Gold and Silver Update

This post is from Chaz...a commodities trader that writes a monthly newsletter on the precious metals market. He has given me permission to post it on my blog. As a disclaimer...I (and Option Magic) are not responsible for the content or recommendations in this newsletter. Also...a lot of this information relates to trading the actual commodities. There may be some terms or strategies that you don't recognize. This update is meant to be an information guide for those of you that are trading gold and silver...or just the gold and silver ETF's like the GLD or the SLV. This commentary is opinion and analysis. You must still use good money management and trade management principles. You must also read the charts. No one...I'll repeat...no one knows the exact future of any event on Wall Street. You must still do your due diligence. Thank you Chaz.


Hello traders. This update is a little late. My apologies for that. Just to much going on lately. Last time, I warned you about this being a dangerous market. Looks like I hit that one dead on. I made money in it because I was playing both sides of it. I warned you not to follow me into this market and I hope most of you took that advice. If you are still holding July calls, you might want to seriously consider getting out as it does not appear these calls are going to pay off. Especially since we have triple witch bearing down on us in a few weeks. Markets only move in three directions. Up , down and sideways. NO ONE can tell you which direction a market is GOING to move but it is possible to determine which direction a market is MOST LIKELY to move. That is what we do here. If you have never lost money in the markets, then you've not been trading them. If you are afraid of losing money in the market, then you don't belong here. Get out now and go open a savings acct like your parents told you to. Commodity trading is not for the faint of heart. If you have the courage and do your homework carefully, there is a good chance you can change your life. I know that for a fact. It changed mine. Here are two thoughts from my own experience for you to consider. I once lost $50,000.00 in a single day. I also once made $10,000.00 in just 10 minutes. If I had had as many positions in my winning trade as I had in my losing trade, I would have made over $2,500,000.00 in just 10 minutes. This happened years ago when I was trading contracts. Fortunately I came to my sense's before it was too late so I no longer trade contracts. I trade options only. I strongly recommend you do the same if you still have the courage to trade. Ok, lecture is over. ......I have exited all July calls. Looking at September, I'm not getting a warm fuzzy. However, December is making me think I'm in love again. It's giving me wonderful fantasies........Nope , I'm not going there. Lol. ......OK, this is what I'm looking at. Silver has corrected as low as $32.15 which is exactly where I said it needed to go in last months commentary. However , there is still that annoying little gap at $29. GAPS ARE MADE TO BE FILLED!!!.....I don't know if this one will be but I want to err to the side of caution. I started to send a notice out a few weeks ago that I thought silver would probably trade in a channel between $29 and $39. I regret not sending that notice out because it has done exactly that. Had I been more diligent , I might have been able to prevent some possible loses to some of you. My apologies for that. But wake up and smell the coffee here.....It is NOT my intent to hold your hand and tell you how to make money in commodities but rather to TEACH you how to learn to trade by looking over my shoulder and seeing what I see. Mistakes WILL be made. Loses WILL incur. Hmm, I think I'm lecturing again. .... Back to the markets.... I think it is likely silver will continue to trade sideways till triple witch is over in a few weeks. I don't look for much to happen. After that, well , they don't call summertime Silly Season for nothing. Summer trading is always erratic. Anything can and often will happen. I KNOW a monster move is coming soon but I don't see it happening this summer. That's why September calls are not giving me a warm fuzzy. HOWEVER, after the September expiration, I'm pretty sure we are going to see large and rapid movement. A few weeks ago, I started placing orders for the Dec 40 calls. I have acquired a few and still have orders pending. I had to pay a fortune to get them. I still have orders pending and hope to get a lot more. It is a VERY cold day in hell when I buy an option that is more than 90 to 120 days out but in this case I believe this strike is going to pay off in spades. If we continue with this correction down to $29 , it may be possible to acquire the Dec 40s below $10,000.00 each. IF someone is dumb enough to believe this market is out of steam and decides to offer them. ....Ok, here's where I put my head on the chopping block. I KNOW we will be over $50 by November. I BELIEVE we will be closer to $60. I THINK we could be as high as $80 on an intra day move. I SUSPECT $100 is possible. Not to hold but to reach on a wild trading day. A few months ago, I told you we would soon see one dollar moves in a single day and then moves approaching five dollars in a single day. This has come to pass and is now history. Now I am telling you that we may see moves this fall ranging from $5 to as much as $10 in a single day. There are no daily limits in the metals markets. Moves like this can give a contract trader a heart attack. Seriously. Don't be tempted. If you are going to trade, trade options only. Or buy physical and hold it. Physical holders...DO NOT SELL ANYTHING unless you have no choice and must have the money. The price of silver next spring is going to blow your mind. Ok, it's late, I'm tired and I'm done rambling for now. I'll try to make comment around triple witch. By then , we should have a better idea of what is likely in the late summer. Happy trades.......Chaz...Saturday, June 4,2011