Hello, and I hope the new week finds you well.

My own weekend was quite nice, filled with beer from local microbreweries and good food.

I have just finished some leftover prosciutto-wrapped tilapia, actually, which we made last night; garnished with fresh zucchini and squash, and topped with some delectable Kalamata olive – all covered in liberal amounts of lemon pepper – and served with a side glass of Sauvignon Blanc.

As for the markets; I am all too aware that we are approaching the season where – for two years in a row now – my entire strategy has gotten clobbered without mercy.

I wonder, what will it be this year?

Perhaps scientists will discover that all uses of silver can be replaced with pop rocks?

Maybe, AEC goes bankrupt?

Or the UN puts forth a treaty, signed by all nations, permanently banning all power generation from uranium?

The possibilities are delightfully endless. All I know for sure is that October is a horrible month, and I hate it.

Now, I am opting to hold a hefty cash position with a large side of silver, just in case we get massive intervention. This is as opposed to outright shorting of stocks or commodities.

I’m as realistic as ever about the chances of a recovery here. There’s just too much drag on the system; and we’re “blessed” to have all the wrong people in charge just when we need real intelligence to implement reforms.

But if we’re to go down from here, I will profit from having a cash position, not generating cash flow from short positions. It’s too risky, in my opinion, that the market reverses and runs higher into the Winter months.

Firstly, shopping picks up in the winter.

Secondly, we have to be getting nearer to some desperate moves getting made by desperate people.

And thirdly, the market HAS run higher in the Fall for the past two years. The statistics crowd should be all over this.

So I’m not really gung ho about the economy or much of markets. But I have relearned how to step aside and let the crowd exhaust itself before reasserting my dominance.

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If there’s one message that’s been clearly reinforced over the last two years, it’s that there is no substitute for good, old fashioned dollar bills.

Elaborate hedging strategies like shorting and options are all good and fine, but not here and not now.

This is a game.

We’re sitting here patiently, waiting for the end of the world, because a handful of idiots decided to gamble with our well beings on some farfetched prospect of attaining total enlightenment and ending all war, and now the same bastards who did this to us are demanding that we trust them with even more – because apparently we’re supposed to buy that only they know how to save the world.

This sort of nonsense has twice now staved off the collapse, creating the most impressive runs we will likely ever see in our lifetimes. The mere threat of intervention can send us higher by another 20% in a matter of no time.

I don’t need to tell you this.

What I do feel I need to tell you is that there are differences between counterparties and custody of assets. Just ask PFG’s debtors, who are now suddenly being made aware that their loans may actually have been hypothecating depositors.

What good are your options if the people who owe you money aren’t around to pay you? Ask anyone short housing through a Lehman brokerage account how that works out.

What use is an ETF giving you leveraged exposure to silver or volatility or, God forbid, the USD, if market liquidity dries up and/or the funds handlers get blown to shit?

Exactly.

Have cash, ladies and gentlemen. And a contingency policy if cash goes away. You don’t know what’s going to happen. I don’t know what’s going to happen. So play it safe.

There will be plenty of time to gripe over missed gains when you aren’t in bankruptcy.

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Here in the 9th floor office, I am attempting to catch up on the world events I passed by last week while taking vacation.

I spent the week on a lake with some friends. Which was, without a doubt, superior to spending it working. The weather was awesome.

Having looked only haphazardly over the news flow in between lunch and returning to the water each day, I’m sure I missed much. But here’s a brief summary of what I’ve gathered so far:

1 ) Spain is slowly being dragged to its death by the harpies
2 ) Italy is chained to Spain
3 ) We have had almost double digit numbers of EU summits
4 ) Rajoy is dumb
5 ) They still haven’t agreed on what the EU even is
6 ) The banks are losing horribly to the greatest bank run ever witnessed
7 ) China is imploding
8 ) Central banks are thinking about doing something – which is a polite way of saying their hands are completely tied
9 ) Total, actual money contributed for and ready to fight the funding crisis – 0 euros

I’m sticking with 25% cash, but not shorting anything. Silver’s sweet, the uranium market is heating up beneath the surface, and the rest of the stuff I own is fine.

Soon, the US will experience a contraction, all thanks to the euro going to parity against the dollar.

Please refer to my previous writings, as all of this was foretold long ago, in an office very much the one I’m sitting in, on this vary same floor.

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Finishing the day, I’d like to remind you that sometimes things can get extremely out of hand – by a factor of 6 beyond anything you ever thought possible.

Resting in my office from a busy day, I’m finally sitting down to catch up on some pieces and finding my breath.

$ERY, after all, just smashed through all moving averages, and is now on the high side of the range, inside of a single session. ERY is basically a trade against gasoline and to a lesser extent, oil. Does that feel like “normal” behavior to you.

The plush leather of my chair beneath me radiates heat from the sunlight leaking in. And the cold air of the 9th floor office mingles with differentials of warmer current from the dry, ninety degree heat from outside.

There were an expansive multitude who were counting on more easing. I warned you incessantly that this was not such a straightforward issue. I cannot help you now.

Far below, I see the many talentless hedge fund managers caught long commodities beyond their capacity to handle.

The margin calls are about to begin.

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I came closer than I care to admit, in the final fifteen minutes of trading, to selling my entire ERY position, going to massive cash, and calling it that.

So close, yet I just can’t do it. The prospects of brutal selloffs in energy names are just too tantalizing to give up on.

The contraction in Europe is not stopping this weekend. Their problem is far too immense for that. No, this is not a simple issue of them simply rebranding themselves, fools.

They have daunting sums of debt all coming due at this exact moment. That’s what’s really dragging them back into the abyss. Not fucking confidence…

Nothing they do now will change that.

Pardon me, but you do not simply absorb twice your outstanding monetary supply over a one year time span, without there being some fucking repercussions.

Hyperinflation is certainly a possible outcome here, so I wouldn’t bet against the commodities outright, just now. Particularly if the Europeans are organizing themselves, they may steal up to do something desperate. Eventually, the commodities will collapse from this, from sheer demand destruction, but they can double in price between then and now on nothing but fear and fleeing hot money.

Rather, I’m focusing on the suppliers of refined products with ERY. If defaults shock the region, or they simply try to print away their problems – either road leads to further economic contraction. If you don’t like that, go back in time and bitch smack the idiots who set the world up for this.

I don’t care, though. So don’t complain to me about it.

But in order to placate my mind a little, and lock in some more of these recent gains, I raised my APC position to full size, for $64.06 a share. I love the company, and even if it sells off, I can be at peace owning it. It will complement the ERY shares nicely, forming a sort of partial hedge.

Best case scenario for me is a brutal selloff that lets me unwind the ERY shares for much higher, while leaving me owning everything I want, with cash to strategically add.

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Shhh. Keep your head down.

Let me show you something. (Glances, first left, then right).

Here, come see. Take a look at this:

That’s the dollar you are insisting is so high that “Bernanke MUST act”.

I know. Doesn’t look that high to me either.

I know; but Ben is just clamming around until he can break skulls and fling free money everywhere, like he’s skiing with hookers in Bernie Madoff’s penthouse.

I know. I know…

But, let me fling some ice water down your back for a minute here.

What if, when Ben says “Monetary policy isn’t a Panacea,”…he means it?

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