The next move

Update 11:40 am (Hawaii) Sure, Spot Silver and the rest of the PMs could continue lower. I'm thinking Spot Silver goes to 30 even though there's been enough correcting (i.e. carnage) and 34 should be the pivot point. But are physical silver buyers waiting? Looks like they aren't. I already wrote about one site running out of Johnson Matthey 10-ounce silver bars. Now another shop has gone out of stock of Silvertowne bars. This comes after the shop ran out of Academy bars and an "our choice" bar, both being the cheaper end of their collection. I still haven't talked myself into buying bars, especially since I decided yesterday to wait ... and prices declined huge today. 

If the physical buyers are right — and traders like Jon Najarian have already ended their SLV put/ZSL call trades — then Spot Silver may bounce soon enough. But there's also this: Spot could bounce here for a day or two, then sell off again next week. I wouldn't put it past CME and the Fed to shoot down commodities to square one, as a talking head said earlier. Nope, if I'm getting in it'll be with a very small position, both paper and physical. 

So what is the next move? I already missed the 'easy money' with ZSL. I'll project and reject out loud here ... if Spot Silver sinks to 30, ZSL will be around 30. If and when Spot Silver then rallies to 40, ZSL will pull back to 18 or 19. Then, if and when Spot Silver craters back to 25, ZSL would run to 35, closer to 40. I don't know exactly why Spot Silver will sell off more in empirical, fundamental terms. I do know human nature, and the metal bears in control will continue to devour without end, with a bit of a pause coming soon. 

Is that enough of a projection? 

So, if equities then follow commodities into the toilet in a week, maybe by mid or late May, what would be the short-term play, especially as June (QE2 coming to an "end") nears? There's always FAZ, which I haven't touched in at least a year. There's QID, EDZ ... and not a whole lot more. And DUST, DZZ, GLL, DGZ — all gold and gold miner bear ETFs. And there's UUP if the dollar keeps climbing, which I doubt will happen. But it all comes back to Spot Silver and ZSL. If CME and the Fed decide to punish Spot Silver to the fullest, it goes back to 19 and ZSL could go to 50, where it was last fall. 

Going into tomorrow's economic news and the end of the week, I probably will remain out of the market. Nothing is worth holding over this weekend. I could buy some Spot Silver and/or Gold plays, but I'd be forced to get some bear ETFs as a hedge. A net zero result, probably, which is a waste of time for peon retail traders like me. The thesis here is no thesis, and therefore no game plan. Yet. 

Update 1:19 pm (Hawaii) Leaning toward no physical purchases for now. Much as I love the look and feel of metal (granted I have a teeny collection of silver coins), it makes no sense to buy physical when it's still at a relatively high level. The time to get physical was a year ago, when Spot Silver was 18 or less ... when Spot Gold was at 1000. When a lot of people did not want to buy ... two years ago. The lack of access to trade for physical PMs is the deciding factor for me. Sure, there are dealers that will pay over spot for your physical. But that's worthwhile only while Spot prices are rising, not declining. So I'm holding off. Probably. 

Meanwhile, ZSL is up to 24.41 in afterhours trading. The volatility of PM tools like ZSL and SLV provide far more opportunity for profits (and losses) than hoarding gold or silver coins/bars. So the plan here for physical is to wait for continued bottoming, and if that means wait until Spot Silver loses another 30%, so be it. Until then, my focus will be on trading. 

And ZSL is now at 24.50 with 35 minutes left before afterhours trading ends. A lot of fear still in the PM market? Isn't the 5th margin hike already built into prices? Then again, this may encourage me to finally get my first silver bar or a few more coins. 

Update: 1:27 pm (Hawaii) I'd love to get both a few more coins and a bar. The Scottsdale Silver Stacker (10-oz) is beautiful and aesthetically appealing, but it hasn't come off its $394.99 price since the new price was posted earlier today. At that time, Spot Silver was roughly at 38 or 37/oz. With Spot Silver now at 34.40, I don't see the Stacker fairly priced until it gets to 375 or lower. I'm a little greedy that way. 

Same with the Scottsdale Silver Academy (hand poured 10-oz) bar. It's been at $397.99 since the price change earlier today. Needs to get lower. 

Sydney taking Spot Silver lower and lower ... Spot Gold, too. 

Silver American Eagles are murky to me. Sure, they're minted by the US, but paying $5 over spot ... I'm more interesting in accumulating PMs, not the collectible panache. That might sound hypocritical since I like the look of that Scottsdale stacker, but the American Eagle just isn't overly pretty to me. I'd take a few at a cheap price, though. 

Scottsdale Silver "stacker" = $394/10-oz bar

Update 2:02 pm (Hawaii) Spot Silver at 34.33. Sydney not bullish. Hong Kong opens shortly. 

Spot Gold at 1474. 

ZSL closed AH trading at 24.57. 

Update 2:54 pm (Hawaii) Avery Goodman's piece on the roiling silver market. He believes both silver and platinum will rise sooner rather than later. 

Hong Kong has opened. Spot Silver at 34.70. Spot Gold at 1486. 

Avery Goodman: The last great opportunity in silver and platinum (May 4 2011)

Update 7:31 pm (Hawaii) Always a welcome sight, a chart interpreted artistically by The Fly. I think this one should auction off in the six figures, minimum. 

But seriously, he has already indicated that Spot Silver is heavily oversold according to his in-house algo, the PPT. In fact, Le Fly has noted that there has never been a single vehicle as oversold as silver. Then again, when machines are running everything, there's no telling when the end of the carnage will happen. If ever.