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« Silver Wheaton Corporation sold off hard | Main | Silver prices drop ‘down under’ »

Silver prices: Sell, Hold or Buy?

silver chart 03 May 2011.JPG

One Black swan event and a change to the margin requirements for the purchase of silver futures contracts conspired to reverse silver prices.

Silver on the Comex division of the New York Mercantile Exchange dropped considerably on Monday as investors were forced to stump up more cash or sell some of their holdings following the CME Group raising its margin requirements. Rule changes are a form of market intervention and should be part of an investors criteria during the decision making process alongside political risk etc.

However, if you have physical silver in your very own hands then you will not be subjected to such pressures. Sure the price of your silver drops in value when such actions are inflicted upon us, however, the silver tide is rising and the effect of this particular action will be short lived. On this occasion margin requirements were raised 13% by the CME Group, who are the owners of the Comex. The volatility indicator is moving towards 'severe' so we must now expect silver prices to move in order of four to five dollars, in either direction on any given day. The silver space is not a playground for those of a nervous disposition. So once having acquired your core holdings be prepared to sit through whatever this rocky road throws up and remember that nothing goes up in a straight line and the bears will have the odd moment in the sun.

Our strategy remains the same , physical metal in your hands is number one, followed by a selection of quality producers and finally, a few well thought out options trades. Ignore the bubble calls, that’s nonsense and stick with the script.

Taking a quick look at the chart we can see that this pull back has taken the steam of the RSI, however, the MACD and the STO remain in the overbought zone. Should silver prices fall further treat it as the buying opportunity that you have been waiting for.


Today we are pleased to report that has closed another two trades with profits of 108.52% and 116.67% respectively.

Over in the Options pit, our model portfolio has achieved an average return of 42.10% per trade, 76 closed trades, 74 closed at a profit, or a 97.36% success rate. Average trade open for 45.30 days.

sk chart 03 May 2011.JPG

The above progress chart shows our performance when profits are re-invested, 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.

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.

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Reader Comments (10)

Sell while you still can.
It has nothing to do with Osama, nothing to do with margin requrements. It has all to do with the fact that market is very overbought and there are no fundamentals to support prices at such high level.
I think sunday's drop is a gap down, this week the gap is tested, and that's it, the bull market in PMs is over.

May 3, 2011 | Unregistered CommenterDi

Am a holder of silver (in hand) and a few quality silver stocks (and gold), but did get a little nervious when the bottom seemed to fall out. Will stay the course! Are you able to tell me where to go to find silver stocks (source)and their ratings?

Your admonition is well taken!

wyn harter

May 3, 2011 | Unregistered Commenterwyn harter

This correction on the silver market wants to scare out the bulls.I have sold some to cover the cost but kept the rest for a future very bullish for silver over $100.

May 3, 2011 | Unregistered CommenterDenis Pelletier

Are you still short Di?

How much money have you lost to date? You never answer these pointed questions, but I'll keep asking. Your shorting campaign looks like a suicide mission to me...and yet, you keep beating the drum.

I would suggest that anyone looking for advice would do well to obtain it from someone who actually anticipated the surge in silver prices. The Kirtleys did. Ted Butler did. Pat Heller did. I and many others did. Di was precisely 100% wrong at every point along the way.

Silver is headed much higher. The only question is how much does it give back periodically along the way...a lot or a little? Dunno. You can't know. Life and silver prices are uncertain. Live with it. Lately, the give backs have been tiny, but silver can eat you alive if you're leveraged and not prepared for the occasional big washout.

The Bin Laden stuff had zero to due with silver's drop. The criminal conspirators at the CME group raising the margin requirement with others to follow had plenty to do with it. But Di is right about one thing. Anytime you have an overbought market in anything, you're subject to getting smacked with a violent correction. It doesn't take much. And when the brokers start hiking margin requirements, it's almost a given you'll get a pullback.

But that doesn't mean anything more than a short term top has been put in.

Let me ask 5 questions.

Is JP Morgan still holding an enormous short position? Yes.

Is there a big time shortage of physical silver AVAILABLE FOR PURCHASE & DELIVERY? Yes. Talk to Eric Sprott about it.

Will Morgan continue to get squeezed despite their desperate attempts to discourage the longs? Yeah, I think they will.

Can they cover a meaningful amount at anywhere near current prices? I doubt it.

Is there any chance real rates will go positive any time soon and provide competition to the metals? None whatsoever.

You want advice? Hope it comes down hard. If it does, buy more, and then hang on for the ride.

In just a matter of years, you won't be measuring your wealth in terms of clownbucks anymore, you'll be accounting in terms of how many ounces of metals you own, how much useful land, etc.

May 3, 2011 | Unregistered Commenterfallingman

"Bull market in PM is over"...that's my laugh for the day...wasn't it over when silver was flirting with $25/oz? I guess the robots who short silver can't be programmed to accept silver hitting 3 figures sooner come later (that's $100/oz+ for the mathametically-challenged). Di, answer Fallingman's question: how much have you lost say in the last 6 months? Me, I continue to make the proverbial 'killing' on my physical, and this ain't nuttin' compared to what's coming...Snakeman

May 3, 2011 | Unregistered Commentersnakeman

I will be adding physical again as soon as the price drops under $38, if my local coin store has any. I bought 'em out
at about $20/oz, when silver broke thru that $19 level.

Anyone who thinks this is a one-off spike and the metals rally is over hasn't been paying attention.


May 3, 2011 | Unregistered CommenterPete G.

Selling is not the way to go folks, right NOW. This is a "calm" before the "storm" phase If you own physical Silver just, hold tight and wait. On the brighter side of things, purchasing physical Silver is becoming more of a even, better buyer's market - a bargain ! One thing positive for Silver "bugs" is, that those heading for the exit probably do not belong in here, in the first place. Why would you sell now, making the bullion available to prop up the "short" Silver inventory of the Banks i.e. JP Morgan, HSBC, etc. so they can manipulate the market even, further, for?

May 4, 2011 | Unregistered CommenterRandy

"With the CME raising three times in a week the margin requirement of silver, that was enough to disrupt the parabolic move in silver prices," said Mark Luschini, chief investment strategist of broker-dealer Janney Montgomery Scott, which manages $53 billion in client assets.

May 4, 2011 | Unregistered CommenterSilver Prices

silver will come down in short time in long will be buy as far as dollar week silver will be over 200$ @ in year 2013 when the dollar will crash because of the high spending defult on the goverment trasuery bond read the book of ((buble econmey )) will scare you whats coming gold and silver will the at the high

May 4, 2011 | Unregistered Commentersam alnajar

Sam I don't think I'll take your advice since u can't spell bubble or economy lol

May 6, 2011 | Unregistered CommenterJohn

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