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Bob Kirtley
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Bob Kirtley has traded options and stocks since 1980. Bob Kirtley spent many years working on Oil projects including some in Alberta, such as the tar sands installations in Fort McMurray. He lived and worked in many different countries, as that is the nature of the construction business.... More
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Gold Prices Biz
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  • GOLD: The Bewitching Hour Of A Triple Bottom Is Upon Us

    Background

    The last time gold sparkled was in the summer of 2011 when an all-time record of $1900/oz was achieved. Alas since then it has been a torturous journey as gold prices has trekked south arriving at today's price of $1216/oz, registering a loss of 36%. However, for the year to date gold is still trading above its low of $1180/oz as it grimly hangs on to a modest gain of 3%. The question we face now surrounds gold's direction; will it test the previous low of $1180/oz and bounce to higher levels or will it penetrate this support level and set the stage for sub $1000/oz gold prices.

    Gold's precarious position

    In the past we have expressed our skepticism regarding gold's capitulation which we saw as a 'capitulation of sorts' and not a final capitulation. The bulls fought back through a number of promising rallies, all to no avail as these petered out and prolonged gold's ability to find its real bottom. A lot of the weak hands have gone and some of the stronger ones who still hold long positions must be having second thoughts as to the wisdom of such a strategy.

    The above chart shows that gold formed a wedge from which it unfortunately broke out to the downside which is negative for future prices. Also note that gold is now preparing to test the $1180/oz level for the third time. If this support level can hold then it will be a good platform on which to build the next bull phase of this bull market. Should it collapse then the patience of those who are not already out will be severely tested with the next stop on the way down being the $1000/oz level.

    Also worth watching is the price of silver which could support gold prices, however, support from gold's little sister has not been forthcoming. Silver prices have now penetrated the support it had established at $18.00/oz and could head lower testing the $15.00/oz level.

    The miners are offering little in the way of support and they won't be spared if this rout takes place. The Gold Bugs Index (HUI) stands at 202 today just 12 points above its low for the year of 190. Many of the precious metals mining stocks are now trading at prices which are way lower than those achieved over the summer which in turn follows a couple of bad years whereby the HUI has lost around 66% of its value. Should the 190 level fail then a retest of 150 is on the cards. The last time the HUI traded at 150 was in 2008 when Endeavour Silver Corp (NYSE:EXK) traded below $1.00, Agnico-Eagle Mines Limited (NYSE:AEM) at $20.00, etc. This may sound ridiculous to you at the moment but for us it is a distinct possibility as the bears are in control. This decline may not be of the 'spike' variety and it could include the occasional bounce particularly as current prices are severely oversold.

    On the bullish side we could argue that supply is dwindling, demand especially from China is growing, there is a rise in turmoil across the planet, a new gold exchange in Shanghai, the London mint is to produce gold coins, money printing, etc. We are all aware of the above along with the many metrics and data points that normally support higher prices and suggest that gold prices should be much, much, higher than they are today.

    Conclusion

    We are finding it difficult to come up with a catalyst that would ignite gold and silver prices and despite the positive factors bearing on gold they are having no effect whatsoever.

    The next bounce in prices, if and when it comes could be another false dawn disguised as a rally and we have had many of those over the last three years. Our preference is to watch the market and use any bounce in prices to establish short positions. It may be possible to trade the bounce with long positions but as investors we would need to be very nimble and move in and out with some speed and gusto, which is not everyone's cup of tea.

    We have kept most of our funds in cash and are pleased to have done so as we can now buy at cheaper entry prices or open short positions without feeling too pressured if a trade goes against us in the early days of its existence. By adopting a flexible approach whereby we can be bearish or bullish in any market sector, our options trading team has generated a profit of 932.79% in just 5 years.

    Do try not to be a perma-anything, as such rigidity takes from you the opportunities that are presented by the markets in both directions.

    Got a comment, then please fire it in whether you agree with us or not, as the more diverse comments we get the more balance we will have in this debate and hopefully our trading decisions will be better informed and more profitable.

    Go gently.

    Disclaimer: www.goldprices.biz or www.skoptionstrading.com 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 of 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 neither a guide nor guarantee of future success.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

    Sep 24 9:14 PM | Link | Comment!
  • Is Silver The Cure For Silver Prices?

    Background

    There are a numerous contributing factors to be taken into consideration before making an investment in silver such as: supply and demand, industrial usage including solar panels, decorative jewelry, and short and long trading opportunities, price manipulation, various metrics such as silvers relationship to gold, the DOW Industrial Index, etc. The list of uses is huge and growing, so today we will look at just one of them which we think is important; the medical uses of silver.

    Some of the medical uses for silver

    For generations silver has been used for medical purposes by various nations across the world. Its medical uses have been recorded since the ancient Roman and Greek civilizations.

    Nowadays the medical use of silver includes creams, wound dressings, and antibiotic applications. Colloidal silver is probably the most commonly known today, it is also used as a tonic when debilitation through disease or old age is encountered. One of Britain's top doctors says the rise of drug-resistant superbugs could trigger an 'apocalyptic scenario' Professor Dame Sally Davies, Chief medical officer warns that within 20 years it may be impossible to fight common infections, this renders even routine operations dangerous, due to the over use of anti-biotics. So silver might be the antidote for superbugs.

    From what we can glean silver helps by causing bacteria to leak in some circumstances, this leakage allows the antibiotics to enter the bacteria and destroy them. Silver is currently been used commercially in the manufacture of socks and allegedly it reduces the odour associated with socks. We also understand that silver is being utilized on a test basis in the manufacture of hospital beds, sheets and even the uniforms worn by ambulance drivers as a possible combatant against the spread of bacteria such as super bugs.

    It could eventuate that silvers medicinal properties may not only be a cure for our ailments but the additional demand could push prices to much higher levels over the coming months and years.

    Chart of Silver's progress

    It is difficult to see this breakout by silver over a 5 year period but it is there, so the next challenge will be to make a higher high above the $22.50 level. The RSI looks to have peaked at 80.65 and suggests that silver is firmly in the overbought zone. The STO has also peaked so we could see a small correction in the near term

    Conclusion

    I am a silver bull, but not a perma-silver bull, as that stance lacks the flexibility a trader requires in order to perform. If you believe that the time is right for silver to explode skywards then there are a number of things that you could do to position your portfolio for such an event. The acquisition of physical silver, silver funds, silver producers and even a well thought out 'options' strategy spring to mind. Our preference is to hold physical silver in our very own hands, invest in precious metals mining companies and trade options. We are of the opinion that an investment in physical silver means just that and not a piece of paper being held by someone else on our behalf.

    In terms of timing; the summer doldrums have been turned upside down by the recent 'pop' in gold and silver prices, but we are still in June so there are a couple months to go before we are out of this period. That's not to say we won't be buyers of a particular stock if it offers a bargain entry level that we can take advantage of.

    We believe there are times to be fully invested and times to exercise a little caution. At the moment we are not prepared to adopt a cavalier approach to silver investment or their associated producers as we have been through a number of false dawns over the last few years, so we need a tad more certainty before we can fully commit our funds.

    Go gently.

    Disclaimer: www.goldprices.biz or www.skoptionstrading.com 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 of 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.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.

    Jun 25 4:19 PM | Link | Comment!
  • Apple Incorporated Or Silver Wheaton Corporation? Updated 20 Sep 2012

    On Sunday, March 4, 2012 we posted an article comparing two of the markets popular stocks and as a short re-cap we wrote the following:

    Apple Incorporated (NASDAQ:AAPL) or Silver Wheaton Corporation (NYSE:SLW): some would say its a little like David and Goliath or Bambi meets Godzilla. Apple is currently the darling of the technology sector and Silver Wheaton is hugely popular in the precious metals space.

    As investors we need to continually ask the following question:

    Is this the best investment vehicle for my hard earned cash?

    So, we took a look outside of our precious metals box and duly noticed the meteoric rise of Apple. No doubt the supporters of Apple would find it laughable to be compared with a much smaller silver streaming company. If we take a quick look at the performance of both since January 2011 we can see that AAPL is the winner by a long way.

    We also posted this chart of the progress that had been achieved by both companies.

    (click to enlarge)

    If we now fast forward to today we have the following financial data from which we can glean that Apple continues to make terrific progress and that Silver Wheaton has finally started to gain some traction.

    Apple Corp has a market capitalization of $657.97Bln, an EPS of $42.54, a 52 week low of $342.24 and a high of $702.33, average volume of shares traded is between 13.00Mln and 14.00Mln, so the liquidity is very good allowing ease of access and exit when trading, with 937.41 million shares outstanding. Current stock price is $701.91.

    Silver Wheaton Corporation has a market capitalization of $14.00Bln, an EPS of $1.60, a 52 week low of $22.94 and a high of $42.50, average volume of shares traded is between 4.00Mln and 5.00Mln, so the liquidity is good, with 353.87 million shares outstanding. Current stock price is $39.55.

    In terms of market capitalization APPL is 47 times bigger than SLW, also of interest is that its EPS is greater than SLW's stock price.

    Now, when looking to invest in a stock we try to acquire a stock that we believe can double in 12 to 18 months. For Apple to double it will need to become a trillion dollar plus company. This is a big ask, even for a stock market favorite, however, it is heading north with considerable speed. On the other hand, SLW will need to grow its value from $14Bln to $28Bln, which is also a big ask, but who would have thought it would have gotten this far back in the day when it could be acquired for around $4.00.

    These are two totally different companies in different market sectors so its very much like comparing apples with oranges. However, when we look at the price of these stocks as of March 4, 2012 (when we suggested that SLW would outperform AAPL by the year end) and compare them to the prices that we have today, we get the following result;

    AAPL: March 4, 2012, $545.18 - Today $701.91 an increase of 28.7%.

    SLW: March 4, 2012, $37.59 - Today $39.55 an increase of 5.2%.

    Clearly, Apple has outperformed and has been the place to be. So well done to Apple shareholders.

    Taking a quick look at the latest chart we get a similar story, however we would ask you to note the recent gains made by SLW since July, largely on the back of improving silver prices and the acquisition of additional revenue streams. The magnitude of this move has been phenomenal in our opinion. We now expect silver prices to continue to rally with SLW making very good gains.

    (click to enlarge)

    Putting the euphoria to one side we do expect Apple to plateau and possibly undergo a correction in the short term and Silver Wheaton to gain on the back of rising silver prices and therefore humbly suggest that Silver Wheaton will outperform Apple between now and the year end. By outperform, we mean that it will experience a bigger price increase in percentage terms. We will continue to monitor both companies between now and then and provide an update as and when there are any indications of substantial developments in the direction for either stock. So its a race to the end of the year between the Techies and the silver bugs, may the best stock win.

    For disclosure purposes we must point out that do own stock in Silver Wheaton and we do not own stock in Apple Incorporated, so our view should be considered in the light of that knowledge.

    Silver Wheaton Corporation trades on both the NYSE and the TSX under the symbol of SLW.

    Apple Corporation trades on both the NASDAQ under the symbol of AAPL.

    Bob Kirtley

    URL: www.skoptionstrading.com

    URL: www.gold-prices.biz

    Email:bob@gold-prices.biz

    Disclaimer: www.gold-prices.net or www.skoptionstrading.com 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.

    Disclosure: I am long SLW. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Tags: SLW, AAPL, long-ideas
    Sep 20 5:30 PM | Link | Comment!
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  • Another bad day at the office for gold and silver, 2014 could be as bad as 2013 at this rate of decline.
    1 day ago
  • The HUI closed at 199 today, if the Dec lows don't hold then its all the way down to 150.
    2 days ago
  • Silver prices have closed sub $18.00/oz for a week, next stop $15.00/oz, if that doesn't hold then possibly $12.00/oz #gold #Silver
    2 days ago
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