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Good Morning Readers
I hope I was missed because I certainly
missed writing this column.
This weekend I thought about what I would
write about today and when I awoke to find out that Osama bin Laden had been
killed. There was the circus that I knew would eventually come. Even though I
was away I was still reading and paying attention to the markets. The reality
is that on Wednesday the FOMC announced it would leave interest rates as they
were and this was followed by an unprecedented press conference by the Fed
Chairman, Dr. Ben Bernanke. This day told volumes. The dollar has been taken
out to the woodshed and beaten severely. It was reaching
unprecedented lows. Please see chart below.
Some “Black Swan” was needed to
give the dollar a catalyst to strengthen. As reported yesterday on all the
news wires was the distraction that was needed. As reported in the Washington
Post,President Obama announced “Osama
bin Laden, the longtime al-Qaeda leader, was killed Sunday by U.S.
forces.”
As I write this Dow
Jones Industrial Average futures are trading up 70 points. All
of the world’s markets are higher, the dollar is strengthening and oil
is trading lower after U.S. President Barack Obama announced that U.S. forces
had killed Osama bin Laden in a firefight in Pakistan.
The circus continued as the “herd”
gathered outside the White House, in Times Square and at Ground Zero chanting
“USA, USA.”
Last week, as Silver hit an intraday high of
$50.50 I sold the remaining half of my SLV @ $48.50. As I write this SLV is
trading at $44.30 in the futures. My readers will recall my warning last two
weeks ago that SLV was extremely overbought and that a pullback in silver was
imminent and profits should be taken. I see GLD trading in a choppy fashion
but when the reality that al-Qaida, which has adapted its tactics in ways
that continues to make the organization likely to remain the most significant
U.S. security threat, is not going away because of the death of Bin Laden
gold will hit $1600.00 an ounce and I feel it would be wise to take profits
at this level. Indeed, last week when Gold hit $1550.00 I sold on quarter of
my position of GLD. As my readers will recall I like to quote the legendary
financier Bernard Baruch who would often say that he liked to sell a holding
and watch it run up another 10 or 20% rather than watch it retrace and give
back all of his hard earned profits.
The mining stocks that I have recommended
(LYSCF, UURAF, AVL, DNN, URG, UXG and THM) will surely pullback a bit today
as President Obama and the media take victory laps on the news of the death
of bin Laden but I may use this as an opportunity to add to some of my
positions. One position I added last week was a European company Tasman
(TASXF) and I will be a buyer of this at $6.00 or below. Tasman is the only
43-101 resource in Europe and my readers will recall that I was surprised by
MolyCorp’s acquisition of Silmet to supply a very tight REE market. On
Thursday I opened a small stake in Tasman @ $5.63 and I see this stock poised
for a breakout above $6.00 as Tasman moves closer to being listed on the
Amex. I will be adding to this position on any weakness. I see this stock
easily pulling back to the 20 day moving average before it breaks resistance
at $6.00. See Chart below.
For today I expect the market to react in a
euphoric manner but by tomorrow the death of Osama bin Laden will be old news
and we will still be the largest debtor nation in the history of the
world.
Stay tuned for updates.
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