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Trading Volatility, Ballasted by Gold

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Do you have a target in mind? The lower it goes, the more bearish all will be on silver. The risk is you'd never buy.

 

 

My original plan was to wait for signs the correction was over in LSIL, so I dithered round the 50's(risking I'd never buy :lol: ). Just as well, since on a 2 year chart I noticed a h/s form and drop to the 40's followed, only to be duly tested for several trading days and that hasn't held either.

 

To my basic charting knowledge this could go all the way sub 30 :o

 

For the record from me, I hold a core "insurance" position and have accumulated a little to it, as I believe for whatever reason, I'm finding disconnect between physical and paper markets. Of course it's possible I'm paying over the odds. But thanks to the wise Steve Netwriter I long ago decided to keep 10-20% in G/S - which I simply don't trade, just add to relative to other positions. B)

 

EDIT: Should add would have bought more on this drop, but my trading profits have not been so good this year :rolleyes:

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My original plan was to wait for signs the correction was over in LSIL, so I dithered round the 50's(risking I'd never buy :lol: ). Just as well, since on a 2 year chart I noticed a h/s form and drop to the 40's followed, only to be duly tested for several trading days and that hasn't held either.

 

To my basic charting knowledge this could go all the way sub 30 :o

 

For the record from me, I hold a core "insurance" position and have accumulated a little to it, as I believe for whatever reason, I'm finding disconnect between physical and paper markets. Of course it's possible I'm paying over the odds. But thanks to the wise Steve Netwriter I long ago decided to keep 10-20% in G/S - which I simply don't trade, just add to relative to other positions. B)

 

EDIT: Should add would have bought more on this drop, but my trading profits have not been so good this year :rolleyes:

Like you I keep a good percentage of my liquid worth in gold. Interesting you mention Steve Netwriter. He hammered me early on for not using log charts. I find it odd that the long term trend of the log is largely ignored by a certain sector of the gold community today. More interestingly though, is applying the long term log to silver. That is where the trade is, and for dollars, in order to hedge a heavy core in gold.

 

As you say, silver could go down further. I won't be too concerned as I consider this something of a "position" trade. I'll sit on it for a good couple of years.... unless silver does suddenly spike to 100. Good luck with your trade.

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Some signs that the bottom is in. An eight month rise followed on by an eight month consolidation:

 

silver-9.png

 

Hey Romans my LSIL surged through the old 50 support, which I took as the ceiling, so looked a good signal we are off the bottom for me b.w.d.i.k

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Hey Romans my LSIL surged through the old 50 support, which I took as the ceiling, so looked a good signal we are off the bottom for me b.w.d.i.k

Yep, I think 26 silver was definitely the bottom. Could now just be a long grind up. The difficulty I foresee is restraining myself from selling for a good profit when a more excellent profit could be realized by waiting for a good year or two.

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A few sources now are not ruling out a retrace this year to below $30 to possibly $26.

 

 

I doubt it, but it's possible. I don't mind if it re-traces as am in the trade for a longer time frame. Actually, I've just put on another buy order which would trigger with silver at around 30.

Sure enough, silver looks to be consolidating here. I think the bottom is in, but the run-up was steep. A re-trace to 30 could be in order. This would be near equivalent to 50 on AGQ, where I have put another buy order on.

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Beep, beep, beep, beep.

 

(Already backing up the truck, just in case. :D )

Hang on a sec. Silverfinger well and truly backed up his truck long ago.

 

Don't you think you are over-stating your case here?? I imagine you are in fact backing up your briefcase in order to convert your monthly wages to metal. :lol:

 

Me? Just sold goooold in order to put another buy order on a leveraged silver ETF [with silver at around 30]. If it works out, imagine I'll be the first to sell once silver hits 100. There's an exit strategy for you.

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Me? Just sold goooold in order to put another buy order on a leveraged silver ETF [with silver at around 30]. If it works out, imagine I'll be the first to sell once silver hits 100. There's an exit strategy for you.

 

R.H looking at my LSIL we are holding around the low 50's, the support is 40 and any drop ought to go there, but why should it drop anytime NOW, around 20% ish? Can't quite get my head round the fundamental reason.

 

Like you I would also load up some more if it did.

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Hang on a sec. Silverfinger well and truly backed up his truck long ago.

 

Don't you think you are over-stating your case here?? I imagine you are in fact backing up your briefcase in order to convert your monthly wages to metal. :lol:

 

Me? Just sold goooold in order to put another buy order on a leveraged silver ETF [with silver at around 30]. If it works out, imagine I'll be the first to sell once silver hits 100. There's an exit strategy for you.

 

Out of interest RH, do you think it is a good idea to be in a leveraged ETF for a prolonged period? Tend to see these as only suitable for shorter term directional moves myself.

 

Observes that none of us (presumably) know the size of Goldfingers pay packet he might just need a pick up truck for his monthly purchase. :lol:

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R.H looking at my LSIL we are holding around the low 50's, the support is 40 and any drop ought to go there, but why should it drop anytime NOW, around 20% ish? Can't quite get my head round the fundamental reason.

 

Like you I would also load up some more if it did.

No fundamental reason. More just looking at the chart. Silver went very fast from 26 to 34, so you'd expect a pull-back before heading higher. If that pull-back doesn't occur I'd think about buying again at around the current level.

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Out of interest RH, do you think it is a good idea to be in a leveraged ETF for a prolonged period? Tend to see these as only suitable for shorter term directional moves myself.

Risky, yes. Which is why I won't want to be in it too long. Around two years should suffice with the idea of silver going from 26 to 100. 100 is the selling target, and the exit plan.

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R.H looking at my LSIL we are holding around the low 50's, the support is 40 and any drop ought to go there, but why should it drop anytime NOW, around 20% ish? Can't quite get my head round the fundamental reason.

 

Like you I would also load up some more if it did.

Silver-Art.png

 

As posted by Warpig on the silver thread.

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Check out the recent correlation between the Euro and silver. They are both moving in tandem against the dollar. If the Euro comes under pressure next week due to a refocussing on Greece then silver should also come off a bit.

 

http://www.reuters.com/article/2012/03/02/us-markets-forex-idUSTRE81Q0E520120302

 

Euro falls as Greece moves back in spotlight

 

 

(Reuters) - The euro ended a roller coaster week sharply lower and may come under further selling pressure as Greece's bailout moves back into focus, and as the European Central Bank chimes in on monetary policy next week.

 

The euro dropped against the dollar for a third straight day on Friday and was on track for its worst week since mid-December after debt-burdened Spain challenged the European Union's new fiscal pact.

 

Spain, the euro zone's fourth-largest economy, set a softer 2012 deficit target than originally agreed to under the euro zone's austerity drive.

.....

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What do you think of VIX at this stage, RH?

 

It looks like it is set to move higher, and the gap up was closed yesterday

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What do you think of VIX at this stage, RH?

 

It looks like it is set to move higher, and the gap up was closed yesterday

Not following VIX much these days. More focussed on the trade above.

 

Silver looks due for a bit of consolidation at this level. If silver comes back of to 30 odd over the next month or so, another heavy buy order of AGQ will be hit. Think the low at 26 is in, but silver has run up a bit fast here.

 

 

longsiiiil.png

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Silver looks due for a bit of consolidation at this level. If silver comes back of to 30 odd over the next month or so, another heavy buy order of AGQ will be hit. Think the low at 26 is in, but silver has run up a bit fast here.

 

 

 

R.H I'd love to see Silver back at 30, it would probably get close to the LSIL 40 support, which would indicate a strong bounce for me, or massive fail. For now I've really gambled and taken small beer profits off the table; only because mine is a ISA paper trade.

 

Still buying by other means ;)

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R.H I'd love to see Silver back at 30, it would probably get close to the LSIL 40 support, which would indicate a strong bounce for me, or massive fail. For now I've really gambled and taken small beer profits off the table; only because mine is a ISA paper trade.

 

Still buying by other means ;)

We've seen a two month run-up so a month of consolidation is a fair bet. I'm thinking a brief dip to 30 odd then a year of slow re-building in the high 30s and 40s. The model I have in mind is the long consolidation after the 50% correction in '08.

 

I can't see myself taking any profits on this trade for a couple of years. But an advantage of this trade [a heavy trade] is that when I do sell it will serve as an exit plan of sorts.

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silretrace.png

 

Here's the retracement I was looking for. Heavy buy order is still on at 50.

 

 

silverwave.png

 

 

Retracement in silver continuing.

 

Buy order at 50 [2nd buy order, got the first at 40... both are heavy buys], but will be getting itchy fingers at 55 no doubt.

 

 

 

 

longerlook.png

 

A longer term view. Looks like a solid bottoming pattern to me, with a higher high.

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Why AGQ over SLV? Just wondering

Because I'm looking to trade the volatility in silver. I only buy and hold gold.

 

The idea with silver is to use the volatility of silver to increase my holding of US dollars. This also acts as a hedge against an equally heavy holding in gold.

 

I don't consider it a complete hedge though and see gold and dollars as complementary forms of liquidity. Gold should still outperform dollars, but by trading those dollars against silver the dollar position may well outperform the B&H in gold... as gold is only rising 20 odd % yearly against the dollar.

 

This heavy and leveraged trade also provides an exit plan. There's a good chance that buying double silver at 26 and again around 30 will give over a 1000% return if silver spikes through 100 in the next 2 or 3 years. Best to sell on this spike when it comes because every chance that silver will then correct to 50.

 

I don't think silver leverages gold, all it leverages is the volatility to both sides. In the aggregate it should appreciate at a similiar rate to gold... 20 odd % a year.

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