SLW analysis for anyone interested...
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"SLW hit a RS peak a few months ago. The under performance relative to silver has really accelerated lately increasing almost each day until today, silver was up over $1 and SLW was down.
Two things going on.
The first is what I've been concerned with for 5 or 6 weeks.
The days of practically stealing silver streams from gold miners are over.
Those contracts that were negotiated when silver was cheap are now wildly obscenely profitable for SLW and that will continue for the next 4 yrs at least. At some point way out there, they have to replace streams as the gold mines gradually play out.
A long ways off but remember Pfizer and how over 5 years in advance of major patent expiration for their two big drugs, the stock started going down and kept going down as the market knew they could not replace those two huge cash cows.
So, I think that is in the mind of institutional investors and lets face it, SLW is the only silver stock big enough to be considered solidly institutional.
I mentioned two months ago that I expected silver miners to outperform SLW.
Ok so that brings us to the second part.
I think everyone buying silver is scared to death that they will get caught in a violent reversal because it's so extended, overbought etc.
Yet it is The best performer around.
Hedge funds want to play, they can't turn a blind eye to that kind of sizzling performance.
So,
I believe and am 100% convinced that a lot of hedge funds are buying silver and shorting SLW as a hedge. It's a hedge that is a very good one so far and when something works, word spreads quickly in the hedge fund community and more do it.
It then becomes a self fulfilling prophecy to some extent as the shorting drives down or holds back SLW.
I've been on the verge of selling some or all for a while now.
I know what is going on but I'm not totally convinced it will continue. SLW's engs reported about May 10th are going to be according to IBD over 200% higher than a yr ago. I don't know if that is right but they will be spectacular as will the April-June quarter, then the next if silver stays over $40.
Yet, the market knows this and this hedge situation is a problem I don't see going away soon because it is working.
Of course, as silver keeps marching up and SLW drifts farther behind of where it "should be" with over $45 silver it becomes a better value vs. silver compared to what it was in say Dec or even a month ago.
I try to give long term holdings a lot of leash but like I said....I'm not opposed to taking it out and replacing it. One problem is the damn 3 day wait in IRAs before I can turn it into something I like better and in 3 days, what I want to buy tends to go up. [as I'd replace it with silver or gold related].
Anyway, just thought this situation might be of interest.
The markets a chess game.
ps
slw up down vol has deteriorated to 1 and it's accum dist rating has deteriorated to D which is exactly what I'd guess just by watching each day for the last few months.
Tell you one thing. A $1 plus move in silver today and having a big silver stock drag on the acct. does not set well with me. I earned this silver lunch and aim to eat all I can. I won't stick with this kind of behavior for long should it continue. I'd like to hang in to see what the reaction to earnings are but that is several weeks away. A relatively long time given the kind of movements we're seeing".
All IOHO of course, Do your own DD
Fabian
AI
