Getting Apocalyptic

I am on the verge here of getting too negative on everything. Hurrican Rita is coming and it is not looking good. Is this a gut overreaction to what happened with Katrina? It sure doesn't look like it tonight - although we won't know until this weekend the extent of the damage.

My gold trade is already running - up 20% from yesterday's buy-in. I was hoping to dollar cost average in at lower prices over next 2 weeks, but that is out of the question now. If hurricane turns out at what its lookin like - the Government is going to have print another $50-200 billion dollars to bailout the south. The Fed will also be under enormous pressure to drop rates.

There is a bigger problem though. The energy inflation going through the economy right now is putting pressure on bond prices and we may see sharply higher interest rates over next two months. I would put the probability of a total stock market crash this fall at around 50%. I would expect a draw-down into the 8,000 area on the DOW and the 1,700 area on the Nasdaq.

I am probably going to be purchasing the Wachovia or some other bank/financials put options tomorrow. I am also going to add to the gold position. I am also thinking of picking up the Pulte (PHM) puts. I have about $11,000 in account right now. $1,800 position in GoldCorp. I am thinking of adding a $2,000 position in shorter term Newmont calls. I am thinking of adding a $1,000 position in Wachovia put options. In Pulte - I am not sure if I will pull the trigger there yet but I wan to.

I want to maintain at least 5K of cash - which will become 7K in next few weeks when I add the final 2K contribution for the year. Assuming there is no significant drawdown that would leave me with 50% cash position so that I can be ready to pick up the Chemicals (DOW) or The9 (NCTY) - on the crash day.

Please tell me if you think I am crazy / losing it.

Regards,

BG