“Silver Shots” Poised to Skyrocket 12,785%

“Silver Hits Critical Levels – U.S. Mint Halts Production of Silver Coins

“New Gov’t-Regulated $1 “Silver Shots” Poised to Skyrocket 12,785%

“Forget about silver coins, ETFs and silver mining stocks. New $1 “silver shots” give you a very real opportunity to turn $10,000 into $1.3 million by year’s end.

“But you must act by June 15, 2009, to ensure maximum gains. Here’s why… “

OK, so first of all we need to start by dispelling one oft-cited myth — the U.S. Mint has not stopped production of silver coins. They are seeing huge demand for the silver American Eagle bullion coin, so they have stopped producing the collectible versions (the “uncirculated” and “proof” versions that the Mint sells from its own website) in order to make sure they can mint enough of the bullion coins to meet demand. That’s because the mint has a mandate from Congress to produce enough bullion coins (both silver and gold) to meet demand every year, but the collectible coins are “optional.” Both silver and gold Eagles in those collector versions (with the “W” stamp from West Point) are on hold now due to high bullion coin demand, as are fractional gold coins (1/2 ounce, 1/4 ounce, etc.). The bullion coins aren’t sold directly by the mint, but they’re easy to buy through dealers or banks.

While we’re talking about halting coin production, by the way, I’d vote for getting rid of the worthless penny first, then stop printing dollar bills so we could force usage of the more efficient dollar coins. Can you believe that the Mint still produces more than five billion pennies a year? That’s a lot of zinc that I’m sure we could find a better use for, and a lot of wasted effort.

But this isn’t about my anti-penny ranting (and what would all the eager collectors lined up for rolls of new Lincoln pennies do with their time?) — this is about investing in silver. And more specifically, it’s about pitching a subscription to Death Cross Trader by Zachary Scheidt. He’d like you to subscribe to his newsletter for $250 (a steep discount, naturally), and in return, he’ll tell you all about what “Silver Shots” are … or, of course, you could just read on and watch the Gumshoe in action as he tries to figure it out for himself.

That second option is free, by the way.

I don’t know much about Death Cross Trader, but the death cross in chart parlance is when the long-term moving average line crosses above the the short-term moving average — which apparently is generally a bad sign. It’s more complicated than that, with other options for interpretation, but that’s the basic shtick. I don’t think this newsletter is particularly focused on “against the market” picks on the short side, though Scheidt is profiled as an options trading expert which would mean he’s likely to use both puts and calls. Or perhaps it’s just a cool name.

So what else do we get in the ad? There’s plenty more about silver — about the CPM Group’s assessment that 97% of the silver ever mined has been consumed (by industrial uses — photography, mirrors, etc.), and plenty more about the huge investor demand.

“And The Wall Street Journal states that in March, sales of Silver Eagles surged more than 9-fold from the previous month… and that investors are clamoring for millions more.

“There simply isn’t enough silver on the planet to meet demand, and “silver hysteria” is sweeping the globe.

“In fact, silver coins with a $1 face value are selling for $31 and higher on eBay.

“And silver collectors are running full-page ads in major newspapers like The Washington Post… offering top dollar to folks willing to part with their family silver. ”

So this dance will probably continue — Silver has moved up and down dramatically in recent years, and as it moves up folks tend to sell their coins and scrap silver, which drives the prices back down a bit. Right now the shiny metal is certainly on a tear, along with gold, and it offers a cheap entry point into investing in precious metals since it’s sort of like the “poor man’s gold” in that a one-ounce coin is very cheap.

And the $31 price is real, though the $1 face value of an American Eagle silver coin is pretty much meaningless, they’re minted for investors and are not circulating currency. Premiums for silver coins, as a percentage, are currently huge compared to gold, though the $31 price is the outlier, for uninformed investors buying on ebay or the Home Shopping Network.

I don’t know if a lot of folks are getting $31 for bullion silver coins right now, but certainly some fools are paying that price. Dealers have plenty of 2009 Silver Eagles available and are selling them for about $2 over spot per coin — doesn’t sound so bad, but that’s still about a 15% premium over the $14 melt value of an ounce of silver (the “spot price” is the value of the actual commodity, an ounce of silver traded in London or New York on the commodities exchanges, and what it’s generally considered that the coin would be worth if melted down).

Gold American Eagles, though obviously far more expensive, often are sold by big dealers for a more reasonable premium these days of just three or four percent. So though you can’t buy the uncirculated or proof coins direct from the mint right now, you can still buy plenty of 2009 or earlier silver Eagles through a dealer — and the supply seems to be met, or close to it, otherwise I imagine the prices would be sailing even higher.

But we’re more excited about the crazy returns teased in this letter, right? So what is this special new way of investing in silver that they call “Silver Shots?”

“If silver crawls back to $150 per ounce-its historical average-then $1 “silver shots” will move to $130 per shot… turning $10,000 into $1.3 million.”

So that’s not bad, right? This is clearly a heavily leveraged play on silver of some kind — after all, even buying silver at $14 and selling it at $150 would provide a huge return, but only a bit over $100,000 from a $10,000 investment, far less than $1.3 million. That extra 10X return (plus!) comes from the leverage of “silver shots.”

And another scenario is provided, which would have Silver at stupendous 20-year highs but is here called the “worst case” scenario …

“… for the sake of being conservative, let’s just say that because of these two events [Obama cutting the deficit and industrial alternatives being discovered], silver only makes it up to $28 per ounce.

“In other words, it doubles from its current level.

“If that happens, $1 “silver shots” will still move to $10…giving you a 10-fold gain.”

OK, so we’re talking about something that goes up with Silver almost dollar for dollar, with significant leverage, and that you can buy for about $1 a share but would be worth $130 if Silver hits $150, and $10 if Silver hits $28.

So what can that be?

Well, it’s possible that it’s something a bit more obscure than I’m imagining, but I’d say that the easiest way to get these numbers is by …

Buying call options on the iShares Silver Trust exchange traded fund (SLV).

The iShares Silver Trust, for those who don’t know, is an ETF that buys physical silver and holds it in a vault (along with, I think, some more complex financial transactions to try to closely match silver’s moves on a daily basis — not sure of the specifics), and trades actively on the market at a price that usually very closely reflects the price of an ounce of silver per share of the ETF — so on Friday SLV closed at $14.50 at a time when silver traded on the Comex was going for about $14.70. They use the London Fix price to set the Net Asset Value of this pool of silver, minus expenses, so it’s usually slightly lower than the current silver price, but moves more or less perfectly along with silver.

And you can trade options on SLV just as you can with many stocks and ETFs — so if you wanted to buy exposure to a hundred ounces of silver, you could do so by buying one call option contract on SLV. Since the ad often teases an “end of the year” timeframe, let’s look at the long-dated call options.

SLV has an option string available for January 2010, so if we look at that we can see that if you’re looking to pay something in the neighborhood of one dollar, the closest bet would be the $17 strike price, which closed on Friday at $1.15.

That means you could put down $115, plus commission, and you would get essentially all the profit from Silver moving above $17 an ounce between now and January. Of course, in exchange for that, your bet is worthless if silver remains under $17 for the next eight months (that is, if silver goes down, or goes up by less than 20% or so). Of course, you could trade in and out if silver fell or spiked over the remainder of this year, but for the purposes of a potential huge gain if silver climbs dramatically, we have to assume that you hold the options — so here are a couple scenarios that assume you buy this call option today:

  1. Silver goes to $19 an ounce in January, about a 30% move from the current price. Since you have the right to buy shares of SLV at $17, we assume that SLV continues to track the physical silver price and those SLV shares are now also at $19. That means your option contract (on 100 shares, as is standard) is worth $200, so you get a nice gain of $85 (minus commissions) on a $115 investment, a gain of about 70%.
  2. Silver stays pretty close to where its average price has been over the last three years, $12-14 or so. Your options expire worthless, and you’re out $115.
  3. Silver goes to $28 an ounce by mid-January, doubling as the teaser implies is the “worst case” scenario — your $115 investment should now be worth about $1,100 (holding the option gives you the right to buy 100 shares at $17 and sell it at $28, for an $11 profit per share). That’s a gain of over 950% — not bad work for eight months, and the return from holding the actual SLV or physical silver would have been more like 100%.
  4. Silver goes to $150 an ounce, which the ad argues is “likely” given the shortage and the rising investor demand. Then your $17 call option is worth $133, and you’ve still got a call on 100 shares, so that’s $13,300 from your initial $115 investment, for a return of … 11,000%? feel free to check my math on that one.

So that’s my best estimate as to what the “silver shots” are — partly because the numbers match up very nicely from the tease and the newsletter is options-focused, and partly because if you’re going to help retail investors get this kind of leverage it’s probably not going to be something more obscure like futures options — and, depending on the contract, some of the SLV options actually trade in decent volume, so a newsletter could get away with recommending them without wildly moving the price. And yes, options trading is regulated by the US government, just like stock trading, so that part of the tease can be justified.

And no, it’s definitely not some secret kind of actual silver metal that inconceivably trades at a huge discount and provides huge leverage — that doesn’t happen. (You can buy silver “shot” — little vials or bags of industrial silver pellets, they look just like little ball bearings, and every time I see it I picture myself loading it into shotgun shells to ward off the werewolf … but it’ll cost you at least the melt value of the silver these days).

Here’s the final summary of reasons for doing this, per the teaser:

“Fact #1: Vanishing supply: The global silver supply has practically vanished. In fact, 97.5% of all the silver ever mined has been consumed by industry. It is gone forever and irreplaceable at any price. The supply is so tight that the U.S. Mint had to halt production of American Eagle silver coins.

“Fact #2: Soaring Demand: The demand for silver is soaring. That’s because for many industrial uses, there is no substitute for silver. Silver is essential for electrical grids, hybrid cars, medical applications, photography and many more. We have to have it!

“Fact #3: The Price Is Right. Silver is near its historical low… around $14 per ounce. Its historical high is $1,400 per ounce. Even if supply/demand forces drive silver only a small fraction of the way back to its historical high, people holding “silver shots” will make a fortune.

“Fact #4: Unprecedented Upside Potential! “Silver shots” allow you to control a full ounce of silver for just $1. And while “silver shots” move in line with silver prices… they move exponentially higher. That means even a small move in silver prices will send silver soaring.

“Fact #5: Trigger Point Has Been Hit! Powerful economic, market and geopolitical forces have converged to create a “once-in-human-history opportunity.” People who buy “silver shots” today for $1… can realistically hope to sell them for $130 or more in December 2009. ”

I’m sure there are many folks here who know the silver market much better than I do, and I know many of you feel passionately about it, so I’ll let you argue about the supply-demand equilibrium that you expect for the rest of this year — let me just comment briefly on these things to provide a possible counterbalance to the argument …

#1 — supply of silver from mines might actually increase as base metal mining increases (silver is often a byproduct of other mines), and as some big silver-focused mines come on line in the near future — the spike in silver over the last few years made silver exploration viable on its own for some companies, so there are likely to be more silver mines in the years ahead.

#2 — silver demand from industry does seem to be increasing, but a lot of that industrial use depends on economic growth. Silverware demand is down and photography demand is way down, and both of those were major markets for silver ten years ago … the spike in demand over the last year or two is explained, by a lot of people, as largely investor demand, from the Silver ETF and coins … that kind of demand can be a lot more fickle than industrial demand, so gravity might come into play at some point.

#3 — I have no idea whether silver will return to its “historical high” of $1,400 in 2009 dollars, but do note that this high was in 1477, according to the chart in the teaser, before Columbus sailed to the new world (and before the conquistadors found all that new gold and silver). Silver has been on a steady trend down ever since, notwithstanding the one really dramatic historical spike in modern times, when the Hunt brothers tried to corner the market and temporarily got prices up to something like $50 an ounce in 1980 (probably near $100 an ounce in current dollars). And the price can go well below it’s recent average, too, it’s been down below $5 in recent memory. I’ll go out on a limb and say that if it does go to $1,400, it sure ain’t going to be in time for your options expiration in January.

#4 — that actually sounds just about right — you get nice big leverage from the options … he doesn’t remind you that the leverage comes at a price, that you have to be right about the timeframe and the price levels, and be willing to give up your entire investment if you’re wrong, but we all probably know that about options trading anyway.

#5 — that’s your call. If silver does go to $150 by January (or, God forbid, $1,400), then this certainly was a “once in a lifetime” opportunity to profit from that. But that’s a BIG if — according to the chart they use in the ad, silver has not been that high ($150) since the American Revolution. Certainly not impossible, but even though I own silver I don’t think it’s going anywhere near that high in the next couple years. A decade, maybe.

So … I personally own some silver, too, and I actually think it’s more physically attractive than gold (for whatever that’s worth), but the bulk of human history disagrees — gold is the one that has historically spent more time being considered “money,” so even though it has much less value in the real world than silver, it remains a fallback position when other mediums of exchange fall apart … thus, people in countries with unstable currencies buy gold jewelry for brides (India), and people who fear the demise of fiat currencies in general buy gold, and those who think inflation will be out of control thanks to the printing of new money, buy gold. In recent years, silver has come in as the poor man’s silver to cope with these same situations, but I’d be more confident in gold if things got really cataclysmic.

Like anything else, a precious metal is only worth what someone is willing to pay you for it, so there is always the fear that investor demand — which truly drives the price now, jewelry is taking a backseat during this latest gold rally, and industrial demand is probably suffering from the continuing death of traditional photography and the weak global economy — could dry up if cash is needed elsewhere, or if deflation really sets in. The brief fear of deflation recently gave the dollar its rally, and that seems to be over now, but I don’t know if it will come back.

Deflation is scarier than mild inflation, and perhaps even scarier than brief periods of severe inflation, but I’d personally have to agree that inflation worries me more as a saver right now — if only because I know the federal government is a lot more afraid of deflation and will print as much money as is needed to stave it off. Yes, I said “saver” — I think that’s a reasonable way to think of gold and silver bullion, as a way to preserve your savings … I perfer to think of “investments” as assets that can generate income and help you compound that income into long term growth, like stocks, or bonds, or land … or a gold or silver miner.

At some point, there will be so much money around that companies and people will have to start spending it, even if they’re still nervous about the future — it’s the American way. Will that drive hyperinflation in the very near term, and send asset prices shooting through the roof? That’s about the only scenario I can bring up that gets silver to $150 in eight months, and it’s certainly more feasible than it would have been a few years ago, but it still seems … well, I’ll be kind and say “a bit ambitious.”

So whaddya think? Any of you options traders have ideas for leveraging silver that are more exciting than my vanilla description? Preferred ways to play silver in the years ahead? Does silver shot really work on werewolves? Let us know.

And if you’ve ever subscribed to Death Cross Trader, click here to let us know what you thought — we’ve had two brief reviews submitted so far, with an overall assessment that I would classify as “tepid,” so we could use some more input. Thanks!


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96 Comments on "“Silver Shots” Poised to Skyrocket 12,785%"

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john piek
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May 23, 2009 8:41 pm

AGQ symbol is a silver trade that may be better than options or slv is agq (silver etf that multiples the gain compared to slv should silver go higher)

Gravity Switch
Admin
11
May 23, 2009 9:39 pm
True — this is one of the ProShares Ultra ETFs. It won’t get you the 10X or 1,000X returns teased as possible through options, but, to their credit, it has actually been reliably doubling returns of the SLV as designed over the past six months (many Ultra ETFs, short and long, have trouble holding the benchmark if you invest in them for more than a few days, they’re designed for daily matching, not long term matching of performance, and often give very surprising results for long term holders). Just FYI, unlike SLV the AGQ Ultra ETF is not primarily a… Read more »
spreadtrader
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spreadtrader
May 24, 2009 7:56 am
Often, the “surprise” isn’t pleasant. What hasn’t been clearly stated is that if the price of silver goes down, the losses are magnified as well due to the 2X leverage being applied on a daily basis. There’s a fairly scary rule in investing and it goes like this: if you lose 50% of your investment you now need to make back 100% just to break even. You’ve heard of that, eh? Not an easy feat. You can do the math to figure out on a percentage basis the difference in losses between holding SLV or AGQ in the two months… Read more »
farley 5
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farley 5
May 24, 2009 11:55 am

Travis did it again! If you LOVE silver, how about buying the SLV Jan ’10 $13 and selling the Jan ’10 $17’s on a combo ticket for a $1.50 debit? If you have a fee account, your Max Gain is $4 less ticket charges. If SLV stays the same, the $13’s should be worth $1.50. As ST says above, you must be able to withstand the $1.50 loss if SLV goes down. Hope your picnic was not rained out like ours ;-(

John Peik
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May 24, 2009 12:05 pm

The ACQ suggestion was in the context of the Gumshow article about silver prospect to go higher in a short timeframe which extends to the months; perhaps less than 1 year ahead (not years) as I understood the article. In this case AGQ may be a good choice among the others such as slv and options.

spreadtrader
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spreadtrader
May 24, 2009 12:52 pm
Here’s a potentially better option play….PLATINUM….buy SWC calls. To do the comparable trade to the Gumshoe’s hypothetical (SLV January 17 calls @ 1.15) you’d buy the SWC January 7.50 calls @ 1.25 (.10 cents more…..sink me). BUT buying the option doesn’t end the analysis. Any prudent option speculator (and that’s what option trading is…speculation) does a risk reward analysis. Yes, Virginia, there is risk in holding long options……you could lose your entire investment. So let’s look at the comparative risk. Well, with option implied volatility so low both of these options are so cheap that we’ll say for argument’s sake… Read more »
Russ
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Russ
May 25, 2009 8:30 am

What is the best way to set up an account to buy SWC options? Is their something or someone out there who will manage an option account?

Wolfgang Wiebach
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Wolfgang Wiebach
May 25, 2009 8:58 am

Travis, despite your encyclopedic knowledge of the stock market, you are not a businessman at heart – get rid of the penny! What would all the retailers of America do without their beloved .99 prices? (Make change with a 1¢ stamp?)

Cool Soupy
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Cool Soupy
May 25, 2009 9:00 am

Assuming this kind of inflation in 7 short months you would have bigger worries than whether you were invested in silver!

Get real people!!!!

harry
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harry
May 25, 2009 9:32 am

Travis,where the heck do you get your $1400 historical high in silver in 2009 dollars?
it is no where near that

Don Believit
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Don Believit
May 25, 2009 11:24 am

The Silver Shots teaser also said they could be easily purchased and held in retirement accounts. . .not mine.

Stone
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Stone
May 25, 2009 12:30 pm

The best thing about silver or gold coins is that when one sells them, if I may assume that most coin people tend to be sneaky rascals at heart, no income tax need be paid on any profit. (emphasis on sneaky rascal)

John Lange
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John Lange
May 25, 2009 1:47 pm

Travis, I have been trading and listening to stock market advice for 50 years that has screwed me over and over(and over the years, have subscribed to just about every investment news letter out there)and you are the smartest person concerning the stock market that I have encountered. You have spent a lot of time and effort to gain the knowledge you process and I definetly “take my hat off” to you. I also have built websites and the workings of your website is one of the best thoughtout.
“One test is worth a thousand expert opinions”.

elissa stein
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elissa stein
May 25, 2009 2:22 pm
There are lots of ways to play silver reasonably. I purchased some call options on silver (commodities- not equities) and sold some higher calls, that expires in Dec 2009. You can do that reasonably and make a controlled profit ( or loss). I also bought slw and sold some calls on that position. I picked slv up as it fell (averaged down) and sold half of it when it went back up. The other half I held and sold calls against it. I am not a huge fan of SLV,because of all the chatter about whether or not physical silver… Read more »
Simon
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May 25, 2009 7:07 pm

Excellent article. I like the idea of using Leaps (long term options like this) with minimal invested. If their wrong and silver plummets back to 9 bucks… you’ve lost very little.

Sniper
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Sniper
May 25, 2009 8:24 pm

Ever try buying only one gallon of gas for $2.399, and argue with the attendant that you want change out of the $2.40 you tender to him?

Gravity Switch
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May 26, 2009 1:45 pm
Holy smokes, just noticed the volume on the SLV Jan $17 options — either a lot of you got interested today and agreed that this was an interesting contract, or the silver shots promo is getting a lot of converts and they picked this exact contract. Volume looks dramatically higher than any other SLV option — 8X higher, from a quick scan, volume is about half of open interest. If you decided to take a spin on silver in this way, I hope it works out for you. The price hasn’t changed dramatically with the volume increase, which is encouraging.
Mart (the Netherlands)
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Mart (the Netherlands)
May 26, 2009 2:06 pm

Be aware of the madness, Gold wil l drop to 650, silver follows gold. Don’t be to early in this game. Play it in september for the January 2011 series.

Steve
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Steve
May 26, 2009 3:26 pm

Am I missing something or does (100 shares) x ($133 profit per share) only equal $13,300, and not $133,000?

Roger
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Roger
May 28, 2009 2:25 pm

The death cross trader claims you can use your IRA for this investment. I understand options are not allowed within an IRA. Am I wrong?

Gravity Switch
Admin
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May 28, 2009 4:38 pm

No, sorry — no margin, so no naked anything.

Matthew Groff
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Matthew Groff
May 29, 2009 9:10 pm

I am just learning more about stocks and the stock market. I wanted to invest some money for my parents recently, but we had to use it for something else.

My question/comment is: Is this a better and cheaper alternative to make some money investing than investing in regular stocks?

It seams like options could be a cheaper way and could be able to make more money, then to invest in some companies, than by buying stocks in those same companies.

Benjamin
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Benjamin
May 30, 2009 12:58 am

I think Dear Zachary is being modest, he and his brilliant copywriters wouldn’t lead us astray would he? i really do believe in my heart of hearts that silver can go back to $1400, and i think by this January. it’s very realistic! That means our $10,000 won’t be worth just 1.3 million like he said, but it’ll be worth a ‘gabajillion’ dollars! Finally, finally, i can buy that private island i’ve always wanted!
p.s. anyone who wants to buy a bridge, call Zachary, he has one to sell you.

Novista
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Novista
May 30, 2009 8:03 pm

The land of oz (Australia) got rid of one and two cent coins some time back — as well as one and two dollar bills, to be replaced by gold (coloured) coins.

It would certainly make sense for the U.S. as the cost of $100 worth of cents and nickels (not sure of ratio) is about 40% more than the value of the coins!

Sound money is not about the jingle of coins as you throw them on the counter. LOL.

Corey
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Corey
May 31, 2009 8:53 am

I see silver above $17.50 when the New Year’s ball drops. I see a maximum this year at $22 +/- and $25 within the first 6 months of 2010. After that, it all depends on how much JPMorgan and the Fed manipulates the market for ill-gotten gains!

Bill Cohen
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Bill Cohen
June 2, 2009 8:47 am

What do you think of this statement coming from “Taipan Daily” . . . .

“Why Settle for Obama’s
$400 Tax Cut When You Could Legally Siphon $15,520
in FREE CASH From
His New Stimulus Plan?”

Thomas Beasley
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Thomas Beasley
June 2, 2009 5:43 pm

How do I find out how to purchase these Silver Shots from the government?

Thomas Beasley
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Thomas Beasley
June 3, 2009 7:36 am

Please,if you will, let me know how I may purchase some of these “silver shots” from the government.

Bill Gruman
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Bill Gruman
June 3, 2009 3:55 pm

I understand the 6/21/09 deadline for neodymium in Greenland, but what is the 6/15/09 deadline for silver in relation to China?

spreadtrader
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spreadtrader
June 6, 2009 10:10 am

Another view on silver……this guy is selling calls on silver futures, not buying them.

http://www.libertytradinggroup.com/market-commentary.html

Notice that the author isn’t saying that silver won’t go to $20 by December, but he may be saying that it likely won’t go to $30 or $40 by then, and he tells you why.

Monnie
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Monnie
June 12, 2009 1:25 pm

Does anyone know about Daily Wealth’s “Biggest Gold Discovery in the Last 20 Years is Right Here in North America?

Cubic
Member
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Cubic
June 13, 2009 10:36 am

The sheep are about to get sheared Gold is at its high along with some silver prices. We are in the worst depression of centuries some time called deflation. The govt. is on a spending bliz to drive us further down in banruptcy; if this is possible.The govt.is now discussing how to falsifiy accounting procedures to further deceive.Credit has dried up. Lets stand back & watch to lose everthing when it blows. Maybe save our underwear. able1932@aol.com

A.M. Deist
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A.M. Deist
June 14, 2009 12:36 pm

For those who like options, buy an option on a silver future is much more lucrative. You control 1000 ounces. The other advantage of the option on commodity futures is that you can buy three, six and nine month out options and when one expires replace it. That way you don’t have to be right about when the commodity starts moving. You will recover all your option losses. I did this in coffee, cocoa and silver many years ago.

A.M. Deist
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A.M. Deist
June 14, 2009 12:47 pm

For those who don’t like putting all their money on a number on the roulette wheel and hoping they get their fortune, there is a safer way to insure profit and still be able to sleep at night. Buy 100 shares of SLV and sell some fool the option to buy them at the higher price. It is a win-win situation. If silver drops and you lose some principal, you still have the option premium and the 100 shares for which you can sell another option.

Strong Eagle
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0
June 14, 2009 9:44 pm

Stumbled upon your website after trying to do research on ‘silver shots’ after getting an email from Investment U.

Besides a great analysis here, your writings are also a firm warning that people can and will say just about anything under the guise of ‘useful investing information’.

Many thanks.

Fraudsnitch
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Fraudsnitch
June 14, 2009 9:46 pm

“Silver Shots”
Zachary Scheidt’s advertisement of “Silver Shots” sounds almost word for word like the ad for “Silver Shots in Taipan Daily.

This is another “Agora Financial” newsletter put out by Porter Stansberry and Steve Sjuggerud from Daily Wealth. All from Agora Press.

WallStreetKid
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0
WallStreetKid
June 16, 2009 11:56 am

I don’t think that the “silver shots” is SLV because the teaser says right in the beginning “Forget about silver coins, ETFs and silver mining stocks”. I think that these “silver shots” are silver pellets that jewelers use to make jewelry. Does anyone subscribe to this service that can confirm that SLV is the play?

Nasim
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0
Nasim
July 10, 2009 1:19 pm

Well, price for silver is in the toilet. The whole scheme collapsed.
Whoever bet on those so called “Silver Shots” are now in a lot of hurt.

Tim Iafolla
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0
Tim Iafolla
September 12, 2009 8:39 pm

Just to complete the picture, there is also an etf that’s the 2x inverse of silver: ZSL. It’s good for hedging silver bullion if you don’t want to be trading your core holdings. It used to be very thinly traded, but lately has been very liquid.

Rich
Guest
0
October 3, 2009 10:45 am

Most people are bullish at tops and bearish at bottoms.

The pre-1982 95% copper penny is worth 1.7 cents, which is why there is a $10,000 5 year prison term for melting them down.

http://www.coinflation.com/

JubileeProsperity.com

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3251493

Jan
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Jan
November 13, 2009 7:16 pm

Please give me an explaination of the “series a,b,c,d,e,f…” in that teaser letter. Sounded like the old silver certificates, but I can see it being options….

Mike Patton
Guest
0
November 14, 2009 2:50 pm
I got the Death Cross Trader “silver shots” advertisement in today’s mail (11/14/2009) and it caught my attention long enough to read it all the way through. I am a silver investor and was naturally curious as to what a “silver shot” was. A big tip-off should have been that he NEVER actually told you what a silver shot was in the ad. Thankfully, I did a google search and found THE GUMSHOE. Thanks so much for your insights and alerting me to this scam. Sheesh……he made it sound like it was a sure thing turning $10,000 into $1.3 Million… Read more »
Buck
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Buck
December 17, 2009 11:33 am

With gold and silver heading down the toilet today, and it being 5 weeks from expiry… i’d say people are probably down 50% on those Jan 17 calls right now. Wonder if the clown who issued the b.s. teaser will reimburse their losses. New Gov’t-Regulated $1 “Silver Shots” Poised to Skyrocket 12,785% indeed. The SEC should be ‘Poised’ to throw those misleading marketing copywriters in jail for fraud and misrepresentation.

Alex
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Alex
December 18, 2009 12:07 am
Guys, a little help on silver for a novice. I’ve $6500 in Fresnillo mining stock on the LSE. Is there a better way to be in silver where it tracks the spot price a little more consistently or is it a good one? I am expecting a new high in early 2010, and I am hearing just too many positives from too many wiley old investors on silver not to think that it’s coming. Thing is if we see a big sell off in 2010 in stocks FTSE, DOW, I’m worried a normal stock will get hit even if silver… Read more »
Alex
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Alex
December 18, 2009 10:02 am

Many thanks spreadtrader for the input.

Peter
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Peter
December 23, 2009 5:23 pm

Dear,

I’m learning investing in gold and silver. Can you give me some ideas on how to start? As far as I don’t have a large amount of money. Thank you.

Peaceful Warrior
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Peaceful Warrior
October 1, 2010 7:56 pm
Peter, don't bother with the ETFs, they're garbage scams. Buy a mining stock instead that's already producing and ready to turn into an easy 10x bagger. Here's what in my opinion has the potential for greatness within the next couple of months. Genco Resources (TSX:GGC) Genco is a Mexican Silver miner turnaround story. This was previously a $4 stock, when a few years ago, it was mining Silver profitably. Because of politics and other issues, the stock has declined to where it is today. Recently with management changes, a new NI 43-101 compliant technical report and feasibility study completed the… Read more »
Captain Jay
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Captain Jay
October 14, 2010 7:56 am

You have to give credit where credit is due; 6 months ago, when the STOCK GUMSHOE first commented on the SLV options play, SLV was trading at 18. Here in October, the ETF is at 23.50!
This would have been a huge profit for properly positioned call options.

SupplementClub
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0
January 16, 2011 1:13 pm

GUMSHOE Didn't write about this 6 months ago, He wrote about it 18 months ago, and silver didn't really move by the cut off date.

spreadtrader
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spreadtrader
May 24, 2009 12:44 pm

True enough.

Doug
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Doug
May 25, 2009 7:08 am

SLV has 2 option symbols for same strike, why, and which symbol to take? at 17 strike?

marco
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marco
May 25, 2009 9:41 am
I have found the cheapest way to trade options (or stocks, for that matter) is with Interactive Brokers. They charge $1.00 or so per contract and $1.00 or so per 100 shares up to a small maximum, which I have never hit. They don’t offer much assistance, so you need to do your trading, but their platform is pretty easy and I think you can set up a paper trading account, which is advisable if you have never traded options before. As noted in an earlier comment, options are speculative and it’s very easy to lose your entire investment. Optionxpress… Read more »
thomas
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thomas
May 25, 2009 9:52 am

very true soup- we have way more problems than people can imagine if silver goes this high. than again, i guess those who really understand the markets, aren’t on this forum.

spreadtrader
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spreadtrader
May 25, 2009 11:13 am

Silver went up 6.00 in less than 4 months from November to February. Are you and thomas saying it can’t do that again in the next 7 months, or are you taking an off-hand, irrelevant comment about “$1,400 silver” out of context?

thomas
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thomas
May 25, 2009 9:54 am

in 1477, it was this high. 2009 dollars. columbus’ timeframe.

JRP
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JRP
May 25, 2009 10:32 am
I’d love to tell the retailers of America what to do WITH their beloved .99 prices. This staple of psycho-manipulation is so transparent and so ubiquitous that we take it for granted and laugh it off; nevertheless, it is a badge of dishonesty and an insult to the customer. If we could persuade a critical mass of merchants to advertise an item at, say, “$4” instead of “only $3.99,” the laugh we direct at the penny-pinchers would become a sneer, I would be able to count my change more easily, and the cent would be sent packing. Any offers to… Read more »
Mikey
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Mikey
May 25, 2009 12:31 pm

Why not… that’s what happened during the Civil Wart when there was no metal for coins.

elissa stein
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elissa stein
May 25, 2009 2:25 pm

You can’t hold physical silver yourself ( or any precious metals), and have it be part of your existing retirement account. You would have to open up a separate retirement account- like with the perth mint, for instance, to hold the silver for you.

Gravity Switch
Admin
11
May 25, 2009 3:46 pm

Usually it’s safest to look for the one that has more volume or open interest and use that — they’re usually the same option, sometimes for January you’ll see the LEAP ticker (LEAPs are long term options that expire in January), which around this time of year gets adjusted to become a regular options ticker. The contract term doesn’t change, just the ticker symbol.

Be careful, though, there are sometimes non-standard options as a result of a merger or large one-time dividend, etc. — don’t think you’ll find that for SLV, but you may see it for other stocks.

Gravity Switch
Admin
11
May 25, 2009 3:50 pm

I don’t know what level you meant by “this high,” but yes, silver at $28 is certainly within the realm of short-term possibility even if inflation isn’t that bad yet (as long as inflation expectations increase), but you’d have to imagine that silver at $150 would mean that the sky was falling in some real way.

Gravity Switch
Admin
11
May 25, 2009 3:51 pm

Thanks John! Keep the compliments comin’, I appreciate it.

Gravity Switch
Admin
11
May 25, 2009 3:53 pm

Thanks Elissa — happy holiday to you, too … and it sounds like you’ve got quite a lineup of ways to play the field on silver.

LS
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LS
May 25, 2009 7:22 pm

Stone is wrong. One cannot sell silver and gold coins back to a dealer privately Every coin dealer asks for your drivers license and copies all of your ID information for his records. He will only pay you with a check which you must deposit in a bank account, so there is record.

The Long Wolf
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The Long Wolf
May 25, 2009 8:28 pm

It all depends on who you deal with in regards to paper work for coin selling, Eagles are still excluded. I have provided no ID’s, yet.Krugs,others, yes on ID’s for sales.

The Long Wolf
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The Long Wolf
May 25, 2009 8:33 pm

Gum, you are the best since sliced bread. You need a real advice letter and If it was me, I no longer would provide free anything. Set up your web site to accept credit cards for your service. $25.00 every quarter until we say stop.

Gravity Switch
Admin
11
May 26, 2009 9:00 am

Thanks Wolf — and since you asked, yes, I do rely on the kindness of strangers (though few are strangers any more). It’s voluntary, but you do get a wee bit of extra Gumshoe goodness for your membership:

http://www.stockgumshoe.com/donate

cgarvey
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cgarvey
May 26, 2009 2:37 pm

I read that you can hold physical metals if the account is a self-directed IRA. You store them with a depository that works with the company that manages the account. Been looking into them for a bit now.

Gravity Switch
Admin
11
May 26, 2009 3:56 pm

Ooops — thanks for checking the math, I’ll fix that. The 11,000%+ is still right, I think (11,565%?), but I threw another zero into the number.

Elissa Stein
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Elissa Stein
May 26, 2009 8:05 pm

right, you can’t hold it yourself. It has to be stored for you. You pay storage fees and management fees. What you can’t do is buy physical silver and hold it in your own vault or in your pocket and call it an IRA. Uncle Sam says no to that one.

Anon
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Anon
May 31, 2009 7:04 am

Sterling Trust Company in Waco Texas has Precious Metals IRA accounts.

Gravity Switch
Admin
11
May 28, 2009 2:37 pm
It depends on your broker — there is no rule that you cannot trade options in an IRA, though some brokers might not permit it (it also depends on your approval level). My understanding is that naked options are not permitted by most (maybe all) IRA accounts, but I know that many brokers do provide IRA accounts where more standard options can be easily traded, especially long options like these calls discussed here. Personally, I have several retirement accounts that I manage (IRAs, Roth IRAs and SEP-IRAs) and options trading is permitted by two of my brokers and prohibited by… Read more »
spreadtrader
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spreadtrader
May 28, 2009 4:30 pm

Gumshoe, when you say “options trading” are you including naked put sales? In a self directed IRA? If so, I ‘d like to know who your broker is. Thanks.

Gravity Switch
Admin
11
May 29, 2009 10:26 pm

There’s no easy answer to that, though I think it’s important to remember that using any kind of leverage — and options are leverage, as is a margin account — dramatically increases your chances of a big loss, so it pays to be very careful and understand what you’re doing before you jump in.

There are lots of different ways to trade options, some much riskier than others — one good place to start learning is the (free) set of Options Institute tutorials from CBOE here: http://www.cboe.com/LearnCenter/Tutorials.aspx

old man
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old man
May 30, 2009 9:49 pm

Silver become used up in the sense that all those little electical outlets in all the houses have to have silver contacts. Silver is used up in purifying drinking water. ?In the old days before refrigeration, silver coins were dropped in milk to keep from ruining and to kill germs. Silver impregnated catheters are used in hospitals,and believe it or not there still many x rays made that need silver for processing,etc.

chief151
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chief151
June 3, 2009 1:15 pm

John, interesting analysis. Are you a full time trader?

spreadtrader
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spreadtrader
January 9, 2010 9:09 am
Woo-hoo………I’d rather be lucky than good. SWC closed Friday at 12.79 and SLV closed at 18.14. The January options discussed above expire next week. The SLV January 17 calls that were 1.15 at the time of the Gumshoe’s great article closed Friday at ……well, at about 1.15. The SWC January 7.50 calls that I was talking about above at 1.25 closed Friday at………5.20….how do you spell “4-bagger”???? …..now for the truth. I held out and bought those SWC January 7.50 calls for .85 cents…….and sold them all in September for 100% on my money. But congratulations to anyone who did… Read more »
Gravity Switch
Admin
11
June 3, 2009 2:13 pm

If you read the article above, you’ll see that I think these “Silver Shots” are just options contracts. I can’t give individual guidance, but if you’re not familiar with options trading there are a few links noted in comments above that might provide some background.

chap
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chap
June 5, 2009 6:04 pm
Earlier this year the government of china awarded mobile phone licenses to its three biggest cell phone manufactures. The start of the test phase begins in june. Industry experts predict chinese demand for the upgraded phones will be enormours. That means they will need a large suppply of silver for the components in the phone. There’s the problem there’s a severe silver shortage. AS demand for silver explodes so will the price. The silver shots price have gone up i just bought 3 contracts in the options at 1.49 a share in the 17 strike price. 1 contract is 100… Read more »
Sylvia Merrill
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Sylvia Merrill
June 12, 2009 9:10 pm
After returning back from Salt Lake City where we moved out of our home in 16 days (which was a killer), I found the article, “New Gov’t Regulated $1 Silver Shots poised to skyrocket $12,785”. I thought it was a good opportunity to get some extra capital. However, upon reading the material in the archives didn’t help and no one seems to know how to go about investing on line. I’ve searched many websites but no one gives out the information so you can move forward. I’m very disappointed that I can’t find the place to deposite my money. If… Read more »
Gravity Switch
Admin
11
June 12, 2009 9:42 pm

Sylvia, if the article above describing silver shots doesn’t make sense to you, you probably need to do more research before speculating in something like the so-called “silver shots” — they are simply options contracts, they’re certainly not guaranteed in any way, and you’ll need approval from your broker to trade options, and you can read up on what options are at cboe here: http://www.cboe.com/LearnCenter/Tutorials.aspx

spreadtrader
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spreadtrader
June 14, 2009 2:25 pm
Of course, you make this all sound simple and risk free (“a win-win situation”). Yet if you’ve done it, you know it ain’t so; and you provide us with no real life scenario to work with…….so I’ll supply a few and you can answer questions for any novices to whom you haven’t fully disclosed the risk of doing this trade. Let’s say I run out and buy 100 shares of SLV on Monday’s open at 14.63 and promptly sell 1 July 15.00 call for .55 cents ($55). Of course, the farther out-of-the-money you sell the options, the less premium you… Read more »
spreadtrader
Guest
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spreadtrader
June 14, 2009 2:46 pm
“[M]uch more lucrative” than what? If you’re saying that there is more leverage with commodity futures and their options than a commodity ETF, that may be so. However, there is a price to pay for the additional leverage and there is no free lunch. “The other advantage of the option on commodity futures is that you can buy three, six and nine month out options and when one expires replace it. That way you don’t have to be right about when the commodity starts moving.” Why isn’t that true with commodity ETF’s like SLV, all other things being equal? Are… Read more »
Strong Eagle
Guest
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June 14, 2009 9:49 pm

Thanks also to spreadtrader and others for providing additional insights.

Jenae
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Jenae
June 16, 2009 6:28 am

It’s either SA or THM, Canada is SA, Alaska is THM.

Gravity Switch
Admin
11
June 16, 2009 1:03 pm
Darrell
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Darrell
September 25, 2009 7:04 pm

The Big Gold Strike is in Alaska and is known as “Pebble” deposit owned by Northern Dynasty, a Canadian Company. This deposit will probably never be developed because of environmental objections and resistance from Native Groups. It is a HUGE find, but 2/3 of the deposit has been claimed by Liberty Star Uranium (LBSU-OTCBB)….if ever Northern Dynasty gets permits to develop a mine, Liberty Star would be a stupendous winner…it trades at $0.003 the last time I looked!!

Gravity Switch
Admin
11
June 16, 2009 1:06 pm
Indeed — sneaky, this isn’t an ETF … it’s an OPTION on an ETF. Wherever the wiggle room is, a copywriter will find it. It’s definitely not silver pellets, which are also sometimes called silver shot — that’s just physical silver, you can’t usually buy it at less than melt value — and you also can’t get easy access to leverage to control a lot of it if you’re an ordinary investor, the way you can with options. You might do fine owning the physical metal, but you don’t get the outsize leveraged bet (or the risk) that you do… Read more »
Gravity Switch
Admin
11
June 16, 2009 1:07 pm

They copy each other all the time, but they don’t usually copy the exact wording … wouldn’t be surprised if the ad you saw, once you clicked through to it, ended up being the same ad for this Death Cross Trader service.

Sean
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Sean
June 17, 2009 11:42 am

What about the need to change every state and local income tax to 5 cent increments?

After all, we know that a 6% sales tax would not go to 5% it would go to 10%.

And by the way, the $X.99 gimmick still works on the vast majority of consumers as does Walmart and Home Depot’s $X.88 psycho-manipulation.

spreadtrader
Member
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spreadtrader
July 10, 2009 3:11 pm

I dunno……I’ve seen sicker dogs than this get well.

Silver Master
Guest
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Silver Master
September 11, 2009 5:36 am

@WallStreetKid

Is it really? bit clueless are we?

Gravity Switch
Admin
11
September 11, 2009 1:14 pm

As it certainly did this time — that contract’s back above $1.30 now. He has a new pitch for the “Silver Shots” out now, I’ll have to look at it and see if he’s changing the contract he likes, though it could easily be the same one again or, if you want to be a stickler about the dollar price, the $18 strike for January.

Buzz Hampton
Guest
0
November 14, 2009 2:23 pm

I too would like this explanation of the series

spreadtrader
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spreadtrader
December 18, 2009 6:51 am

It’s like “stand-up comedy”, eh?

…timing is everything.

spreadtrader
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spreadtrader
December 18, 2009 7:15 am

Can’t tell you what to do Alex. This stock chart looks like most silver mining stocks right now. If it doesn’t hold above 780 (pence?) it looks to be in trouble.

Check out this article where it talks about the silver ETF (SLV) in the U.S. and two silver bullion funds in Canada.

http://seekingalpha.com/article/173428-silver-use-leverage-on-the-laggard-metal?source=commenter

kopitmate
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kopitmate
December 18, 2009 1:51 pm

thanks Spreadtrader…here is the best part from the article you posted above…”The Gold to Silver ratio is easing down, which means either the price of Gold drops or the price of Silver has to rise”…
I ll go with the former i.e. the price of gold dropping and my own intuition saying silver will follow its older brother gold down in price in the short term forseeable future …

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