Today was a rough day. Pretty much everything was down. Wachovia posted a $23.9 billion quarterly loss…largest ever for a bank! How does that happen? It sure takes a certain sort of talent to accomplish that. As I expected, McDonald’s had better than expected earnings; and, yet, they were down for the day by 1.7%. That really shouldn’t happen. Also, some of the gold shares I bought yesterday are already down by 5+ points. Everywhere I read and every dealer I speak to is reporting shortages in both silver and gold. Their spot prices really should be higher. Will it eventually happen? If and when it does, I imagine it to be a violent upswing. That is why I have started buying some gold shares to go with my gold and silver bullion holdings. What this tells me is that the selloff by the hedge funds is not done yet. Today’s market really made each of us look like a deer in the headlights.
As a hedge for future downswings, which I am sure we will continue to see, you might want to buy a few shares of SDS (ProShares UltraShort S&P500), SRS (UltraShort Real Estate ProShares), and SKF (ProShares UltraShort Financials)…either all or pick and choose. RESEARCH BEFORE BUYING but these should spike up when the market is down. I would wait for these to retreat a bit before diving in. I currently own SRS as it’s chart, a few weeks ago, made it look like real estate was healthy as ever.
Until the hedge funds and investment firms have covered all of their shorts and have unwound their positions (in the case of margin/capital calls and redemptions), the baby will be thrown out with the bathwater. As I said in the last post, tread carefully and do pick up small lots of shares until we hit a floor. Don’t invest capital that you need to live on!
Here are some articles for you:
- Here is an article discussing how spending on gold is nearing $3 billion.
- Here is a video on Sprott Asset Management’s chief investment strategist, John Embry, discussing how gold prices have been suppressed on the New York Commodities Exchange. He speculates that there will come a time when long contract holders may call for physical delivery of enough December contracts, and the exchange won’t be able to deliver enough real metal. That would be something else! Gold would surely take off then.
It’s difficult waking up each day when the government chooses to aimlessly print more and more money to patch up the holes. The problem is that this is not a US issue but a global issue…India, China, Australia, New Zealand, and Russia are all feeling the effects. It’s going to be some time before the bottom is realized. When it does, the areas to prosper will be the precious metals, basics, and large blue chips.
I can only hope to keep you informed along the way and to be financially prepared as to how to profit from this.
Regards,
Moolah
