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Major Gold, Silver Bear Says Market On The Verge Of An Uptrend

By Neils Christensen of Kitco News
Friday November 21, 2014 8:04 AM

(Kitco News) - The gold and silver market could be on the verge of an uptrend but more confirmation is needed before one major market bear is ready to buy.

In 2011, Andy Man, an independent trader from Richmond B.C. and part owner of Ser Man Traders, a Vancouver-based company that trains people to become traders, managed to turn $1,600 into $1.7 million by shorting gold and silver.

In an interview with Kitco News, Man said that he is still bearish on the precious metals but not as aggressively as he was three years ago, and that the market could be close to forming a bottom. However, he added there is still a lot of uncertainty in the marketplace as silver and gold continue to suffer from a stronger U.S. dollar.

Andy Man, the ultimate gold bear and part owner in Ser Man Traders, made $1.7 million shorting gold and silver in 2011 and now thinks the market is on the verge of an uptrend but confirmation is needed.

Although the gold and silver markets look technically oversold, Man said that he is not ready to buy just yet. The U.S. dollar still has room to move higher with markets pricing in more quantitative easing measures from the European Central Bank, he said.

“We could be at a turning point but we need more clarification from the ECB,” he said. ““Until we see something change in the U.S. dollar, gold will continue its downward trend.”

Man added that he expects the U.S. dollar to top out after the ECB expands its asset-backed purchase program, which some analysts are expecting could happen as early as the Dec. 4 monetary policy meeting.

“Gold and silver look cheap but I don’t think they are still a good buy. They are cheap for a reason,” he said.

Technically, Man said he would like gold to retest its recent lows at $1,130 an ounce, creating a near-term double bottom. Man added he thinks there will be ample time to buy in 2015.

Man has been following the gold and silver market since 2006 and, with the help of his business partner Mike Ser, was able to take advantage of 2011 top in the silver market; he said he started shorting the market in early May 2011 at around $45 an ounce, then reversed his position at $33 an ounce to ride a rally up to $39, and finally he reversed it again, shorting the metal back down to $33.

Mike Ser, partner at Ser Man Traders, said that they are starting to see investor interest in the resource sector again.

Ser said helping traders recognize market opportunities and how to take advantage of them is one of the reasons why they started their business together two years ago.

Ser added that although it seems impossible, anyone can be successful at trading as long as they know their long-term financial objectives and know their risk tolerance. He added that the gold and silver market can provide traders with profitable opportunities but it can also be highly volatile, which translates into high risk.

 “It is about managing your risk,” he said. “You only trade with risk capital, money that you are willing to risk and not lose sleep over.”

In Man’s example, he was able to short the silver market through Contracts for Difference (CFD), derivatives offered by U.K.-based financial derivatives dealer CMC Markets, which allowed him to start out with a smaller position and became more aggressive as he became more profitable.

“Most people think that Andy just went all in and got lucky but that wasn’t the case. He was very conservative when he first started and was able to build and grow,” said Ser.

While the gold and silver markets remain in a downtrend and consolidation period, both Ser and Man said that they continue to like equity markets as the trend, although appearing overbought, is still pointing higher.

However, Ser said that he is seeing some investment demand creep back into the resource market and is looking at potential opportunities in diversified mining company exchange-traded funds.


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By Neils Christensen of Kitco News; nchristensen@kitco.com

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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