buying ZSL, effectively shorting silver

It's a great time to short silver. When markets rise silver has been going down, and a big market bounce is arguably due. When markets drop, silver has been dropping or at best staying steady.

Gold is up nearly $200 this month so far, as a "flight to safety" which ironically will eventually prove to be anything but safe, as is everything else that goes parabolic including silver when it was at $50 at the beginning of May. Gold might not be at a top yet, but silver was in early May when it crashed and now its bounce seems over and the next leg down begun.

It is extremely rare for something to break down as badly as silver did this year and then recover to new highs. If the recent market panic and massive spike in gold can't lift silver to new highs, probably nothing will. Based on that, while laughing off the many fantasies that abound about silver being used as money or massive conspiratorial short positions due to unwind any day thus spiking the price to $100 or higher, we're of the very unpopular belief that silver below $30 is not far off.

When we make the most unpopular trades is when we realize the biggest gains, and we've done that very consistently over time in this blog. Here's hoping this will be another one of those big counter-trend wins.

ZSL is a levered inverse ETF which goes up in double proportion to drops in SLV, the silver ETF. It closed Wednesday at $13.44 We're going long. Downside risk is probably another 10-15% while the upside is 50-100% or more. A reasonable risk/reward in our view.

Very aggressive traders may consider November calls on ZSL at $20 or $25 strikes, last offered at $1.20 and $0.65 respectively. We're comfortable with the already high risk and profit potential in the double-levered ETF.

Options speculators might also consider $50 or $55 August calls on TNA, if wishing to profit from any big market bounce that could occur imminently. August calls on those strikes were offered Wednesday at $1.00 and $0.35 respectively.

We'll probably play the options if there's at least one more big downward move intraday in the equities markets.



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