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.

Good evening traders. Just a quick note here. Triple witch is coming up fast and as expected, the metals are getting hit on. They may get slammed. The shorts certainly do not want the silver contracts expiring at these levels. We did not get the fireworks we thought might happen last week and after the hits of the last two days, it appears the shorts are going to come on strong and beat silver down. Our 50% retracement rule would suggest that silver may go as low as $31.57 or thereabouts. When triple witch comes around, sometimes its just a good idea to clear your positions and wait for it to pass before resuming trading. And that is exactly what I did today. I sold the May 35 calls, the May 40 calls, and bought 5 May 50 calls as insurance in case we do get fireworks. You never really know exactly what is going to happen so its a good idea to play both sides. All we can really do is carefully examine market technicals and fundamentals and make our best educated guess on what is most likely to happen based on the information we have at hand. My best guess is that this market is going to correct this week and next, possibly as low as the $31.50 range. However, once triple witch is over, I think silver is going for a foot stomping rally to $39.00 or more. And it may happen VERY quickly. I will be buying back into the May 31,33,35, and 40 calls next Wednesday and Thursday which is when silver should be bottoming out. My original intention was to end this commentary at spring break but I have a lot of new readers who want to learn more so I'm going to keep this up for a while to try to give them a chance to learn more and to maybe take that brave step forward. Besides, with what is going on in silver, this is getting to be fun. ....A quick word on gold. I really don't see it dropping much below $1400.00. This market seems to be dominated largely by happenings in the Middle East. Silver is being dominated by a massive shortage that can't be hidden any longer. Silver is what we need to be concentrating on. It is going to be one of the greatest trades of this century. ....I don't think that's an exaggeration. Time will tell. Soon......Happy trades...Chaz....Tuesday, March 8, 2011....10:40 pm.