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Precious metals have been in bull mode since last summer's spark of the FOMC meeting minutes, in August, 2001, when it was stated that "the Fed retains the means and tools necessary to take additional action to liquefy credit markets and/or stimulate the U.S. economy". This was interpreted as monetary inflation by the markets and precious metals rose accordingly. Then, with the mid-term elections, a further boost occurred in the November 3, 2010 FOMC announcement of the purchasing of $600 billion in Treasuries. However since this new year started, the S&P 500 has just been continually chugging along in a vigorous growth mode, but there has been a serious backing-off correction of the precious metals.

So just where are we at in the precious metals bull market. Is this the end of the climb and a fall is ahead? Or is this just a resting place for the precious metals to consolidate, and more gains are expected. What happens next?

The following chart of SIL, the Silver miners ETF is amazing. (I prefer Silver as the leader of the precious metals rise, and use junior mining equities to leverage the metals gains.) I moved the timing back a few months and lo and behold, a fascinating graph came into view. A longer time frame certainly improves the vision and perspective, doesn't it! Sometimes one cannot see the forest for the trees obscuring the view. Too often, investors are concerned about the day-to-day stock prices without realizing the major trend indicated by a longer term view: (click to enlarge)

Source

The chart displays the remarkable rise from last summer's doldrums of the Silver miners in the SIL ETF. Essentially, the SIL has doubled in price for a 100% gain reached right at the beginning of this year 2011. Then the serious backing off, starting in January began and caused us all to wonder...what's next.

This dynamic chart reminds me of "Elliott Waves", (Note: I am not an Elliott wave proponent, but would welcome emails for more information) where the SIL prices may be at the beginnings of wave 3 upwards. But that is not the item under discussion here. Anyone can recognize the trend movement here I think; the massive trend is upwards.

What the chart is telling us is that basically, we are in the middle of a massive Silver Bull and the major trend is upwards. Of course there are corrections and fallbacks, but this huge move is being driven by the monetary inflation initiated and further supported by the FOMC. With the backing of the FOMC, how can the ordinary investor lose?

SIL miners are leveraging the Silver metal itself; the red trace is for SLV the Silver metal ETF, and the SIL candlesticks move higher than the Silver prices. Also note that SIL leveraged the SLV prices upwards but did not leverage much downwards in the pullback, which just indicates the strength of this move, and continued bullishness from the market participants.

Where are we headed in this Silver Bull? Well, not from any extrapolating from the chart or any other arcane mathematics, possibly this silver uptrend may peak somewhere around mid-May of 2011. Why? In my experience, in the smaller metals and commodities and miners stocks, the old axe "Sell in May and Go Away" is still very much a strong factor to consider. Therefore, you need to watch your Silver stock(s) carefully and if any weakness in May shows up, you can decide your particular action then.

How can I use what this Silver wave upwards indication is telling me? Well, there is the SIL ETF just illustrated above or the investor may look at the constituent Silver Stocks of the SIL. The top ten top holdings are listed as follows:

Data as of 2011-02-03 SIL Top Ten Holdings

1. Industrias Penoles SAB de CV (IPOAF.PK): 11.59%

2. Silver Wheaton Corporation (SLW): 10.43%

3. Fresnillo PLC (FRES): 10.08%

4. Pan American Silver Corporation (PAAS): 10.01%

5. Hecla Mining Company (HL): 5.03%

6. First Majestic Silver Corp (AG): 4.57%

7. Silvercorp Metals Inc. (SVM): 4.37%

8. Coeur D'Alene Mines Corporation (CDE): 4.37%

9. JSC Polymetal GDR (PMTL): 4.04%

10. Hochschild Mining PLC (HOC): 3.85%

% Assets In Top 10: 68.35%


Total Holdings: 29

Source

Two of my favorites are Silver Wheaton (NYSE:SLW) and Hecla Mining (NYSE:HL), both larger miners.

However, I also like the larger gains that can be had with smaller Junior Silver Miners/Explorers such as:

Data as of 2011-02-03 SIL Top Ten Holdings

1. Industrias Penoles SAB de CV (IPOAF.PK): 11.59%

2. Silver Wheaton Corporation (SLW): 10.43%

3. Fresnillo PLC (OTCPK:FNLPF): 10.08%

4. Pan American Silver Corporation (PAAS): 10.01%

5. Hecla Mining Company (HL): 5.03%

6. First Majestic Silver Corp (AG): 4.57%

7. Silvercorp Metals Inc. (SVM): 4.37%

8. Coeur D'Alene Mines Corporation (CDE): 4.37%

9. JSC Polymetal GDR: 4.04%

10. Hochschild Mining PLC (OTCPK:HCHDF): 3.85%

% Assets In Top 10: 68.35%


Total Holdings: 29

Source

Two of my favorites are on this list: Silver Wheaton (SLW) and Hecla Mining (HL).

However, generally I prefer the possible larger gains with smaller Junior Miners/Explorers such as:

Canadian Zinc (OTCQB:CZICF)

CZICF Feb 17.png

Canadian Zinc is the former Texas' Hunt Brother's Silver mine in northern Canada, from the 1980's. CZICF.PK is certainly picking up a good head of steam, as the possible water permit approval will ignite the stage for their 95% completed mining infrastructure already in place.

US Silver (OTC:USSIF)

USSIF Feb 17.png

US Silver (OTC:USSIF) is the Idaho's Silver Valley high grade Silver producer. Three shafts (or mines) consolidated into one mining operation, with improving grades, resources, capacity and production.

Silvermex (GGCRF.PK)

GGCRF.png

Silvermex is the result of merged Genco Resources and the older Silvermex. Their Mexican Guitarra high grade Silver operations is a consolidation of 6 separate mining areas into one milling operation. This is my favorite Silver play!

So as you may see, the Silver miners are moving together with the Silver wave upwards. So position yourselves readers, the best is yet to come for Silver miners!

Source: Silver in a Clear Uptrend