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Beating Buy and Hold (thru disciplined speculation)


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... you know that Sinclair himself then shaped the top at $850 (he didn't just "call" it, he CREATED it!). He sold his gold there because he "knew" it was overvalued (by over 80% according to his gold-debt model).

 

http://gold.approximity.com/since1970/External_Debt_Equilibrium_Gold_Price_LOG.html

External_Debt_Equilibrium_Gold_Price_LOG.png

And he got "his people" out at $400 (? !)

 

That brilliantly illustrates the problem in LISTENING TO GURUS.

This one got himself out at TWICE the price his people exited at.

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And he got "his people" out at $400 (? !)

 

That brilliantly illustrates the problem in LISTENING TO GURUS.

This one got himself out at TWICE the price his people exited at.

But if they were in from the beginning, they made a 10-bagger. He himself took more risk. It only goes to show that he is a responsible individual. In this market, he promised $1,650. We're almost there! Can gold go to $16,000? Sure, no problem. But despite his model possibly telling him this number, he is not talking much about it (except for him saying that his $1,650 figure will most likely look ridiculously low, on which I agree).

 

If you bought gold when Sinclair did (2001?) and hold it through that bull and even long after a potentially parabolic move and sell-off afterwards, you'll most likely will have kept up with inflation (say, move to $16,000, then sell-off to $10,000, you still made a 33-bagger from $300 or so in 2001). That's the whole point. No reason to frantically go short etc. without a core position. Just buy & hold.

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But if they were in from the beginning, they made a 10-bagger. He himself took more risk. It only goes to show that he is a responsible individual. In this market, he promised $1,650. We're almost there! Can gold go to $16,000? Sure, no problem. But despite his model possibly telling him this number, he is not talking much about it (except for him saying that his $1,650 figure will most likely look ridiculously low, on which I agree).

 

If you bought gold when Sinclair did (2001?) and hold it through that bull and even long after a potentially parabolic move and sell-off afterwards, you'll most likely will have kept up with inflation (say, move to $16,000, then sell-off to $10,000, you still made a 33-bagger from $300 or so in 2001). That's the whole point. No reason to frantically go short etc. without a core position. Just buy & hold.

You are defending him ? Why ?

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MORE TRADES done...

 

Sell to Close Put

XX Contracts of -SLV110521P40

Order Number:E17NKJTJ

Details Filled at $7.40

 

Buy to Open Call

XX Contracts of -SLV120121C27

Order Number:E17NKNCN

Details Filled at $7.70

 

Buying SLV ... for Port.#2:

 

SLV

USDISHARES SILVER TRUST

Last [Tick] $32.4335[-]

Change $-0.4165

% Change -1.27%

Bid $32.43

Ask $32.44

 

== == ==

SLV port.#2 - bot at $32.44/ 40,000

Options:

E2/ jan $27c - bot at $7.70 / 40,000

Closed: Sold 50,000 option C at: $7.18 (40% at $6.85/ 60% at $7.40)

 

These trades bring me to at least 100,000 SLV option / or SLV shares in each account

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You are defending him ? Why ?

Because on here he sometimes gets under attack, and I agree with many (maybe not all) of his reasons why to hold gold. I think he does a great service to the public.

 

You do too, BTW, but in other ways.

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Because on here he sometimes gets under attack, and I agree with many (maybe not all) of his reasons why to hold gold. I think he does a great service to the public.

 

You do too, BTW, but in other ways.

Okay.

I can respect your opinion on that.

But I do wonder if he will overstay the market this time.

I hope that people are prepared for him to be wrong... again (as with his January forecast)

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Last time he was the biggest trader around. This time he will be a price taker. He knows that too. However, his belief in the late Sai Baba and a few other concerning things have always made me having my BS detector up and running when it comes to Sinclair. For instance, the hype around this crook Armstrong (someone who ran a Ponzi scheme after all, and possibly he ran it because his cycles never worked out as he had thought they would) has made me suspicious too. But in most cases (IMHO) Sinclair is pretty much spot on.

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Adam Hamilton "gets it" - no B&H Purist, he !

 

Zeal051311A.gif

 

Those three earlier parabolas that silver zealots brazenly chose to ignore capped uplegs averaging 92.0% gains over 7 months each. By its climax in late April, silver’s latest parabola had shattered this precedent with a mind-blowing 176.6% upleg gain over 9 months! I couldn’t believe any rational person would want to buy anything after such a big and fast move. Silver traders should have been buying last summer near $18, when silver was out of favor. Back then I predicted a big autumn silver rally, so our subscribers bought cheap.

 

The average daily gains of those earlier parabolic uplegs over their entire spans was 0.62% per day. But by late April this latest parabola was running half again as large at 0.93% per day! Nearly 1% gains per day over a 9-month span are unheard of, absolutely unsustainable. Even the most powerful bull markets with the best supply-and-demand fundamentals correct periodically to rebalance sentiment, and silver is certainly no exception.

 

But parabolic ascents don’t occur over entire uplegs, only near their climactic ends. So along with parabolas’ degree of overextendedness beyond their 200dmas, their terminal gains are a great way to measure their individual intensity. On average, silver’s first three parabolas of this bull witnessed 29.6% gains in their final 6 weeks. Our latest specimen utterly dwarfed this, with an unprecedented 41.6% terminal 6-week surge!

. . .

The only possible outcome of such an unbalanced and unsustainable situation was a massive reckoning. And just as expected in advance and warned about, silver soon collapsed in a near-crash just like it has done after its past parabolic ascents. Traders trapped in this brutal plunge are without excuse, a little bit of homework and perspective easily exposed the supreme danger. The markets slaughter the naive and lazy with extreme prejudice.

 

Set up for Draw-down

Zeal051311C.gif

 

It was appalling to see so many professional analysts become cheerleaders in the final weeks of silver’s parabola. Instead of researching past silver parabolas or warning about the dangers of extreme greed and bullishness, they dusted off their pompoms and joined the silver-to-the-moon foolishness. It was so rare to find any contrarians, any professionals warning of the crazy danger in silver in late April. Since parabolas are so ridiculously obvious, and they always end badly, professionals are without excuse.

 

Were you led astray by these cheerleaders? Did you get suckered into buying silver above $35 like a fool? Did you believe the garbage fundamental theories and ignore the hyper-risky sentiment and technicals? If so, you really need Zeal. We are lifelong speculators and hardcore students of the markets. And since we are trading our own capital, we do endless research work and tell it like it is. I first started recommending physical silver near $4 in November 2001, and we and our subscribers have earned fortunes trading silver stocks since. But when silver is overbought and needs to correct, we tell the truth.

/see: http://www.zealllc.com/2011/silvnc.htm

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Jim Sinclair is possibly the greatest gold trader of his generation. That speaks for itself, really.

cough ! cough !

then how'd he miss THAT ?

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MORE TRADES done...

 

Sell to Close Put

XX Contracts of -SLV110521P40

Order Number:E17NKJTJ

Details Filled at $7.40

 

Buy to Open Call

XX Contracts of -SLV120121C27

Order Number:E17NKNCN

Details Filled at $7.70

 

Buying SLV ... for Port.#2:

 

SLV

USDISHARES SILVER TRUST

Last [Tick] $32.4335[-]

Change $-0.4165

% Change -1.27%

Bid $32.43

Ask $32.44

 

== == ==

SLV port.#2 - bot at $32.44/ 40,000

Options:

E2/ jan $27c - bot at $7.70 / 40,000

Closed: Sold 50,000 option C at: $7.18 (40% at $6.85/ 60% at $7.40)

 

These trades bring me to at least 100,000 SLV option / or SLV shares in each account

 

Because of the vigorous activity yesterday, I am updating the portfolio as of the Tuesday close.

Both portfolios are now "bullet-proof" to upside move.

 

That is, if Silver rallies, I shall stay well ahead of Bib Chapman / the Buy&Hold portfolio -

even if Silver shoots up to $100 or $200. I shall be looking for opportunities to move some of the SLV positions into physical Gold (perhaps thru Gold Money) to remove the risk that something happens to SLV, the Silver etf.

 

UPDATE: Tuesday Close: 17 May:

(Silver : $33.93 / SLV : $33.09 / USD : $75.19 )

 

====== : B&H Portf. : Alt.Port #1 : Alt.Port #2 :

SLV$33.09

Cash--- : - - - - -- $ 0 : - $4,191 K : - $3,064 K :

Silver.oz : -- 100,000 : -- 000,000 : -- 000,000 :

SLV.oz : --- 000,000 : -- 000,000 : -- 040,000 :

Value- : --- $3,393 K : - $0,000 K : - $1,324 K :

Opt.Oz+/--- 000,000 : -- 120,000 : -- 020,000 : calls

Opt.Oz -/--- 000,000 : -- 000,000 : -- 000,000 : puts

Note --- : --- - None - : opt. AB,E1 : opt. D2,E2 :

Opt.Val : --- - None - : - $0,705 K : - $0,417 K :

===== : ===========================

TotValue: -- $3,393 K : - $4,896K : - $4,805 K :

Vs B&H: --- 100.0% - : -- 144.3% : -- 141.6% :

======

SLV port.#2 - bot at $32.44/ 40,000 x $33.09 cls. = $1,324

Options:

A / jun.$30c - bot at $6.00 / 30,000 x $4.05close = $121K

B / jul. $29c - bot at $6.35 / 50,000 x $5.20close = $260K

C / may$40p- bot at $3.61 / 00,000 x $6.90close = $000k

D2/ oct.$30c - bot at $6.50 / 20,000 x $5.47close = $109k

E1/ jan $27c - bot at $8.00 / 40,000 x $8.10close = $324k

===

E2/ jan $27c - bot at $7.70 / 40,000 x $8.10close = $308k

Closed: Sold 50,000 option C at: $7.18 (40% at $6.85/ 60% at $7.40)

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BEATING THE STUFFING out of Buy & Hold !!

 

Relative to the passive Buy & Hold portfolio:

 

Alt.Portfolio #1 : is now 44.3% ahead !

 

Alt.Portfolio #2 : is now 41.6% ahead !

== == ==

 

And with the Size now "topped up" to match (or larger*) the 100,000 oz. and

options positions in both accounts, the outperform will likely only get BETTER from here.

 

This is how to trade options strategically gentlemen.

 

== ==

 

I went to 120,000 on Alt.Port. #1, because there is a 30,000 oz. SLV options position expiring in June, and I want to be able to trade out of that position (if the market rallies) without giving up the SIZE I need to stay ahead of the B&H portfolio.

 

Note that I am VERY AWARE of the expiry dates of the options, and I am always aiming to do trades that push the maturities far out into the future.

 

However, when I started trading in these portfolios, options were TO EXPENSIVE to trade long dates, and so I had to work into those positions, as I have done here.

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And with the Size now "topped up" to match (or larger*) the 100,000 oz. and

options positions in both accounts, the outperform will likely only get BETTER from here.

Why did you get suddenly so aggressive yesterday?

 

Why do you think your outperformance "can only get better"?

Is there really any such thing as a Sure Thing in trading ?

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Why did you get suddenly so aggressive yesterday?

CHARTS!

Several of my charts were suggesting good support at/near the old lows.

 

Here's a SLV chart that I like ... update

SLV-144d.gif.jpg

 

(some may know how much I like buying Gold on the 144d MA. I think it might work for silver too.)

 

The fact that Copper also hit support, was holding well, and the dollar was weakening helped give me the RESOLVE to add aggressively to the position yesterday. I do not want to see Silver take off, and be "undersized" relative to the B&H portfolio

 

Why do you think your outperformance "can only get better"?

Is there really any such thing as a Sure Thing in trading ?

 

I may be a little overly optimistic in that comment - we shall see.

 

My main point was by holding OPTIONS, I can benefit from a further price fall, if we see one.

 

For instance, if prices drop to $26, then I can ignore the options (because I have no further loss below the $30, $29, and $27 strikes.) I can then buy SLV or physical silver. If the Silver price subsequently RALLIES, then I can benefit from both the new SLV position and the old options.

 

B&H of physical does not give me such wonderful flexibility.

== == ==

 

I DO HOPE THAT PEOPLE WILL TAKE NOTE...

 

How I have been very carefully layering on positions, using options where I can, in response to support and resistance level "opportunities" as suggested by my charts.

 

There is a bit of an art to this, but I hope you will admit that my trading is far from haphazard. I think the trading here is a good illustration of the power of options, and how they can be more useful than mere futures and physicals.

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Beyond Buy&Hold - why are so many resisting a more flexible approach?

DA on the other thread wants me to "register complaints" when all I am trying to do is "lift awareness"

 

Everyone's different, as are their objectives, as you yourself posted:

 

tbh, i don't see where your going with this now, maybe you should give goldsilver radio a call and leave a rant for BC, thereby releasing your ire

Bob and other Buy&Hold purists have left their followers with a HUGE OPPORTUNITY LOSS, and maybe some real losses for those who were trading on margin. This was needless.

 

Meantime, they were overly complacent, and even a little abusive towards those who trade around their positions.

 

I do think this may be a foreshadowing of how they will wind up missing the ultimate top, whenever we see it. (Let's keep this risk in mind, if and when the market goes back into a healthy upswing.)

 

They got no one out in 2008, and I predicted they would miss the Silver top in 2011, as they have.

 

What I don't get is why so few here (although there are some exceptions) seem to welcome my efforts to upgrade the trading savvy of people on GEI.

 

Haven't the perils of B&H been well illustrated by this recent 30% price drop?

 

And despite my new long positions, the drop may not be done yet.

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I DO HOPE THAT PEOPLE WILL TAKE NOTE...

 

How I have been very carefully layering on positions, using options where I can, in response to support and resistance level "opportunities" as suggested by my charts.

 

There is a bit of an art to this, but I hope you will admit that my trading is far from haphazard. I think the trading here is a good illustration of the power of options, and how they can be more useful than mere futures and physicals.

Note taken.

There's some lessons to be learned from these trades, and they will slowly sink in.

 

But I do find it hard to take too seriously the very large size positions that you are talking about here.

 

I do like the chart with the 144d Moving Average.

 

Are you worried that you will lose out by holding SLV rather than Silver physicals?

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Are you worried that you will lose out by holding SLV rather than Silver physicals?

An interesting question.

 

One of the benefits in starting this thread is that I have begun to pay attention to the Ratio of Silver-to-SLV. Previously I assumed that it remained clsoe to 1:1 and now I know that if moves around quite a bit.

 

SilverToSLV.png.jpg

 

There was a temporary (?) spike up in this ratio when the price of Silver and SLV collapsed in early May.

 

I now think that it provides a "trading opportunity", and I would want to sell my SLV and buy physical Silver when I can do that at close to 1.00 : 1, or even below that - if I get the chance.

 

I think the cost of running SLV may cause this ratio to go higher over time, as the Gold-to-GLD ratio has risen over time.

 

Right now/today, the difference is about $0.75, and it was over $1.00 a week ago.

 

== ==

 

Maybe this phenonenom has been discussed on other thread here - but I haven't seen it. It seems rather important to me.

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Using leveraged paper instruments to trade the gold and silver bull markets is a very risky thing to do and should only really be attempted by professionals. Well done DrBubb for the money you are making from your trading strategy but you should at least admit that it is not something the average person should be attempting.

 

Bob Chapman and Jim Sinclair have been advising the public on how to protect their wealth during the financial crisis and they have helped a lot of people do exactly that. Sure you could always do better than a buy & holding by buying at the bottom and selling at the top but you are missing their point, not everyone is or wants to be a speculative trader. It is not so much a B&H strategy, it is more that we have converted our cash into something that can't be printed away, more an insurance policy.

 

I am glad that we are now longer being called the mafia. rolleyes.gif

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Using leveraged paper instruments to trade the gold and silver bull markets is a very risky thing to do and should only really be attempted by professionals. Well done DrBubb for the money you are making from your trading strategy but you should at least admit that it is not something the average person should be attempting.

 

Bob Chapman and Jim Sinclair have been advising the public on how to protect their wealth during the financial crisis and they have helped a lot of people do exactly that. Sure you could always do better than a buy & holding by buying at the bottom and selling at the top but you are missing their point, not everyone is or wants to be a speculative trader. It is not so much a B&H strategy, it is more that we have converted our cash into something that can't be printed away, more an insurance policy.

 

I am glad that we are now longer being called the mafia. rolleyes.gif

"Not something the average person should be attempting."

Maybe not.

 

But I remain hopeful that the level of trading methods and Options expertise on GEI can progress beyond that of "the average person."

 

This best way to do that is to show how this type of trading can be made to work in a real life situation, like this exercise of aiming to Beat B&H.

 

I would be delighted if we could have more discussion about the details of how this works, and how the effectiveness of this sort of trading could be improved.

 

I have started many threads about various advanced techniques, and I have a feeling that this one might be the closest to what the average trader on GEI is concerned himself with.

 

The "mafia" remark was aimed at the B&H Gurus who were too complacent in radio interviews and such platforms, not at the average GEI trader who is simply trying to maximise his results with a sensible amount of effort.

 

I have been asked occasionally, "Do you think you can do better?" And this thread is intended to show that I can, and also reveal the trading, options and chart reading techniques that can help achieve those better results.

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An interesting question.

 

One of the benefits in starting this thread is that I have begun to pay attention to the Ratio of Silver-to-SLV. Previously I assumed that it remained clsoe to 1:1 and now I know that if moves around quite a bit.

 

 

Slightly off-topic but this investigation of correlation and inverse correlations for SLV ZSL and AGQ seems interesting.

 

A seekingalpha investigation

 

Are his comments on timing and discrepancies sound?

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Slightly off-topic but this investigation of correlation and inverse correlations for SLV ZSL and AGQ seems interesting.

 

A seekingalpha investigation

 

Are his comments on timing and discrepancies sound?

That's a good article, which is clearly explained.

 

To summarise:

On first look, the correlation (of Daily returns) was not as tight as expected

6083-130555996942236-dwb.png

 

But then he looked into timing issues, and found the explanation:

 

Why the breakdown? The answer is that a lot can happen between 7am and 9:30 am ET. Silver trades continuously between 7 and 9:30 am, and morning economic news can have a major impact . Being more thinly traded than other commodities, silver can also react disproportionately. In the last few weeks in particular, volatility has been extreme, with spot volatility climbing to 70%+. A 5%+ move intraday has been common in the last few weeks. So it really should not come as a surprise that comparing the 4:00 pm close to the 7 am London Fixing Price is not meaningful. Too much has happened in an extremely volatile market. The NAV is meaningful at 7 am ET, but only then.

 

There are other, more subtle issues - for example, the impact of compounding the returns - which I will not delve into. Suffice it to say, the moral of this story is: understand what you are invested in. Understand the benchmark of an underlying ETF. If an ETF is not behaving the way you expect, my experience is that it's behaving exactly the way it should - but obscure or peculiar mechanics or timing issues cause its behavior to appear odd to someone who, ahem, has not looked more carefully at the prospectus. And if you can't find a rational reason for it...arb it. Nothing beats free money.

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I went to 120,000 on Alt.Port. #1, because there is a 30,000 oz. SLV options position expiring in June, and I want to be able to trade out of that position (if the market rallies) without giving up the SIZE I need to stay ahead of the B&H portfolio.

Sold 10,000 of those JUNE Calls...

 

SLV ran up to the 64period ma : SLV-chart

It seemed smart to clip the position slightly

 

Status Filled at $5.00

Symbol -SLV110618C30

Description CALL (SLV) ISHARES SILVER TR JUN 18 11 $30 (100 SHS)

Action Sell to Close Call

 

Up from $4.05 yesterday

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I have been asked occasionally, "Do you think you can do better?" And this thread is intended to show that I can, and also reveal the trading, options and chart reading techniques that can help achieve those better results.

I do understand what your trying to explain to GEI members, but also think that trying to play the heavily manipulated markets of gold and silver can be dangerous especially with leveraged plays. Didn't you lose a load last year selling the S & P when it didn't do what you expected? From memory the charts and other inductors were saying it should crash but then it carried on up. As many have said "there are no free markets anymore.... only interventions..." so how can you plot a chart pattern for intervention.

 

It does seem to me that traders like to tell everyone how great it is when they are winning but aren't so vocal when they lose.

 

 

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Pix, why not get yourself set up with a broker to buy options (obviously not for trading in your case), but why not look at them even to hedge a position? (As an insurance policy). For the buy and holders with all net worth tied to one position/sector, it would make sense to at least consider it. It's seems obvious that hyperinflation will result but the truth is, no-one actually knows what the end result will be, plenty claim to know whilst others are 100% certain of hyperinflation.

 

Look at what's happening to the Japanese ¥, look how strong it is, and look at the state of Japan, (the housing market, bond market etc). Who could have imagined the ¥ could be where it is now a few years ago. True, they have Mrs Watanabe however I don't see an awful lot preventing the US government taking capturing funds from "Joe the plumber" and "Mr and Mrs White Picket Fence" by enacting some obscure legislation meaning x% of pensions have to be invested in treasuries or within US borders.

 

When things get desperate, they will do desperate things.

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I do understand what your trying to explain to GEI members, but also think that trying to play the heavily manipulated markets of gold and silver can be dangerous especially with leveraged plays. Didn't you lose a load last year selling the S & P when it didn't do what you expected? From memory the charts and other inductors were saying it should crash but then it carried on up. As many have said "there are no free markets anymore.... only interventions..." so how can you plot a chart pattern for intervention.

 

It does seem to me that traders like to tell everyone how great it is when they are winning but aren't so vocal when they lose.

After that comment, it is clear that you havent spent two minutes looking at my actual trades here.

Why not spend some of the time you spend posting to look at what I am actually doing in these portfolios?

 

My trades have all been with a "long bias". On the fes occasions where I bought puts, it was only to protect a long position that I had established with calls. And all of the calls are deep-in-the-money calls, which are in effect: longs with limited risk of loss.

 

What you need to understand and ackowledge is:

Trading this way, in a disciplined fashion is actually LESS RISKY than buying physicals with all my cash. I have LESS money at risk than I would buying a similar sized straight long position, not more.

 

(You mentioned "losses" on S&P puts - but not in proper context):

Although I may have lost money on my puts in 2010, it was a controlled position, where I was only ever risking profits. In other words: My S&P puts cost a bit less than the profits I was making from trading Juniors, etc. So I finished the year with a net profit. As I said, I would have had a bigger profit without the puts. But I was prepared to take that risk, It was not a haphazard gamble,

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