Silver (& Gold) and why equities will fall further

Discussion in 'Commodity Futures' started by Armo, Apr 28, 2004.

  1. Armo

    Armo

    Silver has come from highs of $8.40 down to $5.53 (as quoted by my CFD provider). Thats a huge percentage fall compared to Gold. I'm not fully in touch with these markets but I'm almost tempted to buy Silver now.

    But then on the other hand, I'm pretty confident this fall is related to the reversal of 'carry trades', and my intuition is telling me that there is a whole lot more unwinding to come. For those who don't what the 'carry trade' entail - it is the borring of money at short term rates (which are historically lowest right now) and investing in longer dated, higher yielding investments - which has included, during this time of unsurpassed liquidity, commoditities and financial shares (especially REITS) and currencuies (especially high yielding GBP, and commoditity backed AUD).

    In the US, short term borirowing can finance your investing around the 1.5-2% mark. Consider REIT's yielding 5-7% a few weeks ago and commodities soring, you can image hedge funds and anybody else knocking themselves out to employ leverage in such an environment. And those inflated leverage levels are going to decrease as rates rise thereby diminishing the returns of the carry trade. We saw the beginning of it following announcement of that 308k Jobs Report - REITs went through the floor by 5-9% on average over the following 5 trading days.

    My feeling is that the path of least resistance is down for equity markets right now. News is about as good as it gets I suspect in terms of earnings, and over the last month or 2 we've experienced a contraction in PE ratios, evidenced by tghe fact prices have'nt moved despite earning growing rapuidly. The market has not responded to good news, and this is because, I believe, investors are looking forward and are not particularly inspired.

    Anyone want to help me with Silver - buy, sell, hold
     
  2. try to wet your feet with either

    some of the miners like CDE

    or mini silver "YI" on the ECBOT exchange

    * note that for "YI" there is usually a 4 cent no bust rule,

    * meaning if the Comex big contract ( 5 times the mini )

    trades 5.50 the mini "YI" should in theory trade between

    5.48 - 5.52

    there are some threads out there on elite discussing the

    metals ...

    ps if you are an established player in the futures markets

    and can deal with the extreme risk / reward in Comex

    you might want to trade there instead ... however
    with the recent volatility ... it might make no difference

    with slippage .... good luck
     
  3. completely nuts to buy silver now, IMO.
    There hasn't even been any resistance since Apr 13/14,
    and then it only took a week to blast thru it.
     
  4. thats some major trend line action in silver

    :p
     

  5. Hi Peter,

    IMHO there are 4 good reasons to buy silver now. It's called unclosed gaps, but correct me if I'm wrong.
     
  6. In addition, IMHO this is an intraday- reversal today.
     
  7. Can anyone tell me where I can get daily open interest in Silver for free?

    Thankful for any hint.
     
  8. some covering of shorts

    bonds / notes / gold / silver / equities / fx

    after the number came out

    is it more than a day trade and will it carry into tomm

    and next week ?

    ps ... open interest for the metals complex

    can be found in WSJ newspaper or the NYMEX website