CAPS portfolio update
I ended all my "subprime" gold and silver picks (at least, I ended all the ones I saw that were <4 stars, as well as Barrick, about which I read something unflattering on dwot's blog). I have always believed that gold and silver companies are, by and large, some of the worst-run companies, even worse than airlines. However, I think that we are about to experience superinflation in the U.S. making gold and silver increase even more than inflation as panicky investors try to find a way to protect the value of their assets, and that even the worst gold and silver mining stocks would find their way up in the great inflated helium blimp that is this economy.
Some companies are jumping out of the blimp to their deaths by using gold and silver hedges. This is supposed to protect them against the potential of falling gold and silver prices by guaranteeing they will sell gold and silver at particular prices above yesterday's mining costs. The problem is, mining costs are rising because of (guess what?) inflation. (Duh!) The very thing that would make a savvy gold or silver miner very rich is bankrupting or at least debilitating the dumber ones, and Mr. Market might pick up on this at any time, dazzled though he might be by skyrocketing gold and silver prices.
If you don't know your company's hedging policy, don't invest. You can use DGP instead, which leverages to give twice the return of gold price changes, plus a CD-like yield, minus expenses. I think this is a good time to buy DGP.