Silver Crash [Updated]

Silver is down from $40 to $30 in just two trading sessions. This is where and when the real money is being made, and the losers will finally appear naked (see Eric Sprott and his $300 silver forecast).

My options gaped in the hundreds of percents, unfortunately, I closed some yesterday, with a gain of +450%. Those would have been at +1200% for an extra 24 hours of exposure. Such a shame.

Option positions, open last Friday evening, closed yesterday. Decent gains in just 4 trading days...

Current options portfolio. Let's see how much more silver can drop.

Now the question is, how many of the silver bulls sold at close to $50? or even after the crash and bounce, at $42? Long term investors will be killed in the next few months.

I am still looking to buy and hold silver, but not until it reaches sub $10.

Just about an hour after I posted these charts and figures, silver took another leg down. Here are the updated screens:

Clarification: It looks like I was not clear in my post: I am looking to buy and hold silver on the long term, only when silver is sub $10. Probably actually sub $7.

Silver just dropped $12 in two trading sessions, that's about 30% drop. 

Be sure that conspiracy theorists will come up during the week-end with lots reasons why central banks, JPMorgan and evil speculators teamed with the exchanges to make this happen. The reality couldn't be further from the truth.

That said, I have been considering going long silver for a bounce that should be on track for next week, but options implied volatility was too high to be worth buying them — premium of 5% notional for an ATM option with 5 days of theta. I considered going long the futures or the SLV, but I decided not to carry the risk over the weekend. I will look forward to the open on Monday in APAC to find out what I will do. Objectively, I think next week I'll have to go long silver for the bounce back. Not sure exactly when yet.


Anonymous said...

I sold the last of my rolls of junk silver on eBay right at $48/oz. I feel like a genius.

Tiho said...

More ultra bears on Silver - that is perfect. It's just what the doctor ordered before smart money starts buying again as central banks and governments get ready to expand balance sheets and reflate.

I cannot believe how bearish you guys are on Silver and it has perfect fundamentals in this currency devaluation world of ours. Are you guys seriously that out of sync?

You might feel like a genius for a few more months together with pej, but in a few years you will definintly not look or feel like a genius when Silver goes above $100. You'll be kicking yourself and than you'll be making up bullshit porky stories about how you bought silver at single digits long time ago and hold it in physical form just like so many people I know. And in reality all they got is fiat paper.

Sub $10? Hahahaha! You should be looking at buying Silver anywhere in the high $20 as a long term investment. It might not be the perfect bottom us traders always try and achieve (Im still waiting to buy the bottom), but none the less you will be rich in years to come.

Only way Silver could go to sub $10 is if Bernanke goes to jail and gets replaced by Mr Volcker! That just my two cents... as you can see pej I don't change my opinion like you once said and as a contrarian I perfectly shorted the fucker at $42 with a stop at $44 and made a ton!

Tiho said...

By the way I got carried away with my bullish view on Silver, now that everyone is a bear, that I forgot to say congrats on the trade dude. Bloody well done, as we say in Australia.

I'm still holding my Silver shorts!

(I think anonymous is going to think I'm crazy coz I just talked about buying Silver and now I'm saying that I'm still shorting it Hahahahaha)

pej said...

Well done anonymous dude! I wouldn't call that genius, you have to avoid overconfidence if you want to be able to last in this game. You have to call it what it is: good skills combined with the right amount of luck.

You should consider posting with an account so that you get comments updates...

Sorry mate, I was not clear in my post. I clarified and update the post. As you can see, I am as crazy as you, but we have the same short term views. Long term views do not matter so much since we have opposite ones, but our trades are basically the same. I will constantly review my long term views, but so far, I think silver is headed for a major crash lower.

pej said...

Cheers mate for the congrats. I'm beating myself up though, as closing that 23rd of Sept put position on Thursday resulted in a lost opportunity of an additional 1000%. That's right 1000% !!!! :'(

Tiho said...

Imagine how much you can make when Bernanke starts printing again if you buy Silver and then it blows through $50 like hot knife through butter!

pej said...

I don't think we'll see him print again for the time being. Unless there's a catastrophe, which means that he'll be again too late, and markets have collapsed.

So basically, so far, I have been consistent and accurate in my forecasts, even if you oppose them every time :-)

Tiho said...

"I don't think we'll see him print again for the time being"

How do you think he is keeping his promise of keep rates at 0 until 2013?

Do you think he just says it and than it magically happens?

Hahaha! As Jim Rogers says, you probably also believe in tooth varies Pej hahahaha!

Come on man, the only way to keep rates artificially low as 0 for half a decade is to be printing money. He is printing again and you don't even know it. Just look at M1, M2 and M3... he is back again in early August after he ended 01st of July!

He has already fouled so many people on CNBC, but you seem to be thinking just like them, so I guess that includes you as well! Ha! Bernanke is smarter than I thought he was.

Tiho said...

Its a stealth QE3!

pej said...

Dude, another half right point of yours :-)
The main thing is that most people misunderstand the nature of credit.

You have indeed to print to keep the rate at 0% for borrowers, but it would mean that you need to have borrowers in the first place!

If nobody's there to borrow and the deleveraging process is in place, then, you're not printing!

pej said...

I just remembered where I had heard this statement before. It's good ol' Jim Rogers.

Don't get too carried away, or two complacent (I know you love the word!) and just follow the guy. He is definitely on the wrong side of the inflation/deflation debate...

Remain as independent as you can.