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The short squeeze in silver is developing more rapidly now, which explains the big moves of late. I continue to focus on $30 as the next target, but there is no way to predict when and at what price level the squeeze will diminish. Higher prices will eventually entice some holders of physical metal to take profits, reducing pressure on the shorts. The only sensible strategy now is to hold tight and continue following the strong uptrend, while also tightening up our stop points to protect profits.
Note that the Dec options expire on November 23, so I will soon be making a recommendation to either take profits or roll them forward.
Gold
1) Long two positions from $1337.10 bought on the Comex spot close on November 3, 2010. Stop-out point: sell one position at an intraday stop-out point if Comex spot gold trades at $1394.00. If stopped out, then re-buy this position if the Comex spot price the same day closes above $1402.00. Sell one position at an intraday stop-out point if Comex spot gold trades at $1372.00. If stopped out, then re-buy this position if the Comex spot price the same day closes above $1378.00. (updated 9 November 2010)
Silver
1) Long from $24.397 bought on the Comex spot close on October 18, 2010. Stop-out point: sell at an intraday stop-out point if Comex spot silver trades at $26.48. If stopped out, then re-buy if the Comex spot price the same day closes above $26.62. (updated 9 November 2010)
2) Long from $23.764 bought on the Comex spot close on October 19, 2010. Stop-out point: sell at an intraday stop-out point if Comex spot silver trades at $25.82. If stopped out, then re-buy if the Comex spot price the same day closes above $26.08. (updated 9 November 2010)
Gold/Silver Ratio – traders are short the ratio (i.e., long silver and short an equal dollar value of gold) from 67.4, the June 11, 2010 close in New York. Stop-out point: unwind this position if the ratio closes in New York above 56. (updated 9 November 2010)
Comex options (options are high-risk and therefore not for everyone):
Long one Dec’10 Comex 1200 gold call from $67.30, the February 26th Comex close.
Long one Dec’10 Comex 18.00 silver call from $1.419, the February 26th Comex close.
Long one Dec’10 Comex 1200 gold call from $40.60, the July 29th Comex close.
Long one Dec’10 Comex 18.00 silver call from $1.020, the July 29th Comex close.
Continue to hold these calls without any stop-out point, but get ready to take profits or roll them forward. Watch for my recommendation, which will be made soon. (updated 9 November 2010)
US Dollar Index – Short from 79.83 sold on the New York close on September 22, 2010. Stop-out point: buy if the US Dollar Index closes in New York above 78.40. (updated 9 November 2010) View all Trading Comments >>
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