Monday, November 1, 2010

Six Silver Stocks Status - with CFTC Revelations

Six Silver Stocks Status - with CFTC Revelations.
October 31, 2010
The author is an avid Silver investor, and is watching the Silver price this weekend with an eagle eye.   It is interesting  in that this next November week starts with "All Hallows Day" and "All Souls Day" upcoming.  Is it now time for the "good guys" to win for a change?

CFTC Silver Revelations

Last week we had Silver shocking news from the Commodities Futures Trading Commission (CFTC) that Silver futures pricing may have been manipulated:
“I do believe that there have been repeated attempts to influence prices in the silver markets,” Mr Chilton said on Tuesday at a meeting in Washington. “There have been fraudulent efforts to persuade and what I consider deviously control that price.”
With this news and revelations being priced into the markets, Silver appears poised for a new movement upwards.  The author reviews the silver price and the status of his Six Silver Stocks recommendation made on September 17th, 2010.

Silver Price Movement Recently

The Kitco chart following displays the last Silver price at the end of the day Friday October 29th as $24.75 USD.
Figure 1:  Silver Daily closes at $24.75 Oct. 29th, 2010.

Examining the Silver movement using the SLV Silver ETF as a proxy for the Silver price for the last month in the chart following we see the distinct formation of a bowl or cup shape, circled in blue.
Figure 2:  Silver Chart with Bowl formation.  Silver appears poised for break upwards.
In technical trading circles, the bowl or cup shape is seen as bullish, as a continuation of an up trend indicator.  Looking further back to summer, in the following chart of the SLV, we see that the Silver price started the up trend on or about August 22nd, 2010. 

Figure 3:  Silver moves since August 23rd, 2010.  All indicators shown are bullish.  The RSI is turning upwards.  The price bowl looks poised for a break upwards.  The volume is increasing, supporting the price moves.  The MACD and STO are curling upwards.
Since that date, the price action has been straight upwards until mid October.  On about October 15th, the upwards movement stopped and the prices traced out the afore mentioned bowl shape. 
With the CFTC news last week, it now looks as if the Silver price may have finished tracing the bowl and may be ready to resume its upwards movement in November.

Six Silver Stocks Status

Following are the charts of the stock prices since August 23rd, 2010, for my six Silver stocks recommendation and comments.  Each chart is compared to the price action of the SLV ETF, the silver white tracing.

Silver Wheaton - SLW

Figure 4:  Silver Wheaton - SLW is tracking Silver's price.
Silver Wheaton just seems to be moving along the track in line with the price of Silver.  SLW did give a bullish pop of 5% this past Friday.  SLW reported record earnings of $53 million USD, in August, 2010, up 200%.  It will be interesting to see what this November's quarterly report will bring, with the peaking Silver prices.

Hecla Mining - HL

Figure 5:  Hecla Mining -  HL is tracking Silver's price.
Hecla's share price jumped over Silver in early September, 2010 and has stayed up since.  HL reported their 3rd quarter last week with an increase of 30% in cash flow versus 2009.

Silver Standard Resources - SSRI

Figure 6:  Silver Standard Resources - SSRI is tracking Silver's price.
Silver Standard Resources' share price jumped over Silver in mid-October and has stayed buoyant since then.  On Friday last, SSRI announced the sale of their huge Snowfield and Bruce Jack properties.  SSRI will still control about 50% of the value of these properties in the new company, Pretium Resources, formed by their former CEO Robert Quartermain.  Perhaps this is a mechanism, that will be able to unlock the precious metals values in the two large properties.

US Silver Corporation - USSIF

Figure 7:  US Silver Corp USSIF is leveraging Silver's price.
US Silver Corporation displays the characteristics of a junior miner's ability to leverage the price of Silver.  USSIF has stayed consistently above the Silver price line and the gap higher is increasing.  USSIF has just completed a $7 million dollar financing to refurbish a shaft in their Coeur mine, in order to increase production.  USSIF reported their 3rd quarter in mid-October, and production missed target due to a contractor fatality in June, 2010.

Genco Resouces - GGCRF

Figure 8:  Genco Resources - GGCRF is leveraging Silver's price.
Genco Resources is an undervalued Silver producer in Mexico, that was just offered a merger by Silvermex Resources.  On Friday last, ISS Proxy Services recommended the merger going forward, causing the movement in the share prices.

Canadian Zinc - CZICF

Figure 9:  Canadian Zinc - CZICF is leveraging Silver's price.
Canadian Zinc made a large movement upwards in mid-September with their deep resource extension drilling.  CZICF is the owner of the old Hunt Brothers' Silver, Zinc and Lead Prairie Creek mine in northern Canada.  CZICF is drilling to prove up further resources and is awaiting approval of their water permit, expected in 2011.  CZICF just reported last week on their Environmental Assessment and drilling being finished for the season.

Silver Summary

Silver appears poised to resume moving upwards this fall.  The fundamental reasons for Silver to become more valuable was just given a boost by the CFTC revelations.  Major Silver miners such as SLW, HL, and SSRI are moving in time with Silver in addition to their own value creation.  Smaller Junior Silver stocks such as USSIF, GGCRF and CZICF are leveraging the price of Silver with their movements upwards.  The Silver status is definitely satisfactory.

Disclosure: The author is long Silver mining equities.
Important Disclaimer

The information and opinions contained within this document reflect the personal views of the author and should be viewed as food for thought and amusement only. The author may from time to time have a position in any of the securities mentioned. There are no guarantees of the accuracy, reliability or completeness of the information contained herein. Independent due diligence and discussions with one’s own investment and business advisor is strongly recommended. These writings are not to be construed as an offer or solicitation with respect to the purchase or sale of any security or as an endorsement of any product or service. We do not request or receive compensation in any form in order to feature companies in this publication. It is prohibited to copy or redistribute this document to any type of third party without the express permission of the author. This document may be quoted, in context, provided proper credit is given.

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