Tuesday, September 27, 2011

The world didn't end

Well it seems the world of Gold and Silver did not end over night Sydney time. The 'players' seemed to have folded their Gold and Silver shorts and put them neatly away for the next COMEX option expiry or tipped off CME margin increase (or both as we have seen over the last week).

With Gold at $1625 and Silver at $30.70 and both trading throughout the London and New York sessions flat to rising it seems that most of the downside risk has been bled out of the market and the fire hoses are out hosing away the remnants of the weak long position holders.

As I have often told my clients, Silver is the roller coaster – lots of bravado on the slow trek up, then an immense amount of fear and pain on the way down.......but a feeling of elation when it levels out at the bottom. Gold I had been comparing to the merry-go-round, the horses go up and down but you don't need to be strapped in – maybe I should have mentioned you still need to hang on to the golden pole though.

So for those wishing to take long term positions in physical, particularly in silver at around the $30 level your risk/reward profile is looking particularly promising. For those in for the short trade buying silver at around $30, being patient over the next few weeks and seeing if it gets back over $40 and then taking some profits prior to the expected Greek default in several weeks time looks like some easy, but not risk free money.

Note these comments are general in nature and do not in anyway constitute trading advice. The market is made up of millions participants and JP Morgan, some of these participants may read the current market conditions very differently to me and hence the market could move in a direction opposite to my observations above. Remember without risk there is no reward ~ Fortune does favour the brave (but also kills some of the brave along the way). Whatever the outcome remember physical Gold and Silver have never gone bankrupt or fallen to zero in the last 5,000 years - unlike some companies that mine them and the fiat currency they are purchased with.

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