Silver Soars: “Show Me the Money!”
I’m prepping to head back to my lake compound after toughing it out in this metro mess…
Speaking of messes, we’re still hearing the same old tripe from the talking heads about how the stock market is in trouble. But the real story remains the same. If you’re not long, you’re wrong!
My inner Jerry Maguire has led me to use a SHOW ME THE MONEY strategy to bank major profits in my trading services. The flow of funds by the Feds is unprecedented and cannot be ignored.
Nothing has changed. More Money, More Money, More Money is on the way to stimulate the economy and markets. My personal trading has been exclusively Gold, Oil, Euro Currency and E-mini S&P futures contracts. Being long any and all of these bullish breakouts has paid well — you just have too smart by trying to pick the top.
One lesson learned in my 30 years of trading is taking profits is never wrong. Yes, you could miss out on more money. But any money made is more than you had. “I made all my money selling too soon” is a quote on my computer screen from Andrew Carnegie that is just as valid in 2020.
In fact, my premium readers just booked a clean double on silver calls using our simple strategy. No fancy math, just following price — buy the dips and sell the rips!
It all started when my indicator flashed a massive activity spike on iShares Silver Trust (SLV). As a trader, silver is something I always keep my eye on (you can see why following this week’s historic breakout in precious metals). Sometimes it has the tendency to lag gold and then catch up all at once.
On Monday, we saw exactly that as silver futures rocketed higher by nearly 8%, leading our options play to a quick double.
It doesn’t get much better than that!
Keep it In the Money,
Chart of the Day: The next gold boom
Gold posted a historic breakout this week.
Thanks to a little help from the sagging US Dollar, gold futures soared Monday, briefly teasing $2,000 before finally retreating into Tuesday’s session. It’s an incredible breakout that’s been months in the making.
Just look at this long-term chart:
Gold has now gained more than 60% since falling below $1,200 in late 2018. Now that it has surpassed its all-time highs set way back in 2011, we should have many more opportunities to trade it on the long side once it consolidates this move.
Trading Tip of the Day
Alan always reminds us to buy the dips and sell the rips.
But what does this really mean?
He’s not telling us to simply grab shares of any stock that’s dropping — and it would be silly to sell shares just because they’ve posted a small gain.
This old trading adage means that we need to be aware of moments when a particular trade gets a little too hot. You want to be able to buy into a new play before a big runup, ideally as it begins to firm up following a constructive dip.
Then, you need to seize those moments of euphoria when all the latecomers start to pile into a trade. Monday’s action in precious metals was a perfect example. No, I don’t think this is “the end” of the precious metals story. But they will need time to consolidate. Taking profits on those huge thrusts higher is a great way to stay profitable — and one step ahead of the herd.
Plus, you’ll be ready to ride the next leg higher whenever it materializes.
— Greg Guenthner