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Matthew Green  

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  • Is It Time to Short Silver? [View article]
    It was time to short silver when the ball dropped. There is still money to be made in ZSL up to about the $15-16 range, if silver breaks below the 200-dma you might want to wait and see if ZSL goes even higher.

    My real concern is, like all the double leveraged ETF's its really not a long-term investment. I would advise anyone who intends to hold ZSL for the long term to get a CAT scan. Short-term, if you're on the right side of a trade the double-shorts can really help your portfolio. Since you mentioned DTO, that ETN may actually be the best single example. It was launched at around $20 in June of '08, right as oil was about to peak and was over $200 by the new year.
    Jan 26, 2011. 09:18 AM | 8 Likes Like |Link to Comment
  • What Happened to Silver? [View article]
    If you look at the price action over the past decade's bull market, without exception the 3-4 month price runups, in which the price shoots up 40% or more has been followed by at least a year of consolidation and/or sideways trading. That happened after the intermediary peaks in 2004, 2006, and 2008, and then with the crisis investors had the opportunity of a lifetime in Nov/Dec 2008. The previous two times it consolidated back to the 200-DMA, and this might not be any different. That's where the 22.75-23 target comes from, also assuming the G/S ratio goes back up to the mid-50's before resuming its downtrend.

    Of course, unless China collapses and throws the industrial demand back to the first gilded age this consolidation might not be as long as the others that preceded it.
    Jan 25, 2011. 05:41 PM | 7 Likes Like |Link to Comment
  • The Fed Won't Be Able to Combat Inflation by Raising Fed Funds Rate [View article]
    If you want to talk about the Carter years, here's all you need to know.

    In 1980, the US was the world's largest creditor. This is the main reason that Volcker was able to utilize the 20% rates and the plan worked, at least for the US. Sure, Volcker was sent bricks in the mail by home builders who were teetering on the brink of insolvency, but eventually it brought down inflation and set the stage for the boom. Don't forget that a side effect of this was the bankruptcy of Latin American nations that were deep enough in debt.

    In 2010, the US is the world's largest debtor, though not on a % of GDP basis. If rates are raised high enough, before we know it Congress will be calling for ways to stem the cash outflows because, lo and behold, the US will be paying trillions a year in interest. It's either cut now or cut later. The reactionary nature of the government and Americans in general assure it will be later, at least at this point in time.
    Jan 25, 2011. 05:28 PM | 5 Likes Like |Link to Comment
  • Silver in Backwardation: Expect a Move Up [View article]
    I agree fully that backwardation could happen, but Turk mentioned 2009 and left out 2010. Much of the same dynamics were in place last year, but in part due to the dollar's move up the price stayed stuck in neutral until the end of the summer. On the other hand, the dollar was moving up rapidly in early 2009 and we saw the price increase nonetheless. In early 2009 the price of Silver was coming off its huge move down and was a screaming buy regardless of a lot of other market dynamics. Today the opposite is true, it needs to digest the robust move upward of September-December.
    Jan 24, 2011. 12:32 PM | 11 Likes Like |Link to Comment
  • Are Precious Metals Still a Buy? [View article]
    Like mutual funds in the 1980s, part of this secular bull in the metals will continue to be fueled by the new, easy access of the average investor to metals via ETF's. Even the secular bull in stocks had multi-year pullbacks, assisted via outflows from the mutual funds. Right as everyone would be ready to sell, more money than ever before was coming into the mutual funds. Plus, that was only ONE driving factor in that bull market. We can all name a few more factors for the metals bull than simply ETF inflows. The time to buy will be sooner than many think. The reason for the pullback is two-fold: if something advances 40-50% in price in the span of three months it's probably overvalued, especially if its not an individual equity. The emerging cloud over whether China is headed for a pullback will also effect Silver until that question is answered. Even if that causes the pullback to be larger than most expect the opportunity will be correspondingly larger as well.
    Jan 24, 2011. 12:11 PM | 11 Likes Like |Link to Comment
  • Wall Street Breakfast: Must-Know News [View article]
    The Apollo and TPG bid for Sara Lee, on the heels of the Del Monte acquisition by KKR, Vestar and Centerview last November is the latest in what is/will continue to be the trend as food prices continue to rise. This is supported by the fact this bid is being made at 10x ebitda compared to 8x in the Del Monte deal.

    The sale of its Folgers coffee business was beneficial for PG because it was a low-growth brand, but has been a great acquisition for SJM. In the same way, SLE's coffee business could be a great pickup, particularly for PE because there are a number of sub-brands within that division to strengthen or divest.
    Jan 24, 2011. 11:32 AM | 3 Likes Like |Link to Comment
  • 3 Ways to Play the Bursting Gold and Silver Bubble [View article]
    The UltraShort ETF's DZZ for Gold and ZSL for Silver are also worth taking a look at, as buying Gold and Silver at these levels is still risky. This dip could last 3-6 more months but a full-blown bubble popping is years away.

    Agree with most of the points about the rapid run-up, I've been waiting for a correction since November, especially in Silver. The conspicuous absence of mentioning the fundamentals (Asia's buying, West's budgets) is notable, though. The author mentioned that Gold is a currency hedge, but that doesn't come close to telling the whole story. Moreover, the debt problems of the western world may be a factor supporting the prices, but the fact is that Asia may very well be in the driver's seat here in terms of controlling the price simply because they are buying more and more every year. As long as those nations' level of wealth continues to rise year over year, they will be driving this secular bull market in the metals.
    Jan 19, 2011. 12:41 PM | 17 Likes Like |Link to Comment
  • Why Silver and Gold Can Do It Again This Year [View article]
    That chart is a six-month. If you look at the same technicals on a 5-year chart they are still significantly overbought, so a drop to the 200-DMA could still be in the cards, 25% below where the price is now. Gold already broke the 50-DMA to the downside last week and Silver could still do it any day, especially if this bounce is a head-fake.

    The same supply constraints that will make this a long-term bull market were there last summer while the prices of both metals were stuck in neutral. Once the seasonal strength kicked in it was off to the races. I think new highs will be made easily over the next year but it might not happen until the the fall.
    Jan 18, 2011. 02:51 PM | 11 Likes Like |Link to Comment
  • Bullish Sentiment in Gold Abates [View article]
    One thing to keep in mind this week is that the Gold price would be around $1350-60 if the dollar hadn't dropped so much this week. The selling potential has been there but it has been balanced by the greenback's fall. Like or not, more of a pullback might be waiting in the wings if the USD bounces next week. The smart money will be buying on the way down to average out the next inevitable upturn.
    Jan 13, 2011. 01:36 PM | 6 Likes Like |Link to Comment
  • Is the Gold Bull Market Over? [View article]
    If the bull market is truly over the 200-day MA will be breached in earnest and it won't look back, so thats when you should be worried. The only time its gone far below that was in the heart of the 2008 crisis, from which it recovered by March '09. All other times this decade the pullbacks have hit that trendline and then resumed the upward climb. The same goes for Silver. Look for $1275-$1300 for Gold and $23-$24 Silver if this plays out as such. Without a sufficient catalyst and as long as the dollar holds up for the better part of the year, we could be looking at consolidation until August at the earliest.
    Jan 9, 2011. 12:34 PM | 5 Likes Like |Link to Comment
  • Does Breaching Its 50 DMA Spell Gloom for Gold? [View article]
    Gold has retraced to its 200-day MA twelve times or so since 2001, only once breaking it in earnest during the heart of the 2008 crisis. With respect to Gold, 2008 was the dip of the decade.

    There aren't many fundamental reasons why this time would be any different, in terms of meeting the 200 day-MA around $1275-1300 and then resuming its upward climb. Yes, the US economy is recovering but the underlying structural problems have not been solved. This could play out much like 2010 in that the dollar could rally the first half of the year, assisted by the continuing problems with the Euro. Once the municipal and state budget problems come to roost and are in the public eye again the dollar could drop again in the final six months of the year.
    Jan 9, 2011. 12:17 PM | 5 Likes Like |Link to Comment
  • Gold to Go Below $1,300? [View article]
    ...and what seems strictly taboo around here recently is acknowledging a simple fact; Nothing goes straight up and nothing goes straight down. Not even the metals. So relax and use the gains we all patiently waited for over the past few years to buy some more at $26 or below in the case of Silver.
    Jan 5, 2011. 12:17 PM | 8 Likes Like |Link to Comment
  • A Decade of Gains for Gold and Silver [View article]
    This is just a pullback. Most of the tech bubble flameouts had little to no fundamental reason to go from single digits to over $20, or some even to $50 and above, a lot didn't even make it to their IPO. There are solid fundamentals for owning precious metals for the next decade and beyond just as there were for stocks in the 80's and 90's. Currency devaluation is not ending anytime soon. Stocks will do fine, metals will do better.

    I've been waiting on this pullback since mid-November, and have repeatedly said it isn't prudent to buy at the current levels if you can wait a few months for a pullback. If Silver in particular goes back down to its 200-day MA you should be buying every chance you have. If not, wait until the usual summer doldrums.
    Jan 4, 2011. 10:55 AM | 6 Likes Like |Link to Comment
  • Gold and Silver - Waiting on the Dollar [View article]
    The G/S ratio is testing the long-term resistance level at 45-46, if it doesn't break lower we could see a bounce back up into the new year. If it breaks to new lows, it could go lower than 40 sooner than many think. With the dollar creeping higher of late it would be more prudent to see what happens there and play a (very possible in my opinion) pullback early in the new year. Long-term the outlook remains the same. Back in 1990 no one thought the Dow would break 10,000 within twenty years, let alone ten which it did. In the same way, not too many seem to think Gold can break $2000. It's very possible.
    Dec 28, 2010. 02:48 PM | 6 Likes Like |Link to Comment
  • Bloomberg Counters Gold’s Run With Absurd 'Hit-Piece' [View article]
    Respectful, gentlemanly disagreement is a dying art, and you really have been able to see this increasingly over the past fifteen years. Nowadays, you have to make your point and rip the other to pieces. I admit to doing it myself if the point someone made is ridiculous enough. With respect to not refuting statements, that happens everyday on the 24/7 news channels. The insult diverts attention away from the fact that you don't necessarily have a better answer, or possibly even an answer at all. All that matters is that you convince someone you're right by making the other look bad.
    Dec 24, 2010. 10:50 AM | 13 Likes Like |Link to Comment