Sid Klein Global Strategy
Profits to Take, (and the)
Crosscurrents of Opportunity
February 8, 2009
SPECIAL TO GOLD-EAGLE
This is an abbreviated version of the February Sid Klein Global Strategy (SKGS) report for Gold-Eagle. SKGS covers Japan, New York, China, the VIX and other special situations, from time to time. SKGS appears online on a 6-months lag and is electronically delivered to subscribers real-time.
US LONG BOND
This was easy money, down from 140. Who'll be the idiot to ever again pay 130? Who knows? But let's stay tuned-in, shall we? The easiest baskets of bonds to short were fashioned when the Gilts (not shown here) and the US long bonds were at their manic and unsustainable highs, but that short duo has burst, as described previously. But what the heck, let's stay tuned….just in case.
Frankly, I believe the Chinese are now going the other way, though.
The 1st chart on the next page was posted by Prieur du Plessis on January 13, 2009 @ 8:52 am, with the comment immediately below (top of page 2), in blue. The 2nd chart on the next page is an up-to-date look at the long bonds.
"In the chart below, please note the very simple channel in long bond futures going back to the beginning of the bull market. Prices seem to top every 5 years and, right on schedule, they've topped again."
GOLD
With the Comex heading toward bankruptcy and foreign markets opening to take its place, the song remains the same, and as written in these pages since going online over 7 years ago: There is a massive shift of wealth and power from West to East.
We are 100% long gold forever because gold's next cycle is going to $3000 - $3500, as already reported here. At the recent Davos conference, the chairman of Barrick shared the same forecast, based on the possibility of the Chinese turning their paper into gold. (That beats walking on water, no?)
Not having reported on it sooner: Investment demand for physical gold spiked 121% in the 3rd-quarter.
For now, the metal has peaked. The stochastic are overbought on both the 5-year weekly and 2-year daily charts below, respectively.
SILVER
From the November 25, 2008 report:
"…I am now moving from 100% to 200% long silver, basis tomorrow's average price. The chart above illustrates the perfection with which the initial (100%) position was established*. Coupled with a short VIX position from 75, we are well positioned for a rebound in asset prices."
"* Approximate average price for 200% silver position: $9.21."
Like the VIX trade - the other "gimme" - we are in an 80% profit position, sitting atop a 200% long position, with the metal up 42% as at Friday's close. We are selling a 100% position (one-half our total holding) at Monday's opening. The 200-day moving average is being kissed, right at critical resistance, with both the weekly and daily stochastic very overbought (see 5 and 2-year charts below).
Sid Klein
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