Thursday, January 20, 2011

Payday for our Silver Trade

It will come as no surprise to Vultures (Got Gold Report subscribers) that today, Thursday, January 20, 2011, silver took out our initial trading stops and then even before our one-hour “grace period” expired, the downward momentum was strong enough to hit our 20-cent lower “hard stops”.   Therefore we move to the sidelines with our short-term silver trade, which we have been in since August 25 of last year.  It’s Payday!  

20110120SilverStopped 
 
(Silver chart, short-term.  If the image is too small click on it for a larger version.)


Continued…


This trade represents the largest nominal per-ounce gain for a single silver trade yet for Got Gold Report, a very gratifying gain of $8.50 the ounce for silver.  It wasn’t all that long ago when we were paying $8.50 an ounce for silver (or less); now it measures our gain for a single trade.

 
We have come a long way from the first of two well-documented public entries into this silver trade.  Just below is a link to the post where we took the first half of the trade, on the breakout of a very wide triangular consolidation. 
http://www.gotgoldreport.com/2010/08/half-long-silver-on-the-breakout.html  

We think it is instructive to review how the graph looked in that post just above and to compare it to the close-trade graph at the beginning of this message.  When we say we have come a long way, we mean it. 
Recall that we were also stopped in our very profitable short-term gold trade (+$187 the ounce net) on January 14 as we covered then at this link:
 http://www.gotgoldreport.com/2011/01/comex-commercials-short-covering-for-gold.html

Remember also that we have been expecting a pullback for gold and silver as we mentioned repeatedly in the full Got Gold Reports and in our linked charts.  One example is our report from January 9, which is available to Vultures in the subscriber section.  The public portion of that GGR is at this link:
http://www.gotgoldreport.com/2011/01/got-gold-report-january-gold-silver-pullback-.html

Right or wrong, we are out of the gold and silver markets with our short-term trading ammo and that is precisely what trading stops are there for.  Our trading discipline is to attempt to place our trading stops so that if gold and silver correct harshly, we harvest a majority of the gains we have enjoyed.  If gold and silver then continue on lower, our focus can be on where we believe overwhelming support is likely to form.  To decide where we will make our first attempt to reenter. We believe that will indeed be our focus this weekend. 

However, if gold and silver immediately find support right here and move higher instead, we are very unlikely to jump right back into the market, as our short-term trading ammunition is reserved for those times when we feel the odds are heavily in our favor.  Just as they were in July for our last gold trade and in August for silver.  Now that we are stopped, if gold and silver advance strongly right away, we will just have to be satisfied with just our holdings of physical metal and our exposure through the miners and small resource companies we have chosen to hold until the indicators and our gut tells us the time has arrived to redeploy our now larger short-term ammunition.   

That is, the remaining portions of the miners and small resource companies.  We Vultures have been building up a Bargain Hunting War Chest by reducing exposure to high flyers and laggards opportunistically since November. 

We now have a pullback to work with.  Our attitude is to try to make the best of it, as we can, and to attempt to game the negative liquidity in and for the issues we want to own in the small mining space, using our experience and our beloved charts to do so.  We just love to buy bargains.  We Vultures live for it.  

Speaking of bargains, we have spent a majority of the past two days taking in as much of the Yukon Room e-conference as time would allow, and having done so we are very glad we have invested that time.  Please see our January 18 post just under this one on the Main page for details of that conference. 

Along those same lines, we found this article by The Gold Report worthy of our time.  http://www.theaureport.com/pub/na/8360 

It is an interview with  Mike Burke (Bur-Kee), who is currently the head of mineral services with the Yukon Geological Survey, but is soon to be associated with Golden Predator (TSX:GPD.TO), one of the companies we are interested in working in the Yukon “area play.”  Burke is a wealth of information when it comes to the Yukon.

We urge Vultures and GGR readers to find that article and also to take the time to review Burke’s presentation at the Yukon e-conference.  We believe it to be a worthy time investment as well. 

 
Just below is a short clip of the interview to give an idea of the content:

MB: Golden Predator is quite involved in the classic Tintina Gold Belt, or the Tombstone Gold Belt including the former producing Brewery Creek mine. They have Grew Creek Project, which is a small historical gold deposit. They are going to start drilling those projects a month from now.
Golden Predator is one of the players that is acquiring a large amount of ground in the Selwyn Basin around ATAC Resources’ discoveries. Golden Predator is probably the largest landholder in that district after ATAC. Strategic Metals, Ltd. (TSX.V:SMD) has picked up a fair amount of ground, as has Constantine Metal Resources Ltd. (TSX.V:CEM).

Golden Predator was and is a recommendation of our good friend Brien Lundin, who publishes The Gold Newsletter and also organizes the famous New Orleans Investment Conference each October.  We have tracked GPD.TO in on our charts since he first mentioned it about two years ago.  

So friends and fellow Vultures, it’s Payday for the last of our very highly profitable short-term gold and silver trades.  We will indeed be very focused just ahead on all the indicators we track, the charts, the ratios, the news and of course the very important positioning of the largest traders of gold and silver futures, but since it has been a while since we have had the luxury of being “out” we intend to use the "extra" time just ahead for additional research into the companies we want to increase our exposure to if the trading gods are so benevolent as to give us some negative liquidity-induced opportunities just ahead. 

Until next time, good luck, good trading and as always MIND YOUR STOPS.

 
Disclosure:  We here at Got Gold Report hold positions in a number of the companies mentioned in this report or in the linked report, including Golden Predator, Constantine Metal Resources and Nothern Tiger Resources. 


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The Original
Vulture Speculator

Trading gold, silver and mining shares since 1980 with a focus on taking advantage of volatility extremes, Gene Arensberg analyses the markets through a basket of technical and fundamental indicators and shares his findings from time to time here at Got Gold Report. Mr. Arensberg has been quoted in the Wall Street Journal, Dow Jones MarketWatch, USA Today and dozens of other news organizations.

"I've been a huge fan of Gene and his amazing work for years..."

Brien Lundin, CEO, Jefferson Financial, Host of the annual New Orleans Investment Conference and Publisher of Gold Newsletter


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