Wednesday, June 11, 2014

Hi Ho Silver! BTFD!

After reading this post by the Short Side of Long, I am reinvigorated about my convictions regarding silver. Just look at the chart!

As you can see, whenever COT Silver position is very low (low number of long positions), there is usually a tendency to make an abrupt upside move, even if it is only for the short term. However, considering that this looks like a triple bottom consolidation, this might be the last time we see silver within this tight range!

A previous post showing silver's 3 year's rolling performance is also telling me that silver is due for better performance in the future to come!

Finally, Market Anthropology wrote a great post about silver as well. The key takeaway from me? There are 50% more shorts than there were last July when silver came down to this support line. How many more shorts will it take to break it down? And if it does break down, how much further can it drop? What happens when people starts to cover?

Those are all valid questions and concerns if you ask me.

But in any case, I will not be leveraging myself and crazy gambling on this like my previous trade on silver in early May (I am still holding onto my position!). Instead, this time I will be loading up on a nice hefty amount of physically backed Vault Gram Silvers on every slight pullback. I think it is prudent for me to drastically increase the amount of my wealth that is held in precious metals. My current precious metals holdings is a mere 0.63% of my net worth! I plan to slowly reach at least a minimum of 5% within a few weeks if it starts grinding higher. A better case scenario is if it totally crashes through the floor now and finally shake out all the weak hands. I will be loading the boat up in that scenario and probably aim to have more than 10% to even upwards of 20% of my wealth transferred over to precious metals (mainly Silver) before it recovers back to the $19 USD mark!

After watching the Hidden Secrets of Money series again and doing more precious metals research over the weekend, I have much stronger conviction of what is going to happen in the future. It could take months or years, but it doesn't matter. Silver is so beat down, I do find it very hard to see it considerably lower, I dare say $15 should hold its own.

If you are also thinking of investing (note: not speculating) on silver and other precious metals, you might be interested in my post regarding the cheapest silver dealers in Singapore or a more broader article about precious metals investing in Singapore.

Precious metals have been one of the trades that I see enormous risk-rewards, and I bet I will be knocking myself on the head for always being too afraid to accumulate more when it was so cheap.

Good luck out there guys.

No comments:

Post a Comment

Observe the house rules.