Betting against the US Dollar

I

illinimatt81

Greetings

I am here to post P/L and thoughts of my current investment strategy of betting against the US Dollar with the corresponding increase in silver. Of late, the dollar has been rallying on the bailouts affecting the Euro. However, it is just short term and there is a true race to the bottom for the dollar and Euro. QE2,..3? 4? is coming. Inflation is coming. Silver is way undervalued compared to gold. The dollar will fall once the Euro crisis plays out.

Silver historically trades at a 16:1 ratio meaning 16 ounces of silver for one ounce of gold. Right now we are at more like 49:1. This imbalance will be corrected. JP Morgan is out of ammo in their shorting of silver to keep the price down. Pending litigation will limit their ability to continue to short silver. They will take a bath on covering at higher prices. The CME made two margin raises within a week on silver recently. Unprecedented. Why? They are shaking out all of the weak hands and doing all they can do to keep the price of silver down. The expiration of the futures contracts at the end of December is going to be interesting.

I have taken approx $50K in positions poised to gain from a run up in silver. I am allocating about $5K each to 10 different positions and buying shares accordingly. In some cases I have 20,000 shares in a position. In others I have just 2500 and in one case 200.

I will not be able to mention many specific stocks here as there are many that are pink sheets and penny stocks and don't want to run afoul of the rules nor seen as a pumper and dumper. I've been here for many years and do not want to be labeled as such.

The strategy I am employing is to not buy the physical commodity itself but rather to invest in quality Junior Mining companies that are poised to profit handsomely from silver's rise. The companies I am investing in have solid management and have been forecasting profits based on valuations of silver below what they are now. As the US dollar weakens, silver increases as a hedge these companies will see their profitability and fortunes grow accordingly.

Many of the companies I am invested in have increased several hundred percent in the last few weeks. As a position doubles I will take off half and reinvest elsewhere using the house money to continue to profit.

I am not day trading any of these stocks. Looking to hold each for 6-12 months as this situation plays out.

I welcome thoughtful discussion of this sector if others have been following it as well.
 
illinimatt81-

Look forward to the journal as I trade Silver, Gold and currencies (futures) myself. And your absolutely correct about Morgan, I remember when they were pushing the market hand over fist on job numbers and other key price levels. It should be an interesting next couple of months more media and the closing of the prop desk which we all know their just taking the desk over to the HF they just purchased. Good trading and I will be following your post as I always like to here ideas of other metals traders.

JpLazard
 
Quote from jplazard:

illinimatt81-

Look forward to the journal as I trade Silver, Gold and currencies (futures) myself. And your absolutely correct about Morgan, I remember when they were pushing the market hand over fist on job numbers and other key price levels. It should be an interesting next couple of months more media and the closing of the prop desk which we all know their just taking the desk over to the HF they just purchased. Good trading and I will be following your post as I always like to here ideas of other metals traders.

JpLazard
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Thanks for the kind words. I will be divulging more over the coming days and weeks.

As you trade futures I'd be curious as to your thoughts of the possibility of a silver crisis on Dec 29th if the demand for physical delivery of silver were to cause a default.
 
Quote from PaulRon:

Trading parabolic moves is like russian roulette, good luck.

edit: regarding silver
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There is risk in any profitable strategy. I would like you to please give me some examples of where you would rather be invested right now? I can't think of a good reason to be in anything other than metals or miners in the next 6-12 months.

Many of these silver miners are severely undervalued and once results start posting in the months ahead the public will get wind of it. Right now I think the smart money is getting positioned for the move.
 
Quote from illinimatt81:

There is risk in any profitable strategy. I would like you to please give me some examples of where you would rather be invested right now? I can't think of a good reason to be in anything other than metals or miners in the next 6-12 months.

Many of these silver miners are severely undervalued and once results start posting in the months ahead the public will get wind of it. Right now I think the smart money is getting positioned for the move.
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I disagree on your timing. The "easy" money is gone. The silver stocks I follow ( big Canadian firms ) are no longer undervalued and in the past what I noticed is these stocks tend to retrace these huge moves to some degree regularily ( Juniors I can't comment though except there have already been some moves up ). So if you don't catch a retracement you run the risk of overpaying for these stocks. Look at the P/E's if these firms don't increase earnings a lot they will retrace. There are also seasonaility issues to keep in mind.

Here is the trick about Metal Stocks. Metal prices tend to go up as the US$ goes down. Fine. Problem is the mining companies tend to get paid in US$. So while the underlying metal price tends to suggest huge profits are coming often the actual results are somewhat disappointing which slows down or reverses the trend up.

I think silver firms were a huge bargain as you said at various points in the last two years. Now I'm not so sure.

Other areas ? Well, I just noticed many Oil companies are lagging the performance of Oil much as Silver companies lagged Silver earlier this year. I like your strategy more for Oil actually. I will say if we get a major pullback in metal stocks that you strategy mght then become very good. I just don't like your timing. I'd say go with Oil, cash in the profits in 6-8 months, then revisit Metals.
Just my gut feeling on this after following these metals closely since the market meltdown.

Good luck either way.
 
Quote from Nine_Ender:

I disagree on your timing. The "easy" money is gone. The silver stocks I follow ( big Canadian firms ) are no longer undervalued and in the past what I noticed is these stocks tend to retrace these huge moves to some degree regularily ( Juniors I can't comment though except there have already been some moves up ). So if you don't catch a retracement you run the risk of overpaying for these stocks. Look at the P/E's if these firms don't increase earnings a lot they will retrace. There are also seasonaility issues to keep in mind.

Here is the trick about Metal Stocks. Metal prices tend to go up as the US$ goes down. Fine. Problem is the mining companies tend to get paid in US$. So while the underlying metal price tends to suggest huge profits are coming often the actual results are somewhat disappointing which slows down or reverses the trend up.

I think silver firms were a huge bargain as you said at various points in the last two years. Now I'm not so sure.

Other areas ? Well, I just noticed many Oil companies are lagging the performance of Oil much as Silver companies lagged Silver earlier this year. I like your strategy more for Oil actually. I will say if we get a major pullback in metal stocks that you strategy mght then become very good. I just don't like your timing. I'd say go with Oil, cash in the profits in 6-8 months, then revisit Metals.
Just my gut feeling on this after following these metals closely since the market meltdown.

Good luck either way.
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Don't know about oil stocks, but I have heard Uranium stocks are poised to make moves again. I do not think the easy money is gone in the silver market. That would imply the currency crisis has passed. I do not think silver has made its full move up.

I don't see how silver miners having profits in US Dollars is an issue? The price of oil is tied to the dollar as well.

Inflation will be coming and screwing us over, increasing the price of gold and silver and I know I want to be apart of the companies that are sitting on large reserves of "real currency" as their product they sell - at an ever increasing value.

Thanks for the input, always good to be challenged.
 
Quote from illinimatt81:

Greetings

I am here to post P/L and thoughts of my current investment strategy of betting against the US Dollar with the corresponding increase in silver. Of late, the dollar has been rallying on the bailouts affecting the Euro. However, it is just short term and there is a true race to the bottom for the dollar and Euro. QE2,..3? 4? is coming. Inflation is coming. Silver is way undervalued compared to gold. The dollar will fall once the Euro crisis plays out.

Silver historically trades at a 16:1 ratio meaning 16 ounces of silver for one ounce of gold. Right now we are at more like 49:1. This imbalance will be corrected. JP Morgan is out of ammo in their shorting of silver to keep the price down. Pending litigation will limit their ability to continue to short silver. They will take a bath on covering at higher prices. The CME made two margin raises within a week on silver recently. Unprecedented. Why? They are shaking out all of the weak hands and doing all they can do to keep the price of silver down. The expiration of the futures contracts at the end of December is going to be interesting.

I have taken approx $50K in positions poised to gain from a run up in silver. I am allocating about $5K each to 10 different positions and buying shares accordingly. In some cases I have 20,000 shares in a position. In others I have just 2500 and in one case 200.

I will not be able to mention many specific stocks here as there are many that are pink sheets and penny stocks and don't want to run afoul of the rules nor seen as a pumper and dumper. I've been here for many years and do not want to be labeled as such.

The strategy I am employing is to not buy the physical commodity itself but rather to invest in quality Junior Mining companies that are poised to profit handsomely from silver's rise. The companies I am investing in have solid management and have been forecasting profits based on valuations of silver below what they are now. As the US dollar weakens, silver increases as a hedge these companies will see their profitability and fortunes grow accordingly.

Many of the companies I am invested in have increased several hundred percent in the last few weeks. As a position doubles I will take off half and reinvest elsewhere using the house money to continue to profit.

I am not day trading any of these stocks. Looking to hold each for 6-12 months as this situation plays out.

I welcome thoughtful discussion of this sector if others have been following it as well.
More...




One more shyster = poser to disgrace the concept of JOURNAL - so far 100% shysters here. JOURNALS is the biggest joke on ET.

Your opening post caught my attention because of the mention of the US Dollar and your bet against it.

Try to break the bad habit and do the following for a change instead of the usual assinine, hovine, bovine generalities re:entries


post exact dates, prices and quantities of all entries and do it

NOW


then when you exit the positions, post the exits in realtime aka immediately.


As a token gesture I have set aside 10 bucks for your coffin.
 
Quote from illinimatt81:



Thanks for the input, always good to be challenged.
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Problem is you are being challenged by IDIOTS aka "experienced traders at ET"


In a real challenge in the real world by anybody of substance you and the rest of the crew here would be in a perennial chokehold in an ogonblick and rammed from the fullmoonside.

POST YOUR ENTRIES' DETAILS NOW
 
-330 Today / -942 Overall

Today had a lot of selling on the news this morning of the Ireland rescue. The dollar rallied but interestingly it seems silver is uncoupling itself from the dollar lately. It was sideways/up most of today. Despite the strong rallying of the dollar over the past week we haven't seen a corresponding sharp decline in silver. It seems the market is not fooled by the rallying of the dollar due to the relative weakness of the Euro.

Most of my positions were taken in the last week, a substantial amount last Friday and I will be looking to add about $20K more in positions over the coming days as I continue to perform due diligence.

Again, I am not actively trading these stocks but holding over the coming months and reallocating as needed.

I bought last week thinking I was getting in on the pullback before we resume higher. Seems there is a little more pullback. Probably trying to shake out the weak hands. As long as the fundamentals do not change I will stay the course.
 

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