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/Market Trend Signal) 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. I have been a bit disturbed lately to hear of students that are risking everything on these recommendations. That is not what I have taught you. I teach trading...not gambling. If you are going to ignore my teachings, you better be willing to take responsibility for your decisions. If you have not had my coaching classes, please do not trade any of the recommendations in this blog. You need to know what you are doing first. Trading is more than just stock picks. That said, I always appreciate Chaz's opinions and commentary. Thank you Chaz!


Good Evening Traders. It seems we have some interesting changes to deal with. I've spent the last few days checking with other analysts and I can't seem to find even one credible analyst who accurately predicted this recent take down in silver. There are NO ifs, ands, or buts about it. This was the most criminal act I've ever witnessed in the commodity markets. And NO ONE is being charged or even investigated for wrongdoing. Our government is clearly assisting the major bank shorts to clear their short positions. We know that more than 16 THOUSAND positions were covered in this take down. That's unbelievable. We clearly have a new paradigm to deal with. Again, I do not have the luxury of going into great detail of what is happening but my current thoughts are this..... The silver price has been much too slow to rise over the last week. This dashes any chance of a rapid recovery in the next few days. I believe that the silver price will stay in the $32 range until after Oct 26th, which is the November contract expiration date. There is very little open interest in the Novembers but December is HUGE. I normally like to sell my options about 30 to 40 days before expiration in order to avoid time value erosion but I plan on keeping my December 40 calls because I have reason to believe that silver will rise dramatically after the November expiration. Even if it doesn't, WHEN it does, it will be VERY volatile and dramatic. I will not be surprised to see some volatility over the next two weeks but I'm not planning on trading it. I am well positioned for December and March and I have no concerns about WHEN the move occurs. I've seen this too many times . It WILL occur. If it doesn't happen by December, I will start adding on May positions. ....For Jerry's students, those of you holding the January SLV 40 calls, I strongly suggest you HOLD. The December commodity options may not pay off but I believe the Jan SLV will. If you have Jan SLV calls, you might want to consider exiting them by Dec 20th at the latest. Most major traders leave for Christmas vacation on the 20th and don't come back until the 2nd week of January. It's NOT a good idea to be trading over the holidays............. There is one other little thing. The weakness in the silver market indicates that there is a slight chance that the shorts may try to take silver down even further. If they do, it will likely occur this week. Maybe in the morning. IF this happens, try to buy as many far out options as you can. A further take down will only last a couple of days at best. It will be a Heaven sent gift. If another take down occurs, the recoil will be ferocious. For the record , I did buy some December puts just in case there is another take down. I do NOT recommend you do the same ( play both sides of the market ) unless you have experience with this type of trading. Remember this, silver is a manipulated market and the manipulators are losing control of it. They rule it now but they won't for much longer. One last thing. NEVER trade more than you are willing to lose. There are NO guarantees in this business. What looks like a good trade today can look like a stupid idea in the morning. For the umpteenth time, I do NOT predict markets. I offer my opinion of what I think is the MOST likely scenario to occur. Thats it. Good luck and happy trades...... Chaz ....Sunday ..Oct 16th