Sunday, September 16, 2007

"Sell in May and Go Away"....Now what?

Well, as my three loyal readers 'may' (har har) remember I posted about the general malaise that u308, gold, silver, and the mining stocks of all three seem to suffer from through the summer months.

uranium juniors, gold juniors (and majors), and silver stocks have been HAMMERED this summer.

then, almost on queue, the big money got back from the beach after labor day and things started moving up in these assets again.

Ok, so is it time to reenter these positions (if you got out)? should you get in if you never had a position?

First, a review....basically, my original thesis remains intact (somewhat)


  • everyone should stop speculating in housing. if you can sell your primary residence and rent, do it.
  • housing turbulence would kill the mortgaged backed paper market, and infect even higher grades than subprime and eventually the commercial paper market
  • liquidity would get really shaky
  • the US dollar index would break 80 to the downside
  • we could see some bank runs and smaller regional overleveraged players falling first (just starting to play out)
  • it would be challenging to find a hidin place as liquidity dried up everything would tank at first even traditional "safe havens"
  • the "x" factor would be the central bankers' response....would they inflate/liquify the markets in an attempt to forestall or avoid calamity (of one kind in return for the other) and the political response (see recent proposal to liquify markets by raising limits for fannie mae backed home loan)

To date, when Wall Street has cried over their lost million dollar bonuses, the Fed has blinked and liquified the markets....massively....The European Central bank, a lesser extent the UK.

This liquidity will find a home and it won't be new subprime homeloans.....any guesses where it might go?

(to be continued)


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