3:17 am (Hawaii) So, to no surprise, crude oil opened down in premarket trading and is stuck at 101.70 (-0.85). That's put me underwater already for the day and I've opened a small position in SCO at an average cost of 43.80. Naturally, SCO is down, too, to 43.55 now, but the hedge is important. UCO could easily dip below 50 (there it goes just now), so I've got to be hedged.
AGQ was up above 222 while I took a nap. I woke up and it was at 218 and it has dropped as low as 213 (below yesterday's close). Too bad I didn't sell at 218, but Spot Silver is in decent shape with the dollar below 75. I don't advocate holding anything silver overnight. CME (Comex) are devil bastards, but I've come to think of them as just another tool to read in this twisted market. If there's a way to make money off CME, do it. For example, if I had sold my UCO position before the closing bell, I'd have made a little profit, then I'd still go long (short, actually) through SCO after CME screwed crude oil longs with the margin hike. (The news came out after the bell and SCO was at 42.60 or so at the time.)
And as I type, crude craters more. Now down 1.70 to 100.85. Question now is whether to cut losses or wait for a bounce. Or just let SCO do the hedging. Not sure it's going to be big enough of a hedge.
Update 3:43 am (Hawaii) The best move with my crude positions would've been to dump UCO at 50.80-50.90 in premarket. I was napping at the time, hadn't slept since Sunday morning. Hindsight.
UCO now back up above 50, and though I think it will get back to my entry point (51.40), it won't be anytime real soon. Just a matter of patience here. It's not a loss unless I cash out.
Update 4:03 am (Hawaii) Three minutes ago, at 4 am here, AGQ spiked up from 216-217 to 218 and then 220 on major volume. UCO also spiked to an extent. (And my SCO dipped, now 43.40.) What's going on? My guess is short covering. We're now back to normal volume as of 4:05 am. Someone got scared as shit and unloaded. If PMs and crude keep pushing higher, I need an exit point for SCO. Maybe 42.80.
Update 4:11 am (Hawaii) Whether you look for bloggers or analysts or the stars above to give orders to buy or sell, I was thinking along the same lines as
crusty SGS on Friday. He thought it was time to buy physical silver, and that coincided (the next day) with my first purchase of American Silver Eagles at a nearby coin shop. There's no question that a 5-10% allocation for precious metals makes great sense in any portfolio, but only when PMs are at low prices. Though I got my ASEs for "only" $40 and change, well below other prices I saw online — Spot was at 35 — nothing beats paying 50% less for the physical. To do that, of course, required vision and conviction ... in 2009 or '10.
I can't see buying more physical with Spot at 38 or 40 or 50. I'd rather wait for another pullback. (Over the weekend, I expected Spot to fall as low as 30 before rallying.) I'm far more picky and stingy about actual physical shopping than I am about stocks, it seems. Something wrong with that picture.
It's odd and new for me that owning just a little bit of physical silver while watching Spot zoom higher leaves me bittersweet. And more inclined to hold my AGQ position. Or add another silver play like EXK or GPL, both small miners. XG, my favorite small gold miner, is up 1.8% to 10.06.
Update 4:36 am (Hawaii) Sold my small SCO position at 42.80, as planned. Sure, I lost a little bit of fiat there, but it was very good hedging in case the crude market fell off a cliff. Don't think that could happen? I bet you it could, if just for a few days or a week, with one or two more margin hikes from the CME mafia. And with that, UCO has now moved up to 51.62, above my entry point. SCO gave me quite a bit of peace of mind. If I were the kind of trader who could sleep through any market, I wouldn't have needed insurance. But I'm not sleepy, I want to score small and big wins during the trading day, and I'll only be disappointed with this morning's action if crude craters again, i.e. CME mafia maneuvers.
If they announce another margin hike, it's back into SCO for me. I'm a pilot fish.
Update 4:54 am (Hawaii) Will we see another CME assassination attempt on Spot Silver? Probably. I'm 95% sure. But the question is really, When? I noted not so long ago that the run from 19 to 49 would lead to a reasonable pullback of 50%, which was 34. Spot eventually bottomed at 33 (or 32+ overseas if you want to be exact). Point is, there is possibly a line of reasoning for CME when it comes to pressure and margin hikes. I doubt Spot Silver will run to 49 as quickly as it did the first time, and that is likely in the plan for CME. They know they can't keep the price fixed at 19 forever, or even 10 seconds.
So maybe we don't get another silver blindside crash for some time. Maybe it's not just about price, but volume. Velocity and speed of increased price. Maybe CME mafia can handle a 10% gain in Spot Silver in 30 days. How about 15 days? Maybe. How about 7 days? 33 to 36 or 37 in one week? Seems more acceptable for all parties, including silver bulls who really don't want the froth and momentum trading.
Of course it's just a guess. But if 10% up each week keeps the market "stable", maybe there won't be another hike for weeks or months. Maybe. That would take Spot from 33 to 36.30 to 39.90 to 43.90 by the end of this month. Then we enter June, the Fed stays quiet about QE3, people get nervous and everything begins to sell off, a crescendo of concern, then worry, then fear, then terror. Does Spot go back to 19 then? Nobody really knows. I doubt it would stay there very long, though. Maybe a flash crash (when volume is almost nonexistent) kicks in to give the battered market a bottom in mid or late June.
I don't see Spot Silver going below 19. At some point, it will remain more valuable than many stocks. Only a hike in interest rates, at least 50 points, would keep the market buried through July. But, but, but . . . if, as I expect, the Fed keeps pumping the economy with billions of fiat currency "under the table" without a QE3, that lifts PMs. No matter what, the dollar won't hold any gains for long. Worst-case scenario, Spot Silver ranges between 26 and 34. Best-case, 34 to 42.
Actually, Spot's true best-case scenario would be China announcing a gold and silver backed currency. Then there's no way to gauge how high PMs would be valued. Not that most physical investors would unload any. There's not much that can be done with dollars that would be depreciating (by that time) at a horrific rate.
Update 5:12 am (Hawaii) Watching that dude doing the
urban gold mining thing on YouTube is inspiring. No, I have no desire to become a gold and silver jewelry buyer/trader. He is special in that niche and very generous with his knowledge. But it's clear that there is great value out there that isn't being appreciated. Stuff sitting around people's homes, collecting dust, and he found a way to benefit these folks and himself (of course). He was ahead of the game, if you watch his videos and see. He was serious about collecting and investing in gold and silver two years ago.
He doesn't post videos much anymore, but they're awesome viewing. Go
here and enjoy.
Update 6:12 am (Hawaii) For me, it's good to think about patterns and possibilities and probabilities. Otherwise, it's pure guessing without substance. So if Spot Silver gains more than 10% in a week's time, I'm going to be even more cautious, unload any positions lest CME mafia attacks overnight. I know SLV trades at a .975 rate to Spot. There are other correlative ratios I like to test.
Update 7:09 am (Hawaii) Something about UCO did not smell right or feel right the past 10 minutes and my hunch turned out right. It sold off from 51.80 to 51 except for a blip higher when CNBC reported on crude oil not being hit for long by margin hikes. I got out at 51.05 for a small loss. Sucks that I didn't get out at break even or at 52, which would've been a decent profit. But somethings wrong with UCO. This was still a far better exit point than anything early this morning when it traded down to 49.30.
Update 7:14 am (Hawaii) Smells like the run is done for PMs short term. Spot Silver went from 33 to 38+ in three trading sessions. If I were truly neutral, I'd start thinking about getting ZSL (double short silver). There's just not enough buying pressure and AGQ has lost its heat. The oven is on simmer and getting cold. And now AGQ just traded below 219.
Update 7:17 am (Hawaii) Sold AGQ at 219.33 for a gain of almost $10/share. Had enough of this flatline — 40 minutes with almost no positive action. The less time spent in it, the better. There will be many other points of entry. Maybe better ones. But post-lunch is when a lot of hotties start cooling off and when they do, things get frigid real fast.
There it goes, 219.16 and falling ...
8:27 am (Hawaii) Top-heavy action in AGQ. Not long after I exited at 219.33, heavy-volume buying entered. The MACD and stochastics lined up beautifully bullish, but I paused on the buy at 221.65 and it ran from there to 224+. Crazy fast. I entered a position based mostly on buyer's remorse, it seems, and got out with a $1 loss, very small. I'm still up for the day with a modest gain.
Spot Silver jumped to the 38.80 area, but has come back down to 38.60 since.
Update 1:15 pm (Hawaii) Finally got some sleep. So good. Now I'm wondering why the hell I a) got out of AGQ when I did, and 2) re-entered at 223.99. That turned out to be a waste of time and energy. AGQ ran out of steam there — no surprise after leading my metals list in gains today — and I sold out at 222.90 for a very small loss. Apparently, I am getting emotional with my trading, which is interesting and stupid. I have no real emotional attachment, there's no CEO talking up a new product, no lines around the block for the store . . . no attachment. But there's always remorse and greed, and that has more to do with my own emotional state, and I believe I should've shut the computer down and gone to sleep (none since Sunday morning except for a nap early this morning in my car) rather than continue trading.
Part me wants to be in AGQ for an overnight bounce, but with Spot hovering just below 39, the wise words of Teacher Turd echo in my hollow cranium. This is probably not the ideal time. He knows a second bottom is coming. I was far less optimistic, thinking Spot had to fall to 30 before rallying. So why would I chase AGQ now? What I may do before afterhours closing is done is open a partial position. Nothing huge (by my standards).
Spot Silver, silver miners, gold miners, metal stocks, metal etfs, physical metal . . . it's amazing what all of it adds up to, and how it is all universally connected in so many ways. When the Hong Kong exchange begins trading gold futures, and then silver, on May 18 things get ever MORE interesting.
As nations hoard precious metals, even sending agents abroad to collect more bit by bit on the open market, I realize that there's only so much value to a retail peon (me) buying physical at these high levels. The time to gather physical was last year. The year before. So I'm staying perched on the lookout for news, the kind that is golden, the kind that involves major nations and more "investment" in PMs. Again, the pilot fish mentality. I'll ride these whales all I can without losing my natural aversion to risk. The goliaths of earth can hoard all they want. I can profit from their wise economic decisions. The markets are often rigged, but they can't kill off us pilot fish, not those of us who are nimble.
Looks like I sold out of UCO far too early. I took a small loss and sold at 51.05. UCO is at 52.61 after hours. That 25% margin hike by CME mafia 24 hours ago (7:30 pm Eastern) knocked crude down, but not out. (Crude oil is at $104+.) Not even close. Shows that crude would be even higher today without that hike. Today's move also shows that there are more hikes coming. Spot Silver took five whipsaw cracks to the chin from CME for a total of 87% in hikes last week. I expect the same for crude.
Better to stay out, stay tuned in and jump on the shark's back when the news comes out. SCO is a favored weapon now along with UCO.
100% cash. Locked and loaded.
