Risk performs as Greece stays contained.. We bought Silver

Risk is back ON, thanks to optimistic headlines from "insider sources" on the Greek bond swap deal. Some are even suggesting participation of over 90% in the press, which we find very hard to believe.

Fortunately, we took some profit on our 1.3100 EURUSD put as this option may now prove to be worthless in 2 weeks time when it expires. However- we shall not close the trade, which is still in +ve MTM territory, as we feel the market is in "buy the rumour, sell the fact" mode and shall sell off steeply once CACs are used and the Greek CDS are triggered, perhaps causing a domino effect on some smaller peripheral banks.

It's worth keeping chips on the table to be exposed to this tail risk.

In order to hedge ourselves slightly to the upside, we took a small clip of XAG/USD (Silver) for a number of reasons:

1. Silver has shown strong support to a sell-off and has faired relatively well in risk-off scenarios, which we still believe are down the road. Timing in this type of market is a fools game, we are platonic.
2. We remain bullish on commodities in an inflationary outcome (read "currency war") and always look to buy on dips with Gold and Silver, depending on which looks better value.
3. The white metal has outperformed of late, mostly due to it being "safer" (not a word normally associated with Silver) than Gold in a loss-of-confidence scenario, whereby precious metals lose their safe-haven status. We assign a small probablility to this outcome and therefore it must be considered as the price movement would be violent.
4. In an out-and-out real recovery, Silver, of some industrial usem has a better chance of holding value.