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5-year graphs of silver and platinum
By iwog Follow Fri, 16 Sep 2011, 11:27am 10,435 views 112 comments
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Austrian,
Thank you but I am a podunk local, I don't understand how it works. Can you please describe a make-believe straddle like that, two simple hypothetical trades, and how the speculator gets his profit or expected profit from it?
Thanks.
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B.A.C.A.H. says
See this: http://jessescrossroadscafe.blogspot.com/2010/01/is-big-player-front-running-feds-buys.html
A trader is actually describing about how it works. The long-dated bonds will start going up in price weeks before the Fed conducts open-market operations and then the traders will flip the bonds to the Fed at a higher price. This is one form.
Another form is what I described: buy the long-dated ones at a lower price (higher yield) and sell the short-dated ones at higher price (lower yield). Given a fixed amount of capital you're using to make this bet, it can pay off based on the price discount on the long-dated bond.
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47 male
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LarryPatrickMaloney says
Not so much. Nice smack-down in the price of gold and silver today.
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So suppose you have $20k available right now to play with, what's the best bet to make on gold and silver? Buying puts at $? price expiring when? Or just waiting until things bottom out and buy a bunch for the next rise?
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tiny tina says
If you only have 20k, you shouldn't be "betting"
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theoakman says
I didn't say I only have 20k. I said 20k to play with. Thanks for constructive comment.
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tiny tina says
And I suggest you take the advice wisely. If you are asking people whether you should buy 20k of puts, I suggest you don't buy any at all.
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theoakman says
I'm not sure what your beef is. Is your thing to go on message boards and harass girls? Does that make you feel manly? Don't be pissed at me that you waited for gold to hit $2000 to sell, and it never did.
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Monterey, CA
Sold a good portion of my silver in the 30's. More than doubled the initial investment, considering I bought in around $12-15ish. Wish I has cashed out in the 40's, but you can't complain when you pull a nice profit.
Iwog may be right on this one - if we retrace back into the teens, I'll probably put 10-20k back into the silver market.
I'm considering buying rounds instead of SAE's or Phil's - I actually profited more on the rounds because of the low premium over spot.
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Monterey, CA
What's your opinion on gold.. Same parabolic run up, or it hasn't hit it's peak yet?
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tiny tina says
Rofl, I was harassing you? You're crazy. And, your post is laughable. I got myself a home and enough cash to pay off my loan off my gold/silver plays within two years of entering the workforce. I'm not pissed at anyone. I was giving you sound advice. You're the one who got all snippy and sarcastic.
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47 male
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Jason M. says
Faulty analysis. It might be absurd, but the dollar's reserve status has only gotten stronger as the Euro slowly blows up.
There's a measure of how well the dollar is doing in the world. It's called interest rates. There isn't going be any worldwide systemic failure of the dollar while interest rates are at record lows and everyone is fighting tooth and nail to put money here.
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San Jose, CA
iwog says
I agree about the reserve status. However, I have the feeling that Gold, bubblicious as it is now, would increase even more than the dollar (in terms of percentage), in an event of clustered sovereign defaults. No proof; just a hunch.
There's also the dollar index: http://www.bloomberg.com/quote/DXY:IND
Even though the dollar is strong, it is not impossible for the US to default. The more we keep overspending, the closer we get to the Keynesian endpoint. Once we reach that point, a downgrade or a small downward movement of the GDP will cause us to default. It would mean that if you own US Treasury bonds, you'll only get a fraction of your money back (if at all).
How exactly does a default affect the dollar? Traditionally, countries would devalue their currency. But that's really a separate action.
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This guy wasn't by any chance long metals during the period that Iwog announced his short positions in Gold and Silver ahead of nice down moves ?
You can consider Iwog lucky, I do, and I'm assuming he does, but metals have been in a secular up trend, and Iwog (so far) has recently shared an opinion of a correction, that was correct. What's the big deal?
Most traders know that it's more about timing than objective (fundamental) analysis. If your analysis is spot on but off in timing by 6 months or two years, then what's it worth? I'm talking trading not long term investing.
Examples: Many of us knew the stock market was in a bubble in 2000, maybe not quite as many (but still many) knew that Real Estate was in a bubble in 2005. What smart people will admit though is that at those times we didn't really know how much further it could go. (correlary: Greater fool theory).
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marcus says
Yep, I shorted the dickens out of Bank of America in 2010 with puts. Fat Lot of Good that did me.
Jason M. says
Isn't that a bit of an overkill?
If you have a lot of metals, you risk getting cleaned out by burglars. You could keep receipts, but look what happened to MFGlobal Account Holders. They are still being charged storage fees but can't touch their own metals they have a warehouse, allocated receipt for!
5% is plenty. If shit gets so bad, I guarantee that either the Corporations will use the power of Government to control your metals, by banning the possession of the physical*, confiscating the metal from the custodians, or insisting you lease it to them, or whatever scheme they cook up.
* You might have it and hide it, but how then do you USE it to buy anything?
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Monterey, CA
Jason M. says
Actually, that kind of thinking will get you in trouble.
In the event of a currency collapse/hyperinflation, you are correct. But in regular, everyday, buying and selling physical - it is really no different than the market. The price of bullion is based on spot in the paper.
Trying to convince me that there is a disconnect between the ETF and physical is a joke. Sure, you pay a slight premium over spot for physical, but it's always been that way. Just visit Kitco forums - those guys swear there is a disconnect, but will never pay more than a buck over spot for SAE's. It's laughable.
Jason M. says
Wrong again. If you can sell your physical silver at an over 100% profit (especially when it's falling off of a cliff), hell yeah - take your profits and run. History repeats itself and you buy back in when it's rational to do so.
Your thinking is similar to the housing bubble. It's like thinking that housing would never collapse back in 2005-2006 because they "aren't making anymore land." You can argue they are printing more money (which they are), but silver was in a bubble, and it's collapsing right now.
Jason M. says
He regularly places his investment activity on this board. He's had a few good ones, and a few bad ones. I disagree with him on housing, but he looks dead on with silver.
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Jason M. says
Maybe he doesn't mean it as advice. What if he's just shooting the breeze, or looking for good counter arguments before he pulls the trigger.
Sometimes I like it when someone alerts me to a chart that I haven't been watching.
On the other hand, it is true though for me, and I'm assuming for others, that when doing your own independent analysis, listening to the opinion of others is likely to mess one up, regardless of whether your tendency is to agree with them or to fade them.
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Jason M. says
Jason, brother, calm down.
I had a 7 and a 66. Those tests are more about memorizing regulations than anything else. They mean absolutely nothing, I know quite a few dumbasses with 7s and 66s, just like there are dumbasses who are licensed real estate agents, licensed annuity salespersons, etc.
Jason M. says
You'll also pay more for physical sapphires, diamonds, etc. rough or cut. And more for Corn, canned or on the cob, than the price listed on the markets, too. As well as gasoline.
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Jason M. says
I was a floor trader for about 8 years (does that count?), and have been involved with trading about twice as long as you, although granted at least half of that time it was only a minor hobby.
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Monterey, CA
Jason M. says
I have a degree in Economics - which is probably more applicable to this discussion.
thunderlips11 says
I had a friend (heavily into debt) try to give me investment advice. I believe he had a series 7. Meanwhile, he's still broke - sitting at home, while his wife works as a secretary. His last "real" job was at Costco stocking shelves.
Jason M. says
There's always been a premium on physical. I addressed that in my last post. It depends where you buy.
Apmex right now has silver rounds for 1.69/per oz. over spot. That's around 5%.
Tulving is selling SAE's for 8% over spot, and maples for around 5% over spot. Free shipping too.
Pawn shops routinely sell SAE's at spot.
Most dealers buy back at spot, and sell to make a small profit (remember they have a business to run)
Sure anyone can pay 10-20% over spot, I'll sell you the rest of my physical at a 10-20% markup to you right now. Come get it.
Jason M. says
Not all people. But most - yes.
Which is why I still hold physical gold. Around 10-15% of my wealth.
Silver on the hand - looks like it popped. It treated a lot of people well, but it's going down. Give it some time. I used to be a "To the moon" person as well" - but then you have to face the reality that markets don't always move the way you want them to.
Jason M. says
I have been readings Iwog's posts back as far as the old forum, this is back when theoakman was an active poster as well (that guy loves pm's). I'm not sure what year that was. He said to buy gold/silver back in the day, and his reasoning made sense at the time, so I bought several hundred oz's of silver and some gold - it was time to diversify a bit. I've held it for several years now.
Anyhow, I agree that silver is going to go down near the 15-20 range, as he indicates in the above post - which is when I'll buy in again.
Not sure when he said to sell, may have missed some of the other posts, but I agree with this:
uomo_senza_nome says
Jason M. says
Or you can buy sell physical metals based on market movements. It's also a matter of preference and tolerance for risk.
Jason M. says
Well, by buying silver in the 12-15's and selling in the mid 30's - I'd say I demonstrated an actual profit... on paper. Which will put food in my mouth... But yes, no one knows the future.
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Jason M. says
No, Iwogs posts have not bothered me, but then I haven't been trading metals recently, so why would they.
I have thought Gold was due for a correction for a while based simply on the idea that production would get cranked up, as price exceeded the cost of bringing it out of the ground by a large margin and in the absence of feared inflation. But I understand that there are other factors such as various governmental accumulation and don't claim to be an expert, and I'm not usually all that interested in fundamentals anyway.
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Jason M. says
Sometimes.
Watch out for "groupthink."
(just playin around)
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Key to successful trading: spend a lot of your spare time contemplating conspiracy theories.
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Jason M. says
Absolutely, after cashing out most of the silver stack - I've been thinking about going electronic. I probably would have been more aggressive - possibly a much higher profit... but then again, more risk.
Jason M. says
By all means, share your wealth of knowledge. I'm sure we could all benefit.
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Jason M. says
I did nothing of the sort. I was very bullish on both gold and silver until early 2011 to the point of being called an irrational gold bug. This thread and one other thread made during the same week represents the exact moment that I turned bearish and went heavily short. Silver crashed and had the largest two day loss in history several days after this discussion.
What would cause you to lie about my position?
Jason M. says
ETFs are fine for long term trades but a horrible way to day and swing trade the way you've been discussing. Anyone who does this type of trading uses futures contracts and futures options. Why? Because of the tax consequences.
ALL short term ETF trades are subject to short term capital gains rates while only 40% of futures profits are subject to short term capital gains rates. 60% of futures profits, even if realized in a trade lasting a few seconds, are taxed at long term capital gains rates.
This 60/40 rule is so beneficial, that it makes no sense that you'd be playing the ETFs let alone teaching other people how to do it.
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Hinsdale, IL
Iwog said : "Faulty analysis. It might be absurd, but the dollar's reserve status has only gotten stronger as the Euro slowly blows up."
I couldn't agree more Iwog
The USD is in a multi year bull mkt verses non-commodity related currencies . IMO
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Monterey, CA
Rightswingtrader says
Agreed.
And on that note, I'm officially 100% out of the physical silver market (cashed the rest out this morning). Except for a handful of proof coins, and several sealed 25th anniversary sets that are going back up in price again.
If silver drops back in the mid teens, I'm back in.
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Las Vegas, NV
Looks like support at 26. Do you guys still think it's going to 10 - 15?
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SLV + 1.5% today
PSLV -9% today
Seems pretty severe divergence there.
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Monkeyswing says
Yes.
If you're a technical guy, you look at that graph and say "Descending triangle".
I'm convinced the bubble is over. Silver production continues to exceed demand by a substantial amount. I think it's going a lot lower.
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Las Vegas, NV
I hope it doesn't 'cause I just bought another 100 oz bar. Trying to build a pyramid. lol
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iwog says
ROTFLMFAO!!!!!!! So confident! Even if your one chart pattern (of many available for this chart) manages to hold up, the downward breakout chance is still 64% (ref: T. Bulkowski). In any case, it looks like the upper trendline of the descending triangle has already been violated to the upside.
The long-term support trendline has been touched six times over the last three years, which means this is the most significant pattern to trade from. It just touched for the sixth time, price is bouncing off the 100 day moving average, and price just violated your descending triangle to the upside.
"Silver production continues to exceed demand by a substantial amount." Good luck with your fundamental analysis. Nice throwing darts with you.
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Las Vegas, NV
Whether silver's in a flag formation or a descending triangle or not, I guess I'm not really too concerned 'cause I plan to build and hold on to my shiny pyramid regardless of volatility. As long as the world's super powers continue to debase their fiat currencies, silver and gold should be trading higher a year from now, and even higher 3 years from now. And otherwise, as my sister gleefully pointed out, the bricks will make excellent wheel stops for my Mustang. Ha.
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GameOver says
Word. Comrade Kaiser leads the way
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Graphs are meaningless, they show past history and predict nothing.
Of course it's fun to look at things and try to see patterns: tea leaves, palms, astrological charts, etc.
Gambling appeals to people, it's stimulating to the same brain chemicals as surfing, skiiing, bunjee jumping, nookie grabbing, shoplifting, (for women particularly) etc.
Gamble, have fun.
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GameOver says
You may come to the front of the class and receive your diploma Grasshopper.
Graphs and charts don't tell you all of the filters used, they don't provide the visual queues that annalist like me can use as we peruse over data to find fault. What I'm good at is finding problem records in a data set. Missing records, or lack there of, is a huge PROBLEM.
99% percent of people can't read data, so they rely on graphical representations. They are relying on what ever chart creator says it is. It's undisputed, all you can do is take for face value, and for that 99%, it's way over valued.
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Las Vegas, NV
Silver had an interesting week. Seems like when popular sentiment goes from deflation fears to inflation fears, it’s bullish for metals. A strong dollar is deflationary, and I know IWOG feels we’re in a multi-year bull market for the dollar, aka an extended period of deflation. But, I feel that if interest rates rise (like they just did), and the fear changes from Europe blowing up to ‘oh shit, the Fed’s printed way too much money’, metals will soar. What’s gonna happen?
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Monkeyswing says
Can you please elaborate on which interest rates rose? Thanks.
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treasury yields
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Las Vegas, NV
Yes, kt1652