My October investment plan called for establishing positions in three new silver mining companies that had been on my radar for weeks before finally making my buy list, but that has changed as my plan to build the portfolio now favors strengthening my physical holdings of silver and gold instead.
I still believe in the salvation of silver and gold. That has not changed because the reasons for my strategy have not changed. In fact, the reasons are more prominent now than before. Therefore, in making the best value play I see, I'm increasing my swaps of Federal Reserve notes for physical silver and gold.
The future of the U.S. economy is more uncertain now than I've ever been aware before. The self-serving, so-called public servants in Washington have given us rightful cause for pause when it comes to the stock market, or being a confident consumer. The longer the two sides toss the time bomb back and forth across the aisle - the closer the clock ticks toward the default date - real or perceived, the lower will be investor confidence. Have they influenced your investor moxie? They've influenced mine.
We don't know what's going to happen tomorrow, next week or next month. But one thing that seems likely is sentiment will continue to wane. A quick glance at the day watch Friday showed an overwhelming majority of individual stocks trading at lower than average volume and as of first thing Monday morning there are no signs of anybody making a bee line to buy anywhere. Volume is anemic.
We can try to convince ourselves that none of the DC gang is dumb enough to actually allow a default to transpire - and that they're just calling each other's bluff, which they seem to be. But, too, from what we've seen of this bunch in the past two weeks, would you be surprised if they lost control of this bus while all trying to grab the wheel at the same time like so many clowns, sending it off a cliff with us all inside?
The markets are uncertain and unstable and may grow increasingly more so in the coming days, weeks and months. And as these geniuses continue to play with fire, they're not only making investors nervous, they're making the rest of the world nervous, especially those nations with high exposure to U.S. debt. I for one don't trust the DC gang and consequently, right now, can't trust the market. So I'm at least temporarily not making new positions in the companies at the top of my buy list.
And my already existing positions, most trimmed back, are now holds.
Am I being over cautious increasing my hold of metals and cash? Maybe. Do I still believe fiat cash is trash? Of course, except it's not completely trash yet. It still pays the bills and buys the bread. Its demise is yet on the hazy horizon, as to when. So I'm playing this thing the way I feel it right now, today.
I am confident, however, the correct PM plays on my buy list will be here when this government quagmire is temporarily resolved - that is until the can has been kicked further down the road, and I don't mean 6 weeks. I'll need more time than that before taking up new positions. And the key here is "correct investments" as I fully expect the miners without cash flow or financing - those with poor management or low reserves, or that perhaps shouldn't be trading in the first place will be shaken out of the market.
So, at this most uncertain of times, rather than bet on any company's shares, I'll secure more physical bullion - silver at $25 and gold around $1,300 is a bargain not often seen these days, and metal values will rise again - so I'll stuff cash in my pockets, out of the banking system with just enough operating capital in the credit union checking account for paying bills, no more.
Meet the new boss, same as the old boss
Janet Yellen appears to be a very likeable and intelligent person, more personable than the beard, though this is not about her, or him. Nothing she can do or that he has already done will make a sustainable difference from here forward. And we can assume Yellen will continue down the same road her predecessor has already well traveled.
The slippery slope is now steeper
Given the current modus operandi, stimulus pumped into the sagging economy seemed to help in the short term (according to their numbers and rhetoric), but it will prove ineffective, even detrimental, when additional stimuli goes beyond a critical limit, which may have already happened. And don't ignore the fact that the last thing they need right now is for silver and gold to outperform their paper.
Fact: The dual mandated Fed policy is inherently flawed and it will eventually fail miserably resulting in a currency crisis.
If you truly believe otherwise be my guest to purchase treasuries and vote for the party candidate of your choice in the midterm elections October 16th. Could it be a coincidence that Jack Lew cited October 17th as the date the Treasury Department will run out of the ability to employ more extraordinary measures?
Conclusion: This nation's government has a serious debt problem and John and Mary Taxpayer are on the hook to bear the brunt. This will continue to worsen as the redundancy of a debt ceiling is debated, raised again, and more deficit spending is then implemented.
Responsible government is what is needed here, though that sounds like an oxymoron.
More creation of Federal Reserve Notes, as you should know, means units already in existence, as well as those newly created, will be worth less and less until they are worthless. Brace yourself.
This foregone conclusion strongly supports the case for physical silver & gold whose underlying strength is naturally as monetary metal.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.