Profitable silver trade?

Question

I'm extremely bullish on both gold and silver, as well as many of the mining stocks. I've been in the game for quite a while, and I follow several related stocks: SVM, SLW, GG, EXK, GPL, PAAS, etc...

Unfortunately, I was sitting on the sidelines when silver made this latest thrust towards the $40/oz mark, and I refused to chase it (after getting burned chasing stocks and commodities, you learn your lesson). Today it struck over $39.70/oz, and has been ranging up and down. I think there is a strong possibility of silver hitting between $45-50/oz before years end, so I remain bullish on the metal and miners. However, I have a trade idea here...

Silver has been a bit volatile, and the small-cap mining stocks have been even more so -- lots of leverage trading focuses on these stocks and moves them harder than the actual metal prices. I've observed how this market works for quite a while... For instance, I remember when we were at $28/oz. Everyone said "Silver is going to hit $30 soon, but then it will run into a correction!"...plus, the bears were all out to pounce when that psychological level was reached. So as it played out, we broke the mark, saw a pullback, and then it surged back upward and found its new floor around $30. Then it was the elusive $32/oz mark, and the same thing happened...then $35, then $37, now it's creeping to $40. Every time a new psychologically critical price mark is established and broken, the metal has a little slump, and the big gains in miner stocks takes a pretty big wallop (but not totally stripping away gains -- the trend, in the longer-term, stays positive).

One of the stocks I follow which is effected the most strongly is Endeavor Silver (EXK). It makes a big run along with silver, and then silver hits its resistance and the bears attack. The stock will go down 5-7% intra-day when the pullback comes. And this happens as soon as momentum dies down and silver prices dip under the line -- I guess the technicals trigger something in the bears' minds, and they tend to make a nice bit of money with it (if they get out before the next run!). So since I missed this big run in silver and EXK, I figured maybe I can play with the bears this time and put some extra cash towards the next run.

So my idea is to wait until silver backs off a hair, and signals the bears to pounce while my fellow bulls take profits and prepare to buy again at a cheaper price. I think I can catch one of those big 5-7% intra-day dips in EXK and make a nice chunk of change. It's already had two massive runs this week with silver, which I feel were a bit over-the-top despite my bullish sentiment. But I wanted to know what you all thought of this idea. Take a look at silver price charts compared to EXK, and you'll see what I mean. I know I'm taking the risk of getting burned, but it's ok...I'm young, and I'm up for risks that come with reward incentives.

So what do you think about this trade?

Answer 1

EXK is in a strong uptrend evidenced by todays price spike, (11.63) The price is being supported by pretty strong volume of over 6 million. You may have a long wait for that dip to take place. Overall, it looks like a good pick for the long term.

Answer 2

Commodities like gold and silver now are very good options to invest but just with a

good strategy and a good platform you will make this real, i recommend to

trade gold online, is cheap and safe, find a broker to start, i recommend you

to use liteforex cause is the most simple and with the lowest spreads

Answer 3

If Romney wins, there'll truly be a silver lining , this u . s . a . would have a shiny destiny because of the fact he cares approximately it, Obama on the different hand, if he gets yet another 4 years, he will end destroying what he has began. i might nonetheless opt to be attentive to what he meant while he informed the Russian President that "wait till after the election and that i ought to have greater flexibility" For those of you who think of Romney despatched jobs to China , you're incorrect, Romney has not been a factor of Bain Capital for over twenty years, and that business enterprise did not start up sending jobs to China till nicely after he had left the business enterprise.

Answer 4

I'd use a Fibonacci retracement to judge my entry.