Silver Short Squeeze?

by Olivier on November 4, 2010

Today’s price move in Silver is impressive to say the least. SLV – iShares Silver Trust was up almost 6%. Silver related trading instruments like SLW – Silver Wheaton, SIL – Silver Miner ETF and GDXJ – Gold Juniors ETF outperformed. The FED’s Quantitative Easing 2 is a move towards an inflationary environment that is here to stay. Victor Sperandeo predicts hyperinflation as the most likely outcome. This is actually bullish for the entire commodity space. Money is flowing into commodities and stocks in a mad scramble to get rid of paper money. Today we witnessed an increase in pace of that shift in sentiment.

Short squeeze? That remains to be seen. But it sure looks like silver shorts are trapped and are getting their head handed to them. The FED’s 600 billion QE2 is simply adding fuel to the fire. Actually the QE2 amount is 900 billion. Not that anybody cares. :

Taken together, the Desk anticipates conducting $850 to $900 billion of purchases of longer-term Treasury securities through the end of the second quarter. This would result in an average purchase pace of roughly $110 billion per month, representing about $75 billion per month associated with additional purchases and roughly $35 billion per month associated with reinvestment purchases.

The easiest way to ride this Silver and Gold bull market which is the only true bull market around, is to buy and own physical gold and silver held in your own possession. You cannot sell simply hitting a button. Perfect situation to be in. That is, if you want to stay in your position during a bull market as Jesse Livermore recommends.

In my long-term silver price chart analysis that displays a very bullish cup with handle pattern I outlined silver’s outstanding potential.

Silver Price Chart Long Term Bullish Cup Handle Technical Analysis Pattern

Up-to-date Monthly Silver Price Chart on my public list.

But as I have mentioned above lots of commodities look great as well. Uranium DNN Denison Mines and Paper/Pulp TMB.TO Tembec are just two recent examples I bought in.

In any case do not let Greed kick in. Focus on proper trade execution instead. Constantly improve that process. Strive for emotional detachment. That’s of paramount importance if you plan to stay in the game for a long time. Again, trading is not about being right or being perfect. It all comes down to proper risk management.

A subject I want to address as plenty of people spend way too much time and mental energy on ‘missed opportunities’. You ‘missed the boat’? So what. Forget about it. Never chase, the next opportunity is waiting just around the corner. There never is a shortage of opportunities in the markets. Never.

Gold and silver are money. Everything else is credit. – J.P. Morgan

My public list with all my charts can be viewed here:

Buenas noches!

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