Wednesday, January 30, 2013

Bullion Baron's SLV Call Options: Performance

As I mentioned in a recent post, I have been building a position in call options to capitalise on the next burst higher in Silver (2 year time frame):
I've been accumulating $38 & $50 January 2015 Call Options in SLV for around $2.30 and 90c respectively. If Silver was to hit $68 (before expiry) which is the lowest of targets provided above, each option with $38 strike would be worth $30 (having paid $2.30 that's roughly 1200% profit), each option with $50 strike would be worth $18 (having paid 90c that's roughly 1900% profit). Purely as an example if someone put $5k into each (50/50 between the $38/$50 call options) and closed the positions when Silver hit $68, the $10,000 would have been turned into around $165,000. That is the sort of leverage they provide, but on the flip side should Silver not be above the strike price when they expire in January 2015 (if you haven't sold out for a profit prior) then you lose your entire capital (whatever you paid for the options, in this example $10,000).

Further to risk of complete loss (if options expire out of the money), the options are traded on the US market so your funds are converted into and out of USD (from AUD, for Australian based readers), there is the potential the gains aren't as significant if the AUD has appreciated further against the USD (or profit would be higher if AUD has dropped).

This far from covers every angle of options and the risks involved such as time decay and other factors, but perhaps provides some context to the reasons for using them (the leveraged profits possible) if you expect a particular outcome. And at the end of the day the only capital at risk is the 10% I'm prepared to forgo should the Silver rally I'm expecting not eventuate. Bullion Baron: Silver To Shine Again: Prepare For A Burst Higher
I've decided to post a table showing representative performance of the options purchased, but please remember the site disclaimer: 
"The content on this blog is the opinion of the author only and should not be taken as investment advice. No site content should be construed as a recommendation. Any action that you take as a result of information, analysis or advertisement on this site is your responsibility."
While the amount of capital speculated in the portfolio pictured below is significantly smaller than my actual account, it does represent the same breakdown and entry prices so it will track the performance of the options I hold (% gain or loss):

CLICK TABLE TO ENLARGE
You couldn't actually construct a portfolio exactly as pictured as the SLV options are sold in contracts of 100. The table is to measure performance only, not to be replicated.

The portfolio is currently sitting around 7% in the red after some recent price weakness in Silver. The plan is to sell the Jan 2014 call options in the first half of the year into a strong rally and use that capital to add to the Jan 2015 options position (potentially waiting for a pull back to do so, rather than rolling).

I will update the table following any large changes to value or events (buy/sell).

You can follow me on Twitter. I'm usually sharing links and opinions daily (@BullionBaron). You can also CLICK HERE to signup for free email updates.

BB.

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Tuesday, January 29, 2013

Gold Speculator, Investor, Trader, Saver or Gambler?

I recently had an interesting discussion with a few individuals in the comments section of a subscription site (so can’t provide a link) where we argued whether certain members were investing, speculating or trading (based on their strategy) in the precious metals sector.

The word speculator generally has some negative connotations, but I think many in the precious metals space who think they are investing are in fact speculating (myself included, but I’ve never had any issues with that label).

Here are the five labels I would give to those with capital invested in the precious metals space (more than one may apply to each individual):

Precious Metals Trader

The precious metals trader is someone looking for short term opportunity in the market based on chart and other technical indicators which suggest the future price direction of the metal. They might trade short or long on the metal (betting on the price moving lower or higher). They might have a view on the long term prospects for Gold/Silver, but this doesn’t (or at least it shouldn’t) affect their short term decisions. This means when the metals are overbought the trader will either sell short or close their long positions (some may follow the rule “Never short a bull market”).

Precious Metals Saver

The precious metals saver is a regular buyer of Gold &/or Silver. They buy the metals not to speculate on a rising price, but because they choose to hold their savings in ounces instead of dollars. Precious metal savers will generally not concern themselves with the price when they buy, rather they purchase at regular intervals (e.g. every pay day or once a month) and this is referred to as dollar cost averaging. In some cases they are doing so because they believe it will protect their capital from the effects of inflation or some save in Gold/Silver as they believe a new monetary system is likely in the near future and the savings in precious metals will allow them to safely carry their capital from the current monetary system to the next. The precious metals saver might be considered conservative even if they have heavy exposure to precious metals.

Precious Metals Speculator

The precious metals speculator is someone who is heavily exposed to precious metals with the intention of making spectacular gains as the bull market continues. They would have a solid understanding of the market and ensure the fundamentals support their decision. Their heavy exposure means that if something were to change dramatically in the market without warning this could impact the value of their portfolio substantially, a risk they are aware of and prepared for. Unlike the trader they may be prepared to weather significant price corrections with the intention of riding the longer term trend.

Precious Metals Gambler

The precious metals gambler is probably similar to the speculator in many ways; ultimately they are looking for a significant gain in their portfolio, but in attempting to achieve these gains they make poor decisions which might include: using too much leverage, blindly following the actions of a speculator without understanding reason for their choices or buying without knowing their own limits (for example they might buy high without the necessary patience to weather a long correction & sell out at the bottom).

Precious Metals Investor

The precious metals investor is someone who holds Gold/Silver as part of a balanced portfolio (for example they might hold 25% as per Harry Browne’s Permanent Portfolio, with the other 75% held in stocks, cash & bonds, evenly split). They will not be overweight in precious metals and their exposure is likely to be mixed, for example they might hold some physical along with dividend paying Gold & Silver mining stocks. If the goal of the individual is a modest and consistent return over a long period of time (of which the precious metals plays a part) then they are an investor. If they are using precious metals to multiply the value of their portfolio over the short to medium term, then chances are they are a precious metals speculator.

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Several of the above labels may overlap at times. For example the precious metals saver might occasionally trade some Silver for Gold (or visa versa) in order to play the Gold:Silver Ratio (GSR), but ultimately their goal would be to stack more ounces using this strategy (just the same as you might swap from one term deposit account to another with a better rate).

To a degree I would consider myself as having worn the first three hats (Trader, Saver & Speculator) at various times over the last five years.

I have a core position in physical Gold which is unlikely to be sold regardless of the prices we reach over the short to medium term. This core position will be held with the expectation we see a new monetary system at some point (perhaps something similar to Freegold, a concept previously covered on the blog or maybe it will be completely different). I would consider this core position as “savings”.

At times I have sought to benefit from short term moves in the price of Gold and Silver, including when I sold a portion of my Silver between $38 and $46 in early 2011 when I assumed we were nearing a major peak (but held the majority for continued bull market trend).

Primarily though I consider myself a precious metals speculator. I am heavily geared towards a continued rise in precious metals and it should be obvious to most longer term readers that the vehicles I’ve used can be inherently risky (for example junior mining stocks & options). My investment capital is positioned heavily (100% more or less) toward the expectation for a continued rise in the precious metals and while I think there is good reason to expect the bull market will continue, if the environment changes quickly and without warning (for example the US starts raising interest rates and tightening monetary policy) then there is the potential for significant loss.

The above descriptions and definitions are mine only. I have no doubt there are some whose opinion would clash with mine and I would encourage you to speak up in the comments below. Also if you think there is a group who hold precious metals but aren't covered by the above labels I would also value your input.

You can follow me on Twitter. I'm usually sharing links and opinions daily (@BullionBaron). You can also CLICK HERE to signup for free email updates.

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Saturday, January 12, 2013

Silver To Shine Again: Prepare For A Burst Higher

Over the next 12-18 months I'm expecting a major burst higher in Silver which will take the price to new highs, finally cracking through the US$50 nominal record set in January 1980.

If we take a look at the price of Silver over the past 10 years we can see a repeating pattern of volatile bursts higher as the secular bull market plays out:

Click chart to enlarge
If we see a similar rise to previous peak to peak moves (noted on the chart as 80%, 40% & 133% respectively), we can expect the next sharp move higher to take us to somewhere between $68 and $114. 

From the October 2008 low of $9.01 (London Fix prices) the price rallied 5.4x to $48.70 some 2.5 years later. If we saw a similar move this time we would be looking at Silver spot price of $141 around the middle of 2014 (from $26.16 low in December 2011)... that figure lines up conveniently with the inflation adjusted peak from 1980 discussed by Adam Hamilton in this recent article, Real Silver Highs 4:
Silver bearishness has naturally mushroomed following this metal’s rough December.  A growing chorus is declaring silver’s secular bull finished, implying it must have peaked after silver’s dazzling April 2011 surge.  But secular bulls climax in popular speculative manias, which dwarf the silver action of a couple springs ago.  Looking at silver in real inflation-adjusted terms drives home the point its bull is far from over.

For any multi-decade price comparison, adjusting for inflation is essential.  A dollar today is worth a lot less than a dollar in the past.  The Federal Reserve keeps conjuring up new fiat dollars out of thin air, inflating the money supply.  As it grows faster than the underlying economy, relatively more dollars compete for relatively less goods and services.  This monetary inflation bids up the prices of everything.

And to get an idea of what a secular-bull-ending popular speculative mania in silver really looks like, we have to travel back to the last one in early 1980.  Silver peaked at the then-breathtaking level of $48, which no longer sounds extreme.  But a dollar back then went a heck of a lot farther than a dollar today.  The intervening three decades of relentless inflation have greatly eroded each dollar’s purchasing power.

Back when silver’s last secular bull climaxed, the US median household income was under $18k!  Today it is around $50k.  Across the nation new houses averaged just $76k while new cars generally ran less than $6k.  A candy bar cost a quarter.  It is grossly misleading to look at decades-past prices without first converting them into today’s dollars which we all understand.  That creates a righteous apples-to-apples comparison.

Unfortunately the most widely accepted inflation gauge today is the US Consumer Price Index.  Even though it greatly understates true monetary inflation for political reasons, it is still the inflation yardstick that Wall Street accepts.  Using the horribly flawed CPI to recast past silver prices into today’s dollars is actually very conservative.  Since this construct lowballs inflation, it really understates silver’s last mania.

This first chart looks at the last four decades or so of silver prices, showing what a real bull-killing popular speculative mania looks like in today’s dollars.  The nominal (not inflation-adjusted) silver price is shown in red, while the real (inflation-adjusted) silver price is superimposed in blue.  This uses the CPI to recast silver prices in constant November 2012 dollars, the most recent monthly CPI data currently available.

Silver has always been a hyper-speculative metal, which greatly amplifies the magnitude of its popular speculative manias that climax secular bulls.  The terminal ascent of its last one in late 1979 and early 1980 was mind-boggling.  It skyrocketed vertically in a legendary parabola, and then immediately collapsed in a legendary crash.  In today’s dollars, silver’s January 21st, 1980 high was actually over $142 per ounce! Continues...
Real Silver Highs 4
There's a good possibility the bull market does turn bubble over the next couple of years (although that might come later) and I want to be positioned to capture the move whether it ends up just another strong advance or the final parabolic stage...

With the most aggressive move higher in the bull market (over late 2010/early 2011) having occurred in an environment where the US monetary base moved explosively higher with quantitative easing, I suspect the next wave will take us close, if not into, triple digits given the recent introduction of QE3 & QE4. The monetary base is still sitting relatively idle at the moment, but that's likely to change early in the year as I explained in last weeks post (Why hasn't Gold rallied after QE3 / QE4 announced?):
It's probably just taking some time for the purchases to take effect on the Fed balance sheet. In fact the QE4 announcement indicates the additional $45b purchases won't start until the end of "Operation Twist" (FOMC Minutes) which didn't complete until the end of 2012
We are over 20 months into Silver's correction from the April 2011 peak, if the timing of peak to peak moves remains consistent (roughly every 2-3 years) then we can expect a strong rally to commence within the next 12 months with a peak to be expected sometime between mid 2013 and mid 2014.

Silver has been in it's correctional phase for longer than Gold and suspect it will be the metal that is fastest to recover, coming down from the current Gold:Silver Ratio (GSR) level of around 55:


The GSR shows the number of ounces it takes to buy one ounce of Gold, currently the ratio sits at around 54.5 (or around 1.7Kg's of Silver to buy a single ounce of Gold). I don't expect the ratio to remain that high (it has been trending lower for the past several years now) and chances are it could drop to the ratio we saw in early 2011 of around 30 or possibly even lower. If we do see this then clearly holding Silver will prove favourable although I would always recommend holding some Gold as well (no doubt we could learn a thing or two from central banks who stockpile Gold, but not Silver).

If we see Gold head to $2300-2400 this year, a possibility I muse in last weeks post:
After dropping to a low of $1303 in late January 2011 (POG was around $1350 at time of QE2 announcement on November 3rd, 2010), the price proceeded to rally, peaking at $1920 just over 7 months later, a 47% move. I think it's likely that we see similar strength in Gold over 2013, a rally which is likely to push Gold well above $2000 and perhaps as high as $2300-2400.
Then a GSR ratio of 30 gives us a potential target for Silver of around $76-80 in 2013 (although a peak of the next major up leg may not come until 2014).

Tiho of 'The Short Side of Long' had this to say on Silver in a recent post (on precious metal expectations for 2013):
The same cannot be said about Silver. If you hold a view that almost all assets make a new all time high during a secular bull market, as I do, than you probably also find it interesting that Silver remains very attractive. Today, Silver trades at $30 which is 40% lower than the last record at $50 from 1980. Furthermore, adjusted for inflation, Silver's January 1980 peak of $50 in today's money value is well above $100. So one could make an argument that Silver is actually more than 70% below its all time high and has a chance in getting to a triple digit territory before the secular bull market ends.

And with such inexpensive prices on a relative basis, this is where the opportunity lays ahead. During the 1980 peak in precious metals, Silver managed to reach a ratio of 16 ounces per 1 Gold ounce, as it outperformed Gold in the final panic spike. If I am correct in predicting a precious metals frenzy in the coming quarters and years ahead, Silver could become incredibly overpriced. Today, the ratio stands at 54 Silver ounces per 1 Gold ounce, which tends to be a historical average. Even though I am not sure if we will once again see 16 to 1, like we did in 1980, it is very possible that Silver could reach much lower ratio than where it trades today.
He also posted this chart which shows Silver to be oversold on the sentiment readings (a good contrarian indicator showing it's a good time to be adding to positions):

Click chart to enlarge
The above chart would suggest that even if the bottom isn't in (at $26), any further decline would likely be a final capitulation and very short lived (I think the bottom is in and higher prices are imminent). 

The below price chart suggests we have some support forming in a trend line drawn from the mid 2012 lows:

Click chart to enlarge
It's probably going to take some momentum for Silver to break through the $50 level, so I expect the initial thrust in 2013 to take us into the $40's before further consolidation to wipe out the bullishness in order for the price to continue climbing.

Gann Global's James Flanagan recently presented the following chart (from this presentation) which shows a median rally for Silver would take the price 40% higher into the low $40's in the next 4-5 months:

Click chart to enlarge
With my expectation that Silver will see it's next major move high in the next 2 years I decided to use some riskier securities in order to benefit from the rally. I have been selling down some numismatic coins I'd hoarded over the years (can't bring myself to sell any low premium Silver while spot is under AUD$30!) and raised money elsewhere in order to fund a 5-10% position (of entire portfolio) in January 2015 SLV Call Options (bought some last week and will be adding to this position over the coming week or two). 

I can almost hear the cries from the hard money crowd that SLV is only "paper silver" and will become worthless, but there is some serious money to be made if it plays out as I expect (and no paper/physical price break down occurs over the period I'm holding). I will be using options for leverage as opposed to junior mining stocks as I did during 2009-2010. I did well with some of the Silver explorers, holding CCU (ASX) from 6c and selling out between 60c and $1, SVL I bought at 8c and sold out at 35c, to name a couple, but the mining stocks turned south a couple of years ago and haven't yet returned to their former glory (and I lost a chunk of the early gains over 2011-2012, although still well up overall). Not to say Gold/Silver stocks won't eventually recover but I'd rather speculate without company specific risks to worry about.

You can read more about options on Investopedia, but here is a basic definition:
An option is a contract that gives the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. An option, just like a stock or bond, is a security. It is also a binding contract with strictly defined terms and properties.
I have discussed them previously on the blog. I have made and lost capital with stock options, but never previously bought options on the US market for which I needed to open an account at OptionsXpress.

I've been accumulating $38 & $50 January 2015 Call Options in SLV for around $2.30 and 90c respectively. If Silver was to hit $68 (before expiry) which is the lowest of targets provided above, each option with $38 strike would be worth $30 (having paid $2.30 that's roughly 1200% profit), each option with $50 strike would be worth $18 (having paid 90c that's roughly 1900% profit). Purely as an example if someone put $5k into each (50/50 between the $38/$50 call options) and closed the positions when Silver hit $68, the $10,000 would have been turned into around $165,000. That is the sort of leverage they provide, but on the flip side should Silver not be above the strike price when they expire in January 2015 (if you haven't sold out for a profit prior) then you lose your entire capital (whatever you paid for the options, in this example $10,000).

Further to risk of complete loss (if options expire out of the money), the options are traded on the US market so your funds are converted into and out of USD (from AUD, for Australian based readers), there is the potential the gains aren't as significant if the AUD has appreciated further against the USD (or profit would be higher if AUD has dropped).

This far from covers every angle of options and the risks involved such as time decay and other factors, but perhaps provides some context to the reasons for using them (the leveraged profits possible) if you expect a particular outcome. And at the end of the day the only capital at risk is the 10% I'm prepared to forgo should the Silver rally I'm expecting not eventuate.

It's been a pretty boring 18 months for the Silver speculator/investor (at least for those holding longer term positions), but the next 12 months brings about conditions which are likely to change that. Potential price targets I think we could hit in the next 12-18 months vary between $68 and $141, I think it will land somewhere in the middle, but no doubt as it rises I will post my opinion on the blog as we go.

You can follow me on Twitter. I'm usually sharing links and opinions daily (@BullionBaron). You can also CLICK HERE to signup for free email updates.

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Sunday, January 6, 2013

Why hasn't Gold rallied after QE3 / QE4 announced?

A couple of weeks ago I wrote the following at the bottom of a post:
We are probably nearing another major bottom for Gold, I find it highly unlikely there is much more downside than $50 or so (e.g. could drop to the US$1620-1630 level, but unlikely to remain there long if it does).
I have seen a lot of comments about Gold not having rallied on QE3/QE4 announcements. Funnily enough it's this very expectation that's probably driving the price lower as those who took positions in Gold expecting a huge rally on the announcements exit in disappointment. Once the weak hands are cleared we will likely see an explosive rally in 2013.
Following the announcement of QE2 the price of Gold traded sideways to down before bottoming a couple of months later, then from the low point it rallied almost 50% in 7 months. I wouldn't be surprised to see a repeat performance from the recent or near future lows out of this correction (e.g. a move like $1600 to $2400 during 2013).
Since that post we've seen the price of Gold retrace to that $1620-1630 zone. It seemed a likely target for further downside given the previous resistance seen around that level during mid 2012:


Not to say there isn't the possibility of Gold heading lower, but the hammer candle on Friday does have the potential to form a significant bottom. The plunge in Gold was caused by doubt over the time that quantitative easing measures would be used by the Fed (FOMC Minutes):
Various members stressed the importance of a continuing assessment of labor market developments and reviews of the program’s efficacy and costs at upcoming FOMC meetings. In considering the outlook for the labor market and the broader  economy, a few members expressed the view that ongoing asset purchases would likely be warranted until  about the end of 2013, while a few others emphasized the need for considerable policy accommodation but did not state a specific time frame or total for purchases. Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet. One member viewed any additional purchases as unwarranted.
But regardless of the above commentary, other guidance provided in the minutes suggested tightening of policy is still a fair way off (suggesting the sell off in Gold was a knee jerk reaction):


To put the above into context, consider the same chart from the FOMC 12 months prior (January 2012):


Over the last 12 months the Fed has pushed out their expectations for length of an easy monetary policy, but following comment that a few dissidents (which there always are) think QE will be wound up in 2013, everyone decides to sell Gold? Seems silly to me. The graphs above strongly indicate the easy money will be another couple of years at least (chances are if the newly announced QE3 & QE4 aren't as effective as expected the timing will continue to be pushed out).

There's a lot of discouraged Gold & Silver holders at the moment as the price chops around in the current trading range, but I would encourage you to stay sharp. Personally I am buying weakness in the opinion a strong rally is not far away.

There has been a bit of chatter around the Fed's monetary base not having expanded despite the recent announcement of QE3 & QE4 whereby they will be purchasing a combined $85 billion per month ($40b MBS, $45b US Treasuries). In fact a well known newsletter writer, Graham Summers, even suggested that the Fed is lying about their new policies (Did the Fed lie about QE & QE4?):
It’s common belief that Bernanke and the Fed are printing $85 billion per month ($40 billion to buy Mortgage Backed Securities and $45 billion to buy Treasuries). After all, these are the policies that the Fed announced in September and December 2012, respectively.

The only issue with this is that the Fed lied.

Today, the Fed’s balance sheet is $1.3 billion smaller than it was at this time last year. Last week it was $19 billion smaller. The largest year over year growth the Fed balance sheet has shown since QE 3 was announced occurred on November 23, 2012 when the Fed balance sheet was a mere $48 billion larger than it was at the same point in 2011.

Since that time the Fed balance sheet has shrunken year over year.

The implications of this are severe. If the Fed is indeed not employing the policies it announces but is simply engaging in verbal intervention (stating it will do something just so the markets react), then it has lost total credibility as a monetary authority and is nothing more than a market manipulator.
But this is a pretty big assumption on his part, it's probably just taking some time for the purchases to take effect on the Fed balance sheet. In fact the QE4 announcement indicates the additional $45b purchases won't start until the end of "Operation Twist" (FOMC Minutes) which didn't complete until the end of 2012:
The Committee also will purchase longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed at the end of the year, initially at a pace of $45 billion per month.
Pater Tenebrarum of the Acting Man blog also provides the following explanation:
Let us first take a look at US money supply growth. So far, 'QE3' and 'QE4' have not yet ignited a strong acceleration in bank reserve and money supply growth. However, one must be aware that this is mainly due to technicalities. For one thing, the Fed's purchases of mortgage-backed securities are subject to a large settlement lag. The first purchases undertaken in the course of 'QE3' (the MBS purchase program) only settled in mid November. Concurrently the treasury drew down $100 billion in deposits it held with the Fed. Since these are part of the money supply, growth in narrow money TMS-1 was negative for the month of November, and growth in TMS-2 was slower than it would have been otherwise. We expect this effect to be temporary; likewise, the most recent data captured in the US money supply growth charts include what is probably a seasonal decline in demand deposits, offset by a much larger increase in savings deposits (the latter are part of TMS-2, but not TMS-1). Currency in circulation continues to grow at a strong pace as well, up 8.9% year-on-year. Moreover, the recent sharp increase in 'securities held outright' by the Fed shows that the new inflationary program is now well on its way.

The monetary base is approaching the upper end of its recent sideways channel. It will likely soon break out to new highs, similar to what was seen on the occasion of the first two 'QE' iterations.
It appears we are seeing a repeat of QE2 when it took a couple of months following the announcement before the monetary base started expanding and the price of Gold took off:


 And here is how the price of Gold reacted over the events:


After dropping to a low of $1303 in late January 2011 (POG was around $1350 at time of QE2 announcement on November 3rd, 2010), the price proceeded to rally, peaking at $1920 just over 7 months later, a 47% move. I think it's likely that we see similar strength in Gold over 2013, a rally which is likely to push Gold well above $2000 and perhaps as high as $2300-2400.

The US isn't the only economic power increasing the levels of QE/debasing their currency, take Japan's new leader Abe who is hitting the print button:
Markets appear to be responding to two key planks of Abe's agenda: his efforts to pressure the Bank of Japan into more aggressive easing and his moves to oblige industry in restarting stalled nuclear reactors.

Abe has also pledged a big new stimulus of more than Y=10 trillion ($112bn), or about 2 per cent of Japan's GDP (to be partly funded by issuing new bonds). It will be spent largely on public works.

He has also dropped broad hints he may postpone a scheduled increase in Japan's consumption tax from 5 per cent to 8 per cent, even though his party agreed with the tax rise originally.

While the long-term wisdom of these moves, and the likelihood that in the short term they will increase Japan's dizzyingly high public debt levels, is being questioned in some quarters, investors clearly like what they see. The Australian
As well as Gold rising in response to the increased amount of quantitative easing, I expect that Silver will also perform well and intend on purchasing some Jan 2015 out of the money options to capitalise on the explosive run I expect we will see in the metals between now and then (I expect Silver to outperform Gold as it often has during periods of high interest in the metals). I will only be putting a small percentage of my overall portfolio into these, but there is the potential for some extraordinary gains in the case that Silver spikes similarly to past runs in the metal which have occurred roughly every 2-3 years from the start of the bull market (below chart from Kitcomm):


I can't know for sure when the rally on back of further QE will begin, but I am expecting it to start in the very near future and it's quite possible that the reason it hasn't started is due to the delay in Fed monetary base expansion which shouldn't be far away. Like the 2011 Gold rally it might start under the radar with a slow but steady increase, followed by an exuberant & near parabolic finish.

You can follow me on Twitter. I'm usually sharing links and opinions daily (@BullionBaron). You can also CLICK HERE to signup for free email updates.

BB.

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