Precious Metal ETF's Seeing Interesting Action

Matt Thalman - INO.com Contributor - ETFs


Since the start of January the price of Gold and Silver have risen nicely as both metals are seen as a hedge against inflation and purchasing power over time. With continued low interest rates in the U.S., the announcement of QE in the Eurozone, debt issues in Greece, and the Swiss playing games with their own currency, many investors have begun looking for safe havens.

With Gold and Silver being the most trusted safe havens by many, and gold and silver ETF's making it easy for investors to quickly get in and out of owning the metals, we are seeing some interesting actions in two ETF's that actually own bullion itself. The SPDR Gold Shares (GLD) ETF owns actual gold bullion while the iShares Silver Trust (SLV) ETF owns actual silver bullion. The fact that these ETF's own actual bullion is key because their underlying assets are based on the price the metals are trading for at any given time, not futures contracts, miners or any other way to play the metals.

As it would be expected, with what is happening around the world, these ETF's have risen substantially year-to-date; iShares Silver Trust is up 9.83% while SPDR Gold Shares has climbed 8.69%. These move come while the S&P 500 has actually lost 3.1% year-to-date.

But here is what is interesting about these moves; net flows, or the amount of cash moving in or out of these funds are wildly different. iShares Silver Trust ETF has seen $175 million flow out of the fund since January 1 while the SPDR Gold ETF has seen $1.93 billion flow into the fund, according to etf.com data. So why is this happening? Continue reading "Precious Metal ETF's Seeing Interesting Action"

Chart to Watch - SLV

We've asked our friend Jim Robinson of profittrading.com to provide his expert analysis of charts to our readers. Each week he'll be be analyzing a different chart using the Trade Triangles and his experience.

Today he is going to take a look at the technical picture of the SLV - iShares Silver Trust (SLV) Continue reading "Chart to Watch - SLV"

"Take calculated risks. That is quite different from being rash."

Continuing with our options theme this week we have brought in, J.W. Jones, the primary analyst and moderator of OptionsTradingSignals.com. Today J.W is going to share with you his take on the recent silver market, and how volatility and options have presented him great opportunities in markets where traditional investors are running for the hills. Be sure to comment with your thoughts and visit J.W at Options Trading Signals.com.

---------------------------------------------------------------------------------------------------------------------------------

Take calculated risks. That is quite different from being rash.
– George S. Patton -

Last week silver was the focus of incredible price swings which left many licking their wounds and shaking their heads at the trading losses they had incurred. This sell off was likely triggered by the increase in margin requirements for futures contracts, but the stunning price decline extended to all vehicles like exchange traded funds use to trade the glimmering metal.

I recognized the potential opportunity early in the week, and began to look at various position structures using options on Tuesday morning. In order to understand the thinking behind this trade, it is necessary to understand the concept of implied volatility of an option contract. Implied volatility, together with time to expiration and price of the underlying security, form the three primal forces that rule the world of option pricing. This measure of volatility is best described as the collective opinion of traders as to the future volatility of the price of the underlying. Implied volatility is the variable which determines if options are priced cheap or overvalued. Continue reading ""Take calculated risks. That is quite different from being rash.""

Afternoon Market Update (4/15/11)

Do you smell something burning? It must be the metal markets because they're on fire!!! Need a hot ETF for your portfolio? We've got that too. See what you missed from today's market update. Be sure to join me LIVE, every weekday at 1PM ET for current, actionable data for your trades.

Click here to view MarketClub’s full Livestream library

Every success,
Adam