CheetahhhhhhhBlog Mark III

So I am about to be paid, which means I am busy thinking about where to put my money. Currently I am long C options for Jan 12 @ 4.5. This is a value play. I am also long the SPX. I am actually primarily invested in gold, long, though this is more savings than investment, by which I mean, I expect gold to rise roughly as much as the major currencies will devalue.

There is a lot of conspiracy talk about gold and silver. One thing is apparent, which is the Chinese have been net buyers of both. I read an interesting article today which suggested that the Chinese are aiming to make their currency into the global replacement for the dollar, and have it backed by noble metals. The author cited numerous comments by the Chinese government which supports his thesis. Perhaps so. Actually I have read so much speculation about gold and so many conspiracy theories, death-of-the-dollar nonsense, etc, that I’m not sure I give much credence to anything anymore except the chart in front of me. I will however say this.

The U.S. dollar has lost 20% of its purchasing power just since 2000 and 30% since 1990. 70% of that decline has been since 1978. Since the Federal Reserve was created in 1913, the USD has lost 95% of its purchasing power. There used to be a directly inverse relation between gold and the USD but this has broken down a bit, though there is still an inverse correlation. I have said before and I will say again, commodities are priced in dollars, and so commodities will rise as much as the dollar has capacity to fall. The dollar’s capacity to fall seems rather big.

The current bull market in gold is a bit of a self-fulfilling prophecy; lots of talk about the demise of fiat currencies, Utah goes ahead and makes gold into legal tender, lots of talk about inflation, etc. All this creates a demand for gold. This demand shoots the price up. It is not at bubble proportions but I rather do expect gold and silver to inflate into bubbles within the next year or two. In other words, I somewhat expect to liquidate my gold holdings in Jan 12 or thereabouts.

The idea of holding physical gold or silver bars, coins, our rounds is very appealing if you like money, and I imagine if you’ve read this far, you probably like money. I don’t think coins are a good investment because you’re paying approximately 16% extra for the minting of the coin. I would, if I had lots of spare cash, buy Kitco rounds or GoldMoney bars. The only problem here is they are expensive at the moment and they are not easy to liquidate.

I have been paying a lot of attention to silver lately and will probably buy silver long if it breaks above current trading range.

Regardless of global problems and sovereign debt issues in Europe and with US states (a great many of whom are basically bankrupt), the economy is slowly improving, and the broader market is clearly still in an uptrend, though I expect sideways, choppy movement for the near term. Because of this I am thinking mainly about putting an iron condor on the RUT. I am a little scared about this however because the RUT seems to have formed a short term double bottom, and has also formed a clear cup-and-handle pattern, so one could reasonably expect a big rise in the near term. I think I am going to wait for volatility to rise, which would mean choppy downward action, and with the higher premiums from volatility, then take out an iron condor with room for a rise.

Went to Camp Eggers today. Right downtown, huge army base. Not just the American army too, there is also a German base, probably others. There is a bazaar there, which actually was not very good, you can do much better shopping on 3rd Street. I went into the PX though and bought lots of precious things: Peanut Butter Cups, Snickers, Twizlers… Also just FYI for any of my 63 daily readers who are here in Kabul, if you want American products such as fancy razor blades, shave cream, iPods, etc, go to the Camp Eggers PX. Waaaaaaaaaaaaaaay cheaper than Spinneys or Dubai.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. … This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.
— former Fed Chairman Alan Greenspan

So we’re on vacation for a week and during vacation I prefer to have no plans. I told this to my sister once and she thought this was totally crazy. The thing is, a teacher’s life is extremely regimented. If I look at the syllabus, I could even tell you what I’ll be talking about on Apr 12 at 430. So on vacation I go whole hog de-regimentation.

Today we went shopping for Afghan things. Went to 3rd Street. Really wonderful stuff, and cheap. We got some very unique hand-made boxes, and Van got some surprisingly cheap jewelery with semi-precious stones. She’s pleased as a little girl with her first Barbie. Whenever we come to visit you (whoever you may be) you can expect an Afghan nick-nack and you’ll be pleasantly surprised. Then we went to the Flower Street Cafe, which is very popular with expats. It’s in a garden, pretty good food, had a decent fajita which is not something you’d expect to find in Kabul. Like most expat hangouts, the cafe is unmarked, and my driver couldn’t find it at first. Then you have to go through a blast door with a guard with an AK47. After that it’s all garden and cafe and I recommend it highly.

Regarding the stock market, I remain long-term bullish. Short term, can’t say. I’d say we’re in for some consolidation (sideways movement). About 4 days ago I bought Citibank Jan 2012 call options. Then the next day the fuckers announce a reverse stock split which spooked C investors. However I am long-term bullish on Citibank. I trade Citibank a lot, as my loyal readers know, and have actually made a lot of money off them. Now this is my first reverse stock split, which historically signals poor performance, but I imagine C will be the exception, and my primary reason is the slowly improving US economy and the fact that the banking industry has actually consolidated and become even more too-big-to-fail. Surprised by that statement? Well it’s true, and I’m rather bullish on financials. Regarding precious metals, there is a short squeeze on silver going on right now. I told you this would happen in January if you recall. I’m well invested in silver and will buy more and soon as I get paid. The long term picture with metals… well, gold no longer moves in a directly inverse relation to the US$… global conditions are unpredictable… really hard to say except that I will liquidate my metals holdings the minute I see a big drop on high volume. Until then I’m buying.

It’s the Afghan new year holiday, and I’m on 10 days vacation. Apparently the Afghan calendar is based on the old Zoroastrian calendar. The Taliban objects to this calendar and is of the opinion that Afghans should use the Hijri calendar, and so we have heightened security until the new year passes, which is Monday.

I receive intelligence reports from our security company, which gets them from British intelligence apparently. However a lot of what is going on in the country is speculation and rumor. The general discussion is this. Apparently the Taliban commander in Kabul is young and inexperienced. The recent attack on Finest grocery store was an amateur operation for example. However this new young commander also wants to make a statement, hence the idiotic attack on Finest.

The security situation here however seems to be improving. The snow has melted and apparently the insurgents have gone over the mountains and down south to where the real fighting is.

I’ve been in academe for some time now and finally, by some magic, have an assistant. It’s been over a decade. Finally I guess I’ve crawled up the ladder far enough to get an assistant, and thank God. I had him correct papers yesterday, today I put him to photocopying and errands. This weekend he is going through the university strategic plan (200 pages) and highlighting any references to “retention” or “curriculum” which are current academo-political issues I’m working on as both a faculty senator and as chair of the curriculum committee. I’m also going to send him around campus tomorrow gathering info needed for my curriculum meeting on Sunday. I was chatting with some other faculty and apparently they send their assistants off to get their dry cleaning, get croissants at the French Baker, etc. I have plenty of legitimately academic work for the lad at the moment but we’ll see.

2 weeks and it’s spring vacation, which is arriving at just about exactly the right time for my sanity.

My brain is pretty fried. I’m working rather hard. I like my job and it’s a hell of a lot more interesting than previous gigs int he Gulf. Here I’m a real academic at a real university where real higher education gets accomplished. It’s a nice change of pace. I am however rather exhausted by it. And I’m starting to think about things you doing have to worry about in the Gulf, such as publishing. I haven’t published in over a decade so might want to crank something out. I have plenty of material, it’s actually just a matter of sitting down for a few hours and then sending it off.