Buy Alert: January 15, 2016

| January 15, 2016

Buy Alert: January 15, 2016


Option Strategy:

Buy iShares Silver Trust $SLV April 15, 2016 $13.50 calls for $0.70 or better.


Commodity Outlook: Silver

Investors received additional proof of a looming US recession this morning…

Not only did retail sales come in weaker than expected, but the Empire State manufacturing survey revealed significant weakness in the New York manufacturing region.

The January headline reading came in at -19.37, which is the lowest reading since April 2009. 

Tack this bit of unwelcome data on top of the extraordinarily weak Chicago PMI data released in late December and you’ll see why investors are sending the markets sharply lower.

Unfortunately, the US economy is stumbling incredibly close to recession…

What’s that mean for precious metals, specifically silver?

In my view, the US Federal Reserve will have to reverse course and reinstate their extremely accommodative policies (quantitative easing) later this year.  If they don’t, the US is at risk of a major economic downturn.

Of course, the Fed being forced to return to the printing presses to prop up the US economy will be a highly bullish scenario for gold and silver.

Here’s how we’ll play it…


Resource Trade: iShares Silver Trust $SLV

As long-time subscribers are aware, $SLV is our go-to asset for trading the silver market.  The commodity ETF tracks the price of silver directly. So when silver rallies, so does $SLV.

Here’s what we’ll do…

Buy the $SLV April 15, 2016 $13.50 calls for $0.70 or better.

The current bid/ask spread for this contract is $0.63/$0.66.

Do not pay more than $0.70!

Our official entry price for performance tracking is $0.66.  Your price may be higher or lower.

Exit Strategy:

iShares Silver Trust

Remember, we want $SLV to trade higher.  Our first profit target is $15.00 while our second target is at $16.50.

Our risk control line is at $12.90.  If $SLV trades below that level, conservative investors should consider closing this trade to preserve capital.


Category: Commodity Trading