Speculative Trading Update for Tuesday, March 6th

Our trades for this year seem to be going very well for us. Many calls were made on mere speculation based on extreme bearishness from the media and general sentiment as well as on sound fundamental basis. In an article in the beginning of the year we told you that one thing we can be sure to see in 2007 was a strong increase in Volatility. This came to fruition last week as we saw many asset classes get slammed hard. This will definitely continue and get worse as housing and the lenders continue to implode.

Gold and Silver seemed to be holding up well relative to stocks, but of course we also need it to be able to outperform the Dollar as well. We see significant upside in both metals especially now that the topping action we saw last week has all but vanished. Our Calls thus remain intact with Gold even and Silver -2.5%.

Stocks have seen some serious action as analysts cry Recession worries and Carry-Traders fleeing from the Dollar. We see this as an expected event that we see far from over. We should continue to see stocks paddle between 12,000 and 8,500 for the next few years as Per Earning ratios descend. Dow Puts +9.7% and Nasdaq Puts +10%.

Natural Gas and Oil Calls are up 16% and 15.5% respectively. We are watching closely if these levels are only being sustained by speculation of continued cold weather.

We have closed our Lumber call at a 4.5% loss.

New Picks!
Mining Stocks: We have also noticed an extremely bearish take in Mining Stocks. We have chosen two new plays. Our Gold play is a company called Golden Star Resources (GSS). Our Silver trade is with Silver Wheaton (SLW). Both seem to have significant upside, in addition to being undervalued relative to their respective metals. GSS currently trades at 3.56 and SLW at 9.12.

We have also placed a “Carry-Trade Put” Japanese Yen Call. The Yen currently stands at 116.42.

We thus closed this week +6% since January 14, 2007.

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