This was contributed by “Ingot54″a professional trader who is also one of the popular contributors to “Topstocks.”

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I Probably should have included:

* When
* Why
* Where
* Who

as well, in the post title. But I hope to cover much of that below.

All of those questions are always going to be relevant.

Silver is a unique instrument to trade - Silver mini’s give you control over 500ozs of Silver @ one cent/Troy oz/pip

That’s $5 per pip per contract.

You will need to stump up $150 minimum margin per contract, based on a GSLO of no closer than 30 pips away from opening price. ($5 x 30).

And Silver is a very volatile cousin to Gold, once she gets her hair in a knot over something.

For example, it was once taken for granted that if OIL moved, so did Silver - you could see the two of them moving in tandem.

But a decoupling has occurred and Silver is much more independent that that.

Increasingly, thanks to the efforts of people like Jason Hommel Silver is being seen more as a tradable commodity in its own right, quite independent of other hedging instruments. It is seen as a valuable metal for the sake of being prudent to hold some, especially in a volatile market under the duress of the collapsing USA financial system, which we are currently witnessing.

In my view, if you do not wish to actually own physical silver, or their proxy, certificates of Ownership of Bullion (eg from the Perth Mint) then leveraged trading is the way to go - just in my view. It is preferable really to actually own some physical stuff but some prudent trading could finance that for you.

I (still) use IG Markets. The numbers quoted earlier come from their contractual quotes. But most CFD providers nowadays will quote precious metals. Unsure what other providers offer regarding terms for their mini’s.

But like any instrument - you need to be up-to-the-minute … or at last the day on what is happening with the metal. Currently Silver is having a breather - it has peaked out and is enjoying a pull-back.

As I write the price is $18.2175 per oz with a 5-pip spread.
The most recent high was $19.47 on 15th July.

That’s down a touch over 6%.

Just looking at my charts I suggest there is another bit yet to fall - I calculate a bottom somewhere around $17.85 as Support. If that fails then there is no real support (imv) before $16.85.

If you have been wondering why Gold and Slver and OIL have gone quiet lately, look no further than the Middle East.

From an article on comes this:

“Metals markets traded sideways-to-lower on Friday, as gold continued to exhibit continuing dollar-strength related moderation and was not able to maintain the $960 value zone.

“The greenback added a few more ticks in value, rising to 72.15 and, so did crude oil, which climbed very little, getting closer to the $130.00 mark.

“Geopolitics showed signs of significant cooling from last week’s heated rhetoric. In the latest developments, Iran welcomed the presence of U.S. officials at tomorrow’s talks in Geneva. The Bush administration, taking a page from the playbook of Mr. Obama, decided that hurling warnings towards Iran is probably less wise than trying to open a communications channel and ascertaining if there is room for possible solutions to the nuclear program bugaboo.”

So there it is.

If the USA fails to recognise that it is being handed a “Get-Out-Of-Gaol-Free” card by being welcomed by Iran at these talks in Geneva, then look for added strength in all of the above-mentioned commodities.

But particularly, look for an even better performance from Silver.

The metal is awake … it’s alive … it’s cheap to own … and highly and easily tradable.

My prediction (you knew I was going to make one!) is that Silver will outperform Gold as a hedge in coming days.

Others have covered the parlous state of the US economy, so I won’t go into that further, other than to say the situation is deteriorating.

Particularly, concerning Silver (and Gold) is the runaway inflation that is coming, as the chickens come home to roost following the inflation (and hiding) of the M3 money supply over the past few years.

Gold can look after itself - but I say to you today - get to know Silver.

It’s friendly and predictable, and when it moves, it MOVES.

EDIT: In Queensland, Ainslie Bullion Company deal in the physical stuff, and offer an updated daily price list:

They also have a newsletter. And the current markup over spot prices for a 100 oz ingot is 7.5%

In my view that is a competitive quote … a spread of around 14 cents!

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