits will take care of us.

Let's take a look at the beautiful metals charts this week that look poised to continue this move higher.

Metals review

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Gold rocketed 3.75% for the week and closed November at an all-time high close, as well as this weeks weekly chart, and Friday's daily chart was also an all-time high close.

Not too shabby!

That's very, very impressive and really there isn't much interest in Gold it seems.  There are more bearish stories than bullish and most investors still do not own 1 single ounce of physical Gold.

Even more bullish, and extremely rare, is the fact that Gold closed Friday's trading at the high.  That, I dare say, never happens.  This tells me we are on the cusp of a large explosive move higher.

Pundits are scaring everyone with their talk of the potential head and shoulders pattern which is no doubt forming, but could soon be annulled.  I am constantly on the lookout and at any sign of this breaking I'll be out of the trading positions, but still holding physical Gold.

The GLD ETF saw very mediocre volume even as all-time high closes were achieved.  There just isn't any sign of a short-term top as of yet that I can see anywhere.

I am nervous and excited at the same time, but holding strong with all very profitable trading positions.  Funny enough the least profitable one at this time is in GLD options.

Yes, I did say that right.  It's a rarity, but every single trading position I hold is well into the green right now.  And the Gold position is lagging!

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WOW!!!

Silver closed the week up 9.93% and closed at the high of the week!!!!

There isn't really much else to say.  It's on fire and making myself and subscribers a whack of dough just in time for Christmas shopping!

Sorry for the overuse of the exclamation point, but I'm excited!  And so should you be if you've heeded any of my words over the years.

Silver is at highs and looks like it's just walking, not sprinting yet, at least when you look at the mediocre Silver SLV ETF volume.

If we can continue even just a little higher from here, there really isn't much stopping Silver from heading much higher, very quickly, perhaps even above $40 and heading towards all-time highs at $50 in 2011.

You all should know I think setting targets is a fools game, but everyone wants one.  For some reason it makes them feel better, but it shouldn't because they are guesses, plain and simple.

I took quite a bit of flack early in 2010 when I guesstimated that Silver could reach $30 and Gold $1,500 this year.  I take no credit for that whatsoever since I just, in all honesty, threw them out there as what I thought to be relatively conservative numbers at the time.

But the way we've reached them has surprised me.  This bull market is strong indeed.

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Palladium really needs to settle down.  If for no other reason than to let me into a trade.

Palladium rose 12.89% this past week.

I have to look back to 2001 to see if there is any resistance and sure enough there is a gap around $875 that should slow price.  Surely Palladium will slow on the way there though to let me in.  Won't it?

I'm not too thrilled I missed this trade since I mention it every weekend to you and, humbly, have been very accurate in predicting moves.  If we test the $750 level I think it would be advisable to go in as heavy as your trading style allows you using the ETF.  Always use stops though that you are comfortable with.

Speaking of the ETF, it did see absolutely ceiling smashing volume Wednesday through Friday this past week.  Hopefully this precedes a correction.  The PALL ETF chart did close the week with what's known as a Doji in candlestick charting speak.  They tend to occur as a change in trend is about to take place.  We will see.

I'm looking, hoping and praying for weakness in Palladium this coming week.

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Platinum rose 4.86% for the week and Friday candle appears to have broken out above the downtrend line, and above resistance at $1,710.  Next stops should be $1,750, then $1,775.

Platinum and Gold are lagging Silver and Palladium, but who's complaining?  The four metals I cover here are looking for higher prices quickly now it appears, but we must be wary at these time as well, as a quick reversal could come at any time, but I do not see any signs of that yet, but it can change very quickly.  Only subscribers will be alerted in real-time.

The PPLT ETF saw strong volume this week but nothing overextended, just solid buying from what I can tell with Thursday's volume being the highest.

We could see $1,750 very early next week.

Fundamental Review

The Federal Reserve issued a report specifying to whom they lent money to during the crisis in 2008 which is still ongoing by the way, but it may never be reflected in the stock markets as dollars continue to depreciate.

The Fed lent money to large banks and trading institutions, not only in the US, but throughout the world.  And get this, they even lent money to other central banks.  This really shouldn't be news, but I suppose it is since they are admitting it.  Albeit, it was forced upon them.

The US Dollar is said to become the world's weakest currency as it falls below 75 Yen in 2011 according to one big Investment bank who happens to be the big Silver short.  As if we didn't already know the US dollar was heading towards being one of the weakest currencies in the world, but I doubt it will be the weakest for at least a few years, as most major currencies are being devalued.

A big theme of mine has been that as the Dollar drops indices can and will rise.  During the Weimar hyper-inflationary period the stock market soared to unimaginable heights, but it did't really matter much if you tried to buy anything, and that will likely eventually happen in the US.  But even more likely is that a new currency will evolve or be created.  Either way you got to hold Gold and Silver.  It is insurance and will protect you as we move into the unknown.

Obama announced pay freezes for civilian federal workers this past week in a bid to stem deficits.  I'd much rather see him easily identify those who make over $100,000 a year and decide whether that is realistic and cut their pay.  Surely that would save more money and bring some people back to earth.

I read somewhere about a librarian making over $500,000 a year.  Other stories of mayors, police chiefs and other positions making exorbitant amounts of money have to be found and reversed.  Surely they've saved enough over time to work a few years for free before getting a more realistic salary.

If you haven't already been inundated with the leaks revealed this past week here is a long rather interesting account of some of themOr try this one, or do a search and you will be flooded with articles.  It's truly amazing.  Its not as if we didn't really know there was so much lying, scheming and deceit, but it's nice to hear it!

The revered Paul Volcker stated the obvious again as he said the US Dollar is in danger of losing it's role as a global benchmark currency.  Yup, couldn't agree more.  It's a fact and it's inevitable.  Protect yourself.

Millions went without cash in Australia recently as a computer glitch jammed the banks system.  As nice as we have it these days, our accounts are just 0's and 1's when it comes down to it in programming language and can be changed or even deleted from a virus, glitch or even, heaven forbid, a planned event.

It's always comforting to me to have some cash on hand as well as physical metals, just in case.

The IMF gold sales slowed 40% in October versus September.  They sold 628,000 ounces, which is 19.5 tonnes.

I constantly get heckled any time I mention that a tonnes of Gold is only a cube of 15 inches.  I know it's hard to believe, but it's true.  Gold is very dense, thus heavy, and 15 inches would amount to a tonne.  Here is a simple calculation proving the fact.  In fact to be precise the cube would only be 37.26 cm's.  Slightly less than 15 inches cubed!

This fact is a testament to the portability and truly magnificent quality of wealth protection offered by Gold.  Although it can get pretty heavy quickly!

Peru saw declining Gold and Silver production through the end of October 2010.  Gold production fell 11.17% while Silver's slipped 5.87%.  The year is not over but I'd imagine these number won't improve.

On the other hand Australia saw it's Gold output rise by a huge 22% in Q3 2010.  67 tonnes were produced in that timeframe.

It's a good thing Australia is increasing production since they are so close to China who's Gold imports have soared nearly fivefold in 2010.  Imports grew from 45 tonnes in 2009 to 209 tonnes so far in 2010.  And that's only through the first ten months!  Their appetite for real goods is insatious.

In fact, I wouldn't at all be surprised if the "mystery" trader who is holding between 50% and 80% of the LME copper inventory has deep Chinese connections.

Between Paulson, Soros and Touradji, they own as much Gold as the entire US produces in 10 years.  To say the Gold market is small is the understatement of the century.  Get it while you can.

I've warned in the past that the further along the Gold bull market progresses the more Gold scams will emerge.  Some very sophisticated Gold gold surfaced in Hong Kong recently.   The strange thing is it was in the form of scarp jewellery or small trinkets which is usually hard to fake successfully.

Essentially the Gold was mixed with other alloys and passed the test until melted.  This is troubling since it was in such small amounts rather than the easier to fake large Gold bars.

If a metal can be produced to closely resemble Gold and pass most tests it could end up in the Comex warehouses, or worse, the ETF's storage facilities and remain undetected, possibly forever.  This would add a tremendous amount of real gold to the market and potentially depress prices.

I am not worried though.  Those who really want Gold will ensure it is real and let the ETF and others who would rather see Gold lower have the fake stuff.

Coins and small bars should remain unaffected for now, and as long as you buy off a reputable dealer you should be fine.

If you truly want a good laugh, check out this "Can You Spot a Scam" test just released by the FDIC.  Do they seriously think that people are that dumb?  This test should be given to kindergarten regulars, grade two at the latest.

Seriously, check it out and pass it around and laugh at the incompetence your tax dollars are paying for.

Until next week take care and thank you for reading.

Warren Bevan

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