Alphabet Super

ETF Pick of the Week: Double Short Euro (DRR)

Which do you think outweighs the other? The E.U.'s relative inability to act swiftly and decisively to curb an economic downturn compared to the U.S. government. Or the U.S. governments ability to print print print in an effort to curb this downturn. It seems like the U.S. is more capable of at least taking action to aid in an economic recovery compared to the E.U. but does this ability outweigh the inflationary tendency of printing so much USD? Personally I am heavily short on the Euro right now.

Gold Breaks from Traditional Trading Versus Oil and USD, Looks Strong

If you are a believer in playing divergence from historical ratios even in this historically "crazy" market, have a look at Platinum. Similar to silver, platinum to gold ratios have come way down, and are now correcting to the upside along with gold. In the six months leading up the November lows gold dipped about 20%, while silver dropped 45%. If you feel that this is enough to tell you that silver is undervalued consider platinum which plummeted a whopping 60% in the same period. I know the knock on platinum is that it is not the same as gold in the "ultimate flight to safety" sense. Yes, the main consumers of platinum are the auto industry, yikes. But worldwide auto sales have increased the past two months. If you believe in historic ratios look for platinum to fight its way back the 1.5-2.5 times gold level. See PTM or PGM.

Proposed Solution for Toxic Assets Plaguing Banks

I do not think that banks can afford to realize the loss that they would incur if they sold these assets at current market values. I believe that I one hedge fund manager who is familiar in pricing these assets said that the current market values of these assets is about 30% lower than the banks book value. Of course this is a huge generalization but at least it’s a start. The government is not capable of pricing these assets, but the private sector will be able to. I think that the government should simply facilitate a market for these assets. I wonder what the private side would be willing to pay for these assets if they came with default insurance paid for by the selling bank, and backed by the US Governments. Would it be something close to the banks book value? If so, then why not do that? The banks get the assets off their balance sheet while avoiding the crippling mark-to-market loss. The private sector overpays for the asset, in return for the insurance policy paid for by the bank. The government collects the insurance payments from the bank, and only pays out when the asset does, in fact default. This would avoid the guess work by the government on how much they are going to spend, we all know that they are going to foot the bill anyway, but at least this plans seems somewhat morally acceptable. I guess the big questions are what will the private side be willing to pay for the asset if it comes with insurance? What rates will the government charge the banks for premiums, and can the banks afford this?

Now's a Great Time to Hedge Your Gold Bets

Hi All,

I am fairly new to investing and only have a small amount of money at work right now. Because of this I feel that I am fairly tolerant of risk. I have been playing UUP (long USD), DZZ (double short gold), and GDX for the past year with pretty good results. I am currently in GDX and recently bought some PTM (long platinum ETN). My reasoning behind this is the fact that Platinum has not been this cheap relative to Gold. For the most part Platinum seems to follow Gold at 1.5-2.5 times. However, in the second half of 2008 Platinum prices dropped three times as much as gold; the ratio is now close to 1:1. I understand that this is in part due to the declining auto industry, but I wonder if platinum is undervalued at this point. Now that Gold and Platinum have both been heading up for the past three months it seems like PTM is accelerating to the upside compared to GLD or GDX. Global auto sales have increased the past two months. Because of this I like PTM very much. Any thoughts or opinions would be greatly appreciated.