Apr 6, 2011

1. Bloomberg news reports that solar power is dropping in cost by about 5% a year. The Gman (govt) now has a looming problem. How can he raise the cost of electricity as it starts to replace oil, to save us from using too much solar power? By raising the cost of the sun's energy from zero to infinity, the Gman promises we all get richer!

2. It's a big job, but I'm fully confident in the Gman's ability to turn an essential energy/life item into an "investment for the people"! As with real estate and oil, his superplan to enrich us all, is to perpetually raise the price of solar energy, with a zillion solar energy rules and taxes, while we all cheer our new riches.

3. In all seriousness, the Gman and his photocopier crew really should apply for the job of lead clown team at Ringling Brothers Circus.

4. After dismantling the top callers like a sledgehammer on tinker toys, gold & silver continue their mauling of paper money. Gold tagged $1460 last night, while silver rose to within 45 cents of the $40 marker.

5. On the run to $1430, there was more bullishness in the gold community than there is NOW at 1460! Sad Sack sent me a note yesterday and he sounded BROKEN. He's a trying a repeat of his "I can top call gold from $400-887 and go broke doing it" 1979 wiener play. He's much "smarter" this time, and is "wisely" naked shorting silver rather than gold. Is there such a thing as a diversified top caller? A portfolio of top calls on corn, wheat, oil, natgas, uranium, gold, and silver, while saluting the Gman's photocopier. What a wiener. What a horror.

6. The mainstream community is in YAWN MODE. They don't care about gold or silver. They know the crisis is over, now that the Gman has received the new boxes of paper the banksters promised him for his photocopiers. It was a close call, but the situation is now 100% stabilized and growth is back! Let's quickly stand and give the Gman another standing ovation! Bravo, all hail the debt-a-holic and his crew of photocopiers!

7. I leave tomorrow for the caymans to meet with a hedge fund law firm who has done work with my onshore fund law firm. I'll be there until Tuesday. The letter will be sent as usual.

8. Try to fight the urge to ask WHY some of your juniors are NOT tracking gold. This is a CRISIS, not a BOOM. There are huge hedge fund short positions on the juniors. There are also massive numbers of OTC derivatives contracts that are a long seniors/short juniors trade. The banksters are on YOUR side of the trade, but the shorts are not destroyed in the timeframe we all want to see...

9. GDX, GDXJ, ZJG.to, GGGG, and GLDX all had GREAT days yesterday. Those of you who ran PGENs to ZERO on DISAPPOINTING juniors are perhaps wishing you BOUGHT MORE just 24 hrs after wishing you had NONE. Sangold and Jaguar are two such examples.

10. I don't buy any junior stock in anything but a pgen to ZERO. There is no price that "might be the low". There is only buying ALL THE WAY TO ZERO. Sangold

11. What about the OVERBOUGHT SITUATION that exists on the weekly silver chart and on many gold stocks? I'll answer that question this way: Have you thought about how STUPID the top callers look TODAY? They look like the remains of a toothpick sculpture stomped on by GOLD JACK BOOTS.

12. Of course some items are overbought, and of course at some point the dollar has a rally. We just broke out upside out of a huge consolidation but this is a crisis so anything and everything is possible. Gold could reverse right here, or it could soar hundreds of dollars higher. Don't focus on predicting the pullback to the top of the consolidation range around 1424-1444. That may or may not happen. Remember the idiots at gold 1045 who had the great debate about whether it would pullback to 995 or 994. They bought nothing til 1225.

13. Something similar could happen now.

14. On the "it all works out in the wash so don't chase price front": Yes, silver is outperforming gold right now. Question: From the bear low of around $4, did silver rally to about $21 in 2008 while gold rallied to around $1000? Did silver outperform gold on THAT move? Yes. Silver is like leveraged gold. Gold is now up about 5.8 TIMES the low of $250. Silver is now up about 10 TIMES the low of $4.

15. Silver is more volatile. Price is higher now than it was at $4. I've talked about this ACTION with JUNIORS. I've URGED those of you playing individual juniors to focus on those with LOW PRICES, because the PRICE LEVERAGE and EMOTIONAL RISK FACTORS are best at low prices.

16. When a juniors situation rises to $15, 20, 25, 30, 35, 40, 50, 100 (and many WILL) without becoming an intermediate stage or senior stage company (like happened in the internet boom), the RISK you are carrying, both financially and EMOTIONALLY, is OTHER-WORLDLY.

17. It is the same with SILVER. Nobody really knows what kind of downside there is, in a crisis, and especially in THIS ONE. With GOLD, you are dealing with the world's greatest asset, so there is a comfort factor that is REAL. There are a few of you, like T-Rex, who can stomach ENORMOUS drawdowns EMOTIONALLY. But for most, a huge hit on silver would break you mentally if you just "arrive" in silver now, with your first buys.

18. This is another reason that I've mentioned natgas vs oil for new energy players. Can you really take some kind of horrible hit in oil if you are just entering it now, for the first time?

19. The percentage UPSIDE, for NG compared to OIL is HUGE. It is the same for gold juniors compared to gold. For silver, at THIS PRICE, the percentage upside, and this point is ABSOLUTELY CRITICAL...

20. For silver at $40, a move to $44 makes a NEW PLAYER 10%. The new player with NO SILVER is a PRICE CHASER. The person who bought some silver at $4 is making 100% on THEIR INVESTMENT....JUST ON THE MOVE FROM $40 TO $44, WHILE THE NEWBIE MAKES JUST 10% WHILE HOLDING NOT JUST SOME RISK BUT MONSTER RISK!!!!!!!!!!!!!!!!!!!!!!!!!!!!

21. Think about the above point when you look at NATGAS. The higher the price you pay, the smaller the percentage returns on your core positions even when it leaps higher from your buy points.

22. The BANKSTERS understand the POWER of the LEVERAGE of LOW PRICE CORE POSITIONS. Do YOU?

23. Coming in to oil at $100 vs coming into NG at $4 is to me a NO-BRAINER DECISION. Think about those who will BUY SILVER at $70 an ounce. What PERCENTAGE are they making?

24. Write this down and paste it to your forehead with 250 RAILWAY SPIKES: I don't begin ACCUMULATION of an asset of ANYTHING unless it is in the GARBAGE CAN in the eyes of ELMER FUDD PUBLIC INVESTOR. Did you see where I started to buy Alcoa? At about 10 bucks, TEN YEARS AFTER FUDD BOUGHT IT AND FUDD WAS IN MANIACAL LIQUIDATION MODE. Same with General Electric. Same with natural gas. Same with uranium. Likewise: Do NOT quit on your gold juniors. As a group, they will do MORE than you envisioned they would do, but not in the TIMEFRAME you envision it.

Grid Time! "Only" 150 trades yesterday! Slow so far today, but the day is young!

Thanks

Cheers