The less liquid of the two core precious metals is going absoultely bonkers. If potential buyers were a well, that well would be dry.
Depending on which market you’re looking at, silver is either down 5% before the open, or up 40%. Obviously that makes no sense, so what you should really know is that the entire market for silver is OFF LIMITS.
If you believe the cost per ounce, which is what I tend to follow (most inclusive), then silver is going for less than $30 an ounce right now. Actually, it’s going for less than what I sold out of 2/3rds of my holdings for, back in December.
If we get a bleed out closer to $20, sort of like what we experienced in the spring of 2010, I will very likely look to refill my coffers. My vault in somewhat spacious, at the moment, you see.
I think, given the number of new dollars circulating the globe, that $30+ is a perfectly fair price for an ounce of silver. The reason the precious metals market is bleeding out now is because before now, it hasn’t, if you grasp that subtlety.
The precious metals trade was inundated with copycats and latecomers, especially noticeable back in February or so. Suddenly, the whole market just spiked, as every person with a pulse was convinced that barreling into the metals was the “next housing trade.”
Some big funds are obviously in serious trouble here. The kind of plummeting action we’re seeing here is most likely from a major liquidation. Some poor sap(s) ran out of buy orders to hit their equities with, and the only thing left to sell was the metals.
By no means is this behavior necessarily limited to commodities or equities. If it’s a need for cash, the selling storm could just as easily hit the bond market, provided the ability to sell commodities or equities is undermined.
There is no substitute for a cash position here. Even hedging with shorts can go horribly wrong. Let me repeat that; CASH IS A MUST.
If you have a debt position (as pertained to trading) you obviously haven’t been listening to a God damned word I’ve said. There’s no reason you should start now. Your death will be another man’s education.
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tell that to my zsl position that i threw on this morning…..god what a sucker i was….. same with auy. man, you can even win for losin .damn
Oil further bleeding out. Won’t be long now before the carnivores start circling that carcass.
good post CT
Thank you.
Mr Thaler, I was wondering if you could speak to this as someone who has been correctly bullish on the dollar for quite some time.
Do you view being long dollars (long UUP or EUO etc) as the same thing as being in cash. For most traders they are different. Cash if you don’t know what’s going on, or the risk reward is too low, and long dollars if you are bullish on the dollar.
Maybe my judgement is just clouded thinking that being long dollars via shorting Euros is the safest trade out there. Like you have said and many others have as well, either they inflate or deflate, both probably bullish for dollars.
Last time I checked, you cannot place orders with shares of UUP. You cannot cover margin calls with them either. So the answer to your question depends on whether you are long UUP/EUO and still have cash left over.
You can be voraciously long the dollar with cocaine products if you like, but if you’re borrowing money to make it happen, you’re actually short the dollar anyway.
Don’t do that.
I think your absolutely right. I project silver heads to $20(actually alittle lower I have the 2010 highs in mind as a buying point). WAYYYY to many people buying weakness. The bears are going to teach those idiots a lesson about going broke by averaging down before we see a bounce.