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We’ve Officially Arrived at Airplane Glue Highs (SLV/IAU)

Posted on June 10, 2020

Who does your laundry, dice?

The Mrs.?

The help?

A service?

Maybe a robot?

We ask because if you’re not dumping those powders into the machine yourself, it’s likely you’ve lost touch with the average man-Jack out there on the street.

And if that’s the case, you’re likely also missing out on the sheer lunacy that’s sweeping through every corner of this country’s life – from its health to its business to its very spirit.  And if it continues – if you fail to bridge that disconnect and see the folly and absurdity and sheer senselessness of what’s now unfolding – it’s also likely you’ll end up in a whole heap of trouble.

But more on that later.

The Fate of an Unhinged Stock Market

Nowhere is the insanity more apparent than in financial markets, where even we – the ultimate wannabe “realists” – are having trouble understanding the what-is behind the current bullish reality.

That is to say, it generally doesn’t bother us if the market is rising, we’re happy to just hop on for the ride.

Same on the downside.

Who cares, just get on the right side of the trade, right?

Usually.

But when it rises in the face of…

It’s just perplexing…

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We fully expect to see a turning of the tide, and in fairly short order.  But in the meantime, we’re exploiting an opportunity that just arose in the precious metals that affords a tremendous risk/reward profile.

Consider it…

Essentially, it’s a trade that plays off the pricing of a pair of ETFs, the iShares Gold Trust ETF (NYSE:IAU) and the iShares Silver Trust ETF (NYSE:SLV), that today happen to be selling for the same price.

Here’s a chart of the two for the last year –

We are essentially betting $0.16 that 100 shares of SLV will outperform IAU between now and expiry should the precious metals break higher.

Should both securities trade to zero, our maximum loss is $1.27.

Should both securities trade to infinity – and proper STOPs are in place –

our maximum gain is unlimited.

Many happy returns,

Matt McAbby

 

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