3 Things You Need to Know About Buying Physical Silver

It’s hard to believe that less than three years ago, silver was $8.80 an ounce. Since then it has nearly quadrupled in value (up 385%) and more than doubled in the last 12 months alone.

That’s great for those who already own the metal – but is it too late for the rest of us to get in? 

To answer that question, BIG GOLD Editor Jeff Clark sat down with our friends of The Daily Crux (an excellent site that I've had the priveledge of writing articles for). Read what he had to say about the silver rally, and why you should view any correction as good news.

Crux: Jeff, silver has had an incredible run over the past year or so... Where do you think it's headed next? 

Jeff Clark: Well, that's probably the most common question we get these days. Silver has definitely been very exciting. The price has basically doubled in a year, and many of the stocks have done much better than that... So you could be forgiven for asking how long that can continue. 

I think the bullish case for silver going forward comes down to three main factors.
 
The first is industrial demand. Everyone knows industrial use is much greater for silver than gold, and that does make it more susceptible to an economic slowdown. But what's interesting is these industrial uses are growing rapidly.

For example, all of the following uses for silver are increasing: medical, electronics, food processing, water treatment, paper, building materials, wood preservation, textiles, consumer products... the list goes on and on. Every bandage-maker, for example, now offers a silver-based product. You can buy silver-laced toothbrushes, hairbrushes, combs, and make-up applicators. In England, you can buy silver-based soap. 

The takeaway is that all these uses are on the rise, so even in an economic slowdown, there is a higher level of base demand. The demand for any individual application could decline, but the total number of applications for silver is increasing. Over time, I think we'll see increasing levels of demand. 

The second major factor is investment demand. Investment demand is soaring and can't be ignored. The U.S. Mint sold more one-ounce Silver Eagles in January than in any other month since they began creating them in 1986. China's net imports of silver quadrupled in 2010. Against all this you have the fact that most Americans don't own any gold or especially silver. So even though there's already incredible investment demand, the potential for it to increase is still tremendous. 

The third factor is supply. Ask yourself what's wrong with this picture: Total global demand for silver is about 890 million ounces a year. Worldwide mine production is about 720 million ounces a year. Scrap currently makes up the difference, but I think the crucial point to recognize is that producers can't dig up enough silver to meet current demand. 

So what happens if industrial uses continue to rise? What happens if investment demand continues growing? What happens if we do get some type of currency collapse? What happens if Doug Casey is right and we get a true mania in gold and silver? 

We had bottleneck issues with physical supply in 2008, where mints across the world couldn't keep up with orders. A lot of it was due to them being unprepared for the rush, and they've since improved some of their operations. That's great. 

But even with all the improvements, even after adding equipment, even after adding staff, even after adding work shifts... they're still having issues. Over the past three or four months, we've been hearing about mints having delays, temporarily running out of stock, etc. So it's still a problem. 

And if all the factors I just mentioned come into play, then I think you could say "Bottleneck, meet desperation." Regardless of how well prepared a manufacturer might be, demand at some point could legitimately overwhelm the system, and I think that's a very real possibility. Anything could happen. But the scary thing is, we may not have enough supply to meet demand if we get a mania. 

So based on these factors, my view is that silver can continue rising for quite some time. I don't think it stops until SLV, the silver ETF, is a favorite of the fund managers... until Silver Wheaton is a market darling of the masses... until Pan American Silver is Wall Street's top pick for the year... That's when I'll be looking for the end of this silver bull market. 

Crux: Speaking of a mania, just how high do you think silver could go?
 
Clark: Many people don't realize this, but silver rose 3,646% in the 1970s, from its November '71 low to its January 1980 high. If you were to apply the same percentage rise to our current bull market, silver would climb another 500% from here, and the price would hit $160 an ounce. 

Those are just numbers, but it shows that we have an established precedent for the price to go much higher. 

It's the fundamentals, of course, that will determine how high the price ultimately goes. Show me a healthy dollar, show me no threat of inflation, show me a responsible government that stops printing money... Show me a repentant Iran and North Korea... Show me that the sovereign debt issues in Europe are resolved... Show me positive real interest rates... Show me that unemployment is plummeting, that bank closures have stopped, that real estate is recovering... 

Show me all that and we'll talk about the gold and silver run being over... But until those things start changing in a big way, I'm buying. 

Crux: Silver bears often suggest that a large part of the rally in the last bull market was due to the Hunt brothers, who were accused of trying to corner the market. What do you say to that? How much do you think they attributed to the price rise in the '70s? 

Clark: Well, I'm skeptical that the reason silver went as high as it did was primarily due to the Hunt brothers' activity in the market. It's interesting to note that they bought silver primarily because they mistrusted the government, and because they thought silver was going to be confiscated. Remember... gold ownership was illegal when they first started buying silver in the early '70s. 

Yes, they bought a lot of silver... But if you look at the correlation, you'll notice the price didn't necessarily move up when they bought. In fact, when the rumors that they were trying to "corner" the silver market really started going mainstream, which was in the spring of 1974, the silver price dropped solidly for the next two years. One would think that the price would've risen, not fallen, if silver was being "cornered." 

Secondly, if you look at price charts, silver moved in lockstep with gold back then. They rose and fell pretty much together. They both peaked on the very same day, January 21, 1980. So unless the gold market was equally spooked by what the Hunt brothers were doing with silver, it seems a stretch to assume they were the primary cause of the rise. 

Last, as my editor pointed out, you have to consider that it was the mainstream media that largely promoted this idea the Hunts were "cornering" the market. With that in mind, one has to be suspicious that was, in fact, the case. 

To be clear, I'm sure they had some effect, but to suggest they were the main impetus behind silver's tremendous rise doesn't seem wholly accurate. And look at the price today... It's outperforming gold in our current bull market, just as it did in the '70s, and there's no Nelson Bunker Hunt around. 

Besides... who's to say that we won't see other "Hunts" come along today and try to buy up large quantities of the metal? I wouldn't rule it out. 

So again, I think it's more important to look at silver's fundamentals for any kind of price projection than a one-off event. And those fundamentals are very bullish. 

Crux: What are the bearish arguments for silver? 

Clark: Well, I touched on it earlier... but if the economy crashes, silver is likely to suffer more than gold due to its large industrial use component. Another factor is that silver is not bought by central banks, so one source of demand for gold is not present with silver. But I think the bigger trend of a currency crisis is going to dwarf those concerns... And I think that silver will do very well in that environment. 

Silver is more volatile than gold, but that just means you get better opportunities to buy it cheaper, and probably make more money on it if you sell near the top. 

So yes, there are bearish arguments for silver, and one has to be prudent in buying it – you don't want it to be the only asset you own, for example. But it would be equally a mistake to not own a meaningful amount. 

Crux: So... is today a good time to buy? 

Clark: Well, how many ounces do you own? And what percentage of your assets do those ounces represent? 

There's your answer. If you have minimal or no exposure, I suggest buying. Don't rush out and spend all your available cash, because there will always be corrections, but the less you own, the more you want to make a plan to add a meaningful amount to your portfolio. 

Remember... silver is a currency replacement just like gold. It's money... and therefore you want to make sure you own enough for both protection and profit. If you don't own enough, I suggest going into "accumulation" mode... buying some on a regular basis, like dollar-cost averaging. 

Our recommendation in Casey's BIG GOLD– which is a conservative letter, by the way – is that approximately one-third of your investable assets be devoted to the precious metals market. That includes gold, silver, and precious metal stocks. That may sound extreme to some, but we think the risk to currencies right now is extreme. Therefore, being overweight precious metals is justified. Obviously, each individual investor has to be comfortable with what they do. 

Crux: Do you a recommend a certain percentage of ounces in silver versus gold? 

Clark: We generally recommend you hold more gold than silver. We suggest approximately 70%-80% in gold versus 20%-30% in silver. Depending on your situation and risk tolerance, you may wish to have more or less in silver, but again the point is to have meaningful exposure. 

Crux: For individuals who are new to buying precious metals, what are your preferred ways to purchase silver? 

Clark: The options are becoming more and more mainstream, so it's getting easier to buy both metals. The alternatives are growing, and they're also improving. You basically have two choices: You can either buy and store it yourself, or you can buy and have someone else store it for you. Ideally, you want to do both... you want to diversify. 

There are risks to storing metals yourself, such as theft, loss, or fire. You can put it in a safe deposit box, but then it's in the financial system and it's subject to banking hours and could even be susceptible to confiscation, though I'm skeptical that will actually happen. But I do think everyone should have some physical silver handy, at least a couple months worth of expenses. 

So the short answer is to diversify what you buy and how you store it. For physical silver, I would stick to buying the popular one-ounce bullion coins – Eagles, Maple Leafs, etc. 

You can also buy silver funds and ETFs in your brokerage account or online, and there are definitely some advantages to doing that. They're easy to buy, sell, and trade. There's no need to mess with the storage yourself, and it's especially beneficial for those who have larger holdings. You can put $50,000 worth of gold in the palm of your hand – but $50,000 worth of silver would require a small suitcase, so space is an issue. A lot of online options now have delivery alternatives available, and some even have free storage. Options here include the various ETFs, closed-end funds, online options like GoldMoney or BullionVault, and certificate programs like the Perth Mint Certificate. 

So find a couple options you're comfortable with, diversify your holdings, and just continue to buy on the dips, with the intention to hold until the bull market is over. 

Crux: How about silver stocks. Can you give us a favorite? 

Clark: Well, it's pretty clear the go-to stock in the silver industry – in my opinion at least – is Silver Wheaton. It's definitely been a sweetheart the past two years. It's given us everything we could want in a silver stock. 

The stock suffered badly in the meltdown of '08, and things did get a little dicey at the time, but I remember thinking that unless the world comes to an end and the silver price never recovers, this company is going to survive and bounce back – in part because of management and in part because of the business model. They have no exposure to mining costs, for example. 

Shares back then were around $3... If you bought at the time, they're now a ten-bagger. So it's been an incredible run. 

The question, of course, is going forward: Since the stock is already at $35, can it be another ten-bagger from here? 

Well, the company expects to increase "production" by 70% by 2013. And their costs will basically stay stagnant. Meanwhile, imagine where the silver price could be in the next two to three years, and you can see this company can make enormous amounts of cash. Some of that is probably priced into the stock already, but you can't deny where this company is headed over the next few years. 

In the bigger picture, you have to look at our currency issues – they're very real. They're deep. They're intractable. So when I look at what is likely to happen to the dollar and thus what level of inflation is probable, I think silver will go substantially higher, which means Silver Wheaton is going to go much, much higher. Only if you believe deflation ultimately wins the war and that inflation doesn't occur do you think silver or Silver Wheaton won't do well. 

Could it have a big correction? Well, it recently dropped as much as 28%, but sure... it could easily fall more than that in a major correction. But if that happened, I'd consider it a big buying opportunity. 

In my opinion, the bigger the correction, the bigger the buying opportunity, because I really believe the future is very bright for that company. 

Crux: Sounds good. Any parting thoughts? 

Clark: If you're bullish on gold, I think you need to be bullish on silver, unless you think inflation will never come to pass. Regardless of the short-term fluctuations in the market, it's only a matter of time before the currency issues punch us in the gut and inflation really takes off. 

Second, remember that silver will be volatile, but focus on the fundamentals and use selloffs as buying opportunities. Until the fundamentals driving the bull market change, buy. 

Bottom line, the bull market is far from over. I think it's going to go much longer and much stronger... So buying on dips is the best advice I could give anyone. 

Crux: Thanks for talking with us, Jeff. 

Clark: You're welcome. Thanks for having me. 

Editor's Note: Readers of Casey's BIG GOLD can access Jeff's full list of the world's best gold and silver stocks, along with Casey Research's preferred and trusted precious metals dealers.Get your three-month trial with a full money-back guarantee today.


Note: I am a Big Gold subscriber and affiliate.

Latest Inflation Insights From Casey's David Galland

Many - including me - think that 2010 will be a pivotal year in the inflation/deflation saga. And while I hopped over to the deflationist "dark side" almost a year ago, I try to stay very tuned into the inflation scenario, to continually check my thinking on the subject. It's OK to be wrong...I just want to recognize that as soon as I can, and adjust my outlook accordingly.

David Galland always puts together some thought provoking points, and his piece here is tough to argue with. I'll let you read and absorb, and I'll be back with some thoughts from the deflationist point of view later today in our weekly update column. Enjoy!

***

What the Deflationists Are Missing

by David Galland, Managing Editor, The Casey Report

An interesting article by Ambrose Evans-Pritchard came my way the other day. It’s worth a read, if for no other reason than that he paints an appropriately dark picture of the current state of the U.S. economy. You can read it here.

While I very much share Mr. Evans-Pritchard’s view that the global economy is far from out of the woods, our views diverge in that he sees devastating deflation speeding our way down the tunnel. Casey Research readers of any duration know that we see devastating inflation.

While we could both be right, with deflation first and inflation later, I’m not so convinced.

For starters, there is already a massive inflation operation being run by the Fed, evidenced in a historic spike in the monetary base over the last two years.

And the Obama administration is far from done.

The Democrats’ reinvigorated focus on jobs – the single most important factor in this November’s elections – will soon translate into a flurry of new initiatives designed to put people back to work, most of it funded at taxpayer expense.

To believe in the deflationary case would seem to require believing that Obama and his minions are ready to forgo any further political aspirations by collectively putting their feet up on their desks for the balance of their sole term at the apex of global power.

Given Obama’s meteoric rise to power – evidence that he possesses a certain drive and competence in the game of politics – that seems highly unlikely. And so it seems safe to assume we’ll soon witness a redoubling of his efforts to keep interest rates down… to make it easy and cheap for strapped consumers and businesses to keep borrowing… and to otherwise flood the economy with money.

In a deflation, the value of the money increases – which is actually a pretty desirable thing, if you ask me. Inflation, by contrast, means that pretty much everything you own in the local currency steadily loses value – forcing investors into a perpetual game of catch-up. It’s hard for me to calculate how the government can dramatically increase the money supply and yet have each of the currency units become increasingly more valuable over a sustained period of time.

Arguing against that point, Evans-Pritchard makes the case that the U.S. government is making much the same mistakes that were made in the first part of the Great Depression, i.e., being overly tight with the money. And that the velocity of money is falling.

There are a couple of key differences between now and then, however. First, the Fed didn’t actually know what the money supply was back then. They literally had no monitoring tools in place, mostly because no one thought it was important enough to track. Second, they didn’t have fiat monetary powers. Today, neither of those factors apply.

Everyone knows what the money supply of the U.S. is and watches it keenly. Including our foreign creditors. And so it is not surprising to see the Fed publicly talking about tightening up a bit. But it’s just talk at this point.

With the economy continuing to struggle, the only reasonable assumption that can be made is that the Fed – in cahoots with the entirely politicized Treasury – will keep shoveling money onto the economic embers, and continue to do so until economic activity again flares up.

That will, of course, require increasing the quantity of money that actually makes it into the economy – but that should be child’s play for Team Obama – with direct hiring and spending, continuing to buy mortgages and other loans to suppress interest rates, forgiving the bad debts of banks, or changing accounting rules so that banks can postpone reckoning day. And that’s just for starters, all of it packaged nicely in the name of the public good.

And once the money starts to flow, there will be a pick-up in economic activity, which will beget yet more money moving around. At first, this money will be a palliative for the economic worries, but then comes the inflation – a small trade-off, the politicians will decide, if it buys them enough of a recovery to make it through the November elections and get the president the second term you know he so strongly desires.

There is something else that I think the deflationists are missing, and that has to do with confidence in the currency. If the U.S.’s many creditors come to agree with our point of view – that the dollar is being led to the altar as a sacrificial lamb to political expediency – then they’ll further reduce their purchases of our Treasuries and start trading their dollars for stronger currencies and tangible assets, including precious metals.

At that point, interest rates will have to begin rising to attract new buyers. As you can see in the chart of long-term Treasury bond rates, a significant move off recent lows has already occurred, and rates are looking poised for a breakout to the upside.

Of course, the higher those rates ratchet, the more it will cost the U.S. government to carry its massive debt. While rising rates will continue to drive demand to the short end, suppressing those rates, in time the sheer quantity of paper that will have to be rolled over, and the rising tide of inflation, assures that short-term rates will have to rise too.

At that point, the train begins to leave the track.

As the train wreck approaches, the government is going to have to find creative new ways to fund its social contract with impatient voters. Perhaps, for instance, pegging everyday fines and assessments to the amount of income a person makes. Executed brashly, such policies might even allow the government to charge a person of means, say, $290,000 for a speeding violation.

I know what you’re thinking: C’mon, let’s be realistic – that could never happen. Think again…

Europe slapping rich with massive traffic fines

By FRANK JORDANS

The Associated Press

Sunday, January 10, 2010; 11:30 AM
GENEVA -- European countries are increasingly pegging speeding fines to income as a way to punish wealthy scofflaws who would otherwise ignore tickets.

Advocates say a $290,000 (euro203,180.83) speeding ticket slapped on a millionaire Ferrari driver in Switzerland was a fair and well-deserved example of the trend.

Germany, France, Austria and the Nordic countries also issue punishments based on a person's wealth. In Germany the maximum fine can be as much as $16 million compared to only $1 million in Switzerland. Only Finland regularly hands out similarly hefty fines to speeding drivers, with the current record believed to be a euro170,000 (then about $190,000) ticket in 2004.

The Swiss court appeared to set a world record when it levied the fine in November on a man identified in the Swiss media only as "Roland S." Judges in the eastern canton of St. Gallen described him as a "traffic thug" in their verdict, which only recently came to light.

"As far as we're concerned this is very good," Sabine Jurisch, a road safety campaigner with the Swiss group Road Cross.

Full story here.

Or maybe the government will force you to convert some or all of your IRA or 401(k) into Treasuries, perhaps packaged up in an annuity. You’d be given the choice of making the switch or making a withdrawal and paying all outstanding taxes at that point. This is something that Doug Casey has warned about for several years now.

The seeds of that possibility may be headed for the soil: the following article from BusinessWeek reveals that the Treasury is now looking very hard at the trillions in retirement accounts and trying to figure out new ways to “help” the owners of those accounts.

In my view, what’s important in this little dissertation can be summed up as follows:

1. The current administration and its congressional allies have powerful political motives to soak the economic soil with fresh dollars. The Christmas Eve announcement that the Treasury is removing the $400 billion cap on losses it will cover for Freddie and Fannie is a classic example of how far they are willing to go to keep the money moving.

2. Unlike the Great Depression, the U.S. is now on a fiat money system – which is purpose-built for the current scenario. Open the taps, and if that doesn’t work, open them even wider. Failing to do so would be political suicide, and Obama and his team are just not into the idea of serving a single term.

3. Given the size of foreign holdings of U.S. dollars, the nation is faced with a “rock and a hard place” situation, where a sharp loss in confidence on the part of our creditors would likely lead to a currency crisis that drives the value of the dollar quickly lower, at the same time that it drives interest rates higher.

Something will have to give. We think that something will ultimately be the U.S. dollar, as it’s politically more acceptable to have a failing dollar than a smoking hole where the economy used to be.

Before this thing is over, I would not be surprised to see a new currency regime adopted that introduces exchange controls and a different category of dollar to be issued for the purpose of paying back foreign creditors. Such a dual-track currency system is nothing new but has been used by desperate regimes numerous times throughout history.

Forecasting the future is actually impossible, as there are just too many variables. But that doesn’t mean that we can’t step back and make certain logical assumptions about the policies the politicians are most likely to deploy in their efforts to retain power.

In the case of today’s world, the only politically logical decision will be to keep on spending until that spending itself becomes a pressing problem, at which point the politicians will turn their attention to “solving” the newest in a long list of problems they have created.

At which point they will no doubt find some creative way to blame the inflation on speculators, profiteers, and the free market.

The economy is now so manipulated by politicians, big bankers, and special-interest groups that making sense of the markets has become an almost impossible feat. In the spirit of “making the trend your friend,” no matter how dire it is, the editors of The Casey Report are experts in analyzing budding mega-trends and seizing the profit opportunities hidden in them. Learn to do the same – click here for more information.

Ed. note: I am a Casey affiliate, and have been a subscriber of theirs for over 3 years now. The Casey Report gets my highest recommendation for its excellent analysis.

Three Sanity Checks at this Key Inflation-Deflation Inflection Point

I think we're at a key inflection point in the financial markets at this juncture. The direction that things head next could decide the winner, at least for the next few years, of the inflation vs. deflation battle.

So I spent the morning revisiting and rereading many of my favorite arguments from both sides of the debate, and came up with three key metrics for us to revisit.

First, let me lay a little groundwork and list my preexisting assumptions:

• My timeframe is defined as the next 3 years. After that, we may well see hyperinflation and/or a true crash in the dollar - but for the sake of this argument, I want to look at the next 3 years only (reason being, if you misplay the next 3 years, you could be toast anyway!)

• I accept the Fed's ability to "print" money.

• I also believe that inflation is preferable to the government, and given the choice between inflation and deflation, they will inflate (or at least attempt to) every time. Also, massive government deficits certainly make inflation all the more tempting.

When revisiting my favorite arguments for both sides, I noticed that three central themes were the focus of much of the debate:

1. Inflation will occur when the banks start lending again.
2. The demand for money, or prevailing social mood, will determine if consumers trade in their cash for anything (leading to inflation), or if they hoard their cash to pay down debt (leading to debt deflation.)
3. Stock prices will reflect a goosing of the money supply.

Checkpoint 1: Inflation requires an increase in bank lending

Thanks to the wonders of our fractional reserve banking system, where banks are only required to have a fraction of the money they lend out, bank lending has a tremendous multiplier effect on the money supply. During times of expanding credit (2002 - 2007 most recently), this effect was felt in full force, as loose credit led to a bubble in nearly all asset markets.

Since the credit crisis began, banks have significantly curtailed their lending. While the Federal government has boosted the balance sheets of the big banks, there has not been a proportionate growth in loans (see chart below).

Source: The Daily Reckoning

Herein lies the rub - bank lending has not picked up, at least yet. Check out the graph below, courtesy of the St. Louis Fed:

Conclusion: As long as bank lending continues to decline, it's difficult to make an argument for inflation. However, if and when this chart begins ticking up once again, that will be a strong indicator that inflation may be on the way.

Checkpoint 2: The demand for money and prevailing social mood

From World War II until 2007, the world was a place of expanding credit. This growth was driven by consumer demand for credit, which was particularly strong in the US. That is the key point - that the growth was driven by from the demand side, which in turn, resulted in increasing supply.

While many blame Alan Greenspan for creating a housing bubble this decade with artificially low interest rates, it's important to consider the role that consumers played in that spectacle. Greenspan was only giving the populace what it wanted - more credit. He may have spiked the punch bowl, but only at the insistence of the drunken party goers!

Today, with mortgage rates still near historic lows, we have no housing bubble any longer. In fact, we have a plummeting housing market. Why?

Because there's no demand for credit. Consumers are choking on debt - they are screaming "No Mas!"

Can the Fed inflate the asset markets one more time? They are trying like hell, but they'll only be successful if the social mood in the United States permits it.

One of the major reasons Japan was never able to reignite another bubble after 1989 is that the mood of consumers permanently shifted. The demand for money increased - consumers wanted to hoard it. They did not want to speculate, or trade it in for assets.

Did the social mood of the US permanently change in 2007?

One tea leaf worth paying attention to is the demographics card. By 2007, the US had some noteworthy demographic parallels with Japan of 1989 (ie. we're getting old). Though we are not "as screwed" as Japan in terms of demographics, thanks to immigration and somewhat higher birth rates, we've peaked demographically as a country, at least until further notice.

Conclusion: Demand for money, and social mood, are admittedly challenging to measure in an objective manner. There may have been a permanent shift in 2007 - if so, the Fed may find that, like Japan, it's "pushing on a string" in terms of trying to change consumer behavior and attitudes towards debt.

Checkpoint 3: Monetary goosing will show up in stocks, especially financials, first

According to Milton Friedman, the script for inflation roughly goes like this:

1. Increase the money supply
2. The new money goes into stocks first, increasing stock prices
3. Then economic activity increases (a false boom)
4. Then the Consumer Price Index (CPI) rises

Sure appears like the script is playing out to a tee. With regards to stocks, we've seen that financial stocks have been the strongest performers, which you'd probably expect in an inflationary boomlet.

But - this market rally has, thus far, only qualified itself as a stellar bear market bounce. We are still in typical retracement territory. Bounces usually retrace roughly half of their losses - often even more. The 2009 bounce is currently eerily similar to the 1930 bounce in terms of magnitude.

Conclusion: The jury is still out on what has actually driven this stock market rally. We could be at an important inflection point. If the market continues to head higher, the case that it's being driven by inflation will strengthen. If it makes new highs, that would probably seal it.

On the flip side, if the market turns down from here, then all we saw this summer and autumn was a classic bear market bounce.

Bottom Line: The coming months will be very interesting, and hopefully quite insightful, in terms of illuminating which side is winning the inflation/deflation battle. It's too close to call just yet in my opinion, as both scripts have been fulfilled thus far. But we could be near a fork in the road!

Some More Good Reading

• An insightful look at whether or not earnings really drive stock prices.

• Marc Faber's inflation paradox thesis.

• Jim Rogers' latest outlook on commodities, investing, the economy

• China's non-confirmation of crude's new high

• Christina Romer: Contrarian indicator extraordinaire?

• Comedy - The Onion: Financial tips from a stalker

Positions Update - Still Long the Buck

It looks like the broader markets may, at last, be rolling over. Which should be bullish for the buck.

The dollar - gearing up for another megarally?

(Source: Barchart.com)

Open positions:

Thanks for reading!

Current Account Value: $23,859.83

Cashed out: $20,000.00
Total value: $43,859.83
Weekly return: -1.9%
2009 YTD return: -53%

Prior yearly returns:
2008: -8%
2007: 175%
2006: 60%
2005: 805%

Initial trading stake: $2,000.00