It is time to take the profits and run on Stillwater Mining (SWC). There was a good article over at Motley Fool which brought up some rather questionable accounting practices around the company’s free cash flow. Maybe it’s something, maybe it’s nothing. But I want no part of that.

I sold it at $16.50.

The final line on SWC: -0.59 today, +1.00 change overall, $16.50 final price (-3.45% today, +6.45% overall)–bought at $15.50

The following is from an SEC filing by NIVS Intellimedia (NIV), filed on September 27th:

On September 20, 2010, Arthur B. Laffer resigned as a director of NIVS IntelliMedia Technology Group, Inc. (the “Company”) and as a member of the Audit Committee, Compensation Committee and Nominating Committee, effective immediately. Dr. Laffer’s resignation was for personal reasons.

Yes folks, it was the same Art Laffer, of “Laffer Curve” fame.

I will admit, I don’t normally research who is sitting on the board of directors of companies where I buy stock. So it kind of floored me that a Chinese company like NIVS would have an American of Laffer’s stature on their board.

The good news is the 2nd quarter GDP got revised UPWARDS (that is not a typo) to 1.7%. The weekly initial unemployment claims dropped to 453k, which was less than last week’s 469k, and less than the projected number of 457k.

Before you start celebrating, allow me to pull a Greenspan and burst your bubble…

Let’s start with the GDP. While the upward revision is nice, we need to remember it is for the quarter which ended in June. Forgive me for not getting excited over 3 month old news.

Next, we have the unemployment numbers. Now that we’re bleeding a few less jobs, how about the continuing unemployment claims? That came in at 17,000 more than last week. In other words, based strictly on that net, we lost 17,000 more jobs than we gained (or people’s unemployment ran out).

Now that we are back on Earth, I will add this: I consider this a positive for tomorrow’s market correction. Any good economic news will blunt the damage, and keep the correction to a minimum.

I have a simple piece of advice for today: Don’t buy. Anything. Period.

In weather terms, we are in the calm before the storm. If you need to sell, go for it. Keep your cash where it is.

Watch the reports coming out before the market opens: 2nd quarter GDP revision and weekly unemployment. Positive numbers on these two reports could get ignored by the market, while negative numbers could cause an early market drop.

Also, watch the Chicago Purchasing Managers Index at 9:45 am. This could be fuel to the fire for whatever the market does today.

My prediction? The economic numbers today will be disappointing, and the market will take a small dive, which will only get worse tomorrow. Hold onto your “shorts”, if you know what I mean.

AT: 0.17 to $13.97 (1.23%)–bought at $12.62
INTC: -0.26 to $19.24 (-1.33%)–bought at $18.52
JUBAX: NA to $10.35 (0.00%)–bought at $10.17
LYSDY: -0.03 to $13.05 (-0.23%)–bought at $7.274
NIV: -0.01 to $2.13 (-0.47%)–bought at $2.22
PALL: 0.73 to $56.71 (1.30%)–bought at $55.76
SPXU: 0.20 to $26.88 (0.75%)–bought at $27.65
STD: -0.14 to $12.58 (-1.10%)–bought at $12.90
SWC: -0.02 to $17.09 (-0.12%)–bought at $15.50
UURAF: -0.03 to $0.61 (-4.69%)–bought at $0.65958

OVERALL: -0.14%

Maybe it’s the fact it’s been overcast here all day. But the market action has been yawn-inducing today.

I had thought about selling Atlantic Power Corporation (AT) in the $13.70 area. Then it ran up to it, and I still wasn’t comfortable selling it there, so I raised it to $14. Now as Atlantic Power gets close to that sell price…I am kicking it up again, this time to $20.

This stock is still too cheap, even with the nice run it has had. Consider these numbers, even at current prices:

P/E: 5.19
Forward P/E: 4.22
PEG: 0.55
Dividend: 7.72%
Payout: 18.75%

Plenty of room to grow, plus room to expand their dividend. Let the market crash! I am keeping my Atlantic Power!

If we are in the middle of an international currency war (as the Brazilian finance minister suggests), then what is the best play? First, you have to consider the impact of worldwide inflation. With every central bank trying to outprint every other central bank, eventually there will be a mass debasement of ALL currencies (except for the countries that weren’t stupid enough to fall into this Keynesian trading trap). In a worldwide inflation, commodities will be king, but especially precious metals due to a combination of practical utility as well as psychologically perceived value.

The big four in this investing arena are (in order of current price):
1. Platinum ($1,650)
2. Gold ($1,310)
3. Palladium ($570)
4. Silver ($21)

Do you notice a slight disconnect in the prices there? Why is silver so cheap?

The answer is simple: JP Morgan has been manipulating the price of silver for years (think of JP Morgan as the anti-Hunt Brothers). But now that JP Morgan has started eliminating their proprietary trading (probably last month, although they publicly announced it on September 1st) , look what has happened to silver (from Stockcharts.com):

Of course, even the most novice technical analyst can’t look at the silver chart without thinking “overbought”, which this one screams. However, when you remove a weight on a commodity’s price, you tend to get a movement in the price to where it should be.

How high can it go? Hard to say. I am still looking for a good technical analysis on this subject (feel free to toss me a link in the comments). But it is clear that silver is undervalued in comparison to the other precious metals, and it has the most upside in the overall increase that precious metals will see in a worldwide currency war.

I got a kick out of the news that China was lifting the rare earths embargo they put on Japan, after they said there was no embargo. Uh, excuse me?

After all that, I loved the end of the CNBC story:

Japanese Economics Minister Banri Kaieda said in an interview with the Financial Times that the de facto ban would push Tokyo to see new sources of the strategic metals.

“(It seems) there’s a need to put effort into developing substitute products,” the newspaper quoted him as saying, adding that Tokyo would also look to develop alternative sources of the supply for rare earths.

Sounds like a plan to me! You never know when China will decide to put an unannounced and unacknowledged embargo on you…

Here are a few more random thoughts for you (with links):

1. If a major terrorist attack occurred in Europe or the U.S., I think it is safe to say the markets would react negatively in the short term. However, what would the central banks do? I think they would have to buy some more printing presses…

2. The Brazilian finance minister says we are embroiled in a worldwide currency war. On the other hand, the IMF managing director says we are NOT in a currency war. One of them is wrong. Considering Japan and Switzerland can’t seem to do anything to keep their currencies from strengthening, I think I’d have to agree with the Brazilian on this one, especially considering the 2007 conspiracy book Currency Wars is popular in the Chinese government. Coincidence? Hmmm…

3. U.S. mortgage applications fell, in spite of the fact that mortgage rates are at the lowest levels since records on mortgage rates began.

4. As for today’s market action, I predict the indexes will be relatively flat, with probably no more than 0.5% movement either up or down. Short of a major news event, expect a dull day for stocks.

AT: 0.08 to $13.89 (0.58%)–bought at $12.62
INTC: 0.27 to $19.50 (1.40%)–bought at $18.52
JUBAX: 0.00 to $10.33 (0.00%)–bought at $10.17
LYSDY: -0.39 to $13.08 (-2.90%)–bought at $7.274
NIV: -0.02 to $2.14 (-0.93%)–bought at $2.22
PALL: 1.08 to $55.98 (1.97%)–bought at $55.76
SPXU: -0.97 to $26.68 (-3.51%)–bought at $27.65 today
STD: 0.11 to $12.72 (0.87%)–bought at $12.90
SWC: 0.10 to $17.11 (0.59%)–bought at $15.50
UURAF: -0.02 to $0.64 (-3.03%)–bought at $0.65958

OVERALL: -0.62%

Much like the markets today, my portfolio was a little down, a little up, and a whole lot of nothing.

UPDATE:
JUBAX: 0.02 to $10.35 (0.19%)–bought at $10.17

Commenter hilog asked:

What’s your opinion on Avalon Rare Metals Inc (AVARF :OTC)? If one is looking outside of Lynas, are all the other ones the same (same high risk) or does one have a particular advantage over the other…I mean among Ucore, Avalon, Rare Element Resources etc

For most rare earth miners, the phrase “junior miner” applies perfectly. Lynas is the farthest along, with next year looking like the beginning of their full operations. Most of the rest are years behind Lynas in this regard.

However, there is one who is actually making money now: Great Western Minerals Group (GWMGF). Don’t get too excited though: They aren’t profitable…yet.

Right now, most of their sales are coming from rare earth processing, which is a positive sign that they can at least do the last part of their “mine to market” strategy correctly.

What I find uniquely interesting in Great Western are all of the mines where they have either full control, partial control, or mining rights. Their mines are all over the place: Canada, the U.S., and South Africa (which they just added this month).

While I like the company’s vision, they are financially shaky. If they can get to production on ANY of their mines, or even close to production, I could see this company take off. They are well-positioned to completely dominate the rare earths industry in 10 years. Sadly, they are also well-positioned to be filing bankruptcy in the next several years. I would call Great Western a “wait and see”, unless you feel really daring.

Back to hilog’s question, of the rest of the rare earth companies, I still like Ucore (UURAF) the best, mainly because of the positive interest which both the state of Alaska and the U.S. government have taken in their Bokan mine. It is looking like Ucore will get the political green light to fast track their set up (Alaska has already given it to them). That is a HUGE advantage in rare earth mining, which is an environmentally messy process.