I'm The Biggest Silver Cheerleader On Hive & LeoFinance
I’m the biggest silver cheerleader on Hive. Yet, again, silver is getting not love. Yes, I know is considered a precious metal, but if people say gold, I want those same people...JP Morgan to say silver.
The correlation between bitcoin and its precious metal alternative, gold, is a big reflection on the investment preferences of the younger generation compared to the older one. Especially during times like these with the coronavirus economic crisis.
JP Morgan Chase, one of the biggest financial institutions in the world, recently released a report stating that interest in alternative assets has risen significantly with millennials typically choosing bitcoin over digital assets with boomers going towards traditional assets such as gold.
It’s no surprise though that Millennials should choose crypto over traditional assets. It is well documented that the younger generation is more likely to get involved with new technologies such as bitcoin compared to the older generation. That’s not to say that the older generation are wrong or that even the younger generation are right but it’s just a typical demographic for a nascent industry. This happens with all sorts of new technologies, not just cryptocurrency or blockchain.
People want to talk about the FANG stocks, Bitcoin and Gold, but not enough people are talking about Silver. Year to date, the Nasdaq is up 28%, Gold is up 36%, Bitcoin is up 62%, but Silver is holding its own up 59%. People at some point will start to put some respect on Silver's name.
But that's fine, the Smart Money has my back.
The Commitments of Traders (COT) is a weekly market report issued by the Commodity Futures Trading Commission (CFTC) listing the positions held by commercial traders and the “Smart Money”, the hedge funds and bank institutions in various futures markets in the United States. Since the COT measures the net long and short positions held by speculative traders and commercial traders, it is a great resource to gauge sentiment in the Markets.
In mid-2019, both sentiment and the price of Silver started moving higher.
Speaking of the Smart Money having my back, lets go back over a year ago. Over a year ago, the Smart Money bought over 85, 000 of the September call options, $17 strike price in SLV (the EFT that mimic the price performance of Silver) for $26 / options. This trade was good for a doubled for a profit of $2.2 MM with plenty of time left before the options expired.
Industrial and technological uses for silver account for over half of the demand for silver because of silver’s physical properties. In 2019, demand from industrial applications was nearly unchanged from the previous year. But in 2020 as COVID-19 kicked into gear, between 60-70% of the silver mines shutdown, setting up the scenario for a supply-demand imbalance, especially when you take into account of silver’s inflation and safe haven attributes.
About one week ago, I noticed unusual options activity in SLV, the Smart Money bought a boat load of call options that expire in September at the $28 and $30 strike price.
Yesterday, the Smart Money bought over 100,000 call options at the $21 strike price that expire in January. Why the $21 strike price, well these options are now in the money and the more they become in the money every $1 move in the stock price is a $1 move in the option price.
In one of the first episodes of the LEO Roundtable, maybe going back two to three months, we talked about Silver and SLV. After that Roundtable, several of us bought some call options. I have had very few 10X baggers in my trading career. This one might be one I add to the trophy case.
My target 2 is about to get hit, but at this rate, target 3 will be hit before August is over.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted Using LeoFinance
