Tuesday, May 3, 2011

This Is A Must-Read Interview

with John Williams.  I was too busy catching up on research and trading this glorious volatility in the metals and mining stocks today to put together a cogent post.  I made some nice trading profits in AGQ for the fund, added to the ECU position and put on some at-the-money puts on ZSL (think about that one for a second) for myself.  One thing I did notice was that the volumn in both SLV and ZSL was extraordinary, potentially capitulative.  In particular, the volumn in ZSL was double its 10-day average and 10x its 90-day average.  Sounds to me like excessive short term bearishness...we shall see, but I did put my money where my mouth is with the ZSL puts...

Onto the matter at hand.  Please read this interview carefully with John Williams.   A lot of it is a rehash of concepts most of you already understand, but I really like the way he discusses the intrinsic value of the dollar vs. other currencies. He also does a particularly articulate job of translating that dynamic into how it is leading to hyperinflation in this country, perhaps sooner than he has been forecasting:
[Large holders of dollars] will sell their dollar-denominated assets. They will convert dollars to other currencies. They will buy gold. Generally, they will dump whatever they hold in dollars and sell the dollar-denominated assets they don't want. There's a market for them; it's just a matter of pricing. As the pressure mounts to get out of the USD, the pricing of dollar-denominated assets will fall, which in turn would intensify that selling. The dollar selling will intensify domestic U.S. inflation, which is one factor that picks up and feeds off itself and will help to trigger the hyperinflation.
Here's the LINK  Enjoy and keep your chin up, this metals manipulation to the downside will end soon and will be seen, looking back, as being instrumental in setting up the next leg higher. 


  1. Dave, you liking ECU at these prices?? Nice results yesterday...

  2. I added ECU to our fund yesterday and I reloaded my personal position and i may add to my personal position today. those results are minor vs. what they are drilling right now: the massive sulphide zone that they think is the source of the veins like the ones they reported a few days ago. Should start seeing drilling results from the MSZ soon