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« Endeavour Silver Corporation: Update | Main | Silver Standard Resources Inc: Up 11.47% »
Saturday
Sep082007

Our Silver Spread Bet: Update

In an article posted on the 20th August 2007 entitled: ‘A Trading opportunity in Silver: Buy’ we wrote the following:


“We have placed a financial spread bet on the December 2007 contracts for silver, on the London market, at the futures price of $12.15/ounce. We have a stop at $11.15 and a limit at $13.15. Therefore if silver falls one dollar, we are automatically stopped out and lose all our capital that was invested in this bet. If silver prices rise one dollar, we will double the capital invested in the trade.”

Well so far so good as the spot price for silver has started moving up putting our bet in the money. There is still a way to go yet but we are almost half way there. The DEC 07 contract is trading at $12.58 up from $12.15 or up 43 cents, so we need another 57 cents for the sell order to kick in and return the cash to the sidelines.

We consider this sort of trade or bet to be a fun thing and would not put serious money into it. We tend to avoid gold futures, silver futures, gold options, silver options and instead buy stocks. Buying stocks allows us to sleep at night, well some nights! The silver market is thin and just getting silver quotes can be difficult and silver futures more so, that’s why we buy stocks for our investment account. Investing in the stock market is a gamble but feels less of a gamble due to the fact that buying stocks does not have a time element by which it has to achieve its objective.

We will keep you posted on how this play on the silver futures market works out. If you are more comfortable with trading stocks and buying stocks then stick with it and watch as we torture ourselves trying to second-guess the silver futures market traders.

Sleep tight.

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