Silver: ETFs And 5 Miners Valuated For Direction

 |  Includes: BVN, CDE, GDX, GDXJ, GLD, HL, PAAS, SLV, SLW
by: Steven Bauer

This article will focus on Silver & Gold and the ETF, iShares Silver Trust (NYSEARCA:SLV) and SPDR Gold Shares (NYSEARCA:GLD). However, I am pulling away from that theory and will likely treat them separately in the future.

My recommendation for silver and gold is to continue to hold cash in all precious metal securities.

Investors often take the position that silver and gold, over time work as an inflation hedge. In my last article on gold, I suggest that this position or thought carry some meaningful time periods of argument. You might want to view the very long-term chart of gold in this article. Misconceptions of facts and data can be very expensive!

Silver mine production rose for the ninth successive year in 2011, to a record of 761.6 Moz (23,689 t). However, production fell off at several large operations, including the world's two largest primary mines, Cannington and Fresnillo. The gains prevailed over the losses due to production gains from a handful of new mines ramping up. Growth for silver production is on the increase as a by-product of gold and lead/zinc mining.

As an economist, it is important for me to stay close to both production and consumption. You may be surprised that supply and demand does correlate with commodity security's price change.

Top 5 Silver Producing Countries in 2011

(millions of ounces)
















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If you need some encouraging news, I suggest you stay tuned to my future articles on silver and gold. In my personal blog, I update gold and silver every two weeks.

Current Valuation of 5 Silver Mining Companies

My abbreviated valuation as presented in the below table for the mining companies gives a clear perspective of the future direction of gold. My Valuation for GLD, SLV, (NYSEARCA:GDX) and (NYSEARCA:GDXJ) is the same as the mining companies average rating and opinion. That is currently bearish and does not support buying or holding these ETFs.



Projected Price

Rating: ( 0 - 100 ) / ( A - F )

Fundamental Valuation & Technical Opinion



minus 24+%

69 / D

Not a good valuation and technically it is in a clear down trend .



minus 21+%

70 / C

Not a good valuation and technically it is in a clear down trend . Leading technical indicators may be turning positive



minus 26+%

67 / D

Not a good valuation and technically it is in a clear down trend .



minus 24+%

69 / D

Not a good valuation and technically it is in a clear down trend .



minus 21+%

70 / C

Not a good valuation and technically it is in a clear down trend .

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Source of raw data: Finviz.

Notes for the above table: Projected Price is calculated and produces a probable range of the current price over the coming three to six months. Fundamental Valuation & Technical Opinion is calculated and translated into a Rating. Ratings below 90 / A are not current (never are) candidates for buying. I suggest cash and patience as an alternative.

Technical Opinion - 3 Charts

Clearly, the 20 year price chart demonstrates that there are anomalies between silver and gold. These anomalies are of concern to me and are why I will be treating them separately. I hope you gain perspective for studying long-term charts before making any investment decision.

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The following two composite charts make clear that silver, and gold prices are in a pullback. This is my initial warning that prices will be falling in the coming weeks and perhaps beyond.


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Silver Mining Companies

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At this time, there are no ETFs or mining companies with ratings that stimulate my interest in buying. The ETFs are followers of component mining companies, and technically they look terrible. Currently, I suggest cash is the best alternative for silver, gold and most all precious metals.


I am bearish on both the economy and the general market. My recent Instablog postings are focused on securities that should not be held in your portfolio. It is important for you to understand that holding cash during questionable time frames is a wise choice. (This is definitely a "questionable" time frame). This coming Saturday, the above gold and silver will be included in my weekly Instablog posting.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.