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« The Long Swim – How the Fed Could Become Insolvent | Main | Silver price up as JP Morgan cuts short position and backwardisation rules »
Monday
Jan032011

Silver Prices at a Thirty Year High

Silver Chart 03 Jan 2011.JPG

Not an 'all time' high just yet but silver prices have moved at a blistering pace since August 2010 as the above chart clearly depicts. We have to say that we are relieved to see silver punch through the $30.00/oz level as we have been banging the drum for silver for some time.

You may recall that we re-vamped our strategy in August 2010 and reduced our exposure to some of the gold miners and indeed a few of the silver miners in order to acquire more of Silver Wheaton's stock, (SLW) which we are now pleased to have done as it has been kind to us.

However, the mining sector is warming up and the progress made by a number of silver producers such as Endeavour Silver Corporation, (EXK) now standing at $7.37 and First Majestic Silver Corporation, (FR) which is now standing at $14.40 has been admirable. Should the precious metals sector maintain its trek north then the profits generated by these companies will render them irresistible to investors especially when comparisons are made with other market sectors.

Back to the chart for a moment, the gap between the 200dma and the price of silver still gives us cause for concern which we feel we ought to mention as a negative consideration. However, as we all know, this is such a tiny market that any signs of the general public taking an interest and the pressure would surely mount to jaw dropping levels. The fundamentals are in the driving seat at the moment and lets hope that it stays that way, with the technical indicators taking a back seat for now.

On the positive side we can see that there has been a crossover by the MACD which we view as a positive sign for silver prices.

So, nice to be back and we hope that you and yours had a good one, but its over now so brace yourselves for a year of enormous change, volatility and wild price swings as the Bulls and the Bears up the anti.

Over in the options trading pit, we now have 59 winners out of 61 trades, or a 96.72% success rate and we have 3 open positions which have reached their targets or thereabouts and will be closed shortly, taking www.skoptionstrading.com back into a 100% cash position. If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.


sk chart 10 Dec 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

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Reader Comments (8)

This is it! The last high in PMs. I am short both of them, gold and silver. Targeting 22.50 on silver in march or april.

January 4, 2011 | Unregistered CommenterDi

You may be right Di, the trading yesterday was fierce - rising (black candle) all day and then slammed down around 2:30pm (candle changed to red) and continues today.
Sold my accumulator options for a 60% (bought at $1.70 Dec 22/10 - trading close to it today) gain yesterday...did not like the look of the chart.
Will buy back in when the charts tell me. Won't short or buy puts in a PM bull market.

Good luck and Happy New Year to everybody!!

January 4, 2011 | Unregistered CommenterMark

Just to clarify, my comments are based on SLW chart and not $Silver chart.

January 4, 2011 | Unregistered CommenterMark

There you have it folks. Fire up the squawk boxes. Di is short!

And this is the LAST high in the metals. Got it? Until the next time it's the last and final high, that is.

What I want to know is whatever happened to all the much-ballyhooed previous short positions? Di, you were very clear then that severe reversals were at hand several times in the last 2-3 years...and yet, here we sit near multi-decade highs in silver and all time highs in gold. Those prognostications haven't worked out so well. (You must have very deep pockets.)

Care to tell us what you missed before in your earlier "analysis?"

Okay, enough of that.

This is an incredibly unstable situation. We've had a parabolic move in silver, BUT ... for very good reason. Now, the question is this. Do fundamentals hold sway (crumbling conspiracies and QE to infinity) or do technicals rule the day in the short term? No way to know. So, just hold your core, trim trading positions if you like (I did..Dec 31) and hope to pick up more on swoons back toward...or even below...the moving averages. Selling core positions would be lunacy. Going short for even a scalp trade without a very tight stop would be even nuttier.

Silver is going one whole helluva lot higher...into the hundreds of clownbucks an ounce and what happens in the ensuing hours, days, and few weeks won't matter a hill of beans in the long run...unless you get chased out by some technical bogeymen.

And today's panic aside, price could just as easily be at $50 as $22.50 by March or April. Those younger than 55 haven't seen what it looks like when the metals really go parabolic. It's quite a show and we haven't even gotten warmed up yet. Technicals won't mean a thing for weeks at a time.

January 4, 2011 | Unregistered Commenterfallingman

Can you please comment on the SLW call options for March 19th
expiry @42.00 I believe you purchased some in December @ 3.10
and they have come off quite a bit. Do you still like them
here or are thing likely to go sideways for a while. I bot some myself and I am having some anxiety about the trade. Please comment THX

January 4, 2011 | Unregistered Commenterevelyn Hughes

evelyn,

Indeed the options have been clobbered so we are under water now. If it is making you uncomfortable then maybe you should lighten up by selling some of your position.

Options are extremely volatile and will continue to be so.
We will hold for now and see what next week brings, but each one of us is unique and needs to act accordingly.

January 4, 2011 | Unregistered CommenterSilver Prices

Thanks for your response however I got whipsawed by moving my account from TDW Waterhouse back to BMO where the scenes are much faster, but I lost my opportunity to reduce my exposure
on the March calls for I guess I will grit my teeth and hold on for the ride. I don;t have any experience with calls and I thought it would be good to get my toes wet - just hope I don't take a bath Cheers Evelyn

January 8, 2011 | Unregistered Commenterevelyn Hughes

The COT report has been updated and shows Gold is poised to go higher - and like everything else, there is no guarantee that it will.

http://cotstimer-portfolio.blogspot.com/

Will be interesting to see what develops over the next few weeks.

January 10, 2011 | Unregistered CommenterMark

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