romans holiday Posted January 27, 2010 Report Share Posted January 27, 2010 Being very overweight in bullion, I'm now looking to raise a sizeable dollar position this year. I do not really see the dollar as a hedge against bullion, or necessarily inversely correlated, but more as a currency that can be owned in its own right alongside gold and silver. My strategy, in a macro-deflation, will be to stay liquid in the strongest currencies; gold, silver and dollars. The current environment has been volatile and looks to remain so for some time to come. I will look to take advantage of this volatility by low frequency currency trading. I have chosen dollar/ silver to trade as they are a "contrary" pair and move against each other well. One is the reserve currency and represents safety, the other a proxy for commodities and represents risk. As the market swings between safety and risk this should be reflected well in these currencies. I have also chosen this pair as I will feel comfortable agressively trading them [though infrequently trading on the big macro moves] as I see both currencies performing well in the long term aggregate; they are both currencies you would do well to own in an asset/credit/debt deflation. I'll use BV [no gearing] to trade. They charge 0.8% on transactions which I consider reasonable. The storage costs of silver is also very reasonable... but then I imagine I'll spend half the time in US dollars as I will be very much a dollar bull on BV [while a gold bull on GM]. There is a possibility that the dollar and silver might both track sideways together... though in a very volatile channel. It is this channel I will be looking to trade. Silver I see as more speculative than gold and may look to take profits by purchasing further gold. A couple of trading points have stuck with me from the Jesse Livermore book; to stake a position and sit on it for a good while.... and to make sure you stake a large position when you do so. Link to comment Share on other sites More sharing options...
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