Blog Article: 4 Working Days Left, Be a Part of the RUSH

[cherry]

Take a look at these two charts. With gold currently at $711, we are less than $20 away from gold’s former 26 year high of $730 set during May, 2006. I still see that many PM stocks are a far way off from trading at the levels seen while spot prices were previously this high. This spells catch-up to me for PM stocks and has been the recent overwhelming theme of Raw Greed. My writing has been focused on finding fundamental investments from speculation and greed. This is about as speculative as you can get.

There is tremendous continued strength in the spot prices of gold and silver. It looks like gold may form a base above $710. We are also looking at a rapid drop in the USD Index. The $80 mark was a key psychological barrier. We are now 4 trading sessions away from a pending rate cut by the Fed and it looks like the market is pricing in the likely cut. Front page articles on Yahoo! Finance, like the one titled: Stocks End Higher on Hopes for Rate Cut add to the fervor.

Taken from the article:

“Bernanke didn’t really say anything about interest rates, but at this point the feeling on Wall Street is that it’s mandatory,� said Steven Goldman, chief market strategist, Weeden & Co., speaking about a rate cut.

I put in an order to buy Hecla Mining Company (HL: 7.83 -1.26%, vol: 1,492,707) yesterday at $7.69. The stock shot up past my range of $7.50-$7.80 rather quickly. If you aren’t in on PM stocks because of the recent rapid appreciation, I urge you to take a small position in PM stock options to gain some exposure to the possible extended bull run.

For reference, here is the list of PM stocks that I am watching:

Barrick Gold Corporation (ABX: 37.33 -0.74%, vol: 5,791,400)
Newmont Mining Corporation (NEM: 45.25 +0.20%, vol: 7,228,124)
Silver Wheaton Corporation (SLW: 12.48 -0.64%, vol: 1,871,100)
Gold Fields Incorporated (GFI: 16.89 -0.24%, vol: 4,186,400)
Coeur d’Alene Mines Corporation (CDE: 3.51 -1.40%, vol: 5,986,600)
Tanzanian Royalty Exploration Corporation (TRE: 5.3101 -2.21%, vol: 316,900)
Northgate Minerals Corporation (NXG: 3.18 0.00%, vol: 1,072,400)
IAMGOLD Corporation (IAG: 7.81 -0.51%, vol: 793,300)
Hecla Mining Company (HL: 7.83 -1.26%, vol: 1,492,707)
Pan American Silver Corporation (PAAS: 26.43 -1.09%, vol: 602,318)

*Disclaimer: The author is currently holds positions in Coeur d’Alene Mines Corporation, Tanzanian Royalty Exploration Corporation and Northgate Minerals Corporation.

The article is here: 4 Working Days Left, Be a Part of the RUSH | Raw Greed Stock Blog, Fundamental Investing Through Speculation and Greed
Taken from Raw Greed Stock Blog, Fundamental Investing Through Speculation and Greed

[Airelon]

I'd laugh my butt off if he didn't cut the rate, or better yet, raised it.

I think the best solution, would not to be to cut the rate, but promise one in the future. Don't say 'when' it would come. But just announce it along the lines of: Yes, we understand the markets needs, so we've decided to cut the rate in the near future. More specifics will be forthcoming.

And then just do nothing.

[Fredledingue]

Airelon,
If they don't cut rates they will risk a recession for exactely the same reasons as in 2001: Too high interrest rates.
They can't afford the cut rates in emergency later (again) or the FED will lose all credibility.

If they don't lower the rates the market will crashes and THIS will strongly increase the risk of a broader slowdown.

[Airelon]

And if they do cut rates, although our dollar is already severely devalued, it will only devalue it more. Which is risking the very thing they don't want. .

When last time market tanked in 2001, the DOW was around 11,000 and interest rates were at 8% or so. It was normal down cycle for economy to go to recession (10 year average cycle). Recessions are a fact of capitalist economies. The trick, is how to prepare yourself in the beginning.

Today the DOW sits around 13,500 about all time high and interest rates at 5.25% which is near the lows. And don't forget, Berneke is staring at that devalued dollar. In 1989, the Fed cut rates from freaking 12% or so (not sure exact figure) to low 6% and could not save recession. So if a 6% rate cut couldn't save the economy then, how in the heck is a .25 or .50 percent basis cut supposed to save us from a recession now? If an economy is going into a recession with the rate at 5.25% and a low dollar - it only makes sense to let the economy go into a recession at 5.25%. .50 percent cut isn't going to do much against an economy this large, and it would only further devalue the dollar.

Which is something the banks definitely do not need in the long run.

Wall St. could use a bit of a reality check, and remember to look further down the road than just 'next Tuesdays earnings'. The market doesn't create the economy. The economy creates the market. Of course, people like Jim Cramer will whine and moan - but that's why I think Berneke should promise a rate cut. He just shouldn't specify when they'll do it. Recessions are a fact of life. They have to happen. The trick, is to make them like 2001, and not 1977.