Monday, February 28, 2011

Cash or Gold

A video that was put together well for investors that are new to Gold investing.

Sunday, February 27, 2011

Gold asending to a potential new high

Daily chart of Gold going back to early November 2010. Nice chart for a swing trader....

Gold is currently trading above all three moving average with the 15dma crossing over the 50 and 100 3 days ago. (Bullish)
Stochastics have been embedded since 2/16 - Both K and D lines over 80 for 3 days. (Bullish)
MACD Histogram crossed over the 0 mid line on 2/4 and it at the upper portion of the . (Bullish/Neutral due to possible topping)

We should see a challenge of the 1432 high within a week or two, especially with the middle east issues. A flock to Gold is a possibility for stock investors as the Dow/S&P and Nasdaq have had quite a run since August last year and may still be in a correction phase. The triple top (around the 1420 area) should present some resistance, but once it is pierced, it should not be long before the $1500 area is reached.

Short term- Bullish
Mid term- Bullish
Long term - Bullish

Wednesday, February 23, 2011

Silver - Off to the races?

World Silver chart over the last 3 months. Explosive rally to the upside is in tact and riding the upper Bollinger band. Silver has had the short term moving average cross over the mid term 5 days ago and stochastics are embedded. As long as the K line stays above 80, Silver will continue higher.

The Gold / Silver Ratio has dropped to a new low at 42.44 and looks like it will be going lower as it has broken through the 2007 low of ~43.

Some of the Silver miners are still lagging behind the Spot price. The solid mid tier and select juniors producers may start gathering steam to the upside before the end of February.

March as historically been a negative month for both Gold and Silver. (Seasonals in effect?)  Swing traders may want to lock in some profits in their Gold and Silver stocks near the end of this month. Nothing happens 100% of the time, so we can only watch the market, Gold and Silver and let the price action determine what to do.

Long term investors will just be sitting tight and enjoy your investment.  =)

Sunday, February 20, 2011

Silver on the move 'The perfect storm'

Looks like Silver is going to continue it's powerful bullish uptrend, here is an updated screen shot of TD Ameritrade's Think or Swim's platform on Monday morning at 7:30am PST showing the Silver futures. It's a 1 hour bar chart going back to January 24th. The low on January 28th was at $26.30.

Silver hit 33.75 and it looks like this move to the upside should continue.  The major shorts in the market are getting squeezed and they will be taking a huge monetary hit on their bottom line.  I'm sure there are more shorts coming into the market as some will see Silver at a 30 year high and believe that it will pull back or even start a long downwards trend. (I've heard some people on CNBC state that the bull market in PM's are over......they obviously do not understand the monetary system)
We still have a LONG ways to go to the upside as Silver is still undervalued compared to Gold.  The ratio is dropping and is now around 42, compared to 70 last year at this time.  That is a drop of 28!

Feb 21st 3:15pm price update: $34.27 an ounce and climbing on my Thinkorswim trading platform.  This is with the Comex market CLOSED for the Presidents Day holiday. It's going to be an interesting Tuesday...

With Gold on the rise and the Gold/Silver ratio dropping, Silver will have another great year to the upside.

Combine all of the drivers below:

Physical shortage
Futures market 'Backwardation'
Investment demand
China demand (Government diversifying out of the dollar + citizen demand)
Industrial demand
Short Squeeze
Monetary debasement
Civil unrest in the middle east (It will be worldwide in a few years)

As you may already know, even the U.S. Mint cannot produce enough of the uncirculated Silver Eagles as they sold all of their 2011 production in January. (The U.S. Silver Eagle coin must also be minted with Silver that was mined in the United States) Here is the message on their website for the Silver Eagle:

The miners should start gathering momentum to the upside as well with profit margins increasing as the spot price appreciates. Most if not all of the mid tier or junior Silver miners have had a good run over the last 2 weeks for those swing traders.

As long as the stock market stays 'healthy', the Gold and Silver miners should be one of the best areas to invest. People that only purchase physical Gold or Silver have missed out on some huge gains and may be missing out on some of the largest returns in this bull market. The risk level is much higher when you invest in any individual stock, but the returns are also higher for those that do the research.

As seen in a previous post, I picked up AGQ a few weeks ago when it looked like the market had bottomed and was starting to rebound.  AGQ is a double long Silver, so if the spot price were to rise 1.5% in one day, AGQ will rise 3%.  If Silver is headed higher going forward, this may be the right investment to own. On the downside, it will also drop double the amount of the spot price so leverage is a double edge sword.

Friday, February 18, 2011

What you were waiting for

It should say "In Silver We Trust"
Well, everything you have been reading or listening to regarding the Silver market is coming to fruition. The physical supply in large quantities may be a bit thin (1000oz bars) and add a short covering squeeze and you have a pretty good rally to the upside.  

As of 8:40am PST, Silver hit a high of $32.815.

Your physical Silver and Silver miners should be paying off well for you and this is just the start. We still have a ways to go in the Silver bull market. Your patience in staying long and holding through the downturns and sideways market is now paying off! Sit back and enjoy the 'action'.

Wednesday, February 16, 2011

Silver, you bought in January right?

During the month of January 2011, both the Gold and Silver markets corrected after last years end of the season run-up.  Last months correction looks like it presented a good entry into the Silver market for those waiting on the side line with reserve capital.
I did a brief video on the last 8 years of the Silver market which showed that 6 of the last 8 years had the Silver price lower in the first 5 months of the year. Based on that data, January 2011 could have produced the low for Silver for this year. Only time will tell if that is true or not as we still have 10.5 months to go.

Here is Feb 15th World Silver chart.

It is producing higher highs and higher lows since Jan 28th low of 26.30. Bullish
(Based on a Fibonacci drawn from the low in Nov to the high in Dec, the break low for January touched the 23.6 retracement/support level).
The price is trading above all three moving averages, but the 15 day is under the 50. This should crossover in a few days which will produce the bullish formation of the price above the 15, 50 and 100 in that order. Bullish
The MACD Histogram crossed over the 0 line on Feb 2nd - Bullish
Stochastics are 'embedded' (K&D line over 80), so the price action should continue to the upside. - Bullish.

The old high of 31.28 should be taken out within the next week or two and Silver should be on it's way to the next resistance point of 32, 33 or 35.

I missed out on AGQ last year (Double long Silver ETF), so I got a position in one of my accounts on Feb 2nd and 3rd. $7.5k in two weeks is not bad for all of my efforts. (I'm small time, a minnow in the ocean)   I also picked up a few Eagles to add a bit to my physical collection. (A very pretty coin)

There is a lot of buzz about the Silver shortage and backwardation. The Chinese are purchasing quite a bit of Gold AND Silver, so that will definitely place some pressure on the market. Add the European and US investors, Industrial demand, Hedge funds and a Short squeeze and we may see higher prices before the 2011 summer.

Tuesday, February 15, 2011

Silver vs Silver miners ETF SIL

Here is a chart of the spot price of Silver vs the Global X Silver ETF SIL.  (Silver is the dotted line and SIL is the solid light green line).
You can see that they have tracked fairly close over the last 6 months up until the correction in January where the Silver miners declined much more than the Silver spot price.

Silver has started a reversal pattern to the upside starting in the last week of January and SIL has also reversed it's downtrend, but now has a 'gap' to fill. You can see the divergence in price start quickly right when the downswing started and there is still quite a large gap after the reversal to the upside. I expect this gap to fill and SIL gaining ground on Silver going forward. (What I think and what the market does are two different things).

Why do we have this divergence between the spot price of Silver and Silver miners? It looks like people are more interested in physical Silver over the Silver miners at this time. It is also easier for people in other countries to purchase physical Silver rather than a mining stock like SLW, PAAS, SSRI, SVM, HL, EXK, etc....

The Silver miners were selling near $30 an ounce for the 4th quarter of 2010, so their earnings should be very solid. This should boost the Silver stocks as a whole going towards the spring of 2011 and may fill the gap to the upside.

Disclosure: Long physical Silver and SIL.

Tuesday, February 8, 2011

JP Morgan to Start Accepting Physical Gold as Collateral

I heard this on the news today, below is an article from  But first, many probably do not know, but JP Morgan is just as bullish on the precious metals as any bull out there, they are long on various mining stocks and ETF's. Many people think that because JP Morgan was short Silver on the Comex, they want both Gold and Silver to go down. They were shorting Silver on the short term to make some quick money. Many of the short positions came from their acquisition of Bear Sterns.

 One example is that they are a holder of Gammon Gold (GRS).

Don't let the name Gammon Gold fool you as they produce more Silver than Gold as they mined 5.165 million ounces of Silver in 2009 compared to 136,309 ounces of Gold.  Totals for the 2010 year will be out soon.

 JP Morgan is also a Major holder of GLD, the spider ETF.

Here is the article:
Gold is – apart from being a safe haven against the declining value of the dollar and inflation – on its way to be seen as a valid currency, after JP Morgan announced on Monday that it would begin accepting physical gold as collateral for some transactions.
JP Morgan Chase said it will accept physical gold as collateral from counterparties against securities lending and repurchase obligations (repos), since a growing number of its customers are using gold as a hedge against inflation. JP Morgan’s role is to act as a clearing bank between borrowers that want to raise secured funding and lenders. In a tri-party repurchase obligation agreement, the borrower attaches a value to securities it owns, hands over those securities as collateral to a third party in exchange for money. The seller of the security pays the lender a rate of interest for the use of the money.
JP Morgan is clearly trying to capitalize on non-income producing gold sitting idle in warehouses. John Rivett, collateral management executive for JP Morgan Worldwide Securities Services, said that “Many clients are holding gold on their balance sheets as an inflation hedge and are looking to make these assets work for them as collateral. By combining our collateral management and vaulting capabilities, we provide clients with greater flexibility in how they mobilize collateral.”
Gold as collateral has been allowed on the London CME since October 2009. Since November 2010, the Intercontinental Exchange Inc. (ICE) has accept the precious metal as collateral on all credit default swaps and energy transactions.
The World Gold Council and the Industrial and Commercial Bank of China (ICBC) have teamed up on an investment product called the ICBC Gold Accumulation Plan. Basically people can buy $42 worth of gold a day and already one million accounts have been opened since the program has launched.

Sunday, February 6, 2011

Feb Silver technical analysis

Here is a chart of the world Silver index for 2011. For the whole month of January, Silver and Gold pulled back some of the gains realized in the 4th quarter 2010 bull run.

A fibonacci retracement was drawn for the latest run-up which is not entirely seen on the chart.

  • Silver is trading above the 15, 50 and 100 day moving averages. The 15 DMA is under the 50, if the 15 should crossover the 50, the rating will change to bullish. (Neutral)
  • The MACD Histogram crossed over the 0 line on Feb 2nd and is rising. (Bullish)
  • Stochastics K and D line are both on the rise. (Bullish)
  • The recent low for Silver was made on Jan 28 at $26.30 which touched the 23.6 level of the fibonacci retracement. (Drawn for the November/December run-up.)
  • Silver is producing higher highs and higher lows. (Bullish)
As mentioned in previous posts, I think Silver should have a better month to the upside than January. It is sometimes strange that the changing of a month could have an effect on a commodity price. In any case, Silver may make a run to the previous high set on January 3rd of $31.28 if it should continue the bullish uptrend.

Short term: Bullish
Intermediate: Netural
Long term: Bullish

Avino Silver mine

Here is a short vid with Jay Taylor interviewing the CEO for a small Silver company named Avino. What they did not talk about was the potential for expansion of their mine and the size of the property that Avino owns. Check out their website for additional information.

I thought that Avino had potential last year and picked up some shares.
Disclosure: Long Avino

Thursday, February 3, 2011

Feb 3rd, 2011 Gold

Daily chart of Gold going back to early November 2010. Nice chart for a swing trader....

Gold is currently trading under the mid term AND longer term 100 day moving average, but moved above the short term MA today which is a good sign for the bulls. (Bullish)
The 15dma crossed over the 50dma on 1/20.  The 15dma crossed over the 100 dma (Bearish)
Stochastics are on the rise with the K line above 50 and rising. (Bullish)
MACD Histogram crossed over the 0 mid line. (Bullish)

For now, it looks like 1307 was the low for Gold, just below the Oct 5th, 2010 low of 1313. $125 below the all time high set on Dec 7th, 2010. The institutional traders wanted to buy at a lower price and now they have it. As long as Gold stays above 1307, it may be in the next rally to challenge the old 1432 high.

Short term- Bullish
Mid term- Bearish
Long term - Bullish