Cash, Physical Metals, Stocks, and Short Positions

Could this be the religious experience Rick Rule spoke about in our interview with him just a few weeks ago?

His exact words were, [su_quote]If you go into a gold trade leveraged long in the futures market with 20% cash down, what you will experience in the next few months is going to be a religious experience and not of the pleasant kind. If however, you are a rational sober speculatorwho goes into a trade where you can stay the trade, and takes advantage of volatility rather than being taken advantage of by volatility, this will represent what is perhaps a once in a lifetime opportunity.[/su_quote]

As the Euro crisis escalates, gold, silver, and other assets are falling.However, it is important to remember that at the core of this, it is a currency crisis. As noted in our recent silver video, which has already received over 97,000 views in just 72 hours, IF silver gets hit hard like it did in 2008, we could literally see all hell break loose in the physical markets. Now in our video we put that price at anything below $24, however, today the price has fallen below $29 and we are already seeing that most dealers are not budging on their physical prices.

One of the dealers we buy from normally sells 1 oz bullion rounds for about $1-1.50 over spot, today they are selling those rounds for $3.20 over spot (we include shipping). So no delays, no shortages, but we are not seeing the physical market get hit nearly as hard as the paper markets. Remember, the paper markets have over a billion ounces of silver traded every single day, that’s more than all the silver mined in 1 year. So, as long as the paper fraud continues, we have to expect these kind of days, but like Rick Rule said,

Now as we pointed out in Monday’s email, it is VERY important for people in our opinion to have real diversification. That means cash, physical metals, stocks, and short positions. As you know, we’re always looking for new option PUTS, as they have been some of our biggest winners in 2011, Citigroup 50%, Bank of America 100%,Morgan Stanley 125%, and Home Depot 80%. Monday we announced we are also doing something we never do, accumulating a fund.Our staff last week and this week has been buying the Grizzly Short Fund (GRZZX) for some added protection to the downside.  We know this isn’t a very exciting trade, but sometimes when you face systemic risk, it’s good to buy a little insurance.

The reason we like these guys who run the Grizzly Short Fund is because during the 08/09 crisis, they saw a 150% return, and in early 09 they actually came out bullish and told investors NOT to buy their fund. Again, we are only buying this for short term downside protection, kind of like insurance. This isn’t a long term trading idea, just something that we are buying “just in case.” We should note that bear funds don’t do that well in the long run, so if we see a big move down, we will probably be out of it pretty fast, converting to cash or looking for shares of companies that may be trading at a discount. For now, we plan to hold the fund until at least the 1st of the year, if we are still on edge, which we probably will be, we will continue to hold it longer. Since we have shared this trade idea with our members, when we do sell it, we will notify our member 24 hours in advance.

For those who haven’t seen our new silver video, please use this link to watch one of the most popular precious metal videos ever made.This video has made it on every precious metal blog and website in the world!