Sold Silver, Increased Short Position

Sold my position in silver (Ticker USLV) after it appreciated about 35% since January 12. After working through some thoughts surrounding my Sagflation theme (to be posted shortly), I am increasingly worried about deflation and a market pull-back. I have little conviction that silver would perform well in a deflationary environment, although it may perform well during a stock market pullback coupled with an uncertain economic outlook.

Increased my position in the ProShares Short S&P 500 ETF (Ticker SH) to about 15% of my IRA. This increases my hedge on my long positions in equity, which represent a little over 15% of my portfolio. The problems in Europe may come to a head soon and the equity markets are at the top of their one-year range. Europe may muddle its way forward, resulting in the equity market breaking out to the upside. Instead, the riots in Greece suggest this could get really ugly. Additionally, it appears as if deficit reductions are going to be main presidential topic. Both tax hikes from the Democrats and spending cuts from the Republicans likely slow the economy, so I do not expect to hear an  economic plan that boosts the markets. Finally, I am becoming more nervous about the continued decline in non-central bank money in the money supply. The Federal Reserve continues to provide increasing liquidity, which at best provides stability and at worst is an artificial crutch for the economy, in my opinion. Until we work off the excesses of the past, I fear our future is low return.