The Gold and Silver Thread

[xsited1]

Is silver topping? Too early to tell but it may be, at least in the near term. It is having a hard time breaking through $50, and may be in the process of forming a triple top.

The behavior in gold says otherwise. Gold has performed extremely well and is yet showing no signs of topping. If gold is going to move higher it is likely silver will as well.

However the price action in silver had been manic. Options volume on the SLV has been greater than the SPY, which is crazy.

I have a very small short position here expressed in deep OTM puts. I may add to them if silver continues to falter or sell if silver moves to new highs.

How far out of the market are you with the silver puts? I might just have to do that. If you don't mind, what's the strike price and month you're trading?

 

[Toro]

Is silver topping? Too early to tell but it may be, at least in the near term. It is having a hard time breaking through $50, and may be in the process of forming a triple top.

The behavior in gold says otherwise. Gold has performed extremely well and is yet showing no signs of topping. If gold is going to move higher it is likely silver will as well.

However the price action in silver had been manic. Options volume on the SLV has been greater than the SPY, which is crazy.

I have a very small short position here expressed in deep OTM puts. I may add to them if silver continues to falter or sell if silver moves to new highs.

How far out of the market are you with the silver puts? I might just have to do that. If you don't mind, what's the strike price and month you're trading?

It's pure speculation. I own the June SLV puts with a 30 strike. The bid/ask is 8/10 cents. I don't expect it to fall that far but a decline into the 30s would double or triple the price.

The action in gold today would belie a collapse in silver, given that it hit new highs. However, the action in gold and silver stocks continues to be poor.

Another positive for the PMs has been the action in oil. I am very long oil with positions in the ERX, HEU.TO and calls on the OIH. This is a trade however, and I may start selling on further strength.

 

[Toro]

Silver is getting whacked in Asia. After hitting $49 on Thursday and closing at $48 on Friday, silver fell $5 to below $43. It has since recovered to $45. I don't know why.

Tops are often accompanied by high volatility. I believe we may be topping in silver here and I may add to my silver short on strength.

 

[KissMy]

Oil, Gold & Silver got whacked when news that Osama was killed hit the news. Silver dropped 12% but is now recovering.

They got Osama & his Son & 3 other leaders during the firefight. They also killed Qaddafi's Son & 3 Grand Children over the weekend.

This will drop the terror premium off of the oil price. Also Obama will draw down US Troops before the 2012 Election. This will ease the deficit & strengthen the US Dollar.

Oil, Gold & Silver are going to drop like a stone. Gas will drop & Obama's poll numbers will climb.

This will strengthen the US Dollar so much so that I had to change my Avatar.

 

[KissMy]

Notice the huge Silver & Gold price drop when the news was leaked that Osama Bin Laden was killed.

 

[liebuster]

I think this correction will be short lived. Once people realize that Bin Laden being dead or alive had nothing to do with the economic policies of our dear "leaders" things will go back to "normal".

 

[Toro]

I sold half my put position. I own June puts on the SLV with a strike of $30. I bought contracts at $0.12. I sold half my position at $0.25. Thus, I will not lose on this trade, even if the puts expire worthless.

Silver is now at $42.50. My target range is $38-$42 but I think there is a good chance silver could fall to $33-$35.

 

[LordBrownTrout]

Glad to see it pull back a few dollars. May pick up another junk bag if it falls to 35.

 

[JackDan]

Glad to see it pull back a few dollars. May pick up another junk bag if it falls to 35.

Sounds like what I said when it was at 33, I said I would buy another 500 ounces if it dropped down to 28, but it never even went back into the 20's. If it falls back down to 35, I will be there with you ready to purchase some more.

 

[Toro]

I closed a quarter of my original silver short position, selling puts at $0.40. I am keeping a quarter of my position, but even if it falls to $0, the trade will be near a double.

I wouldn't be surprised to see a bit of a bounce. If there is a large bounce in silver, I may reinstate my shorts. I think silver is going into the $30s.

 

[KissMy]

Typically commodities will cover the gap before continuing in the intended direction. There was a huge trading gap created after Osama was killed. The commodities had a short term (gap reversal) recovery to cover that gap but have now resumed their downward direction.

Pressure will mount to withdraw troops now that Osama is gone. This will improve the US budget outlook, credit rating & dollar strength above it's dire forecast. It also takes the terror premium off of oil which will improve the economic outlook above its forecasted slowing.

This is going to hurt commodities until people get a good read of what the future will bring. Most believed all of the wars & terrorism would continue until after the next election.

 

[Toro]

Silver liquidation is in full swing. I have now covered 85% of my original short position and will keep the remaining position as play money, perhaps as a way to gain exposure if silver were to fall before $30.

The market did show signs of stabilization in the afternoon. I would not be surprised to see a bounce, given how oversold silver has become. I would consider reloading my shorts if it bounced to $43-$45.

I am also contemplating longs. The RSI on silver is 41. There have been nine occasions since the bull market began a decade ago when the RSI fell below 30. On eight of this occassions, silver was higher three and six months later on average by 22% and 32% respectively. An RSI of 30 or lower implies a price of $30-$35 over the next 10 days.

 

[Toro]

Silver has been whacked over the past 6-7 days, falling 25%. However, gold is down 5.1%. The Russell 2000 has fallen 4.6%. Thus, the decline in gold is a normal correction.

Silver got crazy, and is now correcting for it's crazy action. The behavior in silver suggests a top that may not be breeched for some time. However, there is no reason to think the same about gold, at least not yet.

My guess is that gold and silver have topped seasonally, as they usually do in April and May. However, I don't think the ultimate top is in. It may be topping but I don't think so. I do think more weakness is coming but a buying opportunity may present itself in the summer.

 

[KissMy]

Silver has been whacked over the past 6-7 days, falling 25%. However, gold is down 5.1%. The Russell 2000 has fallen 4.6%. Thus, the decline in gold is a normal correction.

Silver got crazy, and is now correcting for it's crazy action. The behavior in silver suggests a top that may not be breeched for some time. However, there is no reason to think the same about gold, at least not yet.

My guess is that gold and silver have topped seasonally, as they usually do in April and May. However, I don't think the ultimate top is in. It may be topping but I don't think so. I do think more weakness is coming but a buying opportunity may present itself in the summer.

I feel all commodities are getting hit by a quadruple whammy. They were a bit frothy. Traditional seasonal timing,"sell in May & go away". Death of Osama. Europe raising rates. Exchanges raising margin requirements.

Oil just got a 10% haircut. Silver 20+% haircut. Gold 6% haircut. Corn, Soybeans & Wheat slashed. It is a broad based commodities rout. Osama's death means markets must correct to meet future forecast for US dollar & debt even though his death has currently not brought any troops home. It is the long range forecast.

This is just like the case I made HERE at this LINK with you about how when Bush lifted the drilling ban on the GOM & OCS it caused oil to plummet from $147 down to the $30s even though currently no oil had been added to the supply. A large enough political event / shift changes futures markets ahead of supply & demand.

 

[Mad Scientist]

I want to apologize to everybody for the recent downturn in Gold and Silver. I just bought my first oz. of Gold and about 22 oz.'s of Silver about 2 weeks ago so naturally, they both hit the skids.

It's the story of my life man!

 

[Toro]

I closed my short position, selling my last tranche of puts at $1.03. I think silver is going lower but I don't want to be a pig here. I will start to look to get long, but it is dangerous right now.

First support is at $33. Around this level, RSI will approach 30.

 

[jillian]

I want to apologize to everybody for the recent downturn in Gold and Silver. I just bought my first oz. of Gold and about 22 oz.'s of Silver about 2 weeks ago so naturally, they both hit the skids.

It's the story of my life man!

don't feel bad. there's an old story about how if the general public knows all about a "good buy", it's too late.

happens to lots of people.

 

[Mad Scientist]

Gold down $43! F*ck me!

I read that gold and silver is down because George Soros and his gang sold off massive amounts of their holdings. I don't believe this is due to dollar confidence returning because unemployment filings are up.

I'm gonna' wait for gold and silver to stabilize, then I'm gonna' buy some more!

 

[KissMy]

I want to apologize to everybody for the recent downturn in Gold and Silver. I just bought my first oz. of Gold and about 22 oz.'s of Silver about 2 weeks ago so naturally, they both hit the skids.

It's the story of my life man!

Ok you need to redeem yourself. At what price drop would you consider selling? I need to know when to buy.

 

[LordBrownTrout]

I'm actually glad to see this correction. I'm buying another bag or two if it slides to 25 .