April 15, 2013 – Why I’m Buying 3x Weighted Silver (USLV)

As I posted on my Twitter feed this morning, I picked up some USLV (3x weighted silver) this morning at $10.81.

If you haven’t seen, gold and silver have both fallen over 10% in the last two days:

slv longterm

I am averaging into my position in silver because as you know, I cannot predict direction and I have no idea when the bottom will be.

I decided to use USLV instead of SLV because it’s much cheaper per share and also because it’s weighted 3x.  This means that for every 1% SLV moves, USLV will move 3%.  It’s more risky, but I’m using less capital. Look how much USLV has dropped relative to its recent highs compared with SLV:


Here’s a chart of the last 11 months showing SLV (silver), AGQ (2x weighted silver), and USLV (3x silver):

uslv slv agq

I will continue to buy as it drops further until it starts going back up.  Please note that I only do this for instruments that I believe are going to recover, such as the indices and silver.  You’ll notice that I never do this for individual stocks because you never know when a stock is going to go to zero.

Just like when I was heavily drawn down in my SPY position about 1.5 years ago, I am not worried.  I think silver will go back up.  Stay tuned for my future buying positions.

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