SLW is not a silver miner. I think just getting ahead of a large silver move down tonight or tomorrow as SLW is getting ahead of a new trend lower in the metals here. If not, then we probably see a 7% up day soon. Either way I'll let someone else short SLW and I will follow with Silver. With Silver near 16, the 4th quarter cash flows will look great with the back end loaded delivery schedule into year end.
Just a lot of shorts in there using it to short silver since the tax issue. It will take a move up over resistance in silver to chase them all out again. Until then they are just fighting there position back and forth. I like the opportunity it presents as the company is will to buy back shares as long as it continues to trade 40% under its NAV. I like shorting silver futures here and buying call options for when/if silver pops and everyone is forced out without liquidity here. That is why we get these 7% up days as well, so it cuts both ways. Each time it dips while silver rallies I fade both sides and it always comes screaming in. This morning you could sell silver up near 16 and buy SLW below 13.70. Now you can buy back silver at 15.90 and sell SLW at 13.85. That wasn't always the case but makes for a great trade while this is so cheap. That's $1250 in profit for each contract multiple times a day and wouldn't be possible without the shorts pushing the cheaper asset lower in the face of rising metals, so take it while it's there. The opening trade paid off 30 cents a contract in a few minutes, so a big winner to start off the day. Just enjoy it while it lasts as SLW is selling a lot of silver up here and will all be reflected in 4th quarter cash flows increasing especially with the back end loaded delivery schedule.
SLW discount to NAV back to the highs here against 14. Shorting a lot of silver and reloading SLW back at record lows. SLW is pricing Silver back down to 13 here. We keep getting these low volume morning discounts, let's see if SLW is wrong and rallies on heavy volume in the afternoon or Silver heads down hard off the sales above 16 again. SLW NAV chart also making a huge monthly head and shoulders here depicting either a massive rally to 17 or a drop in Silver to 13. The neck line is at 15 on SLW with silver here at 15.90. The top of the right shoulder is at 13.90. The head is at 12.50 on SLW where the head and shoulders on the SLW chart lies. Either way you have two bullish head and shoulders forming on a large scale with the NAV H&S being a 10 year pattern off of all time highs on the discount. Should get very interesting soon as this plays out but it looks like a big move in the metals markets soon is lining up with a lot of money being placed on both sides. With IV rank back down to a still high 67, it appears the best way to play it is long SLW calls and short metals futures for maximum leverage to the move coming. With the gold/silver ratio at 73 ( low end of the recent range due to silvers strong up move) I like short silver here against for the most sensitivity. A drop in the Silver should pay out more on the futures than your declining long SLW delta and a move higher in Silver should pay out 2-1 on the leverage from the SLW calls due to the massive discount to NAV here. GLTA
Added some more SLW calls back just over $14 here and shorted some Silver at 16. The price of SLW to NAV just got back to Mondays open. Fair value is somewhere around $20 with $16 silver. Anything under $14 here with $16 silver and the stock will be cheaper than when it was at $11 in respect to their forward delivery.
Unloaded some calls at the 50dma and rolled up to the 12.50 calls and covered some gold. Huge payout for one day. Not sure why the shorts always sell into the hole, but they do.
11.50 Nov. calls and short silver and gold futures. Big October 1st NAV discount, best of the year. Want leverage on this monster for October. Will look to short stock against in the next week and cover the big drops in the metals being priced in.
SLW does not have to buy back any shares and may not. They just filed the right to do so in the next year. They will weigh that vs. using the $300 million to acquire a new stream. The still would have over $1 billion to new deals. They also said they are expecting the tax assessment letter to come any day now. They said they will be taking it to court and that will take a couple of years. They will have to pay half the money upfront and the fines which will be held in escrow. The tax burden will probably eat up a couple of years of earnings. I believe this is why people are choosing to take losses and move on to make it back in other streamers in the space as they will have to take charges against earnings for a while or use their line of credit and pay juice on it. Either way, it will be monies they can't allocate to further deals. They will most likely not have to pay taxes going forward as if they lose the case, they said they move the headquarters out of Canada.
You can go to SLW's website and watch the presentation just given by Smallwood at the Denver Gold forum. He speaks about the portfolio currently and going forward in relation to NAV and the ridiculously low share price currently. If I could raise $5 billion I would take this company private myself and reap $500M in cash flow a year for the next 20 years myself. Who else wants to pool funds?
given current silver prices, the low on the ratio back in Oct.2008 suggests that a current price around $6 a share would be equivalent. That being said, SLW had 233,000,000 shares outstanding then and earned 7c a share. I think they earned roughly 17M that year. Silver was around $9 an ounce and they were paying an avg. of $3.90 an ounce. When you plow all these numbers into today, the stock is trading cheaper today than it was at the bottom in 2008 to current prices. The company is much larger and earning much more today. With Silver at these prices they will earn 40% more in the next few years without adding any streams or any of their current streams adding any capacity or further exploration for the next 20-30 years and The Barrick mines never opening. Any of these things opening or expanding will add dramatically to their organic growth in the next 10 years or so. So, todays prices on SLW are all time lows for the company on a valuation perspective. The tax issue is an overhang, but some big players are stepping in here with Ray Dalio becoming a large shareholder and recently spoke of adding to his position. He bought a lot around $20 in the spring. Good Luck
Selling a lot of expensive Oct. 12 puts here above 50c and buying Oct. 13 calls at 45c for a credit while the confusion over this company continues. The move over $15 silver makes this company cheaper today than it was at $11. On a cash flow basis, we are hitting new discounted lows. Shorting a little silver as well to lock in these cash flows as SLW fills the demand for Silver in the market.
A lot of shorts to cover historically here. The shorts covered about 700k shares into the end of August just above 12. A lot more soon. The volatility has a long way to drop. Calls have fallen a bit. I like selling the puts here and using the proceeds to bid up the calls and offer no shares. The shorts will have to sell puts, buy calls, and buy stock. I like front running them and keeping them bidding up the calls and selling in the hole on the puts and force up the stock here for the next little while.
Covering the Oct. 12's and selling the Oct. 11's. as we move into the 10's here. I think the last time SLV was trading here, SLW was trading around $9 a share. That would put next years P/E at around 13, which seems like a reasonable deal for the growth of production through 2019. Still rolling down the calls here until we get a good washout day on high volume. The orderly decline is still prefect to sell premium into and work the cost basis down as low as possible, will be in the $8 range if they can keep SLW around $11 or $10 by Oct. 16.
Just killing all the premium. This thing is a premium selling gold mine ever since it lost correlation to the metals a few months back. With vol. rank so high, you have to just sell the puts and calls week after week and month after month until the stock takes off and reverts the volatility. No need to care about the stock here when you can make this kind of return each month just selling the straddles and strangles. You can sell the 11-12 strangle for 1.20 here. That gives you downside protection to $10 and upside to 12.60. That gives you plenty of room to adjust as it moves as it is so wide with only a month out.
This all seems too good to be true. The vol. rank is pegged at 90% and the premium is so high and it keeps expiring week after week. Makes you wonder when vol. will revert, it always reverts hard and that would require a massive rally in SLW. Buying stock, shorting gold and selling Oct. 12 straddles for $1.80.
Well, it can be very profitable from a short perspective. If you buy SLW here against, you should be able to profit in either direction from the spread widening. SLW is priced for around $8 silver here and tends to be very accurate in pricing future direction of it's underlying asset base. SLW is expecting the price of silver to drop hard soon
If we can get a good push under book value here we could see a big washout drop into the low 9's. A 20% drop under book value would be a great time to cover short calls and go long against a large short silver and gold position. This stock stopped following its asset base a few months ago and trades with zero correlation. All of these things point to people throwing in the towel and are necessary to create a long term bottom of a decade or more. SLW has silver priced at about $8 an ounce here going forward which is probably fair value for silver. Gold is priced on their books at about $500-$600, so a lot of room for the metals to fall after SLW bases. The basing process would probable look a 2 year period of no movement around $10 while Silver and gold decline precipitously. Using long SLW as a hedge against a large short metals position looks like a great trade. Should the metals rally, SLW will readjust to reflect the mispricing of its asset base over the long term and will re-price to the $17 area to reach fair value IMO. I like the lower scenario with gold and silver continuing to fall unabated to the $8 and $600 area.
Keep selling puts and calls. Rolled out to October. Cost basis is now in the 9's from collecting $1.50 a month in premium. The high premiums caused by the decline are returning 12% per month with only risk of being called away for a nice profit, which you can keep rolling up for a scratch on the premium due to the puts paying 75c a month OTM. Always a silver lining in SLW.
Just trying to find the bottom of Silver which looks like it is headed below 10 in the short term. SLW is pricing Silver in around $8-9 oz. here. At that price SLW is fair value here. Just get short some silver here and pick up the $5-6 a contract, that's $25k per contract