Make or Break Time for Silver
Source: Resource Investor, Mad Hedge Fund Trader (9/16/10)
"Silver is now bumping up against key technical resistance."
Unsurprisingly, I have been flooded by emails from readers asking what to do now. Short-term traders, those in the futures markets, and anyone using a degree of leverage should take the money and run. As I have pointed out with my hugely successful agricultural trades this summer (corn, wheat, sugar), we now live in a zero-return world and the 13% gain silver has posted since August 23 puts you way ahead of the pack. Mean reversion can be such a bitch.
For those who hold physical bars and coins, it is a different story. Just keep it locked up and throw away the key. My multiyear target for silver is the old 1979 high of $50. Some hyper bulls, like Euro Pacific's Peter Schiff, thinks it may go to $100.
In any case, the round trip dealing costs for physical bars and coins are too high, sometimes reaching 20%. There are also the tax implications, for those who bother with such things. Remember, coin dealers are now required to file 1099s with the IRS on all PM sales by individuals. And if things don't work out with this financial markets thing, and we enter the Armageddon daily predicted on the Internet, you can always use your silver to bribe the border guards.