October 10, 2013 – Prepare for the Worst Part II: How do you protect yourself financially during the power plays in Washington D.C.? You have precious little time to implement a sound investment plan in the face of the shenanigans taking place. Two tried and true strategies are stock index put options and options on gold futures. Stock prices are relatively high and gold has sold off a lot.
The S&P 500 chart is shown above, for the last two years. You can clearly see the uptrend and high level of prices.
December 2013 COMEX Gold is shown above. This weekly bar chart goes back one year. You can clearly see the relatively low level of gold prices.
If the prediction I made yesterday comes true, you should sell stocks and buy gold. How can you do this? One way is to buy put options on the S&P 500 Stock Index. The ES has huge volume and can support any level of investment. Buy out-of-the-money put options.
Likewise the December 2013 gold futures contract has significant volume. Buy out-of-the-money call options on this futures contract.
Do not be fooled by rumors of a settlement between Democrats and the GOP late October 15th or on October 16th. Transiting Venus is trine Uranus at 3:04PM the 16th (PDT). Uranus rules unexpected events and the trine aspect rules harmony, luck and ease. Venus rules females. It is my guess that some sort of 11th hour settlement will be attempted October 15th or 16th. It will not succeed. The entrenched mind set of conflict, tension and stubbornness is too strong. Start a default investment strategy now. The longer you wait the more the stock market will drop and the higher gold will rise.
This is the trade of a life time. Be sure and use stop losses on both stock index options and options on gold futures. If the default and shutdown fail to manifest, as I outlined yesterday, then you can close out both trades. I expect large moves in both stocks and gold, therefore, you can buy far out-of-the-money options in both. Do not buy the indices themselves. Use options on those financial instruments. It is much saver and less costly. Good luck and good trading. (Credits – Getty Images, Jim Maynard’s Pocket Astrologer and The Wall Street Journal. No guarantees are possible with investment capital – the risk of investment in stock index put options and gold futures is entirely yours).
The Master of Disaster