However, I do think there were circumstances that were causing this volatility. We are nearing month's end and quarter's end. Paulson and Co. have got to be down 50% or so on the year and redemptions will be flying in fast and furious. Out of their 5 man holdings, as I showed in a previous post, GLD was the only profitable position and a big position it was.
However, there was clear short term accumulation yesterday and the market dropped right off the open. There are "confirmed" reports that there was a CME leak of the upcoming margin hike, most likely overnight. The downside was accentuated by margin calls. SLV got hit a lot harder -5.14 vs -9.44 because it is a relatively thinner market and was included in the margin hike.
This is one of the reasons I rarely trade in the PM's especially now that the CME has consolidated power over traders because of the Dodd-Frank legislation that made OTC trading in PM's no longer legal so at any time, even if it is not justified by volatility and it is a matter of Washington trying to help JP Morgan not go belly up on a silver short, they can blast in to the market and throw a monkey wrench that few, even smart money, can see coming.
Im not sure I agree with the silver margin hike, look at the volatility as of two days ago.
The red box was the 5 consecutive CME hikes in silver-volatility was trending up, but not spiking.
Copper was justifiable in my view.
Yesterday's trade in GLD was meant to be a short term trade, not a long term call to buy, we were looking at maybe a day or two. The larger trend in GLD shows someone was definitely a seller.
However, the 15 min charts were showing this move was getting overdone or oversold and it appeared that smart money was stepping in for a dead cat bounce.
For those who want to accumulate a position in gold, there's a long term average that is has the highest probability and least risk, this is for long term holders of gold though, I have mentioned this many times and have thought we have been closing in on this opportunity over the last several months as gold's 3 chart over the long term has deteriorated.
And here are the long term problems in GLD I have been warning about for months.
This chart is backed up as to not represent the recent volatility so you can see there were problems there before September.
In any case, gold will be worth watching for swing traders and longer term traders and investors as it approaches the 150 day m.a.
As for my purchase in a 2x leveraged gold ETF yesterday, the loss on the position was about 8% and below my 2% loss of portfolio value.
This week the model portfolio still ranks #29 out of 16,211 at a monthly return of +74.28% vs the S&P at -5.65%. The weekly rank is 183 still in the top 1% and with a gain of 11.62%, again using no options. Maybe should include an options portfolio? Considering the top performing hedge fund for the 2nd qtr of 2011, Corriente Advisors, did 17.7% with all kinds of assets at their disposal, I'm pretty darn happy with the rank and % return. The average return for the top 25 hedge funds in Q2 was 8.33%, the model portfolio did better then that this week alone! Furthermore, to participate in one of these funds, you have to be a qualified investor, which means you have to have earned an individual income of $200,000 a year or a joint income of $300,000 in each of the last 2 years or have a net worth of $1 million dollars.
Then you pay 1.5-3% of your money under management to fees plus a performance fee of at least 20% and for the best funds up to 50%.
Have a great weekend, I'll probably have several posts up. Suggestions for part 4 of Understanding 3C?
Still think you can't beat the market?
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