So haven't written in a bit as when I go back to read what I've written over the past few months....Nothing has changed. I'm still doing the same things I was doing on the last blog. Acquiring metal stocks and chip stocks.
So over the past two weeks I've sold off my chip stocks and started moving my hedges out on the metals to take advantage of the next leg up over the next year. I was a little concerned about the metals prices specifically silver and gold until the earthquake last week in Japan as it seems they had run to hard to fast and needed to back off a bit so I kept my hedges in place(via selling short calls against my long leaps).
This worked out perfectly as the metals have sold off over the past month or so just as I predicted all based on looking at the charts and so as mentioned above, as they have bottomed out I took my hedges off and rolled those options out to match the longterm leaps in the form of a huge call spread. This way I'm still protected if they do fall out of bed, but at the same time I see more upside for silver and gold now more so than even two months ago.
Why do I say this. Simple the fed is going to print us into oblivion with QE2, 3, 4, 5 and so on. They don't have a choice after this disaster going on in Japan. Bernake(Fed chief) watches the stock market and the S&P futures like a hawk. He knows that if people feel wealthy they will spend and that sooner or later that will inflate and get us out of the dark hole we're in with regard to debt. I personally don't agree with this "spend to save" mentality but I do know what that means....higher equity prices....short term and much higher inflation and gold/silver prices long term. You can see the invisible hand reach in and buy up futures at 2-3 o'clock anytime the market has gotten soft over the past 5 months. This can't continue to go forever or can it.....with a printing press sure you can.
How high can silver go......my thoughts are based on research all the way back to biblical times in the value of an oz of silver and if you do the math....too complicated to get into at this moment it comes down to 16 oz for 1 oz of gold which ironically is also the historical measure dating back to forever ago. We've been as high as 87 to 1 and this was the ideal time to buy....which I was and was telling anyone that would listen to do the same. As usual no one brings an umbrella when it's sunny outside. FYI...I always carry one in my backpack wherever I go. :)
We've just recently broken the 40 to 1 ratio which hasn't been done in 30 years so the move is on now for silver. One of two things have to happen, gold down to get silver back in it's historical ratio or silver up. Which do you think will happen? My guess is gold goes to 2 to 3k over the next 3 year and that puts silver at 187.5 an oz. Don't believe me? Let's just say it goes to 2000 and silver only gets to ratio of 20 to 1 instead of down to 16. Still gets silver to 100 an oz.
Do yourself a favor and buy 5 calls or more if you can afford them Jan 2013 30 leaps on the SLV for 8.25 ask price as of right now....just looked, lower is better deep in the money calls and forget about them. If I'm wrong you lose 4k or so Jan 2013, if I'm correct you will be a very very happy person. If you like call spreads sell the Jan 2013 50 against that leap and you profit from the spread and the spread will cost you less.
If you do nothing else and do not follow any advice whatsoever that you hear from anyone.....just simply put this one trade on and like I said forget about it. Don't look at till next year. You will profit as the Fed continues it's printing process.
I'm not a gold bug or a silver roach or whatever you want to call em but I started buying gold back at 250 an oz and silver at 8 an oz. I've followed this metals market for 10 years much like our friend and fellow blogger follows the oil market so pay attention and listen and protect yourself.
If you're interested in looking at more than the SLV, look at SLW(best silver stock in the market only buys silver at contracted rates of $4 an oz) Look at GG, cheapest producer of gold and if you want diversity buy the GDXJ(junior miners) and the GDX(big miners).
Due your Own Diligence and Happy Investing(Trading)
Marty Blackmon
Gold and silver went on sale at the beginning of the market today. The reason is people were liquidating things they've made money in the cover the things they've lost money in(margin calls) Pick it up while it's on sale.
So over the past two weeks I've sold off my chip stocks and started moving my hedges out on the metals to take advantage of the next leg up over the next year. I was a little concerned about the metals prices specifically silver and gold until the earthquake last week in Japan as it seems they had run to hard to fast and needed to back off a bit so I kept my hedges in place(via selling short calls against my long leaps).
This worked out perfectly as the metals have sold off over the past month or so just as I predicted all based on looking at the charts and so as mentioned above, as they have bottomed out I took my hedges off and rolled those options out to match the longterm leaps in the form of a huge call spread. This way I'm still protected if they do fall out of bed, but at the same time I see more upside for silver and gold now more so than even two months ago.
Why do I say this. Simple the fed is going to print us into oblivion with QE2, 3, 4, 5 and so on. They don't have a choice after this disaster going on in Japan. Bernake(Fed chief) watches the stock market and the S&P futures like a hawk. He knows that if people feel wealthy they will spend and that sooner or later that will inflate and get us out of the dark hole we're in with regard to debt. I personally don't agree with this "spend to save" mentality but I do know what that means....higher equity prices....short term and much higher inflation and gold/silver prices long term. You can see the invisible hand reach in and buy up futures at 2-3 o'clock anytime the market has gotten soft over the past 5 months. This can't continue to go forever or can it.....with a printing press sure you can.
How high can silver go......my thoughts are based on research all the way back to biblical times in the value of an oz of silver and if you do the math....too complicated to get into at this moment it comes down to 16 oz for 1 oz of gold which ironically is also the historical measure dating back to forever ago. We've been as high as 87 to 1 and this was the ideal time to buy....which I was and was telling anyone that would listen to do the same. As usual no one brings an umbrella when it's sunny outside. FYI...I always carry one in my backpack wherever I go. :)
We've just recently broken the 40 to 1 ratio which hasn't been done in 30 years so the move is on now for silver. One of two things have to happen, gold down to get silver back in it's historical ratio or silver up. Which do you think will happen? My guess is gold goes to 2 to 3k over the next 3 year and that puts silver at 187.5 an oz. Don't believe me? Let's just say it goes to 2000 and silver only gets to ratio of 20 to 1 instead of down to 16. Still gets silver to 100 an oz.
Do yourself a favor and buy 5 calls or more if you can afford them Jan 2013 30 leaps on the SLV for 8.25 ask price as of right now....just looked, lower is better deep in the money calls and forget about them. If I'm wrong you lose 4k or so Jan 2013, if I'm correct you will be a very very happy person. If you like call spreads sell the Jan 2013 50 against that leap and you profit from the spread and the spread will cost you less.
If you do nothing else and do not follow any advice whatsoever that you hear from anyone.....just simply put this one trade on and like I said forget about it. Don't look at till next year. You will profit as the Fed continues it's printing process.
I'm not a gold bug or a silver roach or whatever you want to call em but I started buying gold back at 250 an oz and silver at 8 an oz. I've followed this metals market for 10 years much like our friend and fellow blogger follows the oil market so pay attention and listen and protect yourself.
If you're interested in looking at more than the SLV, look at SLW(best silver stock in the market only buys silver at contracted rates of $4 an oz) Look at GG, cheapest producer of gold and if you want diversity buy the GDXJ(junior miners) and the GDX(big miners).
Due your Own Diligence and Happy Investing(Trading)
Marty Blackmon
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