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« Silver Stocks: Take some profits off the table? | Main | Saudi Arabia: No to interest rate cuts? »
Sep232007 Portfolio Update 21 September 2007

Silver Chart 22sep07

Silver has put on a sparkling performance adding around $2/oz to the spot price for a gain of 17.39% lifting silver stocks along the way.

Before we get carried away with blue-sky scenarios we will take a look at the chart of silver’s progress and try and ascertain where next for our elusive star.

The first thing that we can see is that silver has had a dramatic climb over a short time period. The technical indicators, RSI, MACD and the Stockastics are all in the sell zone. They are telling us to beware. Now taking these indicators into consideration we have decided to remove all BUY signals from silver stocks. This stance may very well be short lived as we expect any correction to be over with quite quickly.

We are still silver bulls and remain confident that by the end of the year the price of silver will be a lot higher that it is now. In the midst of the prevailing euphoria we are preparing ourselves for a correction, which actually would be a healthy move for silver, so don’t dwell it too much when it comes.

The following is an update of our portfolio of silver stocks enabling us to see where we are and where we go from here. We are tracking other silver stocks which are on our Watch List but not worthy of our hard earned cash just yet. But things can change fast so don’t be surprised to see a new name pop up.

Below is a list of the stocks that we own along with a record of the progress that has been achieved to date.

Hecla Mining Company (HL) $9.04 - HOLD/TAKE PROFITS
Bought for $5.27 has gained 71.54% - a quality silver stock going along nicely.

Pan American Silver Corp (PAAS) $28.76 - HOLD/TAKE PROFITS
Bought for $18.00 has gained 59.77%. On the 23rd August we gave another BUY signal on PAAS when we said “We made a further purchase today at $24.10” we are happy to own this stock.

Silver Wheaton Corp (SLW) $13.92 - HOLD/TAKE PROFITS
Bought for $9.41 has gained 47.92%.
Sold 50% on 10 July at $13.48 for a gain of 43.3%, we intend to buy it back later. We should have made a purchase before the recent run up but we didn’t. The next correction should present us with another buying opportunity.

Silver Standard Resources Inc (SSRI) $36.46 - HOLD/TAKE PROFITS
Bought for $19.98 has gained 82.50%. On the 20th August we gave another BUY signal when we wrote “we think Silver Standard is at a good level to buy at the moment and we bought today at $28.99.”

Eagle Plains Resources Limited (EPL) $C0.76 - HOLD/TAKE PROFITS
Bought for $0.53 has gained 43.39%. We expect this stock to challenge its hold highs before too long.

Endeavour Silver Corp (EXK) $3.75 - HOLD/TAKE PROFITS
Bought for $3.97 has lost 5%. We also bought Endeavour again on the 29th June when we said “We decided not to wait any longer and purchased a few more shares in Endeavour Silver Corporation today at $4.53. Please note that the stock was sold off when the management team announced that “Several operating issues were identified that have been holding back the Company's planned growth rate and management has initiated resolutions to address each of these issues. However, the Company does not expect to meet the targets set earlier this year of producing 2.8 million oz silver at a cash cost of $5.50 per oz and increasing resources by an additional 20 million ounces”. This statement has not put us off Endeavour, in fact it is reassuring that the management were honest enough to go public with their current status and keep us informed. We are still looking to accumulate on dips and hope to buy again soon.

Minco Silver Corp (MSV) $C1.76 - HOLD
Bought for $2.80 has lost of 37.0%%. Minco Silver has took a battering since trading at $3.50 but now looks to be forming a bottom we will continue to look for signs that a recovery is underway, but will not be buying any more stock just yet.

For the more hyper active traders amongst us we predicted a 50 cent rise in the price of silver on the 1st July and by the 11th July it was up 62 cents so we hope that your short term trade worked out for you.

On 20th August 2007 we signalled another Trading Opportunity in Silver: BUY as we anticipated silver to rally and gain around $1.00 going forward. This trade has been closed showing a gain of 100% in 30 days.

Going forward we intend to identify other such short-term moves that may just add a little extra spice to this investment account, so keep an eye or you could miss out. However do not go mad on this sort of trade and only put small amounts of your cash at risk. We did this via a spread bet based on a silver futures contract. The spread bet provides limited risk as the most we can lose is the stake and it is also tax free in the UK.

Please read recent articles before buying any particular silver stock as we are trying to post updates on a regular basis and the stock that you are intending to invest in may have entered overbought territory.

We do believe that this portfolio of silver stocks is heading to higher ground, so when you look back these prices will look really cheap lessening the importance of whether you bought at the very bottom or not.

The summer is now behind us and we now expect a good rally in silver prices with much higher silver quotes by the year-end. However the progress made will not be in a straight line so be prepared for snap backs coming from nowhere just to play havoc with your digestive system.

But most of all enjoy today!

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Reader Comments (1)

Although the RSI and Stochastic are at or in the 'overbought area', the MACD is far from overbought and the histogram is rising. Silver is now trending and the moving average indicator is the most useful. It is worth following the ADX, which is now over 26 (a reading over 25 suggests that the underlying is clearly trending). The ADX helps to decide if it is best to follow oscillators or moving averages. The following is taken from advice of John Murphy, well-known technician:

'The Average Directional Movement Index (ADX) line helps determine whether a market is in a trending or a trading phase. It measures the degree of trend or direction in the market. A rising ADX line suggests the presence of a strong trend. A falling ADX line suggests the presence of a trading market and the absence of a trend. A rising ADX line favors moving averages; a falling ADX favors oscillators. By plotting the direction of the ADX line, the trader is able to determine which trading style and which set of indicators are most suitable for the current market environment.'

September 24, 2007 | Unregistered CommenterDavid

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