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Thread: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

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    Default Catch a falling silver knife - Notes on EJ's April 29 silver sell call



    We've received dozens of emails and phone inquiries over the past few days on EJ's Time at Last to Sell Silver ($ubscription) announcement on April 29, 2011 to inform subscribers of EJ's decision to sell all of his silver that day after holding it for ten years. As of May 5, silver prices have collapsed 27% since then.

    To save time answering each inquiry on the call individually, here is a summary.

    Five ways that EJ's silver sell call was unlike others you may have read:

    • Did not conflate silver and gold markets

    Said gold was likely to fall, too, but not nearly as much as silver, and may even rise. This correction is about the silver market, not precious metals generally, or about gold. In the event, gold declined only 2.5% while silver plunged 12% at the open the next day.
    • Waited 10 years to sell

    Didn't buy silver a year or two ago. Bought silver in 2001 and didn't sell it until 2011. Bought silver at $4.25 in 2001 when the price averaged $4.36 for the year. At the time an ounce of gold cost 63 ounces of silver. Sold when silver traded for $48.50, at 11.4 times the price paid.
    • One sell call in ten years

    Unlike the stopped clocks who have been calling for a silver price correction since the price hit $20, EJ has not warned once of an imminent silver price correction before last Friday. He made one (1) sell call in ten (10) years.
    • Sold within 2.5% of all time peak nominal price

    On the day of that one and only silver sell call, silver reached a London fix spot price peak of $48.70. The spot price EJ locked in for his sale was $48.50.
    • To-the-day timing

    Starting the very next trading day, silver prices plunged 16%, the largest two day silver price decline in history.
    EJ will send an ounce of gold to the first reader who can find another silver sell call that meets all of these five criteria.

    Five reasons why EJ sold silver on April 29 after waiting 10 years:

    Reason #1: The Gold/Silver ratio hit 32, near the all time low of 27 in 1978.

    Reason #2: Silver prices have risen far ahead of gold, a currency, and platinum, an industrial metal. The only possible explanation is that we are experiencing a silver bubble, likely driven by a one or more large players cornering the market.

    Reason #3: The Silver Stadium is packed to overflowing. Too many rabid and poorly informed silver fans in the stands for my taste. When I got in, the Silver Stadium was virtually empty.

    Reason #4: High volatility implies a turning point, as the market divides into two major groups, those who justify the historically high price that's out-of-whack with gold and platinum and those who can't. As a peak approaches, both camps get increasing nervous until the trading breaks to one side or the other. I'm betting it breaks to the downside.

    Reason #5: "The pigs get fat and the hogs get slaughtered." An 11x return over 10 years is acceptable.

    We'll use the chart below to either confirm or invalidate EJ's theory that the silver bubble is in collapse mode. It shows the actual silver price in black, a theoretical non-bubble silver price growth rate in green, and my April 29 price crash scenario in red.



    Original chart posted on Sunday May 1 before the market opened in Asia. EJ's silver crash forecast is shown in red.



    Last update, close of market Eastern Time May 6. We will update this chart from time to time as the silver price crash continues.

    Does EJ hate silver?

    EJ writes:
    "On a personal note, I'm certain that many of you, like me, like silver. It was not easy for me to sell silver I'd possessed for ten years, and I did keep a small amount as a souvenir. When I buy it back, I probably will not buy 1921 silver dollars again. I enjoyed giving silver dollar coins away as tips to wait staff at restaurants and to friends as gifts. With a cost basis of $4.75, and a sell value of $10, then $20, then $30 as the price went up over the years, the novelty of a 90 year old coin communicated my feelings for the recipients perfectly: to a waiter, that I appreciated superb service, and to a friend a lasting memento of my fond wishes for their good health and success. But it's important to not get attached to one's investments. There is always a time to sell. Your silver doesn't care about you, so you should return the sentiment and view it only as a means to an end. Abstract yourself from your investments, maintain emotional distanced, and focus market dynamics -- the price action, the behavior of market participants, the macro environment, and public sentiment."
    What about gold?

    EJ writes:
    "Gold is not a bubble. It may develop into one, but I doubt it because gold unlike silver is a reserve currency, hoarded by central banks as a back-up plan in case the global monetary system breaks down, which it has been in the process of doing for the past decade. If my theory is correct that gold is a currency and will behave like a currency during a bond market and currency crisis, then gold will not become a bubble and will not correct the way a bubble does but as a currency does following the acute phase of a currency crisis. For example, gold may rise to $6000 then decline to $5000 and more or less remain there as the "new" dollar price of gold after the crisis is resolved. Calling that peak price is a non-trivial undertaking that I have been preparing for since I purchased gold in 2001."
    Subscribers can click here the original Time at last to sell silver article and thread of discussion before, during, and after the silver market correction that followed.

    We will add the Time at Last to Sell Silver article to the list that begins in 1998.


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    Last edited by FRED; 05-06-11 at 06:01 PM.
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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    silver just fell below $40... 18% below EJ's call... 19.5% below the peak...


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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    I'll be impressed indeed if silver falls to below $20 over the next 6 months...

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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Quote Originally Posted by c1ue View Post
    I'll be impressed indeed if silver falls to below $20 over the next 6 months...
    a single 'sell' call in 10 yrs... day before the mega-est silver price crash ever... & c1ue sez...


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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    In all fairness, the fact that margin requirements for silver were just changed probably is responsible for a large part of this big drop in silver prices. Six months from now, silver could be much higher (or much lower). I think it's a bit too soon to be calling this a successful call, from a long term standpoint. Sure, if EJ was advocating short term trading positions, the silver sell call would be a slam dunk.

    Don't get me wrong, I have followed you guys for years and years and I think this is one of the best, if not the best sites for rational investment analysis. (I actually have one of those itulip.com stock certificates you guys used to sell if that tells you how long I have been visiting this site.)

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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Quote Originally Posted by nathanhulick View Post
    In all fairness, the fact that margin requirements for silver were just changed probably is responsible for a large part of this big drop in silver prices. Six months from now, silver could be much higher (or much lower). I think it's a bit too soon to be calling this a successful call, from a long term standpoint. Sure, if EJ was advocating short term trading positions, the silver sell call would be a slam dunk.

    Don't get me wrong, I have followed you guys for years and years and I think this is one of the best, if not the best sites for rational investment analysis. (I actually have one of those itulip.com stock certificates you guys used to sell if that tells you how long I have been visiting this site.)
    i wondered about that too. ej's argued since the fake-o stock cert days to not trade gold/silver... taxes & fees eat up your profits. how far does silver have to fall to justify the cost of getting out & in again? 30%? 40%? to $30 or $35?

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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Quote Originally Posted by metalman View Post
    i wondered about that too. ej's argued since the fake-o stock cert days to not trade gold/silver... taxes & fees eat up your profits. how far does silver have to fall to justify the cost of getting out & in again? 30%? 40%? to $30 or $35?
    This is what I'm wondering too. The reasons to buy silver long term are still there, right? If you get past all the conspiracies, we're still using more than digging up so I would think it has to go up until it doesn't make financial sense to put it in socks and deodorant. I'm not sure what that price would be though.

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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Quote Originally Posted by metalman View Post
    a single 'sell' call in 10 yrs... day before the mega-est silver price crash ever... & c1ue sez...

    I don't know if this was that difficult of a sell call. Market, limit, stop, orders, etc. tend to congregate around previous support/resistance levels, historic price levels, and psychological numbers. $48.70 (hunt brothers 1980's high) was a historic and psychologically significant number, along with $50 being a big psychological area for orders. Even with lax margin requirements, these are historically important price levels.

    I had my take profit orders spread out between $48-$50 Most hit. Price didn't drop magically, it dropped because specs/investors/etc. who knew what they were doing took profit. When there was no one else bidding up the market it dropped, the suckers who didn't take profit lost.

    Abstract yourself from your investments, maintain emotional distanced, and focus market dynamics -- the price action, the behavior of market participants, the macro environment, and public sentiment."
    EJ said it himself.

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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Quote Originally Posted by chr5648 View Post
    I had my take profit orders spread out between $48-$50 Most hit. Price didn't drop magically, it dropped because specs/investors/etc. who knew what they were doing took profit. When there was no one else bidding up the market it dropped, the suckers who didn't take profit lost.
    when did you get into silver? 10 yrs ago?

    never trade out?

    how many head-fake silver corrections went down since 2001 that blew out the technical traders?

    maybe others here sold, but who except ej had the balls to make a 'time to sell' public announcement of the fact on the internet? for the record? in his own name not some anon alias? rep at stake.

    think of the shit we'd throw at ej today if he was wrong & silver broke 50 & kept going up... or even if prices only dipped 5%?

    good trades have many fathers, bad ones are orphans.

    if we want to hear more of these... really... let's try to make it worth his while & not cut him down.

    my 2 cents.

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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Quote Originally Posted by metalman View Post
    when did you get into silver? 10 yrs ago?

    never trade out?

    how many head-fake silver corrections went down since 2001 that blew out the technical traders?

    maybe others here sold, but who except ej had the balls to make a 'time to sell' public announcement of the fact on the internet? for the record? in his own name not some anon alias? rep at stake.

    think of the shit we'd throw at ej today if he was wrong & silver broke 50 & kept going up... or even if prices only dipped 5%?

    good trades have many fathers, bad ones are orphans.

    if we want to hear more of these... really... let's try to make it worth his while & not cut him down.

    my 2 cents.
    Whats wrong with trading in and out?

    Of course he had balls here but, he has a product to sell, and he has done a good job. I don't want to take anything away but, it wasn't JUST ej and itulip members taking profit that caused the market to go down.

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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Quote Originally Posted by metalman View Post
    when did you get into silver? 10 yrs ago?

    never trade out?

    how many head-fake silver corrections went down since 2001 that blew out the technical traders?

    maybe others here sold, but who except ej had the balls to make a 'time to sell' public announcement of the fact on the internet? for the record? in his own name not some anon alias? rep at stake.

    think of the shit we'd throw at ej today if he was wrong & silver broke 50 & kept going up... or even if prices only dipped 5%?

    good trades have many fathers, bad ones are orphans.

    if we want to hear more of these... really... let's try to make it worth his while & not cut him down.

    my 2 cents.
    +1.

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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Originally Posted by metalman
    when did you get into silver? 10 yrs ago?

    never trade out?

    how many head-fake silver corrections went down since 2001 that blew out the technical traders?

    maybe others here sold, but who except ej had the balls to make a 'time to sell' public announcement of the fact on the internet? for the record? in his own name not some anon alias? rep at stake.

    think of the shit we'd throw at ej today if he was wrong & silver broke 50 & kept going up... or even if prices only dipped 5%?

    good trades have many fathers, bad ones are orphans.

    if we want to hear more of these... really... let's try to make it worth his while & not cut him down.

    my 2 cents.



    +2

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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Quote Originally Posted by metalman View Post
    ... think of the shit we'd throw at ej today if he was wrong & silver broke 50 & kept going up... or even if prices only dipped 5%?

    good trades have many fathers, bad ones are orphans.

    if we want to hear more of these... really... let's try to make it worth his while & not cut him down.

    my 2 cents.
    Personally, I have great respect for EJ. And much gratitude for his work.
    The only poor call I've seen was taking on additional shorts in financial stocks back in March/April of 2009.
    Otherwise his calls have been outstanding, to say the least.

    Had he been wrong (by $10 or even $20) with his silver call it would take an egotistical asshole to "throw shit at him".
    I'd be willing to bet BIG money that the would be dung-throwers never made 90%+ per year for a decade on any investment.

    The only people who are never wrong are those who do nothing; and they have nothing to show for being "right".




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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Quote Originally Posted by Raz View Post
    The only people who are never wrong are those who do nothing; and they have nothing to show for being "right".
    Well said Raz, and the people who do nothing in our current environment of deep negative interest rates are real loser - no pun intended.

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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Quote Originally Posted by Raz View Post
    Personally, I have great respect for EJ. And much gratitude for his work.
    The only poor call I've seen was taking on additional shorts in financial stocks back in March/April of 2009.
    Otherwise his calls have been outstanding, to say the least.

    Had he been wrong (by $10 or even $20) with his silver call it would take an egotistical asshole to "throw shit at him".
    I'd be willing to bet BIG money that the would be dung-throwers never made 90%+ per year for a decade on any investment.

    The only people who are never wrong are those who do nothing; and they have nothing to show for being "right".



    rip van winkle investing...



    90%/yr for 10 yrs... big reward for snoozing. true buy & hold trade of the decade, not stocks... if you sold last fri.

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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Quote Originally Posted by metalman View Post
    rip van winkle investing...



    90%/yr for 10 yrs... big reward for snoozing. true buy & hold trade of the decade, not stocks... if you sold last fri.
    marc faber likes to talk about a hypothetical once-a-decade trader: he bought gold [abroad] in 1970, sold it dec31, 1979. he then moved all his funds to japanese equities, which he sold dec31, 1989. he then bought american high tech, which he sold dec31, 1999. and then he did something else.

    i've always been attracted to that idea, and much of my attraction to itulip is that it follows that kind of model. find the big thing, the big move, and stay with it. jesse livermore said the hardest thing he had to do with investments was sit. "be right, and sit tight."

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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Quote Originally Posted by metalman
    a single 'sell' call in 10 yrs... day before the mega-est silver price crash ever... & c1ue sez...
    The sell call was great, but then again, EJ was not the only one to point out the bubbly nature of silver as of Friday, April 29, 2011.

    Jesse noted this, and I myself dumped a 971 oz Ag bar on 4/22.

    In fact, what I was noting was that a fall under $20 is far more actionable than a call that Ag was about to fall - especially given the 4th margin increase by CFTC as well as the unquestionably parabolic nature of the rise.

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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Quote Originally Posted by c1ue View Post
    The sell call was great, but then again, EJ was not the only one to point out the bubbly nature of silver as of Friday, April 29, 2011.

    Jesse noted this, and I myself dumped a 971 oz Ag bar on 4/22.

    In fact, what I was noting was that a fall under $20 is far more actionable than a call that Ag was about to fall - especially given the 4th margin increase by CFTC as well as the unquestionably parabolic nature of the rise.
    bs... a single & definite 'time to sell now' & 'the price will crash' from ej after 10 yrs of silence = jesse's unactionable & repeated warnings that the price got too high too fast & we'll see a correction some day but don't sell, it'll be a temporary setback? sheesh.

    this is like ej's dec. 2007 'time to short stocks... market's gonna fall 40% in 2008' but compressed into 2 weeks. the call let you dodge a 25% loss... if you were listening. if he gets it right in the other direction, the bottom ~20, that's a 2 fer.

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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Quote Originally Posted by metalman View Post
    bs... a single & definite 'time to sell now' & 'the price will crash' from ej after 10 yrs of silence = jesse's unactionable & repeated warnings that the price got too high too fast & we'll see a correction some day but don't sell, it'll be a temporary setback? sheesh.

    this is like ej's dec. 2007 'time to short stocks... market's gonna fall 40% in 2008' but compressed into 2 weeks. the call let you dodge a 25% loss... if you were listening. if he gets it right in the other direction, the bottom ~20, that's a 2 fer.

    EJ and Jesse comparisons are apples and oranges. EJ is not a short term trader.

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    Default Re: Catch a falling silver knife - Notes on EJ's April 29 silver sell call

    Quote Originally Posted by metalman
    bs... a single & definite 'time to sell now' & 'the price will crash' from ej after 10 yrs of silence = jesse's unactionable & repeated warnings that the price got too high too fast & we'll see a correction some day but don't sell, it'll be a temporary setback? sheesh.

    this is like ej's dec. 2007 'time to short stocks... market's gonna fall 40% in 2008' but compressed into 2 weeks. the call let you dodge a 25% loss... if you were listening. if he gets it right in the other direction, the bottom ~20, that's a 2 fer.
    Whatever.

    Besides my own sell, I know of 3 other people - who don't even own physical Ag - who either put money into an investment account to short Ag via ZSL or directly shorted Ag because of the bubbly nature of the rise.

    As someone who is not a iTulip Select member and had no idea on the sell call, my own action in selling Ag - albeit slightly early as is my historical pattern - itself is an indication that there were clear reasons for thinking Ag was due for a fall.

    This doesn't detract from EJ's call, but to say it was unique is wrong.

    As for Jesse - he has been a consistent 'pro' PM person for the entire year plus I've been watching. For him to say that silver is looking bubbly is a significant change in basic position, and thus is actionable. It would be like Alex Jones saying the OBL story line by the US government is believable: a significant departure from norm.

    You also fail to understand that my commentary on EJ's projection of Ag's fall is in fact a compliment.

    EJ isn't perfect - there have been failed calls as well as imprecision in the details of even correct calls.

    This is in no way a criticism; there are so many factors behind any attempt to give precise timing and price level details that any success at all is far above noise level.

    But let's be honest: while I appreciate and respect EJ's capabilities and record, his call to sell in 2007 was right as much as his failure to buy in March of 2008 was wrong.

    He isn't perfect - no one is - and attacking anyone who merely doesn't think EJ is perfect is hardly conducive to rationale discourse.

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