Talk Me Down

[LuckyStrike]

At under 29 I think silver could make a 10% gain in a matter of weeks, so why not play with some fire


USLV

3x leveraged ETN

Talk me down GSUS, I'm gettin greedy.

[EE_]

At under 29 I think silver could make a 10% gain in a matter of weeks, so why not play with some fire


USLV

3x leveraged ETN

Talk me down GSUS, I'm gettin greedy.

Of cource my opinion on this means nothing cuz nobody knows. I do think it is a good bet to get in before friday.
Wall Street is going to be playing some games next week...on top of that I think the ante just got upped for war because of Kim Jong Ill's death and the uncertainty in N/S Korea. A war in that part of the world will be a total surprise with everyone thinking it would be Iran/Syria.
What if NK invades SK and the US and China gets involved?
On the other hand the dollar could become very strong over the coming weeks due to the Euro and NK? What will that do to PM's?

[Joe King]

Go for it. Just don't get too greedy. That's when the burn comes.
...and at 29 you could see 10% at anytime. $2.89 ain't a lot the way it's been going lately.

[ximmy]

It's manipulated down until all saps believe it's value to be super low for all time (now & in the future)... then when the majority sell and they hold almost all they will let the price rise up to the stratosphere baby...

[undgrd]

Pretend you're walking into a Casino in Vegas. Have some fun and don't get mad if your chips get raked. Just remember...just about everyone else playing has more chips than you.

[hoarder]

At under 29 I think silver could make a 10% gain in a matter of weeks, so why not play with some fire


USLV

3x leveraged ETN

Talk me down GSUS, I'm gettin greedy.I look at it in terms of both paper silver and physical silver.

What would make the price of paper silver go up?
What would make the price of physical silver go up?

The only thing that makes paper silver go up is when the value of physical silver DRAGS it up and the manipulators have to make the "spot" price appear legitimate.

Physical silver simply goes up when investors hoard it. If these same investors that would buy physical silver buy paper silver instead, the price of silver does not go up.

Those of us who have been buying and holding physical silver are the ones dragging the "spot" price up and those of you who are buying paper silver instead of physical silver are dragging the physical silver investors back down.

What do you think would happen to the POS if all the paper silver holders converted (or tried) to physical silver?

[EE_]

What do you think would happen to the POS if all the paper silver holders converted (or tried) to physical silver?

The government would outlaw owning silver

[Joe King]

The government would outlaw owning silverIf you didn't bring enough for everyone, no one gets any!

http://4.bp.blogspot.com/_EpnZJErGIx8/TIcfNbt5dsI/AAAAAAAAAAU/GijlZAeOrVI/s1600/strict-teacher.jpg

[Shami-Amourae]

I still think paper silver could go lower. If I had the money I'd probably wait longer, but that's just me.

[osoab]

At under 29 I think silver could make a 10% gain in a matter of weeks, so why not play with some fire


USLV

3x leveraged ETN

Talk me down GSUS, I'm gettin greedy.

We are getting close to year end redemptions. Granted, last year the spike down happened just after the first of the year.

[Silver Rocket Bitches!]

I think it sounds like a good bet. Set a limit to minimize your losses if you're wrong.

[Sparky]

At under 29 I think silver could make a 10% gain in a matter of weeks, so why not play with some fire


USLV

3x leveraged ETN

Talk me down GSUS, I'm gettin greedy.

Do you know about the price erosion that happens with 3x ETNs if you are wrong for a while?

[LuckyStrike]

I think it sounds like a good bet. Set a limit to minimize your losses if you're wrong.

IDK, setting stops with 3x leverage in a market as volatile as silver hardly seems worth it.

[LuckyStrike]

Do you know about the price erosion that happens with 3x ETNs if you are wrong for a while?

Define a while, I am not arguing saying that I agree with owning paper vs. physical, there is no comparison. Nor am I arguing that the silver market isn't super manipulated by the paper market. What I am saying is a think silver (intermediate to long term) is a good buy at these levels and if you are gonna buy why not buy 3x.

I am aware of the pitfalls of leveraged ETF's as outlined pretty well in this article

http://seekingalpha.com/article/35789-the-case-against-leveraged-etfs?source=feed

With that said I have traded, owned and followed AGQ for quite some time and it follows SLV very closely on the day.

Like I said in another thread, I had the double long oil ETN (DXO) blow up when I owned it, thankfully I still made out with a small profit and didn't get burned but I understand the risk in dealing with financial instruments based on derivatives.

To be honest though, the markets as a whole are so leveraged, so complex, and so manipulated that investing in any paper area I think is extremely risky. I don't think in the last 100 years and possibly ever has investing in paper been riskier.

But my bottom line is this, what is the alternative? Certainly not holding fiat currency long term. I wouldn't be here if I didn't believe in owning PHYSICAL PM's but how much is enough? How many preps do you need? Inflation is a bastard and I know of no (convenient) way to keep pace (and hopefully outrun) it without being in the market which as I said is a house of cards IMO.

[Sparky]

Define a while, I am not arguing saying that I agree with owning paper vs. physical, there is no comparison. Nor am I arguing that the silver market isn't super manipulated by the paper market. What I am saying is a think silver (intermediate to long term) is a good buy at these levels and if you are gonna buy why not buy 3x.


I'm not talking about the paper versus physical aspect. I agree that paper is for trading.

Put up a year-to-date chart of SLV versus AGQ (2x). SLV is down 3%. AGQ is down 38%. The triple would be even worse. The multiplier only works on the daily price.

Look at it this way, if something is priced 100 today and gains 10% tomorrow (110), then loses 10%, it ends up at 99 for a 1% loss.

If I'm playing a 2x, I gain 20% to 120, then I lose 20% and end up at 96 for a 4% loss.

If I'm playing a 3x, I gain 30% to 130, then I lose 30% and end up at 91 for a 9% loss.

So it erodes with time until you hit the big upswing you're waiting for. If you have to wait more than a week on a triple, it's hard to ever get it back even if you are right. So you need to keep putting stops under it, and then replay your bet multiple times until you are right. The longer it takes to be right, the less chance you will be paid off for being right.

I think the long term buy on silver is SLW. And you can play the 2x and 3x, but just be aware of this erosion factor.

[LuckyStrike]

I'm not talking about the paper versus physical aspect. I agree that paper is for trading.

Put up a year-to-date chart of SLV versus AGQ (2x). SLV is down 3%. AGQ is down 38%. The triple would be even worse. The multiplier only works on the daily price.

Look at it this way, if something is priced 100 today and gains 10% tomorrow (110), then loses 10%, it ends up at 99 for a 1% loss.

If I'm playing a 2x, I gain 20% to 120, then I lose 20% and end up at 96 for a 4% loss.

If I'm playing a 3x, I gain 30% to 130, then I lose 30% and end up at 91 for a 9% loss.

So it erodes with time until you hit the big upswing you're waiting for. If you have to wait more than a week on a triple, it's hard to ever get it back even if you are right. So you need to keep putting stops under it, and then replay your bet multiple times until you are right. The longer it takes to be right, the less chance you will be paid off for being right.

I think the long term buy on silver is SLW. And you can play the 2x and 3x, but just be aware of this erosion factor.

I appreciate you input and agree with you.

Something I am curious about though, since AGQ's inception, (as far as I can tell Dec 12 08) it is up 325%, during the same time period SLV is 207% so clearly this is not an exact 2X of SLV (nor is it intended to be exactly). Regardless though if the long term trend of silver is up how could it be a bad thing? Say it's just 1.5X more returns than SLV, it's still more than SLV. I understand the examples which you outlined and outlined in the article, but I do not see how if in 3 years silver is at 60 how I would lose money, or even make less than I would holding SLV?

[Sparky]

I appreciate you input and agree with you.

Something I am curious about though, since AGQ's inception, (as far as I can tell Dec 12 08) it is up 325%, during the same time period SLV is 207% so clearly this is not an exact 2X of SLV (nor is it intended to be exactly). Regardless though if the long term trend of silver is up how could it be a bad thing? Say it's just 1.5X more returns than SLV, it's still more than SLV. I understand the examples which you outlined and outlined in the article, but I do not see how if in 3 years silver is at 60 how I would lose money, or even make less than I would holding SLV?

The 2x is only a daily leverage!

This is an exaggeration to make the mathematical point:

Today silver is about $30, and AGQ is about $50. If silver goes up and down by $5 every day for the next 50 days, then on Day 50 it will still be $30. At that point, AGQ will be worth $9.65, if you do the math. That's the erosion I'm talking about. If silver then goes up $5 for the next 6 days, silver will be at $60, and AGQ will be at $35.84. So silver would be up 100%, while AGQ will be down 30%. This is an exaggerated example to make a point about how the math works.

Look at the oil doubles, DIG (long) and DUG (short). Over the last 5 years as oil has gone from $70 to its current price of $100, DUG is down 90%, and DIG is down 40%! Look at the financials: the ultralong UYG is down 95%; the ultra short SKF is down 80%. This demonstrates that ALL leveraged ETFs go down in price over the long term. The only reason AGQ looks good right now over the 3 years is that the ETF happened to be launched right after silver crashed to $9.

Realistically, if silver doubles to $60 in 3 years, AGQ will probably also roughly double. However, if silver is $40 in three years AGQ will be lucky to break even, and probably be at a loss.

[osoab]

So did you pick up any of the triple leveraged?

[Sparky]

So did you pick up any of the triple leveraged?

FYI, USLV was at about $34 when Lucky made the Original Post. This morning it bottomed at $23.68, for a whopping 30% loss in just 6 trading days! This is what I'm talkin' about!

Let's see how long it takes to get back to even at $34...

[LuckyStrike]

So did you pick up any of the triple leveraged?

Ha, thankfully not (although I wouldn't have put in a market order) I actually took the funds and put in an stop limit order on GGN which wasn't filled, since I kinda figured it would slump some. I am trying to educate myself on options, so I may either tweak my GGN order or try some options in the silver space which have big price swings.

[Sparky]

Ha, thankfully not (although I wouldn't have put in a market order) I actually took the funds and put in an stop limit order on GGN which wasn't filled, since I kinda figured it would slump some. I am trying to educate myself on options, so I may either tweak my GGN order or try some options in the silver space which have big price swings.

GGN is still trading at half of its 2008 peak, while GDX made a new all-time high in September. Why GGN?

[LuckyStrike]

GGN is still trading at half of its 2008 peak, while GDX made a new all-time high in September. Why GGN?

Dividend.

[Sparky]

Let's continue this lesson...

When the Original Post was made (Dec 20), silver was closing at $29.55, and USLV was $33.89.

This morning, silver got up to $29.86, which is a 1% gain from then.

At the same peak time this morning, USLV was up a whopping 23% for the day at $33.68, but still down 1% from Dec 20. So silver is up 1% while USLV is down 1%. This is the erosion effect I am talking about.

Granted, if silver continues up in the short run, then USLV will overtake silver, provided you have the discipline to sell it before the next pullback. But I'm just saying the timing (getting in, getting out) is critical, because the erosion effect works against you while you are waiting to be right. With the leveraged ETFs, you can't simply wait a long time (months or years) to be right. You should hold the non-leveraged ETFs for that, because they do not experience the same erosion.

Incidentally, over the same time period, GGN has gone from $14.69 to $14.68.

[LuckyStrike]

Let's continue this lesson...

When the Original Post was made (Dec 20), silver was closing at $29.55, and USLV was $33.89.

This morning, silver got up to $29.86, which is a 1% gain from then.

At the same peak time this morning, USLV was up a whopping 23% for the day at $33.68, but still down 1% from Dec 20. So silver is up 1% while USLV is down 1%. This is the erosion effect I am talking about.

Granted, if silver continues up in the short run, then USLV will overtake silver, provided you have the discipline to sell it before the next pullback. But I'm just saying the timing (getting in, getting out) is critical, because the erosion effect works against you while you are waiting to be right. With the leveraged ETFs, you can't simply wait a long time (months or years) to be right. You should hold the non-leveraged ETFs for that, because they do not experience the same erosion.

Incidentally, over the same time period, GGN has gone from $14.69 to $14.68.

Let's continue this lesson.

Since I made this post barely over a month ago USLV is up nearly 50%.

[Sparky]

Let's continue this lesson.

Since I made this post barely over a month ago USLV is up nearly 50%.

"Granted, if silver continues up in the short run, then USLV will overtake silver, provided you have the discipline to sell it before the next pullback. But I'm just saying the timing (getting in, getting out) is critical, because the erosion effect works against you while you are waiting to be right."

Yep, it's all working to form. If you hit the timing right, you get paid handsomely. Would you have had the discipline to sell it today at a 50% gain? Or would you be holding out for more?

[LuckyStrike]

"Granted, if silver continues up in the short run, then USLV will overtake silver, provided you have the discipline to sell it before the next pullback. But I'm just saying the timing (getting in, getting out) is critical, because the erosion effect works against you while you are waiting to be right."

Yep, it's all working to form. If you hit the timing right, you get paid handsomely. Would you have had the discipline to sell it today at a 50% gain? Or would you be holding out for more?

In this vehicle I would sell. Long term I am still super bullish on silver obviously but the paper markets IMO are for quick profits not buy and hold.

[Sparky]

In this vehicle I would sell. Long term I am still super bullish on silver obviously but the paper markets IMO are for quick profits not buy and hold.

Make 50% and get out. Now we're talkin'!