DOLLAR CYCLE

For many months now I’ve been warning we were going to have a dollar crisis and that dollar crisis would drive the final leg up in gold’s ongoing two year C-wave advance. We are now on the verge of the panic selling stage of this three year cycle.

On Monday the dollar briefly rallied on the S&P downgrade of US debt (who knew?). That had the potential to mark the bottom of the current dollar cycle. But by this morning the dollar has given back all of those gains and then some.

I’ve noted in the premium report that the dollar’s daily cycle often turns on the employment report at the beginning of each month. The previous cycle bottomed one day after the March report and the current daily cycle topped on the April report.

If this pattern continues then we can probably expect the current dollar cycle to stretch for another 2 1/2 weeks into the May report (give or take a day or two either way).

I seriously doubt gold is going to suffer any meaningful correction as long as the dollar is in free fall, so I expect we are going to see the gold cycle stretch also.

If the dollar does continue lower into the May employment report before putting in the cycle low it would then be set up for a more normal duration decline into the final three year cycle low due on or around the June report.

However with the dollar losing it’s chance to rally here gold and especially silver are now at risk of entering a runaway rally.

Details in last nights subscriber report.

1,001 thoughts on “DOLLAR CYCLE

  1. Hot Rod

    Gary,

    If one’s financial models indicated a likelihood DXY will bottom around 70, what is the way to compute an approximate and equivalent zone for gold and silver?

    Silver went up 5 or more bucks from much less than 1 point in the DXY. Are we potentially going to see $75 silver?

  2. ALEX

    Gary

    With your chart pointing to the 3 yr low in the dollar now arriving in June, I am imagining metals would run until then…However…if they do

    Silver cant just go to $50, right? Its been going up .75/day at times.

    I would imagine in a run away move, It could hit $50 in 2 wks.

    Will you attempt to adjust your metals targets , since we were originally unloading at $50 silver , or just plan on selling near the 3 yr dollar low?

  3. niven

    does anyone know what the likelihood of a May sell-off would do to our PM and miner investments? Is it probable right now? Is there any reason we would have one.. looking back at 2010 of May silver prices AGQ went down from 66-56.. a 15% drop!

  4. Michael

    Since Gary is expecting a dollar to bottom in May, that means PMs will top then and move into a daily cycle low that we’re expecting. Could be a hard decline to wash out the sentiment before the final move up.

  5. Gary

    Elaine,
    No the dollar has clearly told me that it didn’t bottom. Until it does a correction in gold is unlikely.

    Since the S&P downgrade couldn’t force a bottom the next trigger should be the May employment report.

  6. jabalong

    Beksachi,

    Following on from our exchange the other day, I cashed in my PSLV position yesterday. With it up 100% since I bought it in November and with a dizzying 25% premium to NAV, I figured it was a good spot to take profits.

    With silver powering on there’s more gas in the tank for PSLV, but I’d rather be in another silver vehicle than one trading at such a high premium, which could deflate at any moment once Sprott decides to announce another share issuance.

  7. Elaine

    Gary,

    Thank you. It’s strange to see GDXJ and SLW lag while AGQ just powers on. I have some cash still, would it be best to just put it into AGQ for now?

  8. Aaron

    With the Snp roaring up this AM, and both PMs higher, miners should be up strong today(for those of you playing the miners).
    Honestly, I could never do that, I just have one lottery play in a junior which I have held for a while (thats my only equity play).
    Alex, Jayhawk, SB, and others that do…good luck! I’m seeing green for you guys today 🙂

  9. Michael

    Aaron,

    As I mentioned yesterday, miners were breaking out. That was my signal. And SLW will hold $40. It was accumulated all day long if you look at the volume. Every deep has been bought. But I have a much larger allocation in AGQ due to the obvious reasons.

  10. ALEX

    AARON

    Nothing like a good pep talk to boost the early morning spirits !-thank you!

    May your baskets overflow too!

    (and if the miners go up on light volume and continue to lag, I may jump into…

    SD, RAX , or a few others I’ve been eyeballing, because I stayed in my miners , when I should’ve been riding SIFY and REDF! 🙂

  11. Bob loves Hawaii

    Aaron, I hold a number of miner positions, and I bought IAG and GG calls yesterday. AEM had a beautiful reversal, and I beleive the large cap miners will start punishing the shorts very soon.

  12. Edwin

    it would surprise me if HUI miners would go past 620 and not get sold there.

    I’m selling some at 620 no matter what.

    mr market is so emotional.. it’s a global up day .. commodity futures are all green practically. USD sunk by a whole percent!

    in my opinion gold isn’t runaway unless it closes this week above 1488

    we still need some more buyers in this market, 1500 is a pretty significant no.. are you going to be one stepping up? 🙂

  13. Bob loves Hawaii

    I encourage everyone to read turd’s report last night. I follow the Comex, and I agree with his assessment of a few days down. The Comex is closed on Friday and the LME is closed on Monday. Thin markets with options expiring next week could encourage speculators to take profits and/or roll positions.

    aligns with a daily cycle and with The Docs view. Last chance to load up for the June Expiry for gold.

  14. ALEX

    FATBOY

    GORO does look tempting, if it breaks to all time highs, it has no overhead resistance, and thats a good thing 🙂

    little sloppy on the handle, not textbook, but it did recover nicely with some good buying. looks pretty good.

  15. ALEX

    Bob from Hawaii

    Did you mean to leave a link to Turds report?

    Also, I think you may be right about some of the Large cap miners making a move…some look very good and I noticed your post yesterday on AEM ( I think that was you)

  16. Hot Rod

    Bob,

    I agreed with Turd as well but saw it a little differently.

    We’ll see a run up today and tomorrow with a pullback over the long weekend when markets are thin.

    I read it as sell tomorrow afternoon, not sell now.

    That being said, if we get a big enough run up today and tomorrow we can just ride out the “dip.”

  17. Bob loves Hawaii

    Alex, that was me. I own AEM calls and when I saw that candle I jumped on GG and IAG before they started moving.

    Hot Rod, I didn’t mean sell today, but that we will have a dip before we rocket higher.

  18. Allenupl

    Gary,
    The November, 2009 low for the dollar was 74.23 (stockcharts.com). I don’t think that has been broken yet. We are testing it. Below that there is not much support until the 71 area.

    Everyone on this board seems to be jumping in and I suspect that reflects the general market – chasing. It is making me a bit uncomfortable, especially since I too lightened up last week anticipating a daily cycle correction and am tempted to buy more SLV calls and get back into SIL.

    So my question is: shouldn’t we be waiting until 74.23 is broken to the downside before assuming the dollar is crashing? Couldn’t this develop into a double bottom and your original thesis of last week will play out (even taking into account the retracement of Monday’s bounce and the unemployment report in 2 weeks)?

  19. Hot Rod

    Damn, I really wish that us premium subscribers had a private Blog to talk about the content.

    Out of respect for Gary, I’ll hold off.

    Happy trading this morning on the open.

    BTW – I read that “rookies buy the open” and “professionals buy the close”

    Is this true in all of your opinion? In the metals as of late, you wanted to buy the open or the dip in the early am and then sell the close (or buy more!).

  20. Hot Rod

    Allenupl,

    No one has a crystal ball.

    I agree with Gary that there have been too many events the past month to potentially push the dollar into an uptrend but in every case it’s reversed almost immediately.

    That being said, don’t f— with the FED. If they really wanted to, they could pull some shenanigans. I’m not betting on that right now, too much momentum.

    Going into May options expiration, maybe a lot of traders want the Blythe premium. 😉

  21. Gary

    Allen,
    It’s so late in the cycle even if one miss times the trade and we do get the dollar bounce it will only last a few days and then gold will get back to making new highs.

    So is it really worth missing 2 and a half weeks of gains because you might get caught in a 3-6 day correction that will quickly reverse back up anyway.

    I will never give up 20% because I might have to weather 2 or 3% first.

  22. traderlady

    RA, I agree. A newbie error for me
    but I look to add back miners I lightened up on last Friday. Let the party begin…. Always a big thank you to Gary!

  23. DG

    I am getting out of EUO this morning with the dollar failing. Got a large pop, so set a break-even stop. Will lose a little due to large gap down this morning. TBT working and should continue if dollar keeps dropping.

  24. Slumdog

    Politics. total malarky.
    Look at this quote, from a senior KGB assbite who in the last Russian government promoted insane economic arrangements.

    He has a right to see the US as adjusting. But he’s frankly too stupid to understand this devaluation of the USD is INTENTIONAL. Well, he’s never had a reason to be honestly a liberal communist; hence, he’s still an apperatchik.

    “close window Close

    * APRIL 20, 2011, 8:23 A.M. ET

    Putin Calls US Monetary Policy “Hooliganism”

    * Article

    * Email
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    * smaller Text larger

    MOSCOW (Dow Jones)–Russian Prime Minister Vladimir Putin Wednesday criticized U.S. monetary policy, calling it “hooliganism.”

    “We see that everything is not so good for our friends in the States,” Putin told lawmakers in the lower house of parliament. “Look at their trade balance, their debt, and budget. They turn on the printing press and flood the world with dollars,” he said.

    “We don’t have the luxury for such hooliganism,” he added. “

  25. New York

    Gary,

    Based on the premium post portfolio change would it be wiser to deploy dry powder to SIL as opposed to chasing AGQ at this level?

  26. ALEX

    HOTROD

    my opinion/personal experience on your question (sorry late, I walked away)

    I have bought the open, BUT I usually wait until after 10 a.m., because gap opens often get closed (not always though)

    It often depends on market conditions. Some Gap opens do not close…but I’d wait and watch it first.

  27. Dan

    Couple weeks ago people took issue with me when I said I was going back to 150% leverage and now the exact same people are rushing buying in today chasing this thing after it’s up 6 days in a row & over 10%. I am seeing lots of fresh faces here and lots of newbie questions. Next week options are expiring and we will have very light volume early on as Europe is closed. So personally, I will be lightening up today & tomorrow with the intention of buying back in later next week. Good luck to everyone!

  28. Hot Rod

    Some fun on this fine morning…

    Walking along in the mission in the rain…come again….

    Mission in the Rain – Grateful Dead

    I turn and walk away then I come ’round again
    It looks as though tomorrow I’ll do pretty much the same.
    I must turn down your offer but I’d like to ask a break
    You know I’m ready to give everything for anything I take.
    Someone called my name you know I turned around to see
    It was midnight in the Mission and the bells were not for me.
    Come again, walking along in the Mission in the rain,
    Come again, walking along in the Mission in the rain,
    Ten years ago, I walked this street my dreams were riding tall
    Tonight I would be thankful Lord, for any dream at all.
    Some folks would be happy just to have one dream come true
    But everything you gather is just more that you can lose.
    Come again, walking along in the Mission in the rain,
    Come again, walking along in the Mission in the rain,
    All the things I planned to do I only did half way
    Tomorrow will be Sunday born of rainy Saturday.
    There’s some satisfaction in the San Francisco rain
    No matter what comes down the Mission always looks the same.
    Come again, walking along in the Mission in the rain

  29. pimaCanyon

    Wes,

    Can you point me to somewhere on the Federal Reserve website where they talk about the details of QE, or even some other source that explains it as you do, that is, exchange one kind of debt for another and NOT exchanging long term debt for dollars as nearly the whole world believes.

    Everything I’m finding on the web, even Wikipedia, says QE is the Fed buying long term treasuries with newly created dollars. If that’s not what QE is, then there are a lot of misinformed people out there.

  30. Francisco

    Gary,
    I know you talked about this in last night’s report, but am still a little unsure why you took the “scary” correction scenario off the table when the dollar bounces (around the time of the jobs report). I think that you’re probably playing the percentages and assuming it will correct in a magnitude similar to the last pullback, but do you think that a larger pullback is such a remote possibility? I ask this because the sentiment seems a bit frothy now and will likely be extreme if we have another 2 weeks of $1 day moves in silver.

  31. DG

    Less: Nope. Missed the buy by a hair. I will add AGQ bits at a time.You just don’t do as well when the low-odds scenario occurs. Forget the past and optimize profits starting now.

  32. Shalom Bernanke

    I’m still not at all impressed with the miners. If they can’t out pace the metals for more than 5 minutes, I might just stick with futures on my next entry (or some DGP and AGQ)

    I won’t be buying anything today, but am happy to post when I do.

  33. Moneyman

    Dan

    What do you get with your claim?

    That you are smarter than all those who sold some of its holdings? Dg, Polly, Gary and others..

    TZ was also right, but he was wrong several times last fall.

  34. DG

    I love it when someone is right and then they try to denigrate people who had an alternate view. The last few days have had “capitulate and buy more” “rush in and buy more” “panic and buy more.” How’s this instead: “The most likely scenario has been aborted and traders are now adjusting to the new set of data.” Where’s the panicky emotion in that? I guess one can feel taller by trying to cut other people’s heads off! Don’t ever panic or rush in or out, but only a fool doesn’t adjust his tactics when presented with new data. Gary will appreciate knowing that he is not “panicking” to redeploy his 15%!

  35. DG

    Mr. M. Several people who did not lighten up have posted, essentially, “Now you fools have to panic and buy back what you sold.” That’s what I was referring to—those posters.

  36. MrMiyagi

    DG,
    Oh, I see, didn’t read the morning posts.
    I did lighten up a week ago but bought back in up to yesterday.
    I have less of a percentage invested now than before but that’s because there’s more money in my portfolio from the gains.
    I am satisfied.

  37. New York

    Gary,

    Thanks.

    Does one wait for any significant pull back or at this point it’s not likely until may?

    That being the case just get back in to AGQ now??

  38. traderlady

    Never a panic here. I simply added some ot miners. Awaiting on AGQ, never chase. I listen to SB, DG, Alex and a few others besides Gary 🙂

  39. Casey

    Bud & Eamonn, I’m in with you. I pulled out way too much AGQ, all back in now. I swear I’m going to have my wife change the account passwords and not tell me until Gary posts we are at the 3 year cycle low.

  40. Gary

    NY,
    If this turns into a runaway move then there will be no way to time corrections and gold could just as easily rally along with a dollar bounce.

  41. MrMiyagi

    I think that a lot of the public will start buying here.
    The gold & silver prices have been going up and up, pile-in mentality will start and build up very very fast.

  42. Yash

    since USD is very imported for PM, tomy c posted his latest USD long term views. He has major lows in 2012 and 2014 as per his cycles. He still has siginificant top in PM this year in may-june and nasty correction too. But he has dollar continue go lower till 2012 (which may become gary next A wave top) and then USD rally later 2012-2013 with re-test of 2012 low in 2014 to end USD bear and PM bull in 2014. After that he predicts USD bull doubling USD value from 2014 low.

  43. MrMiyagi

    Gold is still not going up as I would like it.
    The 1500$ psychological barrier was taken out, is it just too expensive now? Silver almost at 45$.

  44. ahain1223

    DG

    Good post. i was alerted to the dollar vs gold action yesterday and took off my aggressive short as the market action and volume was not showing any signs of large selling. I could have flipped my position given the new circumstances but patience persevered. Ill continue to wait. My point is even though i was right i preserved my capital. Capital preservation is much more important than ego.

  45. Matthew

    …Dan does have some valid points..I haven’t been here long enough to see gary’s guru status take fruition yet..but buying today is at the end of 6 up days and after a 2 dollar pull back…I suggested at 41.70 that a pullback at that point of 4-6 bucks seemed unlikely and was shot down…

  46. DG

    Just a fun perspective: This run in silver—as amazing as it is—is just a fraction of what the Hunt attempt to corner looked like in 1980 (at least if my memory serves). We will get a shot at one of those when the gold bull finally tops (2016-7?). If the financial system survives, that’ll really be something!

    BTW, when that bubble popped silver dropped 50% in four days, I believe.

  47. DG

    Wes: Gold sentiment is—incredibly—just neutral. Gary has said it is gold that drive the PM complex, so this is good news. And the COT, even on silver, is neutral as well., thought it is true public sentiment on silver is too hot. And for the first time I am hearing people talk about silver. We are getting late, but for me I’d need to see at least some frothy numbers on gold to start to worry about it.

  48. Hot Rod

    Even though JPM has a huge short position, it isn’t just in the near delivery months, right?

    So, it is possible that they have changed to the long position in the short months and roll their shorts out to the longer ones, right?

    THis way, they mask their long trades because net/net they are short.

    Does anyone see what I am trying to explain?

    In other words, they are manipulating higher now.

  49. DG

    Nike: Not yet, but I expect to. Bits of AGQ each day. If I see something worth noting I will post, otherwise this is just seat-of-the-oants stuff. It’s always harder when my scenario doesn’t play out. Frankly, Gary is probably right to just do it and not worry about the wiggles, but I am a long-time wiggle-watcher!

  50. Movax2

    Wes,

    So I believe you are saying that the massive run up in the supply of money in every other measure is not related to the activities of the FED and in part, their purchases of US gov debt? Please correct me if this is not what you are saying.

  51. Michael

    I’ve been with Gary since May of 2007 and I can tell you that he was always advocating to stay old turkey for the duration of the intermediate cycle. Recently a lot of so called traders joined the blog and steering newbies into a trader’s mind set which causes them to lose a very invaluable opportunity to make a lot of money. Gary has always said that timing the market is a losing proposition and old turkey always wins at the end. And I personally will continue ignoring all the traders out there cuz you just can’t come even close to the returns that old turkey is making.

  52. n1tro

    Take it for what it is worth. I listed some of my silver bars (I will/prefer buying back coins during the D wave) on fleabay at $50 2 days ago. All have sold.

  53. Steven

    n1tro,

    What type of silver bars did you have? 1 oz or the larger 100 oz bars and you got $50 per ounce? I have the 100oz bars and I’m being told the premium I can get is about 8 cents per ounce.

    Thanks.

    Steven

  54. Steven

    There are rumors the Yuan may revalue 10% this weekend (HUGE) and maybe even up to 25% over the next few months. This certainly could be what drives the dollar into a 100 year cycle low! JK But seriously, if China decides to do this they are finally making the decision to export some of the inflation BACK to the US and this should be damaging to the dollar. They also seem to like to do these moves on holiday weeekends. Just some thoughts. The Yuan curve is already beginning to price in these moves but by how much I don’t know.

    http://www.bloomberg.com/news/2011-04-20/china-s-shift-in-rhetoric-may-signal-faster-yuan-gains-1-.html

  55. Shalom Bernanke

    Alright, we’re seeing some slight outperformance by the miners now.

    Michael,

    My exit last week should not be mistaken for timing the market. I had no choice with the way miners acted in relation to the metals. had I been in metals only I would most definitely still be long them.

    Since I only have physical right now, I’d like to redeploy assets. Although this time it could be a runaway move as Gary has pointed out, predicting a runaway ahead of time has rarely been profitable for me. Regardless of the run, I cannot buy an extended market this late in the C-wave. Even after the last few days up, the holdings I sold are just barely above my exit level.

    Let’s see what presents.

  56. n1tro

    Steven,

    They were all 10oz bars. Pan American, Heraelus, Englehard, and Scotiabank bars. I got one big honking 100oz bar I may get rid of after silver passes $50/ounce because the premium on it would be low compared to coins or bars.

  57. Michael

    SB,

    I recognized that SLW is underperforming and I used the opportunity last tuesday at the panic low to swap out 1/3 of my SLW position that I was holding since 31.5 (intermidiate low in Feb) to the equaivalent dollar amount of AGQ @ 250.98. Looking back it was a very smart move since SLW didn’t even come close to the returns that AGQ is making. However I didn’t reduce my percentage base exposure. I am still holding a basket of 14 juniors that I purchased in March of 2009. I think that miners are behaving just fine. Patience will be rewarded.

  58. pimaCanyon

    Wes,

    Can you point me to a page on the Federal Reserve’s website that explains the details of QE? Or even another website that does this?

    Everything I’m finding on the web, including Wikipedia, describes QE as the Fed buying long term treasuries with newly created dollars. I have not found a website yet that describes it as you do, that is, exchanging long term treasuries for short term T-bills. If it’s as you say it is, then there are a LOT of uninformed people out there, many of whom should know better.

  59. ALEX

    JAYHAWK

    I was looking at the same thing…I really want them to break free and run

    ( I also want a bit more volume so they dont get held back by resistance , in case anyone can grant me these wishes 🙂

    Congrats to Bob From Hawaii…wasnt that YOU?? …GORO reminds me of him always saying he was accumulating around $22 or $24

  60. fubsy_cooter

    ANgry Hippie
    I know Gary pulled the stops recently due to us being late in the daily cycle. I also wonder whether that has changed. On new positions I’m adding, i see the recent low at 1440 as a logical stop although w/o a blowoff top I would be hard pressed to sell on weakness. I much prefer to sell on strength.

    f

  61. traderRob

    Alright, folks, SLW looks like absolute garbage right now. Outside of just running over to SIL, are there any other solid silver plays you all like? AG? SVM? I’ve played with EXK before but seem to time my entries terribly.

  62. MrMiyagi

    Jayhawk,
    Or anyone,
    What HTML code do you use when embedding a link? I tried “a” “/a” (with <>) but it boots my comment right after posting.

  63. coolkevs

    Looks like SPX futures will not record a DAILY Buy Setup. It has to close below 1310.20 for the 9 to register (1310.20 is the close four bars earlier), and that seems unlikely.

    DXY is quickly on the path to 72.5 – crisis? where was the crisis in 2008 – the dollar is flat, folks – lots of wiggles and squiggles in between, mind you, but it is flat, if not a little positive from its lows. We have been at these levels before and the world didn’t blow up. Nothing is more universally despised than the dollar. And this sentiment should set up the contra-trade of this decade!

  64. Jayhawk

    Michael-

    You are correct, old turkey hold through intermediates with a turn off the computer and take a vacation strategy is the way to go.

    I looked at the move from July to Dec and compared several different portfolio type- a basket of my favorite hand picked juniors,a just SLW one and one with just AGQ. I talked about some strategies over the holidays with folks on the blog. The clear winner was AGQ only portfolio. Most were opposed to the strategy at the time and I decided to not uses it. Hindsight has perfect vision in trading and I have not regrets, but I wanted to say congrats to those who went that route. It took guts and you have been rewarded richly!

    I did hold old turkey for the majority of the run, got lucky by selling my AG & EXK close to their highs. I had large positions in SLW and SIL. All sold above current prices so I have not lost on that yet. The thing I’ve noticed is the psychological aspect of trying to get back into a market that looks over extended. DG talks about this and I agree.

    My main mistake was selling my AGQ positions last week and waiting for a brief correction. I know others just flipped capital from mining sales into AGQ, perfect move in hindsight. I’m re entered some mining positions this week and will keep adding as things go, but I can’t bring myself to chase AGQ here.

    Interesting curve balls…Great ride so far and more upside to capitalize on. I did the best I could so I can’t beat myself up.

  65. Natanarchist

    isn’t this fun !…michael, I have been on the blog since you joined but became a sub in ’08. You are correct in that Gary has always preached old turkey. my returns following that approach are spectacular. I did reduce last week, (42.79), but only a similar percent that Gary did a few days earlier. Still just over 130% and enjoying this ride…makes up for mostly sitting and waiting for the last couple years. And the best part is instead of watching ticks, you go do other stuff.

  66. Elaine

    Thanks for your reflections, Jayhawk. I have chased AGQ a few times since joining Gary. Always have been a little hesitant to get in when he says to, so I’ve missed part of the run-up each time. Surprisingly, AGQ still turned a profit for me every time. I had a little cash left waiting for the correction, so I added to AGQ this morning. Hope it still stays positive.

  67. Michael

    Natanarchist, I remmeber seeing a lot of your posts about accumulating physical gold coins in the earlier days 🙂 Yes it was a very profitable run, looking forward for the end though.

    Jayhawk, I was in SLW 100% last year in one account and a basket of juniors in another (that I am still holding) No AGQ. SLW did almost as well as AGQ last year, so no regrets. Then I recognized for the intermidiate run of this year that I’ll be better off with AGQ, so I assigned 100% of my capital to AGQ and 50% to SLW. SLW did well from 31.5 to 47, it had a correction and now it is ready to come back. Not selling nothing, 150% in and holding strong.

  68. Wes

    pima,

    Read the comments to that article, also. Are people arguing that the Fed is funding the US government ? No, because there are a lot of informed people in the world, but they are outnumbered by the misinformed.

  69. ALEX

    TRADERROB

    Just wanted to point out that AXU is breaking out from consolidation to new highs.

    I like EXK and AG ( AGQ , but buying here is not what I would do)

  70. New York

    Wow, AGQ is blazing…

    Question; with the original projection we expected to see AGQ reach 350-400.. right?

    With the recent break out scenario is that target being changed? If not, it makes it a little harder to chase this price at this point.

    What’s the general thought? All opinions welcomed.

    TIA

  71. Otis

    Silver pierced the upper channel line on the 60 minute chart. It has respected this channel for the past month. A drop below 45.10 will put it back in the channel. Maybe we cut right through and expand the channel if we have a runaway move in play. Intently watching…

  72. Otis

    Gary put the notice of portfolio change as a posting this morning in the current thread. I don’t think a twitter alert was sent though.

  73. Wes

    PST,

    I’m a bit burned out on the subject. Plenty of people say the Fed is funding the debt, but nobody I’ve read explains how and for what purpose.

    Clearly, the money supply hasn’t expanded.

    If you can post an article explaining how QE2 results in the Fed funding anything, I’ll gladly read and comment on it.

  74. Vonda

    Made the leap with AGQ at 313 this morning. Such a “sacrifice”: Portfolio’s up over 3%.

    Nice to be back on the train.

    80% AGQ
    9% Gary’s SLV calls
    8% AG

  75. Elaine

    New York,

    I guess if you think that a 25% return is not good enough (AGQ gets to $400 from here) then don’t buy it. My understanding is that if we get there, it will be by about June – 6 weeks away. 25% is better than I was able to accomplish on my own the entire DECADE from 2000-2010.

    :-p

  76. Ryan

    I couldn’t jump in this morning and it just kept on grinding up and I finally just capitulated now and bought in but of course it’s dropping. I have more dry powder so if it goes down more I’m buying more!

  77. basil

    Hi,

    my apologies to anybody who I have offended in the past!

    Just can’t help but come back to this blog. However, I promise that I won’t engage in sarcastic rants of any kind and anything else that’s not proper etiquette. I hope that’s ok and that you guys can let it go too; that would be great!

    Thanks!

  78. Movax2

    Wes,

    Obviously you have put your faith in believing something that is not true. I can’t say why you have chosen this. I wish you luck with getting past that and seeing what is really happening.

  79. KAL

    Hey, Vonda… Yeah, I got out at 275 like a newbie… Cause I am. But, I’m learning and I can chase. I’m like a good lab. I’ll chase any toys you throw ahead of me, I guess.

  80. Otis

    Basil,

    Nice call on 45 silver. If silver breaks this month long channel on the 60 minute, it may just run up to the top of it’s daily channel going back to 1/27. That channel upper trendline hits 50 on 5/3! Although with the volitility that could work it’s way into the PMs I wouldn’t be surprised to see trendlines breaking in both directions.

  81. Wes

    Movax2,

    The Fed has clearly increased everything they could, and none of this has yet resulted in an increase in the money supply, which is what they actually want.

    The money base is way up. I used the example of the apple seller who sold 3 apples a day by displaying 10 apples. Increasing the display size to 100 apples still resulted in 3 apples per day sold. (Apple seller= banks, apples= loans, display size= money base).

    Now, making more loans would increase the money supply. The Fed would love to find out how to do this.

  82. Vonda

    Ryan, if you were the threshold “sacrifice,” thank you very much! Come on down to the dining car; I’ll buy you lunch. Don’t worry; we won’t even look at the tab until we disembark.

  83. CMT

    MrM:

    I’m in the same boat. Redeployed cash into SLV calls, but still have enought to double my AGQ position, just in case I get a pullback.

  84. Vonda

    Kal,

    Hey Newbie, I got out at $270 and I’ve had the benefit of almost a year with Gary, which is still new-ish; obviously new enough to trip over my own paws. (Love the lab analogy.)

    Since last summer, I haven’t minded jumping in at any relative price but I really got psyched out this time. It’s been a good lesson which I imagine will keep delivering.

    Ultimately, it’s like DG said: One makes the best decision one can for oneself at the time.
    Now throw the ball!!!

  85. Edwin

    it would be really awesome if the juniors can start going too..

    c’mon mr market suck everyone in..

    unfortunately I feel a brief reversal is coming near…

    this is too easy.

  86. ahain1223

    Edwin

    Im expecting a short sharp reversal beginning next week. ABX has posted a nice hammer today. Invariably longs would have got sucked in. Aggressive shorts will see inverted hammer and go short (too early). Couple of days more strength will get rid of any stragglers before we see a move down into 1-2 week of may IMHO

  87. Rick 4779

    Wes,

    this is a very interesting discussion and is causing me to think this through.

    Lets say, that years ago the US had expenditures that exceeded its revenues and needed cash. Instead of creating the money from nothing, it issued bonds. China bought $1 billion of those US bonds, and those bonds are now coming due. Instead of rolling them over like they usually do, they decide to take the cash instead (US$). No other investors want to buy those bonds either, and the US does not have the cash to pay the Chinese. It does not want to default on the bonds, so the Federal Reserve buys the bonds itself. It pays the Chinese its $1 billion.

    So now, the world has $1 billion more in cash than it did before. This causes inflation of the money supply and increased prices. No?

  88. Curtains

    I’m curious about strategy, if anyone has done the math on AGQ options vs. futures options. I have been doing almost exclusively slightly OTM options on /si. That has worked pretty well, especially the last few days. Now I need to roll my May options and I’m wondering if I should try call options on AGQ instead. June 350 calls are $27/ea, so I could buy 5 of those for $13,500 or a July 46 call on /si at $12,250.

  89. KAL

    Vonda,

    Haha! I like it when a joke or smart comment keeps on going… My buddies and I used to do that via email and in online class chats. Good stuff!

    Good that you’re still learning. I of course want to be able to say I know how to invest, but as soon as I admit I don’t, and follow Gary and listen to smarter people, the better I’ll do at this money thing.

    Now that you’re on the train, the scenery is alot more fun to watch, huh?

  90. Movax2

    Wes,

    Gold, silver, food, energy, even stocks says otherwise. a slight decline in ones man’s estimation of M3 is not conclusive.

    I hope you hold in your mind that you may be wrong. I see no point in continuing – you can find out if you are right or wrong with an open mind and continued digging. Good luck.

  91. YesLetsDiscuss

    Will 1500 hold? The bulls won the battle below 1500 and now this next battle is being fought on the other side of the line, just above 1500.

    I hope it doesn’t take another two days for a result here. And of course, I am hoping for the bulls to win, and did my part by adding a little at 1501.

  92. Wes

    Rick,

    The US would just print the money to pay off the bonds. No need for the rest of it.

    Bonds, as well as cash, are all part of the money supply at all times. There is nothing special about cash except it is the shortest maturing “bond” there is.

    Cash and bonds both represent demands against the US treasury.

  93. Curtains

    To continue my previous question, the /si option is in the money with silver going up 2%. The AGQ option needs to go up almost 10% to be ITM, meaning silver goes up 5%. At that rate the /si option is $1.25 ITM ($6250 in intrinsic value), where the AGQ option would be just getting ITM (still no intrinsic value, only time value). Or, I could just buy 41 shares of AGQ for ~ $13k. If /si goes up the same 5%, they would be worth a whopping $650 more. Or I could use margin and double that, I suppose. I fail to see the reason not to just use futures options? What am I missing? I understand they can fall much faster than just holding AGQ, but if we are betting on a rapid rise, they seem to be the best bang for the buck. I get nervous if I hold too many, so I’ve been at around 25% of my high risk portfolio on options, up to almost 50% today just because of market rising. I am not doing this in my long-term portfolio because I would have a heart attack (just a mix of physical metal and cash, mostly).
    Gary, what am I missing?

  94. Curtains

    Of course I’m simplifying here, the full intrinsic value in the options won’t be realized until close to expiration, which definitely skews in favor of holding AGQ, but I still think the options have a much higher payout, and have the added advantage of limited downside in case of a massive gap down due to some black swan event.

  95. Ryan

    Vonda,

    You’re welcome, I couldn’t take it anymore. I think the moment my order got filled it started dropping lol. So definitely the correction has started!

  96. Rick 4779

    Wes, I don’t disagree, but aren’t there more demands against the US Treasury after the Fed buys its own bonds? Isn’t there more US$ after my scenario? Isn’t that inflationary?

  97. Vonda

    Kal,

    I think I enjoyed it all better when I didn’t need or want to know so much about investing. At least that’s the mental frame I had when I found Gary.

    Since then I’ve come to enjoy the companionship of the blog community, so now I feel the responsibility to learn in order to contribute–and not just ride coattails

    But after the last couple weeks, yes, I’m happy to just sit back and enjoy the scenery.

  98. pimaCanyon

    Thanks, Wes.

    I read the article at the link you posted, but nowhere do I see anything about the Fed exchanging long term debt for short term. The do talk about the Fed BUYING treasuries. BUY means pay money for them, right? Money as in dollars.

    I have read about MMT and I believe I understand it (well, maybe some of it). I get it that things are different now that we are no longer on the gold standard, that we have a true fiat currency.

    All I’m asking is to see something in print that describes just what the Fed buys treasuries with. Is is as you say with T-bills? Or is it, as everyone else out there says, with dollars?

    This morning I watched a CNBC video that was taped last year in one of the Fed bank buildings. Fed prez Jim Bullard was there. The CNBC moderator explained QE as the Fed buying assets with newly created dollars and used the term “printing money”. He explained that the Fed doesn’t print physical money, they just credit the account of the seller of the asset, but that’s the modern equivalent of printing money.

    When he was done, he asked James Bullard if his presentation accurately described QE and Bullard said yes. (He could have said, well we don’t actually print money and we don’t actually use dollars to buy the assets, we use T-Bills. But he did not say that.)

    Everywhere I look, all I see is that the Fed prints money (by crediting the account of the seller) when they buy treasuries (or any other asset).

  99. Wes

    Rick,

    Changing bonds into cash (and destroying the bonds) or cash into bonds (and destroying the cash)has no effect on the money supply since it is the sum of both.

    The Fed cannot create money. Only Congress can do that, and it does.

  100. Jayhawk

    John-

    Big volume sell at 10:30 on ABX? Not really getting the significance of that.

    Also, looked at the chart. Hain are you talking about a possible hanging man? Even then, not quite seeing any warning signs there, IMO.

  101. ALEX

    One point about the ‘ABX’hammer call.

    It has to close there to be a “hammer’ or reversal. It may be selling off at lunch and bought up after 3 p.m….cant really tell at this point.

    It does look tempted to fill that gap however

  102. Wes

    Pima,

    I guess I don’t see your point. I think the actual transaction takes place by the Fed crediting the Primary Dealer’s account for the long term security and debiting it for the short term.

    What was the transaction in ? T-bills, cash or just electrons ? Why does it matter ?

  103. Bill

    DG/SB, on the 60 min chart, after a gap-up, SLV usually pulls back to the 50 EMA … right now it’s like way above it … I have to think that it will pull back.

    But I’m a beginner here … your take sirs?

  104. pimaCanyon

    PST,

    My questioning Wes is not an assault. He pointed out yesterday that the Fed does not buy treasuries with dollars, that they are exchanging treasuries for short term debt, t-bills I believe.

    I am just asking him where he got that information. I generally take people at their word, but when they say something that is different from what the news media, the trading blogs, the financial blogs, and the Fed itself is saying, then I’d like to see where that information comes from. I have tried researching it myself, but I can’t find it. So I am asking Wes (not assaulting him) for the source of his information.

  105. Rick 4779

    Wes

    It is my understanding that Congress uses the Federal Reserve to create its money. I could be wrong. My money says “Federal Reserve Note” on it.

    Does the Fed destroy the bond when it pays it off with newly-created money? I thought they kept it on its balance sheet.

  106. pimaCanyon

    Wes,

    It matters because if it’s just exchanging one form of debt for another, that would not have an impact on the money supply. But if it’s exchanging debt for dollars, then new dollars are now in circulation and they are likely getting spent buying risk assets, stocks and commodities. To me it’s a pretty big difference.

  107. james r

    Bill,

    Just read your comment.

    I’m hoping this is a blow off top.

    I am sitting on the sidelines.

    I noticed in the previous cycle AGQ took 28 days to correct. We are now on day 27.

    James

  108. pimaCanyon

    Blowoff top?

    I hope not. The blowoff top should not happen for at least a few weeks.

    Daily cycle top? Maybe. If so, let’s hope that that’s what it is because if it’s the blowoff top, then the D wave is upon us.

  109. Jayhawk

    LMAO @ SLW. Rolling over little a little puppy dog!

    SLW to AGQ- “What time is the panic sell off? I’d love to join you for the fun!! I know I sat on my fat butt the past 2 weeks, but that elevator shaft sure looks like a fun ride.”

    Grrrr…

  110. Bill

    Thanks JamesR and pima. My poor choice of using terminology that I don’t fully appreciate here. Just meant a shorter term top, whatever that is called. Is see that SLW, SIL, GDX and GDXJ are all pulling back a little. I’ll keep watching and looking for an entry.

    I myself still believe that the dollar cycle will turn up here, based on Gary’s cycle chart. It’s already way late. If cycles skip a beat then I’m sorta back in the mindset of “interesting stuff but can’t use.”

  111. pimaCanyon

    Correction underway? It makes sense that it might start today.

    If gold and silver conform to the pattern of recent months, then we would expect some kind of low on Tuesday or Wednesday. If the move down starts today, then that gives only about 4 trading days to put in a bottom. Sounds about right.

    (Friday’s a US holiday, Monday is a holiday for London)

  112. Aaron

    The perfect storm…
    Friday is a holiday.
    Monday is a holiday for the LBMA.
    Tuesday is Options expiration.
    The only thing missing here is a margin raise and a dip might…just might appear 🙂

  113. kmisak

    Sophia, for those of us light on HZU/AGQ these days, silver can go ahead and lose all of this week’s gains! My itchy finger awaits… dry powder gettin’ real dry…

  114. pimaCanyon

    James,

    No problem. However, the term blow off top is usually used for the top at the end of a parabolic run and this is followed by a violent correction. So there will be only one blow off top in this market in the near future and it will mark the final top of this C wave.

    I know it’s just semantics, but I believe that’s what most traders and investors think of when they hear the term “blow off top”.

  115. Bill

    Wow, sophia, you bring good luck today.

    Hoping for a super huge pullback.

    Poly didn’t go from 100% invested to 100% cash just for 5 days off did she? She has some 6th sense.

  116. Ryan

    Wow looks like I did pick the exact top to buy in this morning LOL. I’m definitely feeling quite the pain. I guess that’s what I get for panic buying in fear of missing the potential runaway move. I have more dry powder and I think I might even want to jump in more now or should I wait? Any suggestions?

  117. pimaCanyon

    SLV just bounced off the lower channel line that defines its steep rise since last Wednesday. May be just a bounce, but if a real correction has started that will last a few days, it will need to blow right thru that lower channel line.

  118. Fergie

    Aaron,
    I thought the same thing. OPEX and approaching holiday weekend making for low volume doesn’t create an ideal scenario to add positions. Turkey is nice and fat and can easily withstand whiplash, but not getting warm and fuzzy about leveraging here.

  119. kmisak

    @Ryan, you may have pulled the trigger too fast on the way up, so don’t pull it too fast on the way down! If this is a correction in the POS, you will have a better opp to average down in the coming sessions, IMHO.

  120. sophia

    Miyagi-sensei, I KNOW that we were all waiting for the selloff, but on a day like today, it is indeed puzzling? What time is it the NYC? Cleaning before the long w/e at 2PM?

  121. Movax2

    Good test of the runaway move theory. If we don’t go (much lower) than this, we may have more reason to think we are in a runaway move.

  122. pimaCanyon

    The lower channel line I mentioned is at around 43.22 on the next 30 min bar on a 30 min chart. SLV dropping below 43.20, I’d say the correction has begun.

  123. catbird

    pima,

    Turd Ferguson often comes across as perma-bullish on the PMs (for effect, probably) but he thinks a correction will unfold from now until Tuesday-ish.

    He’s looking at $42 on silver to back up the truck, fwiw.

  124. Wes

    PST,

    That’s just wrong.

    Look at the scale. The monetary base is only just over 2 Trillion.

    The US economy couldn’t last 20 minutes on that paltry amount. The money supply is on the order of 13+ trillion.

  125. mdsn

    To the more experienced cycle guys here, If I understand this correctly, if this is the daily cycle correction then gold should break that trend line at about 1475 area. right?

  126. pimaCanyon

    Similar channel on May silver futures using 24 hour data has it’s lower channel line around 43.85 on the next 30 min bar. Note that the price of SLV is running about $1.06 below the May silver futures price.

  127. Wes

    PST,

    It’s not the website that’s wrong.

    Did you not see my post above explaining what the money base was ?

    It’s the post with the “apples” in it.

    Banks have never been reserve constrained.

  128. pimaCanyon

    catbird,

    That’s interesting about Turd. I used to look at his site regularly, but I’m too busy on this site to look at anything else (well, except for charts!).

    It fits though. I think we will see some kind of take down.

    However, what would be really funny is now that everyone is expecting a big take down so they can back up the truck, it won’t happen! 🙂

    No way to know. That’s why Gary suggested to Bill that he get some kind of position today so he won’t be left in the dust should we just continue higher from here.

  129. Duuuuuude

    Pima, I believe this is your chart, which you have got to respect. I had not noticed how neat the channel was. I had an order placed below the channel, but that would make no sense to buy there if the channel gets broken. That would mean I bought at the beginning of a correction.

    http://screencast.com/t/GCYIvqGcSiP5

  130. Wav_ridah

    10:30 cali time for whatever reason always seems like a good time to buy. I haven’t looked back at the daily charts but again its here and I just might add the portfolio change now. I’m not going to over think what could be the last daily cycle of the C wave.

  131. Movax2

    PST,

    Monetary base is more like “potential money supply”. It is the money in the banking system that the banks can use to loan money on depending on the reserve ratio. Those loans are what really creates the money supply. The potential money supply is insane, but much of it is in the banking system so far.

  132. Hot Rod

    SIlver went way up, way down and back up right to where it was in the AM.

    But…the option prices are higher…

    Telling sign.

    That takedown might have been a tree shaker for the heavy options volume today.

  133. Bill

    Price action on daily UUP today (hollow red candle on gap down) looks just as it did 1st week of Nov.

    I still think that Gary’s cycle of the $USD prevails. It’s very regular.

  134. catbird

    pima,

    Yeah, I’ve nibbled twice already today because I’m still building back my position after trimming. I’m done for now…I’m just going to roll the dice and hope AGQ can at least get below $300.

  135. Rick 4779

    Wes,
    Its been a good discussion, you have an intriguing point of view. Its made me think about the Fed’s transaction cycle. I will try to comment further if I have something more to add.

  136. Movax2

    It’s a good conversation, and an important topic that few people are taught about or think about. I find that most people forget to be open minded and will stick to what they think is right, so it is often pointless. Still fun to debate sometimes if people can avoid getting emotional.

  137. Hot Rod

    MDSN,

    I mean more buyers than sellers. The volatility is helping the bull camp because of the extreme bets on the long side.

    In theory, the price should be the same, if not lower due to time decay (however there really isn’t such a thing as intraday time decay to a large degree).

  138. pimaCanyon

    Dude,

    Yeah, that’s the chart, thanks for posting.

    Tough to know where to place an order, though. If SLV does break the lower channel, there’s no way to know how low it will go. It might go down to your order price and take off again to the upside after your order gets filled. It’s nice when they work out that way.

    There is a larger channel on the silver futures that has its lower channel line around 41.50 today, 41.75 tomorrow. That would be a big drop for silver though.

  139. Silverhound

    Bill

    Maybe you’re looking for a crystal ball. I don’t know of anything that can nail what is going to happen 100% of the time. That’s where being patient and waiting for a good entry and going old turkey when the big picture suits pays the dividends.

  140. pimaCanyon

    SLV on SoS list today. -8 million, but only -1 million in block trades. I don’t see GLD or any of the miners or mining ETF’s on the list though.

  141. pimaCanyon

    Any guesses as to how low we’ll go (if the correction has started)?

    Can gold drop all the way to 1440?

    How about silver, all the way to 40? How about 38?

  142. n1tro

    that $1 drop was probably due to london market closing and traders taking profits, happens around 1-130pm est from what I notice.

  143. mdsn

    Pima,
    if this is the daily cycle correction, we need confirmation by gold breaking the trend line around 1475 area. Is that correct?

  144. T

    In my view, today is just another day up… Going by kitco spot price graphs, the low of today is higher than yesterdays’ high… That’s a correction???

  145. Duuuuuude

    Again Pima, is this your larger silver chart? A pull back to the lower end of the channel would be less than 10%.

    http://screencast.com/t/oBdbSDC4s058

    We need to create a T chart here….bullish and bearish to evaluate the factors that could help create the correction, or feed the run away bull over the comming days. I heard already today options expiration, holiday Friday…. You have the dollar touching the November 2010 low.

  146. mdsn

    T,
    so far your correct, I think some (including me) are wondering out loud if this may be the start of the correction. And if so what signs can we be looking for.

  147. Yash

    pima = by tony oew counts (i know no one here likes ew) it should find support at 39.72 low and max it can go down is 38.14.
    so 40 seems right for now. ma10 is 41.33 and ma20 39.50 right now. last daily cycle low went to ma20 so this time also if same happens ma20 should be around 40.

  148. royboy1979

    Bill,
    RE: SLV being lower then futures. Futures do not officially close worldwide until 2:15 PM (could be off a bit) PST. For example, Silver futures I believe were in the 44.10 ranger when the 1:00 PM PST close yesterday and officially closed below 44.00 at 2:15 PST. That is why you have a difference. Hopefully that makes sense.

  149. james r

    T,

    Agree all we done is gap filled.

    It quite possible we may not get a correction until the final top is placed in theis C-wave.

    James

  150. T

    Roger that… Frankly I’ve also been waiting for the correction to start, sitting in almost 100% cash, and my eyes started to burn, so I bought in on Gary’s move… I don’t mean to squelch any analysis on a delayed/pending correction by any means, just that some people hear talk about corrections and assume that it’s a fact being stated, so wanted to put my 2cents in by stating the fundamental points… Now that I have said all this, I’ve jinxed it, and not silver is 100% guaranteed to go below yesterdays high 🙂

  151. traderRob

    Out of SLW… now watch it run, lol! Actually, last time I bailed on HL, the pig sunk further and still hasn’t stopped. May be a good thing.

  152. pimaCanyon

    Dude,

    Close to what I was referring to, but close enough. I have one drawn off the 3/16 low on the 24 hour silver futures, using a 1 hour bar.

    It’s way down around 41.5 today, but by Tuesday it will be at 42.5. That’s only a little over $2 below the current price, so that certainly seems doable.

    The channel that goes back to the January low will be running at about 41.5 on Tuesday. That also seems doable.

  153. Hot Rod

    Duuuude,

    Run Away:
    May options expiration coming up and a delivery month for silver. Futures traders looking for premium to settle in cash.

  154. Yash

    checked 2006 and 2008 c wave top .. it always came back to ma10 until last just few days (10 days max may be) .. so are we close to 10 days of C wave top? if not i think we will get ma10 test.

  155. Supermalc

    Hi Everyone,

    I’m a newbie from London who bought in today and got burned, though I still have my position, and am only slightly down. My reading of the Premium is that I should stick around, but obviously the scaredy cat in me wants reassurance. What happened today?

    Supermalkie

  156. T

    Run Away: Continued dollar weakness, even when fundamentals (ratings downground/impending increase in interest rates) should have moved USD higher.

  157. JReality

    Wish I had bought Beanie’s “Trading Manual” last week when he was selling it for only $8 and when he said it would be available at that price until the end of 2012. I could have had myself a ten-bagger now that he changed his mind and raised the price back to $100. LOL

  158. pimaCanyon

    Dude,

    I would put Hot Rod’s comments in the Correction column rather than runaway. In the past we have seen corrections around those monthly dates.

  159. pimaCanyon

    Supermalc,

    We don’t know what happened today. We don’t know whether it’s significant. It might be the start of a correction, or it might be just another day for silver and it continues higher.

    If we get a correction, silver could see $40 or even $38. Gold could see $1440. Is your position size small enough that you can handle that much of a drawdown without freaking out and selling at the bottom. (Even better would be to not only not sell at the bottom, but buy more at the bottom.) If you can’t take that big of a drawdown, then figure out how much you can tolerate and reduce your position to that size.

    But don’t dump everything because if you do, the risk is that the market continues higher without you.

  160. pimaCanyon

    SLV still on SoS list, at -15 million with -7 million in block trades.

    Curious that I can’t find GLD, GDX, GDXJ, SIL, or individual miners on the list, though.

  161. ALEX

    DEAR EXK

    Did you really just drop down and fill that gap because it was annoying me? Or am I fooling myself??

    No reply necessary, I will know at 4 p.m. by your end of the day actions…Thanks

  162. New York

    T,

    You’re right. The one thing to note is that the ratio will swing high and fast when this blow off is over as silver will drop like a brick.

  163. james r

    To Anyone,

    If we do not get a correction in this cycle, would it be less likely to hit $50.00 than if we did get a correction?

    I am thinking this may be a possiblity?

    James

  164. GottaHaveIt

    Alex,

    I bought AG and EXK this morning in the pre-market.

    AG is looking good.

    EXK … WTF?

    I should have gone with AXU instead.

    Let me know if you think I should dump back out of EXK after the close today.

  165. n1tro

    Supermalc,

    The selloff at 1pm est was london traders taking profits at the close like clockwork. hang in there and you’ll be fine.

  166. Francisco

    n1tro,
    Why wouldn’t we see a similar profit taking event close to 4:00 today for US traders? I’ve always wondered why we see it at 1:00-1:30, but not usually at 3:45?

  167. Workfriend

    Dude,
    I read that it is hard to borrow SLV to short (at Goldman?) and the last time that happened, Comex raised the margin requirments. Not sure where I read it as I was perusing a number of sites.

  168. T

    From Chuck Butler and coincides with Gary…

    …after the market closes, Apple will announce 1st QTR earnings… if the “risk sentiment” is to remain, and continue to put pressure on the dollar, Apple’s earnings will need to be strong.

  169. n1tro

    LME is a lot bigger than Comex so their profit taking is more visible in silver market which is thinly traded. 2hrs after 1pm sell off, we are about the same level as before the big red bar on the 15 min charts 🙂

  170. ALEX

    James R

    what if we shoot to $50 now , SCARY crash sell off , then rocket straight up to high $60’s , then D-Wave crash.

    At this point it seems like anything could happen.

    GOTTAHAVEIT

    Actually, EXK looks good big picture wise. Its in a nice triangle consolidation, and should break out and move up nicely.

    AG ran to $26 and pulled all the way back to $20 and formed the same triangle…I bet Ag pulls back and fills that similar gap tomorrow or day end today(same as EXK did today), and AXU never really broke out from That I. head & Shoulders when EXK did…so AXU was the lagger , now catching up.

    Just my opinion, but I think EXK is going to do great when these break out for real.

  171. Supermalc

    N1tro,

    Thanks. This obviously wasn’t the up-to-$6 correction, is that to come over the Easter weekend? Hmm, halve my position and watch perhaps.

    Supermalc

  172. Edwin

    Guys, I use two vehicles for my unlevered plays

    PBU.UN – closed end trust that hold gold, silver, platinum.
    http://bromptongroup.com/funds/pbu/overview/

    and

    BMG Bullion Fund – this is open fund, so if there’s more inflow they buy more bullion.

    http://www.bmgbullion.com/cgi-bin/qa.cgi?rm=list&category=5&t=

    Holding these three metals (bullion) have provided some steady low volatile gains over the course of the year.

    Just wanted to bring attention to these securities to the people interested in holding a diversified portfolio of bullion.

  173. pimaCanyon

    Finally finished watching the CNBC interview of Bullard taped last year. Near the end of the clip Bullard was asked about “monetizing the debt” and how this is seen as something evil. His answer: The Fed has always monetized a tiny bit of the debt (his word tiny) and now QE will monetize a little more. (his word little).

    So if Bullard himself says QE is monetizing the debt, how can we mere mortals claim it’s not? How can Pragmatic Cap claim it’s not?

  174. pimaCanyon

    Okay, my last post ended with a rhetorical question, now answers needed. Some of us have different opinions about this subject, so maybe best to just leave it at that and get back to: Gold is stuck at 1500!!

  175. MrMiyagi

    T,
    I think that a lot hinges on AAPL report later. There is a possibility of missing, I understand that they might have come up a couple of million iPads short of goal.
    In any case, it seems that silver/gold hace earplugs in.

  176. ALEX

    GOTTA

    I should’ve added that EXK can come back to $11 and still be great. Thats the bottom of that triangle. If you scroll up, Jayhawk posted charts pointing that triangle out.

    If you are buying to hold, this EXK looks good, If only the miners will get going!

  177. GottaHaveIt

    Alex,

    Thanks!

    I appreciate your feedback… you know WAY more about how to trade these miners than me!

    So you recommend holding both AG & EXK?

    I got fed up and dumped my miners last Friday and went 100% into AGQ.

    I decided to give them a second chance and bought a few hundred shares of each today … but I’ve got them on a short leash. If they don’t perform I’ll dump them again and move the money into AGQ.

  178. pimaCanyon

    supermalc,

    You’re welcome. just go back and look at pretty much any trading day for gold or silver from the past couple of months. It’s a volatile sector and on any given day, you’re going to see large price movements.

    Gary says the intraday price wiggles are meaningless and tends to look at only the daily charts. Hard to do after buying a position, but unless you’re day trading, that’s probably a good way to do it.

  179. ALEX

    GOTTA

    well, like I said, EXK could go to $11 and Ag could drop and fill that gap, but longer term I think they’ll do great if the miners finally break out.

    This is Jayhawks EXK chart. Bottom of the triangle consolidation is $11 (ish)

    http://content.screencast.com/users/Jayhawk1991/folders/Jing/media/27ba1530-1522-43bf-8ab6-331fa270d57b/2011-04-20_0822.png

    Nice job on the AGQ pile-on!

    and N1TRO

    Nice story of you re silver sales! Lightening up before we hit $50 aye? Congrats on a good investment.

  180. Wes

    So far as I know, a daily cycle after the current cycle is still due.

    I am content to make profits on a 100% position until a correction into the cycle low.

    It’s the next cycle that needs to be leveraged.

  181. Edwin

    pimaCanyon – QE2 does not end up monetizing debt, yeah the fed collect the interest from the bonds, but the fed will need to spend it to finance the deficit

    they will create more money in the system.

    Anyways like any studied economist, inflation will spike, then what comes up must come down. Deflation.. this mean all asset prices will go down. Bye bye stock market, bye bye gold.

  182. Wes

    Workfriend,

    Neither Fidelity nor Etrade have SLV available for shorting. It’s been that way for several days now.

    I sometimes short SLV common against my call options for a short term trade.

  183. MrMiyagi

    Since Gary’s out chauffeuring friends, maybe someone else can answer this; how com he still runs the GoldScents blog as TC? Seems like few read or post there.

  184. Gary

    GS is the marketing blog. All traffic my partner pulls in goes to the GS site and that way I can track his commissions.

  185. Wes

    pima,

    I thought we covered this yesterday.

    “Monetizing” has a specific meaning to the Fed that does not include creating more money, but it has an entirely different meaning to the general public.

    I think this is at the root of the your question about monetization.

  186. pimaCanyon

    ZSL is a double short silver etf you could use when SLV is not available for borrowing. Like any double etf, it will have decay problems if you hold for many days or weeks during sideways consolidation. But for a trade that lasts only a few days, the decay should be negligible.

  187. Edwin

    Vonda and Ryan – oh man oh well so you bought this morning. 1:30pm EST shouldn’t freak you out.

    Nothing a sure bet though.

    Playing in this market you just go with the higher probability trades. that all you can hope for.

    If you’re holding over the course of a month you’re probably going to be okay. Just be prepared to get a bit of drawdown when the USD does make a weak dead cat bounce pretty soon.

    Don’t think it just drops 1% overnight, it will just keep dropping like a stone.

  188. basil

    Just got back from groceries. Overheard a conversation between two gentlemen about gold and silver. When I asked them if they are invested they said yes, in physical, and then one went on giving me a speech about Fed policies and how we are worse than slaves to the super rich, because slaves don’t have to pay for home and food. He was very smart and also sounded very knowledgeable about PMs. Now, both these gentlemen were supermarket employees and they were putting price tags on merchandise while we had that conversation. According to behavioral market psychology, wouldn’t that be a classic sell signal, if you get silver investment advice from an employee at your local grocery store? Not saying that this will get me to sell, but it sure had me baffled. I’m glad for these guys, but does that mean we entered the mania phase already?

  189. pimaCanyon

    Wes,

    It’s hard to believe the Fed governors are so stupid that they wouldn’t realize what monetization means to the public. Oh, I take that back… When Bullard gave his answer he prefaced it with: monetizing the debt strikes fear in the hearts of men. So he does know that John Q Public thinks it’s a bad thing.

    But if what he’s talking about and what John Q thinks he’s talking about are two different things, shouldn’t someone tell him? Surely they know by now that the Fed has an image problem, so why don’t they spend the time to explain to the public that monetizing the debt doesn’t really mean monetizing the debt?

  190. Wes

    I was thinking the lack of SLV for shorting must mean that SLV is heavily shorted currently, and is a reason that the current rally could continue.

  191. notGreedIsGood

    Can anyone fathom a guess as to what the hell is wrong with SLW? Gary is still a big fan of it, but something must be wrong if it’s down 2% when silver is making an all time high…

  192. Wes

    pima,

    The Fed said that the point of QE2 was to increase asset prices to generate the “wealth effect” so that we would spend more money.

    They don’t want to correct anyone, IMHO.

    I think they got what they wanted. They didn’t create any more money, but they did get investors to redirect money into more risky assets.

    This was their purpose all along.

  193. Wes

    pima,

    Go to your brokerage site, enter an order to sell short 100 SLV at a limit of $100 and see if they accept the order or reject it for no shares available to borrow.

  194. Ryan

    Edwin,

    I wasn’t freaking out, I actually wanted to buy more on the dip but it came back up so fast I didn’t get the chance. I still have more dry powder to deploy so if we do get the pullback we’re looking for I’ll add again. It just sucks that I added more AGQ/HZU right at the top this morning but hey if silver goes to $50, this buy in wouldn’t look THAT dumb 🙂

  195. Sandy101

    Gary,

    I would imagine if Gold goes to 1600 $ + in the current C wave, Silver may be way over 50 $ unless gold starts out performing silver.

    Can you comment on your current targets in the premium report.

  196. basil

    pimaCanyon,

    not yet selling, but contemplating an exit strategy. To me this looks parabolic already, but of course it could get more parabolic than that. Finding the right strategy in a parabolic move, wherever we are in that move, is tough, because either way you could be left in the dust.
    For sure the investing public knows about silver, so I am not sure how much more of that public to expect moving our way with their money. So, in other words, when to sell is exactly the answer I am trying to figure out right now.

  197. traderRob

    Looks like I gave SLW the kiss of death selling at breakeven. Don’t let me near your miners, folks. When I buy, the underperform. When I sell, they die.

  198. JML

    New poster. Sub since Jan.
    Gary said (4/18, 5:16 PM) “When I look at a long term chart every daily cycle is pretty clearly visible. Apr. 12th is not clearly visible as a cycle low”.
    This is true; with the exception of the Sep 9, 2010 daily cycle low (noted in the charts section of premium site) which Apr. 12 looks, on many indicators, very similar to. This would make it a 19 day cycle, of which there have already been 2 of in the last year. Also note the dollar gapping down a few days after the Sept cycle low (similar to today). Just a thought; but if Apr 12 was the cycle low and gold behaves anything like it did after the Sep 2010 cycle low it’s time to buy.

  199. SLW TRADER

    HEY GUISE!!!!

    Great day for Silver Wheaton!

    This ones is for you SLW-

    …………………../´./)
    ………………..,/¯../
    ………………./…./
    …………./´¯/’…’/´¯¯`¸
    ………./’/…/…./……/¨¯
    ……..(‘(…´…´…. ¯~/’…’)
    ……………………..’…../
    ……………………. _.·´
    ……………………..(
    ………………………
    ………………………..
    …………………………
    …………………………..

  200. Edwin

    Ryan – cool. just have some cash ready to deploy when it’s time.

    I’ll buy SLW if it hits 38. Bring it. But I want a t-shirt with purchase. 🙂

  201. Vonda

    It was a fine, fine day, Edwin. But I did end up lightening up a little at the end — risk aversion and before I’ve always been fully invested at 120-150% and had to just sit and simmer during a daily correction.

    I’ve always wanted to have powder to play.

    Currently at 64% invested, all AGQ. (And I lucked out and tucked away a tidy sum intraday, which I do NOT want to get in the habit of.)

    Good to hear you’re hanging okay too, Ryan – and Kal, CatBird, AtEase, and any others who might have added.

    And no panic. Even at full tilt, I would LOVE a swift jolt down to clear the deck.

  202. Edwin

    i don’t think trading a parabolic is any different than trading a penny stocks/biotech.

    those are voltile SOBs, learned my day trading lessons from there and can apply it to gold/silver which move much more slower and predictable.. no day trading for me. Core position holding all the way.

  203. PST

    Pima,
    Let me take a shot at this one more time…only this time I won’t be an obnoxious jerk (sorry again Wes). Wes, we may disagree on this, but here is my interpretation.

    First, let’s agree what the Fed is and what it does. The Fed is the central bank which is in charge of MONETARY policy (interest rates, QE, bank reserve requirements, etc). The Fed is basically the banker’s bank. The Fed controls interest rate policy, adds/drains reserves from the system, and lends money directly to the banks via the discount window and other liquidity facilities.

    On the other hand, the executive branch of the government (administration and treasury) is responsible for FISCAL policy (stimulus spending, tax policy, rebate programs, etc). The printing authority, the US Mint, lies within the Treasury and not with the Fed.

    The Fed does not monetize the debt through printing, because again this ability lies at the Mint within the Treasury Department. The Fed, however, has influence over the money supply (by purchasing and selling treasuries) as well as on the cost of money and borrowing activity (raising and lowering interest rate).

    Now, what is different this time is that the fed has decided to undertake QE to lower REAL interest rates below zero and to inject additional capital into the banking system. Through QE, the Fed purchases assets (treasuries, agencies and MBS) from banks and broker dealer’s balance sheets. The banks must reallocate this capital into other assets (marketable securities) to generate returns. (this shouldn’t be confused with money that the lend banks which primarily sits as reserves or are invested in riskless assets). It is this reallocation of capital into risk assets (stocks, commodities, etc) that is driving these markets higher. To take it a step further, the Fed has dramatically ramped up their Permanent Open Market Operations (POMO) and are also buying up all the banks treasury holdings, so that they will need to reinvest this capital as well.

    Now Cullen is theoretically correct that the Fed is not directly monetizing the debt, they are merely freeing up bank’s capital to redeploy. The banks then need to complete the process by reinvesting that capital in the markets. He is basically arguing a technicality that “the Fed does not monetize the debt” itself. The truth, however, is that are arming the banks with so much additional liquidity, that the banks need to go out and find a home for this new capital, thus the ramp in stocks and commodities.

  204. basil

    SLW made 1,900% in two and a half years from its low at 2.50 to it’s high at 47.60.
    At this point SLW has to be considered an exhausted bluechip.
    In 2008 I bought SLW at 2.50 and sold it at 3.00 because I thought Armageddon is still ahead of us. Then I watched SLW make a phenomenal run. Wasn’t pleasant, as I don’t know any other stock that made that much since the 2008 low.

  205. Edwin

    Vonda – good for you. collect profit when there is some on the table. have yourself a steak dinner/veggie dinner.

    it looked too easy of a setup today.

    you know when it’s too easy. a smack down is coming. that’s the way the cookie crumbles.

  206. Francisco

    Texas Explains Rationale for Delivery (per ZeroHedge)

    Over the weekend, University of Texas made headlines after disclosing it was the first major institution to take delivery of $1 billion in gold, although still keeping it in the Comex system. Today, the CEO of the management company Bruce Zimmerman was on Strategy Session providing the rationale for his action to David Faber. First some prehistory: “We began buying gold in September of ’09 at about $950 an ounce. Our average price is at about $1,150. We’ve invested around $750 million in gold over that twelve months and it now has a value around $1 billion.” On what Texas thinks of gold (no surprise here): “The role gold plays in our portfolio is as a hedge against currencies. The concern is that we have excess monetary and fiscal stimulus. I noted a couple of days ago, i think there was a story out about Bernanke mentioning that while they may not increase quantitative easing, they may not necessarily reduce their exposure either. So i think that may be a signal that will continue to have a good deal of monetary stimulus. We read every day what’s going on in DC and across the states. We’ll see what fiscal policies look like. It remains a concern for us.” As to the specific reason for demanding delivery: “We had gotten to a size and our thought was that we probably will have our position for a longer as opposed to shorter term, although we could sell at any time. But rather than continuously roll the futures contracts, it became easier and more economical for us to take possession of the bullion.” So how long before many if not all other public fund managers decide the same logic should apply to them as well?

  207. Wes

    PST,

    I was apparently at lunch when whatever happened, happened, so you’re still a gentleman in good standing with me.

    I think you’ve nailed it almost in your latest post. I will add that rather than the banks taking outsized risks, it seems to be the hedge funds who are able to get the freed up money in the overnight auctions as the bond sellers seek return.

    Now I have no direct knowledge of this, but in reading various accounts of what is happening, it’s my best guess.

    Anyway, good post, and we’re in agreement at last.

  208. T

    BTW, over the past 12 months, we did get the “low” print for the dollar today. Based on Gary’s analysis last night, this seems to confirm the down-trend.

  209. Shalom Bernanke

    They stunk up the joint, what else? 🙂

    I’m not married to any idea. If they couldn’t go up when silver was gaining 2% each and every day, it was an easy decision. In fact, my exit prices were still just above where miners closed.

    I’m flexible and can buy miners or metals next round, but miners will have to show me something first. I’m also wondering if the juniors are done compared to the big miners. I’ll have my answer in the next few days.

  210. Poly

    Drawdown coming very soon, because I got my feet wet again with a 30% position in AGQ, pre market at $314. 🙂

    Couldn’t bring myself to do anymore than that and no options, already gone against my word on adding so extended.
    I still believe that in both current scenarios, of a daily cycle low or runaway move, a big smack down this extended is to be expected. Most parabolic runs have very wild swings that punish the latecomers and insanely leveraged. We still haven’t seen a nice 4-5% day down that we have seen in the past so often. This extended we could get a whopper 6-8% day. It shouldn’t mean much to the old turkeys or folks who didn’t trade around a potential daily cycle low.
    I know I’ve learned a lesson here and in hindsight should not have traded too much around the low. A re position of leveraged and strikes would have been much more appropriate. However I still wont make a 2nd mistake, one I’ve learned before, which is to add my leverage here in such a stretched state. If or when we get a big drawdown, I will be waiting to gobble up calls, maybe not too far off where I sold he last bunch :). One can wish.

    Alex, thanks for your words last night. It’s been fun either way and a long profitable run. My 30% AGQ add today will help feel like I’m part of the team still.

  211. PST

    Good. Now all we need to do is get Pima, Movax and I think Aaron on board, and we can put this topic to rest and focus on making money in silver.

  212. SLW TRADER

    We could possibly see a 15% down move on the POS by early next week. Selling starts on Thursday and then will pick up Sunday night into Tues…10% drop in one day not out of the realm. This would equal 30-35% drop in AGQ. What is that, around 96 pt drop? Newbies would get roasted!

  213. basil

    pimaCanyon,

    I think that the intraday drop and then the recovery was a good short term sign, but a day when it would pop like today and then drop into the close and end close to the low of the day, that would probably be my exit.

  214. Shalom Bernanke

    Anything could happen, and a sharp correction (maybe even just a day or two) is certainly a possibility even in the context of a continuing bull.

    The sharpest pullbacks are typically in ripping bull markets. I have no problem riding a pullback in a winning trade, but I did have a problem staying in a weakening group while the underlying metal was making new highs every day. In short, I didn’t exit miners in an attempt to sidestep a correction in silver. As I said earlier, if I was long metal only with no miners, I would still be fully in.

  215. Wes

    Poly,

    Good to have you posting. I’ve missed you.

    You could get that 30% exposure by risking a lot less money in SLV options, and if they’re chosen correctly, the delta will go below 1 on the retrace.

    That will mean that you won’t even lose as much as you might otherwise.

    You’ll lose a lot more percent in options but way fewer dollars and still have the 30% upside exposure.

  216. GottaHaveIt

    Wes,

    Please elaborate on this for those of us who are new to options:

    “You could get that 30% exposure by risking a lot less money in SLV options, and if they’re chosen correctly, the delta will go below 1 on the retrace. That will mean that you won’t even lose as much as you might otherwise. You’ll lose a lot more percent in options but way fewer dollars and still have the 30% upside exposure.”

    Thanks!

  217. Wes

    In fact, I’m currently calculating how to minimize my downside exposure with SLV options while keeping 100% upside.

    This would involve selling all AGQ (as well as any other common, if you have any).

  218. Edwin

    oh yeah SB, good to hear you’re on the full metal team. yeah those miners suck wind but i got like a ton of them. they are my friends now.

    ok load up man, start up the bernanke presses when the time is right. Which I think is 1465, the risk of going in at this point is high.

  219. Poly

    WES,

    Thanks, appreciate it, missed being active, but having fun in the sun.

    The AGQ I purchased was just in self managed 401k’s no options allowed. Main accounts are still all cash, waiting for SLV calls and a nice drawdown.

    One of the main reasons I buy the calls is for capital outlay.

  220. Slumdog

    Everybody wants this large, sharp drawdown.

    Agreed?

    Thus, while it makes sense and catches the newbies, imo, it makes sense to get to 1X, 1550, in gold, after the holiday, maybe one day into the work week, when everyone is incredulous that the drawdown didn’t happen, and thus it looks safe to add, after they add, then the sudden pratfall.

    I think the timing on this decline may be a bit early. In the scenario I paint, the traders get ’em all, instead of just the few cherries now on the trees.

    If I had deep pockets, that’s the way I would play it. Come close of biz on Tues in the USA, I would chop off all their heads, fast and furiously, and then rebound, too.

    That would do the necessaries with the greatest amount of pain.

  221. Shalom Bernanke

    Edwin,

    I haven’t yet ruled out miners on the next purchase, either. Sooner or later they will be much higher, it’s just that I did not want to hold when they were telling me something might be wrong.

    If they can trade in tandem with the metals, I might even buy ’em into a silver dip, if it ever comes. 🙂

  222. T

    QE2 isn’t the end?

    Acting Man’s Write-Up

    A must read in my humble opinion

    Lately, Federal reserve officials have taken pains to alert the markets to the fact that ‘QE2’ is indeed going to end in June. Alas, that would automatically bring about a shrinking of the Federal Reserve’s balance sheet as time goes on, as securities currently held mature. Moreover, since bank lending to the private sector continues to contract, there would be the prospect of outright monetary deflation taking hold at some point.

    Naturally, this prospect can not please the helicopter pilot. Thus there are now the first rumors circulating that a shrinking Fed balance sheet won’t be countenanced. We will apparently get ‘QE Lite’ to forestall this possibility…

  223. ...at ease

    Vonda / Kal, riding with you on $313 AGQ. Tried twice to get it at $308 and broker link froze both times, wasn’t meant to Saved some powder to take another shot next time she comes around.

    Ryan, Glad to see you got back in. We still have time to finish loading up. I was very pleased with my gameplan and fully back in with powder to spare. Had to go back and forth between accounts tweaking, to stay below the moving ticker. What a game it was! No sleep last night after Gary said get in before the run up, had to plan reentries. Very pleased, very pleased.

    Eamonn, So happy you got in with your AGQ. I know you have been patiently waiting.

    What a day! busy, busy, busy.
    I can now relax and just turn off the computer and ride.

    As SB says, can go up, it’s good, can go down, it’s good, everything’s fine. 🙂

    Poly, waiting for that 10% pullback to use remaining powder. So much activity today on blog, couldn’t begin to keep up.

  224. Gary

    Folks everyone is looking in the wrong direction. As long as the dollar remains in free fall we aren’t going to get any serious correction in the metals.

    The dollar had it’s chance to rally on the debt downgrade and it’s failed miserably.

    We are now about to enter the panic selling phase of the dollar’s three year cycle.

    Gold and silver will ultimately be driven by the collapse of the currency.

  225. coolkevs

    Update on my Japanese stock trade in comparison to GDX:
    12/7 GDX High: 64.62, close today 62.10
    Loss of 3.9%
    12/7 EWJ High: 10.70, close today 10.18
    Loss of 4.85%

    So, GDX has pulled ahead, but given how GLD has hit new highs, it should be much further ahead than Japanese stocks that had an earthquake, tsunami, and nuclear event to digest and deal with. For those not familiar, I started looking at this comparison based on a DeMark BUY signal for Japanese stocks on a monthly basis in the fall.
    I know everybody here has been riding the Silver bull, for which there is no comparison, but just think the above is very interesting!

  226. Edwin

    Gary – I think the dollar is going to sink lower of course the QE plan guarantees it.

    But I guess we like to make a stab at what going to happen in the next weeks or so. haha

    After QE, what could happen?

  227. Gary

    After QE the same thing will happen that always happens. The dollar will rally for about a year. Gold will enter a severe D-wave correction. Silver will crash back down to or below the 200 DMA.

    Everyone will say “see gold was in a bubble”.

    That will clear sentiment and the whole process will start again. Then at the next dollar three year cycle low the next C-wave will make this one look like childs play.

  228. Wes

    Gotta,

    For an account currently valued at $100,000, and you want 100% upside exposure.

    I would buy $23,000 of SLV May 34 calls @ the closing price of $10.25.

    This is $1,025 for each option which would allow you to purchase 100 shares of SLV anytime before May 21 for $34 per share.

    So you would buy $23,000 divided by $1025 equals about 23 options.

    Now, your downside total risk is $23,000 or 23% of your $100,000.

    You will make $100 per option or $2300 for each one dollar SLV goes up.

    If you put the $100,000 in SLV at today’s price of $44.12 you would buy 2300 shares and make $2300 for each one dollar SLV goes up.

    For $200,000 do twice as much, for $50,000 do half as much.

  229. ...at ease

    Gary, when will this be, what year for the next 3 year cycle low? I need to make sure I have my plans all set for that one. 🙂

    “Then at the next dollar three year cycle low the next C-wave will make this one look like childs play.”

    Thanks for giving that go ahead to get back in, I can relax now and ride.

  230. Razvan

    i have already lost 60 cents out of the price trying 3 times to catch the top in silver. I think i will just weather the storm if we do get a correction although i will probably not be checking my account balance until we recover and make new high!

  231. Francisco

    Wes,
    RE your options suggestion, Given that Gary is now calling for the final three year cycle low in early June, do you think we should look at options with a later expiration date than the May one that you suggested.

  232. Wes

    All I’m trying to do is get to the next correction as cheaply as possible while guarding against no correction.

    It is cheaper to buy May, hold until expiration, and then buy June.

    If you buy June or July now, you’ll lose time premium.

  233. Natanarchist

    @basil…your grocery store clerk story doesn’t provide clues towards the public mania phase. Instead it points to a direction that even regular working folks have been informing themselves. As you said, these guys seemed knowledgeable on gold and the FED policies. I doubt they learned that in the last few weeks. In fact, the way you relate the story, it wouldn’t surprise me if they have owned physical for a long time…perhaps even longer than you. Maybe they are Alex Jones listeners for the past 10 years.

    The big bubble will be when folks who have not bothered to buy gold because its a shiny metal, capitulate and buy. When people who have never purchased a gold coin do so, and then tell you that you should as well because gold is going to the moon…then you will be near a bubble. We are few years from that…even with the increased media attention.

    @n1tro…I believe London closes at 11:30 AM EST. That is where you see some action near the PM fix, between 10:30 AM and 11:30 AM EST. The 1-1:30 PM EST is the the NY pit session which closes at 1:30 PM EST.

  234. Bill

    As a beginner trader, I’m still cautious. Here’s why:

    – AGQ 60 min chart shows huge vol spikes ONLY on sells, never on buys

    – Same for FXE daily chart, all selling – and UUP, all buying

    – SLV/AGQ is way too extended above EMA’s (20, 50) – will snap back – the higher they climb they bigger the snap

    – I see neg div on GLD’s 60 min RSI and PPO (MACD)

    – Hollow candles on UUP (though today’s dried up) are at cycle bottoms on Gary’s chart

    – Gary’s $USD cycle chart shows that blue arrow bottoms (intermediate) are pretty regular, and we are way way overextended. If it bounces, do I get the cycle-rookie-of-the-day award? A chicken burrito perhaps? Supersized?

    None of these are slam dunks, but they do warrant caution. I’m not saying that chasing this is wrong, I’m just saying it’s a chase – good for trading, bad for core. I can’t join you all here because I wasn’t w/you to establish a core position when I should have at each major correction along the way. My mistake, not to be repeated I hope.

  235. Wes

    Francisco,

    The option strategy will leave you with $77,000 in cash for every protected $100,000.

    This is, of course, for use at the bottom, along with any margin you wish to deploy.

  236. GottaHaveIt

    Wes,

    Thanks for the explanation!

    Gary,

    In light of the portfolio change you posted today on the premium site (don’t want to give away the specifics here) could you please respond to Wes’ statement above: “It is cheaper to buy May, hold until expiration, and then buy June. If you buy June or July now, you’ll lose time premium.”

    I’m new to options and I’m trying to get a handle on it.

    Also, if I understand correctly you took the amount of dollars you raised from selling some of your AGQ and bought an equal number of dollars worth of options, is that correct? Or did you only buy enough options to purchase the number of shares equal to the dollar value of the AGQ you sold?

    Again, sorry for the newbie questions, but I’m trying to understand your options strategy.

  237. ALEX

    I was just telling Jayhawk that my favorite charts today were…

    EMC, IL, VMW, GLNG,Simo etc. And Those are TECH stocks. suddenly Beanie is calling me!! 🙂

    well, I did buy GORO today a tad higher then it closed at, that chart looks good on a 6 month daily .

    the old dog ‘JAG’ perked up too.

  238. Bill

    Good point on the BB, JamesR.

    Sophia, I’ve been studying a bit, and have been following a really well educated guru, who never made any money. So my learning is all intellectual, not experience w/the actual beast, like you all have. Make no doubt about it, I’m a beginner.

  239. GKC

    good afternoon, guys here an interesting ancedote, im an institutional futres broker . i communicate with a large group of profesional traders on a minute to minute basis. heres a quote from the chat today, ” i think its time to short silver, mom and pop are lining up to sell their silverware” my response which met with some derisive comments, ‘tops arent made when mom and pop are selling their silver, they are made when mom and pop are buying and bragging about it” i bought more slv on the dip today.Thanks for pointing that out in your recent radio interview gary!!!

  240. ALEX

    Blogger LowTax said…

    Gary, isn’t today’s low in the dollar the same as the ’09 low? I would expect a decent bounce here…

    April 20, 2011 2:38 PM

    HMM, Good point???

  241. Bill

    I have thought of a *possible* reason for SLW’s non-performance. This is pure specualtion, but as it’s my morning and I have all day, I’ll deep dive into this issue, as it’s important to understand.

    SLW makes money by contracting w/miners, by entering contracts to purchase silver (eg: $4/oz), which they then can sell at market ($40+/oz today). So what’s the problem? I can think of 2 things: a) perhaps some miners are in Bolivia, and even though contracts exist, if they are nationalized, or are under threat of so, the contracts can be compromises (“acts of God” clause), thus SLW may not realize gains (i.e. reasonable doubt exists), and b) perhaps some silver miners are running out of silver – have a look at HL and PAAS – terrible charts of late.

  242. james r

    I noticed SIL, SLW, GDX sold off at the close, and GDXJ closed about flat.

    And I have to wonder is this a prelude of what’s to happen to the PM market in the very near future.

    James

  243. Bill

    misspel – meant “compromized” not “compromises”

    Bob in Hawaii – yup, Trader Dan says that as I’m sure you know. He has on the floor experience, so it could be just that. RGLD is a bit to gold what SLW is to silver, and a few yrs back HF’s shorted the life of RGLD – maybe now they do so to SLW

    Are there experts on this forum who know?

    What’s sticking in my head now is that AGQ is going UP, as in UP. And price trumps everything. I just wish it didn’t gap every friggin day, so that I could get onto an escalator, rather than leaping for a rope across the Grand Canyon.

  244. ALEX

    Bob

    Nice echo and that Holiday inn remark really cracked me up!

    GKC

    Is that the truth? I looked up your blog profile and found that I was the 2nd EVER to look it up. However, If you say its the truth to my face 1 more time… (online ) haha , I will believe you.

  245. pimaCanyon

    Thanks, PST, for that explanation. So the additional liquidity is being used by the banks to buy stocks and commodities, thus driving up prices. That makes sense to me.

    What I still don’t get is why this is not considered monetizing the debt. The Fed is giving the banks dollars in return for their US Treasuries. Seems like monetization to me.

    However, maybe it’s because of this that they don’t consider it monetization: The Fed intends to dump the treasuries back into the market at some point in the future. So when they do that, they will reduce the amount of money that’s in circulation, thus canceling the money they added when they bought the treasuries. Is this why it’s not considered monetizing the debt? If so, we could say it’s short term monetization, long term it’s a wash. The only potential problem is if the economy stays in the doldrums for years (or decades!) then it will likely be a LONG time before the Fed dumps the Treasuries. In fact, they could just continue buying them.

  246. Wes

    I’m going to tell you more than I know, but I try not to let that stop me.

    Isn’t it possible that SLW just went up too far ? From the time it started moving in early 2010 until the first part of December, it outperformed silver by 3:1.

    I’ll bet it just priced in the hereafter and quit.

  247. Gary

    I’ll cover the miners in tonight’s report.

    FWIW there’s no way in hell I’m going to lose my position in any of my mining positions.

  248. ALEX

    BoB In Hawaii

    If they are shorting the snot out of miners, because they are heavily long the Metals, wouldnt the price shoot up eventually when they have to cover?? Or can they prevent that?

  249. pimaCanyon

    Wes,

    I like your options strategy. However, rolling options costs commissions (small change, only $1.50 per option per trade for me) and at least part of the bid/ask spread, both when you sell and again when you buy the next month out. You add up the commissions and the spread and do it for a couple of months and it’s not an insignificant amount. Plus you have this additional job of rolling the options each month.

    If it’s likely this thing won’t top until June, then you can avoid rolling by buying June or even July calls, but as you say with those there is time premium built in which you will lose as time passes.

    If you go out to June or July, you can just go deeper into the money to reduce the amount of time premium (extrinsic value), but that requires you to spend more dollars to get the equivalent number of shares.

  250. Bill

    Most of SLW’s contracts are in the $3-4 range. Let’s use $5. Here’s the math:

    When $SILVER went from $10 to $20, that was a 100% gain. SLW’s profit went from $5 to $15, a 300% gain.

    When $SILVER went from $10 to $30, that was a 200% gain. SLW’s profit went from $5 to $25, a 500% gain.

    When $SILVER went from $10 to $40, that was a 400% gain. SLW’s profit went from $5 to $35, a 700% gain.

    Did I do that right?

    Probably Bob’s right that HF’s are shorting this.

  251. ALEX

    Gary
    Maybe we should go back to about Nov/Dec’s Blog… when you used to talk about the dollar diving, A Parabolic move in metals,etc…

    I remember you saying many would sell too early afraid to hold on till the top, thinking a crash was coming
    -you said many would be afraid to buy dips and afraid to buy rising prices.
    I recall you saying at the end price would be going up 7 out of 9 days…and so on.

  252. James

    Bill, for someone who professes to be a newbie, you strike me as anything but. Others seem to be taking you at face value, call me paranoid, but I suspect you are working this board with an agenda.
    それは本当です

  253. Jayhawk

    Alex is goin Beanie on us!

    I don’t blame you, I’d rather be long the USD or some nice treasuries or Beanie’s portfolio at this point than Silver Weaken.

    I saw the $DXY just about tag that 2009 low perfectly…Whether or not it bounces is another story. All those blood red candles look like they want to ripe through it.

    http://www.screencast.com/users/Jayhawk1991/folders/Jing/media/168f2305-e1e3-41e1-883d-40fbbfccafb9

    Posted on Turds blog…This article thinks the PPT is shorting the crap out of our precious miners.

    http://www.silverbearcafe.com/private/04.11/occam.html

  254. Wes

    pima,

    This is my strategy until the cycle low. Then I plan to play big ball.

    Which do you think is cheaper until the cycle low ?

    The July 34 option is $.35 more expensive, or $35 per option.

  255. ALEX

    JAYHAWK

    beanie here…buy that EMC at the open, then tell me, if MY hedgefund guys and My plunge Protection Team are shorting your P.M.’s…
    wont they bounce when they have to cover??

  256. Wes

    Intern,

    If we can determine a cycle low with accuracy, that means it won’t go lower unless we have a failed cycle.

    Isn’t that where you’d like to buy big ?

  257. Wes

    Pima,

    I think you’re going to be confused about the Fed until you start thinking of T-bills, bonds and cash money as equivalent things.

    When Etrade or Fidelity shows cash in my account, the money is actually invested in a municipal bond.

    Nobody holds cash cash other than drug dealers.

  258. Intern

    Wes,

    This is a possible strategy to reduce risk and still catch a piece of a move that is getting away from you?

    Then at cycle low you go back to buying the stock and Old Turkey positions?

  259. Bob loves Hawaii

    Alex, I think the Hedge funds are going to get squeezed big time. I keep adding miner positions. Look what happened with FCX reporting yesterday.

    They are playing with fire.

  260. Wes

    Yes, reload at the cycle low by deploying all the cash you’ve been hoarding by using the option strategy.

    According to Gary, the cycle after this one is the big one.

  261. n1tro

    Nat,

    LME Select opening hours will continue to be 7.00am to 7.00pm (London time) until further notice.

    7pm London time is 2pm EST

  262. Driver

    Gary, your comment re. miners eases my mind somewhat. I put back all my positions today in SIL, SWL & AGQ. I already had most of my AGQ and half of the others.

  263. DG

    Just got home. I got a sell on GLD today (popped up on my short screen). First one of this year. Last year the sells were May, October, and November—all were tops before tradable corrections, though Oct was early. FWIW. If this is already a true runaway move, the sell isn’t going to be worth much, but if it isn’t I expect to get a chance to buy more AGQ at lower prices before month end.

  264. Ryan

    Wow i think today I’m the winner of the worst entry on AGQ/HZU. I got in HZU at 51.12 which is probably around 322 on AGQ lol. I still have strong hand status on 35% of my position. I added 25% today so still have 40% more to deploy so let’s see if we get that pullback. But I have to say I don’t even know if any pullback will be that steep. It was quite impressive to see that big intraday drop today but end the day at the highs.

  265. kmisak

    Ryan, at least you did it; I spent the day wondering! I did manage to add to a couple of my miners – they, I did not sell so much last week.

    I will go big HZU. Is tomorrow capituation day? For me or the POS?

  266. Bill

    James, 僕は本当にnewbieですよ。 If I was experienced like Gary, Poly, DG, SB, etc. I would have bought a position in late Jan when the buy signal was flashing. I didn’t. And yes I have an agenda: to learn from the best here and try to copy so I can move from beginner to advanced-beginner status. 

    DG, if you don’t mind sharing, what signal do you use that caused GLD to flash a short? And, did you short? Thanks.

    Am of to read Gary’s report now!

  267. DG

    Johns: No, I actually added to it at 36.35 today. It’s one I would like to hold because I believe Treasurys are a disaster waiting to happen. I am ahead so can’t lose (break-even stop) so why not hold it and go for a kill? I entered it apparently at the low (at least for now), hoping for more than a trade.

  268. Bill

    Gary, will you make another report for tonight? Just asking (begging!). And, does the volume stuff I mentioned earlier alter your thinking? I my own limited experience, volume is pretty sketchy, but it really stuck out these past few days. Maybe a comp supercomputer trick by GS, or maybe it’s real – don’t know. But it does stick out. Put another way, what would you need to see in the $USD to cause you to say the cycle was bottoming here? An upside reversal on heavy volume? 2 days’ of those? Thanks.

  269. Bill

    OK thanks DG. The fact that you had that signal though means I’ll keep screening this blog for your posts so I can learn.

  270. Wav_ridah

    The other night @ work I mentioned gold’s “new high” and if anyone invests in the metal. No one said yes but this guy tells me silver is the better investment b/c it will bring a “better return”. He said with “gold currently at like 2800 dollars” silver is the better investment. Another guy was telling me silver is almost 100 bucks. I still to this day have not met a single person outside the coin shop that has a clue.

  271. DG

    Bill: You won’t really “learn” much from my buy and sell signals as I can’t share the guts of it, but there are a number of very good traders on this blog who do share freely about tactics, thinking, stops, etc. A great education can be had here.

  272. kmisak

    Funny story! The only person who I’ve encountered with any knowledge is the son of a billionaire. His dad, smart money, told him to buy silver bars a few months ago; he did!

  273. Eamonn

    seems to me that if this thing really goes nuts we could have $70 silver. especially if the thing cascades and people & big money get panicky and take money from stocks and plough plough into silver and gold to preserve buying power

  274. Natanarchist

    @n1tro..I am familiar with those LME times. However the big moves down in Gold happen right around PM fix, which is 11:30 AM (10-11;30 time frame)and the big moves before 1:30 PM est is NY pits…even though the Crimex is open outside those hours. Look at the volumes during those times. Go look at the kitco live gold chart and look at the times gold gets hit…almost always during London Fixing and NY pits. That’s when the big money is playing.

  275. Elaine

    Gary,

    GDXJ as been a poor performer recently, do you think it will pick up speed close to the end? I am still holding it, but it is not moving much.

    Thank you.

    Elaine

  276. Kellie

    Wes, I’ve been accused of being paranoid, but I hold cash. I keep enough to buy a a handgun, a week in a hotel room, and 2 plane tickets to anywhere in about 4 different places around town. And I’m not a drug dealer. 🙂

  277. CMT

    The Kellie comment was me. Didn’t realize my wife was logged in. Anyone else wondering if the dollar is going to break 74 tonight?

  278. Elaine

    Eamonn,

    Gary has said that he doesn’t think silver will get to the norm of 20:1, but if gold is $1600, silver could be $70 and only be ~ 23:1, so we shall see…

  279. Gurvir

    Silver futures at 45.78! we could hit $46 overnight. China just set their yuan at 6.5228 against the USD which is highest since 2005.

  280. Vonda

    Eamonn, I’ve been getting a ratio of roughly $14 move in AGQ for 1 silver point since Jan.

    (So if you tell me where Ag will end up, I’ll trade and tell you where AGQ will be 🙂

  281. fat boy

    Futures usd 74.32 not 74.23
    It’s just messing with the pivot

    Bummed I messed up on the iPhone and sold 10% of my agq only playing with the damn thing, too much work and not enough time to keep up here
    So only in 83% in now
    47 agq
    16 sil
    18 slw
    19 cash

    Comfy I suppose maybe I will wait for dg I don,t do options

  282. Duuuuuude

    Unfortunately, I am only about 50% invested. AT this point with the silver rally already gone and left the station, given what Gary said on the premium sight, would you think that the miners would be a better bet?

  283. Vonda

    FatBoy, You accidentally sold 10% mucking about with your i-phone?! What the hell app is that?!! Sorry, but I am laughing!

    Hopefully you’ll get the chance to reclaim it at a lower price. You could always call up Apple and ask them to divert some of those earnings your way.

  284. ddn3f

    I remember a little while ago someone posted a link to an analysis of the change in price of gold at different hours of the trading day. It showed that the biggest hits to gold comes around 10 AM EST and 1 PM EST. Does anyone still have that link? Or something similar? Thanks.

  285. Le Fou

    Duuuuuuude,

    I don’t agree with the premise of your question. Here’s advice Gary gave Allen earlier today:

    Gary said…

    Allen,
    It’s so late in the cycle even if one miss times the trade and we do get the dollar bounce it will only last a few days and then gold will get back to making new highs.

    So is it really worth missing 2 and a half weeks of gains because you might get caught in a 3-6 day correction that will quickly reverse back up anyway.

    I will never give up 20% because I might have to weather 2 or 3% first.
    April 20, 2011 6:11 AM

    IMHO you could stick 1/2 and 1/2 AGQ and miners like SLW, AG, EXK or AXU. If you really want to take a flyer take a look at XG.

    Best,
    Le Fou

  286. KAL

    Good info, Le Fou. I have like 10% dry powder almost ready for deployment. I keep hearing about all those miners… Currently I’m 85% AGQ, 5% AXU, 10% cashola. Very weak hand in everything though. The fun thing is I keep hearing that line from Ricky Bobby: “Slingshot. Engage!” Hope we all have a great C-wave finale. Awesome to be here.

  287. n1tro

    Nat,

    thanks for the article link. First time reading but I had a feeling about it while trading in the past year. I always buy on the dips at 1-2pm est.

  288. james r

    Interesting enough we had a bollinger crash on the VIX today.

    This occurance does not happen that often. Only happened twice last year.

    James

  289. james r

    So if by tomorrow we do not get a correction, then I am convinced we have a runaway bull and I will deploy my remaining funds.

    James

  290. Duuuuuude

    Lefou and Johns Motivation,

    Thanks for responding. I knew Gary had said those things several days ago. I guess I am wondering if now, it makes sense to chase or to take a position in a stock that has not bounced yet. I am sure Gary would not know how to answer that. Hell, who knows now.

    Again, thank you very much.

  291. dallascfp

    All I can say right now is “There is a big storm coming”

    Gold $1500 with no resistance, Dollar just went through 74.24 like a hot knife through butter. This is what Gary predicted in the April 19 report.

  292. Gary

    The Gann people have been trying to short silver and commodities for months. I tried to warn Flannagan what was coming in the dollar but obviously he ignored me.

  293. Rob L.

    Gary,

    Am I correct in my thinking that there are two more daily cycles left in gold, since you expect the dollar to bottom in June?

  294. Steven

    From Lance Lewis:

    Oddly enough, just when you might think upside speculation in silver would be getting a little silly, the majority of the speculation continues to be on the short side. Stories like this one: ”Time To Short Silver” are literally everywhere. Meanwhile, GS even put SLV on the “hard to borrow” list, meaning that it now costs about 300 bps to borrow the stock in order to short it due to the fact that so many wide-guy hedge funds are short the ETF and have it on borrow already.

  295. Bill

    Man shorting silver now could really lead to a rocket ride up.

    Gary, what’s your take on why the silver miners aren’t following silver? Is it like Trader Dan says, that HF’s are long the metal, short the shares? Seems like a stupid trade to me (if so). Sorry to ask if you already answered somewheres. Thx.

  296. Bill

    Sorry I’m not clear – though you touched on miners tonight, I don’t yet get WHY they are lagging. As you know, usually a lagging miners means an imminent correction in the metal. If miners are about to explode, it may be best to split 1/2 metal and 1/2 miners, right?

  297. Bill

    errr, or if you prefer to save that for tomorrow’s report that’s fine. I know TA isn’t about why’s, just about what’s and when’s. So maybe a better question is best put is what does the divergence between SIL and SLV mean? And again I’m fine waiting for the next report. Sorry for so many posts. Done now.

  298. Silverhound

    Gary

    that was a good report tonite. Cut through a lot of the noise that bubbles to the surface in the public blog. It’s time like this I tend to steer clear of forums to keep a clear mind.

  299. james r

    Crude oil at 112.00 Any higher and it may clip the general market and close today’s gap.

    A scenario that could produce a bounce in the dollar and a correction in metals.

    James

  300. Edwin

    I got sell on my end for silver, the up moves as of the past week have been crazy fast and furious.

    Even if silver does take a breather, the dollar hadn’t finished collapsing down medium term (1 mos) so the price of silver still heading higher.

    I don’t think it’s time to dick around and trade in and out at this point though. But if you really wanted to take money off the table..

  301. Silverhound

    Current Gold/Silver ratio = 32.8
    1508 / 46 = 32.8

    At $1640 Gold target
    1640 / 32.8 = 50.0

    gives Silver target of $50

    Just twiddling my thumbs.

  302. daniele

    silver, if gold reachs 1640 from 1510, it’s nearly 9% up.From 46 in silver up 9% touchs 50.But i thinks it’s unlikely that silver could make the same percentual of gold (9% gld so 9% silver).I do expect double, at least).If we are in a runaway move from now, maybe 60 is the target. i do hope….

  303. Eamonn

    daniele, I say $75. If there is a dollar collapse, a LOT of heavy money will flow into gold and silver to preserve capital buying power. Just my feeling. This thing has not even started yet

  304. daniele

    much better tha 60 😉 I have much cash to get in silver.I’m waiting for a correction, but it’s a hard way, standing here and watch silver fly away…..

  305. daniele

    eamon, yes it’s my imperial crown.He’s an year hold age.Simple wonderful and incredible.He’s like a dog, just stick with me, always.

  306. Power Corrupts

    Gary,

    Just reviewed a few of your reports from last June and July to refresh my memory about just how good your analysis of the dollar has been. DXY was in the high 80’s, sentiment was super bullish, yet you made the case that the dollar was heading for trouble. Great real time call of a major move that few others saw coming. Happy for having my portfolio prepared (sad as an American for our country).

  307. Supermalc

    Wav_ridah, kmisak,

    Re: who’s in the know. I was miffed to read here recently that US brokers commonly give 100% leverage which on top of AGQ meant 4x. My UK broker only gives 33%, so I rang 5 others. One piggybacked my broker, and the other four couldn’t offer me AGQ and said they’d have to get back to me. I’m jumping on this bandwagon, but you guys here are driving and riding shotgun.

    Supermalc

  308. Donagh

    Big debate on the merits of the miners here this week. My tuppence worth is that the miners seem to be heavily linked to action in the SPY. And we all know Gary’s feelings on stocks. So I sold the last of my SLW yesterday at $43 & just swapped into AGQ.

    That said, Gary is the man, so I’ll hold my SIL position, just in case.

    Re Eamonn’s query, Silver seems to be moving about 3:1 for rise in Gold price, it seems to me. Based on projected Gold top about $1650, that put silver topping out in $55-$60, which feels about right to novice me. That still leaves 40% upside in AGQ!!

    Best of luck all.

  309. Silverhound

    daniele

    Good to see you sticking to your trading plan. I hope we get a pullback in silver for you early next week. I’m 100% in Oz miners and they are going nowhere as well so I feel your pain.

    Cheers
    Darren

  310. Eamonn

    But, what if this is the “big one”, where the dollar can’t find support and goes lower than 70? Surely its possible. In all the fever and drive to preserve buying power against the dollar a bubble can develop

  311. trond56

    Bill, I think some of the reason the gold stocks are lagging is due to seasonality.

    The goldstocks are statistically seasonal weak during the month of April. Completely flat during the month on average, even if silver and gold makes small rallies, usually this have no effect on the Hui.
    Visible on this chart, at bottom left ‘Hui bull seasonals’, and look up the month of April.

    However at the end of the month, the Hui regularly explodes. And in 2009 and 2010 the large Hui rallies started earlier than indicated on that seasonal map, namely on 20th of April.. both years after several weak weeks.

    (Also check the statistical intraday average gold chart at upper left, for those interested).

    http://www.flickr.com/photos/[email protected]/5632866903/sizes/l/in/photostream/

  312. Power Corrupts

    Supermalc,

    The initial margin requirement (Reg T) for equity purchases in the US is 50% where it has been since 1974. FRB Reg T maintenance requirement is 25% but individual brokers may have a higher maintenance requirement.

  313. PST

    Pima,
    don’t know if you’re on yet, but what the fed is doing is considered monetizing the debt by all except apparently Cullen Roche. Not to get too convuluted, but QE1 wasn’t increasing the money supply because the Fed was “sterilizing” its actions. This simply means that for any agency or MBS that they were purchasing, they would then sell a comparable amount of treasuries from their inventory (on their balance sheet) to absorb the reserves.
    Think of the whole process this way. The government has $10 is expenses this year and they collect $8 in tax revenues. They need to come up with the remaining $2 (deficit spending) to cover the shortfall. Cullen’s arguement is that the treasury can just print the remaining $2, and that this deficit spending is the only form of monetization. He agrees that the treasury will later issue treasuries to “finance” the debt, but claims that they don’t need to do so first in order to pay their bills first.
    So, in the above example, the $2 of the additional deficit spending increases the money supply by that amount. The treasury will then issue $2 in new treasuries to take this same $2 in new money back out of the system, so net net, there will be no change to the money supply.
    Now enter the Fed and QE. The Fed now goes out and purchases the new treasuries from banks and broker dealers. They create money out of thin air and purchase (via electronic debit) the $2 in new treasuries. This increases the money supply by $2 again. As you can see, the Fed’s balance sheet has ballooned because they are simply creating new money to buy existing treasuries. In the future, they are expected to either re-sell those treasuries back to the public (sopping up the $2 in the money supply) or let their portfolio mature and run-off (their exit strategy)
    Sorry if my description is a bit scattered, but it’s 6 in the morning here.

  314. Haggerty

    I want to shoot myself seriously!!

    Getting back in this morning and I have to go for the undervalued plays 33%SIL 33%NUGT and 33%SLW. I mentally can’t jump back in AGQ.

  315. Shalom Bernanke

    Good morning all. Silver won’t even pause!

    PST,

    If you don’t mind me saying, that’s ridiculous. 🙂 How come Fed Reserve notes have lost 95% of their value since 1913? (and it wasn’t all in the last few years)

    Even the Fed’s stated 2% inflation “target” is flawed. Compound 2% for a few decades and see what the confetti is worth.

    It’s all posturing with smoke and mirrors to shape people’s opinions. Bernanke knows what is going to happen to the USD, but his real job is to pretend Everything is OK.

  316. PST

    Pima,
    Sorry one more thing. Cullen is arguing semantics and its all in the definition of “monetization”. His point is that the monetization needs to occur via the Treasury’s deficit spending. He considers what the Fed is doing as normal Monetary Policy (buying/selling treasuries to affect interest rate changes) and doesn’t want to call it monetization.
    Theoretically, he’s right, but it’s still increasing the money supply (when they don’t sterilize their actions). Apparently though, he’s the only one “smart enough” to realize what’s going and the Federal Reserve presidents don’t understand this nuance. It’s all in how you define it.

  317. Eamonn

    Ben Bernanke is a VERY VERY intelligent man. Look at his CV. Why does everyone universally think he is stupid? He knows all the different arguments. Surely there must be some value in what he is doing.
    Just looking from the outside, in

  318. GottaHaveIt

    Haggerty,

    If I were you, I’d go for AGQ. I sold off all of my miners over the past couple of weeks … including selling SLW at a LOSS last week … and moved all the money into AGQ. I didn’t worry about waiting until SLW was in the green to sell to “get my money back.”

    Forget about the past!

    If you are bullish about the price of silver going up (as I am) AGQ is the place to be. Sure the miners might catch up and maybe even eventually pass AGQ, but why take that chance? Bet on the sure thing. Just admit to yourself that you made a mistake by trying to time the “dip” and look at how much you can make from TODAY forward. You can’t go back in time. Pretend you just learned about silver and today is your very first day in the market. Where would you put your money?
    Just my opinion … I know you feel bad but stop beating yourself up. Think about the future … silver is a rocket ship and you are about to climb on board for the blast-off!

    P.S. Don’t freak out if/when silver prices come down next week. Just ride it out. Go “Old Turkey” and stop second guessing yourself.

  319. Gary

    Haggerty,
    Why in the world wouldn’t you get into AGQ?

    Silver is only at $46. There’s no way this ends or rests before it at least tags $50. That’s still a 17% gain in AGQ from the current price to $50.

    Very few people can do 17% in a year. Silver will do it in the next week or two.

  320. TheBookGuy

    Alex,
    What are the charts telling you about AXU’s action today? I’m in SIL, SLW and AXU just over 100% invested. I’m hoping the lagging miners are going to play catch up!

  321. PST

    SB,
    Are you saying what they are doing is ridiculous or that my explanation is ridiculous?

    If it’s the former, I completely agree. The Fed was created in 1913through the Federal Reserve act, but the “real” currency debasement started once we officially came off the gold standard.
    In terms of the inflation estimates, they are a complete joke. As you know, core excludes food and energy, so none of the increase in commodities is being captured. Also, housing comprises about 40% of the CPI, so with housing plummeting over the last few years, this offsets the increases in other items. They simply change the calculation of CPI every time it suits their needs.

  322. Eamonn

    Shalom Bernanke, you tell me. I have no idea. I listen to Marc Faber and Jim Rogers and they seem to think he is both stupid and dishonest. These are all very smart people. I find it quite strange. Maybe I am an innocent

  323. PST

    Eamonn,
    Bernanke, and the other Fed presidents, are very intelligent men. This is their last resort effort to inflate our debts away and to make up for the shortfall in private spending. QE has also achieved it’s stated goals of lowering real interest rates further and inflating asset prices. The problem most people have is that these guys are “academics” and either didn’t anticipate (or more likely can’t control) the market’s reaction and the unintended consequences.

  324. Shalom Bernanke

    PST,

    Not your interpretation, more the entire process of trying to make it look like there are very few, if any repercussions. There are plenty of people that get confused by the shell game, which is all it is.

    It’s really simple, yet painted as something almost nobody could understand so that sheeple will just take the criminals’ word for it. Essentially, the Fed is nothing more than a counterfeiting operation, just that they were granted this power by our “representatives” in Congress.

  325. Shalom Bernanke

    Eamonn,

    Before we bore everybody back to sleep, I’ll just remind you it’s possible to be both intelligent and dishonest. One does not exclude the other. 🙂

  326. PST

    Eamonn,
    Whether they are considered smart or not, I think it all depends on if you agree with their policies or not. Personally, I agree with Faber and Rogers and think that the system needs to go through a period of debt deleveraging and asset price destruction. The Fed has been reluctant to let this process happen and take the necessary pain and instead have been propping up asset prices through easy money policies which go back to the implosion of Long Term Capital Management in 1998. Faber and Rogers know what’s going and disagree with this approach.

  327. Eamonn

    PST, Shalom Bernanke. I’m probably not in your league, both in intellectual and in economic knowledge. But I will say this. If governments don’t allow private institutions to fail, they are introducing socialism by the back door.

  328. PST

    Eamonn,
    I’m sure you’re in our leaque intellectually, it’s just that people focus their attention on different things. I happen to know economics, but am a complete dummy when it comes to cycle analysis, technical analysis and short-term trading in general. We all have our own strengths…don’t sell yourself short.
    Well, that’s it for me….people are probably bored stiff reading these posts.

  329. PST

    It’s quite ironic that I spelled league wrong in the same sentence talking about intellectual prowess. I had a homer simpson “doh” moment when I re-read this post.

    I swear, last post. Let’s get back to our shiny metal friends and the best way to trade them. Let the trading masters take the board back now.

  330. Haggerty

    Gary

    Don’t you feel that SIL and SLW are undervalued given the circumstances? Spot has moved up and these haven’t cought up yet. i was thinking if AGQ sells off big during a small correction then I will roll some of these positions in maybe.

  331. Keys

    Okay Gary and friends,

    I mentioned the scenario a little while back, but it seems this scenario will play out.

    Silver has moved much faster than gold. We will tag 50 very soon.

    Do we stay invested in silver as gold does it thing? Or do we switch to gold, believing that silver will run slower? Or do we sell everything get a beer and some chicken burritos? 🙂

    The original plan was to sell at 50, but I believe the plan assumed gold above 1600. 50 is a big number for silver, but will it obey 50 or will it obey gold and its run….50 is not just a number btw, its a a nice round number and the first nice round number above all time highs.

  332. Power Corrupts

    SB,

    I know you keep saying everything is OK, but you really ought to take to heart what one of your predecessors at the Fed had to say more than fifty years ago:

    A sample from former Federal Reserve Bank of Atlanta President Malcolm Bryan in 1957:

    “Let us be clear that what is being asked, when we are now urged to a policy of either intentional or connived at inflation, is that we sell our honor…The integrity of our conduct is crucial. Even if we ignore past savers in money forms, which would be a great scandal, we at least have a responsibility…to present and future savers in money forms…we should have the decency to say to the money saver, “Hold still Little Fish! All we intend to do is to gut you!”

  333. Le Fou

    Haggerty,

    You got the answer from the man, but to answer your question, I am back in

    20% AG
    54% AGQ
    26% SLV Jul 16 2011 40.0 Call

    Best,
    Le Fou

  334. pimaCanyon

    Good morning!

    Gold futures broke thru the lower channel line of steep rise since April 14. Could be start of something on the downside. Or, what is more likely for this market, it just redefines the channel with a slope that’s not as steep. 🙂

    Gold has spent a lot of time above 1500 over the past 48 hours. Are we basing here, preparing for a big launch?

  335. Yash

    Silverhound said
    Current Gold/Silver ratio = 32.8
    1508 / 46 = 32.8
    At $1640 Gold target
    1640 / 32.8 = 50.0
    gives Silver target of $50

    This makes both rise equally from here and thats inlikely. Means either gold dosen’t make 1640 or silver makes more than 50 or silver corrects more now than gold etc etc etc !

  336. Michael

    Keys,

    The mechanical system that I follow is going to top in a 1-1.5 weeks and then prices will begin to decline. That will be a huge resistance to over come and I expect prices to decline sharply then. If and only if we are going to re-buy that resistance after the correction, then it will become a support for the final blow off top run. But if prices just decline from there, then that will be it.

    There is also an alternative scenario where if prices decline to lower then yesterday’s close next week, then we might sell sooner with less profit. This week was pretty nerve racking. Everyday we were rising just enough to avoid a sell signal and Monday we bounced off of support which was very bullish.

    So I will re-evaluate next week where we are at, but so far everything looks bullish.

  337. pimaCanyon

    Daniele,

    You still out there?

    I noticed on your profile that you live in Bergamo, Italy.

    My dog is a Bergamasco Sheepdog, a breed that I’m sure you know about, it’s named after your city and district. Her name is Letizia, but we call her Zia.

    Someday I will visit Bergamo, must be lovely there, very close to the Alps.

    Good luck with these markets!

  338. Hot Rod

    Supermalkie,

    Do you feel a little better this morning?

    I felt for you yesterday after your living through the afternoon mini-raid.

    For superstitious and psyche reasons, I don’t like to get into investment advice so I didn’t want to answer your question.

    You have to do what you feel comfortable with.

    My recommendation to you is listen to Gary’s every word.

    I went against him (unintentionally) and missed a few percent of the move.

    As DG has said, you make a decision based on a reason. If it pans out that you were wrong, move on and learn from it.

  339. Supermalc

    Hot Rod,

    Thanks for your concern. Silver is way more volatile than any equities I’ve traded. I am following Gary to the letter. I’m also prepared to exit sharpish if that $ correction happens today. I see silver was up over 2% earlier today, but is drifting down now…

    Supermalc

  340. Haggerty

    Thanks Gotta, Le fou ,Gary.

    If we are headed north I really shouldn’t lose money. I just feel like I need to get things on sale, just going to get in and read the nightly reports and get out whenever Gary does.

  341. daniele

    pyma, i know that breed of dog.But it’s difficult to find it here in town or on plain.It’s easier to find it many on mountains behind the city.Orobic pre alps i mean.When will you came here, tell me.I will be glad to help you!!

  342. pimaCanyon

    PST,

    Thanks for your explanations!

    I think I finally get the part about the Fed not monetizing the debt. I posted re this yesterday and basically said because the intent is to eventually pull the money out of circulation by selling the treasuries, one could say they are not monetizing. The are TEMPORARILY increasing the money supply but at some point in the future they will withdraw that additional money out of circulation.

    Makes sense.

    (‘course the temporary increase in the money supply has wreaked havoc with asset prices, but that’s another story, and one we at this site hope to benefit from 🙂

  343. Francisco

    Allright, don’t shoot the messenger.

    Interesting piece on ZeroHedge:

    Gold and silver have surged to new record nominal highs in dollar terms (all time and 31 year) with the dollar falling sharply on international markets. Silver has continued to surge in all currencies and has surged to a new record nominal high of $46.25/oz (£27.85/oz and €31.54/oz) on growing rumours of a short squeeze involving a billionaire or state interest attempting to corner the silver market. The massive concentrated short positions of some Wall Street banks have incurred serious losses and a desperate attempt to close their futures positions due to the tight physical marketplace may be leading to a short squeeze. This is something that GoldCore and a few other analysts have warned of for some time. We have long said that the very small silver market was ripe for cornering by private or state interests and that appears to be happening on some level. However, there are an increasingly large number of silver buyers who realize the market can be cornered and they are buying in anticipation of this event. The blogosphere has again been ahead of the curve and dismissal of much circumstantial evidence of silver manipulation, a short squeeze etc. as “conspiracy theories” is becoming less easy to do. It looks like many investors internationally and one or a few private individuals and states are cornering the silver market. At one stage the Hunt Brothers cornering of the market was a “conspiracy theory” – it soon became fact.

  344. DG

    Posted last night that I got my first sell on GLD for the year (popped up on my sell/short screen). If this is a runaway move it will keep going anyway. Last three sells cam at tops (May, Oct, Nov last year). Oct was early as gold rallied more and then dipped back to where the signal happened so stepping aside cost nothing. The other two were dead on for sharp corrections. We’ll see what happens I would NOT sell on it. It’s crazy to lose a position now.

  345. Matthew

    pima, really they are going to withdraw that money ? And how would that be ? They will not withdraw any money if they do this house of cards falls hard, they will continue QE.

  346. gusto

    Haggerty, I am with you. No way I would establish a new position in AGQ at this point. Sure, 10-15% is great but I am not putting up half my account now for something thats up 45% in a month. Bad risk management.

  347. T

    Gary, I would love to hear your comments on one thing that bothers me, is that lately I’ve observed during significant downward moves in silver, the volume is beefier than the average… This would indicate the bigger players are selling rather than accumulating, no? When price increase happen on the way up with high volume the opposite is true, no? We certainly are in a bull market, but I’m wondering if the smart money is handing their positions to the retail players who will end up being the ones remaining with silver…

  348. ALEX

    well

    As you know I joined Beanies side…so far this morning my EMC, TZOO, IL ,and SWW are all up nicely!

    yup,just looking, never did really buy them 🙁

  349. pimaCanyon

    matthew,

    They have actually done this several times in the past. Buy treasuries and then sometime later sell them. So the net is the money supply is back to where it was before they started.

    Will they do it this time (that is, sell the treasuries at some point in the future)? Time will tell, but at this point in time that is their intent.

  350. Otis

    T or others,

    The question of volume goes back to MLMT’s old posts too. Since PM’s trade around the world 24 hours a day, are SLV or SI futures really a true representation of volume? I don’t understand the PM markets enough to answer. But I would imagine you would need to look at volume not only in NY, but also Hong Kong, London, and Syndey no?

  351. PST

    Pima/Mathew,
    The likely scenario is that they’ll discontinue QE2, but will maintain the size of their balance sheet where it is. This simply means that they won’t keep adding more liquidity above the $600B, but as the debt matures they will keep rolling it over. This way the liquidity stays in the system for now. It’s basically what they referred to as QE lite before. However, once the economy starts to roll over again later in the year, I fear we could see QE3

  352. GottaHaveIt

    Gusto,

    You are missing the point.

    AGQ is not some “hot stock” that zooms up 45% and then crashes back down when investors move on to the next “hot stock.”

    It simply tracks the price of silver. If silver goes up, AGQ goes up. Period.

    If you think silver is going up (and most of here certainly do) then buy AGQ and get on the band wagon!

  353. Matthew

    pst, I believe continuing qe and qe3 would be the same thing…I guess technically no it wouldn’t be labeled qe2 but yes that is what I was referring to. The other point I was trying to get across is there is no way in hell they are going to pull all of this QE back out once they are done… thats just sillyness

  354. MrMiyagi

    Hot Rod,
    You have to look as high as May 54 calls for a “true” lottery play but it seems a little far away to me.
    It might go to 50 60 cents with SLV at 50$.

  355. Nike Boy2008

    Hi James,

    I believe that the price has to close BELOW the lower bollinger band…

    it didn’t do that yesterday (if it bounces of the lower BB, there is nothing to it)

  356. gusto

    Gottahaveit,

    If you really think that AGQ and commodities themselves are not massively overbought at this point, you are kidding yourself and just blind to the risk.

    I get that when you are in a runaway move, you can be overbought a long time. I think Gary is correct that silver most likely is going to hit $50 or close to it by the end of the run but what I am saying is that I would not establish brand new positions in AGQ at this point without a deep pullback. Most people here have been in for awhile but any newbies should beware is all I am saying.

  357. Hot Rod

    Mr M,

    Thanks. I agree. May is a little aggressive right now for an $8 move for strike. I guess July isn’t a lottery play “yet.”

  358. PST

    Matthew,
    I’m just differentiating between maintaining QE2 (no additional liquidity other than the $600B) versus starting QE3 (a whole new commitment of capital above and beyond the $600B). QE in general is self-liquidating over time as the bonds mature, so the Fed needs to reinvest the proceeds to keep the $600B outstanding.

  359. james r

    Nike Boy,

    Yesterday, from the YAHOO chart it looked like it close a hair below it.

    As for today, I need to wait to see where the VIX closes.

    James

  360. Gary

    Here’s the thing. Silver is so close to $50 that it’s unlikely we will see any kind of significant pullback at this point until it at least tags that level.

    And the other thing is that one needs to be honest with themselves. If silver was to suffer a big correction now, one wouldn’t be able to buy anyway because it would look like the parabola has started down.

    So you are just kidding yourself if you think you could buy silver on a pullback.

  361. Neil

    For lotto play, how about 55 SLW calls. Wasn’t there talk earlier about 65 to 80 dollar top on this when miners wake up again?

  362. Elaine

    Gary, GDXJ has been really lagging, do you think it will pick up steam or is it better to just sell and put funds into AGQ, SLV or SLW (which is also lagging behind SLV)?

  363. MrMiyagi

    I didn’t read all this morning’s postings so forgive me if it’s been asked:
    How significant is todays US$ index breaking below 74 in terms of benchmarks?

  364. Wes

    I have established the all option position I outlined last night.

    I’ve sold all my common, including AGQ.

    I’m 110% invested.

    I’m 60% in cash.

  365. trond56

    I’m fully in, but if not, think I would only have increased gradually now just before Easter. If the short-covering suddently takes a pause, this could get a nasty dive (only for a short time, but even when brief it hurts).

  366. Francisco

    Gary,
    Your initial thinking was that the dollar would break the 2009 low and overshoot a bit to the downside before bouncing. I understand that the jobs report on May 7th is the high probability time for this bounce, but shouldn’t we be leary of a bounce at any time between now and then?

  367. MrMiyagi

    I’m in as much as I want to be in for now. I’ve got some cash left in case of a major dip, it’s the extra cash from selling a bit a couple of weeks ago.
    Sitting and waiting… biggest decision this morning is; tea or coffee?

  368. GottaHaveIt

    Gusto,

    You are absolutely right, I agree with you.

    If you think the silver market is topping and due for a correction, DO NOT buy AGQ because you get double the losses on the way down.

    Personally, I think silver is going UP!

    Yes, there will be dips and corrections along the way, but I can live with that.

    People who have less risk tolerance may want to avoid AGQ because it can and will drop as fast as it went up if/when silver prices fall.

  369. traderlady

    Gary, You hinted last night on a $25 drop to deploy final positions. I guess some of us think it may happen around this extended time off.

  370. Gary

    Elaine,
    It’s going to be pretty hard to outperform AGQ but I do think the miners will soon make up for lost time.

    Francisco,
    Why do you care if the dollar bounces? Do you think that would be the three year cycle low?

    If not, are you saying you couldn’t hang on for 3-5 days while a dead cat bounce runs it’s course before continuing back down?

  371. Gary

    TL,
    In a runaway move there is no way to time corrections so you just have to jump on them whenever they occur because they don’t last long.

  372. Francisco

    Absolutely not the three year cycle low!

    I could certainly hang on for a 3-5 day correction. I guess just being greedy in trying to time putting the rest of my capital to work. Perhaps the risk of waiting is not worth the potential reward of buying AGQ $20 cheaper…..Point well taken

  373. DG

    Amazing. Gold seems to be honoring the sell signal (for now at least), and silver is powering ahead anyway. Gary had said runaway moves show 70-80% up days. How about 100%!

    I am not invested as much as I’d like to be, but still have a nice load. This is my first year with Gary and trading PM’s and using cycles in my analysis. Quite an educational experience. I am already looking forward to the post-D wave to do more size. I’m amazed so many on the blog went 100%+ as easily as they did. This is a long distance race, and the PM bull has years to go. Gary’ll have 100,000 subscribers by the time it’s all over. (Then he can retire—again)

  374. whitebear

    K,

    I told him to buy some cause I just did and maybe our SMT team can blast this POS penny stock out of consol and up couple of points…

    LOL,
    peace

  375. Silverhound

    Yash,

    My post about the Gold/Silver ratio wasn’t meant to be a prediction. It was merely meant to show that if you believe Gold will rech $1640 then $50 Silver is a shoe in.

    On a side note. The Cup n Handle on the gold chart has a target of 1560. It is normal to have a pause / correction when these targets are hit. If silver were to hit 50 at the same time it would be more than just coincidence if they both had some sort of correction at this point.

    Once again, I don’t have a crystal ball and this isn’t a prediction so please don’t take it as one. I’m just looking at this through a traders eye’s which is to expect a couple of different outcomes for different reasons so there is no panic when a correction comes.

    Cheers
    Darren

  376. Jayhawk

    XRA looks like it’s been smelling out the D-wave correction since April of 2010! Seriously, I’ve heard good things about them, but that chart is not very exciting.

  377. pimaCanyon

    matthew,

    Back in the 50’s when the Fed did this very same thing, they did later reduce the size of their balance sheet. That is their intent this time too. When will they do it? Probably not this year. Next year? Depends on the economy.

    But to say they won’t ever do it is simply to ignore the many times in the past when they have done the same thing.

    Maybe this time is different and everything will come crashing down and they won’t, but it will be pretty much game over at that point anyway, new currency, maybe even new government. But if the economy strengthens, their intent is to eventually reduce the size of their balance sheet. If the past is any guide, then they will do just that. The only thing we can’t say at this point is when.

  378. whitebear

    Jay,

    The monthly looks great. I have a buy setup on my system, plus a consolidation at the 50% rtrace. ADX is super tight, when this thing goes…adios!

  379. Silverhound

    DG

    I’m with you. Trading this bull using Gary’s style and without stops hasn’t been the easiest thing to get my mind around. Kind of defeats a lot of what I’ve drummed into myself. I’ve stuck with it so far. I’d like to be able to get the leverage you guy’s are using before the next run complete’s though.

  380. Jayhawk

    Silverhound-

    You are 100% miners, correct? What are you thinking here regarding your plan/investment thesis for the last leg?

  381. MrMiyagi

    Thought about buying LVS (casino) puts this morning but decided I’m fine right where I am.
    For those on the edge of your seats, I went with tea this morning, Earl Grey.

  382. DG

    Silverhound: Gary does use stops. Only near the end of a cycle will he not us them to avoid getting stopped out at the last minute right near the bottom. The stop is usually the previous daily cycle low, because that low should not be broken if the uptrend is still intact. If it is, something is amiss. I’m just not used to putting everything into PM’s, but can see the value of it and risk control possibilities. I have 1/2 my net worth in now, but easily can do more comfortably after this experience (with stops—just not too tight)

  383. Brian

    DG, It was not that difficult if you had been here awhile or had read through historic reports. This had been planned for 3 years. Now we reap the rewards. Gary’s message did not ever waver one bit.

    Cheers

  384. DG

    Brian: I agree. Am looking forward to the next one where I will have that experience under my belt. (Except that it will probably come on the heels of a horrendous U.S. economy.)
    Cheers to you too.
    DG

  385. Brian

    XRA pennant looks great but it needs to break that downtrend line. It has been basing since it carved out XG. Those shares are up 500% since they forwarded them to me.

  386. Silverhound

    Jay

    Yes I’m 100% Australian miners, both gold and silver. They are mainly juniors and some are only thinly traded and expecting anouncements over the coming weeks. I plan to scale out of those ones as the anouncements come in and we approach the timing for a top. The ones with a bit of volume I will wait for Gary’s final call and dump. I have to keep in mind that if an obvious top like a high volume reversal candle comes on gold during the US trading session I’ll be a day late in catching it over here so I may have to try and pre-empt a move and get out early.

    Cheers
    Darren

  387. Aaron

    The USD is acting weak, but this is nothing like what I expected for a 3 year low… I was and still am expecting a vicious drop at the ‘end’ which is why I think we have more to go.
    Bias: I am Short USD.

  388. Brian

    When a pennant like that contracts, ADX, Bollinger Bands etc, are going to naturally contract with price. The breakout is what we need.

  389. kmisak

    Sorry, meant to say that I just can’t stomach buying a lot of HZU/AGQ at the moment, so I have been using dry powder today to load up on jr. miners that I think will pop soon. St. Eugene, Everett, and the Panther in particular. Gary’s confidence in the ‘return of the miners’ is giving me the cojones today…

  390. Le Fou

    Gary,

    When you buy your calls, you said that you look for a delta of .80, and you described how you manage position size, but what are the other criteria that you use? Eg, do you look for the largest open interest, or are there other criteria that you find more important?

    Best,
    Le Fou

  391. GottaHaveIt

    LeFou,

    Where did you find that info from Gary? I’ve been trying to learn more about he invests in options.
    I followed his lead yesterday and bought SLV July 40 calls … but I have to admit, I did it blindly and don’t really know much about options yet.

  392. Matthew

    Pima, It’s pretty sad but I believe your second scenario is more likely. A new currency. The fed could pull some of their QE back, but at what consequence? Deflation, Default on debt, and more importantly banks and most importantly the biggest bank of all the fed, will loose purchasing power. If they keep inflating it is tax on regular people and they continue to profit until death of currency… imho…. I also follow jim sinclair and this is his view as well idk if you are familiar with him but. I would say he probably has more experience than alot of us put together…

  393. GottaHaveIt

    Wes,

    Can you please tell us what options you purchased?

    Just curious …

    I’m trying to learn more about options and like to see what experienced traders are doing.

  394. DG

    I just bought some SLW at 41.85. It has yet to close below its 50 DMA even with all this miner weakness. I will sell if it does, so my stop is tight and would result in a tiny loss. I replaced what I sold at 46.25

  395. Jonas

    I wonder if every person is doomed to commit the same mistakes before truly internalizing key lessons.

    Since I was going on a trip to Spain last weekend, and was anticipating a significant correction this week, I sold all leveraged positions. So here I am, pulling my hair out while watching the bull roar away towards the horizon.

    Unbelievable. I actually thought I was being smart. 🙂

  396. Le Fou

    Gotta,

    Miyagisan answered for me. Also, Gary has talked about the right use of options on the blog, but I couldn’t tell you where.

    Best,
    Le Fou

  397. Wes

    To whoever posted this number for having calls executed at Fidelity:

    1-800-786-5156

    That’s a wrong number. It’s Fidelity, but not for executing options.

  398. DG

    Jonas: Yes, errors need to be made an experienced before they really take hold. The hard part is figuring lout what the error is! Just because something didn’t work doesn’t mean it was wrong. There need to be real theory and philosophical underpinnings to what you do. How compelling was your reason for selling?

    CMT: While true, many, many people have gone broke taking small profits that were not large enough to offset their losses. Maximizing gains when in a good position is crucial over time, IMO.

  399. Haggerty

    Jonas

    I know how you feel, in the past I swore I wouldn’t ever stray from Gary’s plan, and yet I still ended up doing it. I sold all of my AGQ way too early.

    I am just looking at miners now(got in today) because they are still pretty much at the same level they were when Silver was at 42 dollars.

    So if this keeps on trucking people are going to realize this is for real and flood in to these miners. I have to believe that.

    And after this I WILL JUST FOLLOW GARY !!%$#&@

  400. Jonas

    I know, CMT. It’s very true; and I had some very nice gains, so I can’t really complain. But still, the current outcome is very far from what I envisaged for the run up to 50. I wasn’t at all planning to be a bystander.

    I was even trying to buy on the small dip today, but it turned out that market closed for Easter at noon here in Sweden, so no luck there.

  401. Poly

    Jonas,

    The party won’t go on forever without a break, just be ready, you will have your chance again I’m certain, but you must not hesitate when it comes!

    Gary,

    Why the sudden rush to label this a runaway? Last time I looked we were in the “normal” timing band for both gold and dollar cycles to find their bottom.

  402. DG

    For those who took the idea of shorting TLT (long TBT). Looks good so far. Decide now if this is a trade or a keeper. My stop is TLT 93.35 or so (for a small loss rather than my usual break even because I have a fundamental opinion on this one). Target on TLT is…lower! Will post when I close it out.

  403. Gary

    Poly,
    I said in last night’s report I would need to see another correction before confirming this as a runaway move.

  404. Keys

    Micheal thanks for your previous response.

    I think 50$ is a shoe in…I doubt any real correction will take place until then or around then… That being said, I would think others are thinking this way, and that $50 will come quick for the for sure thing type play.

    As a Turkey, these are dangerous times. Thanksgiving type dangerous. At least for myself in my views…There is a nice crash in metals coming…Old Turkey is great, but call this an exception to the rule…something tremendous on the down side is coming. With silver so thin, it might get really ugly.

    All that to say…long-winded and boring as I am…I will most likely hedge or sell positions once silver hits $50. I am reasonably sure that $50 will be revisited again during this bull, so not to get greedy.

    Gary, if I may ask, what is your furthest out guess to when the D-wave completes? I won’t sell me pot(wrongly or rightly), but I plan on buying put protection against it.

    Thanks Coach!

  405. Poly

    Thanks Gary.

    Just catching up on reports and the blog comments. See so many new posts about people buying OTM calls, this stretched and late, wow that’s asking for a wipeout!

  406. Gary

    Keys,
    The intermediate cycle usually lasts about 20-25 weeks. The D-wave should bottom when the current intermediate cycle bottoms.

    The 2010 yearly cycle low came in late July. I expect the D-wave will bottom about the same time this year.

  407. Poly

    Seems the consensus now is for a straight run to $50, few weeks ago $50 was the final get out no matter what number! How a $5 dollar 5 day run changes the tune 🙂

    Even if true, a straight run to $50 from here will almost certainly include a correction back to at least today’s levels, that would be only 8%. Of course anything could happen, but history would suggest a pullback of greater magnitude. That shouldn’t be construed as a negative, just expectations to guide strategy.

  408. Michael

    Gary:

    We were pretty profitable from March to July of last year. Am I misunderstanding, or are you saying that we went through a D wave from may-summer 2010?

  409. Poly

    Hot Rod,

    They’re being purchased at the wrong time, IMO. The INT low or at least daily low was the time. The premiums are stiff and we’re at the point where a drawdown is becoming likely which will virtually make them worthless. Holding worthless OTM’s for weeks through a new daily cycle praying for a new surge to make them whole is no easy feat or a nice feeling.

  410. Keys

    My view on 50 is because, I believe, everyone thinks that everyone else thinks that 50 is a big number. Now if everyone thinks the way everyone else thinks, we get a self-fulfilling prophesy of events to get close to 50.

    Now the point of 50 or close to 50 becomes. If everyone thinks they are smarter than everyone else and they think that everyone is going to tag 50, then some will tag out sooner than 50.

    The question between 48 and 50 will be the battle between greed and risk..the closer we get to 50 the higher the chance of a correction, but the more one makes.

    Of course we can blow right through 50…and all my he said she said could be a bunch of nonsense!

    What has changed in recent weeks is silver’s surge, and the fact that it is so close to 50 now, it might as well tag it for the reasons I mentioned above. With the support of the dying dollar the story gets even stronger.

  411. Gary

    Michael,
    Last summer was just an intermediate cycle correction.

    A D-wave is something else altogether. It is a severe regression to the mean, profit taking event brought on by a final C-wave parabolic advance.

  412. Ryan

    traderlady,

    Thanks for the thoughts! It sure didn’t feel that great adding at the top yesterday especially then soon we had the intraday sell off. I’m not going to add anymore at this point since I put in a decent chunk yesterday. We’ll see if we do get a pullback next week.

  413. MrMiyagi

    Gary,
    Generally speaking, how volent a move is a D-Wave? I’ve read here somewhere in the magnitude of dollars a day to more than 50% retrace.

  414. GKC

    Alex no b.s. those comments were true, i tried to cop/past them from the chat history but my company internet filters didnt let me log in to google to post. and PimaC was that a shot at my chosen profession?;)

  415. Hot Rod

    Poly,

    I thought Gary said that the daily cycle correction (if we’re not in a runaway) was only a week or so.

    Also, if we haven’t topped yet, then there “may” be upside before the drop.

    If they are used more as a lottery play with some “winnings” then I would agree, one would accept them becoming worthless.

    On the other hand, if we are on a collision course with $50 (and likely higher) then they are a very attractive leverage play.

  416. Michael

    Keys,

    I do not have a price target in mind, but once the resistance is reached, we’ll have our daily cycle top. Two weeks ago, on Friday, we reached that resistance and that caused a huge sell off in the PMs.

  417. Francisco

    This may be a very stupid thought, but I wonder how we could only have a minor correction at this point as this momentum continues to develop? Every pullback here seems to be met with intense buying by those who fear that they are being left behind. You would think that at this point we would need to have either a scary correction to shake people out of their positions or a runaway move to the upside.

  418. Wes

    jonas,

    >>>I wonder if every person is doomed to commit the same mistakes before truly internalizing key lessons.<<<

    Yes, and people who don’t read fiction are doomed to repeat the mistakes of the nonexistant. 🙂

  419. Jav

    Hey guys I don’t have any experience with options and am trying to figure out what to expect with the SLV July 40 call. What could you sell the call at if silver rises to $50?

    Have been a sub for about 8 months and have really enjoyed reading everyone’s comments.

  420. ALEX

    I got out my old book of gold stocks I invested in yrs ago

    I cannot believe these charts…when did this happen!!

    MFN

    DROOY

    RGLD

    HMY

    All my old African miners that got stale…are taking off (HMY,DROOY,GFI).

    and GKC…I will believe you now 🙂

  421. DG

    Pima: It behaves kind of like an oversold signal, so down movement for sure, sideways might do it, and even a slowing advance can sometimes work it off. It works best with major ETFs (TLT, FXE, GLD, etc.) and is quite accurate. Given this nut run in silver, though, I a,m much less confident in it, which is why I bought SLW this morning at support rather than more AGQ. It’s the same signal that caught the exact high on TLT two days ago. With GLD I’m just hoping it pulls back now.

  422. fubsy_cooter

    A POLL..

    Do you have a strong urge to take profits?

    or

    Do you feel like you couldn’t possibly sell now?

    The reason I ask is that I am learning that my gut is the best contrary indicator I have. Every time I have the urge to sell, it would serve me better to add to positions. Whenever I feel that I don;t want to lose any of my positions because I might miss out on profits, I should sell.

    I’d love to get a read on what others are feeling.

    I’m leaning toward not wanting to miss profits.

    f

  423. DG

    BTW, a word about catching “the bottom”—Gary and many others here have said “It’s basically impossible to catch the bottom” of a move. That’s a straw man. The point of tight-stop trading is N OT to catch a bottom. It’s to not have a drawdown after your entry. If a stock bottoms at 40 and rallies to 80, you do not need to catch it at 40. You can buy it at 50 so long as once you buy it it does not go much below 50. Buying it at 40 is irrelevant. I just bought SLW this morning and have not been in the hole since. I don’t care at all whether I caught “the bottom” Same with the TLT short. Just a clarification that particular style of trading.

  424. DG

    Fubsy: I like your posts (just lose the Dodgers cap—go Giants!) I’m not sure people here are the best indicator, though, having been so strongly trained to expect more PM rally. Good question, though. My general read is that most people think silver is way overdone on the upside. My wife just did a Google search to try to find an article anywhere today on silver in major media. There was only one she could fine, and it said almost nothing. Amazing!

  425. Wes

    I’m DIM 110% options, with lots of cash (60%). I see no reason to sell before silver gets to $50.

    If there’s a correction in the meantime, so much the better.

  426. Jonas

    I’m fighting an almost uncontrollable urge to buy at this point – which in itself leads me to believe that it’s wrong to cave in. Plus I have promised myself to at see what happens at options expiration next week before I do anything.

    (But I’m rapidly balding looking at the constant grind upwards).

  427. DG

    Michael: Not so. People sold because a daily cycle top was due, not because they were bearish or worried about PM’s. Had there not been a cycle drop due no one would have sold anything. The motivation was not sentiment, but an expected dollar rally. Gary sold some as well, but I don’t think he was being emotional about it. I believe Fubsy’s question was to gauge emotion, not cycle expectations.

  428. Michael

    Gary,

    I thought that the recent sell off we had was quite scary. Slw went from 47 to 40. Same magnitude as going from the March daily cycle top.

  429. Shalom Bernanke

    DG is correct. I would not have sold except miners were lagging terribly and that was where I had invested. As far as the metal, still long with no concerns even if we get a pullback. I’m keeping the metal for many years, riding through pullbacks including the expected D-wave.

    Miners worked well, but had I stayed focused on AGQ or SLV, I;m 100% sure I’d still be in. There has been no valid reason to sell silver, IMO.

  430. fubsy_cooter

    Exactly,
    I’m gauging emotion as my trading/investing tactics are becoming more influenced by it.

    I’ve learned so much trhough this super cycle in Gold and as a member of this blog and Gary’s premium site. My greatest lesson is what I stated above, when my gut screams “Take profits! Protect your winnings!” I should be adding to positions. When my gut begs me not to sell because the upside is so beautiful from here, I should be scaling down.

    That’s it. I do think many around here were more emotional than you DG at the prospect of an upcoming daily cycle bottom. My suspicion is that greed and fear were heavily in play…fear of losing what had been made so far, and greed at wanting to maximize gains by avoiding a drawdown. I know that was true for me.

    F

  431. fubsy_cooter

    And believe it or not, having grown up a Dodger fan, the Giants are still one of favorite teams.

    Usually pretty likable fellows on the squad. Except B Bonds. Never cared for him.

  432. Elaine

    Shalom,

    I know SLV is not popular for some reason on the board, but it has really performed well for me.

    GDXJ is STILL off it’s high, and gold has done nothing but go up.

  433. Jonas

    Miners have been a real drag for me – their general sluggishness exacerbated by the dollar’s plunge in my own currency (SEK), so those were easy to sell and good riddance.

    But I’ve told everyone I know that silver will surely hit 50. My plan was to ride from wherever the expected correction turned (36 to 38-ish) fully loaded in minilong futures with 3-5 times leverage.

    So no lack of conviction here, just making a horrible mistake in trying to outsmart the market.

  434. pimaCanyon

    3 day weekend coming up, then a week of fireworks in the PM markets (or not). Early next week should tell the tale regarding whether we’re going to get something that resembles a daily cycle low or whether PM’s just thumb their noses at everyone waiting to buy and continue to grind higher. Should be a fun week.

    Have a great weekend everyone!

  435. fubsy_cooter

    Yeah, the miners are bugging. Hey, the bull is bucking, and messing with as many riders, as possible, true to form.

    I’m just waiting for a spike day and I’ll be out. Silver rising 3-4bucks or so on extreme volume is going to be my signal to get out of dodge.

    I can be comfy in a move like that b/c I’m confident the tools I’ve gained will let me get into the A-wave at an early stage, and my goal will be to outshine my gains from this super cycle.

    f

  436. Michelle

    dg

    also we dont sell daily cycles, but there was a rummor out there that there might be a 3 to 6 dollar correction in silver and well. i think it was closer to 30 to 60 cents =)

  437. DG

    Elaine: SLV is fine, it’s just that AGQ is 2 X SLV, so why not buy half as many dollars worth of AGQ and keep the cash aside? Also AGQ is actually a little more than 2 X in a strong uptrend.

  438. Elaine

    DG, I have both SLV and AGQ. When we get a minor correction, it has barely budged, as compared to AGQ. But, for the next A – C waves I will be in AGQ much more heavily, unless Gary says not to.

  439. Driver

    Elaine,

    One of the reasons I moved from SLV to AGQ is that JPM manages the SLV ETF. That spooked me a little. Maybe Gary can comment on that concern.

  440. basil

    By the rate silver is going up, and with the dollar 3 year cycle low not due that soon, the target for silver should be raised.
    Also, if silver is ever to reach 200, 250, 300 $ in the next cycle, it actually makes sense that we would end this current cycle with a higher silver price of say $60 or $70.
    A top at $50 would bring us back to perhaps 25 in a D wave. It would then have to ten bag in say 3 years (2012 to 2015) to get to 250. That’s a stretch. Let’s say silver tops at $70 early this summer, and the D wave bottoms at $40 (so not quite a 50% draw down, silver would only have to run up six times in the next cycle, which would be round about what it would have done during the current cycle.

  441. Elaine

    Driver, I think that is the reason others have steered clear of it, but Gary has held it in his own portfolio through the course of the C wave, so, I feel comfortable with his recommendation. But, nothing beats AGQ, especially on a day like today. What a monster.

  442. Otis

    Congratulations to all the PM bull riders, regardless of position size. This was one heck of a week! Enjoy your weekend.

    Have a great weekend Gary!

  443. Vonda

    That was FUN!

    – says one who made the mistake of hopping of the train last week. Seems they overhauled the line and replaced that train with the Express!!

    Good weekend, All!!

    (p.s., Ryan, I trust you’re feeling better about your own leap…)

  444. Sandy101

    Gary,

    If USD has few more weeks to hit the 3 year cycle low, how do you see PMs acting in that period.

    Gold could hit 1600 or so during that period, what do you anticipate silver will do.

    Will be great if you can address this in the weekend letter.

    Have a great Easter guys.

  445. Aaron

    Monday will see a rally in the USD…its officially a BB trade now… a little bounce before it resumes its down fall

  446. Duuuuuude

    OK guys, I keep hearing people here giving broad statements with absolutely no facts or proof to back their position. Without offering valid reasons for your point, I see no reason to even bother posting.

    One thing that would help is to show what you are talking about. A picture is worth a thousand words as they say. If you have not done so already, go to this link and download Jing. It is free and very simple to use. You can take screen charts of your charts or what ever and post it for everybody to see.

    Here is the link. http://www.techsmith.com/jing/free/

    Thank you. (sheeeezzzeeeee)

  447. blammo

    Have a good long weekend everyone. Looking forward to getting some sleep. I can’t be the only one obsessively checking the Comex price every time I roll-over in bed.

  448. Marc

    Sold at the close today. It was a great week and I’m sitting out the 3 day weekend. We’re getting close to the end IMHO.

  449. Francisco

    I am a complete newbie when it comes to options, but it seems like the returns that people are generating are outrageous (ex. duuuuuude’s 17% daily return). On this board, I’ve repeatedly read about people being 150% in AGQ, but much less about people using options strategies to signicantly juice their returns. My question is why were people just buying and holding positions in AGQ, and not using a “conservative” options strategy as well during this whole ride?
    As an example, Gary, why were you invested in your 3 positions and chose to wait until this late in the cycle to buy calls. I’m not questioning anyones investment strategies, I’m just trying to learn more.
    Thanks.

  450. bamster

    Blammo, you are so right. I get up in the middle of the night, check comex, then can’t sleep. Looking forward to getting some shut eye.

    On another note, check out Fast Money. They will be talking about silver. Guy Adami and Beekes have been high on silver for a while now. Adami keeps saying silver is going to have a one day pop of $7-8 one day soon. Hope he is right.

  451. Gary

    Francisco,
    If used correctly options are a great way to increase ones return on invested capital. But don’t fool yourself, there’s nothing easy about this.

    There are going to be many many traders here that are going to get complacent as this progresses, leverage way too heavily into options and then lose everything when the C-wave tops. Or even if they just get caught in a daily cycle correction.

    One has to know what they are doing when buying options.

  452. Francisco

    Thanks Gary. I don’t think that using options are easy at all. It just appears to an observer that if you use a conservative options strategy (a small percentage of your capital at risk, deep in the money calls, etc), that you could generate some additional returns in excess of just buying and holding the underlying security. All I’m talking about is hitting for singles…not swinging for the fences.

  453. SLW TRADER

    Jonas-

    Totally feel your pain. Very disappointing week for those pinning their hopes on the miners trade & with no leverage to the price of silver (AGQ, SLV calls, futures, etc.)

  454. Tudor

    Francisco, I’m using options pretty heavily, but I’m being very cautious regarding entries, strike selection, and position sizing. I’ve already been down the road that ends up in a blown out account because of excessive leverage.

  455. Moondoggie

    Basil,
    Thanks for your post regarding the silver target in this C-wave. I was just thinking the same thing.

    Would you also consider that a parabolic move becomes steeper and steeper towards the end ?

    If so then it would seem to me that because of the parabola and the amount of time before the dollar 3 year cycle low, we could easily see $60 plus before the D-wave arrives …

  456. Francisco

    Tudor,
    That seems to be a common theme, so perhaps I’m underestimating these things. I’ve had education in options, but have always been a bit intimidated about actually trading them. I’m going to use optionsxpress simulation for awhile until I’m more comfortable so I’ll definately miss the remainder of this C-wave.
    I appreciate the feedback though, because I’m curious as to other people’s experience.

  457. Wes

    Dude,

    The jing program won’t set up on my new Vista 7 laptop. Says I’m missing a .dll file.

    Is this really worth pursuing ?

  458. Gary

    F,
    One of the keys to options is to only control the same amount of shares as if you were going to buy actual shares.

    So if you would buy 200 shares of SLW then you would only buy 2 call options.

  459. CMT

    DG, re: your earlier comment re: my response to Jonas re: taking a profit (I really wanted to use re: again, but couldn’t figure out how),

    True, but a lot more people went broke because they didn’t close a trade in the black when they had the chance.

    Jonas needs to learn to be patient and let his trades work for him, but I’d rather he have to learn that lesson, then learn the lesson of holding positions too long for that little extra upside. After all, you’re more commonly in that position than in a C-Wave.

    Having said that, Jonas, listen to Gary, DG, Poly, Alex and the many other excellent traders on here. Not me – if I had smashed my computer with a club on September 1 of last year and not taken so much “profit” in the interim, I’d be up about 5x what I am.

  460. Redwine

    Gary,

    “So if you would buy 200 shares of SLW then you would only buy 2 call options.”

    In yesterdays portfolio change report you said you’d go ahead and purchase as many DIM call options as you could with the cash you got out of selling AGQ previously.

    I’m confused as to whether you purchased enough options to cover the amount of shares you ‘would’ have bought or if you purchased all the options that cash could buy.

  461. Francisco

    Gary,
    I appreciate all your help and advice. I’m not a gambler at heart, and am more conscious about risk management and capital preservation than most on this board. I only make aggressive bets when either I have a knowledge advantage or it’s an asymetric trade. I plan on using options in very small amounts to just supplement returns or tohedge other positions and not to be core positions in my portfolio.

    Thanks again for everything.

  462. blakemancillas

    Per the Dow Jones Newswire:

    “Volume in the silver ETFs put options jumped to a two-day record thanks in part to that big move on April 11 and another the following day to guard against a drop of about 21% from current levels. Then, this week, on Wednesday and Thursday, volume reached another two-day record.

    The trading has pushed the number of bearish silver ETF options in the market almost equal with the number of bullish calls to buy the ETF. Trading in those bullish silver options routinely outpaces bearish puts.”

    Dumb or Smart Money buying protection, here? Thoughts?

  463. Le Fou

    Tudor,

    Is there a book or other source of guidance that you follow, or do you follow a plan that you’ve devised by trial and error?

    Best,
    Le Fou

  464. blakemancillas

    @ Redwine,
    I too am confused. I thought Gary purchased as many DITM calls on SLV as cash would afford, not how many calls equivalent to the amount of shares he could have purchased with that cash. Gary, would you mind clarifying? 🙂

  465. Jonas

    Well CMT, hindsight is always easier than trying to predict. I think my major mistake was not to take some leveraged positions off the table, it was going overboard and trying to optimize for an unknowable future.

    I sat through the big summer 2010 correction with a highly levered position. That left me a bit scarred. Then I exited with almost perfect timing during the early 2011 correction. I just wanted to repeat that again for maximum profits.

  466. Le Fou

    Blake and Redwine,

    Gary can speak for himself, but I believe he uses calls to control the with less money the amount of shares he would otherwise purchase for a position.

    Best,
    Le Fou

  467. Redwine

    Le Fou,

    I’m just confused because he does say in yesterdays report that he’d buy all the options he could with the cash from AGQ.

  468. Wes

    Francisco,

    In addition to Gary’s warning, there are things unique to DIM options that don’t come up ordinarily.

    When it is time to sell a DIM option, you will rarely get a fair price as the bid. The market makers know that they can screw you and they will try.

    To combat this, I usually just short the common and execute the option to cover the short. If you’ve never done this before, it can be time consuming, so if you have many positions it’s easy to make mistakes.

    If you’re in SLV options, for example, you will find there are no shares available to short, so the method outlined above is useless.

    I could go on, but you get the general idea.

    And before anyone asks, of course you can execute first and then sell. But you cannot do this in a timely manner, and if the security is rapidly falling in price you are likely toast.

    In any event, you need to get your training in a less volatile security than silver IMHO.

  469. Bob loves Hawaii

    Francisco, there are many ways to use options with great risk control. I encourage you to find a good options book.

    Gary is right, if you are directionally betting with options you betta be nimble. The daily cycles will suck the premium out of OTM calls and you may not have enough time to recover them.

  470. Gary

    Yes I am buying as many calls as I can with that 15%. In this case I’m not using options to control risk. I’m adding to leverage.

    I’ve said this many times in the past and let me repeat it again. Everyone needs to determine for themselves what their risk levels are. No one should just blindly copy my portfolio. My situation is probably considerably different than most people.

    I could lose half my portfolio and it wouldn’t materially affect my lifestyle. 99% of the people that read this blog or subscribe to the newsletter can’t make that same statement.

    Someone with a family and responsibilities and/or in their 40’s or 50’s really has no business being as leveraged as my portfolio.

    For the vast majority of people options just aren’t appropriate. For one most people don’t understand them. If you don’t understand them then don’t trade them.

    Second if used to massively leverage ones portfolio most peoples emotions prevent them from thinking clearly.

    So if you are going to use these financial instruments know what you are doing and be honest with yourself as to how much downside risk you are willing to take.

  471. Jayhawk

    Read it and weep. SLV vs SIL and SLW the past 30 days. For some reason, the complete disconnect happens. Hats off to TZ for calling this one. I wish I listened.

    SLV

    Stupid things fascinate me…That’s probably why I suck at trading. Twin Towers of massive (89M), almost identical volume bars on SLV.

    Volume

  472. Tudor

    Le Fou,

    The info needed to use options they way I’m using them here is easily available on the web. Since I’m using only the most liquid options (SLV and SLW), I don’t bother with the pricing models. And I’m buying straight calls, not spreads, so the profit/loss calculations are uncomplicated.

    My method is pretty simple and follows Gary’s timing. I only buy on a half-cycle dip. At the intermediate lows I’ll take a decent position closer at the strike that’s close to ATM or even very slightly OTM. I choose a strike that’s 30-60 days out from the expected peak. I don’t like to hold contracts with less than 30 days to expiration. I’ll add at a daily cycle low, or on significant dips within an intermediate cycle, but only DITM, again with a strike beyond the expected intermediate peak, but with a smaller position. I usually don’t try to get cute and sell during the daily cycle peaks.

    This last cycle I tried something a little different, for me anyway. On some of my positions that were really DITM I cashed out 1/3 and rolled them up to ATM in the same expiration month to juice the returns a bit. Good in theory, but my timing was a bit off and those positions were negative for awhile. But I was able to tough it out because a)Gary’s analysis, and b)my expiration month was far enough out (July) that theta didn’t eat me alive.

    Regarding forward month OTM calls (“lottery tickets”): WARNING! If I go there, it’s only with a VERY SMALL position. Like 0.5% or less of my portfolio. I’ve tried it a half dozen times and it’s yet to pay off. So take that for what it’s worth.

  473. bamster

    SLV is trading heavily after hours to the upside. It looks like the Fast Money people were jumping on board today. Adami again re- itereated his call for a $7-8 day spike coming soon. Anyone catch the show?

  474. Francisco

    Thanks Wes and BLH. Great Advice.

    I’m taking this real slow and am doing my homework first. I have several textbooks on the topic that I have owned for over 15 years, but they are not user friendly at all. I think using a practice account and actually trading (ie making mistakes with no money on the line) is my best course of action.
    I’ll definately save your posts though and reference them as needed. Thanks again.

  475. Le Fou

    Thanks Tudor and thanks Gary,

    I appreciate your discussion of Options. It helps. Cut my options holdings today by about 40%. I didn’t like holding over a three day weekend after the talk that I’d heard on this blog. Plus looking at that SLV chart, it looks more and more like we’re playing Thelma and Louise at this point. 😉

    Best,
    Le Fou

    Le Fou

  476. Redwine

    Thanks for the answer Gary. I couldn’t man up enough to buy that many options anyway. My hands started to shake just before confirming the buy so I cut the order in half.

    Still have roughly 7% waiting for a good entry in either AGQ or SLW. Thanks for the guidance and have a great weekend.

  477. TheBookGuy

    I think that gold is probably building a base above $1500 before moving on to $1544 which could be the first place we see some short term profit taking. The real tell tale sign imo is that $1500 gold was not hard to slice through. Gold is actually acting very powerfully when one thinks of the violence that usually happens at round numbers. Folks need to digest that move before we can move on. Friday just might be that day.

  478. Steven

    BTW, I asked my broker (Etrade) if I can borrow shares of SLV to short “in size” and he said you can’t borrrow ANYTHING! They have zero shares to lend out to short.

  479. Eamonn

    Gary,
    do you reckon you will be able to see/call a top so people can buy some Puts on SLV?
    How far out from the top should the Put expiry date be?

  480. Poly

    Gary,

    Not picking here, just an observation, but this SLV call trade seems really out of character for you. So very late in a C- wave and daily cycle, does it not go against everything you have preached for so long? Why not in Jan or Feb when Silver was $28?
    Just seems very risky adding 15% of a whole portfolio now at $46 Silver, which is stretched so far and in the timing band for a nice drawdown any day now. If we get another 17% smack down before $50 do you hold that big losing position for another go at $50? Nobody here seems to question it but it feels like a chase to me.

  481. Gary

    Poly,
    I wasn’t able to call the intermediate bottom in real time in January because gold never suffered the normal second leg down like it has every other time.

    The recent call purchase is purely a play on a continued move up to $50.

    I have plenty of time for those to work, they are deep in the money with little time value, so once silver tags $50 those positions will return a hefty profit even if I had to weather a daily cycle low first.

  482. Poly

    Ok, so if we get a 10% drawdown on Monday, a reasonable drop for a cycle low here you will just hold these calls regardless and wait for the next cycle to take them to $50? If that were true, wouldn’t it make sense to hold them well beyond $50 if you have a new cycle in hand? Wouldn’t you need a failed cycle and start of the d-wave to not get much more than $50 in a fresh new daily cycle?

  483. Gary

    I don’t sell into cycle lows so yes I would hold them. I don’t want to hold them past $50 for the reasons I explained in tonight’s report.

  484. Elaine

    Gary, thank you for your comment about options, folks with families, etc. So for us, should we start setting stops for AGQ and SLV again? If so, can you give us some advice in the nightly report? I would hate to have 17% down day. I have to start a new job on May 2nd, so I will not be able to monitor my holdings except early morning, lunch time and after work.

    Thank you.

    Elaine