Welcome new reader!

Financial news I consider important, with my opinion, which is worth as much as you paid for it.
Please click HERE to read a synopsis of my view of the financial situation.

Monday, August 8, 2011

Panic Day - USA Downgrade

The market cover story for the panic today is a downgrade of US treasuries by Standard and Poors to AA+, a major milestone along the road the US is on. While this is a significant event, one that I have feared since 2006, it isn't unexpected.

Spending at the deficit rate the US has is hardly surprising that the US debt machine is going to be questioned. With that said, who cares the US enjoys being best of the worst, and there is nothing else big enough to turn to. This IS a step today that deserves entry into my series of "Financial Ground Zero" events. But I don't think it is time to panic.

The day the news tells you to panic, and buy gold, should be the day to NOT panic and NOT buy gold. The day to PANIC was the last 6 months or so of me hemming and hawing that this entire market rise is bullshit. Now is too late to panic.

DO NOT RUN INTO THE LIGHT! It is a trap. :)

I am not stating sell all gold holdings, but the day that gold spikes is hardly the day to buy, it is a day to sell. I am selling portions of my GLD, SLV, and other holdings TODAY. I am keeping my gold miner stocks, AVL, in hopes they recover nicely if the market does too. Matter of fact, I am buying a bit of AVL today, but that isn't for the nervous types. AVL is below 4 bucks today, much lower than it's high near 12. Update: Also covering many shorts, 50% or more.

My two cent advice is lighten up on gold TODAY, buy stocks you have loved to have had purchased before, but now are cheap, and keep a decent portion in cash for the rest of the week.

All actions today may be wrong. Buying gold, selling gold, buying or selling stocks. But the smart player does not run with the masses, it runs against it. Balance that thought with resisting going full steam in front of the train, more prudent to edge out there, get a toe hold.

This actually could be the beginning of the worst fear I have had since 2006, an assault on US economic basis and loss of faith. But I can't bring myself to believe it has started already.

With that said, the market could easily go down a bit more. Just I am not sure what "worse" news is out there after the US Treasury has been downgraded. My assumption is an avalanche of following downgrades by others are to come this week, so I can't see the market doing a stellar rally into it.

In the end, trade what you think is best, look around, my opinion is my own, and should not be seen as advice for what you should do, see the link on the right for disclaimer.

Good luck!

No comments:

Post a Comment