Last week I made the point that with potential weakness ahead I would do covered writes on my blue chip precious metals stocks, and I’m glad I did. I covered a week ago, and was able to buy back the calls I sold for on average about 20% of what I sold them for, which helped mitigate the losses suffered this week.
What happened?
Gold was down 3.21% on the week, a significant drop. For the year it is now only up 4.08%, so if we have another week like last week we’ll be back to even on the year. Not great, unless you view it as a buying opportunity.
The general markets are not performing much better. Year to date:
- DOW up 0.85%
- S&P 500 up 4.05% (virtually identical to the performance of gold, by coincidence, or not?)
- TSX up 7.18%
- TSX Venture up 5.58%
Interesting that the blue chip TSX is up much more than the blue chip DOW, but that’s due to the resource stocks on the TSX that have held up well so far this year.
If you are silly enough to look for predictions from a guy who clearly has no idea what he’s doing, I would guess that the next few months will look very similar to the last few months, as we bump along around these levels, both in precious metals and the markets in general. The world will only change if the world changes, which perhaps it is.
Posts about China and Russia from Beginner and Onlooker over on the Buy High Sell Higher Forum this week were quite instructive. Russia has agreed to sell a lot of natural gas to China, which is great for China, since natural gas is a lot cleaner than the coal they burn that is killing their citizens with high pollution levels. It’s a great deal for Russia, because it means lots of money to modernize their energy industry.
It’s bad news for the USA, because now two historical enemies, or at least “not friends”, are now co-operating. Does anyone think that Russia wants US dollars from China in payment for gas? Of course not. This means the end of the petro-dollar, as either Russian or Chinese currency will be used, or perhaps a third alternative, like gold. Either way, it won’t be the US dollar.
US dollars will lose their value, so Yellen and Obama will lose their power to keep printing them to suppress interest rates and keep the economy on life support. That would be a big change.
However, I don’t think the change will happen tomorrow. It may take years, so what we are faced with is a long slow slide into the abyss, not a quick fall.
I hope.
Time will tell. More next week. Thanks for reading.
Glad I Covered Up
by JDH on May 31, 2014
Last week I made the point that with potential weakness ahead I would do covered writes on my blue chip precious metals stocks, and I’m glad I did. I covered a week ago, and was able to buy back the calls I sold for on average about 20% of what I sold them for, which helped mitigate the losses suffered this week.
What happened?
Gold was down 3.21% on the week, a significant drop. For the year it is now only up 4.08%, so if we have another week like last week we’ll be back to even on the year. Not great, unless you view it as a buying opportunity.
The general markets are not performing much better. Year to date:
Interesting that the blue chip TSX is up much more than the blue chip DOW, but that’s due to the resource stocks on the TSX that have held up well so far this year.
If you are silly enough to look for predictions from a guy who clearly has no idea what he’s doing, I would guess that the next few months will look very similar to the last few months, as we bump along around these levels, both in precious metals and the markets in general. The world will only change if the world changes, which perhaps it is.
Posts about China and Russia from Beginner and Onlooker over on the Buy High Sell Higher Forum this week were quite instructive. Russia has agreed to sell a lot of natural gas to China, which is great for China, since natural gas is a lot cleaner than the coal they burn that is killing their citizens with high pollution levels. It’s a great deal for Russia, because it means lots of money to modernize their energy industry.
It’s bad news for the USA, because now two historical enemies, or at least “not friends”, are now co-operating. Does anyone think that Russia wants US dollars from China in payment for gas? Of course not. This means the end of the petro-dollar, as either Russian or Chinese currency will be used, or perhaps a third alternative, like gold. Either way, it won’t be the US dollar.
US dollars will lose their value, so Yellen and Obama will lose their power to keep printing them to suppress interest rates and keep the economy on life support. That would be a big change.
However, I don’t think the change will happen tomorrow. It may take years, so what we are faced with is a long slow slide into the abyss, not a quick fall.
I hope.
Time will tell. More next week. Thanks for reading.