Counting chickens and avoiding the predators

Sat, Aug 8, 2020 - 10:00am

I suppose that many of us here have been doing some chicken-counting lately, imagining the “assets” we will move into when we sell at the precise top and reap a windfall of profit. I have certainly done my share and my wife is probably getting tired of hearing about it. And I was feeling good last night until about 8pm when this recent smackdown began. (I heard that monkey’s disguised as bears did the smacking.) And again this morning I was disappointed to see that these monkeys kept at it all night. I checked price again this morning while taking a break from shoveling gravel in the AZ heat. Hmmm… disappointing. So what can we do about it? Perhaps we ought to think and plan a bit as this bullish move climaxes in its cycle.

In spite of Fridays disappointing action, there is no cause for panic. Sitting here at the computer this afternoon, we see that each dip has been met with buyers who pushed price back up faster than the monkeys were able to push it down. Some folks out there are taking the BTFD advice seriously. Moreover, price moves to a new high after each smash.

I’d say that is bullish.

My prediction? The monkeys will continue this little game Sunday night. They have been unable to paint a lower high in over two weeks. But, I also expect the bid for metals to overwhelm the short sellers within a day of any extension of this smash.

Friday’s action brings me back to my chicken-counting. At some point, I want to take my metal gains and purchase a few things: 1) a suitable property to ride out this social change and coming depression. In fact, I’d like to retire and live there the rest of my life. And why not get a couple of good vehicles to replace our old ones—maybe even a backhoe.

Yet, several unknown factors stand between paper profits and realized gains: Pundits from various venues are predicting some serious inflation, along with a very weak dollar—perhaps even a reset. If one closes the metals trade too soon, inflation could bring some sorrow. Metals may be “called in” at a government set price that we won’t like, after which ownership and bartering may be an offense that lands one’s gluteus maximus in jail. And what about capital gains tax? I am very interested to hear more about tax law as applied to asset exchanges. 1031 exchanges are not applicable to metals? But are there other loopholes?

I am sure that I am overlooking 20 or 30 more factors, but the main one is the possibility of an illegal, organized takedown of metals—with anti-metal propaganda, rumors of confiscation, margin hikes, radical short-selling, fake chart prices, delisting of products like USLV, SLV and even GLD and bail-ins of share-holdings. Perhaps they even kill bin-Laden again.

I don’t want to make the same mistake I did in 2011.

Most of us back in 2010-11 bull market bought our stacks at much lower prices, and added on as metals rose. On that fateful May holiday, when Deep State Stooge #1 was allegedly killed and buried at sea, I daresay that all of you remember what you doing that evening at 6pm.

But silver did not crash to $15 in a day. It took a while. In fact, after the initial drop to 33 in a week, silver bounced up and down between 33 and 43 for four f*cking months. Certainly, any dull-witted stacker could have said “Uh oh! Turd says the bankers are doing this. Maybe I should liquidate a portion of my stack here between 35 and 40, and pick a point where I sell more when the moving averages make bearish crosses.”

Gold was not attacked until September that year, and even then it fluctuated between 1500 and 1800 until the spring of 2013. After what happened to silver, why couldn’t we take a hint? Any one of us could have stepped onto the sidelines and dodged the worst of it—even if we simply sold portions as the 50, 100 & 200 day moving averages crossed over one another on the way back down.

I recall standing on the porch with silver at $37 considering selling my stack to help a recently divorced friend purchase a house. We decided not to. The next day, she got a hard-money lender to help her close the deal. She ended up paying back that 12% criminal loan in a year. If we had helped her, she would have paid back a zero interest loan even faster, and we could have increased our stack purchasing back at sub-$26 prices.

Perhaps some of you decided to re-direct your investments and then bought back in the teens between 2013 and 2019. My yellow hat is duly tipped toward you! Good job. Way to go! That’s not what I did. Instead, I held on with both hands, finally selling out at $17 in 2017 to buy a run-down threeplex. We did OK, selling the renovated property in 2019 and doubling our fiat, buying back our stack +30% for $17 per ounce just before this historic climb back to $50 began.

But for anyone to blame their losses on Craig or any other metals analyst needs some sense slapped into their head. There was time to sell with a gain in hand in 2011 (unless you bought heavily at $45, like I did, and even then, a $10/oz loss is easier to swallow than a $30/oz loss.

So what’s your point here today, Dr J?

As we revel in the price of gold, rolling on our backs in the sunny grass like a golden retriever, and look forward to higher silver & gold prices, we must remain vigilant here at the watchtower. Bankster efforts to contain price are evident as we move higher. Friday’s action is the clearest indicator of their presence yet, taking down both metals at once. An all out assault like we saw in 2011 may be on the horizon. But when it happens, metals will not crash 75% in a day, wiping us all out. No, it’s more likely that it will take a few weeks or months for the cartel bankers to manipulate price lower, against our cursing and railing. And it’s likely that we will have some clear hints along the way.

So shut up and have an exit plan. Simon Black offered good advice—it’s just another investment and we need to not love our metal. It is serving our families right now, protecting us against an uncertain future. But it cannot protect us if we keep it all in the lake through some monetary reset and legislation that could make profit-taking problematic.

These markets are complex with many players and motives.

Craig Hemke has refined his analysis of metal markets over the past decade, making the most accurate projections of any analyst out there, and explaining his rationale in detail. I suspect that Craig will see warning signs if the market forces driving prices higher are weakening and the bankers are preparing for an assault. And I suspect he will tell us what he sees.

We should take heed.

There will be plenty of hard goods for sale cheap as metals stabilize at a high price and even begin the manipulation back down in fiat terms. But don’t sit on your stack if the market forces have clearly changed. Don’t sit there whining on this or any other blogs or discussion boards. And don’t bash Craig if you fail to take some profits and dodge the worst that banksters might throw at us.

Implement your exit plan. Not many of us will sell the right amount at the precise top, and if you brag about it, I’ll call it “luck” and pat you on the back. But anyone who sells part or all of your stack at a good price, and purchases what you need for the future at a good price, I say that “Your’e a Winner.” I will try to do the same. But I will also keep a portion of the stack, well-hidden, just in case the winds of change blow our way again ten years from now.

Buy your dream home. If you want acreage and a large home, you can probably pick up something suitable, in your favored location, on the cheap. I just might buy add a backhoe to my list. And I may need to get a bigger hen-house, literally speaking, and start my chicken-counting with eggs in mind, rather than profits.

Baby chicks hatching
Image: Doctor J--member of TFMetals

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Key Economic Events Week of 6/27

6/27 8:30 ET Durable Goods
6/27 1:25 ET Jul22 Silver option expiry
6/27 10:00 ET Pending home sales
6/28 10:00 ET Consumer Confidence
6/28 10:00 ET Richmond Fed
6/28 12:30 ET Goon Daly
6/29 8:30 ET Q1 GDP final guess
6/29 9:00 ET Chief Goon Powell
6/29 11:30 ET Goon Mester
6/29 1:00 ET Goon Bullard
6/29 1:25 ET Jul22 Silver off board
6/30 8:30 ET PCE and Core PCE
6/30 8:30 ET Pers Inc and Cons Spend
6/30 9:45 ET Chicago PMI
7/1 9:45 ET S&P Manu PMI
7/1 10:00 ET ISM Manu PMI

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