Great Buying Opportunity in the Metals

No two ways about it - gold and silver got smoked today, along with the SLV calls I bought this morning. The barbarous relic was down about $100, silver lost over 6% in today's trading. I still believe the longer-term trend is up - way up. That's because the Federal Reserve and federal government (not the same entities) have told us with interest rates near zero until mid-2013, their only solution is to try and inflate their way out of the debt mess we're in.

It's possible we could see a further correction in silver and gold, but today gives investors a great opportunity to buy the physical metal at a discount... and maybe an entry point for gold and silver stocks/ETFs. Tray tables and seats in the locked and upright position, folks; this is gonna be a really bumpy ride for the foreseeable future.

My takes on the stock market, and what lies ahead...

Today's 512-point plunge in the Dow reminded me of the Crash of '08. We may see a "relief rally" on Friday of a few hundred points; however, if the news from Italy about possible bank runs and credit locking up is true... then look out below. I don't see a sideways market today... it'll probably be a 'rocket ride' up or down.

If we get the rally, Wall Street has dodged a short-term bullet for now... but there are many more financial and economic "bullets" to come. If it tanks lower, then Katie bar the door - this could get real ugly, real quick.

I implore any investor with 401(k) or IRA money in the stock market: If you don't know what you're invested in (or why), GET OUT OF THE STOCK MARKET - NOW. If you can't get out right away, wait to sell into the next rally and go 100% to cash.

Only the nimblest of traders can survive in this market, forget about 'buy and hold' investing that most financial planners and stock brokers recommend. Their job is to get you and keep you in the stock market - probably not what's best for you and your wealth.

Through all this panic and fear, I see two ETFs and an index that I like:

UNG - Natural Gas ETF, which hit a 52-week and 2-year low today. Nat Gas has a history of going dormant for a few years, then exploding higher like a volcano. This could take awhile to realize gains, but if you're patient enough (a few months to over a year), I like buying this ETF and longer-term call options at strike prices of 12.00 and 13.00.

SLV - Silver ETF that's directly tied to the NYMEX spot silver price. I'm not sure if the sell-off in silver is done, but as we see more panic and less trust in paper financial assets, more investors will put money in tangible assets, like gold and silver. I want to see Friday and Monday's trading action to make sure this short-term move is close to finished, before going long on SLV.

VIX - This is the volatility index, which popped 8 points today - or about 30%. The more fearful the market gets, the higher the VIX goes. If we get the relief rally on Friday, the VIX will come back down - which could give a great buying opportunity for the index or call options. But if the market tanks and the VIX goes higher, wait for the next pullback to get in.

You ain't seen nothin' yet, this stock market has a long ways down to go - possibly to the March 2009 lows of 6,500 on the Dow.

Pull up a chair and get your popcorn out - Friday's market action will be a heckuva show.

Debt Deal Was a Dud and a Fraud

Not much to say about this fiasco - this just "kicks the can" of debt and spending down the road and prolongs the financial day of reckoning. There were no actual spending "cuts" made, just reductions in the amount of proposed spending increases. In Washington-speak, we won't spend as much as we planned to spend, so that's a cut and will help reduce the deficit.

In reality, it does nothing except maintain the Beltway status quo.

It's like giving a drunk two more shots of vodka and Red Bull to keep him partying later into the evening. In the short-term, he can keep partying... but in the longer-term, when he wakes up the next morning or afternoon, that hangover will be a doozy.

That's the best analogy I can think of to describe the cause of the American economic boom, and the following bust. Commodities and stock markets don't like the Debt Deal at all - gold has gone up $50/ounce since Monday, the Dow tanked 275 points on Tuesday. Europe still has major financial challenges with the amount of debt carried by Greece, Italy and Spain - frankly, I don't see the European Union or Euro as a viable entity or currency in the longer-run.

This financial "hangover" that America is facing will be really nasty. We got a taste of it from the stock market and real estate Crash of 2008. How bad will it be? Think of your worst hangover in college, where you're dry-heaving over the toilet late into the next afternoon.

When you swear "you'll never get that hammered again," only to go out next weekend and party it up. Unfortunately, the consequences to Americans' wealth and standards of living will be much more severe than acute alcohol poisoning. This hangover will take years - and probably a decade or more - to work through.

I doubt that America will re-gain it's standing as an economic superpower, because most of the success was fueled by debt, having the world's reserve currency, speculation... and ultimately confidence in our country, economy and financial system. The real collateral and support for financial paper assets and nations is in the public's confidence in those assets, countries and governments.

Once the confidence goes, it takes a very long time to recover - and sometimes it never does. Think Enron... MCI Worldcom... Global Crossing stocks; or failed nation-states and empires throughout history. We're in for major paradigm changes in politics, culture and economics as the Greater Depression unfolds. There will be many fortunes lost, but some will be made in the chaos, confusion and mis-information.

Wealth will NOT be made by investing in stocks like Sitting Bull - or buying and holding forever and ever. Information moves too quickly, industries and companies change at a faster pace, Wall Street and governments manipulate markets. For an average individual stock investor, you're playing in a financial casino that's rigged against you.

Wealth WILL be made by people with vision, foresight, and a willingness to serve and provide VALUE. Forget about flipping houses or day-trading stocks, it's more about old-fashioned values and good business fundamentals - just like many of our parents and grandparents did it. That's the silver lining in this massive economic storm, that our country will (hopefully) get back to basics and common sense business and moral values - Lord knows, our country definitely needs them now more than ever.