Silver price discussion and analysis

[rederob]

Re: SILVER

$13.50 breached overnight.
45% gain in 2 months
Hope the lid doesn't fall off any time soon!
Go Macmin Silver Mine

 

[crackaton]

Re: SILVER

Got silver?

FOCUS
Silver bullet ready
SEC approves Barclays ETF, launch expected Friday on Amex
E-mail | Print | | Disable live quotes By John Spence, MarketWatch
Last Update: 11:55 AM ET Apr 27, 2006


BOSTON (MarketWatch) -- At long last, a silver exchange-traded fund that has been in the works for over a year is expected to begin trading Friday.
A registration statement for the highly-anticipated ETF from Barclays Global Investors was declared effective at 10 a.m. Eastern time Thursday by the Securities and Exchange Commission, clearing the way for the ETF to list, an SEC spokesman said.
BGI spokeswoman Christine Hudacko said the unit of British bank Barclays Plc (UK:BARC: news, chart, profile) (BCS : Barclays PLC
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Last: 49.41+0.49+1.00%

6:41pm 04/27/2006

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BCS49.41, +0.49, +1.0%) plans to launch the silver ETF on the American Stock Exchange on Friday. The trust is expected to trade under the symbol "SLV," according to regulatory documents.
Earlier this week in a filing, Barclays said 1.5 million ounces of silver had been deposited in the trust, which is slated to charge a sponsor fee of 0.5% of assets.
Speculation on the silver ETF's imminent launch has been pushing up silver prices, which earlier this month hit multi-decade highs. The ETF, which for the first time allows individual investors to invest in silver without holding the metal or tapping futures markets, could bolster demand for the metal.
Dubbed iShares Silver Trust, shares of the ETF represent 10 ounces of the metal held in a vault. ETFs are baskets of securities that trade on exchanges like stocks, so investors can go short as well as long, and must pay broker fees to buy and sell shares.
Two existing gold ETFs, StreetTracks Gold Trust (GLD : streetTRACKS Gold
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Last: 62.96-0.69-1.08%

6:44pm 04/27/2006

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GLD62.96, -0.69, -1.1%) and iShares Comex Gold Trust (IAU : ishares comex gold tr ishares
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Last: 63.01-0.79-1.24%

6:45pm 04/27/2006

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IAU63.01, -0.79, -1.2%) , have been popular with investors. The first mover, StreetTracks Gold Trust, has gathered about $6.5 billion since its November 2004 inception in one of the more successful fund launches in recent memory.
The silver ETF has taken several twists and turns before it was finally approved by regulators.
The Silver Users Association, a nonprofit lobby group interested in keeping an orderly silver market, had led the opposition to the silver ETF. The group alleged the trust would take a large amount of silver off the market and push up prices, which would hurt firms that use the metal for business or industrial purposes and result in layoffs.
However, after a public comment period, the SEC said the silver ETF would increase the efficiency and transparency of the silver market, and that it would not spark liquidity problems.
Some traders are expecting the ETF may usher in a new bull market for silver if it attracts money from individuals, advisers, institutions and hedge funds looking for a convenient way to get exposure to the precious metal. However, if history is any guide, the trend with gold ETFs introduced around the globe has been a run-up in the weeks up to the launch with a pullback in the weeks after the start of trading. See earlier story.

 

[crackaton]

Re: SILVER

h a read
http://www.financialsense.com/editorials/phillips/2006/0508.html

 

[rederob]

Re: SILVER

I put a 32 cent buy order on MMN today, and it missed the mark.
A retrace to 32.5 fills the Feb 21 gap, and I think that will happen if silver closes below $13.65 tonight as a few of the silver longs may decide to take profits.
By the end of May I am tipping silver to have broken above $15 and settled for the duration at prices much higher. I base this on the probable removal of physical silver from Comex warehouses to satisfy the silver ETF: But I could be wrong.
IN MMN's case, the stock at end-Feb was trading at 38cents and silver hadn't even hit $10/oz. With silver in the mid-high$13 range and MMN at 33cents, it's a steal.
Although we can never be sure what the market will do, buying MMN tomorrow is a classic "no brainer".

 

[crackaton]

Re: SILVER

I put a 32 cent buy order on MMN today, and it missed the mark.
A retrace to 32.5 fills the Feb 21 gap, and I think that will happen if silver closes below $13.65 tonight as a few of the silver longs may decide to take profits.
By the end of May I am tipping silver to have broken above $15 and settled for the duration at prices much higher. I base this on the probable removal of physical silver from Comex warehouses to satisfy the silver ETF: But I could be wrong.
IN MMN's case, the stock at end-Feb was trading at 38cents and silver hadn't even hit $10/oz. With silver in the mid-high$13 range and MMN at 33cents, it's a steal.
Although we can never be sure what the market will do, buying MMN tomorrow is a classic "no brainer".

Yes the situation looks precarious. You have to have second thoughts when the ostello says there is another two years in the commodity boom, and that we should all be saving. And then references to Keating.

Will be very interesting this time next year.

 

[crackaton]

Re: SILVER

Buffett Loses His Silver

By: Theodore Butler


The recent revelation that the renowned investor Warren Buffett sold his silver was a mega-event. It was big news when Mr. Buffett bought silver some 8 or 9 years ago, and its sale is also big news. Let me state the facts as I know them, and then I’ll speculate.

Mr. Buffett always said he would make it known when he sold his silver and he kept his word, using the occasion of his company’s annual meeting to tell of the sale. While he did not reveal the exact amount, time and price of the sale, he indicated that he "sold too early" and did not profit from the sale. I found that very surprising and particularly unusual for Buffett.

According to public statements, Mr. Buffett had amassed a large chunk of silver (between 90 and 130 million ounces) by early 1998 at low prices (under $6). Mr. Buffett was very clear as to why he purchased the silver, citing the fundamentals in the same manner that I have described them and professing to be in for the long term. I wrote several articles at that time, praising and congratulating Mr. Buffett on his investment acumen.

Silver has hit recent highs amid those fundamentals playing out almost exactly as anticipated by Buffett and myself and others. Why would Buffett sell the silver too early and how could he not profit from the recent spectacular price rise the way so many others have profited? After all, this man is an investment legend.

Here’s what I think happened. Buffett didn’t sell his silver willingly, it was taken from him. He lost it. He lost it through speculation in derivatives of the very kind he publicly vilifies.

Those who have followed the silver market closely have come to know the incredible reliability of the pattern of tech fund/dealer buying and selling of silver futures on the COMEX. This pattern has been documented by the weekly Commitment of Traders Report (COT), which I have written about in countless articles.

I believe that Mr. Buffett (or his advisors) also came to appreciate the compelling logic and power of the COTs. I believe that Mr. Buffett (or his advisors) became a card-carrying member of the dealer silver wolf pack, skinning the tech funds for years. I also believe that Buffett’s involvement in beating the tech funds regularly ultimately ended with his silver being taken from him.

It worked like this. When the tech funds plowed onto the long side in silver as the price broke through various moving averages on the upside, Buffett (or his advisors) would sell short against his real silver holdings. When the tech funds finally sold as prices fell back through the moving averages, those shorts established by Buffett would be bought back., booking substantial recurring profits.

The beauty of the scheme was that these shorts would not be considered "naked" by the regulators, even though there were many more affiliated wolf-pack tag-along shorts that were naked. (Whether it is legal for someone with a very large real silver position to use that position to dominate futures trading under the guise of hedging is a matter that I won’t explore at this time.)

But what worked swimmingly for years, namely, the regularity of tech fund buying and selling at expected price points, stopped working about eight months ago. The tech funds plowed onto the long side back in September at around $7.50 and the dealers sold short aggressively. But instead of the price collapsing, as it always did in the past, the price of silver doubled. And it caught many, including me, off guard. (Not for core positions, but speculative trading). I think it caught Buffett off guard as well. So much so that he had no choice but to turn over his real silver to cover his going short at $7.50 or so. He could have bought it back at $12 or $13 and booked a big loss while keeping his silver, but that disclosure might have been embarrassing.

This would explain how Buffett emerged from silver basically breaking even and selling too early. I’m sure he made big profits trading against the tech funds for years, but it is up to him to disclose that. I must confess to a sense of disappointment, in that if my speculation is correct, I feel let down by Buffett, given his public statements on silver and derivatives. I’m sure that is of little consequence to him. More of a consequence to him is that he lost his silver playing derivatives. The lesson to be learned is don’t lose your silver by getting fancy.

That this is a bullish event for silver is beyond question. Buffett’s silver no longer overhangs the market and, more importantly, the silver wolf pack has lost a prime member, if not its leader (I still lean towards China as the leader, but that is also speculation). Given the current favorable market structure as defined by the COTs, the next rally will not be aggressively sold short by the dealers, as I have contended recently. My new speculation about Buffett only strengthens my contention. If I am correct, it’s watch out above.

MARGIN INCREASES

I would like to comment on the recent round of margin increases for COMEX silver futures. http://www.nymex.com/notice_to_member.aspx?id=ntm235&archive=2006

Long-time readers know that I rarely mention margin changes. That’s because I don’t think that all margin increases are bad and are designed to cause selling by long holders as many claim. Looking at the issue through my former broker’s eyes, I know that margins exist for one reason and one reason only – to protect the broker from unsecured client debits. Margins are increased when it is felt the brokers need more protection and reduced when less protection is needed.

But sometimes margins are used to influence the market. I feel that is the case with the last round of margin increases in silver. What made this last margin increase unusual is that, for the first time in 25 years, the COMEX differentiated margin requirements between the front months in silver (up through the September contract) and the more deferred contract months.

In my opinion, the COMEX has done this for one reason only – they see delivery problems ahead for silver and are attempting to clear out as many hangers-on as possible. This can also be seen in the backwardization that has been developing in the December 2006 and further out contracts of COMEX silver. The COMEX attempted to camouflage their real intent in silver by also making a differentiation in the nearby gold months versus the deferred gold contract months, but any serious market observer knows that is silly in gold, where there is not the hint of a delivery squeeze.

You must understand that all exchanges, including the COMEX, operate and set rule changes for the benefit of their most important members, and not the public at large. In most cases, the most important members are the commercial shorts. These shorts want as little outside pressure on silver deliveries as possible, and that is why they are making it easy and enticing for longs (and maybe even outside shorts) to clear out of the nearbys and migrate to the back months. As a general rule, whenever a financial institution attempts to get you to do something, the prime motive is for the benefit of the institution and not you. Please be guided accordingly.

BARRICKS BLACK EYE

Another development I’d like to mention is the quarterly earnings report by Barrick Gold. As expected, Barrick acknowledged another large gold short derivatives loss. Though this loss was buried deep in the body of the report, the combined first quarter realized and open loss grew to over $5.5 billion. No other entity has ever reported a loss so large.

http://www.barrick.com/Theme/Barrick/files/docs_quarter/2006_Q1_rev2.pdf

The surprise in the Barrick report was the aggressive covering, or buy back, of the gold short position. Fully 25% of the year-end 20 million ounce gold short position was bought back in the quarter, with more since the quarter end. While the first 4.7 million ounces covered in the first quarter cost Barrick $814 million, or a loss of $173 per ounce, the last million ounces bought back after quarter end cost Barrick $386 million, or an astounding $386 per ounce. Aside from selling short at the absolute low in the gold price for the past few years and then buying back at the absolute high, there is no other way to lose that much money per ounce.

The other surprise in the Barrick report was that, even though they booked a big loss in covering some gold shorts, they still reported a profit. This is the financial equivalent of alchemy turning lead into gold. If I had a financial interest in Barrick, I would complain to the SEC and the Financial Accounting Standards Board. Since I don’t have a financial interest, I can only marvel at the creativity of the accountants and lawyers that Barrick employs that can magically turn losses into profits. I just wish I could get them to prepare my tax returns.

One thing I haven’t seen mentioned in the gold community has been the effect Barrick’s buy back has had on the price of gold. That gold has rallied sharply as Barrick has been buying gold is no coincidence. The almost 6 million ounces that Barrick has purchased recently is more than $3.5 billion worth of gold. It’s more than half of what the big gold ETF (GLD) holds. Remember, GLD took a year and a half to buy its gold; Barrick took a couple of months. If anyone has a better reason why gold has rallied sharply, I’d love to hear it.

mmandments.

 

[crackaton]

Re: SILVER

Rest of previous post:

NO INCREASE IN SILVER MINING PRODUCTION

One nugget contained in the Barrick report that I wasn’t looking for, was their projection for silver production for 2006. Barrick was the 5th largest company producer of silver in the world last year. http://www.goldsheetlinks.com/agtable.htm. Unless I’ve missed something, the 10 million ounce estimated silver production for 2006 is more than 50% less than the combined Barrick and Placer Dome 2005 production of almost 21 million ounces. I think this is due to the depletion at a number of their mines, most notably the Eskay Creek (acquired when Barrick bought out Homestake Mining).

Combined with the 20% cut back in production at the world’s biggest mine, the Cannington in Australia, announced a couple of weeks ago, it is hard to believe reports stating that silver production is due to increase this year. Not when the number one and number five producers are off so sharply.

THE ETF GAINS

I had planned to write about a number of different issues this week, in response to a large number of e-mails, but I am postponing them in order to deal with two very big silver events – the commencement of trading of the Silver ETF (Exchange Traded Fund) and the sale of silver by Warren Buffett’s Berkshire Hathaway. There is no doubt in my mind that both events are profoundly bullish for silver in the long term.

Since I had written my last article, the Silver ETF (AMEX symbol SLV) has commenced trading. As of the first week or so of trading, it has purchased and holds over 48 million ounces of silver. While it is no secret that I was skeptical that the authorities would approve a security that promised to greatly impact the price of silver, I was wrong. However, I was not wrong in predicting that there would be a big impact on the price of silver. It has doubled in the eight months from the initial ETF filing.

Now that the silver ETF is up and running, where do we go from here? Undoubtedly, the first week’s pace of silver accumulation will cool off, but will continue in time. We have witnessed this pattern in the gold ETF (GLD), namely, spurts and then plateaus in accumulation, but with higher totals a year and a half after initial issuance. There is no reason to expect a different pattern in silver. In fact, one could argue higher proportional accumulation in the silver ETF than in the gold version.

Just like the Great White Shark is said to be the perfect eating machine of the sea, the silver ETF is the perfect silver-eating machine. I say this because the ETF has created a connection between the best investment opportunity in the world with the largest investable pool of money in the world. Heretofore, institutional investors did not invest in silver, for the most part. Very few could deal in futures to take delivery or buy the real thing directly. Now they can, since most institutional investors can deal in stocks, which is the form of the silver ETF.

I believe the world of silver changed dramatically on April 28, 2006, when the silver ETF started trading and opened the silver door to institutional and retirement accounts. It is inconceivable to me that many institutional investors won’t come to grasp the true potential of silver as an investment and their newfound ability to participate in that investment.

Years ago, I wrote an article called "The Silver Challenge" in which I dared the reader to study closely the facts regarding silver and try and not end up buying silver. Those that took the challenge and did buy silver have been, and will continue to be, greatly rewarded. There are many intelligent institutional money managers who are constantly on the prowl for sound investment opportunities. Some number of them will find silver. There are other institutional managers who are already aware of silver’s merits, but have not been able to buy it because it was a metal, not a stock. Thanks to the ETF, silver is now a stock.

COPYCATS

Lastly, and reluctantly, I must once again confront the issue of plagiarism. I don’t find it complimentary or amusing when someone copies my work without approval or citation. I give my knowledge and opinion freely and openly. That does not mean it can be taken and reproduced without attribution for someone else’s monetary benefit. Let me remind those guilty that plagiarism is stealing, and stealing is against every legal, moral and religious tenet known to man. You don’t have to be a Bible expert to know this, just read the Ten Co

 

[rederob]

Re: SILVER

I put a 32 cent buy order on MMN today, and it missed the mark.
A retrace to 32.5 fills the Feb 21 gap, and I think that will happen if silver closes below $13.65 tonight as a few of the silver longs may decide to take profits.
IN MMN's case, the stock at end-Feb was trading at 38cents and silver hadn't even hit $10/oz. With silver in the mid-high$13 range and MMN at 33cents, it's a steal.
Although we can never be sure what the market will do, buying MMN tomorrow is a classic "no brainer".

Order now filled.
Gap at 32cents filled.
Ready to go to the races.

 

[MARKETWAVES]

Re: SILVER

Silver - Long Term View -

------------------------------------------

 

[rederob]

Re: SILVER

I put a 32 cent buy order on MMN today, and it missed the mark.
A retrace to 32.5 fills the Feb 21 gap, and I think that will happen if silver closes below $13.65 tonight as a few of the silver longs may decide to take profits.
By the end of May I am tipping silver to have broken above $15 and settled for the duration at prices much higher. I base this on the probable removal of physical silver from Comex warehouses to satisfy the silver ETF: But I could be wrong.
IN MMN's case, the stock at end-Feb was trading at 38cents and silver hadn't even hit $10/oz. With silver in the mid-high$13 range and MMN at 33cents, it's a steal.
Although we can never be sure what the market will do, buying MMN tomorrow is a classic "no brainer".

MMN trading at 36 cents at moment, giving me a 10% gain on a no brainer in a few days.
Although commodities are precariously high, the medium term view is for more of the same.
For the record, silver's relative strength has not hit the typical highs of its selldown points, so putting on another dollar in a week or so is technically a reasonable probability given the bull run across the metals complex.

 

[mano]

Re: SILVER

Hello Gang
my first post so be gentle with me
I am looking into buying silver. MMN and BSG
Have been following this thread and it seems to be the way to go,But have l left it too late??Thinking of 10k each
I am also looking for a broker , any recomendations?
Or is it better to buy online?
ta mano

 

[rederob]

Re: SILVER

MMN trading at 36 cents at moment, giving me a 10% gain on a no brainer in a few days.

Closed at 37cents giving a 15% gain in 2 days!
The likelihood of silver closing the month over $15 is exceptionally high.
The probability of MMN reclaiming its former glory at the 45 cent level is similarly high.
However the downside risk after today is mitigated by yesterday's gap filling and, although we are not quite there yet, medium term support is likely to settle around 40cents.
As silver's RSI is not as stretched as gold's, if gold falls of its perch next week, silver has the potential to run a bit longer.
As I post, gold has jumped $2 in a few minute, so if that trend holds, and silver is joined at the hip, we should see silver ingrained on screens above $15 come Monday.

 

[Sean K]

Re: SILVER

On line's better when you know what you are doing. If you hve a friend in the game who can set you up, get them to help you. Otherwise do lots of reading and check out everyones web sites.

I hold MMN and it made a nice reovery last 2 days after taking a breather. I think all the bears jumped ship leaving bulls to buy in. Has great potential. Read up about it's project in Texas.

Having said that, there are people who consider the recent dramatic rise in commodoties to be overdone and the market is ripe for a correction. I'd hate to see you put your 20K into these 2 stocks and they tumble 20+% in a few days. However, some people on this site are very bullish and will say any pullback is a buying opportunity, or even that prices will just keep going up, up and up.

If you are really keen to invest that 20K perhaps you should think about putting 1/2 in a managed fund and then buy 3-4 different stocks to see how they go. Put MMN and BSG in that group if you like, but there are other stocks in different resources that you might want to consider.

You should do some more reading and make your own mind up. Or, get a recommendation for a good broker and give them a call to discuss what they can do for you.

 

[rederob]

Re: SILVER

You should do some more reading and make your own mind up. Or, get a recommendation for a good broker and give them a call to discuss what they can do for you.

Or
Buy MMNO at 17cents on Monday - half the price but twice the risk.
The newbie needs to have hairs on his chest (if I have mis-gendered you, apologies!).
As Macmin's options are already "in the money", it's a relatively safe play in a cleary volatile market.
My advice is to "get in there", or take the soft option and get into funds.
Then again, paper trading carries no risk, but will not put hairs on your chest.
Time for buying MMN cheap was yesterday, tho as kennas notes, look for dips in future if you want a safer entry (what the hell is safe in this ridiculously bullish market that refuses to correct?).

 

[Sean K]

Re: SILVER

It's good to be decisive rederob. You should be an Army Officer.

I might look at those options myself. Silver and gold still climbing as we speak.

 

[mano]

Re: SILVER

Thanks kennas for that advice.
I have now made arrangements to speak with a very reputable broker on Monday.He is also recommended by 4 of my aquaintances.
I have spent the last 8 months reading up on the markets trying to get a good understanding of it.Its been slow going but l am getting there.
Now l feel l want/need to do something.
I will continue to read through this forum and learn.
Thanks again
ta mano

 

[rederob]

Re: SILVER

It's good to be decisive rederob.
I might look at those options myself. Silver and gold still climbing as we speak.

kennas
Monday should see another retrace in silver-related equities, so MMN and MMNO look like being reasonable targets.
Although I would not compare MMN to OXR ordinarily, go back to OXR's chart and look at the past 6 months: Notice the retrace in February to fill the slight gap of 178.5 to 179cents the previous month. That's where I place MMN now having filled the 32cent gap during the week.
Here's the kicker: If I am right, MMN's price will double by year's end.
I am content to be only half right.

mano
Until you take the plunge and put your money on the line, you won't understand what this game is about.
If you are a virgin, put out only what you are prepared to lose. You will understand the consequences and could equally end up presently surprised.

 

[rederob]

Re: SILVER

Just in case you thought the wheels fell off last night, take a look at where silver is relative to the recent high volatility across the metals markets:

 

[rederob]

Re: SILVER

Will have to revisit that previous chart as the price of silver has dropped around 10% today.
I said MMN was a no brainer, and it has sucked out my brains to prove it - gordammit!
My average purchase price is still under 20cents, so I think I am safe tomorrow - but famous last words, eh?
I guess I should ask myself "when is the best time to buy?'"
It's always at a correction, and I broke my rule bargain hunting when commodities were precariously overbought.
Will I do it again?
Yep.
I never know when the market will correct, so when a bargain comes up against the run of play, I jump on it and suffer the consequences.
If I did not think it was a bargain, I would not have bought it. It does not make sense to think that a stock must go up after buying it, so I will see what the next few days bring to determine how much self flagellation to administer.

 

[nizar]

Re: SILVER

I said MMN was a no brainer, and it has sucked out my brains to prove it - gordammit!
My average purchase price is still under 20cents, so I think I am safe tomorrow - but famous last words, eh?
I guess I should ask myself "when is the best time to buy?'"
It's always at a correction, and I broke my rule bargain hunting when commodities were precariously overbought.
Will I do it again?
Yep.
I never know when the market will correct, so when a bargain comes up against the run of play, I jump on it and suffer the consequences.
If I did not think it was a bargain, I would not have bought it. It does not make sense to think that a stock must go up after buying it, so I will see what the next few days bring to determine how much self flagellation to administer.

Excellent post rederob
its hard not buying into strength sometimes, but with me personally, i always break my own "buy the dips" rule also because im scared the stock will run away from me
maybe its time to adjust your buy orders down for 2mrw

as i personally think this correction may last for a few days or even weeks (like in oct last year), i wont be buying until we are on the way up again. IMO its much easier than catching a falling knife and plus i dont have enough cash to top up 2mrw and then the next day (?) and the next day (?) and the next day (?) trying to buy at the bottom like a champ