ZSL: Silver Short ETF

By argus613, February 20, 2013

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

i have a small position in ZSL Silver short ETF 2x. In @44 now 54 maybe could go to 75 if silver craters as JPM et al purportedly covers short silver. Larry Edelson believes silver goes to low 20’s or high teens. The launching rubber band is being drawn back. Bob

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21 Comments on " ZSL: Silver Short ETF"

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whatch
Member
15
whatch
February 21, 2013 7:00 pm
Precious metals have always been the standard hedge against inflation and a weak dollar. I don’t believe silver will see any significant decline until certain events take place that force Obama and the Greenies to get out of the way and allow for U.S. oil reserves to be tapped and an adequate infrastructure to be built. Fracking is a proven technology but some people are still thinking in terms of 20-25 years ago. No, in fact I think as world events unfold we will see silver and gold shoot to the moon temporarily. Oil prices and gasoline will also shoot… Read more »
davidshelton
Member
3
February 21, 2013 9:12 pm
I’m working on the premise that 28.50 was the line in the sand for the intermediate term. Maybe we’ll see 26? Perhaps the fear trade in PM’s is unwinding and the inflation trade has not looked appealing enough to many but there’s always the scarcity trade amongst others. Many thought 2003-2007 were pretty rosy years as the general markets rallied but it hardly stopped gold in particular from rising strongly. The worldwide debt super bubble must deflate somehow or other and the apparent path chosen to deal with this by the major central banks of this world fundamentally support a… Read more »
flyinkel
Irregular
15
February 21, 2013 10:34 pm
ZSL as a 2x short of silver gives great payback in the inflationary monetary supply stock run-up. Ecnomists operate off the same equation and as money supply increases so does inflation and interest rates. We have artificially kept those i rates low by buying back our own treasuries but that can’t last. Up till sequestration, volatilitiy and possible flocking back to silver. Notso good for ZSL. Mid Mar, APR, and part of May stocks continue to run up. Why? Full effects of QE money supply increase are not felt for 18-24 months post infusion. Good time to hold ZSL as… Read more »
Wayne Hatcher
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Wayne Hatcher
February 22, 2013 9:16 am
The old adage that what goes up must come down has never been more true than with gold and silver. If you are a player, there are instruments to play both sides of the equation and the good part is that you can own them just like stock with defined risk. It is true that real inflation is what it costs to live in the real world but there are other pressures that drive these markets as well. If you look at precious metals the value has risen and fell in all kind of market scenarios over the years. If… Read more »
flyinkel
Irregular
15
February 22, 2013 9:48 am
Wayne may be right, he probably just has more steely nerves than I do. Here is a good explanation of what can happen if you hold long-term to a 2X, and even worse an inverse 2X. https://www.tradeking.com/education/etfs/leveraged-and-inverse-etfs I held MVV into a decline and got burned pretty badly, and I felt this was the most stressful stock in my portfolio. It took forever to recover and I have watched my 2X and 3X stocks far more judiciously since. I do normally like a longer horizon and buy and hold, however, I don’t do this anymore with 2X and 3X stocks.… Read more »
Wayne Hatcher
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Wayne Hatcher
February 22, 2013 10:51 am
No I don’t have steely nerves. I just have the philosophy that I never invest all of my funds at one time in a market that fluctuates. As with ZSL I ride the highs in investment comfortable that I can take profit if I choose. But, when the investment goes against me I simply look for a spot that I feel comfortable adding to my position, comfortable that it will then take less of a move to get back to even and making it profitable faster. I also never invest in this type of short position stock instrument if I’m… Read more »
Bob
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Bob
February 25, 2013 12:36 pm

How do we short ZSL?

Wayne Hatcher
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Wayne Hatcher
February 25, 2013 2:07 pm

Hello Bob
ZSL is a 2X bear short silver E.T.F.. It moves inverse to silver and therefore is like shorting the metal with defined risk. The opposite would be a long position like buying the real thing or investing in a futures contract or option. There are bullish E.T.F.s out there but at today’s prices you’d spend a lot of money to enter. Oh I forgot. You could buy mining stocks as well.
Hope that helps.

Bob
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Bob
February 25, 2013 4:16 pm

Since there is time decay involved, someone had suggested shorting the short but bankers probably wouldn’t like that too much!
I’ll probably close out Zsl and by Slv soon. Waiting to see the whites of their eyes. That being said, when the SHTF we might not have easy access to our accounts, internet hacking and such. As Jim Sinclare proposes, by good quality mining stocks and take possession of the shares. Bury some tin cans off the property. Wouldn’t be surprised to see a run on metal detectors either. Such is the humor of our times.

whatch
Member
15
whatch
February 25, 2013 5:18 pm
Hi Bob, I realize that I probably am not saying anything that you don’t already know but maybe someone else will get some benefit from this discussion and make the right decision for their comfort zone. I was just playing around last night and ran across an E.T.F. listing page. I think it was on Bloomberg.com. Anyway, I compared the price of the bears to the bulls in the same sectors and the bulls are still priced at a premium indicating to me that possibly the major investors are still expecting a future run up in precious metals. This is… Read more »
dbt09blt
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dbt09blt
February 26, 2013 12:28 pm

Study the price action and consider writing covered calls on part of your position.
works for me. bot zsl @47 in Feb and when it went to $55 sold the mar 53 at 3.60.
downside protection plus reasonable profit if called away. will let it run to expiration unless option drops to below 0.50, then I usually buy it back.

Linus
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Linus
March 2, 2013 10:50 am

Does anyone who is familiar with ZSL’s have any experience with “shorting” ZSL’s?
You would essentially be shorting the short and therefore taking advantage of the time decay over a period. Essentially long silver with the added wind of the time decay of ZSL at your back instead of in your face.

Linus
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Linus
March 2, 2013 10:52 am

Interested in Bob and Wayne’s opinion as this was briefly touched on in the thread.

whatch
Member
15
whatch
March 2, 2013 1:35 pm
Hello Linus, My philosophy/opinion is simple. I look at events, financials, market conditions, and what everyone else is doing. Most small investors in the end play follow the leader and get burned in the end when the big money abandons their positions causing a collapse in share price. I mostly look for a point to make the opposite play and practice patience (wait um out). I believe that what goes up WILL come down as we’ve seen so many times in the past. I’m not saying that there aren’t going to be big gains to be made on the long… Read more »
Linus
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Linus
March 2, 2013 2:43 pm
Wayne, Agree completely. I use technicals to determine sequential entry points and I am patient. However, the innate nature of ZSL is a short term play with time decay that is quite rapid making a long term hold on ZSL akin to buying puts. i.e. I’d rather have time on my side while I wait. If you buy and hold ZSL and silver bullion rises 10% , ZSL should drop 20% without the time decay. This is not the case. Read the prospectus. In other words, if silver bullion stays at a set price for a 6 month period, the… Read more »
whatch
Member
15
whatch
March 2, 2013 6:10 pm
As in most markets, if a position goes stagnate for six months the value is apt to drop due to sell pressure. After all, most investors are not happy to see their money just sit there. If I didn’t think there would be a move in some direction I certainly wouldn’t invest in it. And considering decay, I buy more positions as the price falls making recovery and profit quicker on the turn around. I fully expect a wild shift within the foreseeable future. You gotta be in it ahead of the move to make the play. It’s never failed… Read more »
Linus
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Linus
March 3, 2013 6:51 am
Wayne and / or Bob or others, If you are trading ZSL as a long term position without a comprehensive read of the prospectus (pages 15-21) of the 100 pages or so, and a complete understanding of the volatility of the commodity silver bullion of 38% and the comprehension of contango and backwardation, you are gambling without knowing the rules and you will ultimately lose. I trust that any investor / speculator has such. I am by no means an expert but am gaining some insight from having lost some money on ZSL’s in the past. i.e. if spot price… Read more »
whatch
Member
15
whatch
March 3, 2013 12:28 pm
O.K. I’m growing very tired of this conversation. I do read prospectuses on all investments that I make. I am not so foolish as to let my capital sit just for the sake of sitting idle and watch it back up without a plan. If the spot price of precious metals doesn’t fluctuate for long periods of time, basically the entire world is fiscally stagnate. Sectors of all economies will go flat for periods and that’s when you have to be prudent enough to know when to move on. Linus, I don’t know your investment philosophy or if you hedged… Read more »
Linus
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Linus
March 3, 2013 6:56 pm

Wayne,
My apologies to you. I meant no disrespect and was merely engaging in the exchange of dialogue and sharing information in a meaningful way rather simply saying I think that the ZSL will go up or down. Since you are making money and I am not, perhaps I am the one to learn from you. As far as opinions, yes I agree as well. That is what makes a market. For every person who thinks that the stock will go up, another thinks the opposite.

whatch
Member
15
whatch
March 3, 2013 8:16 pm
Linus, Perhaps it is I who should apologize to you. I did not mean to make the case that you were the reason that I am tired of the conversation. As a matter of fact what you said is absolutely correct without applying some strategy to cover yourself. With that said, I apologize if I sounded crass. But my inbox is being filled with comments and one horse can only be beaten to death just so many times so many ways. Again please don’t think that I was angry at you. I’m just ready to move on and clear my… Read more »
Linus
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Linus
March 4, 2013 6:29 am

No worries. Good luck with your investments.

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