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Does "take a 50% profit on half" = "Sell 25% of the total" ?

 

 

No, it means selling half the position, and realizing a gain of 50% on that in US dollars. And then recycling those funds into AGQ at an opportune moment, on a correction, and re-selling on a spike etc. The reason being to reduce risk in an instrument where there is uncertainty about long term performance, ie, time decay.

 

I do this because I am at the moment very heavily in an instrument which leverages the volatility of silver.

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"It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine--that is, they made no real money out of it. Men who can both be right and sit tight are uncommon."

 

Jesse Livermore

 

 

 

If I'm right about gold (that it's currently on a run that will take it past $2,000) then....well....you have to think what would happen in that scenario...

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Perhaps the hardest part of the trade, besides having sat in dollars and waited for the spike to correct, will be holding on to the position, It will be very tempting to sell at 80, or 100, or then again at 200 and then 400. :rolleyes:

 

Actually, you may well find that the points where you are tempted to sell are the wrong points, it's at the point where you absolutely do not want to part with the position that you need to start thinking about unloading. Here's a quote of mine back when silver peaked in April 2011;

 

 

 

Well, not long after the futures opened tonight silver was down $6, down at $42.60 or 12% lower as I write this. After much vacillating on Thursday I sold half of my silver and bought more puts on SLV. I must confess I felt awful doing it, thinking it was the wrong move however it may just turn out to be a rather prescient one. I'm now hoping it gets absolutely ripped to shreds over the next few days.

 

Screenshot2011-05-02at001803.png

 

A brutal $6 move down inside 12 minutes. I would not be surprised if the euphoric retail money that just poured into SLV en masse sees this tomorrow and we see something rather spectacular in the silver market.

 

Was reading on another forum about a newbie futures trader who was holding silver futures contracts long into the weekend. That's going to be a very expensive lesson learned.

 

I'm not posting this to "big myself up", I'm posting it to point out to you how very difficult it is to unload at precisely the right time since the bullish fervour was unrelenting, people were talking about the move continuing up to $75 and $100 and there were a lot of expectations in the market that this would happen, (together with some absurd predictions of $6,000 etc). I am always very wary indeed when I hear people in the financial markets (escpecially prominent voices) talk in absolute terms.

 

eg

 

When I see someone talk about expectations of returns it reminds me of James Turk on 20th April 2011 on KingWorldNews;

Talking of precious metals;

"Expect much higher prices"

 

Talking of the dollar;

"Expect a waterfall decline in the dollar"

 

The "waterfall decline" came in silver and "much higher prices" came in the dollar index.

 

 

 

 

That was right before the top and he got it 180° wrong, in fact he couldn't have got it more wrong.

 

It's worth bearing these things in mind Romans.

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Actually, you may well find that the points where you are tempted to sell are the wrong points, it's at the point where you absolutely do not want to part with the position that you need to start thinking about unloading. Here's a quote of mine back when silver peaked in April 2011;

 

I'm not posting this to "big myself up", I'm posting it to point out to you how very difficult it is to unload at precisely the right time since the bullish fervour was unrelenting, people were talking about the move continuing up to $75 and $100 and there were a lot of expectations in the market that this would happen, (together with some absurd predictions of $6,000 etc). I am always very wary indeed when I hear people in the financial markets (escpecially prominent voices) talk in absolute terms.

 

eg

 

 

That was right before the top and he got it 180° wrong, in fact he couldn't have got it more wrong.

 

It's worth bearing these things in mind Romans.

 

Thanks for the thoughts PD, but I think you haven't understood my over-all strategy. It is a hedging one, in the full sense of the word, so I should not find myself tied up in a psychological knot about whether to sell or not. Your reply is to a post where I was wearing my bullion bull hat. If you look at the following two posts of mine, I am wearing my dollar bull/ trading hat.

 

To clarify, here are the two aspects that hedge each other:

 

1] Stay long AGQ. Even with time decay, the double leveraged instrument should do at least as well as silver. Here I am wearing my bullion bull hat.

 

2] Trade another AGQ position where I am concerned solely in using the volatility in silver to increase US dollars. Here there is not too much concern about the price of silver going higher when I sell as the long position covers that. The point is to identify reasonable/ good enough entry and exit points. I'm thinking at this stage of selling each time on a 70-100% gain. I am wearing my dollar bull hat here.

 

On the face of it there is a straight hedge here. But over and above this, and with the macro theory of hyper-deflation in mind, the long hold and the short trade of AGQ can also be considered complementary; the expectation being both positions appreciate in value due to the fact that silver will remain volatile to both sides against the dollar.... though appreciating in the aggregate. It will be interesting to see whether the trade will outperform the hold.

 

PS, I've never followed James Turk, nice enough guy but he has his own wheel-barrow to push being in the bullion business.

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Here's a new silver coin you folks might wish to own

http://shop.silverbulletsilvershield.com/user/sherrie?___store=silverbulletsilvershield_en

home_banner.png

 

 

 

 

This coin will have a limited run and will only be available for purchase until midnight of November 25th, 2012.......

The dies for this beautiful medallion are in production and the first mint run will take place in the next 30 days. Please take advantage of the pre-sale discount price while you can.

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1] Stay long AGQ. Even with time decay, the double leveraged instrument should do at least as well as silver. Here I am wearing my bullion bull hat.

 

 

 

RH, how long are you planning on sitting in AGQ? I've got some cash coming in this week that I fancy betting on a 6-9 month silver up-leg. Haven't decided yet whether to put it in goldmoney, a backed etf, or LISL (similar to AGQ). It's the time decay that bothers me. Obviously if this up-leg plays out similar to the last one then it's a good bet, but I always get anxious with leveraged etfs over more than a few weeks.

Apologies for jumping in with a question on my 2nd post, but I'm a long-term lurker and I've previously found your opinions v helpful

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RH, how long are you planning on sitting in AGQ? I've got some cash coming in this week that I fancy betting on a 6-9 month silver up-leg. Haven't decided yet whether to put it in goldmoney, a backed etf, or LISL (similar to AGQ). It's the time decay that bothers me. Obviously if this up-leg plays out similar to the last one then it's a good bet, but I always get anxious with leveraged etfs over more than a few weeks.

Apologies for jumping in with a question on my 2nd post, but I'm a long-term lurker and I've previously found your opinions v helpful

 

Hello, and thanks for the compliment. I feel relatively confident that silver should be on a decent up leg for the next year or two, and so the 'sit and hold' position in AGQ should be that long [that said, am also hedged against this]. I then plan to sell the lot on some spike as these funds are ear-marked for property. In the past, silver spiked to 20, retraced to 10 then spiked near 50. If that is matched in the next leg up, silver should strengthen from 25 to above 100. Even with the element of time decay taken into account, the instrument should at least perform as well as silver. Take the element of time decay out, and calculate AGQ with silver at 100, and the number is a bit mind-numbing.

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There's a pattern that has often been seen on spikes and the following corrections. The price consolidates then strengthens in the shape of a jagged curve. I call it by the technical name of 'the Cheshire Cat grin'! :)

 

Following this pattern, silver could easily see 30 here. Viewing the larger pattern, the bottom looks to be in.

 

 

chescat.png

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  • 2 weeks later...

Has anyone seen this from Clive Maund, courtesy of 321gold.com?

 

http://www.clivemaund.com/article.php?art_id=67

 

A bloodbath is believed to be imminent in the silver market, now that its cheerleaders have herded their flocks into the corral, ready to be fleeced again.

 

In the last update posted early last week, we expressed the view that an intermediate top was forming in gold and silver, a view that is reinforced further by the inability of both metals to break higher later in the week, and the now towering Commercial short position in silver as revealed by the latest COTs.

 

On its 6-month chart we can see how silver has continued to track sideways beneath a resistance level approaching $35. It had a go at breaking out upside on Thursday when the dollar apparently broke down, but failed, and weakened again on Friday. If we look carefully at this chart we can see that, following failure of the steep uptrend that began in the middle of August, a potential Double Top is completing beneath this resistance that portends a drop, and we have already observed several bearish candlesticks with long upper shadows developing beneath the resistance, which is a big reason why we turned bearish. Failure of the support level shown, which is probably imminent, can be expected to lead to a brutal plunge.

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Has anyone seen this from Clive Maund, courtesy of 321gold.com?

 

http://www.clivemaun...e.php?art_id=67

 

A bloodbath is believed to be imminent in the silver market, now that its cheerleaders have herded their flocks into the corral, ready to be fleeced again.

 

In the last update posted early last week, we expressed the view that an intermediate top was forming in gold and silver, a view that is reinforced further by the inability of both metals to break higher later in the week, and the now towering Commercial short position in silver as revealed by the latest COTs.

 

On its 6-month chart we can see how silver has continued to track sideways beneath a resistance level approaching $35. It had a go at breaking out upside on Thursday when the dollar apparently broke down, but failed, and weakened again on Friday. If we look carefully at this chart we can see that, following failure of the steep uptrend that began in the middle of August, a potential Double Top is completing beneath this resistance that portends a drop, and we have already observed several bearish candlesticks with long upper shadows developing beneath the resistance, which is a big reason why we turned bearish. Failure of the support level shown, which is probably imminent, can be expected to lead to a brutal plunge.

 

Viewing the silver chart, a correction looks obvious. It has basically spiked to 35 from near 25, so a consolidation is in order. Calling it a 'bloodbath' or a 'brutal plunge' is a bit overly dramatic though. I mean we are dealing with the silver market here, which is typically volatile.

 

i think there is a very good chance that silver will slowly retrace to 30 odd over the next month or so. I have a heavy buy order for the double silver [AGQ] at 40 with it now at 56.

 

http://www.greenener...280#entry258441

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I have a heavy buy order for the double silver [AGQ] at 40 with it now at 56.

 

I found ZSL today while looking for information on AGQ. It is the opposite of AGQ and aims to return -2x. If a correction is coming then it would seem that would be a good play until AGQ hits 40, it also seems to be at a low on the charts.

 

zsl_2012-10-10.png?psid=1

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Viewing the silver chart, a correction looks obvious. It has basically spiked to 35 from near 25, so a consolidation is in order. Calling it a 'bloodbath' or a 'brutal plunge' is a bit overly dramatic though. I mean we are dealing with the silver market here, which is typically volatile.

 

Lots of talk of this, but I'm going to stick my neck out & say it's not going to happen - too much buying pressure for physical.

 

If it does, it will at best be a 'nominal' pullback - watch the premium over spot on Ag for phys, my bet is that will increase in line with the drop.

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I found ZSL today while looking for information on AGQ. It is the opposite of AGQ and aims to return -2x. If a correction is coming then it would seem that would be a good play until AGQ hits 40, it also seems to be at a low on the charts.

 

zsl_2012-10-10.png?psid=1

 

That's an interesting instrument. I guess, for short term trading, it comes down to how you want to play it. I find the positively geared AGQ instrument more suitable for me because if I get the trade wrong, ie, buy and watch silver decline further, I'm not too concerned as think the position will be salvaged due to silver being in a long term uptrend. With this in mind, very heavy buy orders for a 'long' will be easier to make than shorting. I aim for near zero anxiety when trading.

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Lots of talk of this, but I'm going to stick my neck out & say it's not going to happen - too much buying pressure for physical.

 

If it does, it will at best be a 'nominal' pullback - watch the premium over spot on Ag for phys, my bet is that will increase in line with the drop.

 

Yes, any pullback should be short-lived. And then again, silver may just meander sideways for a bit. Because of this, I'm also maintaining a heavy long position in AGQ even as I trade it.

 

I'm not worried about possessing physical silver as am aiming to shortly convert monetary gains into real assets/ property. I've always thought, as far as bullion goes, gold is just as good to buy and hold if you are looking to stay liquid over the long term. I've found Goldmoney the most convenient for that.

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I find the positively geared AGQ instrument more suitable for me because if I get the trade wrong, ie, buy and watch silver decline further, I'm not too concerned as think the position will be salvaged due to silver being in a long term uptrend.

 

I think you are absolutly correct, maybe ZSL will be a better choice in a couple of years once silver is at $90-$100 and due a serious retracement.

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Hmm.. I'm not convinced holding an ETF over a 'long term uptrend' is a good idea. We saw this with oil. Due to oil contango, almost all the ETF gains anticipated were wiped out at option rollovers...

 

That's an interesting instrument. I guess, for short term trading, it comes down to how you want to play it. I find the positively geared AGQ instrument more suitable for me because if I get the trade wrong, ie, buy and watch silver decline further, I'm not too concerned as think the position will be salvaged due to silver being in a long term uptrend. With this in mind, very heavy buy orders for a 'long' will be easier to make than shorting. I aim for near zero anxiety when trading.

 

see, for example:

http://www.greenener...?showtopic=6627

 

Posted 09 May 2009 - 08:54 PM

At the start of the year, Our great leader started a thread warning that the contango in oil would eat away ETF profits even if the price rose.

http://www.greenener...l=etfs contango

Well, it seems the Questor team from The Telegraph doesn't read this forum!!!

 

http://www.telegraph...ress---buy.html

ETFS Crude Oil

$22.68 +67c

Questor says SELL

Questor admits that the call to buy oil was made too early, but that's not the only reason the ETF Securities Crude Oil (CRUD) investment has fallen 28pc since its recommendation.

The problem was that the sharp "contango" in oil markets during January had a strong impact on Questor's investment in the exchange-traded fund.

 

A contango occurs when oil prices for future delivery are higher than the current oil price. In January, oil prices slipped and increasing the contango effect, which hit investments in the fund. That's because the fund invests in near-term futures so there is some erosion in the price each time the contracts roll over.

In normal circumstances, when future oil prices are lower, this is not a problem. Indeed, for about half the time that the market in contango, the erosion isn't a problem.

However, this erosion at the end of each month looks set to continue as there is no sign of oil markets moving back into the more normal "backwardation" mode, when oil for delivery at a future date is lower than the spot price (ie when conditions are the reverse of a contango). So, despite the move in spot oil prices higher over the last few weeks, the ETF has hardly recovered.

 

It is very disappointing to be caught out by these sharp movements in futures prices and Questor accepts that this investment was not the best call that has been made.

 

With the spot price of oil unlikely to move significantly higher from here, Questor thinks that the loss should be taken on the chin and the money put to better use elsewhere.

Regretfully, Questor says sell.

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Hmm.. I'm not convinced holding an ETF over a 'long term uptrend' is a good idea. We saw this with oil. Due to oil contango, almost all the ETF gains anticipated were wiped out at option rollovers...

 

 

 

see, for example:

http://www.greenener...?showtopic=6627

For the 'long' long term, you may as well sit on gold... due to the volatility of silver.

For the 'medium' long term, say a period of 2 years, it is arguably best to trade silver and use the volatility to your advantage. To do that, you have to realistically value the dollar. Neither over-value nor under-value it.

 

I am trading AGQ both in the 'medium' long term, and the short term:

 

1] The 'medium' long term trade will most likely erode value due to 'time decay'. But I think it will still at least perform as well as $silver.

 

2] The short term trade is to use the volatility of silver to increase dollars. This also hedges the first trade, not to mention 'long' long in gold. Here the 'time decay' element is an advantage.$/ Silver has come off to 34 from 35. AGQ has come off to 56 from 60! Perfect for what I am trying to do with this trade.

 

Yep, with the leveraged ETF there is risk involved. Hence:

http://www.greenener...280#entry258441

 

Comparing AGQ to silver, you can see the 'time decay' element in the leveraged ETF. Though excellent for short/ medium term volatility, time decay may make it more problematic for sititng on. To hedge the risk of this, I've decided to trade half the position; take a 50% profit on half, and re-invest after a period of consolidation. Even though this may mean buying at a higher price, the point of the hedge trade is to increase a US dollar position.

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For the 'long' long term, you may as well sit on gold... due to the volatility of silver.

For the 'medium' long term, say a period of 2 years, it is arguably best to trade silver and use the volatility to your advantage. To do that, you have to realistically value the dollar. Neither over-value nor under-value it.

 

I am trading AGQ both in the 'medium' long term, and the short term:

 

1] The 'medium' long term trade will most likely erode value due to 'time decay'. But I think it will still at least perform as well as $silver.

 

2] The short term trade is to use the volatility of silver to increase dollars. This also hedges the first trade, not to mention 'long' long in gold. Here the 'time decay' element is an advantage.$/ Silver has come off to 34 from 35. AGQ has come off to 56 from 60! Perfect for what I am trying to do with this trade.

 

Yep, with the leveraged ETF there is risk involved. Hence:

http://www.greenener...280#entry258441

 

 

hmm, no i don't think it's about the time-decay, if by that you mean the intrinsic+time = total value of an option.

This is about the ETF being FORCED to roll their contracts month to month and pay the 'contango' difference. Of course, there are reports that silver is in backwardation but I think that's mostly 2015->?

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"Wynter's back......"

 

http://finance.yahoo...tb=c&sto=d&lv=s

Posts by "wynter_benton"

  • October 16 to October 23, 2012
     
    By wynter_benton . Oct 10, 2012 10:58 AM . Permalink
     
    The Leader wishes to inform our followers that the group will be demonstrating our ability to move the price of silver between October 16 to October 23, 2012.
     
    We will be updating our moves in real time during this period. Hold on to you seats because what you are about to see will dwarf what we did in February 2011.
     
    ....do da, do da.....
    Sentiment: Strong Sell
  • Silver will trade above $50 before Dec 31, 2012
     
    By wynter_benton . Sep 13, 2012 2:18 PM . Permalink
     
    We wish to inform our followers that silver will trade above $50 before Dec 31, 2012.
     
    The $36 silver derivative timebomb is still in effect for the Morgue so count the trading days once silver gets above $36.
     
    MFG was setup to prevent us from taking silver above $45 last year. Did anyone wondered why MFG failed preciselsy 30 days before our deadline or why no one can locate the vaporized money? It was designed SPECIFICALLY to stop us from taking silver up and out. Think about it.
     
    Too bad The Morgue cant do that again this time cause we are beyond their reach now.
     
    Once again, we are back. . . . . do da do da. . . .
    Sentiment: Strong Sell

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hmm, no i don't think it's about the time-decay, if by that you mean the intrinsic+time = total value of an option.

This is about the ETF being FORCED to roll their contracts month to month and pay the 'contango' difference. Of course, there are reports that silver is in backwardation but I think that's mostly 2015->?

 

I generally just take the markets as I find them... corrupt and all. The silver market ETFs largely set the price for silver. Any esoteric wisdom which predicts the explosion of these markets I take with a heavy dose of salt, yet still hold some gold bullion as insurance against that.

 

Keep in mind also that I don't consider the aim of accumulating money an end in itself [the mistake of the miser] but rather the means to securing real assets. My long term aim is to be a lot less liquid by around 2015.

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I generally just take the markets as I find them... corrupt and all. The silver market ETFs largely set the price for silver. Any esoteric wisdom which predicts the explosion of these markets I take with a heavy dose of salt, yet still hold some gold bullion as insurance against that.

 

Keep in mind also that I don't consider the aim of accumulating money an end in itself [the mistake of the miser] but rather the means to securing real assets. My long term aim is to be a lot less liquid by around 2015.

 

But ETFs pay contango rollover differences, as per Questor in the Telegraph: you cannot profit from the rise if you are paying the contango. Questor said he made a mistake in buying the oil ETF because it lost out on nearl all the gains in oil.... just sayin...

 

 

Questor admits that the call to buy oil was made too early, but that's not the only reason the ETF Securities Crude Oil (CRUD) investment has fallen 28pc since its recommendation.

The problem was that the sharp "contango" in oil markets during January had a strong impact on Questor's investment in the exchange-traded fund.

 

It is very disappointing to be caught out by these sharp movements in futures prices and Questor accepts that this investment was not the best call that has been made.

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But ETFs pay contango rollover differences, as per Questor in the Telegraph: you cannot profit from the rise if you are paying the contango. Questor said he made a mistake in buying the oil ETF because it lost out on nearl all the gains in oil.... just sayin...

 

 

Questor admits that the call to buy oil was made too early, but that's not the only reason the ETF Securities Crude Oil (CRUD) investment has fallen 28pc since its recommendation.

The problem was that the sharp "contango" in oil markets during January had a strong impact on Questor's investment in the exchange-traded fund.

 

It is very disappointing to be caught out by these sharp movements in futures prices and Questor accepts that this investment was not the best call that has been made.

 

'Contangos' aside, I don't think it is very relevant to compare the oil market to the silver market. Oil is simply a commodity while silver has monetary properties. I've always predicted that the two markets would behave very differently in a [hyper] deflationary environment.... it is probabably easier to see the divergence between gold and oil, silver being so volatile.

 

Questor laments buying the oil ETF, I have so far had some good trading success with the leveraged silver ETF.

 

http://www.greenener...280#entry258441

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