Tuesday, July 12, 2011

While I was 'away'

Trading this market requires resourcefulness and timing

I wasn't able to post yesterday (Monday), but I did scribble this down in the meantime. Just a rant-flavored whine, or whine-flavored rant about the rise and fall of Spot Silver and how I turned a +$200 trade into a -$300 loser.

5:11 am, Monday (Hawaii) I'm unable to post online right now, but I need to vent. Spew, more like it. I went from being up about $300 on my small positions in XG, AGQ and DGP ... to being in the red by $400. All within a matter of minutes, purely from the puppet mastery of the CME mafia. The charts don't lie. Spot silver went from a respectable gain to complete waterfall crash in minutes. Spot gold fared only slightly better.

AGQ went from 185, a fractional gain, to 172 in almost a straight line. The psychology of dealing with such a unexplainable drop is impossible. Either I get out after waiting it out at 182, 179, etc ... and wait for the inevitable bounce, or see AGQ plummet like never before thanks to the puppetmasters. Knowing that they certainly could take it down 20 bucks, 30 bucks without remorse is the trump card they own over all of us peon traders. So I got out at 173, eating a $250 loss. It's not a ton of money, but considering I thought it was a fairly safe, fairly conservative trade with just a handful of shares, it was preposterous.

AGQ bounced, indeed, at 172 and is slowly climbing back up as the MACD indicated it might, now at 175.11. The dangerous speed at which AGQ and other double or triple bulls (and bears) move is not navigable. Yet there I was with that small position. It was pathetic, seeing a decent overall gain in my trading portfolio turn to crap so quickly. It's happened before, so it's not losing money that shocks me. It's the fact that the entire market is down, certain metal plays were up and I seemed to have a grip on the whole situation.

Heck, XG was high as 14.40, and DGP was high as 50.11 in a sea of red. There was no logical reason for PMs to get smoked other than outright manipulation. It's easy to be mad. Nobody likes to lose. For what I have in physical, which isn't a lot, and what small positions I will continue to hold in XG and DGP, the long run is likely on my side and today's loss will be mostly forgotten. I was right to hold AGQ over the weekend. I was wrong not to protect my small profit.

As for FAZ, which I sold at a tiny loss on Friday, it got up over 46 this morning. I sold at 43.03, missing out on today's run as Euro banks tank. I didn't want to chance some insane maneuvering by the banksters on both sides of the pond. That's the game, full of risk, logic and no logic. I probably would've been better off sleeping through this or staying in cash before the weekend.

I was right. I was wrong. But most importantly, my timing was off in FAZ and AGQ. I do not expect to go to bed, wake up in five hours and see Gold below 1500 and Silver below 34. It could happen, of course. XG could give back a chunk of its enormous gains of the past two weeks. It fared better than most miners this spring, but it's pointless to hold any miner that is in stagnation due to rising energy costs. With that fact in mind, it might be best to empty out of XG, sleep well, and wait for a bargain price whenever it surfaces.

Buying low, selling high(er) ... It will work in this ragged, nauseating market. Trying to nickel and dime, that won't work so well. At some level, I believed a gradual rise in the PMs was upon us, but I didn't go "all in" like a fool. The cartel continues to beat down Gold, as it did when price neared 1560 this morning, but buyers remain and I'm not so leery of holding XG here.

More than ever, silver stocks are played in a casino and the House has full advantage. I chalk this up to losing money in Las Vegas, except in this case, the deck was completely rigged before the hand was ever dealt. In those few minutes when my hand seemed to be a winner, it was opportune time to cash in. Better to call it a day early with a small profit than to wait around for the inevitable.

6:01 am, Monday (Hawaii) Stop-loss order is in for my position in XG. It is relatively small, yet my biggest position among the three I began with today. The stop-loss price is a penny below today's earlier low of the day (13.74). That's 11 cents lower than the current price, so I can live with that much of a drop in case the puppetmasters crater gold.

12:14 am, Tuesday (Hawaii) The idiocy of trading silver equities in this climate is obvious, but in small quantities of shares, I suppose I'm willing to gamble. That's saying a lot for someone like me, a rare Hawaii resident who isn't addicted to trips to Las Vegas. Yes, Monday's miscue was about timing. Friday's sell of FAZ, sure it could be categorized as a miscue, but I consider it a calculated minimization of risk. I lean more toward risk control than my logical conclusions largely because -- I'm guessing -- the manipulation of the markets has nothing to do with logic.

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