Butler on shorting silver:
ted butler (@Shorting Silver) ID#317184:
Copyright © 2000 ted butler/Kitco Inc. All rights reserved
I feel I have an obligation to write this post. I notice some discussion of shorting silver, particularly by someone I highly respect, APH. I've said before that he's the best technical trader I've seen, and that's still true. He probably will nail the last ten or twenty cents in this move, and reverse at get long at the bottom. But after posting here for 4 years, I will regret not asking him and you to forego the short side trade due to possible catastrophic risk considerations. I don't give investment advice, and I'm not even trying to tell you to buy silver - maybe the folks calling for 4.50 will be right. But for people I've gotten to know, if would break my heart to see any of them get caught in the coming silver conflagration. As APH has said, you either look at it technically or fundamentally. The fundamental condition of this market is so extreme, that we could get an overnight gap of 5 dollars at any time. The charts don't and can't show that. In fact, the fundamentals are such, that it just about guarantees that we have to have an instant disorderly market, as opposed to a normal bull move. If you are short, you could get hooked into a ruinous position you can't close out.
20 years ago, I witnessed first hand, someone froze in a long silver position ( not my doing, cause I didn't become a silver bull until years later. While the transaction was unsolicited and discouraged, I handled the transaction, including collecting the many margin calls ) . He bot at 40, and the market locked limit down ( $1 a day ) for 20 days, and he got out at 20. 100 grand on one contract. The only reason the trade was allowed to be done, was because it was a commercial-type account ( a small dental supplier, a one man operation, that was desperate for a hedge ) . It is an experience you don't forget. Here we are, 20 years later, down 90%+ in price, with a supply/demand hole that swallow Australia. I feel in my bones that we are at an opposite extreme. If this goes boom while you're short, they will rip your lungs out.
I hope noone takes this the wrong way. This has nothing to do about predicting short term moves, it's about avoidance of a possible disaster-level risk. It's just like that drunk driving commercial, where the guy takes away his friend's car keys. Friends don't let friends short $5 silver. Good luck to us all.
got PAAS? -g- |
