below is a small part of Steve Saville's latest newsletter - http://www.speculative-investor.com/ mods: please delete if not appropriate, but i think the information is good for forum readers, as well as giving credit to the author, who runs a paid newsletter that i subscribe to. i have nothing to do with the author or newsletter. -- Weekly Market Update for the Week Commencing 21st February 2011 Silver Scenarios In the 14th February Weekly Update we said that silver was poised to make a big move over the weeks ahead. We went on to say that we expected silver to drop back to the low-$20s during the first half of this year, but as a result of the preceding week's new multi-year high in the silver/gold ratio we wouldn't be surprised if it moved at least a few dollars above its January peak before commencing a substantial correction. Silver was strong last week and broke out to a new multi-decade high. This doesn't change our expectation that it will trade in the low-$20s during the first half of this year, but it does enhance the prospects for a big move over the weeks ahead. We suspect that silver will soon commence a $10 downward correction OR that it will gain $8-$10 over the next several weeks before embarking on a $15-$20 downward correction. It's an interesting situation, and -- for information purposes only -- this is how we are dealing with it in our own accounts: We are well covered against the latter scenario because an $8-$10 surge in the silver price would certainly be accompanied by a lot of strength in gold and in gold/silver equities (especially the junior gold/silver equities). Under this scenario we would be gradually selling all the way up, most likely increasing the cash percentage in our accounts from the current average of 35% to at least 50%. However, apart from already having a sizeable cash percentage we weren't, prior to last Friday, covered to the extent that we'd like against the former scenario. We obtained the desired coverage on Friday via the purchase of July SLV put options. Our plan is actually a little more complicated than outlined above due to the fact that even if silver is about to embark on a multi-week surge to around $40, it could first pull back to the high-$20s (a 4-8 day pullback would be normal following the quick rise of the past three weeks). Having just bought some put-option insurance, we plan to boost our exposure to the long side by purchasing some SLV call options if (and only if) silver drops back to around $29 within the coming fortnight. The above is as specific as we are going to get with regard to our own short-term trading tactics. This is mainly because we don't want to encourage anyone who is not already experienced in option trading to implement the same tactics. For at least 90% of market participants, trading options is one of the most efficient ways of losing money.
Well if it did hit $20 then there would be a lot of very unhappy first time investors who got in at $30. Can't see it happening myself, but the time line here is soon enough to see if they are on the money or not. Let's come back to this post in 6 weeks and see how its tracking.
If it got back down to $20, I'd be the first to be dancing in the streets with joy. A massive drop = more buy opportunity. Once you are confident on the fundamentals of physical silver, ANY price movement DOWN is just another buy opportunity. Every spike fills me with a sense of dread to be honest, always wondering if the boat has left for the last time?
Personally i wouldn't count on the newsletter for decision making. I think the basics and the fundamental is enough guide for the long term investors. Let us have a quick thought experiment, in between now and mid 2011, can Steve Saville guarantee there are no major economic changes? If another financial disaster happens or China unexpectedly fails at price control or bailouts in big countries like Spain has urgent need. What do you think the price of gold and silver going to be. It does has a possibility that it could happen and the possibility is increasing day by day. Has this been taken into account of the risk model of the newsletter? I am not sure. I don't understand how could things like this be published on paid newsletter for subscription. Maybe we should applaud those financial adviser and investment newsletter of having a sense of humor. If you translate this back into English, it basically means over the next several weeks, silver will go UP roughly $10 OR DOWN roughly $10 over the next several weeks. Why don't we make broader prediction saying The stock market will soon commence a BURST OR A BOOM over the next several decade. It's an interesting situation, and -- for information purposes only -- this is how we are dealing with it in our own accounts: Get my point? However one thing we do certain is that we will continue to have higher inflation, the rich will continue to be rich and the poor will continue to be poor, food price and other commodity price will increase alot in the near future. Government will continue to spend recklessly with more bailouts to the incompetent using taxpayer money or deficit spending. That's the MAIN reason why we are in the game.
well said Cinvalo, now get back to work! Jokes. Yes it seems they do not provide any reasoning to their thought of the price dropping. They jsut say a 'correction'. If the price got corrected to below 25. The physical sellers wouldnt have anything for next couple of years becasue people would just order for future delivery. Thats what I would do.
If we get any type of correction down to the $20's... we will see some "panic" selling... followed by massive buying. But there will be shortages of silver to buy... just like we saw back in 2008. My plan is to double my stack if we see a price close to $25.00.... My cost average is about $19.66 per ounce. Add to your stack everyday.
Seriously i would like to have a pullback too ^^, i want to afford some Dragons in September. Silver jumped $2.07...
mhmm this is giving me ideas to sell all my silver within the next few weeks. should i or shouldnt that is the question
the reason i posted is not because it is one of his best pieces of work (it's far from it), but because he is normally well balanced and reasonably accurate. so i think it merits a once off post. he is basically saying there's likely to be fireworks either way.. which makes sense. i agree. would not sell physical, but i would consider selling paper silver to hedge any physical holdings in the right circumstances (read: 2008 smackdown).... saville doesn't think we are as close to this point of collapse as we might.. he sees basically no chance of a USD collapse within the next few years (from memory) - the secular bull market in gold (and by extension silver) he predicts will end between 2014 and 2020 (obviously this cant be pinpointed so far out, but real time analysis will be based on actions of the market, central banks, governments, etc etc) but point taken and excellent post, thanks for posting. fyi - his big picture view is: Big Picture View Here is a summary of our big picture view of the markets. Note that our short-term views may differ from our big picture view. In nominal dollar terms, the BULL market in US Treasury Bonds that began in the early 1980s will end by mid-2010. In real (gold) terms, bonds commenced a secular BEAR market in 2001 that will continue until 2014-2020. (Last update: 09 February 2009) The stock market, as represented by the S&P500 Index, commenced a secular BEAR market during the first quarter of 2000, where "secular bear market" is defined as a long-term downward trend in valuations (P/E ratios, etc.) and gold-denominated prices. This secular trend will bottom sometime between 2014 and 2020. (Last update: 22 October 2007) A secular BEAR market in the Dollar began during the final quarter of 2000 and ended in July of 2008. This secular bear market will be followed by a multi-year period of range trading. (Last update: 09 February 2009) Gold commenced a secular bull market relative to all fiat currencies, the CRB Index, bonds and most stock market indices during 1999-2001. This secular trend will peak sometime between 2014 and 2020. (Last update: 22 October 2007) Commodities, as represented by the Continuous Commodity Index (CCI), commenced a secular BULL market in 2001 in nominal dollar terms. The first major upward leg in this bull market ended during the first half of 2008, but a long-term peak won't occur until 2014-2020. In real (gold) terms, commodities commenced a secular BEAR market in 2001 that will continue until 2014-2020. (Last update: 09 February 2009) me too!! it's a really weird feeling, no share ever made me feel like this.... i wouldnt be selling physical.. to hedge you could sell paper silver against your physical... ok! let's do it
