Post the non expansion of the Fed balance sheet silver has been the worse performing major asset class in the markets in the last 2 days. Silver futures today have dropped 17.7%. This represents their biggest one-day percentage decline since least 1984. Technically trading silver is a very dangerous business. I prefer to be a long term investor with my silver. I therefore don’t hedge my precious metal. Consequently the last two days have stung a little though we must remind ourselves that this correction has merely taken us back to jan 2011’s price level. Over the last 9 months silver has still outperformed almost all equity indexes, to the up side, note. Silver investors must remind themselves of these details.
I see CME raised margin requirements on Gold, Silver and Copper on Friday. From MW.
‘Initial requirements for gold’s benchmark contract rose 21% to $11,475 per contract, from $9,450 and maintenance margins climbed to $8,500 from $7,000 per contract. Initial requirements for silver’s benchmark contract rose 16% to $24,975 per contract, from $21,600 and maintenance margins climbed to $18,500 from $16,000 per contract. Initial requirements for copper’s benchmark contract rose 18% to $6,750 per contract, from $5,738 and maintenance margins climbed to $5,000 from $4,250 per contract’.
According to the theory, a correction of such magnitude signals a cyclical bear and a threat to the secular bull. For many fundamental reasons i would totally refute this view. In the near term, silver has much rebuilding to do. She has fallen as if she were purely an industrial metal and not a monetary store of value. We must respect this for the moment. If you are long already you have to wait. If you are lite of silver you should wait but small cost averaging at these levels is fine, although i would keep them lite. A technical level approaches around 26.5 or so.. You could take this entry on a spike if you method allows as a long term entry. As a trade you would do better to wait for a re-emergence of the secular bull to emerge. I have exposure to the metal and her miners. I cannot add here with leverage. I have to wait for a trend to reemerge. Option calls are an instrument to consider though the volatility is too large to really make then suitable now. Technically silver needs time to recover from this price action. Fundamentally she has never looked better as the worse it gets the more certain we are that monetary actions will soon follow. Silver has to demonstrate convincingly she is a monetary store of value rather than an industrial metal. For the moment she has not proven that case. There will be much to add to this over the weekend..
All the best Rich
p.s. supports on the crb not so far away..
Weekend update.. here the specialist PM Hedge fund Manager Ben Davies on KWN.. Note Ben trades with leverage and he has to be very careful with his fund’s entries and exists. He has an excellent track record.
And here the weekly market update and comments from Gold and Silver dealers via KWN ‘weekly metals wrap’.These guys are executing for clients and generally dealing in the physical. This assists in understanding the different perspectives on entries on the PMs.
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/9/24_KWN_Weekly_Metals_Wrap.html
Rich
(5 votes, average: 5.00 out of 5)
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