The trigger is based on a pivot. Take a look at the chart again and you'll see that it won't need to be adjusted depending on what gold does on Monday.
I think I didnt quite make my point clear, so I will just rephrase it. I wasnt trying to say that NUGT could have 'as much' volume as SLV ( thats dreaming) :)
I meant to say the volume on SLV Increases about 5x this wk (from the 20 million avg daily in Jan and Feb, to the last couple of days being near 80 million) as the rush of buyers jumps in at the top.
So I was implying that maybe the volume on NUGT would increase 5x from its avg daily now, when the blow off top would arrive and you'd be looking to exit.
But Hotrod cancels that saying liquidity isnt an issue anyways :)
Thanks. Yes, I get that part, but if gold goes up another $20 before pulling back, then in a runaway move the $35 correction won't make it back to that pivot?
That pivot is a correction based on Friday close (don't want to put #'s because of premium content).
Silver report very strangely is quiet. Not much movement at all in any area despite the huge rise.
Gold report may be telling the story.
Commercials - Huge $13k more short contracts Large Specs - Immense $14K additional LONG contracts Small SPecs - $4k additional long and $4k additional short
Hmmmmmm. WHo are the "large specs" anyway?
Are the banks going short and also taking the long side of the trade in their "personal" accounts?
If it were not for the Commercial shorting, Gold would be going ballistic.
Gary, kudos on the last couple of posts, I like your latest plan and will happily follow you.
Had just been looking at the silver chart and worrying about its dizzying rise. My only thought about $50 as a trigger is that all kinds of people are probably watching for that level, so I might head for the door around $49.
In terms of the reallocation to gold, I notice that DGP is an ETN, while UGL for instance is an ETF. Though DGP is well established, have read that ETNs can be riskier vehicles. Anyone have any insight on this?
Lastly, Gary if you're expecting HUI to massively outperform gold on this C-wave finale, will you be considering reallocating any of your money from DGP and/or SIL/SLW to some gold miners? If not, why not? If so, any thoughts on NUGT as seems like one that would be up your alley with the 2x GDX return.
If there is a 3-6 dollar correction on the price of silver will this also have any effect on the miners. They already took a heavy beating and I hope they don't go further down!
One reoccurring theme I have noticed here, is so many people that insist on coming up with their own strategy that is going to beat a man that is at the top of his game.
Now I know from reading here we have a very wise group of people, but we now have a situation where silver has gone parabolic. Gary is once again trying to lead the horses to water, yet so many are stating their own better strategies.
Maybe these strategies will work out, but from the last run we had, so many people were saying they wished they had listened. A second chance is upon us, and I hope people take advantage.
I am not at all trying to take away from the great minds here. What I am saying is that you are listening to a man that has studied and prepared for this for many years. Take full advantage and give your own research a chance to catch up.
Just thinking with my fingers. Take it for what it is worth.
Niven, Why do you care where the miners go next week? Are you going to sell at the bottom of a correction even though you know that at the C-wave top the miners will be much much higher?
Perfect example. The miners took a big hit in March. If one sold into that pullback they missed the move to new highs that unfolded over the next three weeks.
Kitco had the spot market only up 7 cents today. I doubt we are going to see silver gap up $1.00.
More likely that big money will sell into the Fast Money recommendation. If there was ever a bell ringing at a short term top that was it on Thursday evening.
You know guys, Brian has it right (no offense to the Marine's Mom & wife), I paid good money, okay, okay, it wasn't much compared to other doofus guides who lead one astray, but I did, and I intend to follow Gary's lead, since I have heard from other subs, over and over again, how they have profited from his guidance. Sure you can modify the plan to suit your risk tolerances, but you should stay the course. I am very aggressive with my money, wanting it to work as hard for me, as I worked to get it (boy, if that isn't an Americanism, I don't know what is) but I have reduced exposure in options, adjusted positions Gary's profile and am waiting for a drop or slight correction to POUNCE and make a homerun. And it will all be based at Gary's direction, calculations and prognistications. (Feel free to quote me, but give me credit)
If you're saying that smart/big money will sell into the Fast Money recommendation then doesn't it follow that silver will be up first for them to sell into or just at these levels but with increased volume?
Also, do you agree with Adami that we will have a $7-$8 day one day soon?
If a plan is to sell AGQ when silver hits $50 then I want to enter a GTC order for AGQ when silver hits $50. Where do you think AGQ will be when silver hits $50?
I thought I'd publish some data for the last 2 c-wave tops for gold, silver and miners. Note that their repective c-wave tops might differ by a day. I am showing the data for these 3 corresponding to the date for gold's c-wave tops.
Gary, I'd love to get your thoughts as to how you'd play your hand if you were in my situation. Despite having never rode the PM bull in the past and against everyone's repeated warnigs, I thought that I could get cute and actually trade around this thing. I liquidated my entire silver position this week, because I was convinced that we'd rollover and I wanted to sell into strength. Well, now I'm pissed that I gave up my strong hand and am questioning my move already. Someone made the point earlier, but I do think one needs to make their own mistakes to internalize these lessons. Anyways, now I'm very nervous about throwing everything back in at your trade trigger, just in case it turns into something biggger. How would you suggest scaling back in at this point or would just push the entire pile of chips back into the pot?
My 2 cents is to get back in now. I also tried to get cute and I lost a lot of money for a guy like me. The truth is you might not get a pullback, and this thing will keep going and you'll never get back in.
Here's the deal if you get in now you should make money in 6 weeks. The fact that your indecisive sounds like your still trying to be cute(Greedy).
I made the same mistake, and I really hope I never let it happen again. If you get a 30 point dip on Monday consider yourself very lucky to jump back in there.
I really doubt silver will gap up $10. Maybe if it was selling at $100 to $150, but not at $47. That is way too large of a gap. Adami would probably like to trigger a retail trader gap so he can sell his position into it but I really doubt it.
PST, As long as you continue to think like a trader you are going to continue to make these mistakes.
Listen to what you said. You are afraid to re-enter because you might not time it perfectly and you might have to hold through a draw down.
I can guarantee you won't time it perfectly and that you will have to hold through a draw down. But I can tell you that the percentage gain from $46.70 to $50 is still 7%. In AGQ it's going to be a little over 15%. You are going to make at least that much no matter what kind of draw down you have to hold through unless you think this is the top of the C-wave.
Are you really saying that you refuse to make 15% because you might have to weather a draw down first?
PST, Just watch for the day lows on prices and get back in as much as you can. I was totally out prior to Wed last week, I got back in with Gary's recommendation on SLW Options along with GLD and AGQ and already back up over 15 to 20% in my accounts. I still have 25% more to get back in on this next drawdown, but if it doesn't go down 25 - 35 points, I will put the rest in on DGP on day low prices. Just get back in!
Thanks Haggarty and Gary. I think this trade was driven more by fear of giving all my returns back than greed. Again, having never invested in precious metals, I didn't think that we would see a ramp like last week until the final leg of the C-wave. My thinking was that I would rather forego any remainging profits in this daily cycle, rather than get caught in a drawdown, and then get reinvested for the last parabolic move higher. Seemed conservative at the time. Its just the explosiveness of the move last week caught me by surprise. I need to just resist the urge to try to time it again and get reinvested.
Not sure if you can see this one, it is a long term silver weekly with an upper trend line from a peak in 2002 (not sure if it was a C wave top) through 2004, 2006 and to now.
This channel can only be drawn on a log chart - the arithmetic doesn't align.
What is interesting is that the C wave top in 2008 did not make it up to the trend line. Could this have been because of Bear Sterns?
If....we make it up to it on the weekly this time, we have some room - looks like around $60????
I was not able to figure out how to raise the Y axis on stock charts, it only maxes out at the price point high.
One thing is for sure, we are in the middle of an unprecedented move. It is obvious that at some point there likely will be some major draw down, but where is it going to come?
With the global buying pressure, it may not happen under normal fundamentals. In my opinion it is going to take a MAJOR, MAJOR global event to do it. I don't think it will just roll over.
I'm just too young and inexperienced to be able to envision the possibilities here.
Good post Gary. I think $1,650 is too conservative, that less than 10% from this level. A 20% and more final daily has precedence and would not stretch us too far above the moving averages. That would be $1,800.
I know you like moving away fom Silver due to a great of a huge drawdown, but if Gold is going on a runaway, don't you expect Silver to continue it's recent correlation? Seem like getting caught in another 15% might just be a small price go pay to ride Silver to the top.
I was thinking the same thing as you, but if silver does have a very nasty correction and then begins to rise, what are the odds that it significantly exceeds that first high? A lot of risk for little reward?
The average leg up in gold is roughly 24%. This intermediate leg began at the Jan. bottom of $1307. A move to $1650 would equate to a 26% move. Right in line with history.
It's probably wishful thinking to expect more than another 150 points in gold in only 5-6 weeks. It's taken 9 weeks to go from $1400 to $1500.
I'm not trying to beat Gary at his own game. It's more about risk profile. For instance, I don't do options or margin trading. It's late in the game and I'd rather err on the side of caution.
That is, if you can call getting leveraged into gold at a parabolic top "caution" ;)
150 is just 10% from here and 5 to 6 weeks is a long time. If that is the target, a runaway move is not needed to reach there. A runaway move will go much higher than that if it lasts that long.
Folks don't forget that at the final top this is going to look like it's going to go on forever. There will be countless reasons for why the dollar is going to 0 and gold and silver will just keep rising. Selling into those conditions will be the hardest thing we will do all year long. And if you don't time it right (we won't) the urge to get back in because you are missing some of the ride will be almost overwhelming. However those that do will get caught by the D-wave and if they are still heavily leveraged they will lose most if not all their gains.
We're already starting to see signs that euphoria is beginning. At $1650 it's going to be absolutely nuts.
Gary: Fantastic post on the "trade trigger". Thanks. Wonderful analysis.
And I'm sure we'll get that weakness next week, what with: options expiration on gold/silver, first notice day for taking delivery, a Fed meeting, and this over-extended rally.
Since many people seem to like to read their own meanings into my reports, let me be clear. Just because I expect gold to put in the next measured correction next week doesn't mean one should sell positions. Many many people already got into trouble and missed last weeks big move for that very reason.
The trade trigger post is only for those that need to get back in. It in no way suggests someone that is already in do something foolish like exit.
Once the dollar hits a new 3-year low, it'll be interesting to see how long it bases and what drives it upwards in a big multi-month bounce.
I doubt that it would base as long as it did back in the spring and summer of '08. And, as for what will make it bounce this time, my guess is trouble in Spain shaking the Euro:
Is this okay? A 20% move or so would be more of the range to "reach for the sky."
On this chart, the only way $1650 will look parabolic is if we make the run right now and don't look back (no weekly close correction) - put in a solid -4 week strong climb.
This will coincide with a May 20th employment report - and another theory I have that USD locks in embedded this week, tanks until the report and then it's all over...
Please don't take this a second guessing the "expert." I'm just trying to figure out all the angles and options.
I likely won't be selling all my AGQ and SLV options and am trying to determine what % I stay in (lottery play, etc.) and at what strikes.
One can always jigger the charts to get whatever desired result they want. I use purely percentages. At the 06 top gold stretched 24% above the 200 DMA. At the 08 top it stretched roughly 29%. At the 09 peak it moved 25% above.
The difference in these three with today is that now the 200 DMA is already rising steeply. There was a bit of a lag during the other times which explains the extreme stretch.
If the moving average continues to rise at it's current rate then gold will be stretched about 20-22% above the 200 DMA if it tags $1650 in the next 5-6 weeks.
At that point not only is it too late in the intermediate cycle to hang around any longer but it's also too stretched above the mean and in jeopardy of the D-wave profit taking event at any point.
Folks resign yourselves now to the fact that you aren't going to catch the exact top, that you are going to leave some money on the table, but that none of that makes any difference in the long run because we will more than make up for it by catching the A-wave.
So I'm not familiar with conditional trades/triggers. The closest trigger I can find in Fidelity is the CBOE gold index (.GOX). Is there a way to make the trigger based on GLD? If not, how would I calculate the trigger in GOX that would be equivalent to the GLD trigger Gary posted? Thanks for any help.
GARY, Thank you for the "game plan". You have been just sooo accurate that I know the rest shall play out and we shall all be very happy.
ALEX, I appreciate your charts as I shall add to AG and EXK. The 3 months of miners consolidating from their large gains was a valid point. ( Handsome couple....)
EVERYONE, This site is addictive and I have been trying to keep up with it. Thank you all for such informative postings.
Gary, do you have a contingency plan for if the D wave takes you by surprise? Comes way earlier than anyone expected? I mean, anything is possible right?
I use Fidelity. If you're in the conditional trade screen you have the option of choosing an Index OR a stock/ETF. There is a radio button for each. You probably have the Index one selected.
I hope everybody is enjoying their long, relaxing weekend.
Fine report, Gary. I mentioned I was looking at gold via DGP last week to buy into a pullback. This weekend I've also decided to put PHYS on the list as well, and although it is not leveraged, I should be comfortable putting the profits from the miners into it. I think Gary might be correct about the runaway move, so will take advantage and step into the $30 or so decline when it presents.
And I still like silver. It's just more difficult to time an entry in a runaway market. I'm not counting on huge pullbacks, or at least, significant % pullbacks unless they only last a single day. I'll be buying dips if they occur.
SB: Are you not worried that a "pullback" will turn into a mini-meltdown like 2006? It has had quite a ramp up and when the hot money decides to rush for the exit it may be a little like yelling "fire" in a crowded theater. At least, that's my concern.
Also, in 2006 though silver was the place to be, gold actually outperformed in the final run up. Silver barely recaptured its high after the 17% down day.
Gary posted: "We're already starting to see signs that euphoria is beginning. At $1650 it's going to be absolutely nuts."
Kids, go over to Kitco's silver forum and see the crazyness unfolding as well to a lesser extent on the gold forum. Maybe browse down eBay alley and see if you can find silver for under 50$/oz.
This board here is where level headedness is prevailing.
Thanks for the article. I like reading the mainstream info for its spin.
All,
Does anyone remember "last time" in 2008, 2006, etc. during the big final rallies - with regards to the predictors of the "crashes?"
Everywhere you go now, everything you read is preparing you for a crash of epic proportions (Gary - you as well are nervous about it and trying - smartly - to skirt around it if it happens).
Well, isn't the saying that if everyone expects it, it won't happen (at lease the same way people expect)?
I remember in 2008 with Oil at 120, 130, 140 - Not many people were saying a crash was imminent or going to be of epic proportions, certainly not back below $100.
I'm just thinking out loud here. What should we make of this? Any statement such that "silver won't crash" or "silver will just have a normal and healthy correction" makes one look naive, inexperienced or way too optimistic - not understanding market fundamentals.
So, is everyone going to be right this time? I have to believe the answer is yes, but the question is when.
Clarkatroid, I think the courage, confidence and strength it takes to climb the rocks speaks of the character necessary for Gary to advise us as he has. May the Lord keep him safe as he lives life to the full!
Nima, That's what I expected to hear at a three year cycle low. As the dollar really starts to crash into the final low this end of the world talk will intensify. And of course this will only guarantee that the herd will get caught on the wrong side of the boat when that major bottom forms and the dollar rallies against all common sense and fundamentals.
There will be talk of manipulation, especially in the precious metal markets which are going to take a serious hit as the D-wave unfolds.
But of course this will have nothing at all to do with manipulation, it will just be the normal cycles running their course like they have for decades.
Hot Rod, First off one article isn't "everyone" predicting a crash.
Make no mistake, never in history has a parabolic rally like what silver is experiencing not ended in a crash. This one will end in a crash too.
That is virtually guaranteed by human nature. I'll say it again. "action and reaction"
The D-wave is spawned by the extreme upside move at the C-wave top. The only way to avoid a severe D-wave is if the C-wave is very mild. That obviously isn't the case. And as such you can bank on the D-wave being just as powerful on the downside as the C-wave was on the upside.
Turn the chart of silver upside down and you will get a pretty good idea of what the D-wave is going to do to the silver parabola.
If we already have a good chunk of AGQ and SIL and going to eventually move to GLD anyways on your signal, should we just put any extra into gold and gold miners now and avoid extra transaction charges and possible whipsaw in silver?
Intern, IMO we have about as close to a sure thing as one ever gets in this business in the silver market right now.
I just don't think the buying will quit until silver at least tags $50. It will probably go higher but I think $50 is a given. I want to ride the rest of that move. Once I do then I will convert to gold.
Clark: Oh good - glad you found my post..., I use TDW only - always have.
But this month I sold about 1/2 the stuff that's not tax protected in ISAs. I'm pretty used to using IG Index [spread bet] and with the right control will continue there = tax free [I hope!]. I don't trust the inland revenue to stop the capital gains tax hikes in the future.
Rather than using huge leverage on a small pile of money, I'm having a good sized hill of money with careful leverage. That way I maximise my sleepful nights and still make more than with TDWaterhouse brokers.
I buy physical from Chard & Co in your town! Also ebay, thegoldbullion.co.uk [I think] and Baird & Co [London].
Here's a short listing of some of my favorite gold miners. I do not yet own GORO or EGO. ANV has been the leader, but is stretched 50% above the 200 day ma. XG has been a moon shot ever since it was split out from XRA. NGD and UXG are buys on the expected pullback.
When I compute an OTM SLV option (SLV 50 July Calls) I get = [(45.53*.3584) - 1.95] / 1.95 = 7.4x
When I compute a GLD option (GLD 146 July Calls) I get = [(146.74*.5548) - 4.8] / 4.8 = 16.0x
??????
So, an OTM SLV call, which is 10% OTM is less than half of a GLD option already at the money?
A GLD 140 July Call computes to 12.1x while an SLV 60 July call computes to 9.7.
How is it possible that one can get much more leverage with an DITM GLD call than a super-OTM (lottery play) SLV call?
The way I understand leverage is a multiplier on the underlying security move. If this is mathematically correct then every 1% move in GLD is HUUUUUUUGE.
Gary,All I just don't see a strong enough risk/reward for people currently in cash (I'm one of those btw) to jump back in for a move to $50
Yes, potentially one can gain 7% or 15% in AGQ but also the chance of a 2006 style stampede is equally high where people can lose double the gain... Or am I missing something?
(disclosure: I am investing/trading with family money so my risk tolerance is low)
Wouldn't a huge drawdown in silver, similar to that of 2006, take down SLW with the same ferociousness?
If so, is Gary keeping SLW in his portfolio because it barely moved over the past month, and even after a serious correction in silver, SLW will still end up much higher than today?
If you want a good laugh, go check out Turd Ferguson's latest "Wicked Witch of the Precious Metals" video.
This series stars Blythe Masters, the current head of global commodities at J.P. Morgan Chase, and therefore the chief manipulator of the silver market.
She is the Wicked Witch, and works within the Death Star (J.P. Morgan). She is always in her office plotting with her chief assistant in manipulating silver -- Ruprecht (fictional). He is the top Flying Monkey in her stable of Flying Monkeys who trade silver for her.
This one isn't as funny as some of the older ones. And I wouldn't pay much attention to Turd's prediction in here that silver will go down in June only to go up to 67 or something soon after. I know Gary and Doc have the D-wave decline nailed.
Enjoy! And if you like this, go back and look at some of the earlier ones, which I think are funnier.
Hot Rod, To calculate leverage divide your total portfolio by the price of SLV (if you want to figure leverage for silver). Lets say you have a $100,000 account. If you divide $100,000 by the current price ($45.53) you could buy 2196 shares. That would be considered 100% invested.
At the close on Friday the July 40 call options on SLV were priced at $685. So if you wanted to control the same 3000 shares with options then you would buy 30 call options.
At $685 per 1 contract it would cost you $20,550 to control the same amount of shares. So with DITM calls you can be basically 100% invested with 1/5th the capital.
Now if you wanted to be leveraged or extremely leveraged you could in theory buy roughly 150 July 40 call options with your $100,000. You would then be leveraged about 5:1.
If you are really reckless you could buy about 1800 July 48 out of the money call options and raise your leverage to roughly 60:1.
However if you are wrong and the market doesn't do what you think it will do or it doesn't do it in the time frame you need it to then those OTM options will quickly go to zero and you will lose all $100,000 and will have destroyed your account.
CORRECTION: I wasn't paying attention to the details of what Turd was saying in this video. I was laughing at all the dialogue.
He is saying that he thinks silver will go to 67 by late June, so he's not dissing the D-wave or mentioning it. That seems too high to me, and I think the C will top by June 10-17 at the very latest, but, that's just my estimate.
Go have a laugh. These really are well done and funny.
I just realized I mistakenly said 3000 shares of SLV when it should have been 2200. The example I gave will be a little off but you still get the basic idea of how to calculate leverage.
We will see more and more of these absurd silver price targets as this continues. Sadly all these people will get caught at the top and then end up riding the crash all the way down.
If and when we get into a runaway move, how much more attention will you give to the "emotional or hysterical" aspect of the moves & for an exiting decision?
Gary: agreed. And, to emphasize a point that you've made all along -- the drop in the dollar is driving this. And that is going to find a base and then go higher out of the 3-year low.
Looking at a couple of the larger gold miners during the 2008 run-up and pull-back: both PAAS and AUY dropped 80% from their respective highs. Neither have re-gained those highs, although PAAS is close. Gary, or any of the more seasoned PM bloggers know if there's more to those stories? Lots of talk about the jr's but not much about the sr's for the final stages..I'm sure gary's mentioned it here or on the premium site before but I don't recall..can anyone share the reason?
Often miners will float secondary offerings that will depress price. Juniors are some of the worst offenders of this practice. It's one of the reasons I don't waste time trying to pick individual miners.
Gary: After the silver 17% drop in 2006 silver spent the rest of the move clawing its way back up and slightly exceeded that former high. Gold, in the meantime, rallied quite well as silver fought its way back to its high. This seems reasonable this time as well since silver sentiment is now at an extreme level and gold is (remarkably) neutral. That implies to me that gold needs to rally sharply to get to an extreme so we can end the C-wave. Any thoughts about the performance torch being passed to gold as get to the end game as happened in 2006?
I'm not sure we will see gold outperform but that isn't why I want to convert. I just don't want to get caught in a selling climax if silver longs all of a sudden get it into their heads to take profits.
"Seasonal highs almost without exception occur before mid-May, and June, July, August, and September have not for the last eleven years shown any high."
Considering the gold:silver ratio is at about 32:1 I find this an opportune time to swap silver for gold. This is what I plan to do with my physical...Arbitrage.
Gary, Been a sub for a while. Have followed pretty much every move you have made with my own portfolio and have no complaints. Was invested in DGP in the past. It did not seem to follow spot as well as UGL. You may want to look at this. I don't have any math to back it up, but remember not being pleased with the product's performance as gold rallied.
$50 silver is the number everyone is waiting for. I think either profit taking kicks in 1 or 2 dollars below or we are going to shoot right past it and I think that is when the shorts are going to start to panic and cover. that's what I see.
There will be some profit taking prior to $50 as big money starts to sell into strength. The question is will it be enough to turn silver down prior to reaching $50?
I doubt it.
$50 is too big of a magnet. And I think I can safely say there are no more shorts left solvent in the silver market so we don't have to worry about a short squeeze at this point.
1) Most miners are Canadian. The gold price rise in Loonies is less dramatic than in dollars. 2) Miners lag when their costs rise quickly especially energy (read oil). Off 2008 bottom oil is up 325% and gold 218%. 3) Hedge funds have a "pairs trade" going. They are buying gold and shorting the major miners. 4) In 1980's miners were about the only way to invest. Now investors have: gold/silver ETF's, mutual funds, double short and double long ETF's, futures, options etc. 5) Gary's scenario for a "D" wave is falling gold/silver, equities, commodities (I assume) and a rising dollar. 6)When the above plays out, miners should do very well in the upcoming "A" wave.
Intern, The only reason I am in GLD and getting into DGP on the next dip, prior to any switchover is because in some of my accounts, if I sell a stock or ETF I have to wait a few days for the funds to settle before they will allow me to reuse the funds to buy another stock or ETF. In another one of my accounts, I can only do 3 trades a day. So rather than worrying about a delay in funds settlement, I am just bypassing that step on those particular accounts. I have SLV Options, so those will get switched as Gary outlined. Just a matter of forgoing a little less profits on silver on some of the accounts, but securely in the final runup on those accounts that are not as flexible to trade in. Otherwise I would be fully following Gary's plan on all my accounts if it was possible.
I haven't seen anyone mention Kinross Gold as a good stock to buy. Both Casey and Ruff have been recommending this. However, I have owned it for 2 years and it has done nothing. Any comments?
It's a pair trade. They simultaneously buy an equal amount of gold and short an equal amount of GDX. I know of two hedge funds that employ this strategy in Europe.
Since the last C wave top, gold is up 48% and the GDX for example is up 11%.
John Hathaway and Eric Sprott, two managers of billions in gold assets and precious metal miner funds think these hedge fund managers will get burned. So do I.
Nevertheless, hedge funds are making this trade and it will work until it doesn't.
It's a senseless trade. Both are in uptrends. No credible hedge fund should be doing this.
You could go long both assets with possibly a smaller position in the under performing asset but it makes no sense what so ever to depress profits by shorting a rising asset class.
I seriously doubt very many hedge funds are making this kind of colossal mistake.
Gary, I only have one broker account that has margin. All others are IRA/401s. Once this Wave is over, will be closing the restricted trading IRA account and moving to Fidelity. Only opened it until I got my trading brokerage account opened and funded to trade on the platmform for free.
Gary: If this C-wave tops in June sometime, the entire C-wave would've lasted for about 26 months.
Do you have any sort of estimate as to how long the D-wave would last after a C-wave of that magnitude? Or has anyone done any studies on length of D-wave after C-wave?
I have a good chunk of my porfolio in SLW (long since $31) - In your view, why won't SLW struggle mightily with silver for the rest of the C-wave since they are so closely tied to one another?
It seems that somehow everyone has now come to the conclusion that silver is going to crash immediately and that it is going to also crash the silver miners.
Folks this is not what I said. The odds are silver will just continue to lead gold higher and silver miners will reap the benefits.
The only reason I'm converting to gold is just on the slight chance we see another event like what happened in 06. I'm just forgoing a little outperformance to avoid that low probability event.
We will still make big gains in gold just not quite as big as silver. But we've made so much money already that it really isn't important that we squeeze every last penny out of the silver trade.
you guys are crazy for selling your silver at $50. If gold is going to $1650 by June then silver will easily be around $60. I can guarantee as soon as $50 is cleared everyone who sold their metal at 50 will be chasing it again.
Gary, No matter what you say, some people will be hanging their butts out over the edge, without the safety rope strategy you have provided. You like the rock metaphor?
Hot Rod, thanks for that silver log chart. The scariest thing about it to me is the MACD rocketing up.
I'd consider that blue trendline you have as the upper line of the range. But what if we drew another trendline also starting in 2002, but more or less connecting 2004 and 2008, then 2006 is a bit of a blip and we'd be pretty much at that line now. So maybe that could be the lower end of the range.
Maybe this isn't sound technicals analysis I don't know, but just food for thought. Personally, I'm going with Gary's plan, as while I love silver and the ride it's been on, I'll be more comfortable shifting soon to gold I think.
Yeah, this effort to squeeze every penny out of trading is counterproductive. Dial it back a little, reduce your stress, and enjoy the gains you've made.
There are many more opportunities in the future. This isn't your last chance to make money.
I do see the other calculation example but am having a hard time getting the #'s to match. Let's forget a second about the precise leverage amount....
Is it really true that an at the money call option in GLD has more leverage than an the money option is SLV? THis is the main question I am trying to validate.
Let's take the $100,000.
SLV 45 at the money option (21 contracts * $375 = $7875) gives 12.7 times leverage.
GLD Jul 146 has a premium of $4.80. =100,000 / 146.74 = 681 shares. = 7 option contracts * $480 = 3360 =100000 / 3360 = 29 times leverage.
Using the other website's delta calculation, the GLD call has a leverage of 16 times.
Either way, 16 or 29 times is higher than SLV 45 at 13 times.
Maybe it has to do with the fact that GLD is a higher share price than SLV?
Another thing I noticed is the open interest. I would assume that one would have to be very careful about picking a strike price that has enough interest or else selling them will be a nightmare.
The strikes looking good for GLD are 140 and 145 (sweet spots) and also 142, 146, 148 and 150.
Based on this, to me it seems that switching over from SLV to GLD options not only is significantly reducing the risk but is also significantly increasing the leverage.
The SLV option is more volatile than the GLD option but it has nothing to do with leverage. Leverage is simply the amount of shares one controls above what could be purchased with 100% of their portfolio.
You can achieve 10:1 leverage in GLD options just as easily as you can in SLV options. The added volatility of SLV will make the moves larger in each direction but that isn't because the leverage is larger it's just because SLV is more volatile.
Actually you may be able to get larger leverage in GLD because it is less volatile so you will be able to buy more options and control more shares above and beyond 100%.
India on Saturday has silver trading up equiv $2.50 and gold $26. A reaction to China raising interest rates again. Tomorrow night should be interesting.
Just a word of caution when it comes to these charts. For the most part the only reason technical analysis works is because enough people base their trades off of it that it has a self fulfilling tendency.
If your TA gets obscure enough no one will be trading based on it so it will have no predictive value.
Channel lines along the tops of trends tend to fall in this category.
Bull markets go up so they break through upside levels. That's why uptrends almost always end up breaking up through a channel at some point. Technicians trying to pick tops often get fooled by this and then miss a big chunk of the move.
This is why I don't put a lot of faith in patterns for the most part. (I do pay attention to triangles, T-1 patterns and crawls but that's about it.)
Things like wedges, head & shoulders patterns, three peaks and a domed house, Elliot wave, etc are so subjective that there's too much chance of them morphing or smart money fading them to fleece the retail trader who is gullible enough to believe these things give one an edge to be of any real use.
This gets really absurd when people try to incorporate these pattens into intraday moves. Intraday moves can be driven by just a few traders. Does an intraday head and shoulders pattern really have any meaning when it's being driven by three or four big players?
Of course not.
If one just sticks to the big picture cycles and sentiment you will do just fine. If you sidetracked into thinking you are going to chart your way to riches in this bull market I'm afraid you will be sadly disappointed.
Aren't you the one that bought the 2009 bottom with either a load of miners or AGQ? I thought you posted that some time ago. If that is the case, you sure have no worries.
I was referencing the fence sitters, the sellers of everything at any SMT portfolio adjustment, and the constant reading things into Gary's writings that just do not exist.
From your posts, I don't believe you are in that group. I also commend your buying at the apocalypse if that was you. I just joined Gary at that time and bought, but like a fool I traded, when I should have never looked again. Had I shut off my computer and walked away, my returns would have been multiples of what they are now.
I need a Hammy Sammich, some pork and Beanies and a double order of fries please! To wash it down, I need a large cup of that special blend of Tim&Jean coffee.
Tanks
Sold all my gold and silver on your advice and have a bid on AAPL and SMH ready to go for Monday morning.
I was long at the bottom, but I bought too early and took a tremendous beating in the process. I kept catching the falling knife all through Fall 08. I never sold a share, so I came out very well (Old Turkey!), but in no way am I pretending that I timed it perfectly. At one point I think I was down 70%. At the absolute bottom I had no dry powder left so I wound up buying silver bullion on my credit card.
Since then I am up thousands of percent in miners like EXK, but I have no desire to relive the experience. When silver collapses I intend to be far out of range.
When the real D wave comes, at the end of blow off top, it will eat every PM long alive.
In late '81 and early '82, on the backside of the $50 silver parabola, I was buying and selling silver.
I made lots of money very quickly.
What to expect. The drop in silver will not only kill the over extended, it will bring out large numbers of people who hold silver who didn't sell it on the ascent.
They will realize something's "wrong" and will disgorge silver.
Those who think the only way is "up" will at first buy their silver, and then they will discover that the flat price plateau they're then on is not solid. The price will decline, 5% and 10%, and still there will be buyers. And then there will be freefall, further out, when silver will decline by 20% of where it then is, and more.
The failing backside of this building parabola will be as usual inconceivable, just like this rise now feels during this past two weeks to those who are watching and shaking their heads.
David, I do not believe for a minute that the D wave upon us will match what you experienced in 2008. That being said it is still a D wave.
To be honest with you, the upcoming D wave will be a blip to you at the end of this, so I'm not sure trading it has any value to you unless you plan position or company adjustments.
The only reason for me to trade is AGQ, which is clearly a trading vehicle. The miners take a lot more thought. I have really become accustomed to them swinging 50%, and reality says these juniors will for the most part be conversion plays.
My best for example is XG. I received the shares in the carve out. They are up 500% since then. Should I trade those shares around a D wave? My thinking is not.
Obviously you are sitting strong hand status with a good group of miners. Would I trade that status. No. Would Gary trade that status. Not sure but I think he has those same miners in his dresser drawer.
Rod, interesting. Thx! In just 1 month from 20 March 1987 till 27 April silver doubled 5,5$-11$..
Then intraday, 27 April it crashed about 30% from 11,10 to 7,8! Maybe in connection with the rollover to a new month's future contract. + Some news too certainly.
Gold went more moderately from 405 to 478 till 27 April and 'only' dropped 10% that day
It is actually bullish for the dollar. I'm not gonna tell you why it's bullish, but it is. A breakdown will be a FAKEdown; don't fall for it.
That likely means the precious metals rally is near an end. And the stock market should march higher, much higher. It will be a breathtaking equities market rally in 2012.
Don't get me wrong, precious metals will do fine probably year end and long term. (I own some silver and gold, by the way...since the last few weeks).
The next 3 months won't be pretty for pm's. But it will be great for stocks like RVBD and CY. Not sure why everyone wants to eat that last 3-4 points on silver.
Alex "..They simultaneously buy an equal amount of gold and short an equal amount of GDX...."
So, applying this to SLW, even though it broke down from a rising triangle, and is now crawling precariously along its 50 dma, once silver gets to around 50 the hedge funds could reverse - short silver and buy equities - thereby saving our SLW further downside ....
I haven't heard or read anything about a silver/silver miner pair trade.
We know hedge funds are all over gold: Kyle Bass, my classmate John Paulson, PT Jones, Einhorn, Soros, Kaplan, Hermitage, Passport, etc. These guys don't pair trade gold to my knowledge.
Check www.marketfolly.com, www.opalesque.com and www.citywire.co.uk andother hedge fund websites for info.
As far as I know, only European hedge funds like Carmignac (largest hedgie outside the U.S.) and commodity funds are doing anything with silver. They also have a large gold position.
gary if a broker for futures uses a forward contract and not the spot for TA , would that just be totaly insure they are wrong? to track gold do you have to use spot? or if you are tracking a forward contract does it suport itself?
Gary, how would you interpret a more dramatic pullback in gold and silver at this stage if it were to occur? Clearly, you're in the modest pullback camp, so at what point would you interpret it as something more that we should be concerned about? Hopefully, just a useless hypothetical exercise!
Please read parkers post on ttheory. Very good gold silver comparison of 2006 and 2008. It implies silver something like 47 to 40 to 50 when gold rises steady. That answers some questions here about like where will be silver if gold goes 20 percent more.
The conversion by China of its holdings to commodities is not a surprising development.
What's surprising is that the MSM is just now deciding this is something to consider.
China has been purchasing major positions since 2003 and 2004. Check when they first bought major positions in the wheat output of Argentina. That was the obvious start.
You know the phrase, "Sell on the news"? Well, that's why the USD will bottom here.
After I read the whole top of the page and saw sign ups for a seminar, I thought..."hmmm, whatever" , then scrolling down I found the Diamond in the rough!
That double top silver, higher high gold top has some validity to it. History (based on human behavior reflected in the charts) often repeats itself.That could add to my view of things going forward in a good way.
Regarding the Zero Hedge article, it will be curious to see how much the world takes this seriously because the quote from today (not earlier this week) on the amount of the reduction came from the chairman of a private institution. Of course if this is a prominent institution then maybe it means alot. We shall see shortly.
I used to listen to Terry Laundry's T Theory analysis of the markets every Sunday, but haven't been a regular listener for a few months now. T Theory seems to be a workable theory for longer term timing. I probably ought to check the site once a month or so and see what his latest forecast is. His longer term forecast for gold (last time I listened) lines up with Gary's--he says gold is in a bull market till 2020. But he does not have the short term accuracy that Gary has. Still, it's nice to hear other methods of analysis confirming that this bull has a ways to go yet.
If this runup is at all comparable with the past example Gary used, I think it would be fitting about now for the expected small pullback/pause.
We're so close to the $50 mark that I don't think there's going to be much hanging around now ... Why stop for a drink when you're near the finish line?
I can easily imagine, after a day or two, a succession of days where each day is steeper than the preceding. It could all be over pretty fast...
beep
ReplyDeleteLeave it to Gary to keep thinking of ways to help his subscribers, even on a Friday night!
ReplyDeleteGary: you are a champion.
Now, come on gold, give us a nice tasty sale!
What if Monday is a big up day for gold (1 to 2%)?
ReplyDeleteDoes the trigger need to be modified every day?
Thanks, guys, for pointing out NUGT. Didn't know about that one.
ReplyDeleteBut wait a sec....
Isn't it a Direxion ETF? Doesn't matter the liquidity does it?
It's not like a micro cap where you need a buyer to sell your shares, right?
Same as AGQ, shouldn't it be? They use the inflow and outflows to buy or sell the derivatives.
Well, I guess I could say same as HUI.
Yo Basil,
ReplyDeleteHey, welcome back. Here's wishing you big profits in the coming weeks and months.
Hot Rod,
ReplyDeleteThe trigger is based on a pivot. Take a look at the chart again and you'll see that it won't need to be adjusted depending on what gold does on Monday.
Is AGQ a 2x or 3x?
ReplyDeleteDAVID
ReplyDeleteI think I didnt quite make my point clear, so I will just rephrase it. I wasnt trying to say that NUGT could have 'as much' volume as SLV ( thats dreaming) :)
I meant to say the volume on SLV Increases about 5x this wk (from the 20 million avg daily in Jan and Feb, to the last couple of days being near 80 million) as the rush of buyers jumps in at the top.
So I was implying that maybe the volume on NUGT would increase 5x from its avg daily now, when the blow off top would arrive and you'd be looking to exit.
But Hotrod cancels that saying liquidity isnt an issue anyways :)
Pima,
ReplyDeleteThanks. Yes, I get that part, but if gold goes up another $20 before pulling back, then in a runaway move the $35 correction won't make it back to that pivot?
That pivot is a correction based on Friday close (don't want to put #'s because of premium content).
Skeptic - it's 2x
wait a minute...
ReplyDeleteFrom 20 million to 80 million, and I called it 5x as much??? NICE basic math skills!! Man, gotta watch those dirty goose martinis!
And I use real money when I trade?? Yikes!!
I wasn't sure with the holiday today if the COT report would come out. Looks like it did:
ReplyDeleteGold:
http://snalaska.net/cot/current/charts/GC.png
Silver:
http://snalaska.net/cot/current/charts/SI.png
Silver report very strangely is quiet. Not much movement at all in any area despite the huge rise.
Gold report may be telling the story.
Commercials - Huge $13k more short contracts
Large Specs - Immense $14K additional LONG contracts
Small SPecs - $4k additional long and $4k additional short
Hmmmmmm. WHo are the "large specs" anyway?
Are the banks going short and also taking the long side of the trade in their "personal" accounts?
If it were not for the Commercial shorting, Gold would be going ballistic.
Thanks Gary for the post, and it is in a beautiful channel, as well.
ReplyDeleteGary, kudos on the last couple of posts, I like your latest plan and will happily follow you.
ReplyDeleteHad just been looking at the silver chart and worrying about its dizzying rise. My only thought about $50 as a trigger is that all kinds of people are probably watching for that level, so I might head for the door around $49.
In terms of the reallocation to gold, I notice that DGP is an ETN, while UGL for instance is an ETF. Though DGP is well established, have read that ETNs can be riskier vehicles. Anyone have any insight on this?
Lastly, Gary if you're expecting HUI to massively outperform gold on this C-wave finale, will you be considering reallocating any of your money from DGP and/or SIL/SLW to some gold miners? If not, why not? If so, any thoughts on NUGT as seems like one that would be up your alley with the 2x GDX return.
Thanks!
Gary,
ReplyDeleteIf there is a 3-6 dollar correction on the price of silver will this also have any effect on the miners. They already took a heavy beating and I hope they don't go further down!
Excellent, perfect game plan Gary. Exactly what I was hoping to hear!
ReplyDeleteThank you!
One reoccurring theme I have noticed here, is so many people that insist on coming up with their own strategy that is going to beat a man that is at the top of his game.
ReplyDeleteNow I know from reading here we have a very wise group of people, but we now have a situation where silver has gone parabolic. Gary is once again trying to lead the horses to water, yet so many are stating their own better strategies.
Maybe these strategies will work out, but from the last run we had, so many people were saying they wished they had listened. A second chance is upon us, and I hope people take advantage.
I am not at all trying to take away from the great minds here. What I am saying is that you are listening to a man that has studied and prepared for this for many years. Take full advantage and give your own research a chance to catch up.
Just thinking with my fingers. Take it for what it is worth.
Anyone concerned that silver gapped up $1 today even though the major markets were closed? We this continues, we should hit $50 by Tuesday.
ReplyDeleteNiven,
ReplyDeleteWhy do you care where the miners go next week? Are you going to sell at the bottom of a correction even though you know that at the C-wave top the miners will be much much higher?
Perfect example. The miners took a big hit in March. If one sold into that pullback they missed the move to new highs that unfolded over the next three weeks.
Nitro, The volume is in New York. Holiday trading does not change the big picture much unless we have some exogenous event.
ReplyDeleteKitco had the spot market only up 7 cents today. I doubt we are going to see silver gap up $1.00.
ReplyDeleteMore likely that big money will sell into the Fast Money recommendation. If there was ever a bell ringing at a short term top that was it on Thursday evening.
I know Gary believes that miners will outperform gold in the final leg of the c-wave.
ReplyDeleteCan anyone confirm that Gary said he would still be in miners after he switches out of silver?
I ask because I have missed some posts on the blog. Apologies in advance.
I'd say you could be right there, Brian
ReplyDeleteI can confirm that I have no intention of selling any of my mining ETF's or SLW prior to the C-wave top.
ReplyDeleteYou know guys, Brian has it right (no offense to the Marine's Mom & wife),
ReplyDeleteI paid good money, okay, okay, it wasn't much compared to other doofus guides who lead one astray, but I did, and I intend to follow Gary's lead, since I have heard from other subs, over and over again, how they have profited from his guidance.
Sure you can modify the plan to suit your risk tolerances, but you should stay the course.
I am very aggressive with my money, wanting it to work as hard for me, as I worked to get it (boy, if that isn't an Americanism, I don't know what is) but I have reduced exposure in options, adjusted positions Gary's profile and am waiting for a drop or slight correction to POUNCE and make a homerun. And it will all be based at Gary's direction, calculations and prognistications.
(Feel free to quote me, but give me credit)
This comment has been removed by the author.
ReplyDeleteThanks Gary.
ReplyDeleteWill you be increasing your position in miners when you switch out of silver?
When you referenced the hit taken by miners in March, were you talking about 2006?
Ooops! I guess you were talking about March last month.
ReplyDeleteSorry Gary - my bad!
Thanks Gary,
ReplyDeleteI guess I shouldn't have to worry too much when there is still a lot of potential growth for the miners.
Gary,
ReplyDeleteIf you're saying that smart/big money will sell into the Fast Money recommendation then doesn't it follow that silver will be up first for them to sell into or just at these levels but with increased volume?
Also, do you agree with Adami that we will have a $7-$8 day one day soon?
Gary,
ReplyDeleteIf a plan is to sell AGQ when silver hits $50 then I want to enter a GTC order for AGQ when silver hits $50. Where do you think AGQ will be when silver hits $50?
Thanks.
Folks,
ReplyDeleteI thought I'd publish some data for the last 2 c-wave tops for gold, silver and miners. Note that their repective c-wave tops might differ by a day. I am showing the data for these 3 corresponding to the date for gold's c-wave tops.
Gold C-Wave Top 17Mar08 12May06
$Gold High 1032.45 730.05
200 dma 780.12 523
% above dma 32.35% 39.59%
$Silver High 21.34 15.03
200 dma 14.5 9.14
% above dma 47.17% 64.44%
$HUI 519.68 390.68
200 dma 396.47 276.27
% above dma 31.10% 41.41%
Would a better name for the CNBC show "Fast Money" be "Lose Money Fast"?
ReplyDeleteGary,
ReplyDeleteI'd love to get your thoughts as to how you'd play your hand if you were in my situation. Despite having never rode the PM bull in the past and against everyone's repeated warnigs, I thought that I could get cute and actually trade around this thing. I liquidated my entire silver position this week, because I was convinced that we'd rollover and I wanted to sell into strength. Well, now I'm pissed that I gave up my strong hand and am questioning my move already. Someone made the point earlier, but I do think one needs to make their own mistakes to internalize these lessons.
Anyways, now I'm very nervous about throwing everything back in at your trade trigger, just in case it turns into something biggger. How would you suggest scaling back in at this point or would just push the entire pile of chips back into the pot?
PST
ReplyDeleteMy 2 cents is to get back in now. I also tried to get cute and I lost a lot of money for a guy like me. The truth is you might not get a pullback, and this thing will keep going and you'll never get back in.
Here's the deal if you get in now you should make money in 6 weeks. The fact that your indecisive sounds like your still trying to be cute(Greedy).
I made the same mistake, and I really hope I never let it happen again. If you get a 30 point dip on Monday consider yourself very lucky to jump back in there.
I really doubt silver will gap up $10. Maybe if it was selling at $100 to $150, but not at $47. That is way too large of a gap. Adami would probably like to trigger a retail trader gap so he can sell his position into it but I really doubt it.
ReplyDeletePST,
As long as you continue to think like a trader you are going to continue to make these mistakes.
Listen to what you said. You are afraid to re-enter because you might not time it perfectly and you might have to hold through a draw down.
I can guarantee you won't time it perfectly and that you will have to hold through a draw down. But I can tell you that the percentage gain from $46.70 to $50 is still 7%. In AGQ it's going to be a little over 15%. You are going to make at least that much no matter what kind of draw down you have to hold through unless you think this is the top of the C-wave.
Are you really saying that you refuse to make 15% because you might have to weather a draw down first?
Hi, Gary, do you still think AGQ is better choice than miners at this stage of C wave?
ReplyDeleteHot Rod,
ReplyDeleteGood point. You're right. Not sure what will be the plan if we see gold go up 20 bucks on Monday.
Jin,
ReplyDeleteI own them both.
Matrix,
ReplyDeleteSee my response to PST.
PST, Just watch for the day lows on prices and get back in as much as you can. I was totally out prior to Wed last week, I got back in with Gary's recommendation on SLW Options along with GLD and AGQ and already back up over 15 to 20% in my accounts. I still have 25% more to get back in on this next drawdown, but if it doesn't go down 25 - 35 points, I will put the rest in on DGP on day low prices. Just get back in!
ReplyDeleteGary,
ReplyDeleteOriginal target on AGQ was 350-400. Are we moving that up or 400 is still accurate?
Thanks Haggarty and Gary. I think this trade was driven more by fear of giving all my returns back than greed. Again, having never invested in precious metals, I didn't think that we would see a ramp like last week until the final leg of the C-wave. My thinking was that I would rather forego any remainging profits in this daily cycle, rather than get caught in a drawdown, and then get reinvested for the last parabolic move higher. Seemed conservative at the time. Its just the explosiveness of the move last week caught me by surprise. I need to just resist the urge to try to time it again and get reinvested.
ReplyDeleteThanks at ease. Good advice.
ReplyDeleteAGQ is a derivative of silver. It will rise along with silver until silver tops.
ReplyDeleteHaving a little fun today with my new Stock Charts subscription (can't believe I waited until now to sign up).
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=$SILVER&p=W&st=2000-01-01&en=2011-06-30&id=p39229906016&a=232160778
Not sure if you can see this one, it is a long term silver weekly with an upper trend line from a peak in 2002 (not sure if it was a C wave top) through 2004, 2006 and to now.
This channel can only be drawn on a log chart - the arithmetic doesn't align.
What is interesting is that the C wave top in 2008 did not make it up to the trend line. Could this have been because of Bear Sterns?
If....we make it up to it on the weekly this time, we have some room - looks like around $60????
I was not able to figure out how to raise the Y axis on stock charts, it only maxes out at the price point high.
One thing is for sure, we are in the middle of an unprecedented move. It is obvious that at some point there likely will be some major draw down, but where is it going to come?
With the global buying pressure, it may not happen under normal fundamentals. In my opinion it is going to take a MAJOR, MAJOR global event to do it. I don't think it will just roll over.
I'm just too young and inexperienced to be able to envision the possibilities here.
Good post Gary. I think $1,650 is too conservative, that less than 10% from this level. A 20% and more final daily has precedence and would not stretch us too far above the moving averages. That would be $1,800.
ReplyDeleteI know you like moving away fom Silver due to a great of a huge drawdown, but if Gold is going on a runaway, don't you expect Silver to continue it's recent correlation? Seem like getting caught in another 15% might just be a small price go pay to ride Silver to the top.
better looking cot reports in george's free weekly email:
ReplyDeletehttp://www.futuresemail.com/cot/weekly.htm
if you click on the individual charts here you get the cot:
http://finviz.com/futures_charts.ashx
at ease....,
ReplyDeleteYou going into GLD and DGP now rather than ride more silver and transfer later? Reduce transactions?
Poly,
ReplyDeleteI was thinking the same thing as you, but if silver does have a very nasty correction and then begins to rise, what are the odds that it significantly exceeds that first high? A lot of risk for little reward?
I'm just thinking out loud here.
The average leg up in gold is roughly 24%. This intermediate leg began at the Jan. bottom of $1307. A move to $1650 would equate to a 26% move. Right in line with history.
ReplyDeleteIt's probably wishful thinking to expect more than another 150 points in gold in only 5-6 weeks. It's taken 9 weeks to go from $1400 to $1500.
Brian,
ReplyDeleteI'm not trying to beat Gary at his own game. It's more about risk profile. For instance, I don't do options or margin trading. It's late in the game and I'd rather err on the side of caution.
That is, if you can call getting leveraged into gold at a parabolic top "caution" ;)
Gary,
ReplyDelete150 is just 10% from here and 5 to 6 weeks is a long time. If that is the target, a runaway move is not needed to reach there. A runaway move will go much higher than that if it lasts that long.
Folks don't forget that at the final top this is going to look like it's going to go on forever. There will be countless reasons for why the dollar is going to 0 and gold and silver will just keep rising. Selling into those conditions will be the hardest thing we will do all year long. And if you don't time it right (we won't) the urge to get back in because you are missing some of the ride will be almost overwhelming. However those that do will get caught by the D-wave and if they are still heavily leveraged they will lose most if not all their gains.
ReplyDeleteWe're already starting to see signs that euphoria is beginning. At $1650 it's going to be absolutely nuts.
Gary: Fantastic post on the "trade trigger". Thanks. Wonderful analysis.
ReplyDeleteAnd I'm sure we'll get that weakness next week, what with: options expiration on gold/silver, first notice day for taking delivery, a Fed meeting, and this over-extended rally.
This may've already been posted but: great post by Trader Dan on "top pickers" in silver trying to go short and just adding fuel to this rocket:
ReplyDeletehttp://traderdannorcini.blogspot.com/2011/04/brief-consideration-of-silvers-open.html
Since many people seem to like to read their own meanings into my reports, let me be clear. Just because I expect gold to put in the next measured correction next week doesn't mean one should sell positions. Many many people already got into trouble and missed last weeks big move for that very reason.
ReplyDeleteThe trade trigger post is only for those that need to get back in. It in no way suggests someone that is already in do something foolish like exit.
Once the dollar hits a new 3-year low, it'll be interesting to see how long it bases and what drives it upwards in a big multi-month bounce.
ReplyDeleteI doubt that it would base as long as it did back in the spring and summer of '08. And, as for what will make it bounce this time, my guess is trouble in Spain shaking the Euro:
http://gonzalolira.blogspot.com/2010/12/lull-before-storm-whats-coming-in-2011.html
Gary,
ReplyDeleteI totally agree that as we climb here, hysteria will keep exploding especially over $1600, $1650, etc.
With all due respect, on the log chart of gold, $1650 might not look like a parabolic blow off top.
http://stockcharts.com/h-sc/ui?s=$GOLD&p=W&st=2000-01-01&en=2011-06-30&id=p83320454345
Is this okay? A 20% move or so would be more of the range to "reach for the sky."
On this chart, the only way $1650 will look parabolic is if we make the run right now and don't look back (no weekly close correction) - put in a solid -4 week strong climb.
This will coincide with a May 20th employment report - and another theory I have that USD locks in embedded this week, tanks until the report and then it's all over...
Please don't take this a second guessing the "expert." I'm just trying to figure out all the angles and options.
I likely won't be selling all my AGQ and SLV options and am trying to determine what % I stay in (lottery play, etc.) and at what strikes.
One can always jigger the charts to get whatever desired result they want. I use purely percentages. At the 06 top gold stretched 24% above the 200 DMA. At the 08 top it stretched roughly 29%. At the 09 peak it moved 25% above.
ReplyDeleteThe difference in these three with today is that now the 200 DMA is already rising steeply. There was a bit of a lag during the other times which explains the extreme stretch.
If the moving average continues to rise at it's current rate then gold will be stretched about 20-22% above the 200 DMA if it tags $1650 in the next 5-6 weeks.
At that point not only is it too late in the intermediate cycle to hang around any longer but it's also too stretched above the mean and in jeopardy of the D-wave profit taking event at any point.
Folks resign yourselves now to the fact that you aren't going to catch the exact top, that you are going to leave some money on the table, but that none of that makes any difference in the long run because we will more than make up for it by catching the A-wave.
So I'm not familiar with conditional trades/triggers. The closest trigger I can find in Fidelity is the CBOE gold index (.GOX). Is there a way to make the trigger based on GLD? If not, how would I calculate the trigger in GOX that would be equivalent to the GLD trigger Gary posted? Thanks for any help.
ReplyDeleteDavid
So lets assume we get gold at 1650, and then get correction, how big will this correction be? back to 1300-1350 or even lower?
ReplyDeleteDave,
ReplyDeletePretty much all trading platforms now have a trade trigger feature.
Just call your broker and ask him to walk you through setting up a conditional trade trigger order.
E,
ReplyDeleteThe answer to your question is in the April 16th weekend report.
GARY, Thank you for the "game plan". You have been just sooo accurate that I know the rest shall play out and we shall all be very happy.
ReplyDeleteALEX, I appreciate your charts as I shall add to AG and EXK. The 3 months of miners consolidating from
their large gains was a valid point. ( Handsome couple....)
EVERYONE, This site is addictive and I have been trying to keep up with it. Thank you all for such informative postings.
Gary, do you have a contingency plan for if the D wave takes you by surprise? Comes way earlier than anyone expected? I mean, anything is possible right?
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteBob LH
ReplyDeleteThanks for sharing your trade idea! I assume you will enter a bit early on this one. What are your initial thoughts on timing? Early June?
Thx again.
Dave,
ReplyDeleteI use Fidelity. If you're in the conditional trade screen you have the option of choosing an Index OR a stock/ETF. There is a radio button for each. You probably have the Index one selected.
I hope everybody is enjoying their long, relaxing weekend.
ReplyDeleteFine report, Gary. I mentioned I was looking at gold via DGP last week to buy into a pullback. This weekend I've also decided to put PHYS on the list as well, and although it is not leveraged, I should be comfortable putting the profits from the miners into it. I think Gary might be correct about the runaway move, so will take advantage and step into the $30 or so decline when it presents.
And I still like silver. It's just more difficult to time an entry in a runaway market. I'm not counting on huge pullbacks, or at least, significant % pullbacks unless they only last a single day. I'll be buying dips if they occur.
SB: Are you not worried that a "pullback" will turn into a mini-meltdown like 2006? It has had quite a ramp up and when the hot money decides to rush for the exit it may be a little like yelling "fire" in a crowded theater. At least, that's my concern.
ReplyDeleteAlso, in 2006 though silver was the place to be, gold actually outperformed in the final run up. Silver barely recaptured its high after the 17% down day.
Thoughts, anyone?
I'm leaning towards a gold focused play with a slash of juniors on the silver side like AG, EXK.
ReplyDeleteI'm looking at DGP, UGL, NUGT for core and some select gold mining stocks. I will keep a little powder dry for SLV calls for any dips that come up.
Any good gold miners folks like please share your ideas.
"splash of silver juniors"
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteGary posted: "We're already starting to see signs that euphoria is beginning. At $1650 it's going to be absolutely nuts."
ReplyDeleteKids, go over to Kitco's silver forum and see the crazyness unfolding as well to a lesser extent on the gold forum.
Maybe browse down eBay alley and see if you can find silver for under 50$/oz.
This board here is where level headedness is prevailing.
This is the most balanced group out there, all the other blogs I read is total collapse of US $, food riots, new currency?
ReplyDeleteI am not sure will it happen or not, and how can you even plan for those kind of events, any feedback/comments?
This comment has been removed by the author.
ReplyDeleteInteresting Article
ReplyDeletehttp://www.businessinsider.com/rein-in-rampant-speculation-or-face-the-black-silver-swan-2011-4
Jayhawk,
ReplyDeleteXG is worth a look. It's basically what GPL was a few weeks ago. That cuts both ways of course.
ANV and GORO are both interesting.
gary your wisdom continues to amaze me.
ReplyDeletethe only worry i have, is a very selfish one. That being you dont fall off one of these mountains you persist in climbing.
cant you switch hobbys to playing xbox, log rolling, or something/anything less dangerous please ;)
Francisco,
ReplyDeleteGood read, thanks!
Francisco,
ReplyDeleteThanks for the article. I like reading the mainstream info for its spin.
All,
Does anyone remember "last time" in 2008, 2006, etc. during the big final rallies - with regards to the predictors of the "crashes?"
Everywhere you go now, everything you read is preparing you for a crash of epic proportions (Gary - you as well are nervous about it and trying - smartly - to skirt around it if it happens).
Well, isn't the saying that if everyone expects it, it won't happen (at lease the same way people expect)?
I remember in 2008 with Oil at 120, 130, 140 - Not many people were saying a crash was imminent or going to be of epic proportions, certainly not back below $100.
I'm just thinking out loud here. What should we make of this? Any statement such that "silver won't crash" or "silver will just have a normal and healthy correction" makes one look naive, inexperienced or way too optimistic - not understanding market fundamentals.
So, is everyone going to be right this time? I have to believe the answer is yes, but the question is when.
i get it. uncle gary calls taxi for clarkatroid & friends at SMT at $1650 gold while the party still rages in the nightclub.
ReplyDeletewe all wake up without a hangover though, have a nice sleep in, then shower, change and let the good times roll again
Rod,
ReplyDeleteI can promise you that all you'll hear at the top is people talking about JP Morgan's short position and how it's going to blow up.
Read the comments on Francicsco's posted link.
ReplyDeleteJust like the folks on Kitco's forums. Silver/Gold will not go up indefinitely.
Piotr,
ReplyDeleteyes you are mixing stuff.
I don't want to exit silver until it tags $50.
Clarkatroid, I think the courage, confidence and strength it takes to climb the rocks speaks of the character necessary for Gary to advise us as he has. May the Lord keep him safe as he lives life to the full!
ReplyDeleteNima,
ReplyDeleteThat's what I expected to hear at a three year cycle low. As the dollar really starts to crash into the final low this end of the world talk will intensify. And of course this will only guarantee that the herd will get caught on the wrong side of the boat when that major bottom forms and the dollar rallies against all common sense and fundamentals.
There will be talk of manipulation, especially in the precious metal markets which are going to take a serious hit as the D-wave unfolds.
But of course this will have nothing at all to do with manipulation, it will just be the normal cycles running their course like they have for decades.
Hot Rod,
ReplyDeleteFirst off one article isn't "everyone" predicting a crash.
Make no mistake, never in history has a parabolic rally like what silver is experiencing not ended in a crash. This one will end in a crash too.
That is virtually guaranteed by human nature. I'll say it again. "action and reaction"
The D-wave is spawned by the extreme upside move at the C-wave top. The only way to avoid a severe D-wave is if the C-wave is very mild. That obviously isn't the case. And as such you can bank on the D-wave being just as powerful on the downside as the C-wave was on the upside.
Turn the chart of silver upside down and you will get a pretty good idea of what the D-wave is going to do to the silver parabola.
Gary,
ReplyDeleteIf we already have a good chunk of AGQ and SIL and going to eventually move to GLD anyways on your signal, should we just put any extra into gold and gold miners now and avoid extra transaction charges and possible whipsaw in silver?
Not yet comfortable with options.
Intern,
ReplyDeleteIMO we have about as close to a sure thing as one ever gets in this business in the silver market right now.
I just don't think the buying will quit until silver at least tags $50. It will probably go higher but I think $50 is a given. I want to ride the rest of that move. Once I do then I will convert to gold.
Clark:
ReplyDeleteOh good - glad you found my post...,
I use TDW only - always have.
But this month I sold about 1/2 the stuff that's not tax protected in ISAs.
I'm pretty used to using IG Index [spread bet] and with the right control will continue there = tax free [I hope!]. I don't trust the inland revenue to stop the capital gains tax hikes in the future.
Rather than using huge leverage on a small pile of money, I'm having a good sized hill of money with careful leverage. That way I maximise my sleepful nights and still make more than with TDWaterhouse brokers.
I buy physical from Chard & Co in your town!
Also ebay, thegoldbullion.co.uk [I think] and Baird & Co [London].
John
Here's a short listing of some of my favorite gold miners. I do not yet own GORO or EGO. ANV has been the leader, but is stretched 50% above the 200 day ma. XG has been a moon shot ever since it was split out from XRA. NGD and UXG are buys on the expected pullback.
ReplyDeleteANV
NGD
XG
UXG
IAG
EGO
GORO
AAU
GDXJ
Hi Poly,
ReplyDeleteHope you had a good break...need to ask you a question ...can I send you an email?
Gold and Silver UP in India on Saturday trading?
ReplyDeletehttps://www.kitcomm.com/showthread.php?p=1320750#post1320750
Question for Options Experienced Traders,
ReplyDeleteThe formula I found and am using to compute "leverage" is:
= [(Underlying Security Price * Delta) - Option Premium] / Option Premium
When I compute an OTM SLV option (SLV 50 July Calls) I get = [(45.53*.3584) - 1.95] / 1.95 = 7.4x
When I compute a GLD option (GLD 146 July Calls) I get = [(146.74*.5548) - 4.8] / 4.8 = 16.0x
??????
So, an OTM SLV call, which is 10% OTM is less than half of a GLD option already at the money?
A GLD 140 July Call computes to 12.1x while an SLV 60 July call computes to 9.7.
How is it possible that one can get much more leverage with an DITM GLD call than a super-OTM (lottery play) SLV call?
The way I understand leverage is a multiplier on the underlying security move. If this is mathematically correct then every 1% move in GLD is HUUUUUUUGE.
Gary,
Was this a factor in your strategy shift?
Gary,All I just don't see a strong enough risk/reward for people currently in cash (I'm one of those btw) to jump back in for a move to $50
ReplyDeleteYes, potentially one can gain 7% or 15% in AGQ but also the chance of a 2006 style stampede is equally high where people can lose double the gain...
Or am I missing something?
(disclosure: I am investing/trading with family money so my risk tolerance is low)
Thanks
Hello Group,
ReplyDeleteWouldn't a huge drawdown in silver, similar to that of 2006, take down SLW with the same ferociousness?
If so, is Gary keeping SLW in his portfolio because it barely moved over the past month, and even after a serious correction in silver, SLW will still end up much higher than today?
If you want a good laugh, go check out Turd Ferguson's latest "Wicked Witch of the Precious Metals" video.
ReplyDeleteThis series stars Blythe Masters, the current head of global commodities at J.P. Morgan Chase, and therefore the chief manipulator of the silver market.
She is the Wicked Witch, and works within the Death Star (J.P. Morgan). She is always in her office plotting with her chief assistant in manipulating silver -- Ruprecht (fictional). He is the top Flying Monkey in her stable of Flying Monkeys who trade silver for her.
This one isn't as funny as some of the older ones. And I wouldn't pay much attention to Turd's prediction in here that silver will go down in June only to go up to 67 or something soon after. I know Gary and Doc have the D-wave decline nailed.
Enjoy! And if you like this, go back and look at some of the earlier ones, which I think are funnier.
http://www.youtube.com/watch?v=WhcFI-vzNXk
Silverman,
ReplyDeleteThat was Friday (yesterday).
For some reason, they don't go for Easter there.
Hot Rod,
ReplyDeleteTo calculate leverage divide your total portfolio by the price of SLV (if you want to figure leverage for silver). Lets say you have a $100,000 account. If you divide $100,000 by the current price ($45.53) you could buy 2196 shares. That would be considered 100% invested.
At the close on Friday the July 40 call options on SLV were priced at $685. So if you wanted to control the same 3000 shares with options then you would buy 30 call options.
At $685 per 1 contract it would cost you $20,550 to control the same amount of shares. So with DITM calls you can be basically 100% invested with 1/5th the capital.
Now if you wanted to be leveraged or extremely leveraged you could in theory buy roughly 150 July 40 call options with your $100,000. You would then be leveraged about 5:1.
If you are really reckless you could buy about 1800 July 48 out of the money call options and raise your leverage to roughly 60:1.
However if you are wrong and the market doesn't do what you think it will do or it doesn't do it in the time frame you need it to then those OTM options will quickly go to zero and you will lose all $100,000 and will have destroyed your account.
Gary,
ReplyDeleteCan you estimate the price of AGQ when silver hits $50. I would like to put a GTC order at or close to that price.
Thanks!
Couldn't have explained it better myself Gary, you should add this example on your premium site.
ReplyDeleteSteven,
ReplyDeleteJust calculate a 15% return from Friday's close on AGQ and you should be pretty close.
CORRECTION: I wasn't paying attention to the details of what Turd was saying in this video. I was laughing at all the dialogue.
ReplyDeleteHe is saying that he thinks silver will go to 67 by late June, so he's not dissing the D-wave or mentioning it. That seems too high to me, and I think the C will top by June 10-17 at the very latest, but, that's just my estimate.
Go have a laugh. These really are well done and funny.
I just realized I mistakenly said 3000 shares of SLV when it should have been 2200. The example I gave will be a little off but you still get the basic idea of how to calculate leverage.
ReplyDeleteWe will see more and more of these absurd silver price targets as this continues. Sadly all these people will get caught at the top and then end up riding the crash all the way down.
ReplyDeleteP.S. Turd is saying silver will go down some in MAY and then up to 67 in late June.
ReplyDeleteJust trying to correct my original post to fairly represent what he is saying.
Gary,
ReplyDeleteGreat explanation on Options.
If and when we get into a runaway move, how much more attention will you give to the "emotional or hysterical" aspect of the moves & for an exiting decision?
Exits are based on cycles and technicals more than sentiment, because sentiment will reach extremes and stay extreme for several weeks prior to a top.
ReplyDeleteGary: agreed. And, to emphasize a point that you've made all along -- the drop in the dollar is driving this. And that is going to find a base and then go higher out of the 3-year low.
ReplyDeleteLooking at a couple of the larger gold miners during the 2008 run-up and pull-back: both PAAS and AUY dropped 80% from their respective highs. Neither have re-gained those highs, although PAAS is close. Gary, or any of the more seasoned PM bloggers know if there's more to those stories? Lots of talk about the jr's but not much about the sr's for the final stages..I'm sure gary's mentioned it here or on the premium site before but I don't recall..can anyone share the reason?
ReplyDeleteOften miners will float secondary offerings that will depress price. Juniors are some of the worst offenders of this practice. It's one of the reasons I don't waste time trying to pick individual miners.
ReplyDeleteGary: After the silver 17% drop in 2006 silver spent the rest of the move clawing its way back up and slightly exceeded that former high. Gold, in the meantime, rallied quite well as silver fought its way back to its high. This seems reasonable this time as well since silver sentiment is now at an extreme level and gold is (remarkably) neutral. That implies to me that gold needs to rally sharply to get to an extreme so we can end the C-wave. Any thoughts about the performance torch being passed to gold as get to the end game as happened in 2006?
ReplyDeleteI'm not sure we will see gold outperform but that isn't why I want to convert. I just don't want to get caught in a selling climax if silver longs all of a sudden get it into their heads to take profits.
ReplyDeleteGary,
ReplyDeleteWhat are your thoughts on this statement;
"Seasonal highs almost without exception occur before mid-May, and June, July, August, and September have not for the last eleven years shown any high."
This seems congruent to your timeline, yes?
It all depends on where we are in the intermediate cycle. Last year gold made all time highs in June. That almost never happens but it did.
ReplyDeleteAlso,
ReplyDeleteConsidering the gold:silver ratio is at about 32:1 I find this an opportune time to swap silver for gold. This is what I plan to do with my physical...Arbitrage.
Gary,
ReplyDeleteBeen a sub for a while. Have followed pretty much every move you have made with my own portfolio and have no complaints. Was invested in DGP in the past. It did not seem to follow spot as well as UGL. You may want to look at this. I don't have any math to back it up, but remember not being pleased with the product's performance as gold rallied.
From the Jan. bottom Gold has rallied 15%. During that same time DGP rallied 31.7%.
ReplyDeleteSeems to be doing exactly what it's supposed to do to me.
Gary,
ReplyDelete$50 silver is the number everyone is waiting for. I think either profit taking kicks in 1 or 2 dollars below or we are going to shoot right past it and I think that is when the shorts are going to start to panic and cover. that's what I see.
There will be some profit taking prior to $50 as big money starts to sell into strength. The question is will it be enough to turn silver down prior to reaching $50?
ReplyDeleteI doubt it.
$50 is too big of a magnet. And I think I can safely say there are no more shorts left solvent in the silver market so we don't have to worry about a short squeeze at this point.
wmp,
ReplyDeleteBig miners are lagging.
Some ideas:
1) Most miners are Canadian. The gold price rise in Loonies is less dramatic than in dollars.
2) Miners lag when their costs rise quickly especially energy (read oil). Off 2008 bottom oil is up 325% and gold 218%.
3) Hedge funds have a "pairs trade" going. They are buying gold and shorting the major miners.
4) In 1980's miners were about the only way to invest. Now investors have: gold/silver ETF's, mutual funds, double short and double long ETF's, futures, options etc.
5) Gary's scenario for a "D" wave is falling gold/silver, equities, commodities (I assume) and a rising dollar.
6)When the above plays out, miners should do very well in the upcoming "A" wave.
I have to wonder who came up with this idea that hedge funds are shorting the miners. Only an idiot would short undervalued miners.
ReplyDeleteI think it's safe to say there aren't too many idiots running hedge funds, so I doubt very many hedge funds are shorting miners.
Sounds like a rumor started so as to get dumb money to throw away their mining shares on the cheap.
ReplyDeleteIntern, The only reason I am in GLD and getting into DGP on the next dip, prior to any switchover is because in some of my accounts, if I sell a stock or ETF I have to wait a few days for the funds to settle before they will allow me to reuse the funds to buy another stock or ETF. In another one of my accounts, I can only do 3 trades a day. So rather than worrying about a delay in funds settlement, I am just bypassing that step on those particular accounts. I have SLV Options, so those will get switched as Gary outlined. Just a matter of forgoing a little less profits on silver on some of the accounts, but securely in the final runup on those accounts that are not as flexible to trade in. Otherwise I would be fully following Gary's plan on all my accounts if it was possible.
ReplyDeleteAt ease,
ReplyDeleteYou can cure that problem by enabling your account for margin.
Hi Sophia. Sure, but don't want to post email on public board, I can send you an email?
ReplyDeletebamster,
ReplyDeleteAre you saying that someone who thinks silver is going to $50 is already short ?
I haven't seen anyone mention Kinross Gold as a good stock to buy. Both Casey and Ruff have been recommending this. However, I have owned it for 2 years and it has done nothing. Any comments?
ReplyDeleteThanks.
Did you guys see this, one way to get sheeple to sell.
ReplyDeleteMorningstar Lowers 3-Year Gold Price Forecast By 26%
http://blogs.barrons.com/focusonfunds/2011/04/22/morningstar-lowers-3-year-gold-price-forecast-by-28/
Diana,
ReplyDeleteStick with the ETF's and you won't have to deal with stuff like that.
Gary,
ReplyDeleteIt's a pair trade. They simultaneously buy an equal amount of gold and short an equal amount of GDX. I know of two hedge funds that employ this strategy in Europe.
Since the last C wave top, gold is up 48% and the GDX for example is up 11%.
John Hathaway and Eric Sprott, two managers of billions in gold assets and precious metal miner funds think these hedge fund managers will get burned. So do I.
Nevertheless, hedge funds are making this trade and it will work until it doesn't.
It's a senseless trade. Both are in uptrends. No credible hedge fund should be doing this.
ReplyDeleteYou could go long both assets with possibly a smaller position in the under performing asset but it makes no sense what so ever to depress profits by shorting a rising asset class.
I seriously doubt very many hedge funds are making this kind of colossal mistake.
Gary, I only have one broker account that has margin. All others are IRA/401s. Once this Wave is over, will be closing the restricted trading IRA account and moving to Fidelity. Only opened it until I got my trading brokerage account opened and funded to trade on the platmform for free.
ReplyDeleteGary: If this C-wave tops in June sometime, the entire C-wave would've lasted for about 26 months.
ReplyDeleteDo you have any sort of estimate as to how long the D-wave would last after a C-wave of that magnitude? Or has anyone done any studies on length of D-wave after C-wave?
Thanks much.
J,
ReplyDeleteApril 16th report.
OK. Got it. Thanks.
ReplyDeleteGary,
ReplyDeleteI have a good chunk of my porfolio in SLW (long since $31) - In your view, why won't SLW struggle mightily with silver for the rest of the C-wave since they are so closely tied to one another?
Rob,
ReplyDeleteI'm not sure what you are asking me.
Gary,
ReplyDeleteGoing forward, do you have the same concerns with SLW as you have with silver?
It seems that somehow everyone has now come to the conclusion that silver is going to crash immediately and that it is going to also crash the silver miners.
ReplyDeleteFolks this is not what I said. The odds are silver will just continue to lead gold higher and silver miners will reap the benefits.
The only reason I'm converting to gold is just on the slight chance we see another event like what happened in 06. I'm just forgoing a little outperformance to avoid that low probability event.
We will still make big gains in gold just not quite as big as silver. But we've made so much money already that it really isn't important that we squeeze every last penny out of the silver trade.
you guys are crazy for selling your silver at $50. If gold is going to $1650 by June then silver will easily be around $60. I can guarantee as soon as $50 is cleared everyone who sold their metal at 50 will be chasing it again.
ReplyDeleteI can guarantee I won't be chasing it. I will just be making money in gold instead.
ReplyDeleteWes,
ReplyDeleteNo, I'm saying everyone is expecting $50, so when everyone is expecting the same thing, the market usually throws you a curve ball.
Razvan, I agree.
ReplyDeleteGary,
ReplyDeleteNo matter what you say, some people will be hanging their butts out over the edge, without the safety rope strategy you have provided.
You like the rock metaphor?
Gary-
ReplyDeleteI think I've got the plan down.
Short silver
Short miners
Short gold
Long Apple?
Got it!
Hot Rod, thanks for that silver log chart. The scariest thing about it to me is the MACD rocketing up.
ReplyDeleteI'd consider that blue trendline you have as the upper line of the range. But what if we drew another trendline also starting in 2002, but more or less connecting 2004 and 2008, then 2006 is a bit of a blip and we'd be pretty much at that line now. So maybe that could be the lower end of the range.
Maybe this isn't sound technicals analysis I don't know, but just food for thought. Personally, I'm going with Gary's plan, as while I love silver and the ride it's been on, I'll be more comfortable shifting soon to gold I think.
Yeah, this effort to squeeze every penny out of trading is counterproductive. Dial it back a little, reduce your stress, and enjoy the gains you've made.
ReplyDeleteThere are many more opportunities in the future. This isn't your last chance to make money.
looking at sell/buy volume oscillators there's definitely a slow down in gold, so chances are good for a correction.
ReplyDeletesilver though is almost still full bore insane, there's a small dropoff on the fast oscillator, that's all
this is 60 day charts
Gary/Board RE: Options Leverage,
ReplyDeleteThis is the link I was using to calculate Options leverage:
http://www.optiontradingpedia.com/options_leverage_calculation.htm
I do see the other calculation example but am having a hard time getting the #'s to match. Let's forget a second about the precise leverage amount....
Is it really true that an at the money call option in GLD has more leverage than an the money option is SLV? THis is the main question I am trying to validate.
Let's take the $100,000.
SLV 45 at the money option (21 contracts * $375 = $7875) gives 12.7 times leverage.
GLD Jul 146 has a premium of $4.80.
=100,000 / 146.74 = 681 shares.
= 7 option contracts * $480 = 3360
=100000 / 3360 = 29 times leverage.
Using the other website's delta calculation, the GLD call has a leverage of 16 times.
Either way, 16 or 29 times is higher than SLV 45 at 13 times.
Maybe it has to do with the fact that GLD is a higher share price than SLV?
Another thing I noticed is the open interest. I would assume that one would have to be very careful about picking a strike price that has enough interest or else selling them will be a nightmare.
The strikes looking good for GLD are 140 and 145 (sweet spots) and also 142, 146, 148 and 150.
Based on this, to me it seems that switching over from SLV to GLD options not only is significantly reducing the risk but is also significantly increasing the leverage.
Too good to be true?
The SLV option is more volatile than the GLD option but it has nothing to do with leverage. Leverage is simply the amount of shares one controls above what could be purchased with 100% of their portfolio.
ReplyDeleteYou can achieve 10:1 leverage in GLD options just as easily as you can in SLV options. The added volatility of SLV will make the moves larger in each direction but that isn't because the leverage is larger it's just because SLV is more volatile.
Actually you may be able to get larger leverage in GLD because it is less volatile so you will be able to buy more options and control more shares above and beyond 100%.
Jabalong,
ReplyDeleteNo problem. Here is the chart as you indicated with the line linking 2004 and 2008 and cutting through 2006.
We've already broken up above it in 2011.
http://stockcharts.com/h-sc/ui?s=$SILVER&p=W&st=2000-01-01&en=2011-06-30&id=p39229906016&a=232160778
This is why I keep going back to thinking the situation this time is vastly different than prior ones.
India on Saturday has silver trading up equiv $2.50 and gold $26. A reaction to China raising interest rates again. Tomorrow night should be interesting.
ReplyDeleteJust a word of caution when it comes to these charts. For the most part the only reason technical analysis works is because enough people base their trades off of it that it has a self fulfilling tendency.
ReplyDeleteIf your TA gets obscure enough no one will be trading based on it so it will have no predictive value.
Channel lines along the tops of trends tend to fall in this category.
Bull markets go up so they break through upside levels. That's why uptrends almost always end up breaking up through a channel at some point. Technicians trying to pick tops often get fooled by this and then miss a big chunk of the move.
This is why I don't put a lot of faith in patterns for the most part. (I do pay attention to triangles, T-1 patterns and crawls but that's about it.)
Things like wedges, head & shoulders patterns, three peaks and a domed house, Elliot wave, etc are so subjective that there's too much chance of them morphing or smart money fading them to fleece the retail trader who is gullible enough to believe these things give one an edge to be of any real use.
This gets really absurd when people try to incorporate these pattens into intraday moves. Intraday moves can be driven by just a few traders. Does an intraday head and shoulders pattern really have any meaning when it's being driven by three or four big players?
Of course not.
If one just sticks to the big picture cycles and sentiment you will do just fine. If you sidetracked into thinking you are going to chart your way to riches in this bull market I'm afraid you will be sadly disappointed.
Here's another interesting historical silver chart.
ReplyDeletehttp://stockcharts.com/h-sc/ui?s=$SILVER&p=W&st=1987-01-01&en=1987-06-30&id=p28634145708&a=232160778
What the hell happened in the spring of 1987?
In 6 weeks silver went from $5.60 to $11 (96% increase).
This was March 23rd to the end of May.
Correlation....Notice how the week of April 20th is the last huge green positive candle. The week after that had a gap up, run up then a crash lower.
Bob,
ReplyDeleteWould you post a link? Thx!
f
David with the flea,
ReplyDeleteAren't you the one that bought the 2009 bottom with either a load of miners or AGQ? I thought you posted that some time ago. If that is the case, you sure have no worries.
I was referencing the fence sitters, the sellers of everything at any SMT portfolio adjustment, and the constant reading things into Gary's writings that just do not exist.
From your posts, I don't believe you are in that group. I also commend your buying at the apocalypse if that was you. I just joined Gary at that time and bought, but like a fool I traded, when I should have never looked again. Had I shut off my computer and walked away, my returns would have been multiples of what they are now.
Gary,
ReplyDeleteWhen the time comes to get out of silver are you going to let a trade trigger on SLV execute it or do it by the seat of your pants?
Puppy Dog Follower,
ReplyDeleteI need a Hammy Sammich, some pork and Beanies and a double order of fries please! To wash it down, I need a large cup of that special blend of Tim&Jean coffee.
Tanks
Sold all my gold and silver on your advice and have a bid on AAPL and SMH ready to go for Monday morning.
Brian,
ReplyDeleteDon't forget to buy some SLV puts and go long green energy micro caps! : D
/sarcasm off
Brian,
ReplyDeleteI was long at the bottom, but I bought too early and took a tremendous beating in the process. I kept catching the falling knife all through Fall 08. I never sold a share, so I came out very well (Old Turkey!), but in no way am I pretending that I timed it perfectly. At one point I think I was down 70%. At the absolute bottom I had no dry powder left so I wound up buying silver bullion on my credit card.
Since then I am up thousands of percent in miners like EXK, but I have no desire to relive the experience. When silver collapses I intend to be far out of range.
Gary,
ReplyDeleteSpeed climbing the Eiger.
Under 3 hours.
http://www.liveleak.com/view?i=dd2_1303574321
This guy's done it before, obviously.
In preparation of your Swiss vacation. Enjoy.
David, your story brings back memories.
ReplyDeleteWhen the real D wave comes, at the end of blow off top, it will eat every PM long alive.
In late '81 and early '82, on the backside of the $50 silver parabola, I was buying and selling silver.
I made lots of money very quickly.
What to expect. The drop in silver will not only kill the over extended, it will bring out large numbers of people who hold silver who didn't sell it on the ascent.
They will realize something's "wrong" and will disgorge silver.
Those who think the only way is "up" will at first buy their silver, and then they will discover that the flat price plateau they're then on is not solid. The price will decline, 5% and 10%, and still there will be buyers. And then there will be freefall, further out, when silver will decline by 20% of where it then is, and more.
The failing backside of this building parabola will be as usual inconceivable, just like this rise now feels during this past two weeks to those who are watching and shaking their heads.
Beware the D wave, the backside of the parabola.
David, I do not believe for a minute that the D wave upon us will match what you experienced in 2008. That being said it is still a D wave.
ReplyDeleteTo be honest with you, the upcoming D wave will be a blip to you at the end of this, so I'm not sure trading it has any value to you unless you plan position or company adjustments.
The only reason for me to trade is AGQ, which is clearly a trading vehicle. The miners take a lot more thought. I have really become accustomed to them swinging 50%, and reality says these juniors will for the most part be conversion plays.
Congratulations on your intestinal fortitude.
David with the flea,
ReplyDeleteMy best for example is XG. I received the shares in the carve out. They are up 500% since then. Should I trade those shares around a D wave? My thinking is not.
Obviously you are sitting strong hand status with a good group of miners. Would I trade that status. No. Would Gary trade that status. Not sure but I think he has those same miners in his dresser drawer.
Rod, interesting. Thx! In just 1 month from 20 March 1987 till 27 April silver doubled 5,5$-11$..
ReplyDeleteThen intraday, 27 April it crashed about 30% from 11,10 to 7,8!
Maybe in connection with the rollover to a new month's future contract. + Some news too certainly.
Gold went more moderately from 405 to 478 till 27 April and 'only' dropped 10% that day
http://stockcharts.com/h-sc/ui?s=$SILVER&p=D&st=1987-02-20&en=1987-07-31&id=p29167713725
http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&st=1987-02-20&en=1987-08-31&id=p59231623039
http://www.ritholtz.com/blog/wp-content/uploads/2011/04/dollar-index.png
ReplyDeleteIt is actually bullish for the dollar. I'm not gonna tell you why it's bullish, but it is. A breakdown will be a FAKEdown; don't fall for it.
That likely means the precious metals rally is near an end. And the stock market should march higher, much higher. It will be a breathtaking equities market rally in 2012.
Don't get me wrong, precious metals will do fine probably year end and long term. (I own some silver and gold, by the way...since the last few weeks).
ReplyDeleteThe next 3 months won't be pretty for pm's. But it will be great for stocks like RVBD and CY. Not sure why everyone wants to eat that last 3-4 points on silver.
Beanie, did the silver bull kill your puppy ?
ReplyDeleteOr did you sell it to buy PM and ride the next wave down because it will be up by year end ?
It's not making sense to me.
Alex
ReplyDelete"..They simultaneously buy an equal amount of gold and short an equal amount of GDX...."
So, applying this to SLW, even though it broke down from a rising triangle, and is now crawling precariously along its 50 dma, once silver gets to around 50 the hedge funds could reverse - short silver and buy equities - thereby saving our SLW further downside ....
Hope so!
John
Two burglars just broke into my house. I spooked them and they ran away
ReplyDeleteCat,
ReplyDeleteYou will just have to watch the spot price on Kitco if you want to time it perfectly.
Beanie,
ReplyDeleteInstead of being wrong time after time why don't you just buy a $25 subscription so you can learn how these cycles work and make money.
We will be out of the metals long before the dollar rallies and the D-wave begins. Most here have profited up to 200% or more in the last 9 months.
Maybe this has been pointed out already, but doesnt the SLW chart have a 50 day crawl on it?
ReplyDeleteJohn,
ReplyDeleteSilver Pair Trade
I haven't heard or read anything about a silver/silver miner pair trade.
We know hedge funds are all over gold: Kyle Bass, my classmate John Paulson, PT Jones, Einhorn, Soros, Kaplan, Hermitage, Passport, etc. These guys don't pair trade gold to my knowledge.
Check www.marketfolly.com, www.opalesque.com and www.citywire.co.uk andother hedge fund websites for info.
As far as I know, only European hedge funds like Carmignac (largest hedgie outside the U.S.) and commodity funds are doing anything with silver. They also have a large gold position.
gary
ReplyDeleteif a broker for futures uses a forward contract and not the spot for TA , would that just be totaly insure they are wrong?
to track gold do you have to use spot?
or if you are tracking a forward contract does it suport itself?
Eamonn, some would argue that guns and ammo are just as valuable as Silver these days.
ReplyDeleteEamonn,
ReplyDeleteIt is in the name.
These charts call for correction, coinciding with a daily low. Or the parabola continues..
ReplyDeleteGC Weekly Hitting long-term resistance, pull back this week and finally break out the following weeks mimicking SI's run.
GC 4hour
SI 4hour If ever one could draw a pattern on a parabola, this be it.
Happy Easter everybody.
ReplyDeleteGary, how would you interpret a more dramatic pullback in gold and silver at this stage if it were to occur? Clearly, you're in the modest pullback camp, so at what point would you interpret it as something more that we should be concerned about? Hopefully, just a useless hypothetical exercise!
OT, but Gary might like it, amazing pictures.
ReplyDeleteJimmy Chin Climbs Yosemite, And Lives To Tell The Tale (PHOTOS)
http://news.travel.aol.com/2011/04/24/jimmy-chin-yosemite-national-geographic/#4080127
Link: http://arum-geld-gold.blogspot.com/2011/04/nice-channel-for-gld.html
ReplyDeleteA post on gold. I am between projects and will be posting more frequently.
Please read parkers post on ttheory. Very good gold silver comparison of 2006 and 2008. It implies silver something like 47 to 40 to 50 when gold rises steady. That answers some questions here about like where will be silver if gold goes 20 percent more.
ReplyDeleteChina is going to reduce usd holdings by 2/3.
ReplyDeleteThey are going to export massive inflation back to us by buying up every resource they can (imo)
http://www.zerohedge.com/article/china-proposes-cut-two-thirds-its-3-trillion-usd-holdings
Yash,
ReplyDelete"parkers post on ttheory"
That's not enough information for me to find what you want me to read.
Could you post a link or something I could Google, please?
Best,
Le Fou
Le Fou,
ReplyDeleteHere's a link to terry's T Theory site. Parker often posts there:
http://www.ttheory.com/
BOB FROM HAWAII
ReplyDeleteThanks for the chart, did you mean you were going to be posting more on here, or somewhere else?
P.S. I bought 'your' GORO on the breakout recently :)
I am not thinking it'll pull back much below a gap fill. If it does,depending on how it looks, I may add more.
Beanie:
ReplyDelete"I own some gold and silver since the last few weeks."
Uh-oh.
The conversion by China of its holdings to commodities is not a surprising development.
ReplyDeleteWhat's surprising is that the MSM is just now deciding this is something to consider.
China has been purchasing major positions since 2003 and 2004. Check when they first bought major positions in the wheat output of Argentina. That was the obvious start.
You know the phrase, "Sell on the news"? Well, that's why the USD will bottom here.
PIMA
ReplyDeleteThank you for that link.
After I read the whole top of the page and saw sign ups for a seminar, I thought..."hmmm, whatever" , then scrolling down I found the Diamond in the rough!
That double top silver, higher high gold top has some validity to it. History (based on human behavior reflected in the charts) often repeats itself.That could add to my view of things going forward in a good way.
Thanks again!
Long but great post.
ReplyDeletehttp://fofoa.blogspot.com/2011/04/deflation-or-hyperinflation.html
2 questions,
ReplyDelete1. why is beanie not banned yet
2. and is this the sign of top as beanie bought some gold/silver in last few weeks.
jc,
ReplyDeleteRegarding the Zero Hedge article, it will be curious to see how much the world takes this seriously because the quote from today (not earlier this week) on the amount of the reduction came from the chairman of a private institution. Of course if this is a prominent institution then maybe it means alot. We shall see shortly.
Thanks, Movax2!
ReplyDeleteYou're welcome, Alex.
ReplyDeleteI used to listen to Terry Laundry's T Theory analysis of the markets every Sunday, but haven't been a regular listener for a few months now. T Theory seems to be a workable theory for longer term timing. I probably ought to check the site once a month or so and see what his latest forecast is. His longer term forecast for gold (last time I listened) lines up with Gary's--he says gold is in a bull market till 2020. But he does not have the short term accuracy that Gary has. Still, it's nice to hear other methods of analysis confirming that this bull has a ways to go yet.
E,
ReplyDeleteYes, it is a sign of an impending top. Beanie bought very close to the end of a 3 year C wave!
Alex, I have a blog that I post my charts on. I will post those there and shoot an alert over here.
ReplyDeleteIf this runup is at all comparable with the past example Gary used, I think it would be fitting about now for the expected small pullback/pause.
ReplyDeleteWe're so close to the $50 mark that I don't think there's going to be much hanging around now ... Why stop for a drink when you're near the finish line?
I can easily imagine, after a day or two, a succession of days where each day is steeper than the preceding.
It could all be over pretty fast...
John,
ReplyDeletePeople were looking for a good-sized pullback two weeks ago that never materialized.
I believe it was yesterday that someone mentioned that the 17% drop in 2006 came out of the blue. Now we're expecting something similar.
Doesn't the market often do the opposite of what people are anticipating? I am extremely interested to see how this plays out.