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Trading Volatility, Ballasted by Gold

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It was certainly an excellent entry point.

 

And where do you reckon the Dollar Index / Gold would be trading at with Silver at $100?

Gold? It's on the base-line now [1600] so in 2 years the base-line should be around 2300/ 2400 [20 odd % yearly appreciation]. From there it should go on a wild spike at some point. Assuming the spike is similiar to the recent one which saw gold go from 1500 to 1900, gold could predictably spike from say 2300 to 3000.

 

So silver spiking to 100 could see gold spike to 3000.

 

 

 

Dollar index? Haven't the foggiest. Only doubt it will collapse. :rolleyes:

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buyweekly.png

 

 

With AGQ close to a heavy buy order placed at 50, have bought it here with half the funds. Rest of funds still placed for 50.

 

 

 

Bubb, if you read this can you move this thread back over to the Open Blogs section as do not post on this thread often and can therefore be difficult to find. Cheers.

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buyweekly.png

 

 

With AGQ close to a heavy buy order placed at 50, have bought it here with half the funds. Rest of funds still placed for 50.

 

final.png

 

 

Close enough to 50, so have bought with the last of my earmarked funds.

 

 

I've now pretty much exposed to precious metals with all my liquid worth, with this trade balanced against core gold. Will be keen to reduce a lot of that exposure on the next silver spike. Target of 600 odd in two years or so.

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bump

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I'm really not sure about your target of 600, but I agree that we've recently had a good entry point. I bought on Friday at a price of $52.86. I decided to buy based on a belief that QE3 will push the price of silver/gold up (I also hold physical), and various SMA charts suggested a low was approaching. I got a nice move up after purchase on Friday and on Monday, while it fell back a bit today. I'm happy with the timing, and my target is only around 70. I'm not expecting to hold for long, but as always, things can change. I'm playing with money inside my "trading account" here, it's a relatively small amount and I'm happy to take on more risk than my other portfolios.

Yes, looks a good entry point.

 

This instrument looks like a good one to trade in the shorter period. Thought about it myself [over and above - or below - the medium term] but personally have neither the time nor inclination for the shorter term trading, or day/ week trading.

 

Still, may give it some thought.... and may shorter term trade a 1/3 of my medium term longs.Would then want to sell a bit on a silver spike and higher than the previous one. I guess that would be trading in the short/ medium term. It would also serve to hedge the heavy medium position.

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RH

 

I don't know how to post charts, but went to Yahoo Finance and got a two year chart comparing AGQ with SLV

 

The result was using AGQ had no advantage over SLV at all !!

 

You maybe increasing your risk over the two odd years time frame, without getting ANY benefit.

 

Hope this link works........

 

http://finance.yahoo.com/q/bc?s=AGQ&t=2y&l=on&z=l&q=l&c=SLV

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RH

 

I don't know how to post charts, but went to Yahoo Finance and got a two year chart comparing AGQ with SLV

 

The result was using AGQ had no advantage over SLV at all !!

 

You maybe increasing your risk over the two odd years time frame, without getting ANY benefit.

 

Hope this link works........

 

http://finance.yahoo.com/q/bc?s=AGQ&t=2y&l=on&z=l&q=l&c=SLV

Thanks for posting that. Yes, this is a high risk trade. The kind of trade I'm looking for is to sell in the short/ medium term. On the chart you've posted that would be similiar to the first half of the chart where it spikes to 400%. The important thing about the trade is to sell on the spike... and to have bought on the dip. Just sitting for a fixed term would be a bit senseless.

 

The post above yours also thinks about hedging the Medium term of this instrument by using half of the AGQ position to sell and buy within the shorter term on smaller interim spikes/ dips. A hedge within a hedge so to speak.

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Watching this closely for a last throw of the dice:

 

 

gold_1_year_silver-4.png

 

R.H what exactly are you watching it for? What chance that still heads higher, but silver might fall further if the markets get "Greeced".

 

b.t.w that brief dip below 30 you mentioned to me back in March, looks to have outstayed it's welcome :lol: Just relieved to be sitting out the paper trade right now phew!

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R.H what exactly are you watching it for? What chance that still heads higher, but silver might fall further if the markets get "Greeced".

Yes, silver had dipped a couple of times to round 25 already [reflecting the magnitude of the 50% decline seen in 2008] So on another leg of deleveraging silver may once again go as low as 25. I reckon this will see the ratio spike above 60 as gold may decline less than silver.

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Yes, silver had dipped a couple of times to round 25 already [reflecting the magnitude of the 50% decline seen in 2008] So on another leg of deleveraging silver may once again go as low as 25. I reckon this will see the ratio spike above 60 as gold may decline less than silver.

 

My favourite LSIL looks in a hurry to get to last 2 year low of around 20, going nowhere near it, until that trend is hit or breaks up.

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My favourite LSIL looks in a hurry to get to last 2 year low of around 20, going nowhere near it, until that trend is hit or breaks up.

This looks the bottom to me... third time down, and slow grind down this time:

 

silv-1.png

 

 

agq2.png

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aagq.png

 

Silver looking back in business.

Indeed.

A nice run-up in AGQ

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silvercheck.png

 

agqcheck.png

 

Comparing AGQ to silver, you can see the 'time decay' element in the leveraged ETF. Though excellent for short/ medium term volatility, time decay may make it more problematic for sititng on. To hedge the risk of this, I've decided to trade half the position; take a 50% profit on half, and re-invest after a period of consolidation. Even though this may mean buying at a higher price, the point of the hedge trade is to increase a US dollar position.

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silvercheck.png

 

 

 

Comparing AGQ to silver, you can see the 'time decay' element in the leveraged ETF. Though excellent for short/ medium term volatility, time decay may make it more problematic for sititng on. To hedge the risk of this, I've decided to trade half the position; take a 50% profit on half, and re-invest after a period of consolidation. Even though this may mean buying at a higher price, the point of the hedge trade is to increase a US dollar position.

 

Even with the element of time decay taken into account, AGQ should perform at least as well as the $silver ETF over the longer term. Hence do not mind leaving the other 50% sitting in it.

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Actually, you may well find that the points where you are tempted to sell are the wrong points, it's at the point where you absolutely do not want to part with the position that you need to start thinking about unloading. Here's a quote of mine back when silver peaked in April 2011;

 

I'm not posting this to "big myself up", I'm posting it to point out to you how very difficult it is to unload at precisely the right time since the bullish fervour was unrelenting, people were talking about the move continuing up to $75 and $100 and there were a lot of expectations in the market that this would happen, (together with some absurd predictions of $6,000 etc). I am always very wary indeed when I hear people in the financial markets (escpecially prominent voices) talk in absolute terms.

 

eg

 

 

That was right before the top and he got it 180° wrong, in fact he couldn't have got it more wrong.

 

It's worth bearing these things in mind Romans.

 

Thanks for the thoughts PD, but I think you haven't understood my over-all strategy. It is a hedging one, in the full sense of the word, so I should not find myself tied up in a psychological knot about whether to sell or not. Your reply is to a post where I was wearing my bullion bull hat. If you look at the following two posts of mine, I am wearing my dollar bull/ trading hat.

 

To clarify, here are the two aspects that hedge each other:

 

1] Stay long AGQ. Even with time decay, the double leveraged instrument should do at least as well as silver. Here I am wearing my bullion bull hat.

 

2] Trade another AGQ position where I am concerned solely in using the volatility in silver to increase US dollars. Here there is not too much concern about the price of silver going higher when I sell as the long position covers that. The point is to identify reasonable/ good enough entry and exit points. I'm thinking at this stage of selling each time on a 70-100% gain. I am wearing my dollar bull hat here.

 

On the face of it there is a straight hedge here. But over and above this, and with the macro theory of hyper-deflation in mind, the long hold and the short trade of AGQ can also be considered complementary; the expectation being both positions appreciate in value due to the fact that silver will remain volatile to both sides against the dollar.... though appreciating in the aggregate. It will be interesting to see whether the trade will outperform the hold.

 

PS, I've never followed James Turk, nice enough guy but he has his own wheel-barrow to push being in the bullion business.

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Yes, silver had dipped a couple of times to round 25 already [reflecting the magnitude of the 50% decline seen in 2008] So on another leg of deleveraging silver may once again go as low as 25. I reckon this will see the ratio spike above 60 as gold may decline less than silver.

 

Great call R.H

 

My favourite LSIL now on an upcurve breakout, I waited until 40 was broken and got in at 42, hoping for a slight pullback to double up with an initial target of 60 on that chart. If 60 breaks it's off and running bigtime for me.

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Great call R.H

 

My favourite LSIL now on an upcurve breakout, I waited until 40 was broken and got in at 42, hoping for a slight pullback to double up with an initial target of 60 on that chart. If 60 breaks it's off and running bigtime for me.

 

Cheers.

 

I will continue trading the volatility of silver perhaps as much as two or three times a year. Low frequency trading because each trade is, in relative terms, a large portion of my stash. Though in the mediate term am confident these instruments will rise, will be interesting to see what they do in the immediate term.

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silvercheck.png

 

agqcheck.png

 

Comparing AGQ to silver, you can see the 'time decay' element in the leveraged ETF. Though excellent for short/ medium term volatility, time decay may make it more problematic for sititng on. To hedge the risk of this, I've decided to trade half the position; take a 50% profit on half, and re-invest after a period of consolidation. Even though this may mean buying at a higher price, the point of the hedge trade is to increase a US dollar position.

 

agqsave.png

 

Looking good so far.

 

BO 40 Ex. 25.12

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My favourite LSIL now on an upcurve breakout, I waited until 40 was broken and got in at 42, hoping for a slight pullback to double up with an initial target of 60 on that chart. If 60 breaks it's off and running bigtime for me.

 

Went to plan B and bottled LSIL at 48 today, looked worringly like it could dive back to my buy in. So will watch and hope it goes there, if not around 15% is better than nothing. Just couldn't decide whether to double up or take profit at the weekend, so sitting out seemed the best option.

 

Not sure the calculation to your AGQ at 40, but would suit me fine!

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