BKX & C for Big Stix

;} catch(e) {}" href="http://3.bp.blogspot.com/_Re9-fle5IRM/SJmVBvaV6bI/AAAAAAAACM4/1ZgAYxVXJII/s1600-h/bkx.png">Time for a review of the Banking index ($BKX) since it is the anti-gold and it is in the midst of a hopeful market rebound that has the hopers clicking their heels - next stop... Kansas. The chart includes a bottom panel showing Citigroup. Our drummer, Scott asked about C because his wife found some long held shares and would like to know what to do with them.

Scotty, I cannot give that direct advice but the BKX is encountering decades old resistance which will not be easily overcome. It comes down to whether or not you trust that the Fed has things well in hand or not. Even if they do, they will save the system by inflating to beat the band (no pun intended) and while the banks would be bailed out, I think there would be better performers out there (see below). But even if C is to be saved along with IndiMac, Fanny, Freddie, Bear Sterns, GM/GMAC (have they been propped yet?) it will likely come from a lower level as the current resistance area in the banks is likely to fail by the fall (again, no pun intended).

You might consider cashing up and investing the proceeds somewhere productive. Or somewhere safe. It is a shame that all manner of crooks and criminals got away - on an 80' yacht or perhaps a private jet - with murder on the decline from 50 (C) and 120 (BKX) while long term investors in this racket get to bag hold a questionable financial system. So, one might sell and buy gold right this minute (it is in buying opportunity range in the mid 800's esp. for people with no exposure) with the proceeds. GLD at the least, BullionVault or physical. Perhaps a royalty entity like RGLD. Some sort of anchor for insurance against this mess. Just remember, gold is not about price. It is about long term value and capital preservation in an era where paper money is being printed toward extinction. But you must have the patience of an elephant.

But gold is not the only answer. The answer could be any investment in something of value. The guitarist I told you about last night was interested in and asking about gold back when it was $400-500 an oz. He instead opted for what he knew and I believe continues to collect vintage amps and we both know the demand for these old time capsules. There are productive companies and economies out there as well and while it may feel like the world is ending I believe it is really only ending for the naughty players in naughty industries (ie financial Ponzi wizardry) and the bag holders they victimized.

We'll talk more if you want, dood. Meanwhile, back to the important stuff; I thought the songs sounded better recorded than I thought they were when we were playing them. Even Moonwalk, exercise in pain that it was, I think will come around.