Silver looks looks like it will close above the psychologically important $35 level this week, and the metal could be headed much higher thanks to global central bank policies. Silver has long gotten the red headed step child treatment from Wall Street and the investment community.
We became incredibly bullish at around $16 or so per ounce, and we took profits at around $44 or so in 2011. We are now buying again because silver has once again broken out above prior resistance. Keep in mind, the markets could stage a POMO fueled bounce next Sunday night and they could attempt to gap the metal down on Monday morning. At this point the tape is so strong here I am buying any correction until a predefined overall stop loss. Using options is a good strategy to lock in gains on the way up while preventing the meat of the move via a built in stop loss -- you can only lose the premium you pay for the option, unlike buying paper silver via the SLV which can fall via manipulation by TPTB.
Here are 6 ways to play the metal for a longer term buy:
1. Buy physical silver from Apmex.com -- while I certainly cannot endorse them, I can say from personal experience that they provide a very legitimate service over the internet. I had absolutely no problem with my orders and their customer service was exceptional. There are no trading commissions, and your positions are completely confidential.
2. (SIVR) -- This ETF product touts itself as a physical metal ETF that is supposed to house the silver represented by the fund in an actual bank vault. IF Silver goes to $100 an ounce or higher, SIVR should help investors to hedge their currency risks.
3. (SLV) -- SLV is a controversial way to invest in silver. The true blue bulls call SLV "paper silver" and do not trust that the fund actually holds the amount of the metal that is advertised in the fund's prospectus. SLV was issued by J.P. Morgan who also holds a large short position in the metal for its own account. While this is a decent way to play silver and is highly liquid, we prefer owning silver bars, rounds, and coins to this index fund.
4. (AGQ) -- This is a double leveraged "paper" silver ETF that provides a solid bang for the buck if you are long term silver bull like me. Silver has been used as money for centuries, and we think the gold to silver ratio will contract in the future meaning that the upside for silver should be substantially higher than the potential upside of gold.
5. (PSLV) -- The Sprott Physical Silver fund is an interesting and advisable way to play silver. The fund holds the actual silver for investors, and shareholders can actually redeem their position in silver bullion instead of cash. I really like this offering because it offers investors a true purchase of the underlying metal and not just a promise from a banker.
6. (ZSL) -- Believe it or not, shorting the leveraged bear Silver ETF may be a good trade here because of the leverage involved. ZSL is a double levered ETF that shorts silver. Using a stop here is a bit more difficult, but for the most aggressive silver bull, shorting ZSL actually makes a good deal of sense right now because you benefit from the flawed construction of the leveraged ETF product while participating in the silver bull market.
My bank vaulted Silver ounces help me sleep well at night and I have had a great experience with this company. They are the best resource I have found for the little guy who wants to get his money into something other than the U.S. Greenback.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I am long physical silver