Trade Alert – Portfolio moves in our metals, dollars, and chips
I want to make a few trades today, so let’s jump right in and get started on the dirty details.
First, gold has continued to rally and rally big since I was pounding the table for you guys after that recent gold crash. The week of the crash, I personally gone to a local coin dealer here in rural NM and paid just over 5% premium to the spot price, which is exactly how I described it to you guys. In big cities, you should be able to pay less than 5% or so over the spot price for the physical coins or bars.
The strange undercurrents in gold and silver right now includes all those brokers dealing in commodity paper and futures in the criminological banking system where’s there’s little threat of punishment for manipulating and defrauding your customers. What’s to stop the big banks from manipulating and defrauding their customers when the DoJ and SEC have already said they won’t punish the big banks for crimes if it would cause the firms to close their doors? Nothing is the answer, and that is why I am so set on using physical gold and silver coins and bullion to build this Revolution Investing position up. Over the next couple years, I think most investors should be working on building up 10-15% of their assets in gold and silver bullion and coins that you personally have direct access to at any time.
Last time I talked about the importance of building up your precious metals assets I was talking mostly about gold. I continue to hold gold and even some GLD for a short-term trade. I think silver is probably an even better short-term trade as you can’t find any silver coins or bullion for less than 20% premium to the reported spot price. My analysis points to there being a good trade over the next few months at least in the big silver ETFs like SLV and I’m going to add the SLV into the Revolution Investing portfolio at least through the summer. Buying a small starter position for now in the popular ETF, SLV.
I also want to add Intel to the portfolio. The stock is up 20% recently and there seems to be the same $20 floor that I’ve talked about with Intel for a decade now. With a 4% yield and the company betting billions on finally catching some traction in the smartphone and tablet markets, I think there’s some good risk reward in this one. That 4% yield is nearly three times the Treasury rate right now. Obviously the decline of the PC market that Intel long dominated is weighing on this stock and there’s plenty of risk that Intel doesn’t ever catch up to the ARM/QCOM/BRCM dominance in the mobile computing world. That said, Intel’s investing billions more than anybody else in the future of mobile computing and I think they’ll be a major player for a very long time to come. Using common stock and opening up a 1/3 position.
To open up a position for this new long, I’m going to close out the Qualcomm long position, which is personally still my smallest long position and one that just hasn’t gone anywhere since we added it. I want to capture that 4% INTC yield instead of holding the QCOM long.
Finally, I want to cover our Dollar General short. I still think the dollar stores have way overbuilt their capacity but I’ve been impressed with Dollar General’s execution on trading up to a slightly more affluent consumer seeking the ease of shopping at the smaller DG stores than the bigger Wal-Marts and Targets. Dollar General’s just not even trying to remain enough of a “Dollar Store” to keep me in the short position. I will keep the Dollar Tree short in the portfolio, as I think the company is competing in a overbuilt market that will continue to squeeze margins.
