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Silvers Golden Cross

Technical indicators are not perfect and if they were we would all be fat and happy.

Silver 3rd June 07

However when we see a chart formation such as the one above that silver recently formed it does give us reasons to be cheerful. From this chart we can see that the MACD black line has just crossed over the red line in an upward move, sometimes referred to as the golden cross. If we back track through silvers history we can see that this is usually followed by a substantial move upwards in the price of silver. It will be interesting to observer silvers behaviour over the next say four weeks and see if silver conforms or not. Our hunch is that it will but short term trading is always very difficult so if you do decide to invest based on this type of indicator then pick a quality silver stock that you would like to own anyway. Then you wont be too disappointed if she misbehaves.

Silver stands at $13.74 today so we will check it out again on the 3rd of July 2007.

Silver: Formed a base?

The last few days has seen silver form a base from which the beginnings of a rally can be detected.

Silver Chart 01 June 2007

We normally do not like to look at silver on such a micro level but this chart could be telling us that silver has indeed found some support on which to base a rally. We could still experience some more of the sideways action typified by the summer doldrums but May is now behind us giving us some room to feel a little more optimistic about the future.

As we can see from the chart, silver appeared to form a double bottom at the $12.80 level and as we write has moved up to $13.52 for a gain of $0.72 or 5.6% since the 24th May 2007.

Although this is a small move and could reverse as silver has often done in the past, we see this as an indication of better things to come. So if you have a few favourite silver stocks start accumulating now even if it is only a few for now and then buy again a little later down the line when you are more confident that silver is actually on the move.

SILVER: A Testing Time for Silver Stock Holders

Once again silver takes a breather and rests on its 200-Day Moving Average. This average has proved to be more or less silvers support area over the past few years, but will it provide that support as we enter the summer doldrums?

Silver Chart 29 May 07

From the chart we can see that silver over the last year has consistently managed to form higher lows when it has been sold off which is an encouraging sign as it indicates silvers underlying strength. You will also notice that the technical indicators are also in their respective negative zones, although not entirely on the floor. Silver may well go lower and take this indicators to the floor which would present us with a fabulous buying opportunity but at the same time it will be gut wrenching for those of us who are already fully invested in silver stocks.

It is almost the end of May so those that normally sell and run for cover are gone by now. And was the sell off devastatingly bad? No just a gentle pull back. However, having hit $15.0 last April it has been a long and frustrating twelve months of watching silver build steadily only to see it drop dramatically during in corrections wiping out most of the gains. Patience is required here as silver teases us regarding which way she will go. Try to remember that if we go back to April 2005 silver was trading at around the $6.0 level, so silver has doubled since then.

The next few weeks could see more of the same with silver churning at these levels giving us no clue as to where she is heading. However in our experience the longer the consolidation period lasts the bigger the breakout when it does arrive.

Finally we remain confident that silver will head north from this point and we will keep a firm grip on the silver stocks that we already own with the view to accumulating more should a suitable ‘Dip’ present itself.

On spikes we also expect silver to outperform gold so look out for silver ‘out doing’ gold through whip lash style movements which will drag silver stocks onto the lips of every analyst needing a career boost.

Endeavour Silver Corp: Watch for Buying Opportunity


Endeavour Silver Corp Chart

Endeavour Silver Corporation is one of the recent additions to our silver stocks portfolio when we were fortunate enough to make our first purchase at under $4.00.

As you can see from the chart above the fall in the price of silver has resulted in some profit taking, resulting in the stock price retreating to around $4.92 on the AMEX Stock exchange. The next month or so could be rather slow for precious metals in general so we could get another opportunity to accumulate more of this silver producer at advantageous price levels. We doubt that we will see sub $4.00 again but $4.00 to $4.50 would still be a bargain in our eyes.

In a report published this week the company outlined their performance for the quarter in which a couple facts stood out for us:


“The cash cost per oz of silver produced for the 1st Quarter 2007 was US$5.85 per oz compared to US$6.13 per oz in Q1 2006.” This shows that the company is driving costs down which will pay real dividends as the silver price rises and their profit margins increase.

“Reserves tripled at Guanacevi to 9.93 million oz silver and resources also tripled to 21.06 million oz indicated and 9.99 million oz inferred.” This shows that they are discovering more silver and adding value to their reserves.

This is a producing silver mine where the future becomes brighter with every news release. We are of the firm opinion that silver itself is set to move higher once these current doldrums are behind us so we will look to accumulate on any dips over the summer.

Endeavour Silver Corporation trades on (TSX: EDR) (AMEX: EXK) (DB Frankfurt: EJD)

Silver: May 2006 verses May 2007

Silver Chart 14 May 07

Last May 2006, we saw the “sell in May and go away” crowd in action and wondered if we would see a repeat of this sell off in 2007. The truth is that we do not know what the herd will do but we do have a couple of observations that show that Silver is in a vastly different position this year to last year.

Taking a look at the chart for the time frame in question we can see a number of differences between May 2006 and May 2007.

We will look at May 2006 first.

We can see that the price of Silver had raced ahead of its moving averages leaving the 200 DMA a long way behind. In fact the difference between the Silver price at $15.00 and the 200 DMA at $9.00 is approximately $6.00. You can see that this is a huge gap overdue for a correction.

Also note where the technical indicators are: The RSI, the MACD and the Stockastics are all above their middle point with two of them banging on the ceiling. This is telling us that this is an overbought situation.

Now we will look at May 2007.

The price of Silver has made steady progress over time taking the moving averages along with it for the ride. The price of Silver is at $13.00 and the 200 DMA is also at $13.00 so the difference is only a few cents and not the massive disparity that we saw a year ago. This tells us that the price of Silver has not run too far ahead itself as it did in May 2006.

Now note where the technical indicators are: The RSI is close to 30, the MACD is neutral and the stockastics are heading south towards the 20 level. In summary they are more or less telling us that silver is over sold, which is dramatically different from the overbought situation of May 2006.

These are just observations that we can add to our deliberations while trying to decide which course of action we should take. However it suggests to us that if there is a sell off this May then it could be a mild one lasting for a short time only. Gold is also in a similar position and in our view any sell off will also be short lived. This could just be the buying opportunity that you have been waiting for?

Silver Portfolio Update: 08 May 2007

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 very pleased with the progress to date and have added two new silver stocks since the last update.

Below is a list of what we have and a record of the progress that has been achieved to date.

HL $8.61 BUY
Bought for $5.27 has gained 63.38%

PAAS $28.81 BUY
Bought for $18.00 has gained 60.06%

SLW $12.40 BUY
Bought for $9.41 has gained 31.77%

SSRI $38.34 BUY
Bought for $19.98 has gained 91.89%

EPL $C0.82 BUY
Bought for $0.53 has gained 54.70%.

Two new additions are as follows:

EXK $5.37 BUY
Bought for $3.97 has gained 35.26%.

MSV $C2.41 BUY
Bought for $2.80 has lost 13.90%.

As you can see we do not invest in hundreds of silver stocks and we have been content to accumulate slowly those stocks that we think are quality and were undervalued at the time we made an investment. Of the two new additional stocks Endeavour Silver has made terrific progress since we made an investment on the 5th March 2007 with a 35.26% increase in just two months. Minco we bought on the 24th April 2007 so it is early days for this new entry. It is always difficult to buy right on the bottom as we did with Endeavour but we think that the worst is now over for Minco and look forward to some consolidation before it begins to climb.

As for silver itself we believe that we are within touching distance of an upward breakout followed by a run to $20.00. We know that the summer is upon us but we think that any selling will be mild and short lived so our intention is stay with it and hang on in there.

Silver Prices set to rise higher

Silver Prices set to rise higher

Technically speaking, it looks as if silver prices are preparing for a move higher next week.

The STO for silver prices has hit the bottom of the chart and bounced off slightly, indicating a move to the upside is due in the short term.

On Friday silver prices went above their 50dma and this of course is a positive thing as over the last few trading session, silver prices have been stuck under the 50dma, now they have risen above it, we should be in for a small rally.

Gold prices rose up nearly $15 (2.22%) over the last two days, rising $5.50 (0.8%) on Friday. However silver prices were only up 20 cents over the same period, around 1.5% suggesting they should move slightly higher to catch up with the gains that gold made, provided gold prices maintain those gains when trading starts again this week.

All in all silver prices are looking good in the short term and of course in the long term the fundamentals are still all in place for silver prices to rise significantly over the coming months and years.

Silver Wheaton: Good Results

SLW Logo
Silver Wheaton is a new innovation in that it is a silver only company and does not own or operate any mines.

As we have stated before Silver Wheaton’s total revenue is derived from silver sales, which it acquires from gold and base metal mining companies as a by-product of their operations. This is the only company that we are aware of that operates in this manner. Its position is unique in the market place. By placing contracts with other miners for their silver at favourable rates and selling on to the general market they have created a terrific niche for themselves.
Having silver purchase contracts with five separate mines, the Company expects to sell approximately 15 million ounces of silver in 2007, growing to 23 million ounces by 2009.

Silver Wheaton is un-hedged and well positioned for further growth, which is something that is attractive to us as investors who want exposure to the price of silver in the coming Silver Bull Market.

In their latest news release the company have stated Net earnings of US$24.9 million (US$0.11 per share) from the sale of 3.3 million ounces of silver, an increase of 80% compared with US$13.8 million (US$0.07 per share) from the sale of 2.7 million ounces of silver in 2006. The operating cash flow has more than doubled from US$13.9 million to US$29.9 million.
The good news does not stop there as Silver Wheaton has also announced a couple of new deals, which will add to silver sales going forward. The first is an agreement to acquire 25% of the silver produced from Goldcorp’s Peñasquito project located in Mexico for the life of mine. This has cost them US$485 million in cash. In addition, an ongoing per ounce cash payment of the lesser of US$3.90 and the prevailing market price is due (subject to an inflationary adjustment), for silver delivered under the contract. So with the price of solver at say $15/oz then the company stands to make $9/oz on each ounce.

The second deal is similar to the one above whereby they have an agreement with Hellas Gold S.A., to acquire all of the silver produced from Hellas Gold’s Stratoni mining operations in Greece for the life of mine. This has cost Silver Wheaton US$57.5 million and an ongoing per ounce cash payment of the lesser of US$3.90 and the prevailing market price is due (subject to an inflationary adjustment), for silver delivered under the contract.

With more deals to come according to Peter Barnes, President and Chief Executive Officer of Silver Wheaton, the future is looking bright for the company.

Taking a look at the overall financial structure Silver Wheaton has a Market capitalisation $2.53 Billion, P/E Ratio 28.75, outstanding shares 221 million, share price US$11.43. Considering that the whole show is run by half a dozen staff this a unique business model.


Silver Wheaton Chart 28 April 2007

In conclusion we are pleased to own some of this stock and will continue to accumulate as and when our cash situation permits.

Silver Wheaton can be found on the NYSE and the TSX under the symbol SLW.

Endeavour Silver Corp: Production Up a Whopping 63%!

Endeavour Silver yesterday reported first quarter production for 2007 at 490,986 oz silver and 1020 oz gold from their Durango property in Mexico. This output represents a 63% increase over the same period last year when production hit 300,872 oz.

This is a significant event as it puts Endeavour's silver production 10% ahead of schedule in their quest to achieve a target of 2.6 million ozs of silver from the Guanacevi Mines. When we put this into the context of the current ‘skills labour and plant’ shortages scenario it is a terrific result to actually get ahead of the schedule. How many times do we hear grumbling? We can’t get the drills, men, machinery, permission, etc. Yes this is a very pleasing piece of news and well done to the team at Endeavour. Their success is evidenced by the fact that they have managed to assemble a team of 412 personnel who are presently engaged onsite at Guanacevi in an effort to complete the capital projects as soon as possible and that the new ball mill is now fully commissioned.

As we are in the good news mode we ought to mention Endeavours latest acquisition, which is the Bolanitos Mines project. This acquisition was made last week and is now being assessed for development and production with a forecast to be released later in the second quarter.

The stock closed last night in Toronto at $C5.67 and $5.07 on the AMEX and remains on our Buy List as we expect this silver producer to achieve its goal of becoming one the top primary silver producers in the world.

Endeavour Silver Corporation can be found on the following stock exchanges: (TSX: EDR) (AMEX: EXK) (DB Frankfurt: EJD)

Minco Silver Corporation: An opportunity in China?

Minco Logo


Minco Silver Corporation is focused on creating high-grade silver properties in China. The stock price has pulled back recently raising the question of “Is now the time to buy”?

Minco China Map

This company’s main asset is the Fuwan Silver Project in the province of Guangdong, China. On the 17th April 2007 the company announced a 15% increase in its resource estimate as follows:

“This estimate has increased the overall tonnage of the Fuwan deposit from 19.0 million tonnes to 23.0 million tonnes. This is an increase of approximately 15.3 million ounces of contained silver of which 4.5 million tonnes (29.2 million contained silver ounces) were upgraded from the inferred category to the indicated category at an average grade of 203g/t silver.”

Details of the updated resources have been taken directly from Minco’s news release on the Changkeng and Fuwan properties and are tabulated below:

Resource Estimate @ 50g/t Ag Cut-Off Grade.

Minco Silver Corporation Resources

*** The resources reported on the Changkeng permit represent 51% of the actual resources that reflect the proportion of ownership by Minco Silver Corporation that would be realized upon establishing the Changkeng JV. The total Changkeng permit inferred silver resources are 8,051,000 tonnes and 36,753,000 ounces of silver.

Geopolitically China may not be the most popular area in the world to invest but we should recognise that trade with China is increasing on a daily basis and this could be a case of “first up best dressed”


Dr Cai Minco CEO

A look at the management team reveals years of experience and high relevant qualifications. The President and CEO is Dr. Cai, who holds a Ph.D. in Mineral Economics from Queens University in Kingston, Ontario, Canada. Dr Cai is a Chinese national, which gives the company a tremendous advantage when it comes to paving the way for Minco’s mining activities. Having worked in foreign climes I have experienced close at hand the benefits that can be gained from having local ‘talent’ in your team. A construction team working away from home bares similarities to a hockey team on a road trip, if you get my drift. So the ability to understand the cultural differences and negotiate accordingly at a local level is of the utmost importance.

Also on the board of directors is a man that may be familiar to you and he is Robert Quartermain, a director of Silver Standard since 1985 and we know that Silver Standard have made terrific progress.

Robert Quartermain Minco


The financial structure of the company is as follows, the Market Capitalisation is $C88 million, shares outstanding 31 million and they are currently trading at around $2.84. This is not the largest silver miner in the pack but they do have a good prospect with their current property and the potential to add properties to their portfolio going forward.


The first thing we notice on this chart is that Minco has suffered from recent sell off from highs of around $C3.50 to a low of $C2.80. It did trade as high as $C4.50 when it first appeared on the TSX. As with a number of new ventures the excitement takes hold and the stock price heads north at a frantic pace. That initial froth has now been blown away and the price has dropped sufficiently for the team here to take a closer look.

Minco Chart 24 April 07

If you look closely you will see that the 50 DMA has crossed the 200DMA in an upward direction, sometimes referred to as the golden cross. Chartists view this move as being positive for the stock although it is not always 100% accurate. The RSI has bounced close to the ‘30’ level, the MACD is close to the floor and the Stockastics are on the floor. Well we can’t get much lower than that which indicates to us that there be a correction on the cards. There also appears to be support for the stock at $C2.80 which is another positive sign.


On balance we think that Minco Silver Corporation is worth a small investment and we will buy the stock today. The pull back presents us with an entry point that we will take advantage of. China does not worry us as we believe that more and more companies will target China in the future as a trading partner. We also believe that silver has a bright future and we are still looking for silver to hit $20.00 this year. We can be cavalier at times so don’t go too mad on this one stock or any other stock for that matter.


Minco Silver Corporation trades on the Toronto Stock Exchange under the symbol MSV.