Silver (maybe time to dip yer bread)
 

Well after boring people silly on here with my gold rantings I'll start on silver:lol1:

I think we'll see $50/oz again thsi year and perhaps $100/oz within a couple of years.

There was a recent peak of about $50/oz and it has had a pull back and is about $35/oz today.

I first dipped my toe at about $23/oz (wish I'd been more courageous then, but hindsight and all that) and will be adding more in the dips. Interested investors should think about buying in the near future

imho there are a couple more years of the bull market to continue in gold and silver, and silver may well out perform gold in that time. The precious metals rally is NOT over, despite what vested interest parties would try and have us believe.

DYOR:)

I think some of the semi-precious commodities could be worth a punt if you don't mind a bit of risk. I'd be looking at metals that are increasingly used by places like China as their technology develops. There are peaks and troughs of course but most of them seem to rise inexorably over time.

Tin is an example.

http://www.mongabay.com/images/commo...chart-tin.html

dl

Wasn't it Bunker Hunt who cornered the silver market?

These markets are so corrupt it is unbelievable. I have several conspiracy theories about what has happen over the past couple of weeks in the commodity markets and i reckon over the next couple of months the Gov. actions will confirm those theories and further service to highlight this manipulation.....

Anyway, just remember guys without speculating the political rhetoric and so forth that QE2 comes to an end in June (or at least is expected ;)) looking at the USD chart, if it breaks out of its downtrend then it could rally well through the summer months, this is going to hurt commodities and that breakout is not only from a technical perspective but with the Fed's printing press put on pause we expect to see the USD rally too for obvious reasons. US inflation isn't as bad a problem as we have domestically and with BoE minutes suggesting rate hikes as early as Q3'11 potentially and then subsequently each quarter through 2012 the argument for buying gold etc. as a hedge against inflation also begins to diminish.

Whilst these things can and will probably continue to grind higher, i still maintain that this trade was last year’s trade, what worked then doesn't mean it will work now. As the market moves the game changes around it.

Silver starts looking appealing as a punt for me around the $34 level with a wide stop at the breakdown of $32 and upside targets of $39 followed by $43. As ever this is not advice just some quick thoughts, DYOR!!!!!

Is that Do Your Own Research????? Guessing.

dl

what does DYOR stand for ?

In the paper today it said investors sold off gold and silver, aswell as other metals because it was feared the growth in china was slower than expected

I was checking the price yesterday and seen a sharp drop down to £910 oz for gold, check this morning and its back up past £930 oz, whys is this ?

And Alloy, would you mind sharing a theory with us, I'd like to hear your thoughts if you dont mind ?

The conspiracy theories that I believe in (its a not actually a theory its fact) is that govts, mainly the fed are doing their best to keep the price of gold/silver down. Google it and read, I've explained it before and with the greatest respect don't want to type pages all over again.

Alloy, with the greatest respect this is not last years play for many people. It maybe for you due to the nature of how you make your living on very short term price changes.

Nothing has really changed in terms of macro economics. Gold will continue to rise and will hit $2000/oz in the next year or so. Silver will hit $100 in the next 24 months or so. (unless something drastically changes)

This may not be the sort of changes that allow you to make the sort of profits you need. But for people with cash in the bank being eroded by inflationary pressure its a very good tool for investment indeed.

Gold has really paid off for me, I'll be pouring my cash into silver this year

DYOR = do your own research

I won't.

I remember when gold was $250. It was just when I finished my MSc in mining geology!

Commodities and PM's are cyclical. I don't believe this talk about a super gold-bull etc.

First off, my skill isn't speculating to this extent, but here are my thoughts...

CME hikes the margin rate of commodities twice over the past fortnight. The people this effects are the speculators who have been trading the bubble on low margin rates, with the hike in the cost to warrant their positions they then become forced sellers capitulating from their holdings and driving prices down therefore bursting the bubble.

With commodity price pressure released the consequence is a release on inflation pressure meaning that central banks can wipe the sweat off their brow and maintain low interest rates for a little longer and not de-rail the economic recovery. Now QE2 comes to an end next month, this is going to reduce liquidity in the market, however the debt ceiling in the US is almost reached so they will have to go to congress to apply for this debt ceiling to be raised should they want to start round 3 of QE. By releasing the inflationary pressure they will appease policy makers and then have the debt ceiling increased to begin firing up the printing press again and further pumping more money into the markets.

Then there is China, last month they reported a rise in inflation of 5.4%, again the inflation pressure they are coming under despite hiking interest rates to combat this issue remains a concern. It is in the interest of the major economies and the economic recovery to control inflation without hiking interest rates, the obvious route of which is to supress commodities and remove the burden they bring with their price increases.

Finally Australia historically comes to the market with its supply during our summer months, with inventories around the globe already high, this additional supply will further swamp markets and suppress prices. Caution that with the floods etc their supply will probably not be as big as it has been in the past, but still an additional amount on top of already stocked inventories is going to continue to keep price under control....

The time frames of how this all is playing out just seem manipulative to me, people have been relaying the article about the Hunt bros. in the 80’s however the behaviour there and reasoning behind hiking margin rates is wholly different to what we have witnessed in recent weeks. Long and short of it all, QE3 fired up 4-6 weeks after QE2 stops IMO, further sting pulling to the exchanges to curtail speculators puffing the bubble back up and all in all a reduced level of return and a higher level of risk, thus making the play less attractive.

I could be wrong, but these are some of the reasons that i am less interested in the commodity plays at the moment and more focused on other developing themes :)

Alloy, though you are factually correct in what you say my conclusion is different to yours. I don't think any of the issues you mentioned above will be able to stifle the continued bull run in pm, it will slow them down and delay them, but not stop them.

The Fed has pulled all sorts of dirty tricks to keep gold down but it has still trickled up nicely.

We'll agree to disagree on this one. I suppose there needs to be opposing views for a market to work:)

The only way gold is 'going to the moon' is if civilization (and the dollar) collapse. Then I hope the gold tastes good when you try and eat it.:lol1: (assuming you hold physical and not paper gold).

So? When did I say it wasn't? You are becoming the master of stating the obvious.

Gold was recently $250 around 1998-2000? That makes you over 30 years old and still living with your mother:lol1:

Yeh to be fair my view has been less bullish over the past months and then observing the last couple of weeks and the events that have been the drivers of price I have become increasingly cynical. Your perception of how to play it is the right read accross shared by many which is another reason I have become less bullish, the obvious trade is often the most crowded which is why you get such dramatic capitulation as no one is short these instruments so events such as a margin hike mean that sellers reveal themselves to cover their longs but there isn't as many bears buying back their shorts, result of which is large down moves.

The main issue I have and the reason I don't have any exposure on is that it is all second guessing economic politics and that is the reserve of a punter IMO :)

Inflation is the ultimate theme here and looking at high yield defensive cyclical stocks with low forward PE ratio is IMO a "safer" hedge against inflation but certainly not as exotic as where you are pushing your capital too.

On a side note have a look at a silver chart over 50 years...appreciate different factors were at play, but it will put your risk into perspective, if I were trading these plays and could secure a gaurenteed stop loss I think I would be more than willing to pay the premium for it!

To be fair I don't think that makes me a punter.:)

It's because I'm comfortable with economic politics, it's something I take an interest in and know a little about. I have a strong opinion on where things are going with regards to this. It could be the wrong opinion, but it's a strong opinion based on a lot of reading and homework. It's not a 'punt':)

ps, the stuff I pm'ed you about, that's a punt! (It's risen a bit since then btw;))

What I think - and the reason I am holding off buying any physical (I'd like to buy krugerrands) - is that the price will not continue to rise like this in real terms. At some point there has to be either a rise in the price of everything else or a fall in gold. Either way, I feel that it costs too much relative to income to justify buying right now.

Cheers for sharing your thoughts, Alloy. QE 3 on its way. Shortly followed by 4, 5, 6... and so on, is my prediction. :brickwall

All the best to you pal the fundamental difference between us is that you take personal positions and I trade other peoples money. I wouldn't feel comorftable in taking on exposure that I didn't have conviction in and right now I'm apprehensive on commodities, however that is continually under review and subject to change :)

We should have a beer DD!

Alloy - Doesn't everything in the market ultimately move according to the whims of government and quasi-government (i.e fed) intervention and policy? I mean if you are saying commodities is too opaque to understand because of this what isn't?

A friend of mine bought a load about 3 years ago. He has it in his house and it's worth a fortune now

Defo up for that beer some time soon Alloy!

Interesting interview on Bloomberg yesterday, they had some bird from the CME on and she was asked why they had increased the margin call 5 times in 2 weeks. She was squirming a bit I think!

Anyway, I missed the dip last week but will be feeding in cash as and when.

Happy investing.

I'm long Silver at 33.65 got filled yesterday evening :Whatever_

What does 'got filled' mean? Met the stop loss?

If so not surprised, short term movement in my very very humble opinion will be down. The upside is longer term, hence a potentially good buy for a mid/long term investor like me to take advantage of the politically motivated actions to send the price down in the short term.

I'm aiming to come in at $30 if I can.

Means he had a bid working in the market, he has bought Silver.

Yes i have bought silver, after this discussion last week and having had a look at the chart i placed a bid on my personal account. There are several technical reasons to be buying silver IMO this is purely a swing trade with initial target of 36.30 followed by 38.90. If it takes out 32 on the downside then i'm out of this trade :)

Oh, I see. I was curious why you had put the :Whatever_ next to the post?

Anyway, I was having a chat to one of the other dads in the playground and he works for Man group. He was telling me how they have rooms of PhD types sitting in a room devising algorithms which are then used for most of their trading.

Is this how you work as well?

I put the :Whatever_ as i'm not sure i want to be in the trade as its not a conviction play for me, but thought i'd put my money where my mouth was with regard to already stating loose parameters in the thread :)

The only algos i use are to finesse execution on large orders. I use algos when i'm too lazy to sit there working the order book myself. They can also be used for arbitrage and spread trading, i have a spread machine here for example that makes a market in an ETF upon being hit whether it be on the bid or offer the spreader then goes into the futures market and takes the opposite leg across two other instruments to exploit the spread whilst matching off the risk all automated to my parameters. Another one is technically driven by inputs i program to scalp in the futures markets.

Man Group flagship is the AHL fund which is all pretty much quant driven. It works well in a trending market but not so good with FX fluctuations and rage bound markets.

I am a technical chartist, so most of what i trade is driven by observations of supply and demand.

Thanks, have a good day:)

Just for a bit of house keeping, after initially ticking through the entry, now sitting over 4% onside after being in the trade for 72hours, move the stop up to 34 for no other reason than I don't have huge conviction on the short term although still bias to the upside. Worse case scenario make the costs back plus a percent, having locked in some profit we are now playing with the markets money :)

Dollar index having a chew on the 38% fib retracement of the Jan high to May low showing indecisive strength, however has broke out of the downtrend and could continue to recover.

With regard to this and still seeing silver perform "well" i have just moved my stop loss up to 35.30 which should lock in a 5% return, still looking to give it space to target 36.30 followed by 38.90 :)

First target is hit :D out of half the position for 7.9% return, moved the stop on the balance up to 35.75 :)