Silver

[mach]

I am currently short silver via ZSL (held over the past weekend). I looked at 3:50pm at the 1 year chart for SLV and decided to hold onto my ZSL. I am well aware of what is going on in Europe with Greece, Spain, Italy, etc... as well as the drama over here RE: the debt ceiling.

The simpliest move is to go long silver/gold (all in - without margin) as a safety play.

I am betting the opposite of that at the moment because in the PMs - you have to do the opposite of what you feel/think.

I gotta tell you though - it doesnt feel comfortable at all. Everything in me is screaming to go long 100% and yet I am holding onto a 2x short of silver (I still have my physical position and various mining stocks).

Interesting times....

Anybody treading presious metal knows about the seasonal low in July-Aug timeframe. Most of the analyst out there predicting gold to be $1800 to $5000 in year 2012...

Don't you think big boys will always do oposite of most of people think & do ? :confused:

[krugger3]

Looks like Straw wins today. Nice play to you.

[jbilprophet123]

yesterdat went short gold 1554 did not like action. First went long silver and covered gold at 1552. Ended up long silver via AGQ 50% position at silver 35.30 will like to hold it.. Thght long at almost top of the day nah .. too much strength of gold so will keep it.
Rest half will be deployed after a few days or weeks ..

[anywoundedduck]

Looks like Straw wins today. Nice play to you.

Close, but no cigar. And doesn't jbil like to live on the edge! That boy is either going to be rich, or poor. Me? Still holding tight. No complaints.

[krugger3]

I think Straw sold and took his profits.

[fat panther]

Anyone getting nervous, ready to bail gpr (great panther)? Looking toppy to me right now considering I feel an overall topping/softening. I hate the word crash.

[Eat Beef]

Still riding freebies from 5 years ago, let 'em ride!

[jbilprophet123]

Sold AGQ Silver quite possibly is going much higher now.
But 23 points gain in 2 days made me do it.

Selling on breakout of gold to ATH print with so much momentum bad bad chicken trade.
But 13-14% gain in two day ..

[Eat Beef]

Good trade jbil, you never lose money when you're making money!! After all, someday we'll get a retest...

[Strawboss]

Sold my ZSL yesterday (not as soon as I would have liked to have). I didnt buy AGQ as I wanted to wait a bit and see what was going to happen, especially with Bernanke testifying today (usually they suppress PMs during these farces). Now that the cat is out of the bag - QE3 has been pre-announced, you are going to see gold/silver scream higher. I am currently looking for a intraday dip to get some SLW (I think it will perform well) but, so far the market hasnt let me.

Just so you know - wave 3 of 3 is about to begin and when we look back, you will be able to identify its beginning with Bernankes testimony today.

[jelly]

Just so you know - wave 3 of 3 is about to begin and when we look back, you will be able to identify its beginning with Bernankes testimony today.


SB, Wave 3 of what? up or down? Sorry, I don't understand.

[King Of Budz]

Nice trade on the ZSL Strawboss. Looks like you sold at just the right time.

Silver is meeting some resistance, paired with the downtrend in the dow, and the 5% gain in silver today.

I'm going to go out on a limb here and pick up some ZSL at $15.40 and hold overnight and maybe into Friday.

I'm thinking people will be locking in some profits tom. We'll see.

[Strawboss]

8851

They say a picture is worth a 1000 words. Notice that price closed today ABOVE all of the moving averages, both simple and exponential. Also notice that the 10 day average crossed above the 20 day which means that dips will be bought.

Its time to get long I believe... Bernanke put to rest any question as to whether there will be a deflationary wave (he wont allow it).

Wave 3 of MAJOR THREE is upon us. It is the biggest upward wave of the ENTIRE bull market (and may take silver to approx. $175ish before its done).

Prior to today, you know I was leaning towards being skeptical - waiting for the banks to play their games. That is no longer an option for them as Bernanke showed their cards (QE3 is coming).

For those of you new to silver, I have some very simple advise.

BUY-SILVER-TODAY

Physical silver (not paper) and dont worry about what the price is today, tomorrow, next week, next month or next year. Just buy it and hang on tight.

For everyone else - my reasoned judgement is that the tide has turned and that the equities (miners) are going to vastly outperform the metals by the time MAJOR THREE is over.

[bemac]

Are we gonna see QE until China and/or the USA collapses? :biggrin:

[Strawboss]

Yup................As Sinclair has been saying for years..."QE to Infinity...and beyond!" (ok - a little Buzz Lightyear in there).


Are we gonna see QE until China and/or the USA collapses? :biggrin:

[Zed]

$38.60, daily closing basis is the breakout number if you choose to buy a break. Otherwise it was a period to buy weakness, buying today is higher risk as we have not got price advantage and we have not broken out of the sideways move. Nice strength but will it follow through, looks like it might but it remains a higher risk entry point.

2c

[Strawboss]

The key to me is the RSI moving above 60 on a daily close. That is a very reliable indicator of a trend change. Not foolproof of course, but, highly reliable. Besides, I am talking to the newbies about buying physical (not paper). Even if price was to pike - the premiums would simply rise anyways - hence, "BUY TODAY".Also, if you wait til a breakout on the close, the dowside risk is actually higher if it is a false breakout because you bought at a higher level (assuming the close would be higher than $38.60.

My number on a daily close is $39 as that is a stronger resistance level. I am thinking we are going to push through that tomorrow keeping in mind that Bernanke has to speak to the Senate (more opportunity to discuss QE3, more time for more "crisis" news from Europe, etc...

Also, you can bet your last dollar that there are hundreds/thousands of fund managers, hedge funds, etc... discussing this evening Bernankes remarks and the implications of them. They are discussing what the impact of QE3 will be, what will be affected, what the plays are, etc...

Everybody familiar with the gold/silver markets knows about the summer seasonals. With each year, more and more attempt to front run the trends - each year more and more try to pre-position positions in advance of the trends.

I gotta tell you - todays comments by Bernanke completely changed my mind regarding there being a deflationary headfake to provide political cover for QE3. I think he is jawboning the markets to essentially tell them they dont have to worry about downside risk because the Fed is going to ensure there is no downside - US dollar purchasing power be damned.

Also keep in mind that there is no question that the US is going to increase the debt ceiling by multiple trillions. They have to roll over $500 billion in August, not to mention all the money they have raided out of the pension funds they will have to replace, not to mention the $120+ billion they will need to cover operating expenses for the month of August. It is conceivable that they will need to sell close to $1 Trillion in new debt NEXT MONTH. Gold and silver typically smell out such moves in advance.

I think that is what we are beginning to see and I am really thinking that is going to continue to push both gold/silver higher. Furthermore, I really think the mining shares are about to have liftoff. They are soooooo attractively priced...

Sorry for the rant, I could go on and on and on...

[Gcubed]

Short term, buy gold. Europe will support your bet. Silver will dump with Mr. Dow in the mean time. QEIII aint here yet. Ben will have to justify what he hinted at. It will take some time to justify. Take that to the bank. JMHO.

[Zed]

I'm fading you G....

This is as bullish as all get out! QEIII is at the beginning of the process of being discounted into the market. The market will fire up and finish up prior to the fact... started just prior to June 30 because it was "the fact" date being the end of QEII. The selling was all over bar the shouting ahead of that date... blind Freddy knew it was coming... markets look forward not backward... QEIII + Election on the way = FUBAR Stock, PM and commodity bears.

JMO

[Gcubed]

I'm fading you G....

This is as bullish as all get out! QEIII is at the beginning of the process of being discounted into the market. The market will fire up and finish up prior to the fact... started just prior to June 30 because it was "the fact" date being the end of QEII. It was all over bar the shouting ahead of that date... blind Freddy knew it was coming... markets look forward not backward... QEIII + Election on the way = FUBAR Stock, PM and commodity bears.

JMO

OK, We work de-tails out on scrap. ;)

[jbilprophet123]

OK, We work de-tails out on scrap. ;)

QE3 was hinted and some will say news is factored in.
Aug 2 is approaching and QE3 lot of anti forces are now in play.

If things are all fine and markets rallying till aug2 then the reason and willingness to accept QE3 compared to tax increase rationale will be lower.

so if QE3 is needed a top here and very soon must happen.
If it does not then QE3 is in danger and so on..

The test of breakout and real fear which happens around bottom has not really happened in the recent correction
of PMs.

Somewhere around july-aug typically is the seasonal low for PMs before real marching ahead for the year end rally..

VIX fear is gone out of the market now..

Last but not the least in any way stefanmo model from his blog will say today 1590s is the highest point
of gold valuation for this value of USD.
Unless a huge higher level standard deviation is about to setin which does not sound realistic looking at above points..

What it says to me is even though it is possible that another 1 or 2 % will come in gold as a spike above valuation model
(like that of below the lowest point)
this remains a high risk entry point i concur..




Happy sitting on sideline again waiting for better entry point after 2 day trade of silver..

[Zed]

So far we have no break of the $38.60 level ($38.59100!) on a daily closing basis. FWIW it looks like we will have a reaction from this level, personally I would be targeting the 50DMA area as the next low risk entry point that also offers a logical stop loss level. For now it looks like there will be a little more sideways action, hopefully the short term trend out of the end of June holds and we set a higher short term low (50DMA area?). We then have a crack at the $38.60 line again! Failing support at the 50DMA the high 33's looks doable.. if we hit the 200 DMA area I would be calling a high probability buy.

[fewferfev]

jbilprophet123, about the VIX fear "gone out of the market now" -- here is a read for you:

by Shah Gilani, Contributing Editor, Money Morning

Original Title: The Stock Market Volatility Index: What the VIX is Telling Investors

In the early ‘80s, when I was running a hedge fund from the floor of the Chicago Board of Options Exchange (CBOE), I was a market maker in OEX options. The OEX is the Standard & Poor's 100 Index. The CBOE Market Volatility Index (VIX) was born from trading options on the OEX and from our desire to more accurately price risk. The stock market volatility index (VIX) - or "fear gauge," as it's often called - has been giving off unexpectedly low readings in 2011. But don't be fooled, things aren't what they seem.

Follow up:

Structural dynamics are currently suppressing the VIX, and are diminishing its predictive power.

If you want to trade this as a speculative investment - or even if you just want to use the VIX to better hedge your portfolio holdings - you need to understand the forces that are working on this stock market volatility index.

Let me explain ...
I Was There for the Birth of the VIX

Back during my hedge-fund days, we used Monchik-Weber machines with their built-in Black-Scholes options pricing formula to help us mathematically measure put and call-option values. The computers would provide us with the theoretical value of the options we were trading.

But it wasn't long before a gap between those theoretical values and the actual market prices drove us to find a different way to measure volatility. To calculate "implied volatility" - the estimated volatility extracted directly from bids, offers and actual prices - we looked at real-time prices as opposed to theory.

Simply put, based on actual prices for calls and puts on the OEX, we separated out implied volatility and used it as a measure of what traders were expecting to happen.

This volatility measure is the expectation of price movement over the next 30 days. The higher the reading, the more likely stocks are to move in one direction or another.

Over time, our volatility index became known as the VIX. And eventually, the VIX - not the OEX - became a measure of options-pricing volatility based on the Standard & Poor's 500 Index.

The VIX is called the "fear gauge" for a good reason: As that index rises, it's basically telling us that traders and investors are paying a greater premium to buy options, mostly because they are "paying up" to buy puts.

The Stock Market Volatility Index: What's at Work?
I'm often asked this question: If there's fear in the marketplace - and traders are buying puts and their prices are increasing, and they are selling calls and their prices are decreasing - why don't the two cancel each other out and the VIX react less dramatically?
That's a great question.

And the answer comes in two parts.

First, "selling calls" is a hedge against falling stock prices. But when you sell calls against a position you hold, you only collect the "premium" or payment that you sold the calls for. No matter how far the stock falls, your downside protection is limited to the money that you collected for selling the calls, meaning this hedge has limited value.

On the other hand, by "buying puts," you can hedge or profit from a steep-and-lengthy drop in the price of the underlying stock. Even more important, in a sell-off or outright panic, investors and traders are more inclined to buy puts as protection or as a speculative position without too much concern for the prices they have to pay. That's why volatility spikes in fearful markets.

That brings us to the current situation. I think we'd all agree that there's been an awful lot of fear in the markets of late. And yet the stock market volatility index - the VIX - has remained stubbornly below (often well below) its historical norm of about 21.

So just what's going on here?

Going by these low VIX readings, investors and traders have been shrugging off a whole host of negatives that are hanging over the stock market. Bullish investors would have us believe that stock prices are very effectively climbing the proverbial "wall of worry," meaning "the market" sees good times ahead for stocks.

That may be true. But there's also more to the story.
The Rest of the Story
Before the markets reached recent highs this past spring, investors and traders began protecting accumulated profits by selling calls against their holdings. I'm not just talking about individual investors; I'm talking about institutional players, too.

At the time, all sorts of potential market "headwinds" were grabbing headlines - everything from the twin tragedies (earthquake/tsunami and nuclear disaster) in Japan, inflationary fears and the approaching end to QE2 here in the United States, soaring oil and commodity prices, and the convulsions in the Middle East, to name just a few.

What we saw was that put buying was met head-on by even-more-robust call selling. So while the buying of protective puts should have lifted the VIX, a steady stream of call selling was offsetting what would otherwise have been generally widening premiums.

The more the markets digested the bad-news headwinds and the higher stocks edged, the less put-option prices were being bid up. What's more, as things have quickly settled, call sellers have added to the downward direction of the stock market volatility index.

But there are larger, more-important structural dynamics working to keep the VIX low.

For one thing, the so-called "reach for yield" in a very-low-interest-rate environment is causing investors - and especially institutions - to sell calls against stock holdings in order to generate income.

Demographics are playing a role, too. Baby boomers have started to retire. As boomers age, they are switching from stocks to fixed-income investments, which reduces the demand for put protection as they unwind their equity holdings.
Hedging and Speculation Strategies

The real question to ask is: So where do we go from here?

It remains to be seen whether the selling of calls for income is a statement that investors believe the market has limited upside. If so, that would mean that they're willing to trade away the small chance that there will be a substantial increase in stock prices in return for a boost in their income.

It also remains to be seen whether a low VIX means that the premium options sell for is lower, making it necessary to sell more options to garner additional income. If that's the case, the lower level of this stock market volatility index would be structural, and thus self-sustaining.

But it's also possible that a terrible danger is lurking behind these low VIX readings. And that's something you need to beware of: Just because it appears as if the markets have adjusted to all these headwinds and haven't corrected meaningfully doesn't mean that they won't.

That brings us to hedging and speculation strategies.

In terms of hedging, what I can tell you is this: The low VIX creates an excellent opportunity for you to buy put protection at reasonable prices. In the face of future unknowns, and as long as implied volatility is low, you should take advantage of cheap puts to add some portfolio protection ... just in case.

For traders of the VIX, holding positions for big moves is out of fashion and foolish. Until the VIX stops trading in narrow bands, traders should take smaller profits and be quicker on the trigger when their trades are in the black. They can always keep a deep out-of-the-money position in calls if they want a longer-term, investment-type play.

Although the VIX is a stock market volatility index, traders and investors need to understand that it's really no different than any other investment instrument - meaning that it, too, is vulnerable to structural changes and the dynamics of constantly moving market expectations. You should always understand what's going on with the instruments you invest in and trade ... and avoid at all costs getting blindsided by moves that you could have anticipated.

[fewferfev]

also, this very fine article by AlbertaRocks:

http://econintersect.com/b2evolution/blog3.php/2011/06/16/why-isn-t-the-vix-surging

[Lore]

That last bit of discussion dovetails with my notion that technicals give way to EVENTS. In a normal market, things work in normal fashion. But we are talking about collapse of the Euro, collapse of the Dollar, crisis in Pak/India, Pan Asia Gold Exchange, breakdown in international relations, things popping up like a game of wack-a-mole...

Examples:

- Japan's economy was stable, GDP upticking nicely, and then WHAMMO! THE JAPANESE ECONOMY IS DEAD - A HUGE SWATHE OF GLOBAL COMMERCE WIPED OUT IN A BLINK. Who foretold that?!?
- Eurozone Emergency Meeting PUT OFF (http://www.straitstimes.com/BreakingNews/World/Story/STIStory_690592.html)
- Karzai's brother wacked. Karzai next?
- India connection to Mubai bombings? US already at war with Pak; got to back India, likely send a pile of troops...

Every near term bottom can reasonably be construed as 'support' for next unexpected bit of SHTF. Elliott Wavers will be reading their retroactive tea leaves for the next hundred years.

JMO... BUY PHYSICAL AND HOLD, BUY SHARES FOR SPEC, VERY RISKY TO TRY 'TIMING' THIS...

[Zed]

Nice work people! :biggrin:

[gpond]

Nice work people! :biggrin:Yep, new buy signal on the silver today. First one since the recent unpleasantness.

[Strawboss]

Silver closing on a WEEKLY basis above $39 is HUGE!

If you have been sitting on the sidelines - thinking about buying silver, I would strong suggest that you do it NOW!

If you understood how little physical silver there is and the enormous amount of fiat that is going to be chasing it...

Silver is the investment of the decade.

Just sayin'...

[prophet]

Is silver officially outta woods? :)

[Strawboss]

Clive does a good job of showing just how attractive a silver entry is currently:

http://www.clivemaund.com/article.php?art_id=67