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Monday
Jul232007
Silver: On your marks, get set!
Monday, July 23, 2007 at 11:36AM
Silver has gained about 8% or approximately $1.00 in the last few weeks adding a little sparkle to what is usually lacklustre summer trading.
Looking ahead, the month of August could possibly bring us another correction although we believe that it will be a small one and short lived. From then on we expect to see silver make a run to the $20.00 level as we have forecast for some time. This means that silver has to gain 50% in the next six months, a bold prediction considering the bearish sentiment that currently surrounds the precious metals market. Throw in the long period of consolidation that we have been through, the possibility of market manipulation, interest rate rises, stock markets at all time highs and its no wonder that some of the players have cashed up and moved on. However when this rally gets underway they will be back having to pay higher prices but never the less they will still make good profits. We see these people as being almost akin to a large short position which now requires an inducement before they return. That inducement will come in the form of the dollar dropping further, a new high being made, a major discovery being made or increased trading volume on a ‘no-news’ day.
As things stand at the moment we are fairly happy with our strategy and have no regrets about holding on to our silver mining stocks and indeed acquiring a few more over the recent months.
The next six months will see some stocks leap ahead and push into overbought territory. We will decide at the time whether or not to take some profits off the table and will inform you accordingly. However, if we are correct in our predictions then we should have the lion’s share of our funds in the market at any given time. If we do decide to take some profits from one over bought silver stock then the funds should be re-deployed into another silver stock, which has been a little slower to move.
A word of warning: conventional wisdom suggests that as investors, we should devote between 5% and 15% to precious metals, which may indeed be the wise thing to do. We are not conventional and all of our investment cash is tied up in gold, silver and uranium mining stocks. We agree that it is a narrow view and we are well aware of the consequences should we get it wrong. This is why we sometimes say “do not go mad on this stock” even though we are buying it. Make sure that you can take a hit and live to fight another day, the market will always be there with a selection of dazzling deals to tempt you.
Looking ahead, the month of August could possibly bring us another correction although we believe that it will be a small one and short lived. From then on we expect to see silver make a run to the $20.00 level as we have forecast for some time. This means that silver has to gain 50% in the next six months, a bold prediction considering the bearish sentiment that currently surrounds the precious metals market. Throw in the long period of consolidation that we have been through, the possibility of market manipulation, interest rate rises, stock markets at all time highs and its no wonder that some of the players have cashed up and moved on. However when this rally gets underway they will be back having to pay higher prices but never the less they will still make good profits. We see these people as being almost akin to a large short position which now requires an inducement before they return. That inducement will come in the form of the dollar dropping further, a new high being made, a major discovery being made or increased trading volume on a ‘no-news’ day.
As things stand at the moment we are fairly happy with our strategy and have no regrets about holding on to our silver mining stocks and indeed acquiring a few more over the recent months.
The next six months will see some stocks leap ahead and push into overbought territory. We will decide at the time whether or not to take some profits off the table and will inform you accordingly. However, if we are correct in our predictions then we should have the lion’s share of our funds in the market at any given time. If we do decide to take some profits from one over bought silver stock then the funds should be re-deployed into another silver stock, which has been a little slower to move.
A word of warning: conventional wisdom suggests that as investors, we should devote between 5% and 15% to precious metals, which may indeed be the wise thing to do. We are not conventional and all of our investment cash is tied up in gold, silver and uranium mining stocks. We agree that it is a narrow view and we are well aware of the consequences should we get it wrong. This is why we sometimes say “do not go mad on this stock” even though we are buying it. Make sure that you can take a hit and live to fight another day, the market will always be there with a selection of dazzling deals to tempt you.
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