Thursday 22 September 2011

Out goes the baby, along with the bathwater

£ to $ exchange rate (pound falls graph points down)
A strange day today. Dump everything was the mood:

  • Dow down 368 points at time of writing. That's 3.3%. 
  • FTSE down 246 4.6%! (remember that part of this is catch up from last night).
  • Silver down the best part of 7%
  • Gold down about 3%
This is not normal trading. Fear of any kind of economic meltdown should favour gold if not silver. This is just people throwing the baby out with the bath water.
I did very well yesterday with my shorts and a bit of help from gold and silver. Today the shorts have made me a packet but this was offset by a big loss on silver and some more on gold. To be fair there were some who were expecting this fall in precious metals but I did not listen. My inclination now is to hold on but, as ever, I may turn on a sixpence (I use this expression to show how old I am.)
Then there's the tricky decision about whether to take profits on the shorts or to let them run. Again the interim decision is to hold on.
And then there's the dollar.  I've made a lot as the £ fell against the $ as shown in today's chart. The dramatic fall today 1.6% (massive for a currency) Is part of this dump everything mentality. Luckily I hold a sizeable chunk of my cash in cash dollars and I also hold dollar assets.This has been generating a decent profit in its own right. And will do so again today.
Current disposition of my portfolio is 15% gold and silver, 3% commodity, 20% equity shorts, 63% cash.

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