TheSilverPrice.info: 2012

Over a year ago, I penned an article entitled “4 Silver Investments to Avoid.” About two weeks later, on April 26th, I wrote another article: “Should I Sell My Silver?” saying that I expected an imminent correction in the silver price, after it had gone “parabolic.”

It caused quite a stir at the time. There was no shortage of people calling me delusional for suggesting the bull market in silver was overdue for a pause. Some even labeled me a “traitor,” presumably to the “hard money” movement.

One of the silver companies I recommended to NOT buy immediately contacted me after the article was published, insisting there was nothing to worry about, and that their stock was a great investment.

For the record, since then, the price of silver is down 35.2% (based on the London PM fix). And of the four silver investments I said to avoid:

1. The iShares Silver Trust (SLV) is down 33.3%.
2. Large silver bars have obviously gone down commensurately with spot silver.
3. Shares in Silvercorp Metals (SVM) are down a WHOPPING 61.5%.
4. And shares in Coeur d’Alene (CDE) are off by 50.8%.

Not pretty.

One of the biggest headwinds for the gold and silver markets right now is the weakness in India’s economy and currency.

For a long time, India has been the world’s biggest market for physical precious metals. Though it was recently eclipsed by China as the world’s single biggest market for physical gold, India remains in the top 3 for both silver and gold.

As the Indian economy slowed rapidly over the past 12 months, the Indian Rupee swan-dived. Today it takes more than 57 rupees to buy one US dollar, up from 46 a year ago.

That makes the price of silver (and gold), which is priced in US dollars on world markets, much higher for Indian buyers.

Demand has dropped accordingly– silver bullion sales volumes in India are off between 30% and 40% versus a year ago.

Nonetheless, the weakness in India’s currency, which has also been undermined by political uncertainly, is a perfect illustration of why it pays to hold silver and gold in the first place.

Indian savers who entrusted their savings to banks and kept their money in rupees have been at the mercy of the sliding currency.

Those who bought and held precious metals, on the other hand, have seen their purchasing power hold steady, even as the rupee tanked.

While the US dollar may again be enjoying a period of relative strength, this is almost certain to prove temporary.

And just like Indian savers who kept their money in rupees, trusting your money to the government will be a losing proposition in the long term.

Holding your money in US dollars, particularly in some insolvent, illiquid bank earning one-half of one percent interest, will result in the destruction of your purchasing power.

If you agree with that thesis, the question still remains, what’s a good price to exchange your dollars for physical silver at?

To be fair, nobody can accurately divine the short-term movements in precious metals prices. But from a purely technical standpoint, silver is starting to look very interesting.

The gold/silver ratio has been clobbered over the past year in an almost uninterrupted pattern except for a brief respite in early 2012.

At the peak of the last precious metals boom, it took fewer than 20 ounces of silver to buy one ounce of gold. Over the past few years, the ratio has dipped as low as 32. But today the number has blown out 57.

If the thesis holds that we are in another precious metals boom, it certainly stands to reason that the gold/silver ratio ought to correct and become much lower once again.

More importantly, however, every single indication out there suggests that central bankers will continue doing… the only thing they know how to do: PRINT.

Despite some short-term corrections (as we saw in 2008), this is no doubt bullish for precious metals… and especially silver.

Given silver’s already steep decline from its highs last year, a price in the mid-$20s range is beginning to look very compelling.

Until tomorrow,

Tim Staermose
Chief Investment Strategist
Sovereign Man

Monday, June 25, 2012

Gold and Silver Rebound While Equities Sink | Wall St. Cheat Sheet

Gold and Silver Rebound While Equities Sink | Wall St. Cheat Sheet

www.TheSilverPrice.info

3 Silver Stocks Ready to Shine - CDE, PAAS, SVM - Foolish Blogging Network

3 Silver Stocks Ready to Shine - CDE, PAAS, SVM - Foolish Blogging Network

www.TheSilverPrice.info

here are two different types of silver mining companies: those that produce and those that explore. Production companies produce silver and have cash flow while exploration companies are still trying to find silver and have no cash flow. Prudent investors looking for value and safety will select those production mining companies that have a proven financial track record.

The following three silver production mining stocks share the same traits: they make a profit, have low production costs and are trading around their lows. Their stock prices have dropped not from material negative changes in the company but in response to the overall economic slowdown.

Coeur D’Alene (NYSE: CDE), located in Idaho, is the largest U.S.-based primary silver producer. The stock’s 52-week trading range is $16.21 - $30.99, and the stock currently trades around $17.50.

The company operates mines in the U.S., Mexico, Bolivia, Argentina and Australia. The company incorporated in 1928 and has been in operation ever since. The company’s flagship mine, Palmarejo, is located in Chihuahua, Mexico. Palmarejo accounted for $513 million in metal sales in 2011, or about half of the companies’ total sales. In 2011, silver and gold production exceeded 9.0 million ounces and 125,071 ounces respectively. Silver production costs run between $6.50 - $7.50 per ounce.

Coeur D’Alene has a market cap of $1.57 billion. The company’s revenue was $1.02 billion in 2011 as compared to $515.5 million in 2012. Net income for 2011 and 2010 was $93.5 million and -$91.4 million respectively. The company has operating cash of $397.4 million. The price to earnings growth ratio is .22, and the price to book is .73. The return on equity is 4.05% and the company has a current ratio of 1.77.

Silvercorp Resources (NYSE: SVM) is headquartered in Vancouver, Canada, and operates silver mines in China and Canada. The stock’s 52-week trading range is $4.89 - $12.12, and currently trades around $6.50 per share.

The company’s focus is in China and they have one particularly outstanding mine located in the Henan Province. The Ying Mine has an unusually high concentration of silver, lead and zinc. Every ton of ore yields approximately 11 ounces of silver, 160 pounds of lead and 24 pounds of zinc. The profit made from the lead and zinc mined pays for the cost of silver production and adds an additional $7.00 of profit per ounce. For 2011, 5.3 million ounces of silver and 1800 ounces of gold were mined. Silver production costs ran $3.25 per ounce in 2011.

Silvercorp has a $1.11 billion market cap and saw a 42% increase in 2012 revenue over 2011 from $167.3 million to $238 million. (Silvercorp’s 2012 fiscal year ended March 31, 2012). Net income rose from $67.7 million or $0.40 per share in 2011, to $73.8 million, or $0.43 per share, in 2012. The company has a price to earnings growth ratio of 2.78, a price to book of 2.55, a generous return on equity of 20.99%, and a current ratio of 4.48. Silvercorp pays a $0.10 dividend and has a 1.50% dividend yield. The next dividend date is set for July 19, 2012.

Pan American Silver (NASDAQ: PAAS), headquartered in Vancouver, British Columbia, Canada, operates mines in Mexico, Bolivia, Peru and Argentina. The 52-week trading range is $14.80 - $34.49, and the stock currently trades around $18-$19 per share.

Pan American Silver is the 2^nd largest primary silver mine in the world. The companies’ largest mine, Alama Dorado, is located in Sonora, Mexico and accounted for 24% of their total silver production for 2011. Alama Dorado mined 21,853,582 ounces of silver and 78,426 ounces of gold, and had silver production costs of $4.80 per ounce in 2011.

Pan American has a market cap of $2.89 billion. The company reported 2011 revenue of $855 million as compared to $647 million in 2010. Net income for 2011 was $352 million and $14 million in 2010. The company has a price to earnings growth ratio of 3.81 and a price to book ratio of 1.03. Pan American sports a 3.81 debt-to-equity ratio and a current ratio of 5.49. The company pays a dividend of $0.15 with a dividend yield of 0.80%.

Silver prices have been beaten up because of the global slowdown and the never ending problems in Europe. Long term investors looking for growth and income opportunities may want to consider adding these three silver stocks to their portfolio.

Don't Walk, Run Away From Gold, Silver - TheStreet

Don't Walk, Run Away From Gold, Silver - TheStreet

www.TheSilverPrice.info

Want to know a guaranteed way to win in a casino? Walk up to a roulette table and bet $10 on red. If you lose, bet $20, and if you lose again bet $40, and then $80, $160, $320, $640, $1280 . . . . This betting strategy is known as a Martingale betting system and unfortunately we see people use variations of a Martingale system all too often when investing.

Silver: Concern on whether $26/Oz support can hold | www.commodityonline.com | 3

Silver: Concern on whether $26/Oz support can hold | www.commodityonline.com | 3

www.TheSilverPrice.info

Friday, June 22, 2012

Silver Will Follow Gold Higher; Special Report by Leading Financial Web Site Penny Stock Detectives

Silver Will Follow Gold Higher; Special Report by Leading Financial Web Site Penny Stock Detectives

www.TheSilverPrice.info

Silver at `Attractive Entry Point,' Del Ama Says - The Washington Post

Silver at `Attractive Entry Point,' Del Ama Says - The Washington Post

www.TheSilverPrice.info

Liquidation 'Could Send Silver Down to $18' | Resource Investor

Liquidation 'Could Send Silver Down to $18' | Resource Investor

www.TheSilverPrice.info

Wednesday, June 20, 2012

Look At This Rare Occurrence In The Silver Market (NYSEARCA:SLV, NYSEARCA:ZSL, NYSEARCA:AGQ, NYSEARCA:PSLV, NYSEARCA:GLD) | ETF DAILY NEWS

Look At This Rare Occurrence In The Silver Market (NYSEARCA:SLV, NYSEARCA:ZSL, NYSEARCA:AGQ, NYSEARCA:PSLV, NYSEARCA:GLD) | ETF DAILY NEWS

www.TheSilverPrice.info

Monday, June 18, 2012

Gold and Silver Price Discovery: At and Despite the Margins :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

Gold and Silver Price Discovery: At and Despite the Margins :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

www.TheSilverPrice.info

Will Europe Provide the Final Catalyst for Gold and Silver? - CME Group

Will Europe Provide the Final Catalyst for Gold and Silver? - CME Group

www.TheSilverPrice.info

Over the weekend, the worst case short-term scenario for Greece was avoided. In one of the most closely watched elections on Wall Street, the pro-bailout New Democracy party defeated the Syriza party, which had threatened to walk out on the bailout agreement. The election results provided a relief rally, but is was short lived. As seen with the previous Spain bailout, the markets are still waiting on more definitive central bank action as the next catalyst.

Asian equities rallied soon after the election results. The Japan Nikkei and Hong Kong Hang Seng indices both hit one-month highs. However, American equities and commodities traded lower as the focus shifted to bonds. Spain's 10-year government bond yield jumped above 7 percent and hit as high as 7.285 on Monday, representing a new euro-era all-time high. "In the past, it seems like that as soon as one issue has been resolved or rather, as soon as there is less uncertainty regarding one main issue affecting markets, attention quickly turns to next one, similar to the situation after the Spanish banking rescue last week where focus shifted onto Italy and Italian banks, explained ETX Capital senior trader Markus Huber.

Don't Miss: Patience Pays with Gold and Silver

Despite trading as low as $1,606.9 per ounce in early trading, gold managed to hold support and pare its losses. Silver also showed weakness as it declined to $28.24, but rebounded to $28.65. As the charts below show, both precious metals are currently in a holding pattern. Gold has support at $1,550-$1,600, while silver looks to be an absolute bargain on dips towards $26.

Although some may expect gold to underperform the market with no official easing being announced by the European Central Bank or the Federal Reserve in recent days, gold traded higher every day last week to gain more than 2 percent. In fact, gold and silver both appear to be in the process of making bottoms that will lead to higher prices in the second-half of the year as more dominoes fall in the eurozone. The latest example comes from Zero Hedge via Market News. Spanish banks may need another 150 billion euros for provisions on bad loans, according to El Confidencial on Monday. The estimate comes from an independent audit due to be released later this week.

"The provisioning estimates contained in the anxiously awaited report, commissioned by the Spanish government and conducted by private consultants Oliver Wyman y Roland Berger, will be higher than previously estimated because their calculations now include large provision figures for the retail mortgage sector. The 150 billion euros in required loan loss reserves is not to be compared directly with the 100 billion euros of recapitalization aid offered to Spain earlier this month by its eurozone partners," Market News reported. The news is just another reinforcement that the insolvency problems seen in regions such as the eurozone are nowhere close to being solved.

A global central bank effort that has been rumored to take place if needed in response to the eurozone problems will boost gold and silver, but will hardly provide the last catalyst for the precious metals. The eurozone is the first focus of the insolvency crisis, not the last. The United Kingdom and Japan have headline worthy problems of their own, while the United States is quickly approaching a fiscal cliff and another debt ceiling showdown later this year. The coming months and years stand to be a very interesting time for gold and silver.

Noteworthy ETF Inflows: SLV - Forbes

Noteworthy ETF Inflows: SLV - Forbes

www.TheSilverPrice.info

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the iShares Silver Trust (AMEX: SLV) where we have detected an approximate $69.5 million dollar inflow — that’s a 0.8% increase week over week in outstanding units (from 320,400,000 to 322,900,000).

Click here to find out which 9 other ETFs had notable inflows, at ETFChannel.com »

The chart below shows the one year price performance of SLV, versus its 200 day moving average:

iShares Silver Trust 200 Day Moving Average Chart

Looking at the chart above, SLV’s low point in its 52 week range is $25.65 per share, with $42.78 as the 52 week high point — that compares with a last trade of $27.78. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique — learn more about the 200 day moving average ».

Special Offer: Find out what Dave Moenning is holding in the ETF Channel Flexible Growth Investment Portfolio with a special 20% off coupon from Forbes and 30 Days Free.

Exchange traded funds (ETFs) trade just like stocks, but instead of ”shares” investors are actually buying and selling ”units”. These ”units” can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.

Thursday, June 14, 2012

Precious Metal Silver Prices Over the Next Few Years: The Silver Institute Announces the Release of a Report on China's Silver Market

Precious Metal Silver Prices Over the Next Few Years: The Silver Institute Announces the Release of a Report on China's Silver Market

www.TheSilverPrice.info

Wednesday, June 13, 2012

Gold and Silver, Are You Brave Enough to Buy Low? :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

Gold and Silver, Are You Brave Enough to Buy Low? :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

www.TheSilverPrice.info

Tuesday, June 12, 2012

Investors Would Do Well to Accumulate Physical Gold and Silver as Alternatives to Paper Currency - International Business Times

Investors Would Do Well to Accumulate Physical Gold and Silver as Alternatives to Paper Currency - International Business Times

www.TheSilverPrice.info

After trading above $1640 an ounce last week, the price of gold fell after hopes for another round of quantitative easing was quashed when US Federal Reserve chairman, Ben Bernanke, failed to provide any hint of further monetary easing in his testimony on Thursday. However, on Friday prices rebounded as there were talks of an imminent bailout for Spain's banking sector. Then, on Saturday, Eurozone finance ministers agreed to lend Spain up to 100 billion euros ($125 billion) in order to prevent the Spanish banking sector from collapsing. After a 2 1/2 hour conference call of the 17 European finance ministers, Madrid said the amount of the bailout would be sufficiently large to banish any doubts.

Precious Metal Silver Prices Could Soar: Silver to Respond to Europe Easing & Worldwide Economic Growth - PR Newswire - The Sacramento Bee

Precious Metal Silver Prices Could Soar: Silver to Respond to Europe Easing & Worldwide Economic Growth - PR Newswire - The Sacramento Bee

www.TheSilverPrice.info

HOLLYWOOD, Fla., June 11, 2012 -- /PRNewswire-iReach/ -- In the middle of last week, silver prices began to surge slightly as suspected. Early last week silver was seen trading around that sweet spot, enticing investors to increase their silver portfolios and lowering the barriers to entry for first time investors. Silver responds similarly to gold; however its influential ties to industrial growth and manufacturing separate it, making it a wise investment choice with stimulus efforts and worldwide economic rebounding.

Potential Global Stimulus Measures Look to Have Positive Impact on Silver Prices - MarketWatch

Potential Global Stimulus Measures Look to Have Positive Impact on Silver Prices - MarketWatch

www.TheSilverPrice.info

NEW YORK, NY, Jun 12, 2012 (MARKETWIRE via COMTEX) -- 2012 has proven to be a tough year for both silver prices and silver mining stocks. The iShares Silver Trust ETF (SLV) has fallen over 16 percent in the last three months, while the Global X Silver Miners ETF (SIL) has dropped over 20 percent over the same period. The Paragon Report examines investing opportunities in the Silver Industry and provides equity research on the iShares Silver Trust ETF (nyse arca:SLV) and the Global X Silver Miners ETF (nyse arca:SIL).

Monday, June 11, 2012

Spanish Bank Bailout Sets Up $2,000 Gold & $60 Silver This Fall | Resource Investor

Spanish Bank Bailout Sets Up $2,000 Gold & $60 Silver This Fall | Resource Investor

www.TheSilverPrice.info

Euro-zone finance ministers panicked this weekend and agreed to a preemptive announcement of a $125 billion bailout for the Spanish banks, bringing the grand total for bank bailouts to $600 billion when Ireland, Portugal and Greece are added.

Money printing on this scale has only ever been good for precious metal prices by historical precedent. The bank bailouts are an example of money creation at the source with banks able to lend more against this new capital injection and sterilizing bad debts.

Precious Metal Prices

It sets gold up to power above the $1,923 all-time high of last September and hit $2,000 an ounce this fall, while silver will as usual outperform to the upside and cross the 1980 all-time high of $50 and go to $60. This is only what we heard in the Dubai Old Souk earlier this year (click here).

Of course the euro-zone politicians have been panicked by the upcoming Greek election on June 17 to do something now rather than wait for the contagion to hit Spain. It remains to be seen whether preempting market fears has actually put them ahead of the curve.

Nobody really knows the likely course of events after the Greek election. Watching the TV programs with politicians lashing out at each other smacks more of anarchy than a stable democracy. But many have begun to question the practicality of leaving the euro.

The single currency was not designed for countries to come and go. Liquid assets in euros have already fled Greece but going back to an independent currency would still mean huge losses for the rich, although it would also create a buying opportunity.

Perhaps then the euro zone will bite the bullet and accept even bigger losses on Greek debt, and create money to save its banking system as an alternative. The sudden cave in over Spain at the weekend certainly suggests that is the way the wind is blowing.

Monetary Inflation

More and more paper money in the system, more and more sovereign debt, it can only end badly and most certainly with much higher inflation levels. Inflation in China jumped last month as the world’s third largest economic bloc slowed down.

Investors who want to beat inflation are left with fewer and fewer options. Central banks cannot print gold, they can only buy it themselves as an inflation hedge and help to push up the price. Silver is a tiny market that will follow and outperform gold as a sister monetary metal.

There are few win-win scenarios for global investors in these markets, expect more and more investors to jump on this train. That is why prices are going higher.

Equity Research on Endeavour Silver Corp. and Hecla Mining Co. - Silver Miners Set for Strong Second Half - MarketWatch

Equity Research on Endeavour Silver Corp. and Hecla Mining Co. - Silver Miners Set for Strong Second Half - MarketWatch

www.TheSilverPrice.info

Precious Metal Silver Prices Over the Next Few Years: The Silver Institute Announces the Release of a Report on China's Silver Market

Precious Metal Silver Prices Over the Next Few Years: The Silver Institute Announces the Release of a Report on China's Silver Market

www.TheSilverPrice.info

Data on China's future outlook and demand, becoming the second largest consumer of precious metal silver, should indicate their impact on the global silver market in the next few years. Smith McKenna, LLC responds to the Silver Institute's announcement for those looking to invest in silver.

(PRWEB) June 11, 2012

Focusing on global demand, China has become the second largest consumer of silver worldwide. The silver institute has a report in the pipeline which will detail China's impact on the silver price in the next few years. The report is scheduled for release later this year in October. Just twenty years ago, China's silver demand represented only three percent. Today it is more than five times that, seeing 16% - with forecasts of it going much higher. Those looking to invest in silver could benefit significantly from this emerging data.

"Many knowledgeable observers of the Chinese market believe that silver demand will continue to grow significantly over the rest of this decade, therefore increasing China's Importance to the global market," said a rep at the Silver Institute.

Stephen M Smith, who is the managing member at Smith McKenna, LLC believes that silver could potentially double in value over the next few years, citing the Silver Institute's upcoming report as something to keep a close eye on. Silver has nearly doubled in the last two years, something that we could see a repeat of again. Smith has been accurately predicting macroeconomic trends for over 20 years. He's currently offering a free investing book to a limited number of people in order to educate the public on how to invest in silver, and increase their chances of success from the start.

Silver responds similarly to gold; however its influential ties to industrial growth and manufacturing separate it, making it a wise investment choice with stimulus efforts, worldwide economic rebounding and the demand from China all expected to increase, noted Smith.

Friday, June 8, 2012

Supply/demand fundamentals favour gold, silver, oil, uranium and pgms - SILVER NEWS - Mineweb.com Mineweb

Supply/demand fundamentals favour gold, silver, oil, uranium and pgms - SILVER NEWS - Mineweb.com Mineweb

www.TheSilverPrice.info

Silver Better Investment Than Gold, According to Penny Stock Detectives, a Leading Financial Web Site - Press Release - Digital Journal

Silver Better Investment Than Gold, According to Penny Stock Detectives, a Leading Financial Web Site - Press Release - Digital Journal

www.TheSilverPrice.info

New York, NY (PRWEB) June 08, 2012

Danny Esposito, contributor to Penny Stock Detectives, argues silver has been used as money throughout history, making its association with money equal to gold’s. He believes investors who argue that silver is not a monetary precious metal because it has more industrial uses than gold are wrong. Instead, Esposito suggests, silver’s exciting new industrial uses make it a more attractive investment.

In the article, “Silver as Precious as Gold,” Esposito notes, “Silver has the highest electrical conductivity of any element known to man and the highest thermal conductivity of any metal.”

Silver bullion’s ability to kill bacteria without harming the human body has made it invaluable in many medical applications. Everything from wound dressings to gowns to catheters to medical equipment is manufactured with silver bullion.

Research and development continues to find new uses for the precious metal. It is estimated that three-quarters of the silver bullion mined each year is already earmarked for industrial uses. This leaves less and less silver bullion for investment purposes, Esposito explains.

Thursday, June 7, 2012

Silver Surged 3% - ECB At 1%, Dovish Fed Comments and 'Helicopter Ben' Testimony

Silver Surged 3% - ECB At 1%, Dovish Fed Comments and 'Helicopter Ben' Testimony

www.TheSilverPrice.info

Is the Table Set For A Mania In Precious Metals?

Is the Table Set For A Mania In Precious Metals?

www.TheSilverPrice.info

It may feel like I'm out of touch with the precious metals markets to broach the subject of a mania today, but I think the table is being set now for a huge move into gold and silver.

There are, however, very valid reasons to reasonably expect a mania in our sector. For one thing, manias have occurred many times before, but the main issue is that a mania in gold and gold stocks is the likely result of the absolute balloon in government debt, deficit spending, and money printing. Saying all that profligacy will go away without inflationary consequences seems naïve or foolish. Inflation may not attract investors to gold and silver as much as force them to it.

Now, one could make the argument that any rush into gold and silver will be muted if no one has any savings, especially given that demographers say a quarter of the developed world will soon be retired. But even if individuals are wiped out, the world's money supply isn't getting any smaller, and all that cash has to go somewhere.

I wanted to look at cash levels among various investor groups to get a feel for what's out there, as well as how money supply compares to our industry. Data from some institutional investors are hard to come by, but below is a sliver of information about available cash levels. I compared the cash and short-term investments of S&P 500 corporations, along with M1, to gold and silver ETFs, coins, and equities. While the picture might be what you'd expect, the contrast is still rather striking.

Wednesday, June 6, 2012

Morning Silver Market Report - International Business Times

Morning Silver Market Report - International Business Times

www.TheSilverPrice.info

June 6, 2012 10:19 AM EDT

Compiled 06/06/12 6:00 AM (CT) Statistics: London Gold Fix $1,633.25 LME Copper Stocks 231,200 tons +325 tons SILVER MARKET FUNDAMENTALS: (6:00 AM CT) With a sharp upside extension and breakout on the charts overnight, July silver has reached the highest level since May 10th. Like gold and global equity markets, the silver trade seems to be anticipating action from the ECB. In fact, some players are also thinking the US Fed is poised to easing and that has to have a portion of the bear camp in silver under pressure. Another issue that might be prompting buying of silver is the hope of a 3rd party budget control agreement in the EU. It is also possible that physical commodity markets are anticipating some fresh bank recapitalization plan. Silver might also be drafting some support from marginally support action in the Euro and perhaps silver is simply seeing bargain hunting buying in the wake of a heavy pattern of speculative liquidation that dominated the silver trade from the beginning of March to the May 16th spike low. At least in the early action today, silver looks to be vesting itself in some form of action from at least one central Bank. Comex Silver Stocks were 142.329 million ounces down 649,227 ounces. Silver stocks have increased 11 of the last 20 days. OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CT) Hong Kong shares managed more short covering gains overnight, while Shanghai equities simply marked time again on the charts. European equity markets were higher overnight off hopes of something positive from the ECB meeting early this morning. Early US equity market action was posting definitive gains, as there are expectations of central bank assistance in the air. Seeing a downward revision in Euro zone GDP readings overnight probably increased the hope of easing from the ECB. The US economic report slate today is rather thin, with a weekly mortgage application survey due out early, a couple Fed speeches due out during market hours and a Fed Beige Book scheduled for release in the early US afternoon trade. In general, there appears to be an attempt to fan risk-on sentiment but the question is whether or not the ECB meeting will contribute to that theme or detract from that theme.

Have Gold, Silver, And Mining Stocks Bottomed? | Precious Metals | Minyanville.com

Have Gold, Silver, And Mining Stocks Bottomed? | Precious Metals | Minyanville.com

www.TheSilverPrice.info

On Friday, the price action in gold caught the attention of most market participants as gold put in a monster move to the upside in light of risk assets such as the S&P 500 selling off sharply. In fact, gold futures rallied nearly $58 per troy ounce on Friday (+3.71%) while the S&P 500 Index sold off over 32 handles (-2.46%).

Monday saw some profit taking in gold and silver futures as Friday’s monster gains had to be digested. Short term traders were locking in profits, but overall the price action remains quite bullish at the moment. The gold miners remained extremely strong into the bell on Monday as buyers bid up prices in the afternoon to push them nearly 1.65% higher for the trading session.

Long time readers understand that I am a gold bull in the longer-term and have been for quite some time. Unlike some gold bugs, I will discuss the downside in precious metals from time to time even though it generally fills up my email inbox with some rather rude and hate-filled emails.

My view of gold and silver is that they are senior currencies. With that being said, I monitor the value of gold in US dollars and recognize that a stronger US dollar in the longer-term is not necessarily bullish for gold. Yes both gold and the dollar can rally together, but mutualistic price action generally does not last for long periods of time.

Obviously I monitor the price action of the US Dollar Index futures on a regular basis to help me gauge when the dollar is at key turning points regarding price action. Back on May 5 I penned an article titled The Dollar & Gold have Eyes on Europe where the following chart and statements were made:

“The key level to watch is the 80.76 price level on the US Dollar Index futures. If that level gets taken out, the dollar could extend to recent highs and beyond should the situation in Europe begin to unravel.”

A few weeks have passed since I posited that chart and statement to readers and time has proven my analysis wise. On May 14 the US dollar took out the overhead resistance at the 80.76 price level and has since worked even higher taking out the resistance level around the 82 price point.

In the same article, I discussed my expectations for gold prices in the intermediate term as quoted from the gold chart below:

“My expectation is that we may test the key support area [1,550 – Gold Spot Price] one more time, but price will likely breakout to the upside when this pattern is finally triggered.”

The gold futures weekly chart shown below illustrates how we tested the key support level as discussed above and a major bounce to the upside appears to be unfolding.

While we could see some short-term consolidation, I continue to believe that gold prices are likely to climb higher. In addition to the safe haven status, should an all-out currency crisis begin to unravel in Europe, gold and silver will be viewed as safe havens to protect European citizens’ and corporations’ wealth against a faltering euro.

In fact, all ways out for Europe are positives for precious metals. If a currency crisis takes place and countries default, money will pour into gold and silver as Europeans attempt to protect their purchasing power.

However, politicians are not going to allow governments to default without a fight. Instead I suspect more and more pressure will be placed on the European Central Bank (ECB) to print piles of euros. Both outcomes are bullish for gold and silver in the intermediate to longer-term time frames. In fact, the fundamental case for gold seemingly continues to build as central banks around the world print vast sums of money and multiple currency crisis scenarios are likely to transpire.

Silver has actually outperformed gold recently during this selloff. Unlike gold, silver did not quite test the recent support zone. In light of this divergence, I would not rule out the potential for one more move lower in gold and silver that might trigger stops on the other side of key support.

I do believe that probabilities favor that we have bottomed in precious metals, but there is always a chance of one last push lower to shake out weak bulls. The weekly chart of silver futures is shown below.

The weekly chart of silver futures shown above demonstrates how silver outperformed gold on the recent selloff as silver failed to test key support. However, gold has started to show out performance to the upside which is most obvious when comparing the strength seen on Friday.

While both gold and silver appear likely to have formed a major bottom or are in the process of forming a major bottom, I continue to believe that gold miners are offering more potential upside. The gold miners have been absolutely crushed the past few months.

Back on February 29 of this year, the Market Vectors Gold Miner’s ETF (GDX) made a high of $57.91 / share that day. The most recent low which occurred on May 16 saw GDX trade as low as $39.08 / share. The move over the course of only a few short months produced a loss over 32% for investors that held an unhedged position.

From a fundamental standpoint, valuations have become close to levels not seen since the lows which formed during the financial crisis in 2008 and 2009. However, an excerpt from James Turk’s analysis which recently was published in “Things That Make You Go Hmmm” by Grant Williams is certainly worthy of discussion.

Turk produced the following 30-year chart which depicts the amount of gold in grams and ounces required in order to purchase one unit of the gold mining index (PHLX Gold/Silver Sector (XAU)). The gold mining index is very similar to the HUI Gold Bugs Index (^HUI) or GDX.

The following quote comes from James Turk where he references the chart shown above:

“I want readers to take a look at the following 30 year chart which I believe is the most important and extraordinary chart for 2012. It presents the XAU Gold Mining Index measured in terms of gold, not dollars. We’re making history here. Gold stocks have never been this undervalued before.”

The chart above speaks for itself. Long-term investors looking for deep value should look no further than the gold miners for opportunities. In the past 30 years, they have never been this cheap relative to the price of gold.

Obviously gold miners have rebounded sharply from their recent lows the past few weeks. In the longer term they are still extremely oversold, but in the short run a pullback to back test a variety of key support levels may be warranted.

Should a pullback occur, I think it will likely mark an excellent buying opportunity in the intermediate to longer term. The daily chart of GDX is shown below.

GDX could very well power right on through the short-term resistance level, but I would be surprised if it could push through the intermediate term resistance near the 52 price level on its first attempt. A pullback here would be quite healthy, but Mr. Market may not offer that opportunity. Right now the gold miners clearly have a strong valuation argument to consider them at a value presently.

In addition, we are seeing the US Dollar Index futures start to roll over while gold and silver futures are trying to form bottoms and build consolidation bases to move higher from. If this is a major top in the dollar, then gold, silver, and gold miners are on sale as we speak. The next few months will tell the real story, but in the longer term this may go down as an unbelievable buying opportunity that most investors will miss entirely.

Read more: http://www.minyanville.com/sectors/precious-metals/articles/s2526p500-gold-gold-futures-silver-silver/6/6/2012/id/41525#ixzz1x1enJZj8

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