Tuesday 11 January 2011

Trading Update: Silver

In the New Year predictions slot I suggested that gold would continue to offer handy in-and-out (or out-and-back-in) opportunities in its long upward march. Right on cue, gold ticked down from its record year-end high in the first week of January.

But at the same time silver slipped even more
- 9%, in fact - from an even more dramatic high.

Personally I have taken this as a cue to start moving in. Physical silver (I have no interest in paper) is more volatile, and less liquid, than its denser friend - an altogether less friendly trading environment for the retail punter. Nonetheless a splendidly tight bid-offer appeared fleetingly yesterday - one of those things that can occur from time to time - and I happened to be at the right screen at the right time. Am now watching for another. DYODD etc



Anonymous said...

May I ask whom you are using for your physical silver trades?

Nick Drew said...

certainly -


should stress that I am in no way recommending them, & they are not one of our advertisers (!)

as stated before you should DYODD - there is plentiful pertinent stuff to read there

Steven_L said...

Why not 'paper' Nick? You been reading too many comments under Telegraph Finance articles?

Buy beans, buy lead ...

Must admit I was eyeing up silver on my cfd acount the other night at arounf $29. I could well see it taking off again, but these kind of markets are hard to time.

Was in at $18.28 and out far too early at $23.50 last time. I still subscribe to the 'if gold goes to the moon silver leaves the solar system' idea though.

It's the poor mans gold and the world is full of poor people.

Nick Drew said...

why not paper ? I think you know the answer but I'll rehearse it anyway

IMHO, as you know, gold etc are hedges against Bad News

now Bad News could easily include events that cause the failure of many paper-type instruments, synthetic assets etc etc

it would be crazy to have one's Bad-News hedge fail at just the time it was needed, and for the very same reason: in the trade this is known as "wrong-way risk"

like buying a put option from an oil company: the price of oil collapses, you exercise the put, only to find the oil co has gone bust because of the oil price ...

hovis said...

I didnt know BV now traded silver as well ... interesting

BrianSJ said...

Sprott Physical; does this offer equivalent safety, lower mark-ups and no VAT?

Bill Quango MP said...

Capitalist pig writes...

slow this morning. I only just got that!

Nick Drew said...

Sprott - dunno, Brian: you'd need to do DD ! there is no substitute for it

they are avowedly claiming only 'indirect' access to the market, I see, which might not suit some purposes

I am guessing (only guessing, mind) they invite punters to assume their share price will tend to have a (very ?) high correlation with market silver prices

in the days before direct physical bullion investment was easy, a lot of people traditionally picked mining stocks as a proxy

and a lot of people got burned accordingly: the correlations are often not what they'd hoped / assumed

("basis risk" in the trade)

I can see I shall have to put up a risk management post ...

Nick Drew said...

Quango - slow ? admit it, all you MPs are just trembling in your boots at the thought of 18 months at Her Majesty's pleasure