Apple Incorporated (AAPL) or Silver Wheaton Corporation (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.

The European Central Bank (ECB) made the headlines with a widely anticipated cut to its key interest rate of a quarter of a percentage point to a record low 0.75 per cent in an attempt to ease Europe's financial crisis and boost its stagnating economy. This move by the ECB will make it cheaper for people and the business community to borrow and ultimately spend this cheap cash.

Next up to the plate was The Bank of England (BOE) chipping in with STG50 billion or US$77.62 as part of its Quantitative Easing stimulus package to boost Britain's recession-torn economy. The BoE also decided to keep its main interest rate at a record low of 0.50 per cent after a two-day monetary policy meeting.

Then we have The People's Bank of China who decided to cut its benchmark lending rate by 31 basis points to 6.0 per cent.

Now we wait patiently for the next shoe to drop, which belongs to the United States. This Friday another set of Non Farm Payroll (NFP) will be announced with the hope that they are somewhere north of 120,000 jobs. However, should this figure come in at sub 120,000 then the heat is back on the Fed to take action. If this figure is as low as 60,000, then Chairman Ben Bernanke will be required to move and move quickly. Our own opinion is that it will be a low number and therefore some form of QE3 will make an appearance albeit in drag if necessary. Any indication that QE3 is on the cards will ignite gold prices with a subsequent knock on effect lifting silver prices as the demand for both of these precious metals gains traction.

All of the above represents a policy of cheaper money and more money, which is inflationary through the continuing debasement of our spending power. The lack of confidence in fiat currencies still exists despite the short term rally in the US dollar.

You may recall the last time we updated the silver chart we said: "that silver could go as low $26.00, so acquire gently." That level is holding for now as the chart shows and the longer this sideways action continues, the bigger the move will be when it comes. Also note that the RSI has dipped below the '30' level and that silver prices did rise, but not in a convincing fashion, the 'tease' for silver bugs continues. However, rather like a bouncing ball the oscillations are getting smaller with every bounce. The trading range is narrowing and in the near term silver prices will break out of this range and move almost violently to new ground. As we see it the odds are skewed towards an increase in silver prices rather then a fall and once they do catch fire it will be dramatic. Once above the $30.00/oz level silver prices will experience a number of pullbacks, however, these pullbacks will be weak and short lived. The $30.00/oz price level will not be penetrated as each low will be a higher low than the previous low. The $30.00/oz level will become the new support for silver prices.

(click to enlarge)

To conclude we politely suggest that you accumulate as and when you can and that you do not sell any of your physical silver bars or coins, you might be just offering someone else a real bargain. As for the stocks we remain skeptical about their ability to perform, its not happening for them at the moment and we need to see some signs of investor interest in the producers before we decide to increase our exposure to them. At the same time we are not selling any of our silver producers as we purchased them early in this bull market and they owe us nothing.

Now for those of you who are adrenalin junkies you may want to consider allocating some of your funds to a few well thought out options trades. As we see it options are the only vehicle offering leverage to the underlying movement of silver prices. You will need to be highly selective, totally focused and disciplined. Once you have made a purchase the clock is working against you and Theta is your enemy as the time premium erodes with each passing day. As a trading strategy the use of options will not suit everyone. A speculator needs to be nimble and prepared to move quickly. Unlike the acquisition of stocks where a speculator can adopt a 'buy and hold' strategy, time is against you in that the value of the option erodes as time elapses.

So if we have stimulated your interest drop by and see us some time.

We hope that you all had a very good Thanks Giving break, however, its behind us now so get your game face on, the second half promises to be explosive, one way or another.

Bob Kirtley

URL: www.skoptionstrading.com

URL: www.gold-prices.biz

Email:bob@gold-prices.biz

Disclaimer: gold-prices.net or 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 have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

This trade involved the S&P 500 (SPY) and was executed as follows:

Based on the view that the US stock market would rally leading into the Fed meeting we decided to buy call options on the S&P 500 ETF with the intention of moving into and out of this trade quickly.

On the 11^th of June we signaled subscribers to "… buy SPY Oct '12 $138/$140 Vertical Call Spread for a $0.82 net debit with 5% of our capital allocated to this trade".

On the 19th of June, eight days later we told subscribers "We hereby signal to close our SPY Oct 20 '12 $138/$140 vertical call spread for a $1.03 net credit with 5% of our capital allocated to this trade". This means we have banked a 25.61% profit in just eight days!

(click to enlarge)

As you can see on the above chart, the S&P 500 rallied prior to the Federal Reserve FOMC meeting on the 19^th.

We were aware the Fed could've disappointed by not announcing QE3 at the meeting and hence equities would've dropped.

We therefore decided to bank our profits on the 19th by closing out the position prior to the FOMC meeting.

As it turned out the Fed didn't announce QE3 and as the chart shows equities sold off as we predicted.

If we hadn't made the decision to close our trade prior FOMC meeting, we would be sitting on a small loss. This shows the importance of being nimble and being able to trade around significant events.

We do not operate on a buy, hold and hope basis. We are a trading operation and this flexibility has enabled us to deliver strong returns ever since inception.

The success of this SPY trade is not in isolation. This trade was our 100^th closed. Out of those 100 trades, we've had 91 closing at a profit. Each trade (including losers) has generated an average return of 35.39% (meaning the 25.61% return on our latest trade is below our average).

Our trading signals are open on average for just 50.55 days, so although we are a trading operation, we are not day traders. We believe our niche is between the buy, hold and hope investors and the hyperactive day trading strategies, and this niche has served us and our subscribers well since inception.

Prior to signaling this trade, we communicated our thoughts on equities to subscribers in our weekly subscriber update, where we discuss the markets and offer analysis on where we think markets are headed and what our trading strategy is going forward:

"… we are seeing some bullish signals for US equities. The signal we consider to be the most important is the sub-zero bullish MACD crossover. The chart below attempts to illustrate when the crossover has occurred before over the last five years, with successful signals in blue and unsuccessful ones identified in red.

(click to enlarge)

This crossover has occurred 18 times in the last five years, arguably being accurate on 14 of those occasions. This signal, combined with the fact that the S&P 500 has retraced roughly 50% of its rally since September and the possible lift equities could get from further Fed easing has now caused us to now become bullish on the US stock market.

In terms of trading this move, we will look at taking some positions this week..."

Shortly after updating subscribers on our outlook, on Monday the 11^th of June we observed favourable buying conditions and signaled to our subscribers to do the following:

"We hereby signal to buy the SPY Oct 20 '12 $138/$140 vertical call spread for a $0.82 net debit with 5% of our capital allocated to this trade.

To execute this trade we are buying the $138 calls and simultaneously selling the $140 calls for a net debit for $0.82

The risk in this trade is limited to the net debit. Therefore for every option contract in the spread we have $82 at risk.

The return in this trade is limited to 143%, since this spread cannot be worth more than $2.00"

The value in our service is not limited to the profits we generate for subscribers, we also provide full updates on a weekly basis outlining our thoughts and offering market analysis and guidance on our future trading strategy.

We communicate our actions and intentions extremely clearly, spelling out in full detail what is involved when entering into each trade we place.

For the more complex option trading strategies that involve buying or selling more than one call or put at different strike prices or expiration dates we give precise instructions on how to enact each leg of the trade in order to eliminate subscriber confusion and error.

All of our trading signals contain strictly limited risk and that the full risk of any trade is always stated clearly.

Not only do we instruct subscribers on what is involved and how to place a given trade, we quote live market prices at the time of sending to further eliminate uncertainty and maximise returns for our subscribers.

We also advise on how much to allocate to each trade as a percentage of tradable capital based on our assessment of risk.

It is these fine details that differentiate our service from many others that over-complicate, confuse and frustrate their customers with poor communication and muddy instructions. On top of our crystal clear trading signals, we are more than happy to answer any questions subscribers have about our trading recommendations or other inquiries about the service.

Paramount to our success lies in the flexibility of options and the opportunities they provide. Had we of simply bought into the SPY ETF, we would have had zero leverage.

We could have bought SPY shares at $132 on the 11^th of June. We could have sold those shares on the 19^th of June for $134.5 for a profit of 1.9%. Instead we banked at 25.61% profit by effectively using options!

(click to enlarge)

By using options we outperformed the purchase of the SPY shares 13.47 times over!

We knew when entering into our options contract that the funds at risk were only $0.82 per contract - an observable amount we could quantify before entering into the trade.

The maximum gain we could have achieved was 144%, as the spread was limited to closing at $2. This predictability is fantastic for calculating upside and downside potential and therefore, how attractive a given trade is based on one's outlook and risk-reward preferences.

If one doesn't have the time to regularly monitor their emails in order to place our trading recommendations or simply wants a more passive way to use this type of service, then Global Autotrading and e-Option could be useful. These two services place trading recommendations on our subscribers behalf, meaning when we signal a trade the Autotraders automatically enter into it with the precise amount of your capital allocated based on our recommendation. There are some fees involved but the Autotrader services allow for zero subscriber participation for those seeking the ultimate in trading ease. We do not receive any compensation from Autotraders, they simply provide a service to make trading easier for the subscribers who are just too busy to take action at the appropriate time. The Autotraders are completely separate and independent of SK Options Trading.

Hope this helps and please feel free to send in any questions that you may have about options trading and how you can gain leverage to some of the smallest moves in the financial markets.

Bob Kirtley

URL: www.skoptionstrading.com

URL: www.gold-prices.biz

Email:bob@gold-prices.biz

Disclaimer: gold-prices.net or 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 have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

We start with this quote from David Cameron, the British Prime Minister made at the conclusion of the latest in European Summit Meetings.

Well, it was a good meeting in that there was complete agreement that dealing with deficits and getting growth are not alternatives, they go together, you need to do one in order to get the other.

We are stunned. Its taken 22 of these high level meetings to agree that they need growth! The mental anguish is unbearable, we just cannot take these people seriously.

As we see it to get growth the eurozone needs to be competitive. To be competitive they need to get the costs of production down otherwise no-one will purchase their products.

May we suggest the following for their consideration:

1. Slash unemployment pay

2. Cancel the minimum wage

3. Cancel paid Maternity leave

4. Cancel paid Paternity leave

5. Introduce a flat tax system and free up all those tax officers

6. Cancel security of tenure in the public sector

7. Fix public sector spending as a % of GDP, say 30%

8. Drop the idea of a financial transaction tax

9. Reduce the pay of all EU politicians by 30%

10. Raise the tax rate on all EU politicians to the same rate as their citizens.

You can see where we are going with this and its probably why a career in politics it not open to us.

Anyway, all this dithering generates uncertainty and that has led to the euro being sold off as the investment community does not like uncertainty. The markets in general are also heading south so just where can an investor go in this period of turmoil. As we can see from the above chart they are apparently going into US Dollars. Yip, the very same dead cat dollar! It appears to be a case of picking the best from a bad bunch. The dollar with its 'no spending ceiling for me' president is also in a real mess and before long it too will be dropped like a hot potato.

Now, should the negativity surrounding the euro dissipate then the dollar would come under pressure once again. When everyone is negative about the euro we need to tread carefully as the herd is usually wrong and a bounce could surprise us all.

Taking a quick look at the above chart we can see that the STO and the RSI are both well and truly in the overbought zone which suggests a pullback from here. There also appears to be the formation of a double top, which, if it eventuates doesn't bode well for the dollar.

Going forward we see this current lack of stability leading to a eurozone bailout in some form which will involve the creation of more euros, in the miss-placed belief that liquidity is the cure for insolvency, which its not. On the other side of the pond it is election year and so QE3 is only a matter of when and not if. As if the world wasn't awash with enough paper money we are about to be flooded with more of it. We expect QE3, maybe in drag, to make an appearance by the end of June, thus continuing with the debasement of the US dollar.

At this point gold will embark on a serious rally as the buying power of these currencies sink and investors look for a safe store for their wealth and the preservation of their capital. Gold is well under $1600.00/oz and by the end of the year we expect to see it at the $2000.00/oz. So, in terms of what you can action today, buy gold. We are slightly different in that we are looking for leverage in the this rally and although the gold producers are starting to move we do not wish to increase our exposure to the mining sector just yet. Our preferred vehicle is via the options trading route where we believe that if we remain patient enough and get the timing right the profits generated will be truly astounding.

As always go gently and remember that its your money and your call.

And now Europe in pictures:

I'll reduce the retirement age in France and the Germans can pay!

You stupid French peasant.......

The IMF want how much?

(click to enlarge)

I will only say this once, David!

Stay tuned for further developments.

Disclaimer:www.gold-prices.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 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 have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

FRANCE

We start the week with news of changes at top in France where the French President Nicolas Sarkozy becomes another victim of the financial crisis and subsequent austerity measures. 'Sarko' as he is know by some has been ousted by the socialist leader Francois Hollande, who has been elected on a platform that includes reducing the retirement age, a 75% tax on those who earn more than one million euros and the re-negotiation of the European 'Fiscal Pact' with its European partners.

We understand the voters frustrations but do they really believe that these promises can be kept. France is broke. France has lost its AAA rating. The debt is getting bigger and not smaller. We will now need to watch for a softening of the 'tone' from President Hollande, as we expect reality to dawn on him as it has on everyone else and like most politicians his stance will change on the realization that he can not deliver on his campaign promises.

We expect this change in leadership to have a small but significant effect on the financial markets as this tad of uncertainty will exert downward pressure on the Euro and conversely upward pressure of the US dollar. The strengthening of the dollar will lead to a slight fall in both silver and gold prices.

GREECE

Greece has been out of limelight recently as concerns of the financial nature moved to Spain. However, as the Greek election results start to come in we can see that the two main parties have been well and truly given a slap in the face, as the Greek voters have turned to the myriad of small parties in an attempt to get out from underneath the weight of the austerity measures that are currently being imposed. The two main parties may have to form an alliance and try govern together, but they only have about 40% of the vote and a united opposition could block their every move. The smaller parties appear to be thriving on an 'No to Austerity' platform and should they form the next government, well we can kiss goodbye to all the hard work at those summit meetings that were held as part of the European effort to keep the Greeks in the European Union. For now though we have to wait for three days as the parties try and form some sort of coalition government. Again this is more uncertainty and the financial markets do not like being kept in the dark, so we expect more pressure on the Euro as the markets open with the dollar being the beneficiary and gold and silver drifting lower.

RUSSIA

No surprise here as Vladimir Putin will be become Russia's President on Monday. Interesting to note that not everyone is happy with the outcome of these elections as opposition protesters clashed with police not far from the Kremlin. Again this is a situation which is not totally cut and dry as the discontent looks set to rumble on as the disgruntled element of the population try to get their feelings made known.

ASIA

All of this political turmoil will have a know on effect in Asia, where the financial markets have opened in a negative mood. The Hang Seng is down 2.45% and the Nikkei is down 2.5%, as we write.

We can only conclude that this is going to be a rather volatile week for investors, a time to wear your hard hat and exercise patience with your trading activities. Our intention is to hold our core position of physical gold and silver and the associated mining stocks, but not to increase our exposure any further just yet. We have maintained this stance of not buying precious metals mining stocks for some time now as they did not offer the value in terms of getting a real bargain.

However dear readers, we could be getting close to that moment so stay tuned as things are changing at an accelerating pace and we may need to move fast when the time comes.

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

Question: What is it that we are trying to achieve?

Answer: Exposure to the Gold Bull Market in order to generate a handsome return on our investments.

We are all aware that there are a number of vehicles available to us for this very purpose including the acquisition of physical gold, investment funds, gold mining companies, options and/or futures trades.

We have long held the view that holding physical gold in your very own hands is the first step and you then have the outright ownership of gold and you are not subject to the vagaries of the third party risk that comes with owning paper. If you are comfortable with owning paper and enjoy the ease at which you can move in and out the various funds that are available or the speed at which you can trade stocks then that's fine, as it is your aversion to risk that needs to be satisfied.

Now, if you are keeping up with play you will have noticed the chorus of support for the mining the sector lately. Some miners do indeed have excellent management teams in place with good track records along with interesting prospects in relatively safe mining jurisdictions. They should also be generating a fair amount cash with gold prices trading around the $1700.00/oz level. Lets face it, if they are not making money at these levels you would need to ask why you need to own them at all. Then there is the question of what use will be made of this cash pile, another acquisition, an increase in the exploration budget maybe, or even paying their loyal investors a dividend. Some miners are involved in all of these activities, although it has to be said that the dividends are not yet attractive enough to entice an investor looking for a handsome return for taking such a risk. To get the returns that we would like, we tend to look to those miners who are unhedged, that is as a miner who does not forward sell the gold for today's gold price, that will be produced later on.

However, having tracked the progress of this sector of the market closely we are not impressed. If you take a quick look at the chart of the unhedged miners, the *HUI, you will note that it has been in consolidation mode for some time now and it did touch 500 in March 2009. Today it stands at 509.42, so unless you are an exceptional stock picker your money hasn't been working for you at all. We would like see a serious breakout above the 600 level before we would be comfortable with acquiring any more stock.

The Juniors are also being trumpeted as the place to be, however, many of the juniors do not have any ounces of gold in the ground as proven reserves, therefore why should they rise with gold prices? Junior explorers tend to rise on whether or not they have found gold, not in lock step with the gold price.

As a suggestion for those of us who do want to maximize their returns from this precious metals bull, then a few carefully thought out options trades could be a possible solution for us. This way we are exposed to any movement in gold prices which in turn is magnified by the effect of the option. Do remember that loses are also magnified in the same way so its not a strategy for those who have an aversion to risk. On the other hand the quality stocks are not performing as anticipated and a non-producing junior stock is a shot in the dark, however, its your hard earned cash and its your call.

Footnotes:

You may be interested to see some of our past posts on this subject as we have wrestled with it and found it worrisome of late.
Are Gold Stocks worth the effort? Posted on Sunday, August 15, 2010

Are stocks the way to play this bull? Posted on Saturday, February 27, 2010

Gold: Are juniors the way to go? Monday, July 7, 2008

Disclaimer: gold-prices.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 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 have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.