Nickel short trade

29 sept. 2020

Thanks for viewing,

I am not sure how widespread interest in Nickel is, my interest in Nickel is;
- It is a valuable metal that is in demand as the world turns towards electrification (Nickel currently has a low proportion of its demand ~3% from batteries and ~70% from steel-making but EVS. Vehicle manufacturers are turning towards much higher proportion of vehicles being EVS and battery manufacturers are turning to higher efficiency batteries with a higher proportion of nickel,
- There are therefore, strong fundamental reasons to expect strong long-term demand,
- It is possible to buy large volume physical metal and store it in secure locations (you can even take out a low interest loan on a %age of the market value of the metal collateral) like silverbullion.com.sg.
- I would like to add physical Nickel into my "all weather portfolio" (so that commodity positions comprise 7.5% of the portfolio - a la Ray Dalio) I am looking for an entry point to buy.

If you trade, I put my entry point on a break below the swing low for a 1:1 extension of the previous drop. If my view is correct this would allow wave (B) to complete without making a lower low (than was set in Feb 2016). This would set the scene for a new bull move towards all-time highs. That short trade (stop placed arbitrarily above nearby resistance) could net -27% closing out at $180.93. Actually, I may look into a platform that offers a short contract. If the Feb 2016 low is exceeded, my bullish scenario is off the table.

Reasons for a bearish view:
- MACD histogram strong down trend,
- MACD moving averages looking like crossing over to the downside,
- If a wave (B) unfolds to an expected 1:1 extension that will mean an 44% price decline,
- Lower buy volume for Iron ore over the past 18 months and signs of exhaustion in the Iron Ore rally - and as so much of nickel demand is from steel-making this would also drag down Nickel,
- Nagging suspicions about a generalised property bubble that is in the process of deflating in the west (commercial property down 20-30% in the US in 2020) if it gets underway (massive manipulation will be required to stop the implosion of a huge speculative bubble in residential and commercial property) in China - there could be a huge reduction in steel demand for construction.

At the moment I'm not trading, but looking to enter long around the $180 (below 88000/TON) mark. At the moment silverbullion.com.sg is offering just under 4% over spot and similar buy-sell spread. Storage fee are around 1.5% per year at current prices (more as a % basis for smaller 250kg / 550lb amounts). They have 2000kg bags of 99.8% pure Nickel at USD14,986/ton. I would be looking to enter below USD8000/ton and am hoping for a ~40% price drop overall before the next bull market. Of course, I could be wrong, or right but too early, or I may miss the buy-zone for some reason (like lack of funds) even if it unfolds exactly as I have charted it.

I am not an affiliate and the link posted isn't an affiliate link. It is just something I discovered in my search for gold and silver bullion non-bank vaults. If anyone knows of a better offering elsewhere - please let me know (I am also interested in low premium / spread bulk copper - not small ingots or coins).

Lately, I have been finding Elliot Wave principles very helpful in determining entry-points into commodity, gold and silver, and equity positions. When pessimism prevails people and organisations sell or get liquidated and the bottom normally isn't right at the point that fundamental factors switch from 'sell' to 'buy'. I find EW is helpful for setting entry and exit points - especially in lieu of more concrete information.

Protect those funds

28 juin 2021

Ordre annulé