Replies to post #79644 on Value Microcaps Motherboard

[cl001]

Kipp, I am in agreements with you. I am another "metalhead" very worried.
I believe the market is worse than most people lead to believe. First it was the subprime hedge funds, then it was the quants hedge funds, last week was the Sentinel bankruptcy. Which one will be the next? Now even the money market fund is not safe! This is the replay of 97 Asian financial crisis in the US, in a much larger scale. People already started to run for the bank now! http://www.reuters.com/article/email/idUKN1721531120070817
Look at the tape of HBM.to on Friday, very flat on the huge up day. As Canadian mining companies issuing PR one by one to declare it money in the safe hand, HBM's pr is still missing. As we know HBM has a lot of cash, ironically it could of disadvantage now. Even one million dollar loss in the commercial papers may lead to one billion dollar loss in HBM market cap, this is the kind of market we are in right now. I sold over 50% of HBM with great pain last week. Only a few weeks ago MikeS was recommending me to unload HBM at 29, wish I had listened to his advice.
The hedge funds reportedly have 9 trillion assets. It will take them a long time to unwind. The market will likely to rebound in the short term, probably till the end of month or when the next shoe drops. As the market always overshoot going higher as well as diving lower, the money will likely to run away from the hedge funds faster than they piled into the hedge funds. Sep will likely be another month for huge redemptions. I suggest to use the rebound to reduce the exposure to the stocks except precious metals.
I already significantly reduced my base metal exposure, the largest holding is AL. I believe RTP will have no problem raising money and finishing acquiring AL. It is a very low risk bet. I also have a significant short position on DBB to hedge against my remaining base metal positions.
Now the investor are rushing to bond that pushed the bond yield much lower. This is exactly Bill Gross predicted a few months ago. However, as fed pumping more money into the system(inflation) and cutting interest rate(weaker dollar), investors will find the US bond is no longer the safe house (as Bill Gross predicted in the same time) and they will likely to turn to the rock solid financial instrument in the past thousands of years, GOLD.
I was stunned last week to see the Canadian are pouring the gold baby with the basket of water. Some gold juniors were down 60% in the past a few months and heading lower on no news. I believe now is the best opportunity to load up gold stocks in the past 2-3 years. I recently open a new account to trade Canadian stocks and I put it into 100% gold juniors last week.
Action plan, I suggest to wait in line early Monday morning to withdraw all of your money from CFC or any mortgage related banks, call your broker Monday morning to switch your money market to government bond base money market and considering to increase your gold exposure when market open on Monday. I like AUY, one of the biggest failures of Cramer, actually looking quite cheap as a mid cap gold mining play. My favorite gold juniors are (SAM.TO NGG.V SGR.V ADA.V CMM.V AUN.V), most are non-earners you can find the discussions on the JM board.

[bbotcs]

kipp440:

I agree with you. I saw a chart last week (don't remember where), showing that China has a low amount of gold reserves compared to other countries, and they should be buyers of gold for years to come.

Until now, I have avoided using the term "house of cards", but that is what the hedge funds are. And even the good hedge funds are doomed in the short run, imo. I doubt that the big pension funds will be sinking money into them anytime soon.

So what could move the market up with hedge funds crippled? Foreign investors? They would be crazy to dump money in our markets during a financial crisis.

The falling knife isn't finished falling.

Again--Warren Buffet warned about derivatives.