Our long options trade on May SLV is really pissing us off and may be a total loss. We are still looking for an exit where we can recover our costs or at least some of them. However op-ex is fast approaching and we can dare to dream that the Europeans will do some QE tomorrow (the euro and SLV have a high positive correlation), for example, but this is wishful thinking, which doesn’t make money. I also think the dollar is going to see a steady decline over the summer, but this will be too late to salvage our SLV position (SLV and the dollar have a high inverse correlation). We will jump out when we can. Bloody frakkin silver.

There is a lot of talk that gold and silver markets are manipulated. I have always been skeptical, I dount they’re any more manipulated than any other stock, and this is partly because, contrary to popular perception, and as I point out rather constantly in this blog, gold and silver are not money, they are merely perceived as money. In truth they are just shiny metals and that’s it, and people who attribute other qualities are living back in the 1960s when there was a Gold Standard. However yesterday there was a very suspicious multi-million dollar trade in gold. It’s suspicious because it was made below value, immediately pushing prices down. It’s also suspicious because anybody trading millions of dollars does it in pieces, not wholesale. Even me, who only deals in thousands, even I stagger trades to cost average the price.

I see gold miners at a historical low, presenting a great long-term investment. I’m going long NUGT today. I also see gold prices steadily rising over the summer despite seasonal factors which would suggest otherwise. This is primarily because gold is entering a new 13-1/2 month cycle. Further, the seasonal patterns are different in election years and the democratic election year pattern generally sees summer rallies. Gold as a speculative instrument should rise with the SPX, and gold miners (NUGT) along with it. I think we can recover our losses from this bloody SLV trade by Jul or so with NUGT. We will probably go long PHYS or GGN toward the end of May as well.