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« Silver has a ‘Popeye’ month | Main | Endeavour Silver Corporation Making Good Progress »
May262009 Portfolio Update 26 May 2009

Silver chart 27 May 09.JPG
Chart courtesy of Stockcharts

The last update was over two months ago on 8th March 2009 since then gold has moved up to $957.90/oz, silver up to $14.70/oz and the US Dollar has declined from ‘89′ down to ‘80′ on the US Dollar Index.

The resulting effect has been to lift many of the stock prices of the silver producers considerably bringing some relief to silver bugs. In the short term we could see an oversold dollar bounce back albeit slightly with a corresponding knock on effect on gold. If a dip follows then it should be used as an opportunity to acquire a few more of your favorite shares, as we still anticipate that both gold and silver prices will set new records before this year is out.

On the news this morning was a report that the largest project in the development phase in Queenstown, New Zealand, is now in jeopardy as the Royal Bank of Scotland is considering withdrawing funding. This is an example that DE-leveraging is still alive and well as banks that are in difficulty tend to pull back and regroup closer to home. It remains to be seen if the mainstream shares will suffer another bout of extreme selling and whether or not our tiny market sector would be caught up in a possible sell off.

A quick look at the chart shows us that Silver has done very well to put on $2.5 in a matter of weeks, however keep an eye on the technical indicators which now suggest that silver is overbought and we could be in for a little consolidation.

On the American front it is sad to see that President Obama has introduced subsidies for dairy products. We understand that this is a move in retaliation as the European Union has already introduced similar subsidies. These are early signs of protectionism which do not bode well for an economic revival. We need to watch this space, if tit for tat protectionist policy making becomes popular then the whole shooting match will grind to a halt.

Here is a summary of the silver stocks we are currently invested in or following:

Hecla Mining Company (HL) – Initially we bought this stock for $5.27 - a quality silver stock which was going along nicely and then we thought Hecla was overbought, as it hadn’t corrected with other silver stocks, therefore we took profits on Hecla at $11.89, the stock price then dropped so we bought it back at $9.72, getting a 18% discount on our shares. On the 14th April we sold 50% of this stock for $11.79 in order to lock in some profits as we anticipated a fall. On the 18th June 2008 we re-purchased Hecla’s shares for $9.61. Hecla traded as low as $0.99 and closed on Friday at $3.36. Hopefully Hecla can continue to improve and eventually surpass its previous highs.

Pan American Silver Corporation (PAAS) – Initially we bought this stock for $18.00 and on the 23rd August we gave another BUY signal on PAAS when we said “We made a further purchase today at $24.10” giving us an average purchase price of $21.50. On January 31st, 2008 we sold about 50% of our shares for an average price of $36.65, locking in a profit of around 70.32%. On the 18th June 2008 we re-purchased PAAS shares for $31.06 and on 16 July 2008 we made another purchase at $36.53. PAAS has traded as low as $8.93 over the last year and was standing at $14.32 at our last update so its pleasing to see PAAS close at $21.42 on Friday.

Silver Wheaton Corp (SLW) – Originally bought for $9.41 and made another purchase on 15 July 2008 at $15.61 and a further purchase on 6 August 2008 at $11.43. We were slightly relieved to see the stock close recover to $6.63 at the last update and closed on Friday at $9.34 giving us room for a small smile.

Silver Standard Resources Incorporated
(SSRI) Initially we bought this stock for $19.98 and 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” giving us an average purchase price of $24.48. On January 31st, 2008 we reduced our exposure by selling around 50% of SSRI for an average price of $34.82 locking in a profit of 42.22%. SSRI dropped to $7.99 during in the sell off but recovered a little to trade at $13.82 two months ago so its pleasing to see it close on Friday at $21.73 restoring some of our confidence.

Eagle Plains Resources Limited (EPL) – We bought this stock for around $0.53, it has been down to $0.08 but closed on Friday at $0.215, improving considerably since the last update. We will continue to hold for now and keep a close eye on it.

Endeavour Silver Corp (EXK) – We initially bought Endeavour for $3.97 and on 7th December 2007 we bought more shares saying; “EXK is down from over $5.50 and as it has been beaten down so much we are signaling a BUY again on this stock and we made a further purchase bringing our average price to $4.10 per share as we doubled our position.” we secured EXK for $3.26 on the 2nd April 2008. This purchase being the largest we have ever made in EXK. Three months ago EXK closed at $1.02, another victim of the sell off despite encouraging results and stood at $1.29 at the time of the last update. On Friday Endeavour closed at $2.02 registering a 56% gain in a short time.

Minco Silver Corp (MSV) - Bought for $2.80 as a speculative move, three months ago it closed at $0.40, which hit us hard, however it was showing signs of recovery during the last update when it traded at $1.24 and closed on Friday at $2.20. Again we will continue to hold and hope that it can continue to head north.

Traders Corner:

We have no positions open at the moment however some of these stocks have run a little ahead of themselves and the occasional PUT might be worthy of consideration, if we decide to take that route we will inform you immediately as always.

We remain in a patient observation mood during this world full of financial turmoil, the outcome of which we expect to be the continuing demise of the dollar and an ever-increasing recognition of both silver and gold as the only place to be.

Have a sparkling week.

Any thoughts – then fire them in.

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Reader Comments (2)


May 27, 2009 | Unregistered CommenterHANA

Hello Friends i have a small question??? can you suggest funds that deal mainly in mining stocks out of england...excluding Blackrock gold and General fund and investec global gold fund. Tks vm indeed Naresh

May 27, 2009 | Unregistered CommenterNaresh Trivedi

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