Don’t Hi-yo Silver (SLV) Your Metal Money Away!

Not using market timing when trading silver and gold is insane – unless you are content to ride out 50% drops in silver and 25% plus drops in gold.

Silver and the SLV are looking a bit sick right now. If the move this morning in the pre-market to below 27.45 holds up by the NY close, the silver ETF (SLV) could careen down to around 21.50 to 23.00.

I’ve often said that you should not “ride your investments down the hill” pretending it’s some kind of Wall Street sponsored pony ride. If you do, you are being taken for a ride. You need to use market timing for any commodity TRADE.

Silver is NOT an investment. It is a trading vehicle that requires market timing. Gold is an investment that pays you nothing and although it has traditionally held far more value than silver has (check out the massive 2008 decline in silver and the lesser decline in gold), gold (and the GLD / IAU ! ) can correct very severely depending on the strength of the US dollar over the long term and other factors over the shorter term.

So don’t ride the Silver Pony down the hill. You can always buy back your investment/trade when it turns around.

Having said all that, I do recommend that you keep at least 5-10% of your assets in gold just as you hold US dollars for emergencies and for savings. Gold may work out better than the US dollar given the current government policies. But your trading position in gold is another thing.

Likewise with the silver ETF, if you feel the same way about a portion of it, meaning that it is an “investment,” that is fine. Keep it “no matter what” if you like. But your trading position is another thing and the above applies to it!

As for the overall market? Read the blog entry from yesterday about the breaking of the wedge and sign up for my FREE weekly newsletter coming out after tomorrow’s close. Please click the link below if you would like to receive it at no charge.

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Standard Disclaimer: Remember, it’s your money and your decision as to how to invest it.

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