Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next discussion with that very intent.
I am assuming that you are still planning on keeping us abreast of your silver trading activity. As someone who jumped in too early (even earlier than you did), I am interested in how you are handling this good investment/bad chart phenom. No need to reply to this message. Just wanted to let you know that there is some interest out there. I am out of silver for now, but have traded it relatively poorly because I was always a step ahead of you.
Minyan Jeff Epp
In the interest of real-time education, I have walked through the entire trading process online--but, as you have missed it, I'm happy to do so again. I've been watching the commodity for a while (and actually missed it on the way up after trying to scoop an offer at $6). I was patient and refused to chase (as it ripped through $8) and instead began to scale into a position as it reversed lower through $6.40ish. My thinking, at the time, was that this would be a long-term holding and a preferred alternative to the greenback (which I think is a wasting asset).
I was early on my initial purchase--shocking, I know-- and "traded around" the long side all the way to $5.50 (where, by the way, I missed an effective "doubling down" by a penny!). Still, I managed to reduce my cost basis under $6 and felt relatively comfy with that price point. Soon thereafter, however, something clicked in my mind and altered the dynamic of the trade and the landscape of my time horizon.
My reasoning for wanting long-term silver exposure was in tact--I still think the dollar is dust--but Carrie began to crystallize in my crowded keppe. If the reflation trade unwound (as a function of higher rates), the asset class morass wouldn't discriminate between silver, bonds, stocks, soy, schnitzel or superballs. In other words, the rising tide that lifted all boats would absurd the flush that allowed them to float. This was--and is--my fear.
I had two choices with regard to my silver position--I could trade "wider" and allow for further weakness or adapt and take proactive measures (as a function of my newfound thoughts). I chose the latter--an oversold bounce begrudgingly snapped silver back above $6 and I lighted up (initially) and flattened out (eventually). Further, as we approached $6.20ish (along with double decker gold resistance), I initiated a small and tight short side position and trailed the silver sliver down before covering (and flattening) late last week.
I am now in watch mode--I feel good about the relative long term prospects of the metals in general (as an alternative currency) but fear the wrath of Carrie and her unbiased bashing. The lesson here--and there is one--is that the onus is on us to adapt to the market and take actions that are both disciplined and consistent. When in doubt, sit it out and await clarity--it certainly doesn't show itself as often as it used to but rationalization is the fastest way to lose our hard earned capital.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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