Introducting the model portfolio!

The idea.. turn $1 into $2 or more!

Let's create a model portfolio of $10,000.  Our target profit level is 100%.  So by the end of this year, we want the portfolio to be valued at $20,000 or higher.  At least that is the idea.  Can I do it?  Why not?

This portfolio will be modelled based on my own portfolio.  I hold other stocks but I'm just going to stick with the two most recent ones that I've picked along with the price I bought them.  I purchased these because I believe these are represent low risk and high reward.  Prices exclude trading fees.

SLW Jan12 30 Call (Stock Option) - Average at $8.67
Buy 6 contracts - Total $5202
Rationale 
Silver wheaton is a great stock and underperforming silver right now.  They purchase silver from mining companies for $4 and sell it at spot price.  It's a great business model.  The rationale for buying an in the money call is less risk that the contract will expire out of the money.  I believe Silver will hit new highs by the end of this year and this should put a boost under SLW to above $50 by years' end.  If that happens, each contract will be worth $20 or more.

CLM2 140 C (Futures Option) - Average at $0.96
Buy 5 contracts - Total $4798
Rationale
Oil has collapsed back to Dec 2010 levels.  Meanwhile the dollar is getting devalued faster than waste coming out of a person suffering from severe diarrhoea.  This is not sustainable.  I believe oil will rise back to within $100 by end of this year.  The rationale for buying a longer out of the money contract is so that there is enough time for this play to work out.

Currently the above positions are

SLW Jan12 30 Call - Currently $12 (38% Gain)
CLM2 140 C - Currently $0.97 (1.36% Gain)


Current Model Portfolio Value $12,050


Will update as and when we move along!

Graphs of metals versus other paper currencies

1 year graph of CHF (Swiss Franc), SGD (Singapore Dollar), NOK (Norwegian Krone), AUD (Australian Dollar), GLD (Gold), SLV (Silver) against the USD (US Dollar).

The top performers are

1. Silver (134%)
2. Gold (51%)
3. Swiss Franc (33%)
4. Australian Dollar (16%)
5. Norwegian Krone (13%)
6. Singapore Dollar (12%)

5 year graph of CHF (Swiss Franc), SGD (Singapore Dollar), NOK (Norwegian Krone), AUD (Australian Dollar), GLD (Gold), SLV (Silver) against the USD (US Dollar).

The top performers are

1. Silver (245%)
2. Gold (194%)
3. Swiss Franc (56%)
4. Australian Dollar (36%)
5. Singapore Dollar (30%)
6. Norwegian Krone (15%)

8 year graph of CHF (Swiss Franc), SGD (Singapore Dollar), NOK (Norwegian Krone), AUD (Australian Dollar), GLD (Gold), SLV (Silver) against the USD (US Dollar).

The top performers are

1. Gold (301%)
2. Silver (201%)
3. Swiss Franc (75%)
4. Australian Dollar (57%)
5. Singapore Dollar (40%)
6. Norwegian Krone (34%)

Conclusion?  Your best bet is still Gold and Silver against paper currencies, saying their performance is astounding is plain for all to see.  Paper currencies will continue their long term devaluation.  Interest gained in a paper account will not be enough to account for the decline of purchasing power.

One Early August Morning

Another night another day! This afternoon I watched Enter The Dragon with Bruce Lee and later a documentary on his life and family. It's inspirational to read his struggles as an actor and as a martial arts artist. His marriage to a Caucasian woman was also at that point in time a very taboo thing. Today it is less taboo, depending on which part of the world you go to anyway. It's unfortunate he died so young, but his legacy will live on that is certain.

Now on to metals...

It's mid August and gold and silver. Gold is currently $1742.60 and silver is currently $39.27. Silver will hit $50 by years' end and Gold, $2000. I believe we are right now in the beginning stages of mania in Gold and Silver. Oil has collapsed back to $83.50. My guess is by the end of the year oil will be back and above $100. I've placed bets on oil and on silver wheaton, a silver streaming company. I expect silver wheaton to reach new highs by the end of this year. It is currently $37 and I expect it to hit $60 by January 2012 possibly higher. Now's the time to get into the mining shares, I fully expect those to take off by the end of this year. The Fed will unleash more QE, whatever they call it, it's going to happen.

I have placed large bets on oil and silver, so we'll see how that goes. Lady luck has been on my side this year. I've not placed any bets on gold but that is because I believe silver has greater potential along with oil. This summer has been stunning for gold and silver, the strongest in almost 30 years. That speaks volumes about the economic uncertainly that is currently present in the world today.  People are rushing to real money.

What I expect by June next year
- Silver at $60
- Oil at $150
- Gold at $2500

Most likely, these values are underestimated because the mania will slowly start to realise itself over the next months.