My Two Biggest Concerns Right Now

Gold and silver have been experiencing a good December so far. However, it's not quite time to celebrate just yet because two things concern me at the moment.

Before I proceed, I want to say that I (as well as many others) are already well positioned with our gold and silver exposure. But as I said in an earlier post, I want to stockpile cash and not chase this move up for gold and silver right now because we may be in for a greater degree of short-term volatility.

Here are my 2 concerns:

1. Trump Tariffs
If the Supreme Court rules that the Trump tariffs are illegal, then it could push the market towards a more risk-on environment. This would be good for tech stocks. This would be good for specific stocks such as Walmart. The overall stock market could see a boost while hurting gold and silver.

A way to hedge against this outcome would be to go long on tech. You could buy shorter duration put options on gold/silver. You can write covered calls on gold/silver. There are many ways to hedge.

However, I am choosing not to take any action to hedge because if gold/silver take a hit, I believe it will be a short-term dip, and it would not change the long-term trajectory of gold/silver.

If there is a dip, I believe that silver will fall more than gold in the short-term. And I believe that silver miners would fall more than silver. In that case, I would be ready to buy the dip.

Keep in mind, all of this is just a concern, it's not guaranteed to happen.

2. New Fed Chair
The market expectation is that Kevin Hassett will be the new Fed Chair nominee. The odds of that happening are 74%-90%, depending on which odds site you're looking at.

Kevin Hassett is the most dovish of the top 4 viable candidates.

It's basically expected that Hassett will be chosen and come in with a more dovish monetary policy, which would be good for precious metals and stocks.

However, if Hassett is not nominated, then the markets (gold, silver, stocks) will most likely react negatively.

As you know, I have taken a small hedge, betting that Christopher Waller will be nominated as the new Fed Chair. The odds are near 20:1 right now. I risked a small amount of money (and it's most probable that I lose).

If Waller is nominated, then the markets should fall (along with my gold and silver), but this bet will pay-out 20:1.

If Kevin Hassett is nominated, then the markets should rise (including gold and silver), but I will lose my small bet on Chris Waller.

Anyways, this is why I'm not chasing this rally up going "all-in" because from my perspective, we're not in the clear just yet. These two concerns are lurking right around the corner. The Trump tariff decision may be announced any day now. And the new Fed Chair nominee is expected to be announced early next year.

So please avoid overleveraging. Keep your guard up and prepare to take advantage of any short-term dips.