When Gold and silver had been doing well a few yrs ago, and the market crashed, people were required to raise cash because of margin calls so it resulted in gold and silver tanking as a result of the market tanking. People sold their winning trade (Gold and silver) to have the money to meet the Dow and SP margin call
With gold, oil silver and copper getting crushed, the margin call thing works the opposite way too. With the S&P at all time highs, folks have made a lot of money in that vehicle so, if commodities are getting crushed with margin calls the only place to raise money, is in your winning S&P and DOW trades. Forced liquidation in a vehicle that people have been saying is long overdue for a correction.
As a result i got short the DOW first thing this morning.
Hi chem. Yahoo seems to have deleted the post I tried to make earlier this afternoon. I agree with your thesis about PM weakness spilling over into stocks. Also, I had a question. My expectation is we see a fourth-wave bounce in PMs at some point, followed by a fifth wave flush that clears out the last holdouts, and then we begin to see the next uptrend, and I hope to be on board for it. I do not expect silver to go below $22, but I'm wondering what levels are you looking at to buy silver?
They decimated all the levels, I really can't offer any long term guidance because of how all the prices have been trashed. In reading other trader chatter, everyone's level's were getting ripped through, absolutely crushed.
Silver getting to and staying below $23.74 implies bears will try and take it down to $19.452. A close above $23.93 for 10mins or longer says that the trend down may be broken and a chop sideways could happen with a high to $24.79. I'm not sure I want to play the volatility because usually they stop me out by 1 -2 cents and go the other way during these first few days. I might wait another day or so to play.
In any event keep time in mind, summer is a slow period for PM's so these levels may remain until august. Also keep in mind sell in May for the general mrkt and a brutal sell off is somewhere around the corner for the major averages. I received margin raise notices for end of day today on PM futures. I think the place to raise money is winners like dow and S&P, so will we see further push down by 2:00 to 2:30 pm margin clerk time? I'm going to bet yes for now.
Implied open on the dow is for 125 points higher and that is roughly 14725. My stop is around 14732.
I don't normally hold overnight, but I'm thinking of holding my short of DOW tonight.
My reasoning is: it seems margin requirements are going to be raised on gold/silver overnight. If this happens, some folks will be forced to liquidate further or meet margin which will cause some more pressure. Winners like the DOW/S&P will be sold some to raise cash to meet the requirement.
Taken with the Boston terrorist attack, and it seems there is enough there to justify holding until tomorrow.