Market Curiosity: Exploring Markets And Systems

February 22, 2011

Surveying the playing field: fortunes can be made or lost in the next month or so, and sent to PCH :-)

Filed under: Editorials — Tags: , , , , , , , , , — Jeff Fitzmyers @ 11:54 am

I have closed out most other trades. The primary focus is on silver. Why?

1) A comment on Mr Ferguson’s update that Friday March open interest only dropped a small 4.5%.

Difficulty in choosing right currency has become unmanageable – gold will continue to become currency of strength without liability; storehouse of value; medium of exchange

Possibly, at some point, people will begin focusing more on purchasing power stability and less on trying to eek out a few percent deciding which currency is the least worst every month, which bond’s won’t default, and which stocks will not drop too much.

Feb 22 update: And Wow: Fed’s Hoenig Says United States Has “Deeply Undermined Free-Market Capitalism” How can entities manage their affairs efficiently if the rules keep being modified in secret? Sooner or later they find more efficient paths. Ticker Guy’s take.

2) Silver is still, by far, the most undervalued store of wealth.

3) Timing. I don’t have a high success rate at timing things. In a way, that’s why I prefer to sell puts — timing can be off a lot and the trade can still be profitable.

John Embry: Eric Sprott and I have always contended that in silver if you get some serious physical buying in the absence of above ground inventories that are available for sale, that the paper manipulators would basically get overrun. Right now we are in the process seeing that unfolding… I definitely think a short squeeze is underway in silver. The evidence will be if the price of silver moves sharply higher from here. I think you will know if you have a real short squeeze if this thing starts piling on gains in the next week.

4) What vehicle? The COMEX can and will likely change the rules in their favor to try to survive. So other than a few token June 60 calls, that venue seems risky. ETF’s — except Eric Sprott’s probably have less silver than advertised. That leaves silver stocks and SLW appears to be the best. And of course options are to be considered in potential situations where large percentage sustained moves can happen in short timeframes.

That all boils down to a few SLW June 60 calls (incase price goes ballistic), and SLW June at the money calls that are rolled forward as they get a few strike prices in the money. The stop loss is a close under the 10 EMA. If silver really is about to rise substantially, except for a few fast drops, price should steadily rise higher.

The over all exit strategy? If price really does take off, start shifting some value to things that the gov is not (yet) interested in. For me, that is PCH, PCL and maybe WY.

Bonds/debt are weak:
Feb 22 EDIT: Opps, I did not update the data correctly, this chart is incorrect. Debt did go up today a fair amount on good volume. Correct chart:

Old chart:

Stocks continue to be overbought (I speculate that a tug-of-war going on between value and fed printing):

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