Wednesday, April 28, 2010

Runaway Move in Gold Miners Coming

Please compare the oil miners index and oil versus current gold miners and gold. 
1/1/2003 to mid-June (5.5 months)
mid-June to 12/1/2003 (5.5 months)

Miners (CDE for example):
5/1/2009 to mid-October (5.5 months)
mid-October to NOW (5.5 months)

I have option positions in: ABX, AUY, CDE, GLD, UNG

The objective now is only to manage failure.

Buckle Up.


Monday, April 19, 2010

Gold Ready For New Highs

Chart looks beautiful.


Massive reverse head in shoulders - very healthy consolidation after the new high @ $1224.  Failure would be devastating, but is looking unlikely at this point.  Look at how price hugs fib. arcs and is attracted/repelled at fib. retracement levels.


Leap Call Purchases

Historically, the $VIX (volatility index) is very low, this means options are very cheap.  For those who don't know, options are a form derivatives that give the buyer/seller rights at certain prices at certain times.

Here's what I bought, with the idea of hitting/holding through a major turn in the market.

AUY: Jan/2012 $5 calls for $5.42 (basically free leverage but no margin)
UNG: Jan/2011 $6 calls for $1.87
FAZ: Jan/2011 $8 calls for $4.90

Example above is AUY, Yamana Gold.  This leap call option has a strike price of $5 and an expiration date of Jan, 2012.  Between then and now, I have the right to buy Yamana Gold at $5 per share.  Currently AUY is at $10.  So, currently each contract is $5 "in the money".  If Yamana were to go to $19 per share (double current price), my options will quadruple.  It's basically free leverage, without using margin.
If Yamana makes a big move up, which I am all but certain of, then the volatility will also increase greatly.  This will increase the premium on options paid, this will play a factor in how much I am able to make out of this trade.
UNG is the Natural Gas ETF (a trainwreck, having crashed from $64 to $7 in 2 years (natural gas has been a disaster, but UNG in particular due to the fact that, in general, ETFs are scams...sorry to be blunt......with this in mind, I will have to be a bit more careful with these options).
Same for FAZ, which is a reflection of my opinion that banks have another "big round" of declines coming.

Wednesday, April 7, 2010

Notes from Jim Sinclair's seminar in Toronto

The more places this is posted, the better.  -GK


The following is from a diligent client of mine who went to the Toronto seminar hosted by you in February.




I was able to go to Toronto this past Thursday to attend a presentation by Mr. Sinclair to address what is currently going on in the world, including finances of course, which is his specialty. I regard him as one of the premier authorities on gold and currencies in the world, and as such value his opinion highly. I took copious amounts of notes, and tried, to the best of my ability to record precisely what he said and what he meant and pass them along to you all to make what you will of them, and to take whatever action you feel appropriate in your personal situation. After hearing him live, there is no question that what you read on the website is exactly what he thinks and sees going on. 50 years of experience in the investment world, at all levels does count for something. You decide what. The notes are in the order things were presented, including an hour and a half question and answer where Jim fielded all questions from the folks that were there. Some themes are repeated for emphasis. I recorded them as they came.

1. Get a copy, if possible, of the BBC movie, "The Last Days of Lehman Brothers" it is exactly what occurred. They were flushed and allowed to go down. Those that did so made billions.

2. The same people that sold Greece the products to hide the true condition of their finances ratted them out and are hugely short of Greek debt at this time.

3. The more these people win at what they do, the more powerful they become.

4. The failure of Lehman set off the bankruptcy(s) that allowed government money (your money) to flow to large institutions, who were the winners on the bet.

5. The next phase of problems will come about because of a loss of confidence in currencies themselves.

6. Regulators are totally ineffectual in dealing with what is occurring.

7. If we have a failure of Greek debt it will be catastrophic and you and I will pay. If Greece does not fail, we will have money printing (quantitative easing is the buzz word) to infinity.

8. China is actively seeking control of the resources of the world, all JSMineset speculation on this has far exceeded what was postulated.

9. With the incredible bonuses being paid to Wall Street executives, you have to know it is there last lick of the cone. They know profits are not real.

10. To balance the US balance sheet, gold would have to go to insane numbers. The mechanism is in place to drive gold to incredible numbers.

11. Credit default swaps are being used as the hammer to destroy nations. They are doing this by shorting sovereign debt, then using the media to bring about the profit of their position (ie calling nations PIIGS – this isn’t flattering and does not inspire confidence, causing people to stay away). The players doing this have no conscience, are oblivious to the side effects, are power crazed, and believe they are gods. Sovereign debt is the next bomb to implode.

12. The only currency that will sustain what is coming is gold.

13. We are headed for a one world currency with a central bank of central banks. The world is going to change dramatically in possibly as little as two months.

14. The individual states in the US, which are bankrupt in many cases, will be attacked next. Big money is already hugely short of state debt. Ultimately this will take down the US dollar as well.

15. A one world government is coming.

16. Hyperinflation is a loss of confidence in paper currency.

17. Gold is money without liability on the other side. It stands alone. Make your balance sheet as good as it can be.

18. If Greece goes (is flushed and not bailed out), then the whole world changes, perhaps overnight. Look for 200 dollar swings in the gold price. Because the "dark side" (those who are in control of this) are smarter than you are, add to your positions in gold on reactions. Gold is an insurance policy.

19. China will rule the world. Friends of China will benefit from that. China’s interest in Africa and its treasure chest of mineral wealth isn’t an accident.

20. Yuan denominated paper, if one can get it, might be a place to be with some of your investment portfolio.

21. Equity markets may in fact go up due to a Weimar effect. All that money created from nothing finds its way into the stock markets of the world.

22. He stressed simplicity in your personal life. Be focused, balanced, and go back to basics. This is not a time to get fancy.

23. There will be no end to naked shorting by the players. The real game is destroying nations, countries (think Dubai, Iceland…)

24. He feels the flushing is in fact deliberate. If Greece does in fact go down, it will definitely be deliberate.

25. Gold’s window is still open here because those that know what is coming are still accumulating. Expect it to be closed by year end. That means if you don’t have any, don’t expect to be able to get any.

26. Hold any stocks you happen to own in certificate form in your hand, and don’t lose the certificate. If you are a stock player, check out true custodial accounts. Make certain that your holdings are in fact yours and NOT on the books of the bank.

27. A question was asked: If I had a million Canadian dollars to invest right now, where might I put that? The answer was 1/3 into gold bullion, held close, 1/3 in both Canadian Tbills and Swiss Franc’s, and the remaining 1/3 into what you do best.

28. Major financial houses today are acting like countries. Greece does not control its destiny, it is in the hands of those houses which become stronger with each situation they take down.

29. Expect mining company consolidations to greatly accelerate.

30. The Canadian dollar is very much a wild card. It may rise nicely, because it and Canada generally have remained conservative as opposed to other far more leveraged approaches. Canada is currently sitting in the cat bird seat, and it’s not really helping Canada because of our export based economy.

31. The number to watch on the Euro is 1.29 against the US dollar. Should it go lower, the Euro is in serious trouble.

32. The US has no strength for geopolitical disruptions at this time. It’s a house of cards that could come down at any time.

33. Keep it simple! Back to basics.!

34. The Asian and the Polish crisis were precursors to taking down the Euro. If the Euro is torched, the pound and dollar are next. As a side note, Jim Rogers feels the British pound is months or possibly weeks away from being heavily attacked once again. This is my comment, not Jim Sinclair’s. Look for the pattern here.

35. Money (the wealth of the world) has been concentrated into a very few hands. They are currently only interested in tearing down. There is no interest in creating, only destroying. China is building up. Algorithms (computer modeling and trading) are being used to destroy.

36. Gold stocks should leverage 2 to 5 times a bullion position.

Sunday, April 4, 2010

Quick notes

Jim Sinclair is fond of saying: "When the Devils are in charge, virtue is a sin.", of late. :)
Please watch the 10-minute video found in this link:

Some great interviews at King World News
Fed board emergency meeting on Monday: Emergency Fed board meeting on Monday
Ready for a volatile week in the metals?  :)
I have dropped some JPMs in favor of options on the large-caps.