Price of Bailouts 7 Trillion and counting, US Dollar is under siege. GDX, TYX

I did not notice any Reserves of this magnitude in FED's balance sheet recently for this kind of shopping spree. So the money will come from issuing new debt by selling treasuries and plain vanilla printing money. In "normal economy" if corporation is taking more debt to buy assets which nobody wants in the market, issuing new shares in order to buy the same low quality assets, losing its revenues in the form of taxes because of recessions its shares will go down. US Corp. manage from July to prove otherwise, its shares US Dollar was going up in value against almost all other currencies and its Debt was selling like hot potatoes in a cold day.

I will say just five the most dangerous words in investment: "This time it is different". It was "different" before with Google GOOG, Subprime, All banks and markets DIA, SPY, QQQQ, but only for a little while and then reality has stricken deadly.

It will be the same this time with US Dollar and Treasuries Bubble, the higher they go the faster they will fall back to reality.

Fed Pledges Top $7.4 Trillion to Ease Frozen Credit

"Nov. 24 (Bloomberg) -- The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago.
The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

........

Most of the spending programs are run out of the New York Fed, whose president, Timothy Geithner, is said to be President- elect Barack Obama’s choice to be Treasury Secretary."

We know what the "New" guy is going to do: Reinflate, money, garantees...everything...Gold will give an answer.

Gold Miners GDX are in a Break Out.

After months of suppression with all broader equities Gold Miners GDX suddenly remembered on Friday that they have been waiting all these years for Disaster to come and to be a protection, store of value and even new wealth creation in times of Debasing of Empire and its currency US Dollar. GDX has rallied 27% on Friday. What happened? We have discussed already that Gold is screaming on its charts. Gold Miners have rallied Friday even with US Dollar flirting with new highs. Downtrend line is broken to the upside and potential overtake of MA50 is in the picture. Largest Gold producer Barrick Gold ABX has rallied more then 30% in one day. We are closer to a point when direction of US market will be irrelivant for Gold miners or even better: its dimise will fuel rise in Gold, Silver and Miniers. Because of artificial US Dollar rally and pending collapse of Treasury Bubble Gold is positioned to overtake recent highs in a very bold action and fuel new rally in its Miners. Watch further developments in Royal Gold RGLD early warning Gold indicator of future move. Total value of all mining companies represented by HUI Gold Bugs Index is still below 100 billion dollars, one Google GOOG was much bigger then total sector in its Happy days. We need just 1% of total value in equities to ignite the sector to the new highs. Recent Deflation Fear and following Deleveraging have damaged the sector, Supply side is struggling and Gap will be huge with rising Demand driving the prices Up. Situation with a small brother Silver will be even more explosive, with recent cuts in production in Zinc and Copper mines and hundreds of projects put on shelves Supply will never come at this price level as a majority of Silver is mined as a By Product of Zinc and Copper mines.

GDX, SSRI, SLW, AUY, ABX, MGN, SST.v, OK.v, TNR.v, BVG.v, MAI.v.

Treasury Bubble Collapse Monitor TYX, TNX, FVX, GDX

U.S. Treasuries, the Final Asset Bubble

Economic Deflation in Gold Terms and the U.S. Dollar Collapse

Mark Faber on Gold GDX, Equities and US Dollar.

'I still like gold,' says Marc Faber

INTERNATIONAL. Speaking on CNBC Squawk Box Europe, Marc Faber the Swiss fund manager and Gloom Boom & Doom editor and publisher said on Fiday that asset markets are "terribly oversold" now, while investors are going overboard into the US dollar and US Treasuries.
"What you could see in the next three months is a very strong rebound in asset markets, in equities, followed by a selloff in bonds and eventually a selloff in the dollar," he said.
"I still like gold," Faber said, because it is cash and not the liability of someone else.
He however warned the assets that held up very well in the current crisis may not perform well near term. "If we get a rebound in equities, it is conceivable that people will sell assets that held up well and try to put their money in distressed assets,' he said.
“Gold price could easily drop to US$700 per ounce before it enters into a rise but one will see much higher gold prices eventually because paper money is over time losing its purchasing powers in the world. It’s very clear that every currency is losing its purchasing power in the world", Faber told India's CNBC-TV18 last month.
Faber also believes that the gold mining exploration sector is extremely at depressed levels and even if gold falls, gold mining exploration companies will go up.
Governments and central banks around the world are providing liquidity and that will eventually have an impact, Faber said.
And once the buying starts the rally is likely to be "stronger than people expect" given that financial institutions are sitting on so much cash, he added.
"I think the intervention by the government in the past and at the present time has created more volatility, not less, and so right now we have deflation, we have colossal deflation in asset prices," he told , noting that equities alone have lost US$30 trillion globally.
The Gloom Boom & Doom editor warned that if markets remained down for a longer perid, the current crisis may end up being worst than the 1929 depression.
Statistically a rebound should happen, but if it doesn't "the air is out" and the world faces an economy "worse than the depression of '29 to '32," he said.

SSRI, SLW, GDX, AUY, ABX, GG, KGC, SST.v, TNR.v, CZX.v, OK.v, BVG.v

Gold chart is screaming that US Dollar is Toast with all those Treasuries bought. GDX, SSRI, SLW, TNR.v, CZX.v, OK.v, SST.v, BVG.v

Gold can not keep it quiet any more. On Friday it screamed loud and clear that Deflation, US Dollar and Treasury Bubble are jokes all along with implied Zero rate returns on maturities up to One Year. With all automakers on the wedge of collapse GM F, with second biggest bank CitiCorp C at near life support machine who is buying all this crap? Answer could be even more close to you then you think. One of the monetary tools of the Fed at near Zero rate policy is Debt Monetisation when FED is buying Treasuries all across the maturity and bringing more lemmings into the game of momentum play.

It was always a mystery for me how could you finance all those bailouts without US Dollar total collapse? Before China will produce Goods, get dollars for it and happily buys Treasuries to finance US Corp. With import plummeting (including with payments for Oil to Middle East and others) foreign buyers do not have any more dollars and hunger to buy more and more debt. Even worse for Mr Paulson and Co - China started to talk about buying Gold and investing in its own country Infrastracture, Russia is struggling with falling oil, selling USA Agencies Debt and is buying Russian Equites. Saudis are still trying to figure out why they pushed the oil down with only to have the wrong guy in the office and are buying gold as well.

Saudi Arabia buys $3.5bn of gold in two weeks I guess they know thing or two about how much Oil is really left in their ground.

All those deleveraging is a valid idea up to the point and that point is: if your bank is stable you do not have to buy Treasuries at Zero rate. I will not be surprised that all that Quantitative Easing is already happening and FED is printing money and buying Treasuries all across maturity. It is a very fine balance game: if you can increase sales of treasuries to other buyers you can try to fill liquidity gap at low rates before market will figure it out and demand higher yield for debasing currency. Two weeks ago one of the auctions of 30 years Treasuries failed because of low yield. Last week we had those fireworks with all yield collapsing. Gold has kissed MA50. If Gold market is telling us that these ideas are valid it will play levels 800, 820, 840 and 860 before breaking out of MA200 which will be bullish confirmation on weekly chart.

Is China Market finally thinking for itself? FXI

Very interesting chart: with recent meltdown in DOW DIA, S&P SPY and Nasdaq QQQQ and new lower lows Chinese ETF FXI managed to make a higher low and formed strong reversal pattern with Buy not violated on PPO as in a more cautious case in Dow. Next week will be crucial whether FXI can overtake resistance of MA50.

US Dollar looks Exhausted to Rise on Fear, Bearish Rising Wedge Reversal is in the making?

US Dollar looks Exhausted to Rise on Fear, Bearish Rising Wedge Reversal is in the making? Last Thursday when Dow DIA H&S reversal was violated and waterfall started, US Dollar broke out Up of Double Top Reversal, but failed to make a definite High confirmed by Buy crossover in PPO. Hell broke lose after Mr. Paulson opened his mouth again. Jim Paplava has interesting theory that this is his intention: to drive lemmings into Treasuries in order to secure financing for all bailouts.
"The Federal Reserve’s balance sheet has ballooned from $900 billion to more than $1.8 trillion. That’s 13% of GDP. The Treasury Department has telegraphed its intention to float $550 billion of debt in the fourth quarter and estimates it will have to float another $368 billion in the first quarter of 2009. Our national debt will then be close to 49% of GDP."

Nothing is certain apart from uncertainty nowadays, but US Dollar looks very exhausted on its chart. It has push up from Double Top formation refusing to Sell off on markets continued turmoil and Fear, but now is in a potential Rising Wedge formation with PPO still in a down trend pointing to lower resolution. Again TA only works for those who are making money and never does for those who can not.

If CitiCorp C will not be bail out this weekend in one form or another waterfall in markets could bring Fear back and US Dollar will Break Up. But formation is very favorable for the best outcome for Treasury: Market up DOW DIA in a Bullish Engulfing candles pattern, Fear down VIX came into Double Top stronger reversal pattern, US Dollar is weaker resolving downwards from rising Wedge. Inflation is welcome back, deflation Monster is going out of the picture. Last Friday Gold action could point to this resolution. Gold market is too small to accommodate all money running out of Treasuries when prices will go down from recent Top with almost Zero interest on up to 1 year papers. Manageable debasing of US Dollar will be in the picture back, wrong perception of Deflationary scenario in the Treasuries market will allow to sell US Corp. more Debt at lower prices then was imaginable before, but all this Flood will make this Bubble the biggest to fall so far. Gold will go higher recent highs and Silver will be in a parabolic move again.

GDX, SSRI, SLW, ABX, RGLD, AUY, TNR.v, CZX.v, OK.v, MAI.v, SST.v, BVG.v

Gold is up 7.7% 57 to 801 USD, is China already buying it?

Wed, Nov 19 2008, 01:51 GMThttp://www.djnewswires.com/eu
China PBOC Mulls Raising Gold Reserve By 4,000 Tons - Report BEIJING (Dow Jones)--China's central bank is considering raising its gold reserve by 4,000 metric tons from 600 tons to diversify risks brought by the country's huge foreign exchange reserves, the Guangzhou Daily reported, citing unnamed industry people in Hong Kong. The Guangzhou-based newspaper didn't elaborate on the plan. China's forex reserves, at US$1.9056 trillion at the end of September, is the world's largest. U.S. dollar-denominated assets, including U.S. treasury bonds and mortgage agency bonds, account for a big proportion of the forex reserves.
Newspaper Web site: http://gzdaily.dayoo.com

-By China Bureau, Dow Jones Newswires; (8610) 6588 5848; djnews.beijing@dowjones.com

Google GOOG Below 250 USD intraday! Dow plus 500 points Rally, Gold at 800!

Time when the prediction was made that Google could deep below 250 in a severe Bear market valuation passed in our memory as so distant and happy that it is almost not worth mentioning. But the call was done and was right on the money.

http://sufiy.blogspot.com/2008/07/google-goog-bear-case-contunued.html

Other observations could come into life with recent developments. Announcement about the new Head of Treasury fired the rally in the market. Yesterday all hope was lost: VIX made break up, DOW has violated Bearish Flag downwards and US Dollar almost broke up to upside. Today was the different story and first Gold start to rally and overtake very important resistances on the way to 800. HUI, GDX and all Goldies have followed in unison with gains up to 31% in Barrick Gold ABX. Is it a turning point? Very much could be: in DOW we have a Bullish Engulfing Reversal candle pattern, last capitulation could exhaust the market pretty much and they should do something over the week end to fix the situation with CITIGroup C. The most important is that gold rallied even with still rising US Dollar and maybe our endless battle with gravity is over. Goldies in HUI and GDX have formed very strong reversal and never retest the lows in recent sell off it could be very strong positive divergence from the general market which is in play again. So we can forget charting miserable destiny of financials in the DOW and concentrate back on our Bull in Gold, Silver and Commodities ones investors will come back to their common senses.

With the new guy in charge in Treasury we can expect understanding of the currency question and that the strong dollar will kill economy in Deflation spiral. Weak US Dollar is the medicine from this meltdown.

Shorts will be served Fried next week particularly in Gold and Silver and their producers Shares.

SSRI, SLW, AUY, GDX, SST.v, TNR.v, CZX.v, OK.v, BVG.v

Trade is coming back: Dry Bulk Index shows signs of life. FCX, CZX.v, TNR.v, MAI.v

We have here a Buy crossover on PPO from extremely oversold level. We have already discuss the theory that Credit Crunch could overstated the real danger of down turn in Real economy in China and Asia. Trade is based on Credit facilities and if you can not secure Letter of Credit for your trade operations Trade is just do not happen. With all that flood of liquidity making its way into system recovery could be not so far away in commodities. China stimulus package is a Major turning point here as well. Ben and Hank will talk today on the Hill, before every time they have testified markets were selling off. Will they make it different this morning?

G20 "whatever further actions are necessary" - is it Intervention to weaken US Dollar? GDX, SSRI, SLW, AUY, FXI, EWZ

Nothing sensible came out of G20. One thing which can not be announced, but be done: intervention in open markets to weaken the US Dollar. Today at 6 am Pound and Euro have took off and continue to rise all trading day until close of Wall Street. Rally against the dollar were not spoiled even by markets going down. Tomorrow we will have more signs whether it is our Bold decision of G20. All indicators are at cross roads: US Dollar is ready to break down, but needs a push - risk is an assending triangle with upside break out if Double Top will not be confirmed; DOW DIA held closing Low of last Reversal day, needs to push up; VIX formed Dragonfly Doji, could be a strong reversal in the forming right shoulder - needs push down. Lost chance now will cost dearly everybody in the markets and US economy.

US Dollar Last Wish and Favor to the World. Gold, Silver, GDX, SSRI, SLW, AUY.

This is the number one in all our analyses. US dollar last wish is to save US Corp. Without US Corp. it will be out of existence. Please check two previous charts why it is so important now. US dollar last favor to the new world - is to go down now, next week. Stronger dollar is a Deflation Monster, killing the US Economy and taking down world economy with it. Those with higher Debt are in the worst shape in deflation: real money repayed back are Increasing in value! US Corp is the Victim here. Inflation is the only way out. There is a chance to save US Corp. - it will never be an Empire again and it does not need to be any more. With new energy it could come back leaner, wiser and stronger eventually. Action is needed this weekend to help the dollar go down. Coordinated Cut which could be announced and Intervention in the Forex in Yen and US Dollar. Agreement could be cut and China could agree to manageable debasing of USD: everything is ready. US Dollar is at the Double Top, one definite action and it will break down. With weaker dollar we will have tectonic shift in Inflation expectations. With near zero short rates managed by FED and falling dollar long term rates in the form of Treasury Yield will go Up. Banks will be able to function and earn on their lending. With rising assets prices, fear will subside and greed will return back with changing perception of lost performance, all money on the sidelines will chase it again. Weak dollar - Lending recover - Velocity is Up - Inflation - Rising assets prices - Less redemptions - Less margin calls - No fire sells - Back to fundamentals - Debt is going down in real terms - Liabilities of US Corp to subjects are going down in real terms - Derivatives on the End of the world outcome are becoming worthless and could be isolated - Export is Up supporting economy with struggling consumer - Tax returns are up with inflation - Housing will bottom at lower level in nominal value (do not ask me about real value). Survival.

So where is out bottleneck for all those trillions and worthless money - as usual: Gold, Silver, Commodities. First time in this game for 7 years our interests aligned: FED should even Buy some Gold to push it up to 1000 to show that Inflation and not Deflation is coming. Will we get at least something of what we are talking here about: charts are telling that everything is ready, players have made their moves and we can see their footprints, tons of money will be made as usual by those in the know, but it is the only chance to save the world from lost decade Japan style.

Fear Index VIX indicating Reversal Down, confirming Dow DIA Reversal Up. DIA, GDX

We have a very good picture confirming Bullish Reversal in Dow DIA: fear index VIX is forming a Bearish reversal with potential resolution Down. Dow retest of Low happen with less amount of Fear: market participants were ready to pay less premium for Put protection and Volatility expectation is going Down. For a definite move in the Dow from deflation to positive Inflation outcome next weak Rally must be fueled by this weekend action on key to all things now US Dollar. Fed is fighting Japan style Deflation and flooding the system with the money, in order that all these flood came into real economy you need to return normal velocity of money. Fear and panic is leading to Fire Sell, downward spiral in markets with Dow as indicator is leading to further margin calls, redemption and Risk not taking. Money are stashed at the Fed on banks accounts. Spiral became self reinforcing: panic - fire sell - prices down - more panic etc. Fed can not leave it to "effective market" any more. There is no such thing with Fed in existence and more practical importance is that all economy will be killed by derivatives, Lehman was a turning point which showed that collapse will take down all financial system. Everything is on the table now: turn markets into Inflation expectations and try to liquidate all "bad derivative positions". If velocity will not be returned now in the form of Weaker US Dollar, higher Long term Yield which will lead to steeper curve and Banks ability to make money by lending, Flood will eventually happen, but too late and with much more water when all economy will be submerged under hyperinflation. This money creation and record deficits for years to come already making all things are hardly manageable in US Corp. But there is a chance and it must be taken. Please follow to Us Dollar chart.

DOW DIA is at a very important H&S Reversal point, time for Action. CS, FXI, EWZ, GDX.

We can see from the chart that we are half way there: saving the world from Deflation spiral Japan style for the next 10 years. Bold action is needed now over this weekend to kill the Fear, confirm H&S Reversal squared by Intraday Double Bottom. Dow must overtake 9653.95 on weekly close to diminish Bearish Flag. If not, we will have a waterfall, further assets fire sell and self reinforcing deflation spiral. Dow for us here is only a reference point, but very important now: it is showing whether FED efforts reinflating economy are working or not. Deflation will be forgotten in two weeks after move above 10000. But action needed now. All reinflation efforts are leading to "liquidity trap" if velocity of money is falling of the cliff: banks are not taking any risk and just keeping money at the FED. The key to all is US Dollar: it must be weaken immediately and everything is ready for it: just one push and world will be saved from Deflation Monster. We will refer to further charts on what must be done.

US Dollar at a Double Top? The main Drama moving the markets. SSRI, SLW, AUY, GDX

As we have discussed Dow Low Retest and VIX picture are giving a good chance to Form powerful Reversal in US Dollar - Double Top. Everybody needs a weaker dollar, it is time to remember old word - Inflation. Nobody wants 30 year Treasuries at Yield below 5% - if it is a surprise it is not on this blog for sure.

U.S. Treasuries Fall After Investors Shun 30-Year Bond Auction

"By Cordell Eddings and Sandra Hernandez
Nov. 13 (Bloomberg) -- Treasuries fell, led by 30-year bonds, after investors shunned the government's $10 billion sale of the securities amid concern that U.S. debt sales will grow.
The bonds drew a yield about 9 basis points above the level in pre-auction trading. At 4.31 percent, it was still the lowest since regular sales of the security began in 1977. Investors have been favoring shorter-term debt, which serves as a haven in times of turmoil and a bet the Federal Reserve will lower interest rates. The U.S. sold $34 billion in four-week bills yesterday at the lowest rate on record.
``The 30-year is not a central bank product, and there's no real interest from pension funds'' at a yield below 4.5 percent, said Andrew Brenner, co-head of structured products in New York at MF Global Ltd., the world's largest broker of exchange-traded futures and options contracts. ``There's just no interest in it.''
The yield on the 30-year bond climbed 18 basis points, or 0.18 percentage point, the most since Sept. 30, to 4.35 percent at 4:17 p.m. in New York, according to BGCantor Market Data. The 4.5 percent security due in May 2038 plunged 3 1/32, or $30.31 per $1,000 face amount, to 102 1/2.
Ten-year note yields increased 13 basis points, the most since Oct. 28, to 3.87 percent. The two-year note's yield rose 8 basis points, the most in three weeks, to 1.24 percent.
The rate on the one-month bill was 0.05 percent, near yesterday's record low.
`Too Many Unknowns'
The bond auction followed yesterday's sale of $20 billion in 10-year notes. The $30 billion total of the two auctions is the biggest amount of the securities sold in a week since at least 1990, when Bloomberg began tracking the data.
The gap between yields on two- and 10-year government notes widened to 2.64 percentage points, the largest since October 2003. Traders yesterday pushed two-year note yields to the lowest level in five years, while the Treasury's sale of $25 billion of three-year notes on Nov. 10 attracted the highest level of investor bids relative to the amount offered since 1998.
``In the current market environment there are still too many unknowns,'' said William Larkin, a portfolio manager at Cabot Money Management in Salem, Massachusetts, which manages about $500 million in assets. ``People are looking for the safety of the shorter-term securities.''
30-Year Sale
Today's bond auction forecast to draw a yield of 4.224 percent, according to the average estimate of seven bond-trading firms surveyed by Bloomberg News. The bid-to-cover ratio, which gauges demand by comparing the number of bids to the amount of securities sold, was 2.07, below the average of 2.19 times in the nine auctions since the bond was revived in 2006.
Indirect bidders, a class of investors that includes foreign central banks, bought 18 percent of the securities offered, down from 43 percent at the last sale.
The sale was a reopening, meaning the bonds pay interest at the same rate and mature on the same date as those in the August auction. They mature in May 2038.
Futures on the Chicago Board of Trade show an 80 percent chance the Fed will lower its 1 percent target rate for overnight bank lending by a half-percentage point at its Dec. 16 meeting. The odds were 58 percent a week ago.
The difference between what banks and the Treasury pay to borrow money for three months, the so-called TED spread, was 1.96 percentage points, compared with 4.57 percentage points a month ago.
Record Deficit
The federal budget deficit in October, the first month of fiscal 2009, climbed to a record $237.2 billion, spurred by U.S. purchases of stakes in some of the country's largest banks. It exceeded the budget shortfall for President George W. Bush's first full year in office.
Banks and securities companies globally have reported almost $1 trillion of losses and writedowns tied to a meltdown in the credit markets since the start of 2007. The U.S., Japan, the U.K. and the euro region are headed for their first simultaneous recessions since World War II, according to the International Monetary Fund.
Initial claims for U.S. unemployment insurance rose last week to the highest level since September 2001, when the economy was last in a recession. They increased to a larger-than- forecast 516,000 in the week ended Nov. 8, from a revised 484,000 the prior week, the Labor Department said today in Washington.
``The jobs data isn't having much impact on the market,'' said Theodore Ake, the head of Treasury trading in New York at Mizuho Securities USA inc., another primary dealer. ``The weakness in the economy is not a surprise. We know we are heading into a recession.''
To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net; Sandra Hernandez in New York at shernandez4@bloomberg.net."

Fear Index VIX is staging reversal after Dow Low Retest.

Fear as a very strong Emotion and you can not be at Ultimate Panic Stage for a long time. Stupidity is another story, and you my dear friend are the best to know it...We have made Low High on Dow Low Retest and it is a very positive observation. After brutal Sell off with unprecedented speed of decline we are back into chartered waters: public knows now that we can anticipate powerful Rally and started position itself today selling treasuries all across the maturity. Fear will subside and Greed will be chasing performance again. Once Fear will stop spinning heads around double Top on US Dollar chart will be a very good reason to address fundamentals of the "safe heaven" currency, backed by One Trillion deficit.

Dow has retested the Low, Bull will push the Fear, Greed and Inflation is back. DIA, SPY, QQQQ, FXI, EWZ, GDX

I hope I will not spoil it...In the beginning of the day Bottom seems to be falling off with the last Hope. News are all Negative and the last faith is lost. I guess it is how Mr Market is testing us. Another important observation: Who is leading Whom - China was up more then 4% after its more in Depth Stimulus Package appreciation and today we have experienced Powerful Retest of Low. All three major Charts has been alligned today: Dow restest of the Low, Fear VIX made lower high on this Retest and USD has made Second High forming Double Top. Everything is ready for transition: Fear for what has been left of your Capital to Greed and chasing perfomance. Dow is only the refference point for us - our heart belong to another tangible Things which are Nessesary as always. We were worring about mere existence of the Financial System, then Currencies and now Deflation. Time is to stop worry, let FED fight Deflation and position our pennies for Inflation Tide. Technical Analyses is never a pure scince and is only a way of Meditation on the Way of Things. It only works for those who are making money and it never works for those who are losing. I do not know what kind of fundamental shift it is Painting for us today: news are awful, "deflation is everywhere" and no Hope left for our Gold, Silver and Commodities Bull. But there is a Knowledge in the Market and those who know are leaving their footprints. We mere mortals can not call to Hank or Ben, but some others can...They are making money and we can see it on the picture. Trends are Bigger then Life and money involved are Big, so we can try to make our small stake on it: following the major Trend - Debasing of the former Empire currency. One of the "unknown" fundamentals TA is telling us now could be coordinated action after 15th of November with Rates Cut and weakening US Dollar policies - Quantitative Easing is all over mind those in power now. Trade will be made to prevent the collapse and allow orderly decline of the currency to stimulate Export and bring Inflation back.

Fingers Crossed: Retest in Dow - US Dollar: gravity is back.

Markets are bigger then we can appreciate it, with never ending bad news we have retested today the Low and formed a stronger reversal pattern. US Dollar has broke from triangle and killing all hopes for Gold and Commodities made a new High. Stronger Reversal pattern has been formed as a Double Top: aligned with retest in Dow, Falling Fear and its measure VIX, retest of 700 in Gold we have very good chances for US Dollar levitation coming to an END. Charts to follow. Never say never...but Sun is coming back to Rise from the East.

SSRI, SLW, GDX, AUY, TNR.v, CZX.v, SST.v, BVG.v, OK.v

China Retail Sales and Domestic Demand is Growing. SSRI, SLW, GDX, AUY

China Retail Sales Rise 22%, Help to Counter Slowdown (Update3)

"Nov. 12 (Bloomberg) -- China's retail sales rose 22 percent, close to the fastest pace in nine years, signaling that domestic demand may help the fourth-biggest economy withstand a looming global recession.
Sales climbed to 1.008 trillion yuan ($148 billion) in October, the statistics bureau said today, after gaining 23.2 percent in September from a year earlier. The increase matched the median estimate of 16 economists surveyed by Bloomberg News.
China's government pledged $586 billion of spending on low-cost housing and infrastructure on Nov. 9, seeking to boost confidence as the economy loses steam. Waning export demand and slumping real-estate sales threaten to undermine growth that has already slowed to the weakest pace in more than five years.
``The big package sent a signal for people to keep shopping,'' said Arthur Kroeber, head of research at Dragonomics Advisory Services Ltd. in Beijing. ``Rising domestic consumption will help to cushion economic growth in the coming months.''
The benchmark CSI 300 Index of shares closed 1.2 percent higher. The yuan rose to 6.8285 against the dollar as of 3:58 p.m. in Shanghai from 6.8305 before the announcement.
Automobile sales climbed 19.6 percent in October from a year earlier, boosting the Chinese ventures of Volkswagen AG and General Motors Corp. Jewelry rose 30.6 percent.
Andrew Wu, the group director in China of luxury goods maker LVMH Moet Hennessy Louis Vuitton SA, said Nov. 11 that he was ``cautiously optimistic'' about the economy after the stimulus announcement. ``China is in a strong position.''
Signs of Weakness
Signs of weakness included slower sales growth across sporting goods, cosmetics, jewelry, furniture, garments and food. Spending on telecommunications equipment and construction and decorating materials fell.
Household electronics rose only 0.8 percent after a 30.3 percent gain in September.
``Stiff headwinds are ahead and we expect a slowdown in retail sales growth in coming months,'' said Merrill Lynch & Co.'s Hong Kong-based economists Ting Lu and T.J. Bond.
Ha Jiming, chief economist at China International Capital Corp. in Beijing, said the retail figures were inconsistent with evidence that growth in household spending had already weakened.
Rural sales helped to underpin today's figure, accelerating to growth of 21.9 percent from 21.8 percent in September. For urban spending, the gain was 22.1 percent, down from 23.9 percent.
Investment, Construction
China's economy expanded 9 percent in the third quarter from a year earlier, the slowest pace since 2003.
Falling demand for real estate is undermining investment and construction. In Shenzhen, a manufacturing and exporting hub on the nation's east coast, house prices declined 12.6 percent last month from a year earlier.
Inflation has halved from a 12-year high of 8.7 percent in February. Exports grew by the least in four months in October and manufacturing contracted by a record. The benchmark CSI 300 Index of shares has dropped 67 percent this year.
Wage gains may sustain spending. Urban disposable incomes climbed 7.5 percent in the first nine months of 2008 from a year earlier, after adjusting for inflation. Rural incomes climbed 11 percent.
PepsiCo Inc., the world's largest snack maker, said this month that it plans to invest $1 billion in China in the next four years to increase production and sales.
Railways, Roads
The stimulus package, running through 2010, includes housing, rural infrastructure, railways, roads, airports, tax cuts for business investment and subsidies for farmers.
The central bank has already lowered interest rates three times in two months and reduced restrictions on lending to stimulate growth. The key one-year lending rate is 6.66 percent.
For the first 10 months, retail sales climbed 22 percent from a year earlier to 8.8 trillion yuan, the statistics bureau said. That was up from 16.8 percent for all of 2007.
In the first half, consumption contributed 50.2 percent of the nation's economic growth, investment 44.9 percent and net exports 4.9 percent. Last year, net exports accounted for 21.5 percent.
The biggest gain in China's retail sales since Bloomberg data began in 1999 was a jump of 23.3 percent in July this year.
To contact the reporter on this story: Nipa Piboontanasawat in Hong Kong at npiboontanas@bloomberg.net "

China is still growing, Export up 19% in October.

Rate of growth is lower then in September at 21.5%, but remembering the total Credit Crunch in Trade and general mood in the markets in October it is great news for that part of the world.

"China trade surplus rises but export growth weaker
1 hour ago
BEIJING (AP) — China's trade surplus swelled in October to a monthly record but export growth weakened amid a global economic slowdown that has battered Chinese exporters, according to data reported Tuesday.
China's global trade surplus rose 30 percent from the year-earlier period to $35.2 billion, the customs agency reported. The surplus with the United States rose 13.6 percent to $17.5 billion, while that with Europe rose 12.2 percent to $15.6 billion.
Exports surged 19.1 percent to $128.3 billion in October despite weaker global consumer demand. But that growth rate was down from September's 21.5 percent and sharply lower than the recent peak of 26.9 percent in July.
"The global financial crisis has had a considerable impact on Chinas export growth, which will continue to show weakness with recession in the U.S. and Europe," said a report by Jing Ulrich, JP Morgan & Co.'s chairwoman for China equities.
An unexpectedly sharp downturn in foreign demand for Chinese goods has led to a wave of factory closures and layoffs in the country's export-driven southeast.
The government has tried to help struggling exporters by boosting export-related tax rebates. Its massive stimulus package unveiled Sunday calls for efforts to compensate for weakening foreign demand by boosting domestic consumer spending.
China's import growth fell even more sharply in October, widening the trade surplus and reflecting weakness in domestic demand. Imports rose 12.4 percent to $93.1 billion, compared with September's 21.3 percent growth rate."

Gold, Silver and Miners are Up, when market is down. SSRI, SLW, GDX, AUY

Interesting US Dollar has manage to close Up today and formed "the hanging man", normally it will be a reversal pattern within our Triangle pointing to resolution downwards. Markets were under pressure in US even after Chinese stimulus package, very interesting divergence has formed when Gold and Silver manage to close positive after so custom selling pressure in New York session. Night and Morning Asia is Buying and during the day West is selling. Not today and Goldies have rallied closing strongly on positive side. Is it another sign that Us Dollar levitation magic is over? We will find it out very shortly.

Chinese Stimulus Package is a Poison Pill for US Dollar?

How Chinese are going to finance their Stimulus Package of equivalent 586 Billion US Dollar? Are they going to Sell part of the reserves which are mostly in Treasuries? Or they will at least buy less in the open market? Both ways it is not very positive news for a US Corp which needs to finance 1 trillion dollars deficit this year. On another hand it is great news for Gold, Silver and Commodities and all Asian markets rallied on this news. This is decoupling we have discussed over the weekend happening right now.

"China Stimulus Plan Will Boost Stocks Sentiment (Update2)
By Chua Kong Ho
Nov. 10 (Bloomberg) -- China's 4-trillion yuan ($586 billion) stimulus plan will boost stock-market sentiment, Morgan Stanley said, predicting short-term rallies for steelmakers, building materials producers and financial companies.
``Beijing has done the right thing to beat market expectations on stimulus package size,'' Morgan Stanley's analyst Jerry Lou wrote in a note to clients today. ``That is why we think market sentiment will improve.''
The stimulus package, of which 100 billion yuan is earmarked for this quarter, will be spent on low-rent housing, roads, railways and airports and infrastructure in rural areas. The funds, equivalent to almost a fifth of China's gross domestic product last year, will be used by the end of 2010, the Beijing-based State Council said yesterday on its Web site.
China's CSI 300 Index, a measure of local-currency stocks traded in Shanghai and Shenzhen, has declined 69 percent this year as the global economy slowed, cutting demand for the nation's exports. The stock measure, the worst performer in Asia, gained 6.3 percent to 1,783.19 at 10:11 a.m. today.
``Higher social welfare spending and rural reforms will help boost consumption,'' Jing Ulrich, chairwoman of China Equities at JPMorgan Chase & Co., said in an e-mail. While economic risks remain, ``the stock market will start to anticipate the positive impact,'' she wrote.
The government will allow tax deductions for purchases of fixed assets such as machinery to stimulate investment, a move that will reduce companies' costs by an estimated 120 billion yuan.
To be sure, ``considerable uncertainties'' remain over the ultimate size of the plan, Goldman Sachs Group Inc. economist Song Yu said in an e-mailed report today.
``The amount of `extra' investments involved is still not clear at this point,'' wrote Song, adding that not all of the 4 trillion yuan will be spent by the government.
To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net "

Silverstone Resources SST.v - landing spot for Ben's Choppers

All those charts meditations on the way of things will stay without any positive implication if we will not be able, my dear Diary, to make some money from all what is left from our devotion and common sense practise after mind disturbing dollar levitation. So where are those waters to fish for what will be left of all those trillions coming on after paying bonuses to bail out bankers? We are pleased to help Mr Obama, because we all need weaker dollar and some positive inflation signs. As always we like crazy way of things: like to deploy your ten percent of the capital for one hundred percent return. Gold is a Call on USD going down, Silver is a Call on Gold and Silverstone Resources SST.v is a Call on Silver without any Time decay. Latest deal will double silver revenue in OZ next year and is a necessary step to bring confidence back into the company. You must do your own DD as always and can find some initial information on this blog.

US Dollar Risk Averse Trade is close to an End?

US Dollar Risk Averse Trade is close to an End? Very nice article in explanation for all my charts.

"Well, the one thing the US government might have had going forward was the strength of the dollar, which, despite America’s economic weakness, low rates and some evidence of Japan-style quantitative easing, was still going strong in recent weeks.
But there are now signs of slackening demand for the US currency, according to Bank of America’s Robert Sinche.
Specifically, one source of the the dollar’s recent rally has been the scarcity of USDs among G7 nations and emerging market countries. That’s now easing, according to BoA, with the provision of currency swaps, such as the $30bn for South Korea, Brazil, Mexico and Singapore announced last week. Intuitively, a mass of dollars coming into the system would ease upward pressure on the USD and that easing can be seen through recent declines in the Libor-OIS spread, BoA says:
While there are many factors that influence the LIBOR-OIS spread, particularly the stability of prime money market fund balances, the spread does provide some measure of the offshore demand for USDs, as does the pricing behavior action in the NDF markets. There are signs that these pressures are beginning to moderate in recent weeks as USD funding liquidity has become available on a widespread basis, suggesting that the scarcity demand for USDs is lessening significantly.
The second factor affecting the USD in recent weeks, according to BoA, has been the repatriation by Americans of foreign assets. Data from the Treasury TIC report indicates that US residents had sold foreign equities for each of the three months ended August, with total net sales of $21.6bn. That, however, may be slowing:
It appears that repatriation accelerated in September/early October, with weekly data (from AMG) showing the sharpest redemptions in international mutual funds during the first half of October. However, those redemptions slowed sharply during 2H October, falling to only an estimated -$0.2bn (2 weeks ended October 29) from -$6.4bn in the 2 weeks ended October 15. With global equity prices stabilizing in recent days, the pace of USD-supportive redemption/repatriation is likely to slow further in the weeks ahead.
The final factor, according to BoA, has been the recent appetite for risk aversion, which drove investors to the safe-haven status of USDs, as well as the Japanese yen. Using the VIX as a measure of risk appetite, BoA thinks the VIX’s recent fall means a “significant correction” in USD gains is likely. As goes the VIX, goes the dollar.
Finally:
A strict reading of interest rate differentials would imply the potential for a further 10% fall in the USD Index during the weeks ahead, about three times the 3.5% correction in place from the October 28 recovery high. While that magnitude of correction appears unlikely in the immediate future, we do note the seasonal forces that often weaken the USD into yearend. Moreover, in a global financial system characterized by a scarcity of capital, it is rather ironic that the currency of the largest capital importer (largest current account deficit) has been so strong in recent months. In this context, the strength in the USD in recent weeks also appears unsustainable, with broad-based gains in both developed (ex-Japan) and select developing-country currencies expected during the final two months of the year.
While predicting a weaker dollar pits BoA against Deutsche Bank and a number of other investment houses (see for instance, this recent Bloomberg article on the dollar’s strength), the final nail in the USD coffin (at least in terms of short- to medium-future gains), may ironically be the election of Barack Obama as president on Tuesday night. From Forecast’s Ray Atrill, via Bloomberg:
The more people feel positive about the election outcome, ironically, the worse it may be for the dollar. An improvement in the stock market, for example, as a barometer of improved sentiment and perhaps improved risk appetite, given what we’ve been through in the last year, typically is associated with a weaker dollar.
During the heights of uncertainty, fear and risk aversion, the dollar has been the beneficiary. At the moment, I’d probably see a dollar sell-off as a positive sign in terms of the international financial community’s judgment on the election outcome.
Probably the next shoe to drop is how quickly Obama makes announcements

http://ftalphaville.ft.com/blog/2008/11/05/17851/dollar-danger-ahead/

5 year Treasuries are rolling over into Inflation mode.

This area is crowded by everyone now: Hedge funds, Mutual funds and Banks. Supply is coming but appetite is diminishing, values are rolling over into Inflation zone with Yield over 3%. When you have Blue Chips in Dow paying dividend Yield higher then 5 year Treasuries it is time to allocate at least some of your cash to equities to boost returns. Everyone is watching everybody, you can not afford to lose in returns and miss the turn around in the market being over defencive in that world.

10 year Treasuries TNX - commercials are buying equities.

Here we have much more conclusive picture: Yield is rising, commercials are moving out of treasuries and into equities. Mutual funds have to match their assets allocations and have to sell Fixed Income and Buy Equities. This is the place were Curve is getting steeper - first hope for the banks to start lending. No deflation signs here as well. It is the place where the Treasury will try to lock in low rates in coming auctions for financing its 1 trillion dollar deficit. More staff to come - more discount: higher Yield to be offered.

30 year Treasuries TYX: Pension funds and Insurance are moving into equities?

These guys has helped us to call bottom on 10th of October. Difficult to consider the clear picture, but the divergence is apparent and killing Deflation argument already: yield is slowly moving up - treasuries trade has became too crowded. Only professionals are investing in 30 years to match their maturities on liabilities side, move here Up in Yield and Low in Price will create the last Bubble to burst - Treasuries. Last two days were very important: market was under selling pressure on Thursday, but treasuries were selling as well. Once only smell of inflation will come into Play music will stop here. Recent move up here is supporting our hope for USD breaking down from Triangle pattern with all positives we have discussed these two days.

Brazil EWZ Engine of Growth in Soutn Americas is coming back.

As brutal as it was flight to "quality" of US Treasuries with 1 trillion deficit as a collateral is ending. All emerging market is different from 1998, some of its parts are particular strong now. My love is in Argentina with risky TNR Gold TNR.v play, but Brazil is the place to move continent forward. Once fear of Default in places like Argentina will come down and stability will returns to commodities play this Farm of the world will get its share of excitement again.

China FXI - it is still there and growing.

Do not confuse market and economy in places like China. My call on Parabolic rise and coming down last year was right on the money, like it was excessive then so it is unsustainable on the downside now. China do not have to do all those bailouts USA did, but they can chose to do all those stimulus like in USA using their Reserves of 1.9 trillion. It is happening already: Agri reform - slaves will be able to sell their land for the first time, Infrastructure - railroads spending in trillions of local currency. Housing and debt problem are disconnected in China: level of borrowing still at its infancy compare to developed world. Nothing will be perfect, but markets have discounted China rising below 5% already. Oil below 100 and recent commodities prices are big presents to the hard working people there, they will scoop the world resources exchanging worthless US Dollars from the reserves for securing Supply of precious commodities.

Dr. Zinc and Dr. Copper thoughts on Global Economy. CZX.v, TNR.v

Why commodities? In the inflationary environment price of commodities could never fall to zero. It is determent by Supply and Demand. Demand is going down first hurting Price, Supply is determent by Price and Price is determent by cost of production. Until world is going into Depression with Deflation (credit contraction as a reason and price falling as a symptom) Demand is there at a particular price. Price will be adjusted by marginal project going out of production reducing Supply further. Fear here made this Bear masquerade possible: all commodities Trade is based on Credit. When you can not produce reliable Letter of Credit you simply can not Trade. Watch out what metals are telling us: Inflation is coming and Infrastructure will be the name of the game. Move above 25o will confirm these affirmations.

Another less reliable thought: now everybody is telling we are in recession: we were talking about it last year. With all those money coming into play and Unemployment of 6.5% we are not so far from Recovery even in US with new debased Dollar value.

Juniors - Life after Death experience. TNR.v, CZX.v, SST.v, BVG.v, OK.v, MGN

Couple of weeks ago when Juniors were down their Cash Value world seams to be Ending in that part of the world. Next step would be to pay you as a Buyer just to hold some Junior Mining shares. Why is it so? Do they have any excessive Debt? Do they in production with a Negative Cash Flow? Some of them are. So look now for the strongest: this is a life time opportunity to Buy into 2003 all over again: FED is on your side ReInflating economy again. Buyers are almost Non Existing, but Sellers could be gone any time with USD going down and China and Commodities firming up. Move up will be explosive once reversal H&S confirmed. Chinese are all over the world scooping what has left. M&A will be the name of the game.

Canada - is the Party time here again? CZX.v, SST.v. TNR.v

Very nice reversal H&S in the making as well, rising China and Oil stable above 60 will bring more fuel for the rally. More fiscally prudent and solid on commodities, recent sell off in Canadian Dollar was just as a honey for the bees. Positive total recovery from Fear will be the most benefit for Canadian market.

Gold and Silver Index XAU is more decisive about its intentions.

On this chart we have more clear positive signal with H&S reversal. right shoulder is already forming with Buy at PPO. Move above 100 will be important for this new born Bull.

Gold Bugs Index HUI - No bugs left? Watch the butterflies! SSRI, SLW, AUY, GDX

Picture is muted here. Two Left shoulders are much higher of the potential Head at 150.27. Danger here if the Gold will slip from Bearish Flag with US Dollar breaking up we can retest 150 area. I will not count on this: if the pattern will go as we have discussed in USD, VIX, DOW we will have fast shoot up above 250. Friday close above 200 is important, PPO is at Buy cross. With two Right Shoulders to be formed at above 227 and 250 we will have very strong reversal.

Gold - Inflation expectations are rising. GDX, AUY, ABX, NEM, RGLD.

Gold Inflation indicator is still to be confirmed by decisive move up from recent Low. On a positive we have Buy cross on PPO and very strong candles. Danger here is a break down from Bearish flag. We need US Dollar to come down and implosive move in Gold up with Short squeeze, like in the beginning of September. First step will be to close above 750 weekly and then above 800.

Gold Miners GDX H&S Bullish reversal.

After three legs down from July's high GDX is turning up in reversal H&S, it is important that RS will be formed above 20 for powerful come back. Watch the US Dollar as we have pointed before. With strength in Gold this sector will fly back to normal valuations very fast. We need just 1% of all money allocated to equities to change this game forever.

Basic Materials is coming back.

Basic materials are showing the same reversal pattern: economy will recover much later, but demand will come before it at some level and at some price. Here is the key: level of price is killing the Supply side more then Demand is diminishing. Decision to close the mine will come quick without the credit available, but to build a new one you need 5-7 years with all favorables in place. Study Zinc as one of the examples.

Dow Jones World Stock Index - Following Bullish Reversal

I am not sure whether there is any life on Mars, but Earth is still spinning around. We must overtake 188.36 for definite move and Decoupling to be recognised. It has already happen: US Corp will have 1 trillion Deficit after all these bailouts, China has 1.9 trillion Reserves.

Dow Jones Transportation is staging a Bullish Reversal.

Reversal in Dow DIA must be confirmed by Bullish Reversal in Dow Transportation: 107.76 must be taken out above 110. Oil below 100 will help here.

Panic has lifted the US Dollar with collapse in the markets.

I like this chart. It is USD to Dow DIA ratio: just look at that perfectly managed picture before Mid September Lehman collapse. USD was rising with manipulation and Dow was sliding: my guess idea was to shake out Oil, Gold, Silver and Commodities Speculators, bring prices down and then stop pumping dollar and bring election rally. Something went terribly wrong for someones: after Lehman Dow collapsed with all markets and US Dollar made a shooting star killing the masterminds behind this with last economic strength - export. Good news here is the Reversal H&S formation which show new unusual for us reality: Strong market in Dow means weakening US Dollar losing its "safe haven status".

Fear Index VIX is confirming Bullish reversal in the Markets.

So far so good here in confirmation of Bullish Reversal H&S in Dow VIX is staging Bearish reversal in its chart. Less Fear - more appetite for risk, more Buying into Stocks, US Dollar is weakening as "Safe haven" helping to exporters to gain some legs while domestic consumers are underwater. Friday was really important: break out of 70 on VIX could lead to Double Top Retest and self reinforcing selling into the waterfall on Dow. Free White soldiers could be formed - strong reversal pattern, it did not happen with all those bad news - it is a good news.

Dow Jones Industrial DIA - Holding the World on its Shoulders.

Cream of the cream, Blue Chip stock former pride of USA Corp. Most liquid they took the hit first with Margin calls and Redemptions - they will show signs of life first. Strong Reversal H&S pattern is forming. With awful news on unemployment 6.5%, Ford F and General Motors GM on Friday market has managed to rally after two day shock of slipping back into abyss. We are on the one side here: we need reversal confirmation and that 9750 on Dow will be taken back. Risk if that it still could be a continuation Bear Flag pattern if 9750 will not be taken back - then the waterfall.

US Dollar USD - One Trillion Dollar Question. SSRI, SLW, GDX, AUY

Faith has been lost and gravity laws were shattered. Sun has risen in the West and US Dollar has rallied after initial manipulations crashing all commodities, Gold and Silver. Juniors has been sinking below cash value. Time is to jump if you are leveraged, Bubble Vision has found "new" thing to talk about - Depression and Deflation. We must admit: Decoupling has happen so far only between us and our paper capital gains. We get so much emotional torture that are not sure any more is it Very Bad Already or could it get Worse? All is tighten up now to one simple thing - Fear. US hit the wall so rapidly that all world seems to be ending in front of our eyes. Fear and forced selling have pushed valuations to the meaningless levels, who would look for value when world is ending? Nobody - and we can not do anything if it is true. But there is another One Thousand steps before End of the World which could separate you and what has left from your money if those who run the world will chose to continue the show.

Our strategy is not against USA or any Free Will for that matter (we were positively surprised in our cynical thinking on November, 4th). We are still following the tide. Do not fight the FED. Bankrupt government can not go bankrupt if it is borrowing in its own currency: it can always print more. There is only three way out of trouble for the new positive energy in the falling Empire:

1. Rise taxes, it will not allow to solve the problem (economy is in recession) and could kill any recovery. Little step will be done here. Social unrest and Depression is picture here, back to 1930s.

2. Borrow. It is what going on and will be done next. But you can only borrow some time. Next year budget deficit will reach astonishing 1 trillion dollars. Who will be those suckers to lend? At what price?

3. Print more money, it will be the answer. US will destroy its currency but it is the only way. Clever way will be to use at least part of this money for Infrastructure development. Strong dollar is killing what have left from US economy: you need weak currency in order to stimulate your export when your internal consumers are under water.

Medicine here now is to make the yield curve steeper as soon as possible: it is the only way for banks start to lend and make money, do not touch them, in our plan they are only means of creating wealth in super inflation environment. Banks are borrowing short and lending long in normal economy. You need fast Negative Real Rate: low short term rate "targeted" by FED and higher long term rate determined by the market on 5, 10 and 30 years Treasuries. The more money you print by way of selling Treasuries the bigger discount, higher yield. You are debasing your currency. After you stop to worry about your bank and that the world will end tomorrow you are looking for protection of your capital and risk to deploy it for profit.

I will leave all worries about Deflation to the FED, we will deal with what will come out of their fight with the Monster - Inflation, it will be the same things like in 2003 or in 1970s: "limited" by its nature Gold and Silver as value preservation and Commodities as means to develop and feed the world in EX "Developed and already Obese" societies. Recent developments has brought us into the powerful picture of New Bull Leg if our analyses is right: all even true believers are shaken, pessimism is at its high, Fear just only now is subsiding. Majors are selling at levels of Long World Wide Recession, Juniors at near bankruptcy levels ( and many will vanish for sure).

Now it is important that it will start happening in the nearest future: transition from Fear of Deflation and forced selling to Tide of new liquidity. I will run a few charts which will be important for progress in our strategy.

We can try to be very clever (we did it with reasonable success) and trade in or out all the way. In the end it will not be so important if you are not forced to sell at the Low and not stupid to Buy at the High: Tide will lift you if your boat still in the right place.

Inflation, remember this word, we know how to deal with it, now lets search for The Signs.

Silverstone Resources SST.v - Bull in Silver continued.

This is the place to be and accumulate if you do not buy deflation argument and that Silver will go below 5.0 USD again. Finally we have great news for the company:

"The Northern Miner, 11/7/2008
Silverstone moves into gold, may double 2009 sales
Vancouver – Silverstone Resources (SST-V) secured the life-of-mine silver and gold production from Sherwood Copper’s (SWC-V) Minto mine in the Yukon.

The move should more than double Silverstone’s silver equivalent sales in 2009 to 4.5 million oz. and, as Silverstone president and CEO Darren Pylot notes in a conference call, it marks Silverstone’s first foray into gold.

The Minto mine, though primarily a copper mine, has proven and probable reserves of 9.13 million tonnes grading 0.74 gram gold per tonne and 7.73 grams silver per tonne. That translates into 204,000 oz. gold and 2.1 million oz. silver - or around 16.4 million silver equivalent oz. assuming Silverstone’s 1:70 ratio of gold to silver oz.

In 2009 Sherwood forecasts production of 30,000 oz. gold and 300,000 oz. silver as a by-product of copper processing.

To get its hands on that and future production Silverstone will pay Sherwood US$37.5 million upfront and US$300-per-oz. gold and US$3.90-per-oz. silver on production up to 50,000 oz. gold. Over 50,000 oz. gold Silverstone has the right to 50% of gold and silver.

Sherwood will immediately receive US$12.5 million with the rest to follow within 14 days of signing a letter of intent.

To make the payments Pylot says Silverstone will draw about US$10 million from a US$15 million line of credit and the rest from its US$28 million cash reserves.

As part of the deal Silverstone also gets the right of first refusal on potential silver and gold production from Sherwood’s Kutcho copper project in northern BC. Pylot says, if it goes to production and Silverstone was on board, Kutcho would be about 80% the size of Minto in terms of contained metal as a by-product. It would primarily come as silver.

Prior to the agreement with Sherwood Silverstone was focused on buying silver by-product.

Although Silverstone didn’t have an explicit goal to diversify into gold, Pylot says it was becoming difficult to find quality silver assets “with zinc and lead prices the way they are and silver suffering.”

That primarily accounts for its interest in the Minto mine where he says Sherwood can still operate at prices as low as about US$1-per-lb. copper.

Gold, in other words, just happened to be the main by-product (in terms of value) at a project where, more importantly, the underlying fundamentals impressed Silverstone.

“We want to get bigger by minimizing risk by getting mines that will run at all times of the cycle,” Pylot says. Minto fit that criteria.

With Minto on its roster, gold and silver’s share of Silverstone’s 2009 sales will respectively be about 40-60. Pylot says that the company does not have an explicit goal to diversify further but won’t say no to good deals outside the “silver space”.

“If gold comes up again, we will do that,” he says.

Pylot estimates that Silverstone will generate about US$27 million from Minto over the first 12 months.

For his part Sherwood president and CEO Stephen Quin says in a statement that given Sherwood and Capstone’s pending merger, "Some of the benefit to Silverstone from this transaction should flow back to Sherwood…since Capstone owns approximately 22% of Silverstone."

On news of securing production from the Minto mine Silverstone’s share price increased 6¢ to close at 74¢.

Silverstone has similar off-take agreements with Capstone Mining (CS-T) for silver from its Cozamin Mine and Lundin Mining (LUN-T) for silver from its Neves-Corvo and Aljustrel mines. It also has the right to purchase 12.5% of the potential life-of-mine silver from Aquiline Resources’ (AQI-T) Navidad project.

TNR Gold TNR.v Minera Andes MAI.to Los Azules first valuation of the third party.

All data must be verified and do you own DD as always, but it is very good start:

https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgIzouZjF8718kbkr5H2HFUQRlkUs8EnPneWXMcCxQljHRZNAcJEQo6pollhPKD4nxFFRjmhlyARmJTxwmQ2p4c6fVyFxO4K3KJQuVMmuZoBMpNmISGgwVb1Bj4CmyvKAPTd4avxg/s1600-h/mai1.jp

"TNR Gold has a "conditional" back in right of 25% in the Northern half (with higher grade core according to MAI) of the property. Now company is conducting a legal action against Xtrata to remove the "condition". More could be found here."

http://mining101.blogspot.com/2008/11/one-less-issue-to-ponder-over-obama.html