cccactii – Page 2 – Slope of Hope with Tim Knight

Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Metal and Miners (by Steve)

By cccactii - 16 years ago (11, Nov 2009 9:18:17 AM)

I was trying to write this up yesterday before GSS reported but I was called out on a trip. I have a full time job and am not always actively trading.

Trying to write something that may be helpful to you all or even to some of you is a real challenge for me, as I came to this site to try and learn from more active traders and especially to try and incorporate technical analysis into risk management skills. Trying to write a quality post is forcing me into a Baptism by Fire scenario and I will keep it simple as that is what has worked for me.

Lots of great posts once again preceding this one on precious metals. I have had at least 50% of my net worth in metal and miners off and on for the past several years, and this is not a suggestion, but something that I slowly became more and more comfortable with over time as events unfolded validating my views. I view it as insurance in a sense and I try to trade around core mining positions and SLV, nearly always from the long side.

I have no idea on the next 10-20% and I don't much care one way or another. That may sound flippant, but if I had confidence that I could capture that move, I would do so. I need to see greater enthusiasm in a spike like fashion for me to do much selling of my trading positions right now. Remember that I am trying to emulate the quote from the Livermore book,in the earlier post about making most of his money in the sitting, not the thinking. I rarely looked at a chart the past two years and it could have been very helpful had I done so.

Silver really seems to be the poor man's gold as the coin store keeper tells me they loved it at 20 and sold it back to him at 16 last year. They have not been back. Continuous higher prices always bring them back it seems. I will buy more at 15 and lower. Here is a view on silver, when owning a full position around this time last year felt like this.

Three of the major gold miners (NEM,GG,AEM) reported last week and the stocks had different reactions to "the news" initially. I own GG and AEM and mentioned that I was buying the initial break the next day at 58 area just above the trend line. Further opportunity followed on day two of "sell the news".

Here is a one year view of GG

Last year was gut check time for those of us too long metal. I had made a great sale of GG at 50 and trimmed some other gold stocks and I was looking to buy it back lower. I had roughly 10% long puts and long precious metal and I was feeling loaded for bear. I started buying GG back at 38, 33,28 23. Arms,legs and torso gone. I spent some hard time thinking it through and believed that my thesis was still intact and that the pricing was a good old fashioned "sell everything" liquidation.

I had bought a small amount of GSS at 1.50 and 1.20 on the way down and then I started putting in bids in all my accounts and wound up with nearly 70,000 shares bought between .41c -.68c. I had similar fills in smaller size on some other juniors. This was not planned but acting on the fly. I had much larger orders not filled below these levels. Looking back it would have been great to have liquidated my metal and had fresh eyes into the plunge. I did not sell on the rally and bought more from 1.20-1.80 and some Jan -Feb calls. I still have the bulk of my GSS position and have only sold 5k shares in the mid 3's.

Last post I showed the FCX Pref M as the one that got away. So far GSS is one that did not get away, and it has been very difficult to keep the position to this point. I can have 50k swings daily, but that is reflective of the volatility in the precious metal stocks. Use it to your advantage short or long.

Here is a view of GSS long,med,short term.

So far I have done well under some seriously adverse pricing. Now that pricing is more favorable I am not dancing on the clouds. I am trying to manage my way through these times and I was fortunate to have bought some things right. I will need to sell it right as well. It now feels more like this ride – – especially after writing this post.

The One That Got Away (by cccactii)

By cccactii - 16 years ago (04, Nov 2009 7:12:54 PM)

Hello everyone,

I have been on a trip and have only been able to skim the SOH postings for the past few days, but I have been reviewing my past trades recently to try and learn from my mistakes and better manage my successful positions,in order to prepare for what may lie ahead.

I was quite bearish the past several years and I imagined that I would get an opportunity to buy stocks and bonds at prices that my generation had never seen. My thesis was a rally after the plunge and a retest or break much lower. I was not, and will not be surprised to see the S&P 500 break well below 500, but the printing press may have rendered that idea mere wishful thinking – at least for the time being. At some point, via time and price, my bearish thesis will be foolhardy to maintain as it will have been fully realized, and I will have missed a great opportunity, in maintaining that view. Have I missed that opportunity?

The point of this is to try and be prepared for that opportunity and recognize that I may have real captured value, and it is safe to hold onto the position long term. How long is the question, and for many of you this exercise may not pertain, as your methods and time frames do not mesh with my own. However, one should not be too quick to trade away a great position.

Last year I remembered scrambling around trying to find some decent bonds or convertibles as they were in a death plunge and I perceived that deep value could be found. I called several brokers asking if they had a good bond desk or trader that could help me identify potential investments. One Financial Advisor thought I was taking on too much risk looking to buy lower quality bonds after they had plunged to record spreads vs investment grade bonds. I am certain that they would have thought that buying the same bonds was a prudent decision when they were at all time highs.

I bought HYG, but I wound up buying some Freeport McMoRan Pref. M shares. When I bought these there was so much going on during the implosion of our financial system, I did not have time to really think through any long positions I might take,other than the idea of buying them for a bounce and letting the dust settle. I then planned to buy stocks and bonds long term when the S&P 500 came into the 500 range. I needed to be a little less bearish and look at some charts.

After I bought these shares, I was worried about the Phelps Dodge acquisition and the possibility of too much debt. I was bearish on copper as I believed the excess of the worldwide building boom would take its toll on demand. It is embarrassing to admit that I bought these on Dec. 5th 2008, at just over 33 and sold them a month later in the low 40's. FCX stock was getting crushed and it seemed like bankruptcy was our national fate. I got spooked and sold them with the idea that I would buy them lower. Here is a chart for your amusement.

I had been using Aberdeen Asia Pacific Income Fund (FAX) to augment the low yield in my money market funds. I noticed it plunged twice in 2008 and quickly recovered. I bought a fair amount at 3.30's during the crash and sold 75% of it around 5. I really like the idea of cashing dividends when my entry is low risk. I will be buying FAX starting at the mid 4's and more lower should that opportunity present itself again.

I love buying death but need to be more objective about tempering my bearishness and sitting tight in something other than gold and silver when I have bought it at the right price. I hope to see comments on what some of you are looking at to prepare for a more bullish time period and what are your vehicles and prices that you would be wanting to buy them at. Here is a 2 year look at FAX.

Next week, I plan on doing a post on the one that did not get away , as well as an interview with a gold broker that Bill Fleckenstein has suggested his readers may want to use for physical metal acquisitions. She is a very sharp gal and has a birds eye view on the physical gold and silver markets that I think readers may find helpful no matter which side of the metal battle you may be involved with. She has agreed to log onto SOH and answer any questions after the post, and I am looking forward to this, as she has been most helpful in cleansing my view in that market.

Solvency and Sovereignty

By cccactii - 16 years ago (28, Oct 2009 1:01:24 PM)

Hello Slopers. I am cccactii a new and very occasional poster here and I was quite surprised that Tim gave me a chance to post, and I imagine you will be astonished that he did so. He may have had a momentary lapse in judgement if you are reading this or he is giving you all some fresh meat to fade.

I am a 47 year old airline pilot that became aware of the futility and danger in leaving my money with mutual fund managers and similar CFP types near the end of the tech bubble. I believed then that I had to learn this myself or I would be fleeced. I am a native of Minnesota and will never be looking at charts on my laptop while flying. Most of you slopers likely spend more in commissions than my net worth so this post may be for those of us who are trying to get to your realm. As such I am a Slo – Ho, or a Slop – Hopper, but I will get there!

In order to manage my own money I read a great deal including Jimmy Rogers, Reminiscences of a Stock Operator, Prechter's Tidal Wave, and even Edwards and Magee's Technical Analysis of Stock Trends to name a few. I have rarely been using charts and it certainly would have been helpful. In 2001-2002 I was convinced Greenspan would destroy the dollar and bail out any and everything he could.

I began to look at alternative investments as I perceived Wall Street to be toxic. I realized that gold and silver had been in a 20 year bear market while paper (stocks and bonds) had the opposite results during this period. I pulled up a chart of silver and Jimmy Rogers quote "I just
wait until there is money lying in the corner, and all I have to do is
go over there and pick it up. I do nothing in the meantime."hit me like a 100oz silver bar. It was the first time in my life where I believed I could have little to no downside risk as the zero rate policy was in full force.

Silver had been forgotten and it was laying there waiting to be picked up. We sold our house in Phoenix as I perceived a housing and credit bubble in 2002, and I put all of the money in physical silver and some gold. This 10-15 year base between roughly $4.50 -$5.50 had me believing the upside from such a long base would be spectacular, and my downside nil, except time value of money at less than 1%. It was to me a very bearish expression of my views, and in my mind allowed me to opt out the madness that was going on at the time.

Soon after my large purchase silver moved up from $4.50 and I kept buying until the $8 area, and gold up to $480 before I decided I had enough and would just sit tight. I began reading Bill Fleckenstein daily and that only added to the confidence of my metal position. The crash in precious metals last winter was rough on me at the time, as I am heavily exposed. Instead of brooding about my metal positions tanking I thought long and hard about my thesis of the Fed printing until they cant, and gold being a very good place to be. I decided it had to be forced liquidation as all of my reasons for owning gold were completely intact. I surmised the best course of action would be to buy more. I bought more physical and some miners.I like the idea of being my own central bank and having individual sovereignty through metal. A sovereign piggy bank to you slopers.

I am trying to emulate the old man in Reminiscences of a Stock Operator who said very little except "you know it's a bull market" when asked his opinion. This dovetails Jesse in my mind when he talks about his sitting that made him the most money, not his thinking. Until I can trade like you Slopers I need to sit on the only bull market I have been fully invested in.

This bull market to me is cash. Gold is the highest form of cash and it fit perfectly in my still ongoing 10 year bearish thesis. Gold pays no dividend so in my mind I need an appreciation commensurate with interest bearing instruments. Roughly I need more than .5%/yr, .9% for 2 year according to yesterdays auction and 3.5% for 10 years. Lets compare this stealth gold bull market that a certified bear has embraced, yet the public seemingly has yet to discover. I was surprised that most slopers seemed to want to short gold, rather than own it. That may prove to be prescient and my posting this view may mark the top.

This looks like a 10 year bull market to me. Major precious metal crash like pullback to retest the 700 area last fall. I am guessing we will challenge the $1000 level soon and possibly a $950 flush. It is not out of the realm of probabilities that we retest $700 area once more, but I am not expecting it.

Gold vs SPX on a ten year view we can see the stock market rally was largely a falling dollar phenomenon and gold traded up with the market but diverged with the plunge. Gold has made a new high and SPX – Not so Much!

Gold is technically a commodity but perhaps is starting to be seen as money, which is ultimately what I would expect in this environment. Gold vs CRB index. below.

Finally a ten year view of the dollar with price performance of Silver,Gold, and a miner of each, as well as our beloved GS. I was surprised to see GS with all the intellectual firepower and unlimited access to funding has underperformed. Is this a bullish picture?

I believe that everyone needs to think hard about the dollar and what that ten year chart is telling us. We know that the economic activity since March is all government induced. It is failing now and I believe they will stimulate much more. Last night it appears that the home buyer tax credit will be extended and moved up the income strata as that is where the new supply lurks. More job losses this week including the airlines which are a very good indicator of the economy along with the shipping stocks.

I read a great deal, and you may find this gal useful for macro data. Plus I think this Fleck article is mandatory.

I currently own puts on many stocks and indices and I feel that this will help mitigate any damage my large gold position may incur. I do not believe gold will go down without the stock market going with it. I believe that gold may go up even if the stock market tanks. Others before me have done a much better job on gold than I have done, but I hope it makes you think and you find something useful in the post. Good Luck to us all!