Placing Stops to Protect Gains in Silver (SLV)
Silver (SLV) experienced the worst selloff in 36 years last week. The good news is that even after last week’s selloff, SLV is still 120% above the lows made last August. While we still believe SLV will make higher highs later in 2011 or in 2012, we want to protect our gains in some fashion.
We have picked two levels below the market where we have place good until cancelled (GTC) stops on SLV. If the prices are hit, our SLV will be sold at the market. Depending on individual circumstances and risk tolerance, we plan to sell between 35% and 50% of SLV in the first block. The second block will sell our remaining stake. If SLV can recover and our stop levels are not hit, we are happy to hold our ground. If SLV gets weak again, we can envision an excellent re-entry point coming later in 2011.
We are happy to (a) protect our profits if our stops are hit, and (b) consider buying SLV in the coming months. We will let the market decide. We may move the stops up if SLV can continue to gain ground. We will enter the stop orders before today’s close.
