Sold SLW Calls; Still PM Bullish; Positioning for Market Mayhem
Today, I sold off about 80% of my SLW LEAPs that I purchased last year. I made a small fortune, my biggest single trade ever. Luckily the orders filled at my limit order price of $14, near the the day's top.
I have been wanting to take some gains for a long time, to increase my cash position. I finally pulled the trigger with this most recent run. Maybe silver will jump into the $40s before the month is out, but I'm becoming increasingly uncomfortable with the market, and the world in general. I don't know what to expect, but I want the option to pounce hard on any deals that come along.
I still hold other SLW calls, CDE calls, and plenty of silver/gold stock. A significant portion of my portfolio is physical. When I say physical, I'm talking actual silver rounds and bars that I've handled and locked up. I'll buy more physical with my cash position if I see some good dips. I think we might be due for some market and PM volatility this year and next and I want to hedge my PM position with cash (boy, that sounds backwards doesn't it?!). Ultimately, my plan is to cash out of the market, buying real stuff along the way. I want agricultural land, homes, PMs, and off-the-grid necessities and comforts. I think I'll be able to get some of that cheaper if I wait a while. A market/real estate crash combined with major PM appreciation is the perfect situation for capitalizing on this incredible mess the world is in.
My overall belief in the economy is that we will eventually have a global currency. I blogged about this last Halloween: http://caps.fool.com/Blogs/crazy-thought-could-imf/467341 Here's the best part from an article, worth reading:
The IMF Director, Dominique Strauss-Kahn, was the head of the 2010 Bilderberg Group. The #2 guy, John Lipsky, is CFR and was Chase Manhattan's Chief Economist. I haven't looked up the rest of the IMF's senior staff.
What will become important, however, is the G-20, that coalition of the strongest economies, the center of power in a new world. The G-20 gave the IMF $850 billion (€620 billion) and the mission to solve the crisis. What followed, says, Strauss-Kahn, was "the biggest global coordination ever."
Does this mean that the IMF became the first post-crisis world government?...In Strauss-Kahn's view, the IMF should become an administrative unit of sorts for the G-20, an agency that "tries to find solutions for global and national problems," and comes up with plans and create values. "In the end we aim at much more than just the right financial and economic policies. The ultimate goal, of course, is world peace through economic stability."
The Fund cannot afford a failure of the Greek bailout. Through Greece, it has gained a foot in the door of the First World, and if the IMF hopes to become the new world organization for economic policy, a thinking army to implement G-20 decisions, then now is the time. If Greece defaults, it could turn into another Argentina for the IMF.
The Greek crisis also introduced a new element: the concept of the "joint venture," or cooperation with other institutions, most notably the EU. The IMF dropped €250 billion over Europe, most of it coming from Asian contributions. The former Third World was coming to the aid of the old First World. It was undoubtedly a sign of a new world order.
Nine of the 24 directors are still Europeans, and five of the 24 are permanent representatives, appointed by their governments and not elected by anyone. The US director holds 16.74 percent of all votes, the Japanese director holds 6.01 percent, Stein holds 5.87 percent, and the French and British directors each hold 4.85 percent.
They constitute the top tier, with no potential for any of them to leave the board or be replaced by new members. Is it fair? IMF employees give a friendly smile when they are asked about fairness.
Sitting in his bare office at Harvard University with the shades drawn, Rogoff says, coolly and soberly: "A Greek bankruptcy is unavoidable. There is a 95 percent chance that Spain will go bankrupt. Hungary is on the brink. Things will get much worse in Eastern Europe. We will have a certain number of countries that will go bankrupt. We will have a number of euro zone countries that would be well advised to take a sabbatical from the euro for a year. The situation in the United States is very worrisome. The markets will refuse to tolerate this level of debt." The worst of it is that it sounds as if he were expressing unavoidable facts.
In the 5 months since that blog, my belief that the IMF will head up this new currency has only grown. My best guess is that the PIIGS will get bailed out, one by one, maybe firstly by other Euro nations, and then by the IMF. Eventually the Euro will be bailed out by the Federal Reserve, which will be bailed out by the IMF. We'll either have a drastically altered version of the dollar or some new name altogether. Some basket of PMs/Commodities will probably back it. Countries not willing to participate in the new world order will be squeezed until they submit.
Zerohedge today posted a new update on the IMF.