Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
The demand for silver remains very strong despite the regulators delivering an almost knock out blow when they changed the rules half a dozen times effectively inflicting margin calls on those who use margin. Stump up or sell was the order of the day driving silver down from $48.00 to around $34.00 where support was found.
This take down has not lasted very long as we can now see silver prices are on the move again, albeit they were taken down today by a dollar or so, they have moved up to flirt with the $40.00 level.
One of the drivers is the European debt problem which has turned into an on-going soap opera with the latest member of the pig pen, Portugal, discovering a huge €2bn (£1.7bn) hole in the public accounts, which the former socialist incumbents failed to mention while in power. The new leader, Pedro Passos Coelho, now needs to prepare the Portuguese for a program of austerity, yes we have heard this one before as the dilemma of the PIIGS financial ineptitude continues to unfold. The mess has culminated in gold hitting record highs in both the British Pound and the Euro. As the fear surrounding both these currencies builds we expect both gold and silver to be sort after, as safe havens are becoming rarer by the day.
The precarious position of the US Dollar has been well documented and over the last few months it has been unable to break above the ‘76′ level on the US Dollar Index, so its down to Swiss Francs, Aussie dollars, Canadian dollars and the Kiwi dollar as possible hiding places.
We don’t know enough about fine art or antique cars to make a comment, but they are tangible assets that experts in their fields may find them to be an attractive alternative to the folding stuff.
Taking a quick look at the chart we can see that the 50dma is turning north and fingers crossed it will avoid a possible crossover with the 200dma, known by some as the cross of death. Also note that the gap between the silver price and the 200dma is only $8.00 which is dramatically smaller than it was early May when it had widened to around $20.00. This closure takes some of the pressure off of prices which is also positive for silver.
The technical indicators, the RSI and the STO are in the overbought zone at the moment, however, the MACD still has room to move higher. Overall its reasonable to expect some consolidation over the next week or two.
Another factor to add to the mix is the battle for $1600/oz gold which will continue until next Tuesday, when the COMEX options expire and a lot is riding on the outcome, so expect both the bulls and bears to contest the outcome with some gusto.
A little further out say by the end of next week, we anticipate that the rally in both metals to resume and put in an excellent performance by the end of the year. So get into position, certainly by mid August if you wish to catch the rising tide.
We are observing the behavior of a number of silver producers at the moment with the view to making a purchase if our selection criteria is met. However, there are a number of options plays that have caught our imagination and has attracted our ‘opportunity cash’ so its action stations for us as the next leg of this rally gets underway.
For those subscribers who are too busy to trade their own accounts we are now able to offer an Autotrading programwith our SK OptionTrader service, as we are pleased to announce that we have entered into a partnership with Global AutoTrading and therefore autotrading is now available for SK OptionTrader signals
Our model portfolio is up 338.11% since inception
An annualized return of 117.00%
Average return per trade of 40.41%
81 closed trades, 78 closed at a profit
Average trade open for 46.27days
The above progress chart shows our performance when profits are re-invested, however, to see exactly how it is going, please click this link.
Disclaimer: Gold-prices.biz or SK Options Trading makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents our views and replicates trades that we are making but nothing more than that. Always consult your registered adviser to assist you with your investments. We accept no liability for any loss arising from the use of the data contained on this letter. Options contain a high level or risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. Past performance is not a guide nor guarantee of future success.
