Time to Fall in Love?

In my entire life I have never been attracted to a man by the way he looks. Sure, I can look at a photo of the fellow who was all over the covers of bodice-rippers a while back — Fabio, was it? — but my immediate thought is a jaded “Westminster Kennel Club Best of Show Body, probably has the mind of a Cocker Spaniel and the temperament of an irritable Chow.”

What has that to do with gold, energy, currencies, and emerging technologies you may wonder? Everything, my dear Shooters. For starters, nobody sold me any toxic derivatives.

I am also well able to tell the difference between reality and fantasy. Any female who can watch Rex Harrison playing the ghost for Mrs. Muir without any interest surely has a severe hormonal deficiency — but that’s the difference between an actor and reality. Even this uber nerd can be distracted if she doesn’t focus, and what blows ALL of my circuit breakers is Kevin Smith, clad as Ares, God of War (Xena, Hercules), in tight black leather complete with special effects and an insolent smile that says no woman could ever hold his interest — which doesn’t make me want to change him; it makes me want to prove “he” is wrong and I’m more lethal and harder to captivate. I like the character just as it is!

Blast reality anyway. Mr. Smith is a perfectly ordinary nice man still married to his high school sweetheart of a quarter of a century ago, he can’t hurl thunderbolts, and nobody is going to let me solve my problems with a sword, a primary thing wrong with this universe. THAT knowledge is why nobody can sell me any treasuries or bonds of any ilk.

The same principle covers strewing rose petals and singing “Tra-la, tra-la” as you call your stockbroker because surely, after all these months of stocks rising, those aren’t just green shoots but veritable rain forests full of undiscovered miracle cures for depleted portfolios. There is never any shortage of snake oil salesmen or dreams that cannot be.

Never allow even perfectly-reasonable impulses like skewering lawyers to lead you astray. I resist firmly, particularly last week when my Irish ancestry whispered seductively, “Ah, but wouldn’t it be grand, lass, to give them boyos a whack or two with a claymore and shove yon troublemaker into th’ weir?” Dear Charles flashed me a split second smile (we can read each other’s minds) that conveyed that simple knee-capping later would suffice and I wouldn’t go to jail for nearly as long. I stuff such rare brief whisps of emotion down tightly into the very tiny part where I keep such thoughts, and return to being cerebral and icily civil…and solve problems. Emotion always costs us money. Which is why I don’t own giant whirlygigs that make electricity and I’m not drawn to firms hoping to recover frozen methane far below the Atlantic.

I have nothing whatsoever against handsome men so long as they are chock full of what I really value, that being intelligence, broad knowledge, principles, character, the ability to recognize and appreciate how very odd I am and think that’s wonderful, and being totally unflappable. John was a very good-looking man, but that isn’t why I accepted his proposal. My darling Charles — picture an older Robert Mitchum, reeking of “bad boy” charm because he can’t help it, who cherishes me totally. He’s six feet of swashbuckler disguised as Bruce Wayne and feels he’s twice that tall…until I show him he needs to duck going through eighteen-foot doors. Intellectually I recognize that he is quite a handsome, personable man but what binds me to him are his brilliant mind, vast knowledge, and ability to handle any disaster and say blandly, “It’s not just a job, it’s an adventure!” And quite a few other qualities I won’t get side-tracked on. Finding a Charles is roughly like the chances of a genuine Treasury agent offering me a clearance on old gold bars out of Ft. Knox at $35/oz. With a pre-signed Presidential pardon for both of us for the transaction. We need the same ideal of far more value and ability than meets the eye in our investments.

My problem with the market is that there is never a time when I do not want to own gold. I don’t buy when the price doesn’t strike me as right, but that doesn’t mean I don’t want to own more gold, silver, rubies the size of a pigeon’s egg, and a Silver Ghost at any given time. Oil wells are good. Cattle. Georgian silver. Some objects always have greater intrinsic or emotional value (watch that one!) and tend to hold their value better through good times and bad. Stock certificates for retailers and manufacturers are rarely among them.

The Commodore said, “If you have to ask what it costs you can’t afford it.” That isn’t entirely true for most of us. We have to pick and choose, but over the years with care and a little luck we can accumulate quite a few trinkets (including investments) which will stand the test of time. The more discerning of us do not collect comic books, Cabbage Patch Kids, or Bob Mackey Barbie Dolls as future money-makers. You can pick up mint condition Hummels in large lots for under sixty bucks apiece, if you have a taste for the saccharine, but I can’t advise it unless you just happen to be partial to chubby-cheeked German kids. (Okay, so my collection is white bisque Alka-Kaiser, but I don’t regard it as an investment in anything other than beauty.)

No, no, a thousand times no! we do not buy blue chips and expect them to be worth more decades from now, any more than we look for Rudolph Valentino look alikes. The original DOW is long gone. Particularly we do not in times like these with all the stability of a child’s top on its last wobbly spirals. Beyond the basics of metal, commodities, and storeable energy I’m a trader, not a holder, and right now even trading feels to me like thrusting your hand into a tank of piranhas believing you can grab a hunk of their dinner before a bunch of them take chunks out of you. This is such a crazy world I couldn’t talk myself into shorting the drachma if I could find anyone dumb enough to take the other side of the bet.

How about some nice munis? Hey, what can go wrong with municipal bonds? Oh…Orange County, things like that. Maybe some nice little public utilities paying dividends in the high single digits? You go for it; this country girl doesn’t like the looks of power and light companies, coal mines (sure are a lot of…odd…accidents there and in several other fields recently), LNG (play with Congress long enough and spend vast sums on anti-coal advertising and you might become next to join the “most hated” list), deep water drilling rigs (see note on coal mines), refineries, wind turbines, or nuclear facilities. Stir up some Cap & Tax, whisk in a VAT, raise taxes and union membership — all on the docket — and those babies are going to be in big trouble. “Oh, but people can’t do without electricity!” No, but all of us could curtail our usage considerably if we set our minds to it. If we’re all still here in the Bar five years from now let’s remember to check on how those are doing. If I wanted to bet something is going to go down when the sleigh ride gets really rough…I’d wager a bit against Sprint, Verizon, and such. Why? Have you looked at your own cell bill lately? How many Americans are there over the age of seven or eight who aren’t glued to those devices, texting or talking like mad as they drive? No, that does not mean that celluar telephones have become so much a part of our national way of life that dispensing with some of your units and plans is, or will be, out of the realm of possibilities as times get rougher. My bet would be that the cell ‘phone mania is too big not to shrink dramatically. How about a flyer in Time-Warner? No. At least, I wouldn’t.

If Cap & Tax raises your light bill by $1800/year, as calculated, where do you think most people will cut $150/mo out of their budgets? If Obamacare isn’t knocked out, most health “care” premiums are estimated to rise at least $3,000 a year, and some will be paying over three times that much! Where is THAT money supposed to come from? Using Woolite instead of the drycleaners? Stop having the poodle groomed? Give up gym memberships and Blockbuster? We have new taxes and higher taxes coming, along with severe inflation and no end in sight to high unemployment. At what point will a significant portion of Americans be unable to pay for more than the most basic household expenses and a way to get to work? Fifteen million unemployed don’t help, and one analysis estimates the cost of Card Check at 4.5 M jobs. Almost all of the retail sector reeks when viewed that way.

Right now I don’t like the looks of anything ordinary much, for sure not P/E, politics, international currency battles, treasuries, anything subject to bureaucratic regulation (such as avoiding Cap & Trade by simply allowing the EPA to make law, raising CAFE standards through similar means, and letting the NLRB dictate Card Check without any Congressional activity whatsoever, all under discussion), bonds, CDs, insurance companies, banks…

I like — cautiously — what we’re about here: gold, energy, emerging technologies, and maybe, just maybe, a wildcat bet in currencies if you really know what you’re doing. I don’t, the risks are too high and too many for my cravenly spirit, and more than briefly one fiat currency seems very like another to me and all of them doomed. However, a very sure way to go broke is never to take any risk at all and this isn’t the climate to seek “security” in the promises of governments, particularly at 1.5% interest with the current inflation rate the Feds deny but the recent BLS report delineated clearly.

Silver hit $18.65 while gold was up $11 Friday to $1180. I remain convinced the metals market is being manipulated severely but just took a look at Friday closes for the last year or two and murmured, pleased, “I told them to buy silver when it got below $15.50!” Sure enough, very briefly it dipped down to fifteen, but there was a nice window at 15 1/2.

Those of you who “believe” in Technical Analysis (even though the great power of mirroring the individual choices of millions of small investors is largely gone) too look at the nice little formation that’s building. By the end of the quarter we should know whether Ag will punch through $21 and bounce around between there and where it is now, plus or minus a pair of dimes, for a while, or if there will be one last chance to buy our shimmering beauty for at least a couple of bucks below current price. This time if I wanted some I think I’d get acquisitive by sixteen. I’m no Adrien Ash, guys, and I wouldn’t dream of trying to prognosticate how high gold will rise between now and 2020 or even 2015, but I sniff a possibility. I’ve been commenting on silver for fourteen months now and it may be sheer dumb luck that I haven’t been wrong once and any halfwit could have called it. It just could be, though, that I have a good grasp of controlled avarice and a fair sense of what sort of monkeyshines are going on in metals. I pondered a while back for you if the goal were to set up a new trading channel between roughly fifteen and seventeen plus, ride that up and down about three times (making a 25% profit both ways), which happened, and then play a while between eighteen and twenty-one. I don’t know. It hasn’t happened yet, but I think we’re on the verge. What “feels” probable is one perhaps brief opportunity to acquire the last silver we’re likely to see below $18 for a long time and a concommitant rise in gold of at least $180 when silver establishes a higher support level. A pretty big “name” indicates that his alarm bells go off when gold is over $1162.

Sudden insight. I think I was born bearish. Yes…I…uh…now see that I expect different items to go up according to foreseeable futures because the world is full of bad times and ideas, basically, far more than because any particular product or sector is good. Delighted laughter. I suspect I learn far more from writing for you than you do from reading my work. I would never have bought stock in Hula Hoop, but I continue to think munitions a good bet.

Other than stats and statements I have accumulated as the basis for an article I never know what I’m going to say either until I write it, and I hadn’t realized exactly how bearish I had become in the last two or three weeks. I just mulled over my private “gut check” briefly, and decided no, it isn’t time to go to DefCon 5, yet. Condition Air-Sea Rescue Orange will do if we pay attention and keep a tight hold on our emotions. Watch silver; I think there is a good chance of a fifteen per cent. profit buying the next dip and at least that much more when the next plateau emerges. I would be horrified if you sold on that possibility, and suggest we don’t contemplate divesting metals unless the Federal budget is actually balanced, something about as likely as appointing me to the Supreme Court or the return of reliable cyclicals.

Linda Brady Traynham
Whiskey & Gunpowder

May 3, 2010

The Daily Reckoning