The volume is extremely low today. Anybody buying or selling out there needs to be very careful. The market will not reveal its true direction until Monday.

I believe that if there is a pullback, it would be more healthy. I still don’t see markets going down big time yet, despite my overall bearish stand. The real stress may come first or second quarter of next year, when banks can no longer hide the ongoing resets of option ARM mortgages. For now, the levitation act performed by Wallstreet may continue for awhile.

I will definitely be a buyer in the gold sector if it pulls back. Tech sector may be another good choice, ASSUMING that Xmas sale is good. The weak sectors will continue to be separated from the general markets, since capital around the world is still chasing quality stocks to avoid inflationary assault.

Hang on tight. Greed seems to be still the word of the day.

This is the first time that I’ve ever tried to “bust the door” for black Friday sale. I went to Toys R us to get legos for my kids. The sale started at midnight, and I was 30 minutes late since I was going through global stock market news due to Dubai debt panic. Stocks are down 3% to 6% around the globe, and US will open with hefty losses too. Gold has already sold off in Asia by $50.

Anyway. At 12:35am, I arrived at ToysRus, and parked my car at a really far away location since the entire parking lot was basically full. Starting from the door, I kept walking to get to the end of line. It took me about 5 to 10 minutes of walking to get to the end of line, which is about 500 feet away. The store itself was full of people already, as I could see thru the window, and there are probably some 200 people outside waiting to just get into the store. I asked the person who was at the end of line, and confirmed that the line was indeed for Toys R us. Man, I couldn’t help but laughed. This is just crazy! Thirty minutes after the sale begun, and I probably won’t get into the store for another 40 minutes.

Realizing that the lego items that was on sale was most likely sold out already, I decided to go home instead. As I drove away from the full parking lot which was designed & allocated for 3 other big chain stores like Toys R us, I also noticed that all other stores are still closed. Boy, all the cars there were mostly for Toys R us, except for a few early campers at other stores.

I’m not sure where the recession is. Looks like the Thanksgiving & Christmas sales may not be too bad. If you want to look for bargains, you will have to find a way to beat others to store. I think I’m going to try online. Bing search engine is providing cashback for various stores. At Walmart.com thru Bing, you can get 15% off. Maybe that’s an easier way to get to your bargains.

Happy Thanksgiving.

GDXJ was debut this Wednesday. Both GDX and GDXJ (the junior companies) are offered by Van Eck.

Here are the links to the company site for GDX and GDXJ. The complete weighting of the components are listed below:

GDX is a tracking ETF to GDM index, a mining index determined by Nyse. The component weighting cannot be determined by Van Eck. Unfortunately, the top holding ABX at 14.5% is probably one of the worst choice. ABX recently announced to dehedge its gold forward sale, which was costing ABX some 4 billion dollars. ABX is also rumored to be the accomplice of gold suppression scheme together with JPM & Fed. The other components in GDX that I don’t like are AU at 5.62%, GFI at 4.25%, HMY at 3.24%, all are deriving 100% or significant gold productions in Africa. As the gold prices zoom upward, mining gold in an impoverished (relatively speaking) continent will tend to be problematic. I expect more labor and theft and political problems. Also gold production from Africa is declining as a whole. With the exception of GFI, which has expanded its production to other continents, the other two companies are definitely not my preferred choice (especially HMY). GFI is probably the “cheapest” company among major gold producers that one can buy, since its mine life is still quite long. HMY may have the highest leverage to gold price, due to its very high cost basis. At later stages of gold bull market, HMY could easily come back with a vengeance despite the terrible management. Although one may consider shorting out those components when owning GDX, I hesitate to do that. The other company that derive its production from Africa is RangGold (GOLD) at 4.72%. This has been one of the company that has baffled me, easily outperforming all other components, without me owning it. Definitely one should not short this component out.

Onto the new GDXJ, top components (CDE, SSRI, HL, SVM) are taken by all silver mining companies instead of gold mining companies. That’s 21% of the GDXJ. My ongoing concern about investing in silver companies is that they will couple to the general stock market a lot more than gold mining companies (at least initially). In a deflation, gold/silver ratio will zoom upward, relatively depressing the price of silver. I would have hoped to have less silver components. By the way, junior companies or small-cap stocks also tend to get depressed more in a downwave. Regardless, CDE and HL (and MFN) don’t seem to have good management in shareholders’ interests, raising big amount of capital at the recent zenith of 2008/2009, diluting a big percentage of their stockholders. I suspect that the deals were hammered out with hedge funds in the Wallstreet who have shorted all these companies in the backroom. With a big short ratio, it was simply not possible to cover those short position via open market purchases without driving up the stock prices. And what is the chance of having so many companies silmultaneously raising capital all the the absolute zenith of the stock market?

Most of the rest of the GDXJ components beyond top ten are not familiar to me. And that is the beauty of investing in an ETF, not needing to know every individual company. Assuming that gold bull market continues, GDXJ will eventually outperform GDX, with much higher volatility. I expect the rallies in both will be kind Read the rest of this entry »