Saturday, November 10, 2007

Why Silver got Beat down on Thursday...


As you can see from the chart above, silver was making a decent move on Thursday HK time. Rose through $16 per Oz (blue line).

But as the market approached New York opening (silver is traded on the NYMEX) it look
as if someone took an axe and chopped the leg off silver.

Silver went from $16.10 to $14.85 in an intraday move. An 8% move. Gut wrenching for those who is 20x leveraged.

Anyhow... After searching high and low for a reason.

I think this is why.

"NYMEX to raise gold and silver futures margins"

Notice, the news broke on Reuters Thursday morning US time. And they raised margin requirements by 50%! Think of how much unwinding of positions if you were not a commercial bank. Hence if you were long. I am sure I won't be the only one blogging about this.

Ah well. At least that potential bad news is out of the way.

14 comments:

  1. did you consider usages of silver?

    ReplyDelete
  2. my sweet VC

    Industrial usage has mopped all excess released supply from the shrinkage of photo use.

    There is an ounce of silver used in every Plasma TV

    And there are 1000 oz of silver vaporised every time the Americans shoots a cruise missile at anything. hahhahaha

    Anyhow, check out the silver institute for further info on silver demand.

    ReplyDelete
  3. thank you for suggesting silverinstitute.org. It's an interesting site.

    but keep in mind that various types of alloy can replace silver if its price is to high!

    I would say, for coming 8 years, bet on Silver is not as good as bet on China.

    ReplyDelete
  4. Dear Sir,

    I have some questions abt silver which post here :
    http://phatdat.blogspot.com/2007/06/kitco.html

    "I would like to buy silver...but as my investment is not that large, shall I use Boc to buy the "london silver"?
    I checked Hangseng and HSBC, seems no silver are offered"

    "one more Q, y needa buy 實貨? is it ok to buy those 存 摺silver?"

    ReplyDelete
  5. If you buy paper silver,when the bank bankrupted,you get nothing,just like Mr.Suen said,you are "game by system"

    you can refer to Mr.Suen's past article about NorthRock,the potential risk of buying paper silver.That's why Mr.Suen suggests his fans to buy physical silver.

    cheers
    Albert

    ReplyDelete
  6. i buy at 15.64 and it's still falling...

    ReplyDelete
  7. thx Albert...

    But, shall I just put the physical silver @ home and play as LEGO?

    I just mean that the transaction cost of keeping the silver in the safty box is quite high...

    ReplyDelete
  8. thx Albert...

    But, shall I just put the physical silver @ home and play as LEGO?

    I just mean that the transaction cost of keeping the silver in the safty box is quite high...

    ReplyDelete
  9. Dear Anonymous-Albert & Anonymous,

    Hard to imagine why Mr.Suen suggests his fans to buy physical silver. Please use your brain a little bit to compare the chance of Bank of China bankrupt with chance of physical silver being stolen!

    as a matter of fact, the buy-sell price difference of physical silver is very big! Transaction cost is an important factor when we choose a investment way.

    and it can't be played as Lego. (ha ha)

    If you like playing Lego, go Toysrus buy the limited edition "Republic Cruiser" of Star Wars Lego today. Keep it sealed and eBay it in future, the expected return is much better than your physical silver!

    ReplyDelete
  10. Well.

    I love it how people share their investment advices on this humble blog.

    Go VC!

    As for storage. Even safe deposit box has risks.

    If you remember what happened to DBS safe deposit box in Mei Foo...

    All I am going to say is this... When gold and silver reaches its peak, the entire banking system will be under tremendous stress.

    And yes, Albert is correct on my piece on Northern Rock. (thanks for remembering that piece, that piece is for all of us physical silver bugs)

    Anyhow, if there are force majeure, people like VC will come out and say "well, the failure of payment by BoC is a 5 standard deviation event, once every quadrillion years event."

    Oh wait... what are they doing in Shenzhen now? You can't take money out of BoC. hahahahahhaha

    I trust BoC in peaceful normal times. But When there are tremendous stress in the system, you rather be safe than sorry.

    Oh... Also, you can always buy yourself the "Republic Cruiser"... You can always sell it to VC on ebay.

    ReplyDelete
  11. Pakman, if you buy their Silver at the price they bought, I buy their ""Republic Cruiser" at the price they bought.

    ReplyDelete
  12. hahaaha

    sure...

    But I am just afraid this will turn into another "unfair agreement" like the type I have with Leona.

    Because the liquidity of silver is... I would say somewhat higher than a "republic cruiser"

    Perhaps by then oil will be at $1000 a barrel, and they might just turn your plastic cruiser into fuel.

    ReplyDelete
  13. if oil $1000 a barrel, 硬膠 price will go high too. 硬膠 price go high, new Lego price go high. New lego price go high, vintage Lego go higher! Ha Ha.

    But don't panic, Nuclear power will light the world!

    about liquidity of Lego:
    http://www.bricklink.com/index.asp

    ReplyDelete
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