Gold Will Always Shine

Couple of weeks ago, I explained why I felt gold would be in a long term uptrend in one of my posts "沉默是金".

I did what I believed in and when Gold dropped to 700 level, I aggressively bought one of my beloved long time gold trade play GG at 25.55, and I also bought quite a large lot of GGAH(09 Jan 40 call) at 60 cents. I unloaded 80% of my positions in GG today and sold all my GGAH at more than 5 times the 60 cents cost, with a very handsome gain. You just can't be too greedy. Thank you for your 700B bail out plan, Uncle Sam!

One of the reasons I was quite aggressive on GG was because I have played it for couple of years now and knew its movement too well. And I knew 25 level was a steal with GG's current asset. Also, just like trading stocks. You buy when no one else wants to buy. You buy Gold when WS Fianancial Anal said, Gold would go to 600.

With this gigantic bail out plan, US$'s value will go down to drain and Gold's future can never be brighter. However, this current run up is too fast and that's the reason I sold 80% of my GG and cashed in my options today. I will sell the rest of GG if Gold does move higher from here. Meanwhile, I will still keep my GLD and GDX as long term inflation hedge in my account. I don't recommend anyone to trade individual gold mine stock since they are highly volatile unless you understand it very well.

Just a note for the record, in 1989, The old Bush passed an Act to set up a Trust to bail out the S&L. The price tag was 59B. At that time, it was a gigantic number. When the bail out was finally over in 1994, the price tag ran up 3 times. Assuming we had the similar price tag ratio this time, you are talking about 700B * 3. Auch! My calculator just exploded. It can't handle that number any more. However, since this is the mother of the financial crisis, 3 times of 700B seems a bit too convervative.

Please don't fool yourself into thinking that, US$'s long term down trend is over. In contrast, it just get started.

Folks, we are not talking about a financial system overhaul here, we are talking about, literally, the corruption of US financial system regulation here. The high inflation will come. By the way, we are talking about a global inflation with severe asset depreciation.

I have a suggestion. A good one. To protect Main Street's interest(that's us, taxpayers), the US government and SEC should implement a new stock market mechanism.

Here it goes. "At any time, any day in the future, if the S&P index drops lower than the lowest point of 9/18/2008, the US stock market will be closed. The US market will not be reopened until the public can guarantee that, the S&P index can open above the 9/18/2008 bench mark. As long as that bench mark is not guaranteed, the US market will remain closed forever, for good".

[quicktime2004]

Thanks for sharing