The Patient Investor’s Guide To Playing Silver’s Wild Swings

Trade of the Day Wake-Up Watchlist

I’d rather miss a bounce than catch a falling knife. Especially when that knife just dropped 30% in a single session.

Karim Rahemtulla, Head Fundamental Tactician, Monument Traders Alliance 

Karim Rahemtulla

I’m known for being a metals guy.

I got people into gold and silver years ago. I made a fortune in Seabridge. I bought Hecla under $3 and watched it climb to $23.

So when silver crashed nearly 30% last Friday, my phone started buzzing. Friends, subscribers, neighbors – all asking the same question: “Is this the dip to buy?”

Silver’s sitting at $80 after touching $115 just days ago. Down 30% in one session. Looks like a bargain, right?

Not to me.

Look, my situation is different. I’m playing with house money on these positions. When Hecla swings 20% in a day, I’m not losing sleep. My cost basis is $2.90.

But if I were putting fresh capital to work today? Different story entirely.

People who completely ignored precious metals for years now want to “buy the dip” at $80 silver. These are the same folks who thought I was nuts accumulating miners when nobody cared about the sector.

Now they want in after a 300%+ run, just because it pulled back 30% from the peak.

That’s not value investing. That’s trying to catch a falling knife.

Silver in the $40s – that’s where I’d consider backing up the truck with new money. Maybe. Gold around $3,000 on a real correction.

Will we get there? Who knows. Silver could bounce tomorrow and never see those levels again. Or it could keep bleeding for months.

But I’d rather miss a bounce than catch a falling knife. Especially when that knife just dropped 30% in a single session.

When I bought Hecla at $2.90, people laughed. “Dead money sector.” “Gold bugs living in the past.” I bought anyway because the risk-reward was obvious.

At $86 silver after a face-ripping rally? The risk-reward doesn’t work for fresh money. You’re hoping to time the bottom of a correction in something that just went parabolic.

That’s speculation, not investing.

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The metals bull market isn’t dead. Friday’s sell-off doesn’t change the fundamentals that drove this run. But jumping in at $80 because it’s down from $115? That’s how you turn potential profits into guaranteed losses.

My levels haven’t changed. $40s for silver. $3,000 for gold. They seemed impossible when silver was at $115. Now they look a little less crazy after Friday’s massacre.

Patience pays in this game. The people texting me about buying the dip at $80 are the same ones who ignored my calls at $20.

I’ll keep waiting for my spots. Even if I never get them.

Because the discipline that got me in early is the same discipline that keeps me from chasing crashes.

Your Action Plan

Friday’s sell-off was scary, and a reminder of how volatile silver can get. But if prices can stabilize – and so far this week they have – you could start to look at some miners for potential short put trades.

That’s when you pick a level you’d like to buy the stock and if it drops there, you get assigned shares. And if it doesn’t, you collect the premiums.

It’s a way to get paid while you wait for your spots. And if you do get assigned, you’re buying at levels you already decided made sense.

Just remember – even with puts, don’t get greedy. Pick strikes where you’d actually want to own the stock long-term, not just because the premium looks juicy.

The volatility is your friend when you’re selling options. Use it.

And if silver were to shoot back up to $115 or more, which is entirely possible, I’d look to short again.

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Published by RJ Hamster

I was born on 6 August 1956 in San Francisco, California to Janet and (the late) Richard Hovis. I grew up in Santa Monica, California where I attended elementary, junior high school, and high school (graduating in 1974), in addition to involvement in sports and recreation (Little League +, the Boy’s Club ++). Further, it was in elementary school – St. Augustine’s By-the -Sea Parish School that I found, and made the choice to truly journey with God. I attended Arizona State University from 1974 to 1977 – seeking to become an architect, however, I was not accepted, and, as such, I graduated with a Liberal Arts degree. Upon graduation from Arizona State University, I attended Cal Poly San Luis Obispo and studied City and Regional Planning at the Master’s level. I successfully completed one (1) year in a two (2) year program – I did not complete the Master’s degree in City and Regional Planning – due to personal reasons. I returned to Santa Monica where I started (October 1979) my career as graphic designer with Exxon Company, USA. I spent five years with Exxon Company, USA. While working with Exxon Company, USA I was accepted into architectural school – Sci-Arc in Southern California, however, I did not attend preferring to stay with Exxon.. In 1982 I married Laura Flosi and in April 1983 we had our one and only child – Lauren Alain Hovis – a gift from God. We moved to Phoenix, Arizona in 1984 from Los Angeles, where I went to work as a graphic designer with Kitchell CEM (from 1985 -1987). From 1987 – 1995 I was an independent contractor, and a registered representative in mortgage finance, financial management, graphic design, and drafting. Further, I attended the University of Phoenix and successfully obtained a Master’s in Business Administration (MBA) in 1982. I was also a member of the Scottsdale Jaycees, where I became very involved in community events and projects. In 1994, I accepted a cartography position with the Defense Mapping Agency in Reston, Virginia. As such, I relocated from Phoenix to Reston. In 1998, I was accepted and worked as a Visual Information Officer with the Central Intelligence Agency. In 2002, I worked as a Support Officer until my retirement (due to a need for shoulder surgery) in September 2018. Away from my Federal Government service, I have been involved in various organizations and activities in Northern Virginia. In November of 2011, I married Rebecca Ouellette in Santa Monica, California. I reside in San Tan Valley, AZ with my two hamster - Jess and Timothy, our fish, our lizard - RJ Lizard., and our cats - Pearl and Grey. As to hobbies, I enjoy playing sports, attending sporting events, mentoring individuals from financial management to hamsters, building models, photography, travel, multimedia design, managing partner for RJ Hamster, and jazz – smooth jazz to a samba or a bossa nova. Love and God Bless, Peter – aka RJ Hamster Jo hi

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