Take physic, pomp

Trading Post (austere but practical edition)

A different format today, but the same old photo.

So oil is back to $70/bbl (here’s a weekly candle chart to show how crude has liked that number for quite a few months) ………

(click to enlarge)
…….and the market doesn’t like it when countries come out and say they’re not going to spend as much money as they were going to spend. So the obvious choice here is to print a bunch of dollars, Bernie. As Gary Biiwii oftens says it’s a case of “inflate or die”, so rather than die, just get on and inflate the balloon again.

Let’s be clear here: The FreeWorld™, led up by The USA, led up in turn by The Fed, is scared out of their short pants by the mere word “deflation”, let alone it getting any traction at all. Here we are on the second Friday in a row where the deflation trades are winning out, so you can bet your sweet bippy the suits are going to do something about it over the weekend. As such, IKN offers a few ideas for places where trades might work nicely:

  • Any small silver. My personal choice would be Fortuna (FVI.to) here but if you like, choose EDR.to, FR.to, IPT.v, USA.v…hell, even GPR.to is flippable here in the shorter-term (not my preferred timespan, but is for others)
  • Copper explorers. This is a sector we’ve tracked carefully in The IKN Weekly this year and over there we’ve selected three favourites. One is Antares (ANM.v), the stock currently being dicked around by the Casey mob, but there are others to like. Copper doesn’t like deflation, it really likes inflation and the same leverage factors (plus the depletion of world copper mines) makes exploration plays a great place to be. It also happens to appeal to me persoanlly because LatAm has some world class deposits just raring to go.
  • Small golds. They can be producers or explorers with a defined resources. They can also be scam-ridden things just waiting for you to hand over your money. But find a good one (e.g. one I own is RIO.v and that’s a good story) and what you have is exposure to gold at a fraction of the cost of the big producers. These little guys can give you great leverage going forward, but remember the flipside of leverage is the high risk.
The choice is yours; you bet on inflation or bet on deflation? If you think Deflation is about to happen (or “is happening”, for that matter), ignore these thoughts (or perhaps take the opposite sides to the trade). There is a case to be made for a shorter-term deflationary impulse in the works, but if that does indeed happen your longer-trm looking Otto will just ride it out. This is because i’m hitching my cart to the inflation trades and am long to prove it. DYODD.

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