Wow, what a crazy few weeks.  I've had a couple of acquisitions, made some bone-headed moves, got hammered along with everyone else in the correction, and yet, after all that, I saw a glimpse of a bright golden light at the end of the tunnel….

First, let's talk about my bone-headed moves.  I couldn't believe how bad my timing was!  First I sold Aurelian Resources (ARU.TO) literally the day before it popped 10% on a news release about some phenomenal drilling results.  Next I sold my QID a week or so before the correction.  Lack of patience is no doubt my biggest weakness in the markets.

As for the correction itself, this was long overdue.  It feels like I have been waiting years for it to come and I am glad it is finally here.  Sure it is painful to watch my stocks go down, but in the big picture this is a good thing.  For those who can't believe their stocks are dropping so low, keep in mind that we are experiencing a liquidity crunch.  People who have overextended themselves either through borrowing or risky bets now have to sell their other assets, such as good-quality stocks, at whatever price they can get to cover their losses.  Furthermore, since stocks are dropping so quickly, others are panic-selling or even profit-taking which further exasperates the situation.

Despite the carnage and my bearish views on the U.S. economy, I made the decision not to buy back into QID and not to short anything else.  Shorting, simply, is just not my forte.  One thing I did not like about holding QID is that you never know when another bull market is going to start or how long the current one can keep going on for.  China is the best example of an out-of-hand bull market.  Furthermore, if I was to short some stocks, I would short homebuilders and subprime lenders, but that too is dangerous because I am seeing extreme volatility in those stocks – sometimes they jump +10% or even +50% in a day and that's something I could not live with.  Now I know why Warren Buffett and Tom Stanley do not short stocks.  Instead, I have been using the cash to add to my current positions.  Some stocks are being given away and, although things could get much worse, my timing at bottom-feeding has never been great and so I am buying now while prices are what I think are extremely low.  Of course, it should be noted that I am in nothing but commodity stocks which I am not only very comfortable holding through a correction, but I feel have the best long-term prospects from here on out.

This brings me to that light at the end of the tunnel I saw.  Those Sprott guys have been predicting this subprime mess - and the fall of the US Dollar - for years now and I find it fascinating watching it all unfold EXACTLY like how they said it would.  It is uncanny how right they were.  Of course their conclusion for years has been that after the initial liquidity crunch, there will be a rush to gold and commodities in general.

Although everybody was giving the global Feds a big thumbs-up for injecting over $135 billion of liquidity into the system last week, one needs to realize that this comes at a price of inflation.  To contain the problem, the Feds either need to inject liquidity or lower interest rates, both of which continues to increase the supply of money which in turn increases inflation.  And it seems people are recognizing this as gold is suddenly everybody's friend again.  Gold and silver bullion, and even their stocks, have been holding up quite well during the past month.  It probably helps that they were already pretty beaten-down for the past year.  But I think more likely this subprime mess is a catalyst waking the world up to the major mess in the financial system.  During financial catastrophes, gold is and will always be a safe-haven.  (For full disclosure, at least 30% of my assets are in precious metals.)