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Monthly Digger - January 2011


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In 1980, the film of the year was "The Empire Strikes Back." If you wanted to know what the film was worth you'd read "When adjusted for inflation, it is the 12th highest grossing film in history." http://en.wikipedia.org/wiki/Star_Wars_Episode_V:_The_Empire_Strikes_Back

 

Gold in January 1980 peaked over $800 and today it is said that peak in 2010 dollars is worth $2251. http://inflationdata.com/inflation/images/charts/Gold/Gold_inflation_chart.htm

 

The Empire of gold will strike back.

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GS definitely holds an empire.

 

"An October report by Goldman Sachs predicted that the metal will reach $1,650 an ounce in 2011."

http://www.chinadaily.com.cn/business/2010-12/31/content_11781252.htm

 

Idols of Gold

"In the previous 10 months, China's gold, silver and jewelry consumption increased by 35.6 percent year-on-year."

http://europe.chinadaily.com.cn/business/2010-12/04/content_11658267.htm

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I took all my certs to Schwab at the end of last year, so the positions were in my account to trade. I traded out of them over the past few weeks and have been adding back here. Junior silvers have my eye. I also put in a low ball bid on the SLW warrants but they haven't filled. Chesapeake has been strong as has Sandspring. Those two along with Candente comprise my set it and forget it portfolio. I expect easy doubles and perhaps much more on each. This may not be the bottom but it's down enough from where I sold that I want back in. I'd look for at least a retest of today's lows and perhaps marginal new lows into early next week. Otherwise. If you have conviction that we're still in a bull. And as I see it, nothing suggests otherwise. You take a stand down here.

 

Onward to glory!

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Yes Chesapeake Sandspring have been strong, holding on to them, but WOW some majors, GG, NEM slicing through the 200ma, AUY just starting to go through the 50ma, My juniors GORO and UXG still above the 50, but I'm scared, I think they follow. If they go through the 200ma, I'll be hurting big time, thinking of selling half, but the tax man going to get a big piece of the action.

 

HUI diving for the 200, looks like it had a head and shoulders. Knew this smack down was coming, just like all the others in the gold market, but I still don't have a good sell strategy. I'm confident gold going to $5000 so I just hang on, but these are brutal smack downs and always depressing.

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They say catching 50% of a move is a good thing. Doesn't sound like a lot until you have to live through another correction. Cash is a position. Practice holding 10% in cash by selling for profits. Just because you have cash doesn't mean have to spend it. You might get used to the fact you are making money even while holding back cash.

 

This trading/investing thing is more of an exercise of looking at yourself in the mirror to see how you react when you are in the money or out of the money.

 

If you think the fall continues, sell on any (intraday) bounces, take profits more often, leave a core, sell it all, do something. With cash, you can always rotate over to lagging stocks if a run up commences.

 

A chart may not show drifting down until June, I don't know, anything is possible but I would understand it fundamentally. I'm 10% cash now could go to 20% cash, miss a move up and not even care.

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