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SILVER RUSH – Is it Time to Short Silver?

Posted on April 20, 2011 by Penny Stocks Picker

At this moment Silver Spot price is flirting with $46.00 and is up about 75% since the end of January when it was about $26.00.  In summary, I’m LONG Silver but at this moment I will be preparing to hedge my bets for a short term pull back (GOING TO SHORT IT).  I’m not saying it doesn’t have more room to continue this parabolic run.

Personally, I have been a precious metals investor since early 2000 when silver was around $5.00/oz and gold at $265.00/oz.  I was super excited at the time and couldn’t stop telling my friends, family, neighbors, co-workers, anyone I came across that they should begin investing in the metals and detailing all the reasons why.  Well, let me tell you…most of them thought I was a nut case.  I have learned that offering advice is a no win proposition no matter what happens.  If they made money from my suggestions it was all their doing….if they lost….it’s all my fault (No good deed goes unpunished).  That’s one reason I stopped posting regularly here.  Most recently I became super bullish on Silver in October 2010 when it was about $23.00/oz I told my closest friends and family that it was time to take a position if they hadn’t already and that it would outperform Gold this year.  Well, sad to say some of them won’t even talk to me anymore cause apparently buying precious metals is Un-American…whatever…F-em!

I’m holding onto my Silver positions (I have lots of reasons to remain bullish long-term besides the economic situation were in) but now I’m ready to hedge that position buy buying Put Options on the Exchange Traded Fund SLV which closely mimics the price of Silver.   This is funny….everyone is now talking about buying Gold and Silver while I’m telling them to hold or sell (don’t add yet…buy the pullbacks)….here we go again…I’m a nutcase.  As Silver continues to go higher…I’ll keep adding more puts (don’t go all in at once).  Now you ask, why would a guy who is so bullish on Silver want to short it when it’s seems like it’s now just beginning to catch on fire?  Mainly….it’s gone to far to fast and PUT Options (call it insurance) will not only protect me if Silver takes a dive but will add to my profits.  Yes, we could see a huge move up in a very short time frame (all the late comers chasing it, Possible short squeeze…..) and that will give me even more confidence to short the metal (for the short term).

Everyone (everyday people, traders, institutions, millionaires, billionaires, countries…..) who pays any attention about the economy, the money supply, the debt, the deficit, inflation, chaos…….and believes that all this gloom and doom is going to kill the dollar has most likely already taking a position in the metals to protect against inflation or profit from the rally.  Hard times lay ahead but I want to have faith (or I’m Naive) that things can’t possibly get that bad (not to us..right?), they won’t let that happen (or will  they?)

Anyway, I’m not going get on a political debate cause I’m merely a capitalistic pig who is not giving any advice…..I’m just saying that I’m a long term silver bug who is getting ready to hedge (insure) his long-term position by shorting  Silver with PUT Options of SLV.

Long-Term I’m also highly bullish on Natural Gas.