I would think SLW would trade in harmony with SLV, albeit with more leverage. Seems to be going the other way lately. Do you think this is due to the secondary offering and Goldcorp's sales?
I understand your reasoning. I just don't agree with it because it's simplistic. You don't seem able to recognize that's there's more to it than a one line arithmetic formula that doesn't even come up to the level of algebra.
SLW will continue to leverage the price of silver. Take a look at the following article on HUI Upleg Structure. The HUI is leveraged to gold price just as SLW is leveraged to silver price.
Even on the one year chart, SLW outperforms SLV by 2 to 1. When the SLW upleg resumes, SLW will outperform SLV by 4 to 1, as it has before.
SLW warrants might be a good way to play it. I haven't done the research to find out what the practicalities are.
you just don't get it eric. When SLW first came out at the price of $3 or whatever it was, it was a great investment. It moved to $12 in less than a year; just when the SLV ETF came out and silver went parabolic for a while.
Since that time, it has barely moved. It lost its "leverage" in relation to the POS. If you don't get it, I'm sorry. I know algebra escapes most Americans.
I'll stick to the SLW warrants and to SLV and experience a higher beta to the POS. Now if SLW started paying a dividend or bought back stock...it might be better to own SLW.
I got in to SLW at $4 and sold at $12 as I understood the leverage. Since then its basically marked step for step with the POS.
Another thing SLW could do for future deals is not pay as much up front money and pay a higher price per oz, say $8.90. Then they wouldn't have to take on debt or dilute the stock and they would have more profit leverage with a higher POS.
I bought some warrants back at 32 cents which entitles me to buy shares at l.25 up to 3 years.
First of all it will then cost me 1.25 PLUS the 32 cents or l.57 per share.
All it does it let you keep your money and buy when you wish riskng only 32 cents or whatever.. But if you buy now at even 58 cents you now own a full share not an option.
When it reaches l.25 you have already made, at 58 cents, 67 cents.
Who makes the most money the guy who buys at l.25 plus 32 cents or the guy who buys now at 58 cents?.
I rest my case!
Normally I'd say earnings don't matter but in this case they do since everyone is looking for direction since the GG sale. People are still shy... we need to hear guidance and earnings to get everyone comfortable again. I called the bottom two weeks ago and I'm gonna tell everyone right now that SLW is gonna see $30+ by may. Be patient and dont't sell till late april! JMO
I think with the current price of silver ($18)being so much higher than the cost of SLW's silver purchase ($3.90), that SLW has lost its leverage to the price of silver.
The better play is the SLW warrants. This was pointed out in another thread a few weeks back.
If you don't like warrants, then just stick with SLV. Less risk and you get bascially the same leverage.
Interesting choice of words in "harmony". The musicla analogy is not lost here. Harmony isn't two parts play/singing identical notes but complimentary ones. SLW & SLV do not move in lock step together, but do move generally in the same direction long term.
In the case where SLW lags behind POS, I'd say it has everything to do with the temporary saturation in the market (GG's shares) & the broader selloff since the first of the year. IMO.
SLW has had a record of earnings disappointments with the exception of last qtr. when analysts curiously dropped estimates to a ridiculous level of .07 or .08 share. Result, a positive "suprise" followed by GG's recent move - talk about things that make me go hmmm.
IMO again, SLW "should be" priced ahead of POS due to it's bus. model but that is true only if one believes PM's will continue to climb or at least hold. The effect of wider profit margins on existing silver contracts.
What prevents this from holding true day to day are all the other influences outside the POS bubble. ie; broad market selloffs, profit taking traders, economic data & speculation thereof being met/or not and whether those many factors are priced in already...it's all one big convoluted dance. Too many players with their own agendas & influences & opinions to name them all or point to one with any certainty and say "this" is why "such & such" is occurring.
Follow the trend. MACD, Bollinger bands, M avg., slow stoch. You'll see pretty good idea of where we are & where we are headed - just not exactly when.
I say we are poised for another nice steady run like in Sept. to start soon. It may have started this week. "If" things stay as they are (fat chance) I would expect SLW to be in the $19 - $20 range. The fact that it is not, is just more potential building for an explosive catch-up run - the kind I love to trade in & out of.
This is a theatric sell off scheme prior to a good earnings report. I'm betting the report will be good and propel this equity higher in the comming weeks. If you sell tomorrow the boys with jets, the beach houses, and hot girlfriends thank you for your contributing to their New York family fortunes. If I'm wrong than I lose, and read this wrong, but I don't think so.