A very interesting development is occurring in the market, and although signs of it first appeared some time ago, they revealed themselves with even sharper clarity this last Friday.  This is a development that we have alluded to several times in this space and that we have come to feel even more strongly about it with as it has come into maturity.

Last Friday, we witnessed the power and the speed with which the U.S. dollar can rise when economic conditions turn favorable.  In this case, a jobs report released by Washington revealed two important trends: a slow down in the number of jobless claims filed (we’re still losing jobs, but at a slower rate) and an improvement in the headline unemployment number.  Pictorially, it looks like this:

A mere 11,000 souls filed for first-time jobless claims, and the trend appears to have flattened.  The report also showed the unemployment rate declining to 10% (not on the chart).  Most were expecting no improvement from the previous month’s level of 10.2% – a 26-year high.

For those of us who read statistics for a living, there’s no reason to suspect the next few months won’t bring both positive job…

Roughly one month ago – the week of October 19th – we at the Residual Income Report issued a missive entitled “The Best Play on Gold ‘Strength’,” wherein we invited our respected readership to engage in a ‘zero premium’ trade using Hecla (NYSE:HL) and the ishares silver trust (NYSE:SLV) call options. The trade, you’ll recall, had an initial cost outlay of precisely nothing (excluding commissions) through the simultaneous purchase and sale of equally priced calls of Hecla and SLV, respectively.

At that time of writing, the Hecla January 5 calls and the SLV January 19 calls each traded for $0.65. The situation today is as follows:

* Hecla’s January 5’s trade for $1.00, and
* SLV’s January 19’s are fetching $0.45.

Closing the trade today means pocketing a spread of $0.55 on each pair opened. Not bad for ‘nothing ventured’ save commissions.

But is now the time to close the trade?

We at the Oakshire Financial claim no crystal ball, but we have reason to suspect that the latest bull run in the precious metals…

Back in July, we at the Residual Income Report recommended investors look at the Coeur D’Alene 3.25% convertible bond, then trading at roughly 65 cents on the dollar, and yielding 5.00% annually.  Our thinking focused on the possibility that gold might run up against a wall at $1000 and retrace before attempting to scale that barrier once again.  We suggested that gold could move sideways for six months before it decided its next move, and there, friends, we were wrong.  It took only three months for gold to leap decisively above $1000 and, as of this writing at least, to stay there.

Regarding silver, which generally moves in tandem with gold, we said the following:

For its part, silver nearly doubled in value between October of last year and June, climbing from $8.88 to just under $16.00 (all figures London Silver Spot Fixing Price). Technically, the silver jury’s still out.  Because although like gold it’s currently in a rising trend, and should more or less mirror gold’s overall price action, it will do so in its own inimitable and radical, silveresque fashion.  There’s therefore little to deduce from recent price action where silver is headed in the short term.

Silver,…