Archive for February, 2016
February 29th, 2016 by Vigilo
Silver Manipulation 2016 seems to be at another make or break point. With the latest gush of commercial short sellers, you can expect a smack down in price. Then again, what if they fail? And how can we make money in the meantime?
Silver Manipulation 2016 – Short Position Spike
The commitment of traders for silver shows that there is a commercial net SHORT position of -73,677 contracts. The net short position has not been that high since the year 2008. It was followed by a 55% DECREASE in silver in 3 months, then followed by a 600% INCREASE in silver the next 2.5 years.
At this point, I don’t expect the same type of move, especially since there has already been a bear market for 5 years. But on a shorter term time frame, every time these shorting spikes show up, silver makes a LOWER LOW. It’s been the game during this whole bear market.
It’s no secret gold and silver are manipulated. GLD and SLV are ETF funds where ‘paper’ gold and silver are speculated and traded upon. However, actual physical gold and silver held within these ETFs, are only a tiny fraction of the amount traded. This allows for JP Morgan, HSBC, Scotiabank, and our bankster friends to put massive pressure on the price, simply by applying downward pressure via short selling.
The minuscule amount of contracts that are actually delivered in physical metal, allow the banksters to short without having to put up the metal. So every time the price of silver begins to rise, the commercial shorts go heavy shorting, thereby halting silver’s rise and bringing it to a lower low. The true value of gold and silver must be suppressed to keep the system afloat.
This charade will likely continue, until it can’t. Meaning, there will come a point where the price is lower than the cost to mine. That would result in a physical shortage as miners cut back on production. OR, the market overtakes the short sellers and the banksters don’t have the opportunity to cover their positions. OR, a geopolitical event forces a run on gold and silver and there won’t be enough available.
Any variation of these scenarios unveils the TRUTH. That paper speculating is NOT indicative of actual physical gold and silver. And the result will be one of the most epic in human history. Every time one of these massive shorting events happen, could be the last time for Silver Manipulation 2016.
In the meantime, can we ride the banksters coat tails during Silver Manipulation 2016? Can we share in their obscene profit when they give us the signal? I believe we can, and I’ll show you how.
Profiting on the Silver Manipulation 2016
First of all, only do this AFTER you have acquired physical gold and silver. These Silver Manipulation 2016 smack downs give an opportunity to lower the average cost in building your savings of physical metal. Once you have that taken care of, then you can profit on the PAPER manipulation, while taking possesion of the PHYSICAL metal.
A tactic I found that has worked for the last few years is this….
1. When the commercial net short position reaches a negative -55,000 contracts…. SHORT SILVER.
2. Once the short position begins to decrease, set your STOP at the high from the previous TWO weeks. (to be a bit more conservative, you can set the stop immediately, even before the shorts start to decrease, you would’ve been stopped out at the orange arrow with this variation)
3. Once you are stopped out, wait for the next build of short positions to over -55,000 contracts, then do it again!
This provides a way to kill some time and make some profit while we laboriously wait for the inevitable next Silver bull.
Another way to think of the commercial shorts is by using a truck as an example. Driving up a hill, the increase of shorts would be the pushing down of the gas pedal. But once the truck’s momentum reaches the top of the hill, or the point where pushing the gas pedal is no longer necessary, then you can coast and actually pick up speed going down the hill. With the shorts, the price typically drops once they begin REDUCING the shorts. It means they have reached the equilibrium of where the momentum of their shorting is enough to push the price lower, allowing them to cover their positions into a lower low.
As physical silver holders, we can make some profit until that inevitable time, when the truck drives off the road and crashes before making it to the bottom of the hill.
CAUTION: Always use a stop. while this is intended to lessen the personal blow of each Silver Manipulation 2016 smack down on our physical savings. We can’t be sure which time will be the last.
Let me know how this trade works for you. If you have one of your own, feel free to share it below.
In God’s will
disclosure: at the time of this writing, author is long physical silver, long intermediate SLV call options, and long short term SLV put options.
February 7th, 2016 by Vigilo
Silver 2016…. is it time to buy, sell, do nothing, pay attention, or just ignore it? Procinctu will point out some recent happenings, to help YOU better answer that question.
What we know concerning Silver 2016
To figure out future price action of silver, and everything for that matter, we must first identify and separate facts from fiction.
1. In the first two weeks of the year, markets generally begun 2016 with a steep sell-off across all sectors, including a ding to silver. However, precious metals reversed, decoupling from the markets as January came to a close. SLV Nasdaq Dow Jones S&P
2. Short-term, this past week, silver followed gold’s lead, and finally broke out of it’s resistance put in place since December 4th.
3. Long-term, MACD has been showing a massive divergence since 2013 on a weekly chart. Even short-term, MACD divergence has been occuring the last several months on a daily chart, leading into last week’s breakout. Look at the vertical lines to note a HIGHER low in MACD, but a LOWER low in SLV price. Note: divergence in the MACD, in relation to price action, is a STRONG sign of a reversal.
4. Actual physical silver inventory held in the COMEX is vanishing. The amount of registered silver in the COMEX is nearing the same level as it was when silver was nearly $50 an ounce! The steep decline began last year as you can see from the chart (noted via red circle). Note: since the majority of gold and silver in the COMEX is never delivered, the charade is able to allow 28 owners to every ounce of silver, and over 500 owners to every ounce of gold. Effectively ignoring the laws of supply and demand…..at least while they can.
5. The silver mining industry has a bullish mindset. Just recently, CEO of First Majestic Silver Corp., Keith Neumeyer said as much in an interview with Money Metals Exchange.
We’re trading, right now, at 80 to 1, gold-silver. We’re mining at 10 to 1, and we’re in a deficit. How can that relationship last? We’re going to have a racial compression, in my view, that’s going to send the price…and I’ve said this 100 times… to triple digits. I know that at $14 or $15 silver that sounds stupid and it’s probably hilarious to many people, but that’s where I think it’s going.
All of the above facts actually took place. They are not just conspiracy theories from a perma silver bull. They are all valid reasons to have a bullish perspective on silver 2016.
What to do to profit in Silver 2016
First and foremost, before anything, Procinctu has always encouraged owning Physical silver and gold. Periods like now offer great opportunities to begin acquiring, if you have not already. You can adjust up or down depending on your beliefs, but 10-25% of one’s portfolio in precious metals is ideal.
With that out of the way, and your physical silver (and gold) savings taken care of, let’s address playing silver through SLV, the silver ETF.
Being that it triggered bullish on Feb 3rd, you could play it short-term with a target of $15.36, but watch out for a pull back. My stop is currently $13.49, but that should be moved up as SLV continues higher. It has moved $.34 already since triggering, so if you are not in the trade already, you could consider waiting for a potential pullback.
To wear the bearish hat for a minute, the current price of SLV is outside of the upper bollinger band on a daily chart, which means it is overextended and might ease a bit. The 200 simple moving average is also impending.
Also, it’s no secret that SLV and GLD are manipulated…. one tactic I have done in the past is to hedge my holdings by buying weekly in-the-money puts anytime the price shot up, because it seemed it would always get pounded back down. Those things considered, honor your stop.
Now back on topic. As far as specifics, you could buy the SLV ETF outright as you would any stock. You can also buy the SLV, then sell covered call options against it to collect premium.
Personally, I instead bought some $17 and $16 calls for June 30 expiration. I admittedly bought these before the actual trigger, so their current P/L is 51% and 75% unrealized gains. Keep in mind these are out of the money options, so only do this specific trade if you know how, and understand all of the risks involved.
Another way to play silver, is a more leveraged vehicle… silver mining.
If you are looking for a cheap silver stock, with tremendous upside, check out Great Panther Silver, symbol GPL. The current price even allows for the novice to ‘invest’ in shares while not mortgaging their future. The seasoned trader can profit on it with sound analysis as it’s price moves about 6% every day on average. Current price is $0.58.
If you are looking for cheap silver stock options, I recommend you check out First Majestic Silver Corp., symbol AG. Again, only for pros, but AG stock also moves about 6% per day on average. What I like about this one, is that options in the coming month and nearest the money, often cost only .05 in extrinsic value. So essentially, you could trade 100 shares for only $5 in premium extra. Again, I have to reiterate, only do this with a sound plan.
AG has already made a big move and is currently at a resistance line, so do not enter until it breaks, and confirms that line, above $3.65. Conversely, you could look into $4 puts if it fits into you trading plan, and we indeed end up pulling back.
First Majestic has been providing nice pivot points and you can buy calls or buy puts on it in whatever direction it is trading. Personally, I like the company to own outright as well.
Silver 2016 Conclusion
Silver 2016 has a huge upside. Though it appears the bottom is already in, and the metal is about to enter into a bullish trend, it is still possible for one final push lower. That is why you should always trade with a stop. But considering all the facts, Procinctu thinks the bearish trend is exhausted, and silver is on it’s way up.
No matter the direction, you now know several ways to profit on Silver 2016…. whether it be through SLV, SLV covered calls, GPL, or AG. Of course, if you don’t have your physical metal secured yet, get that first and pay no attention to the price. Treat is as insurance and wealth preservation.
Note: If you do not understand options trading, or even want to better your stock trading, I recommend checking out TradeSmart University.
As always, markets can stay irrational longer than you can stay solvent. So always manage your risk/reward. Also, not mentioned above, but NEEDS to be considered, are the geopolitical rumblings throughout the whole world. Wars and threats of wars, negative interest rates, currency wars, devaluations, and on….. Silver and gold are safe havens in times of crisis. Something to keep in mind.
Stay tuned for updates and may you have a profitable Silver 2016.
In God’s Will