Global X Silver Miners ETF

If you are someone that does not like the risk of owning an individual Silver miner, this is one ETF that you may want to consider. SIL is Global X's Silver Miner ETF.

Stochastics are at the over sold area and looks to be heading towards the upside.  SIL has been in a trading range for 1 year and plenty of swing trading opportunities can be seen looking back. Buying in the low 20'ies and selling above $25.

Should Silver break above $50 next year, the Silver miners should start moving quickly to the upside as earnings should be outstanding for the junior and mid tier producers. Once SIL breaks the high produced earlier this year of $31.34, it may run to the next fibonacci level 423.6 which is at $40.

Sprott to purchase 1.5 billion worth of Silver for PSLV

From Commodityonline:

 

Canadian billionaire Eric Sprott has filed for the purchase of $1.5billion in Silver bullion for covering an expected demand in his Sprott Asset Management's silver ETF- PSLV. A $1.5 billion in purchase will require about 45 million oz of silver.

Such a large purchase has normally Lead to higher prices. Sprott's $580 million silver purchase in 2010 was accompanied by an almost 175% gain in COMEX Silver when prices surged from $18 to $49! The current purchase of $1.5 billion is almost 3 times the 2010 purchase and as such prices could easily double or even triple.

Barclay's iShares Silver Trust issue also witnessed rapid price acceleration. COMEX silver had doubled from $7.50 to $15 within 6 months till the launch of the ETF.

Based on the info above, Silver _may_ start moving to the upside in the coming weeks as more physical Silver is removed from the market.  I say _may_ because the CME, CFTC and the bullion banks may have other plans for the remainder of the year...   Mr. Sprott can be seen as the Hunt Brothers of the 2010/2011 and going forward.

Long term Silver trend

Miner snapshot - Richmont Mines

Daily chart of Richmont Mines (RIC) from Sept 2010 to Nov 2011.

 Richmont broke out to the upside in Feb 2011 and even though it has been through a rather bumpy ride since then, the medium term trend is up. The trading range between the upper and lower trend lines remains intact.....for now.

Some fundamental information from their website:

Quick Facts

• The stock is traded on the TSX and NYSE Amex under the ticker symbol "RIC".
• Fiscal year-end: December 31
• Head-office: Rouyn-Noranda, Quebec, Canada
• Shares Outstanding as of December 31, 2010: 31.2 million
• Number of employees as of December 31, 2010: 407
• Operating mines: 2
• Mine currently being developed: 1
• Number of wholly-owned mills: 2
• 2010 sales: 68,123 ounces of gold
• 2009 sales: 59,733 ounces of gold
• 2008 sales: 70,945 ounces of gold
• 2007 sales: 46,193 ounces of gold 

Richmont Mines has been successfully producing gold for over 20 years.

Our vision is to become an intermediate North American gold producer through a combination of organic growth, strategic acquisitions and partnerships.

We are…

• A profitable gold producer, operating in a safe political environment;
• Well-positioned to initiate partnerships and/or acquisitions.

We have...

• Operational expertise in underground, narrow vein gold mines;
• A portfolio of exploration properties in Quebec, Ontario and Newfoundland;
• A strong, flexible management team;
• A healthy balance sheet and underlying asset value.

We DO NOT have...

• Any long-term debt;
• Any hedging contracts. 

Our Mission: Building the Next Generation of Gold

Over 2010-2012, our focus will be on making the following key objectives and priorities a reality:

• To operate 4 to 5 mines;
• To increase our annual production to 200,000 ounces of gold;
• To build reserves of 1,000,000 ounces of gold;
• To reduce operating costs;
• To initiate strategic partnerships and/or acquisitions;
• To sustain a comprehensive Investor Relations marketing campaign;
• To achieve valuation parity with our peer group of Canadian junior gold producers.

Richmont Mines has one mine in development and 10 exploration properties. This company may be one to keep an eye on going forward.  Their website:  Richmont Mines


Disclosure: At the time of this writing, GSR does not hold any positions in the company.

Fortuna Silver Mines (FSM)

Fortuna Silver Mines is a junior Silver and Gold producer that is moving up towards Mid tier status.  Their flagship mine is in Peru and have just went into commercial production on their San Jose mine in Mexico.  See their website for details.

Here is a weekly chart of FSM with consolidation periods marked with the blue boxes.

If the spot price of Silver continue to appreciate from here, most solid junior and mid tier Silver miners should follow the uptrend.  This may send miners like FSM to new yearly highs.  The RSI on the daily and weekly charts are on the rise and may attain the 70+ overbought zone in a few weeks.  Entry points are obviously on the dips and better seen on the daily chart.

Disclosure:  At the time of this post (Nov 12th, 2011), long shares of FSM.

Silver pivot points and fibonacci levels

If you look at most stocks or commodity's, you'll see that they trade to pivot points within the day. (Google pivot points or look them up on your favorite stock charting website).  I noticed that today's Silver trading was between pivot points which is slightly unusual.  But when you place a fibonacci retracement on the chart at specific high and low points, you'll see that the price stopped at the 38.2 fibonacci level which provided some resistance.

Here is a daily chart of Silver with a Fibonacci drawn from the low point early in 2011 to the high point in late April of $49.82.

You can see the fibonacci levels on the left side at 23.6, 38.2, 50*, 61.8, 78.6 and the price levels on the right.

Here is a 5 minute day chart with pivot points, the yellow is the center, then you have 3 levels of resistance points in red and 3 levels of support lines in green. The price action of Silver is trading in between the center pivot point and the upper resistance pivot point R1.  (Price action will typically move up to a pivot point)  If you did not have a fibonacci drawn, you would not see the 38.2 level based on the high a low points.  This level provided resistance to the upside as seen on the chart.

Lesson:  If your swing trading, use pivot points with fibonacci retracement which may help you find hidden support and resistance levels.

Silvers Parabolic Years

Silver miner performance year to date

Below is a year to date daily chart of select Silver miners vs SLV which will represent Silver.  Overall returns can be viewed as the 'strength' of the company as viewed by investors.

It is interesting that not all Silver miners follow the price of Silver as seen above.  Year to date returns as of Oct 28 for SLV and select Silver miners are:

iShares Silver ETF SLV:   20.57%
Fisrt Majestic AG:  36.25%
Endeavour EXK:  26.58%
Global X Silver Miners SIL:  2.5%
Silver Standard SSRI:  -17.76%
Pan American PAAS:  -20.03%

The mid tier Silver miners First Majestic and Endeavour are positive for the year and have out performed the physical Silver year to date while the major Silver miners SSRI and PAAS have under performed. 

I've heard David Morgan state that he was rebalancing his portfolio at the start of this year and it may be something that PM investors may want to do each quarter or on a yearly basis.  He mentioned that he was focusing on mid tier comapanies for 2011 which has been good advice as seen with the companies listed above.

If you were to liquidate your portfolio of PM companies and reinvest the proceeds back into the PM industry, your allocation and the companies that you selected would probably be different than what you have now.  I plan on selling portions of certain miners before the end of 2011 and rebalancing for the 2012 year. 

Alexco Resources

Daily chart of Silver miner Alexco Resources.  Google them and check out their company website and fundamental information.

You can see that Alexco has been a volatile stock with swings up and down over the past 11 months. I expect to continue to see the swings in this stock with a upside trend as long as Silver is on the rise.  Look for low points in the RSI (30) and sell points near the RSI 60/70 level.

Disclaimer:  At the time of this writing, I have a position in Alexco Resources. Ticker - AXU

Silver ETF SLV on the rise

On September 26, 2011, Silver (ETF SLV) hit a oversold reading of ~14.03 on the RSI. For traders that are watching Silver, this was a good time to accumulate shares of SLV or Call options depending upon ones strategy.

The RSI is close to a 50 reading and rising.  Futures swing traders and hedge fund speculators may be accumulating positions for a potential price appreciation in November...?

The MACD has crossed over and is also trending upwards. In these markets, no technical indicator will tell you what will happen tomorrow, but it does look like Silver and select Silver miners may be heading for a potential rally.

Silver Price Manipulation debate - Kitco

Silver price manipulation debate between GATA's Bill Murphy and CPM Jeffery Christian