Sakhaneft, you'd think all things precious would track a logical track but I've come to learn that even when a trend is in place, short and medium term gyrations are not the exception, but rather the norm. Let's get everyone thoroughly disgusted, disinterested, and disheartened and then you get the herds attention and the run begins anew. I've given up trying to second guess this market. Keeping the faith has kept us primarily value investors.
Sakhaneft, we've come to expect the July-August period to be seasonally the weakest for metals and this year seems to be a repeat. Volume reversal really does need to occur before a solid turn should materialize. The next weeks should prove to be revealing as to a confluence of world events, dollar direction and general stock market direction. The DOW continues to suck the energy out of EVERY other market and the metals prove to be no exception. The brave are buying this thrust into uncharted territory and I feel more content to maintain silver longs and sit on the sidelines.. awaiting the impending fall.. September/October always seems to be interesting.
Sakhaneft, Vincente would seem to be a micro event for PanAm and i would expect that Pan American is well positioned, to cash in on rising silver prices with it continuing to boost precious metals production over-all. In the first quarter of 2014, silver production grew a healthy 5% compared to first quarter 2013 and gold production spiked a massive 43% for the same period. Bolivia was purchased with the thought that it was 'the little train that could'.. and it keeps chugging along without major capex and so I don't worry about it too much. But, that's just me. Let's see how close they can get to meeting full year production forecasts and I'll be gratified if they come within 85% of expectations.
The Motley Fool - Today
Bet Like George Soros and Cash in on a Silver Rally
There are growing signs that now is the time for investors to take the plunge and make a bet on silver. Already the top end of town is making some big bets on silver with Wall Street investment managers and institutional investors leading the charge.
Billionaire investor George Soros has already made some big bets on precious metals and silver miners in particular. He invested $9.4 million in precious metals streamer Silver Wheaton (TSX: SLW)(NYSE: SLW) and $10.7 million on miner Pan American Silver (TSX: PAA)(Nasdaq: PAAS).
Why will silver rally?
Indicators are pointing out that silver is undervalued particularly in comparison to gold, which has rallied this year, while silver prices have remained relatively flat. This becomes apparent when taking a closer look at the gold-to-silver ratio, which measures how many ounces of silver buy an ounce of gold.
At the height of the gold bull market, 43 ounces of silver bought one ounce of gold, but since then the ratio has widened, now needing 63 ounces of silver. Silver has failed to keep pace with gold despite the historically close correlation between the prices of the two precious metals.
When coupled with signs of diminishing supply as well as growing demand for use in industrial processes and the manufacture of jewelry, it is clear a sustained rally is imminent... Pan American is well positioned to cash in on rising silver prices with it continuing to boost precious metals production. In the first quarter of 2014, silver production grew a healthy 5% compared to first quarter 2013 and gold production spiked a massive 43% for the same period.
The company continues to control costs with all-in sustaining costs for the first quarter 2014 down a massive 20% compared to the equivalent quarter in the previous year to $15.54, and are expected to fall further. This tight cost control and low all-in sustaining costs allow PAAS to generate profits
Leeb, following your assertion that PAAS and SLV track one-another I went back to the three-year time-line charts and did the overlay of PAAS vs. SLV and can see a tracking with what appears to be expanding and contracting pricing variations of between roughly 10 and 30 percent with 10-20% seeming to be a fairly normal premium average for PAAS above the SLV ETF. With present valuation of PAAS nearing a 30% premium I do see where you derive your concern as it does seem as if one of three things will occur; ONE: That PAAS will shrink in valuation as compared to SLV or that; TWO: SLV will either appreciate in price vs. PAAS.. or that: THREE: PAAS as a more leveraged equity will slow or fall in appreciation v. SLV while SLV does rise more significantly to reflect a more stable longer term pricing relationship. I do know that EQUITIES have always preceeded price moves in underlying commodity markets and therefore must keep this in mind when attempting to guess at what should be true market differential between these two different yet similar animals. dcp
Sakeneft, From Kitco EOD Round-up
Price action Tuesday saw follow-through selling pressure that begins to suggest near-term price up-trends are finished and that prices will now work sideways to lower in the coming weeks—barring a geopolitical flare-up. Lack of fresh concerns about the geopolitical front have led to better risk appetite in the market place early this week, at the expense of safe-haven gold. However, four situations remain simmering on low heat on the back burner of the market place: the European Union sovereign debt crisis, the Iraqi civil war, the latest flare-up between Israel and Hamas, and the Russia-Ukraine tensions. Any one, or more, of these conflicts could quickly move to the front burner--and gold would likely see good safe-haven demand quickly develop.
Sakhaneft, thank you for the update. If you err, it generally seems to be on the side of conservatism. I can't fault you for that. Prudent, means you've lived long enough and wisdom comes from application of experience and and plan implementation. Well played.. again. dcp
Sak, wasn't being critical of your market decisions and support your long term bullish out-look. I always am appreciative of your sharing your thinking with the rest of us and especially find of value, your objective research which is a valuable form of discipline in purchase and sales, especially over the near-term. Thanks again. dcp
Sakeneft, one thing is certain.. since July 1st, you haven't given up much profit opportunity by grabbing profit at high-water-marks. We seem to be running-out the clock on this June-July typically weak pricing period for metals and perhaps August will show us where the strength resides. Good luck to all.
Otto, I dare you to short 10,000 shares out-right.. and if you don't have the cash.. I think you should sell naked calls... I'll take the other side of your bet and I bet that you lose.. BIG TIME! Happy 4th of July, America!
Sakenhaft, much appreciated benefit of your current technical analysis. Your timing couldn't have been much better for today's range. I sincerely do get a better feel for the day to day ebb and flow of a more thinly traded market further narrowed in a single mining issue using your approach. You have made a longer term calculation and are using Pan American in this regard as a trading tool as well. My hat is 'off' to you! Thanks so much for keeping the faithful few in your thoughts. I too, believe that we will see a sharp pullback one time further and I also believe it will come sooner, rather than later. Should this test hold, as I am confident it will, the fall months should prove interesting and profitable on the long end. Good luck to you and all herein. dcp
Sentiment: Strong Buy
Sakheneft, a good strategy indeed! Don't forget to put some physicals in your tupperware!
Sakhaneft, you present a reasoned argument for continued growth, expansion and success at Pan American Silver. You offer a reasonable expectation for anyone believing that silver has become too cheap and dollars too expensive. And, for anyone believing the contrary, I believe these shouldn't be buying silver shares.. at all. The management of Pan American follows a professional approach to cautious yet aggressive planning and execution. Missteps can and have been made in the past, but learning from past errors is worth a considerable amount if the lessons produce solid results and a firm footing for the future. Thank you. dcp
The Fuel for Metals
What skeptics of the Bull market have failed to realize over the past 5-years is that the Federal Reserve has turned the stock market upside down, making bad economic news a reason to buy stocks, and good economic news a reason to sell them. The distortion keeps the real value of assets obscure and stuck in the “Twilight Zone.” The answer to this bizarre market behavior is simple: the stock market is being ruled by the Fed, not by fundamentals. In simple terms, what matters to the stock market is the easy money from the Fed, not the performance of the companies whose stocks they are buying and selling.
Indeed, the Bank of International Settlements (BIS) warned a year ago, on June 6th, 2013, “the equity markets are under the spell of monetary easing policies that have enabled market participants to “tune out signs of a global growth slowdown.” Investors are able to shrug off weak economic data and instead, continue to bid stock prices higher, “amid the prospect of further central bank stimulus. Abundant liquidity and low volatility fostered an environment favoring risk-taking and carry trade activity,” the BIS observed.
Under the cloak of “Infinity QE” – the Fed injected $1.5-trillion into the coffers of its agents on Wall Street, which in turn, was funneled into the stock market, and inflated the market value of NYSE and Nasdaq listed stocks by $6.5-trillion to a record $25-trillion today. Since the Fed fist launched QE in Sept ’08, the central bank has increased its portfolio of bonds by $3.45-trillion, while the value of US-listed shares has increased $15-trillion. In other words, for every $1 of QE, the Fed increased the wealth of shareholders by $4.35. Last year, every bit of news that did not fit the Bullish narrative was downplayed and soon forgotten.
Analysts estimate that 40% of the increase in the earnings per share of S&P-500 companies in the past 12-months was due to the “financial engineering” of corporate treasurers.
From June 10, 2014-Motley Fool
When you decide to buy your silver:
Since investors are often nervous about investing in silver exchange-traded products that don’t hold the actual metal, funds are being forced to buy large amounts of silver as money flows in.
These days, precious metals aren’t attracting much new capital, but this will change when we experience a significant stock market slowdown or decline. Long-term bulls in silver know, this could be a good entry point. As investor money flows into silver funds, so will demand for the actual metal.
Investors looking for silver exposure should just buy the largest producers, like Silver Wheaton (TSX: SLW)(NYSE: SLW), which processed or 'streamed' more than 33 million ounces of silver in 2013. The company remains consistently profitable, has reasonable debt levels, and even pays investors a 1.3% dividend.
Investors looking for a better yield would probably prefer Pan American Silver (TSX: PAA)(NASDAQ: PAAS) and its 3.9% dividend. Pan American also trades at right around its book value, has virtually no debt, and is sitting on $400 million in cash. The company is a terrific place to sit and wait for silver prices to recover.
Just when you are certain that new lows are to be tested... got to suck 'em in.. one more time! Yes, i believe you are targeting June & July time frame for your purchases.. yet, days like this dispels too much fear... fearful is best purchasing.. chasing is separating the casual buyers from their cash stash. Don't get me wrong, medium term is higher.. stocks are not yet done making a top.
With tough enough fingernails... silver can look rather impressive. Let's see where the white metal takes us.
Why We Are Now Selling Our Gold Positions For Silver Positions
Jun. 1, 2014 12:09 AM ET | Includes: AG, AGQ, DBS, DSLV, HL, PAAS, SIVR, SLV, USLV, USV, ZSL
Disclosure: I am long SIVR, AG, PAAS, GPL, RVM, MVG, EXK. (More...)
Summary: Seeking Alpha
Silver's performance over the last three years has been especially weak, but we believe silver is about to start significantly outperforming gold.
2013 Silver Institute data shows that scrap silver supply has plummeted by more than 60 million ounces; 2014 should see even further drops as the silver price has fallen further.
Primary silver miners didn't produce silver profitably in 2013, and may have challenges in 2014 mining silver profitably; and byproduct silver production may also see a drop.
Analysts and investors are especially bearish on silver and are positioned accordingly; thus positive news may catch the market off-guard, and being long silver is truly a contrarian position.
The annual silver market is very small at under $20 billion, and there is the potential for significant gains if even a moderate amount of money enters the silver market.
In the past we've been very bullish of gold and the gold ETFs (SPDR Gold Shares (GLD)) and less bullish on silver and the silver ETFs (iShares Silver Trust (SLV) and the Sprott Silver Trust (PSLV)), with our biggest reason to own silver simply being its correlation with gold. We are starting to change our mind and believe that investors should begin to allocate more of their precious metals portfolio to silver over gold. We want to stress this isn't because we're bearish on gold (quite the contrary), but rather that we believe that the potential returns on silver are potentially much better than in gold.
I fail to see Yahoo bulletin board enforcement.. anywhere. Their revamp would suggest that all their former personnel ended up in the administration of the White House. Perhaps I'm being too critical.. OR not!