Wednesday, December 17, 2008

Angry Trades

While I ride out big losers in DXO, OIH, TBT, SRS, and SKF....

I took profits in my last remaining *longs* today.

I sold Stillwater Mining at 5.14 today. I had bought it two months ago (way too soon) at 3.87.

And I also dumped my Suntech Power Hlds at 10.81 this afternoon. I had bought it about a month ago for for 5.80.

The Suntech was easy to let out. It had almost doubled and I have plenty of *long oil* exposure in DXO and OIH.

The same goes for Stillwater Mining. I am still long palladium in my futures account so I can afford to let it go. Palladium is trading at near $175 an ounce a multiyear low (I got long around $390 or so). Methinks SWC is only rallying with gold miners as its fundamentals (i.e. spot price) are lagging the yellow metal's.

I messed up on these metals. I, like more than a few others, was discouraged by gold's reluctant, slow drift up in the runaway commodity bull market. So, when commodities weakened, I nibbled on palladium instead of gold or silver. Palladium, though possessing better supply/demand fundamentals, is proving to be a very *industrial* metal. It sold off hard with the collapse of the auto industry.

Meanwhile, gold has held up really well relative to the entire basket of commodities in this *deflationary* environment. Gold's probably going to go a lot higher considering the fact that after 12 years of being a goldbug....I have no exposure whatsoever to gold.


Taylor Conant said...

I'm in DXD, QID and SDS right now. I have been in FXY since it traded at around 94 or so. I got into SKF at 110 this week, and I got into SRS at 90 and doubled up at 54.999 (ha!). I sold my SWC at 4, which I purchased at 2.5, and I am looking for the price to drop back down below 4 at which point I'd take a position again, and a larger one than previously. I am also looking to get into GDX at 25.

My extremely conservative friend, who last had success trading/short-term investing in gold miners and the Yen (a few weeks for the Yen, as a Forex trade), decided now represents a good risk/reward on TBT and PST, so I think he's going to get into those. The oil (DXO) shares look decent here, too.

I know platinum/palladium have more industrial uses than gold and therefore will behave differently, but at the same time they typically trade at a premium to gold, so it's really hard to see GDX taking off (as I believe it's trying to now that gold is moving again), without something like SWC moving up as a platinum/palladium proxy as well. If gold's going to shoot for new heights, I think GDX and SWC are going to come with... and silver will likely have a runup as well (which might make IAU/GLD and SLV, as well as some silver miners attractive here).

I have spent a lot of time wondering if I should hop back out of my QID/DXD/SDS trades (at a small loss right now) and let them head down as the market goes up for a time (I'm targeting Dow9.5k as the new peak) and get back in around there, or if I should just suck it up and ride this bear-bull until it comes back down my way...

What do you think about all of this?

I've also been considering adding to my trading account as I get more and more bold/confident in my ideas... I'd like to take positions in DXO and TBT myself right now but I don't have enough "risk capital" (as I've arbitrarily delineated my funds in my mind) at the moment to do so without drawing down more of my savings.

Am I being greedy?

Also, I have been thinking about beginning to start accumulating gold AS my savings... ie, start converting my "don't touch this for any reason save to fend off impending starvation," Richest-Man-in-Babylon savings-egg into physical gold... what do you think of that? I want something safer than these trashy paper dollars I don't believe in, but at the same time I am trying to pay heed to "letting my money work for me."

Your thoughts, O Wise One?

Taylor Conant said...


One of the reasons I have been thinking about ducking back out of DXD/SDS/QID is that I don't see those three performing well in the short-term interim while GDX/SWC also perform well (in this deflationary, short-term bear-market rally).

Anonymous said...

Good move getting out of SKF and SRS. You can thank me later.

Taylor Conant said...

Good move getting out of SKF and SRS. You can thank me later.

Rut roh!

CaptiousNut said...


I am in a similar boat. I'm inclined to ride out the bear market rally.

It's hard to imagine oil below $35 if the economy isn't far worse than anyone realizes. So if DXO keeps dropping, I've just got to make money on my SRS and SKF...or so I think.

As for gold....I don't know.

I wish I could get some palladium coins not too high over spot price. Those I'd be comfortable with as *savings*. Of course they're sold out everywhere.

TBT is insane here. Of course I thought that many, many points higher.

Ideally, if the market would crash, I could make $$$$ on the Ultrashorts, close them out, and parlay the proceeds into more TBT.