I’m going to have to make this week’s post short – my brother’s over with his 4 kids so breaking away to write is not easy.
It’s certainly been an eventful week though, my portfolio value jumped by over 10%. That helps fix some losses a few weeks back so that I’m now up 2.3% over the past 4 weeks.
Uranium went on a tear midway through the week. I have to admit this was a bit disappointing, because my covered calls all expired in-the-money so I’ll have to wait for a pullback to buy back in. I sold at-the-money covered calls on all the shares I bought a couple weeks ago because they were worth quite a bit … I generally like to do that after a quick run-up in price. Needless to say, my Uranium position is now way down and my unallocated cash is way up.
I’m also extremely bullish on Crypto at the moment, with the idea that we’re going on a massive end-of-year rally (and possible blow-off top) like you see with bitcoin in 2013 & 2017. There are a number of really bullish events coming forward including signs that an ETF in Bitcoin Futures is likely to be approved. One thing I should point out with this is something that Rauol Pal has been mentioning … that it’s really inefficient to have an ETF based on Bitcoin futures rather than allowing one that just purchases bitcoin – much like the Sprott funds in gold, silver & uranium. Futures involve a lot of middlemen making money though, so it amply rewards the Wall Street power structure, and that makes it much easier to approve. Whatever the case, it’ll have an effect.
There was also a decent rally in gold and silver miners this last week from very oversold levels. Copper ripped higher as well, and I sold off 20% of my copper/nickel miner NOVRF. I am still very bullish on copper over the next decade, but the current cover of The Economist focusing on rising commodities (natural gas in particular) has me nervous, as this tends to be a sign of sentiment and positioning getting a bit too hot.
Interest rates at the long end pulled back a week this well, which is good for TLT. Between the slowdown in China that the Evergrande situation portends and the fiscal cliff passing in the United States, I still expect lower rates next year and I’m also nervous about the effects on commodities. Gold and Silver miners should be a better protected than industrial commodities, particularly given the relatively low sentiment and the positioning in those spaces, so I still like the old Bonds-Bullion position for a slowdown here. My TLT calls position is pretty light compared to prior months over the past year, and I intend to add to it, but I’m waiting until the seasonally weak month of October comes to a close.
As for Fed tapering, I would probably use a tapering announcement to purchase more TLT calls as these have been bullish for bonds in the past. Like many things with bonds its a bit counter-intuitive, but it has to do with risk-aversion picking up. As I’ve said in the past regarding QE, I believe that it is a psychological game to try to encourage people to expect inflation and thus borrow and spend more. The actual effects in the system are mainly to take long term bonds and mortgage-backed securities from the banks and replace them with “overnight reserve assets” which they cannot sell or do anything with, and which pay them an interest rate near zero instead of 2%. Still, these psychological effects have proven extremely effective in the stock market. Also, I’ll repeat myself and say that bonds are low and gold has not been moving because QE is not money-printing and we are in a strongly deflationary environment – not because a highly sentiment-driven cryptocurrency market has replaced them as an inflation hedge.
Here’s where my portfolio left off. I have to go, have a nice weekend.
- HEDGES (16.2%)
- 15.4% TLT Calls
- 0.8% EEM Puts
- PRECIOUS METALS (48.3%)
- 8.6% AG (Silver), mainly shares & some calls
- 6.2% SAND (Gold, Silver & others), all calls
- 5.9% EQX (Gold), mainly calls & some shares
- 5.0% LGDTF (Gold)
- 3.8% SILV (Silver)
- 4.1% SILVRF (Silver)
- 4.0% MTA (Gold & Silver)
- 3.1% MGMLF (Gold)
- 2.0% RSNVF (Silver)
- 2.2% SSVFF (Silver)
- 1.6% HAMRF (Gold)
- 1.0% WPM (Gold, Copper & Silver), all calls
- 0.8% GOLD (Gold, Copper), all calls
- URANIUM (4.0%)
- 1.3% CCJ, covered calls sold on it
- 1.6% UUUU, covered calls sold on it
- 1.2% BQSSF
- COPPER & NICKEL (4.7%)
- 4.7% NOVRF
- CANNABIS (7.9%)
- 1.4% CRLBF
- 1.3% GTBIF
- 1.3% TRSSF
- 1.4% CCHWF
- 1.3% AYRWF
- 1.3% TCNNF
- CRYPTO (5.7%)
- 2.8% ETH
- 0.6% ADA
- 2.4% MARA calls
- DERECKS TRADES (1.7%)
- CASH (11.5%)