![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/sp_en_6.gif)
Silver
- Thread starter Strawboss
- Start date
- Joined
- Mar 31, 2010
- Messages
- 8,614
- Likes
- 17,297
Yes but - the key to keep in mind is that it will take a while for the companies to start closing mines. Weatherman makes the same point as you do in this regard - and my rebuttal to him is the same. Copper mines arent closing in the next few days/weeks or probably months. Heck - it could be another year or more before they start closing.
Yes, I sold call options to "lock in" gains on my mining shares, without selling out of them. Its similar to a put in that you sell call options when you think share prices might go down or sideways for a period of time. But different in that the gains are limited in selling call options, but virtually unlimited in buying a put option.
Call options are sold with the hope that they expire worthless, which mine did.
Call options are sold with the hope that they expire worthless, which mine did.
- Joined
- May 3, 2010
- Messages
- 35
- Likes
- 18
He started with a blank piece of paper. The then wrote some words on the paper. It said "the bearer of this piece of paper has the right to buy x * 100 shares of "abc mining corp" if and only if the price = $5 per share or above. This offer only good for 27 more days. So he "wrote" a call.
He then had the choice to put that call option under his pillow, or sell it to someone who thought that "abc mining corp" would rise above $5 dollars within the next 27 days. So he sells the call option he just created (he wrote). Lets say "abc mining corp" went to the moon, and a few days later was trading at $23 a share. If the jelly had no shares, and the owner of the call wanted to "exercise" against jelly, then jelly would have to buy shares on the market and sell them to the owner of the call. So selling "uncovered" calls can be a very expensive mistake if the stock goes through the roof. But since jelly owned the underlying shares, no matter what the current market price, jelly will sell his shares for $5 a piece (plus the cash the buyer paid for the option contract)
Now, if the the shares are below $5 for the whole 27 days, then jelly keeps the money the buyer of the call option paid to him, plus the shares.
He then had the choice to put that call option under his pillow, or sell it to someone who thought that "abc mining corp" would rise above $5 dollars within the next 27 days. So he sells the call option he just created (he wrote). Lets say "abc mining corp" went to the moon, and a few days later was trading at $23 a share. If the jelly had no shares, and the owner of the call wanted to "exercise" against jelly, then jelly would have to buy shares on the market and sell them to the owner of the call. So selling "uncovered" calls can be a very expensive mistake if the stock goes through the roof. But since jelly owned the underlying shares, no matter what the current market price, jelly will sell his shares for $5 a piece (plus the cash the buyer paid for the option contract)
Now, if the the shares are below $5 for the whole 27 days, then jelly keeps the money the buyer of the call option paid to him, plus the shares.
I purchased some Jan. 2016 call options on SLV on Friday. Due to the lack of volatility in silver, the options on silver are dirt cheap right now. If silver comes to life and starts making some moves higher, the options will increase in value significantly.
I only bought a very small amount, so I'm not out much if I'm wrong. However I do think we'll be much higher than $19 come 2016.
I only bought a very small amount, so I'm not out much if I'm wrong. However I do think we'll be much higher than $19 come 2016.
At what strike price Jelly? I used to buy way out of the money leaps. Leaps are another name for very long dated options. So i would buy an 18 month out expiration date call option on SLV @ $30 strike when silver was trading at 18 lets say. This was until the compliance accountants at my firm told me to stop. New policy they said, no securities of any kind without express authorization from compliance, and oh, disclose all monthy brokerage statements from now on. Which was OK because that was part of the reason why i switched gears and started my phyzz accumulation phase. And I was a not a very savy phyzz buyer right out of the gate, buying tubes of silver eagles off fleebay at sometimes super inflated prices.
I did the $24 strike price.
If we get a pullback next week in the miners I may pick up some 2016 GDXJ calls. I think the stocks will perform better at first as they recover from extreme discounts, so gdxj calls would likely be a better play than slv calls. I just thought the SLV calls were good buys given the lack of volatility (and hence cheap options). I already hold a couple 2016 $50 gdxj calls, and will likely pick up a couple more.
Again, these are just fun speculation, but I think they will turn out very well considering the oversold condition on the long term charts, and the extreme negative sentiment.
On a side note - if you know what to look for in junior miners and exploration companies, those will perform as well as call options, yet will never expire.
If we get a pullback next week in the miners I may pick up some 2016 GDXJ calls. I think the stocks will perform better at first as they recover from extreme discounts, so gdxj calls would likely be a better play than slv calls. I just thought the SLV calls were good buys given the lack of volatility (and hence cheap options). I already hold a couple 2016 $50 gdxj calls, and will likely pick up a couple more.
Again, these are just fun speculation, but I think they will turn out very well considering the oversold condition on the long term charts, and the extreme negative sentiment.
On a side note - if you know what to look for in junior miners and exploration companies, those will perform as well as call options, yet will never expire.
On a side note, after last week it appears that silver has begun the next stage in the bull market. And the key is oil. Oil staged a nice strong breakout from resistance, and the precious metals and oil typically go hand in hand. Now that oil is starting to head higher, I expect silver to do the same. Not to mention the oversold condition on the long term charts, and the extreme negative sentiment. As a contrarian investor, Silver is a no-brainer right now.
I know more experienced people think silver is still in a downtrend, and will continue lower this summer. But in my opinion, this is it, this is the beginning of the next stage in the bull market.
I know more experienced people think silver is still in a downtrend, and will continue lower this summer. But in my opinion, this is it, this is the beginning of the next stage in the bull market.
Last edited:
Thanks, I will have to look into those on my next purchase. I think long term options on silver right now are an excellent buy if you think the metals are going higher starting this summer. Due to the complete lack of volatility over the past couple months, the premium on SLV call options has decreased significantly.
But like I said, GDXJ calls are a much better buy as the miners basically explode coming out of a correction like we've had. That is where the biggest gains will be at first. And what you have mentioned is why I'm buying the GDXJ calls as well. If a nice miner you own shares in is nationalized, you are sunk. However, GDXJ will barely be affected by a nationalization. So its safer. Of the mining stocks I do own, I'm very careful about where their mines are. I refuse to own a company who mines in a unstable country. When gold and silver really take off in a few years, you can bet there's going to be a string of nationalizations as the coming hard times will cause governments to become desperate for money.
But like I said, GDXJ calls are a much better buy as the miners basically explode coming out of a correction like we've had. That is where the biggest gains will be at first. And what you have mentioned is why I'm buying the GDXJ calls as well. If a nice miner you own shares in is nationalized, you are sunk. However, GDXJ will barely be affected by a nationalization. So its safer. Of the mining stocks I do own, I'm very careful about where their mines are. I refuse to own a company who mines in a unstable country. When gold and silver really take off in a few years, you can bet there's going to be a string of nationalizations as the coming hard times will cause governments to become desperate for money.
- Joined
- Mar 31, 2010
- Messages
- 8,614
- Likes
- 17,297
Southfork - I hope you didnt take my disagreement to your previous statement as personal...it was NOT. YOU are one of the people on GIM2 whose opinions I value the most...I just cant agree with you on the point in question...just wanted to make that clear...
Having said that...YES...SLV is exactly like Crimex...levered to the gills...and when the music stops...its going to be a time of weeping and gnashing of teeth...
Having said that...YES...SLV is exactly like Crimex...levered to the gills...and when the music stops...its going to be a time of weeping and gnashing of teeth...
I did say it was backed by 100% real silver (derivatives). The zero counterparty risk was a joke, so good on all of you for disagreeing.
Maybe I will say it this way. SLV is likely not backed by real silver. I would add that the extremely low audit cost tells me that not even the auditors are counting each bar of silver.
Maybe I will say it this way. SLV is likely not backed by real silver. I would add that the extremely low audit cost tells me that not even the auditors are counting each bar of silver.
Hmmm, Strawboss. Silver up a buck in a day, and barely a mention on a forum called "Gold Is Money".
Most guys on this site wouldn't buy silver if it sauntered up to him wearing lipstick and a tight skirt. (Ok, exaggerating for effect, so sue me!)
I bought a long-term option 2 days ago that was betting that silver wouldn't trade above 21.65 by January 15, 2016. Got that? 2016!!
WTF? You guys are so beaten down it is incredible. But that is a pretty good sign. Did you see the CPI report that just came out? The Feds didn't care, are still fighting deflation. But no. What we have is accelerating inflation at the moment. Still low, but rising rapidly, assuming trend continues.
What's not to like?
Ever consider a contrarian stance?
Best to all,
dpong
Most guys on this site wouldn't buy silver if it sauntered up to him wearing lipstick and a tight skirt. (Ok, exaggerating for effect, so sue me!)
I bought a long-term option 2 days ago that was betting that silver wouldn't trade above 21.65 by January 15, 2016. Got that? 2016!!
WTF? You guys are so beaten down it is incredible. But that is a pretty good sign. Did you see the CPI report that just came out? The Feds didn't care, are still fighting deflation. But no. What we have is accelerating inflation at the moment. Still low, but rising rapidly, assuming trend continues.
What's not to like?
Ever consider a contrarian stance?
Best to all,
dpong
- Joined
- Mar 31, 2010
- Messages
- 8,614
- Likes
- 17,297
RSI on silver is currently at 80 on the daily.
Silver is very much overbought at this juncture. Now - whether silver can bleed off its overbought condition without being smashed remains to be seen.
I suspect that this is a short covering rally - it has all the indications of being such...
What I will be looking for is for silver to make a higher high (after a short correction) but where the RSI peaks at a lower number than present. That would create a negative divergence and be a sign that the short covering has exhausted itself...
Now - just because that is what i am looking for doesnt mean that is what is going to happen...Silver could fly straight to $26 for all I know. I highly doubt it...but, with silver anything is possible.
Silver is very much overbought at this juncture. Now - whether silver can bleed off its overbought condition without being smashed remains to be seen.
I suspect that this is a short covering rally - it has all the indications of being such...
What I will be looking for is for silver to make a higher high (after a short correction) but where the RSI peaks at a lower number than present. That would create a negative divergence and be a sign that the short covering has exhausted itself...
Now - just because that is what i am looking for doesnt mean that is what is going to happen...Silver could fly straight to $26 for all I know. I highly doubt it...but, with silver anything is possible.
True enough, Strawboss, and I really respect your work. But at $22, please become a believer.
I was late to the party a little, and only bought silver at 7.50. I had been concentrating on gold before that. But 7.50 felt like picking up money off the floor. And at this point in the 'cycle' if you will, buying under 20 feels the same way to me. Some patience may be required, but this thing has been beaten and kicked in the teeth. Blood is already in the streets, as it were. And economic times they are a changing.
Best of luck to you and yours,
dpong
I was late to the party a little, and only bought silver at 7.50. I had been concentrating on gold before that. But 7.50 felt like picking up money off the floor. And at this point in the 'cycle' if you will, buying under 20 feels the same way to me. Some patience may be required, but this thing has been beaten and kicked in the teeth. Blood is already in the streets, as it were. And economic times they are a changing.
Best of luck to you and yours,
dpong
- Joined
- Mar 31, 2010
- Messages
- 8,614
- Likes
- 17,297
GIM2 is a place full of veterans of the PM price wars. Many of us have been here for years and years and have seen this sort of thing over and over and over again... A one day event doesnt do much for us...
We all have our physical stash in addition to whatever paper positions (if any) we may have. If the price continues to rise...GREAT. Looking forward to it. If it crashes and burns...I wouldnt be surprised. I still think $14 is a distinct possibility. It doesnt HAVE to drop to $14 - I am just saying I would not be surprised if it did over the next several months to about a year from now...
We all have our physical stash in addition to whatever paper positions (if any) we may have. If the price continues to rise...GREAT. Looking forward to it. If it crashes and burns...I wouldnt be surprised. I still think $14 is a distinct possibility. It doesnt HAVE to drop to $14 - I am just saying I would not be surprised if it did over the next several months to about a year from now...
I, too, am a veteran with (well, I won't tell you), and seen the wars. I was an Admin on this site, and you may or may not remember me. We HAVE seen this thing over and over again, and it has trained us to duck and cover. I have told you that I respect your work, and I do. You may be right, and I may be wrong. I'm just pointing out that Silver sentiment is what seems to me to be EXTREMELY low. EXTREMELY. Inflation is at low levels but starting to tick up.
I admire your discipline, and I recognize it.
Simply I urge you in your overall view to consider the contrarian position.
And I wish you the best of luck and fortunes.
Kind Regards,
dpong
PS. If Silver Sammy comes back, well then............
I admire your discipline, and I recognize it.
Simply I urge you in your overall view to consider the contrarian position.
And I wish you the best of luck and fortunes.
Kind Regards,
dpong
PS. If Silver Sammy comes back, well then............
Silver has been ice cold lately. But I suspect that will change shortly. But now, at the beginning of the summer doldrums? Sure, if what they are saying over at zero hedge is true. There will be blood on the streets in China, after the full story of the warehouse rehypothication fiasco comes to light. They are allready closing their hedges on the futures markets, buying futures to zero out the short side protection on all that phantom long gold and silver in their empty warehouses.
Attachments
Oh, should you buy in the summer doldrums, or sell?
I'm not pumpin', I'm just sayin'. My technical analysis doesn't show me any promise for silver. My gut sort of does, but with a medium to long-term horizon. Not saying it is the bottom, but it feels cheap given the inflation numbers I'm expecting to see in the not-too-distant future. Once everyone digests inflation numbers, it won't be the bottom anymore.
As stated, best of fortune and luck to you and yours,
dpong
I'm not pumpin', I'm just sayin'. My technical analysis doesn't show me any promise for silver. My gut sort of does, but with a medium to long-term horizon. Not saying it is the bottom, but it feels cheap given the inflation numbers I'm expecting to see in the not-too-distant future. Once everyone digests inflation numbers, it won't be the bottom anymore.
As stated, best of fortune and luck to you and yours,
dpong