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MadMarketScientist

Forget Gold ... Are You on the Silver Bullet Train?

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Silver has been the best trade for last 7 months, the following table makes the point...

 

Total return since August 27, 2010

Global Asset

140.4% Silver

75.1% Corn

39.0% Crude Oil

38.2% Russell 2000 Index (Broad Stock Market)

36.3% CRB Commodities Index

35.8% Coal

35.1% Soybeans

31.8% Nasdaq

30.1% Copper

27.2% S&P 500 (Large-Cap Stocks)

25.2% Dow Jones Average (Large-Cap Stocks)

21.1% Gold

18.3% Financial Sector SPDR Fund (Big Banks)

5.6% Producer Price Index

2.3% Consumer Price Index

-2.2% Investment Grade Corporate Bond Fund

-2.6% 10-Year U.S. Treasury Bond Total Return

-10.6% U.S. Dollar Index

 

Are you in the trade yet?

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Yep, it's going pretty crazy right now over in silver. There is talk of price manipulation by certain investment banks. If things go wrong here, the current movement of silver could well be dwarfed. I encourage people strongly to google silver manipulation.

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Yep

http://www.traderslaboratory.com/forums/f103/v-dow-spread-7706.html

 

But - better late to the party than never ??? I'm taking profits now. Stopped buying at 24...

 

MMS, not to go all 'autrian econ' on you but ... do you have thoughts on the Gold/Silver ratio?

At this point, that seems to me like a far more prudent trade to bring your readers attn to than outright AG trading... that is unless they are prepared to manage and thrive through a possible correction down to 32 ish

The Real Gold/Silver Ratio Part II - SilverSeek.com

etc etc

Edited by zdo

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zdo - about the Gold\Silver ratio, yes you are correct, that is a far more telling story. it has definitely closed the gap but it is still off its historic lows ...

 

2011 - 24

2007 – For the year, the gold-silver ratio averaged 51

1991 – When silver hit its lows, the ratio peaked at 100

1980 – At the time of the last great surge in gold and silver, the ratio stood at 17.

End of 19th Century – The nearly universal, fixed ratio of 15 came to a close with the end of the bi-metallism era.

Roman Empire – The ratio was set at 12.

323 B.C. – The ratio stood at 12.5 upon the death of Alexander the Great.

 

is silver in a bubble or is there another 100% to go? unfortunately, i think it all depends on the what the Fed does ... and who knows what they plan on doing. i'm not even sure they know sometimes!

 

MMS

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Silver has been the best trade for last 7 months, the following table makes the point...

 

Total return since August 27, 2010

Global Asset

140.4% Silver

75.1% Corn

39.0% Crude Oil

38.2% Russell 2000 Index (Broad Stock Market)

36.3% CRB Commodities Index

35.8% Coal

35.1% Soybeans

31.8% Nasdaq

30.1% Copper

27.2% S&P 500 (Large-Cap Stocks)

25.2% Dow Jones Average (Large-Cap Stocks)

21.1% Gold

18.3% Financial Sector SPDR Fund (Big Banks)

5.6% Producer Price Index

2.3% Consumer Price Index

-2.2% Investment Grade Corporate Bond Fund

-2.6% 10-Year U.S. Treasury Bond Total Return

-10.6% U.S. Dollar Index

 

Are you in the trade yet?

 

Wow - Silver looks like the big winner here

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Luckily my advisor told me to get short yesterday at 49.030. Biggest risk trade I ever took, but biggest gain I have EVER had on only 2 contracts lol

 

 

I will attach a pic since no one would believe me...even myself haha :rofl:

Silver_April_26.thumb.png.978af718142c6053d29e69faa0427b76.png

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I've been at silver trying to work out what position to place. I've plotted fib levels based on the 24/8/10 - 3/1/11 uptrend which ended on 31.024. These suggest price then pulled back to almost the 62.8 fib level of 25.792 before retracing back up through the 100 fib level and with a small pullback on 14/3/11 pushed through the 161.8 fib level on 5/4/11 with a small pull back on 11/4/11.

 

Would other people agree with me that if it drops below the 39.191 level, or even better the 38.043 resistance level it will likely return to the 25.792 - 31.024 range of late 2010? Or would other people start shorting it before that e.g. around 42, the low of 18/4/11?

 

Looking at the long side would hitting the 261.8 fib level of 52.950 seem possible and yesterday was just a pull back along the way? Yesterdays high placed us about 3/4 of the way there.

 

Edit - interestingly changing the fib levels to run from 24/8/19 - 9/11/10 would indicate the 261.8 level of 47.996 was pretty much hit before the market yesterday tested the limit but couldn't propel the sustain the price above it. In which case the 161.8 level of is an even better resistance/support level. With this degree of chart fitting I could almost call the top...

Edited by iwshares
Changed my fib levels

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I've been at silver trying to work out what position to place. I've plotted fib levels based on the 24/8/10 - 3/1/11 uptrend which ended on 31.024. These suggest price then pulled back to almost the 62.8 fib level of 25.792 before retracing back up through the 100 fib level and with a small pullback on 14/3/11 pushed through the 161.8 fib level on 5/4/11 with a small pull back on 11/4/11.

 

Would other people agree with me that if it drops below the 39.191 level, or even better the 38.043 resistance level it will likely return to the 25.792 - 31.024 range of late 2010? Or would other people start shorting it before that e.g. around 42, the low of 18/4/11?

 

Looking at the long side would hitting the 261.8 fib level of 52.950 seem possible and yesterday was just a pull back along the way? Yesterdays high placed us about 3/4 of the way there.

 

I think people are shorting now...as well as me. If we break the high, then all bets are off, but I can see us going back to the $25 area and very fast if this bubble bursts.

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Today's silver thoughts:

 

The weekly pivot is acting as a resistance since the break below of 25/4/11. Price opened higher at 45.99541 but has dropped below to 45.4049. If price can go above the high of 49.78928 then the drop is just a pullback/fakey setup. Otherwise price (in the short term) is probably reversing to the S/R pullback level of 42.9237. Sell at the S/R level of 44.2185 with a stop of 44.6206 (the support line of the last two days candles) and a profit target of 42.9237.

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I still think there's more bullish potential for Gold

 

so do I, as the US dollar goes down (and why won't it if we are printing it like we are drunk), gold and silver have no where to go but up. i think there will be a little correction while we are heading up to June 30 and the end of QE2.

 

this is what everyone thinks is going to happen ... and you know what that usually means.

 

the Fed must have a plan in place? It would be foolish for us to believe they are going to print money until the US dollar is worthless. I can't see them willing to give up being the money standard so easily.

 

I would love to be sitting in one of their strategy sessions listening to their debates about the scenario simulations ... this is probably just another manipulation and somehow Goldman (the Fed) is gonna come out on top!

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the Fed must have a plan in place? It would be foolish for us to believe they are going to print money until the US dollar is worthless. I can't see them willing to give up being the money standard so easily.

 

"The Ben Bernanke" is just a man. He may think otherwise but the facts remain the same. If things spiral out of control, it won't matter what plan the Fed has. I don't believe that financial crisis we just saw was planned for was it? Anyway enough apocalyptic talk!!

 

For now I agree. Stocks are going up as the economy is inflating artificially. It's not all of a sudden become strong. So commodities are being used as hedges. After all they are finite resources. There are other factors, but I think gold and silver are still undervalued based on this. I always tend to think that while people are still trying to pick a top(or a bottom) the market will keep on pushing.

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Was only managing my open trades yesterday so had a few days away from silver. on 27/4/11 it punched back through 47.8585 which seems a strong resistance level before the price peaked at 49.8174 and crashed. On 28/4/11 price dipped back below this but closed pretty close to the previous days close, though bearish. There was quite strong volume with these moves which is positive for the bulls - though the cynic may argue this was because every magazine show is now talking about silver as the next big thing... I guess it's all down to whether price can keep above the 47.8585 support and breach the 49.8174 resistance. Quite an interesting one this is turning out to be

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Very interesting, the news is reporting that the XAG/USD has dropped in response to the news about bin laden, yet from how I'm reading the charts the it's actually risen since the announcement. Is this an example of newsreaders putting 1 and 1 together and getting 3, not actually analyzing how a market has been behaving and what it means?

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Very interesting, the news is reporting that the XAG/USD has dropped in response to the news about bin laden, yet from how I'm reading the charts the it's actually risen since the announcement. Is this an example of newsreaders putting 1 and 1 together and getting 3, not actually analyzing how a market has been behaving and what it means?

 

It's down because they are increasing margins with the exchange. Had nothing to do with Bin Laden

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My advice to any new trader on news is listen to what the news is and ignore the rest of the report. Form your own opinions on the effects of the news and reasons for them, based on your understanding and observation of the market itself.

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The inside day of 2/5/11 coupled with the down trend started 28/4/11 seemed to create the energy for the big move down yesterday. I'd call today a pullback in the downtrend. I haven't been trading it, but I'd move my position to a hold and be ready to take profits if I'd been riding the silver train on the way up. 42.2273 was an important S/R level on the way up so the breach yesterday and the lower level now would support a reversal of the trend. Mind you taking the whole uptrend into account we're only testing the 61.8 fib level so it may yet pullback.

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Another down day for silver ... how much further will silver fall past the 19% in the last three days? Very interesting chart below:

MajorCorrectionsinSilverintheCurrentBullMarket.png.9d7f64d09f50d261be9dc5d3f8b5b83c.png

 

Silver has had some large and scary sell-offs but the volatility is perfectly normal.The average of all corrections is 19%. Applied to the high of $48.70 on April 28, silver would fall to $39.44 if it matched an average drop. So the current pullback is about average. A couple corrections silver fell by about a third; which brings us to $32.48. A 25% fall would take us to $36.52. The 53.9% sell-off is pretty unlikely IMHO.

 

I personally would love to see $32 silver, because that would be a healthy sell-off and appear to have limited downside from there. I'm holding tight and waiting to buy!

 

MMS

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Yeah I think that the recent heavy push higher has been more about speculation than anything seeing that the margin hike has moved silver down so hard. My idea is that it is still going to rocker at some point and this maybe was just a bit of a false start. I wouldn't be surprised if many of the guys involved in oil's move higher are the same big players in silver now.

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I personally would love to see $32 silver, because that would be a healthy sell-off and appear to have limited downside from there. I'm holding tight and waiting to buy!

 

MMS

 

Are you anticipating $32 ? Just wondering why you would hold long through such a dump?

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Are you anticipating $32 ? Just wondering why you would hold long through such a dump?

 

I ask myself that question all the time ... but when I am long something, I never sell all with the intention of buying more later. Instead I will sell some of the position, hold the rest, and buy more when its lower. I know mathematically this is not the 'optimal' trade but it works for me mentally. I think it has to do with the 'out of sight, out of mind' mentality I have. So if I'm out of a position I tend to not watch it anymore and move onto something else. Maybe I'm watching too many things? I guess I have things to work on ... trading well is a process :)

 

MMS

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As I alluded to on the first page of this thread - silver is a bullet, but silver is not a train.

I have orders in to cover most of my hedging shorts starting at ~ 34.75 ... but would not be surprised to see it go much lower... would enjoy seeing $24 again... just for snicks and giggles...

 

remember when silver was under $3 oz? :)

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Hedge back on.

Filled on hedging shorts this am at 37.61 avg price

Just following the plan... don't have much subjective confidence this will be one of those great momentous trades :)

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