I have progressively become more risk averse since July.
We are probably in for a rough week ahead after friday’s big selloff on Wall street.
I still remain extremely bearish and now have an even larger gold % holding since July. I’ve held off acquiring an even larger gold position due to the likely gold selloff to cover margin calls in the event of a steep Wall street drop.
We saw a similar thing in late July, gold dropping a number of percent due to liquidations to cover Margin calls. Since then gold reached further heights, with the dollar reaching all-time lows against the Euro. Since July, I’ve continued to convert some of my US Dollar-based liquid assets (currently in CDs at FDIC-insured institutions) into foreign currency. I believe there is fundamentally nothing that can prevent the continued erosion of Dollar’s value.
I’m planning to convert the remaing US Dollar cash reserve to acquire more gold (after a big stock market selloff) and diversify completely away from the Dollar.
Root cause of this remains the collapsing housing market and associated MBS and derivative markets. This SIV bailout plan is likely to fail and credit markets will probably be in trouble into next year.
The remaining leg holding up the economy, the US consumer is tapped out. We are very likely already in recession. The call for a starts of recession are always determined after the fact, after revisions in previous month’s GDP numbers come in.
