Tuesday, December 25, 2012

MERRY CHRISTMAS!


I wanted to extend my deepest and most sincere blessings to you and your family this Christmas.  I pray that you are blessed and that this year-end time brings you closer to God who through His son, Jesus brought salvation to all that desire it.

I pray that readers gain a real relationship with, rather than an intellectual understanding of their Savior.

I began preparing for the year-end wrap up yesterday and as I reflected on the blog I couldn't help realize what a hard year this was for me personally due to family illness issues and professionally thanks to the Fed and also President Obama's healthcare law.  I have grown up a lot this year and have had so many great opportunities to make hard choices.  Fortunately, I was able to make many of them correctly, but could not have done it without input from God, family, friends, and physicians.  I am very blessed.

As I'm typing this Christmas morning and my family is taking a break in their present opening, I wanted to wish you so many great blessings this year.  Know that I am praying for each of my clients (I do daily) and for the folks that stop by and read this blog.  

The coming year is going to be just as nutty I feel, thanks be to God that I have faith.  I've questioned so many times how bleak life would be without a belief that there is something more, something greater, and something for which there is a purpose.  How hard a life this would be without Jesus!  And thank God that those Mayans ran out of rocks!  Please look for a year-end wrap up and outlook for 2013 coming soon.  

MERRY CHRISTMAS!

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

Saturday, December 22, 2012

WHERE NOW WITH SILVER?



SILVER DONE?
Clearly the recent action in the markets has caused many to completely abandon the notion that precious metals are awesome and they now contend that they are dead and gold and silver will become the next prepper's widow maker.  This may be true, and to confirm it, I wanted to examine the charts and also some of the reasons that this would be correct.... and why it wouldn't.

CHART HEADING DOWN....MAYBE
Take a look at the weekly SLV chart.  Some may ask why SLV, the easy answer, is this is the one that I have saved in my stockcharts system, but very importantly, this is what you'd buy if you didn't have a safe full of silver bullion or Silver American Eagles.




In this example we see that SLV did hit near the $35.00 area that we had identified a turn and then melted lower to the $31.00 level where it bounced off it's 200 day moving average (black line).  That strong bounce sure looked good, however the rebound was short lived.

Last week, the $30.00 level was breached and the etf suffered a nasty close at the $29.00 level.  If you were an owner of SLV you'd have to be very concerned that a fall back down into the downward channel through $27.50 would be very, very ugly.

$SILVER
For those of us that hold silver in other forms than SLV, I wanted to put up the commodity silver price up so we could look and see if there were any differences in the chart.



Unfortunately, real silver is already in a downward channel and a similar level of $27.50 is very important.  The close on Friday was actually odd to me in that the equity markets got spanked (if we now call down 1% spanked) while silver was up a tad.

As bad as it looks for silver, there is one shining hope left, and that is that the 14 day EMA is still above the 40 day EMA (on a weekly chart) and the slope of that relationship is still positive (flat to up to the right).  As of this moment, this very long term trend indicator still has a hold on the trade and no sell has been signaled.

WHY NOW?
It has seemed like that ever since the Fed tied their unlimited QE to achieving some job employment number that all precious metals have been falling with renewed vigor.  I'm not sure it that is a result of many suggesting that there is now some end on the horizon of infinite Federal Reserve action and that would somehow tame the beast of inflation that was surely expected to come.  Or, perhaps traders realized that the Mayan calendar prophecy was going to fall on its face and therefore there was no need for extra stores of the shimmering metal.

Another rumored explanation for the recent vicious sell off is none other than that some hedge funds are forced to sell GLD and SLV due to redemption requests.  The famous manager John Paulson has been rumored to be selling his largest positions which do include GLD.  As we all know any significant move in gold will cause silver to move in lockstep with it.

In the last week, Morgan Stanley and Citibank both called on their clients and advisers to sell shares of Paulson's fund and GLD was the single largest holding at nearly 30% as of September 30, 2012 - http://www.stockpickr.com/pro/portfolio/john-paulson/ .

AN EYEBALL'S GLANCE
As I eye ball things, it also seems like the period from October through year-end is always weak for silver as well.  Perhaps it is seasonal.  2011 was up significantly, so we can't say that it works all the time, but hopefully it won't be like October 2008 where silver was completely destroyed and taken down to the $8.00 level.

CONCLUSION
The real story here is that silver has some issues and you'd be smart to look for some kind of bounce at the $27.50 area.  If it doesn't come, the low twenties are easily in play.


GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/

Monday, December 10, 2012

BRINGING HOME THE BACON - FOODSTAMP REPORT

GOVERNMENT SUCCESS!
The SNAP program (Supplemental Nutrition Assistance Program) is enjoying a record amount of success as it recorded a huge  monthly increase.  The Federal Government released September data showing that the foodstamp roles added more than 600,000 participants, the largest monthly gain since December of 2009.

The current count shows that we have more than 47.7 million Americans obtaining food through the program, this is about 15.5% of the US population.  The projected MONTHLY cost of this support is $6.4 Billion.




THE FOODSTAMP CHALLENGE!
As the number of citizens and non-citizens on foodstamps increase the politicians cannot help themselves but wade into the mess and attempt to make the folks on SNAP feel good about themselves.  In fact, politicians like Corey Booker, mayor of Newark, NJ go further and attempt to make the point that the nation should INCREASE foodstamp benefits for recipients.

NEWARK MAYOR SHARES FOODSTAMP CHALLENGE
Corey Booker tweeted his experiences and shared the misery of living on $4 a day which is about the amount that he would receive as a single person that qualifies for benefits in the program.  Unfortunately, Mr. Booker hasn't keyed in on a significant part of the program that is revealed in the name, which is SUPPLEMENTAL ASSISTANCE.  The foodstamp program is not intended to be the food source for 100% of a participant's food and is not envisioned to be a long term provider for a single person or family.

In my opinion, the real reason Mr. Booker took the challenge and has made this a big issue is that he has grand aspiration of higher office like governor or senator.  

BRINGING HOME THE BACON
Politicians understand how this works better than most of us.  See, Mr. Booker sheds light on just how hard it is for his constituents to live on foodstamps, and he is perceived as a guy who fights for the poor.  The federal government increases their monthly allotment and then they vote for him.  Or, sometimes it is the other way around.  They vote for him and then they expect him to "BRING HOME THE BACON".  At least that is how Joann Watson of Detroit believes it should be done.


Fox 2 News Headlines

My guess is that Mr. Booker will get elected to some office and he'll deliver more taxpayer money to more foodstamp participants ensuring that they get something extra.  I personally wish that we'd work to add jobs not an extra portion of hog.

WASTE AND FRAUD
The federal government has a target of 3.8% error or fraud rate for the SNAP program, that means they are hoping to only waste or have stolen $2.5Billion this year!

ATTITUDE
I think one of the largest issues I have with the SNAP program is that our federal government attempts to "sell" this program as if it is good to everyone.  Here are a couple of examples;

  • Advertising to add more recipients - The SNAP program spent millions earlier this year in LA and Texas attempting to add more people to the foodstamp roles.  They purposefully try to reduce the stigma associated with "getting some bacon".

  • Politicians tell us it just isn't enough.  Mr. Booker is a perfect example of this problem.  There would never be enough to satisfy people.  Even if we raised the benefit by 50% we'd be told that the amount isn't enough to buy organic fresh veggies or meat.  

  • Sales -  For some reason the USDA believes that it needs to sell taxpayers on the merits of the program.  Their website tells us that for every $5 dollars spent on the program it generates $9.2 in economic activity!  Yeah!  Frankly, I don't need to be sold on the need to help someone out and get them back to work.  I actually support the idea of the SNAP program and don't need to be sold on the idea that the program is good for the economy.

WE NEED SNAP
Don't get me wrong.  There are people that are in poverty that need "temporary assistance" to get to a self sustaining level.  I feel strongly that programs like SNAP, housing assistance, free Obama phones, and more make life more comfortable than it should be FOR MANY able bodied men and women.  I think the fact that SNAP continues to increase despite all of our government's reports that show how the economic situation is improving.  If our economy is better and the employment rate is lower, how is it possible that the SNAP program continues to expand at an even greater rate? 

GOATMUG

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments athttp://www.goatmug.blogspot.com/