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A Look At Silver

05/29/13 02:42:20 PM
by Koos van der Merwe

Silver is the poor man's gold. As the price of gold dropped, the price of silver fell even faster. Is it time to start buying silver?

Security:   SLW.TO. SLW
Position:   Buy

Silver Wheaton was established in 2004. Today it has positioned itself as the largest precious metal streaming company in the world. The company has a number of agreements where, in exchange for an upfront payment, it has the right to purchase all the silver production at a low fixed cost from solid high-quality mines around the world. Based on its current agreements, the forecast for 2013 is approximately 33.5 million silver equivalent ounces. Production is anticipated to increase significantly to approximately 53 million ounces by 2017. Unlike most other mining companies, Silver Wheaton has no ongoing capital or exploration costs.

Figure 1. Monthly Chart
Graphic provided by: AdvancedGET.
The monthly chart in Figure 1 shows that the Elliott Wave count is suggesting a Wave 4 in the process of being completed. The RSI is close to oversold levels and with the PTI (Probability Index) only giving a 30 rating, this suggests that there is the possibility of a further downside. The candlestick is a black spinning top which, after a long decline, signals weakness among the bears and warns about a potential change in trend.

Figure 2. Daily Chart
Graphic provided by: AdvancedGET.
The daily chart in Figure 2 shows an Elliott Wave count with Wave C bottoming on May 16, 2013. The low formed is lower than wave 3 on the chart where the RSI formed a low and then rose to a higher low. This pattern gave a divergence buy signal. The price, should it break above $24.33, will give a JM internal band buy signal. The JM internal band is a 15-period simple moving average offset by 2% positive and 2% negative. Note that the double bottom that has formed with Wave C is suggesting a move up.
I would be a buyer of Silver Wheaton at present levels.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

Address: 3256 West 24th Ave
Vancouver, BC
Phone # for sales: 6042634214
E-mail address:

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