What Happens To Gold And Silver Next? Look Out Below?

Can someone help me look into an odd situation..Silvercrest(SVCMF), has had some VERY unusual activity in the last 10 days...
I don't know if some entity is doing something unsavory, or, I'm just getting paranoid...it was up to 1.38 today, with spot down 0.30 cents at that time...my "Livermore" instincts are up...red flags...or?
http://www.otcmarkets.com/stock/SVCMF/quote

@Tips N Tails

DUST and JDST are good instruments with leverage to sell short without having to borrow shares.

The problem right now is because gold is in an uptrend, these ETFs that go up in value when gold drops, havent had a chance to go up because of the uptrend.

You'll notice these are at 52 lows. Assets at 52 lows continue to go lower, it doesn't matter if its 6 bucks or 200 bucks, it will keep grinding lower on you.

If you think because DUST is at 7 bucks and that it wont go lower, I can tell you it WILL go lower on you and before you know it, it will be down from where you bought.

Why? Once again, you sell short any asset at yearly lows or do not buy it. It is in a downtrend and will continue to grind lower on you.

Furthermore, there is another additional risk with a leveraged ETF. Dont get me wrong, I use leveraged ETFs all the time and like them. But they only work with a trending asset AND they must rise day after day other wise the "decay" will erode your position.

When I refer to "decay" in these leveraged ETFs, to keep it simple, is the erosion of price in the specific leveraged ETF, in this case, DUST. During the day and specifically at the end of the day, it is re-balanced. This is because these trading instruments are composed of futures, options and other derivatives that are in constant change.

As the re-balance occurs, it in a sense resets the ETF. this is why if you bought it and held for a long time, and the market it is supposed to follow does not trend or it goes against the current trend, it loses its value dramatically and it NEVER does even out.

DUST and JDST would work great IF gold was in a downtrend. However, gold is not in a downtrend so these ETFs will consistently continue to make fresh yearly lows.

... and it doesn't stop there. The ETF maker, in this case Direxion, will just re-issue new shares, doing a reverse split, and the cycle starts all over again. So in other words, once this fund goes to say 3 as an example, they will do another reverse split and create more shares and once again, so long as gold is in an uptrend, DUST will continue to grind lower.

Buying and holding a leveraged ETF never works. Trading a trend, up or down, works with a leveraged ETF. Also, on a very short time frame, a day or two will also work.

But again, you cannot just buy it and expect it to work. As an example, suppose gold does fall for a week. Ok so you have a week's worth of trend which is good. However, in one fell swoop, a gap up in the price of the gold or the miners could easily erode your gains by half. OR you will come to find out that you could have had a better trade by actually selling short the metal, a metal ETF or miner ETF or gold miner.

So if you are planning on buying DUST or JDST, go ahead but keep in mind you will have to be extremely nimble in how long you hold it, know your time frame and levels and be prepared to close it out in a hurry if you have gains. Remember, buying assets at 52 lows is a losing proposition and carries additional risk.

looks to me like price remains range bound.. on the lower end for now... either it breaks or bounces from the low end.. time will tell.

@Tips and Tails

For the most part, these leveraged ETFs are trading instruments they are NOT investments. If you have a strong trend, you can ride these for days, sometimes weeks at time. However, there comes a point where the trend changes and the decay erases the progress made until the trend starts again.

No one buys "early". Like anything else, there has to be a proper entry point. Proper buy points in leveraged ETFs are similar to other assets, you could buy/sell short a break of a trend line. you could sell short the yearly low or buy the yearly highs. HOWEVER, because of the decay, once the trend dies or the movement loses the buyers, the leverage ETF decays, they rebalance its holdings which give it the leverage and the process starts all over again.

You will NOT, however, be able to buy and hold a leveraged ETF and expect to come out ahead. If anything, you will end up with serious losses.

Again, because of the decay, the re-balancing of these leveraged ETFs, you cannot expect to buy and hold, it doesn't work like if you were buying a stock. The issuer of these ETFs, what they do, is they will do a reverse split once the share prices go down into single digits. So as an example, say you buy at 7. it goes down in time to 3. At some point the issuer will do a reverse split and issue shares at say 50 bucks. AT that point, the shares once again continue their downward trend.

Leveraged ETFs are great products. However, you must know HOW to use them. To think you can just buy and hold one is a grave mistake that will cost one dearly. Furthermore, as I have repeated many times, buying any asset at yearly lows is not sound nor wise. Combine that with an asset that decays on you and you are looking at a double whammy.

Off topic I know but what broker do you guys use? I've used Vanguard but TD or ScottTrade have smaller commissioning fees which do add up over time.

@Tips N Tails I use Charles Schwab. I like the streetsmart edge software it has.
@ ilikeikes Just finished buying my physical this morning. First purchase of PAAS had profit today, should have bought more this morning when it was only up 11 cents, but after market trading has most silver miners down, so will see what tomorrow brings and hopefully buy more. Let me buy all my miners before the major disruption

in the "no one is talking about" column.. while gold and silver chop around, SBGL made 52 highs... you might recall this stock months ago looked so ugly in terms of price.

Yet the strong uptrend brought it back up.