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Silver Wheaton Corporation Shares Up 100.00% since Buy Signal of the 9th August 2010

By Bob Kirtley
skoptionstrading.com


 

SLW Comparison Chart 04 Dec 2010.JPG

On the 9th August 2010 we took the decision to reduce our exposure to a number of gold and silver stocks in order to pile into Silver Wheaton Corporation (SLW) . As the chart shows, so far so good, as SLW has increased in value by 95%. Gold and silver have done well, along with the HUI, GDX and the GDXJ. However they do lag behind SLW which is moving swiftly especially when you consider that it is a $13.62 billion company. The secret is of course in its business model which is that of a silver streaming company which secures supplies of silver from the miners of other metals where silver is a by-product of their operation. These contracts are long term and the purchase price is fixed so as silver heads north so will SLW as their earnings and profits will be monstrous, in our humble opinion.

We deployed a large portion of the funds by acquiring more of Silver Wheaton Corporation (SLW) stock for an average price of $19.76 and are pleased to report that they closed yesterday at $39.31 registering a gain of 100%. Not too shabby a performance over four months for a company with a large market cap.

Our history of trading in Silver Wheaton Corporation (SLW) is as follows:

Originally bought this stock for $9.41 and made another purchase on 15 July 2008 at $15.61 and a further purchase on 6 August 2008 at $11.43.

A smaller portion of the funds were utilized in our trading account as follows:
Early in September we piled into Call Options on SLW which also worked out fairly well as we reported on November 2nd, 2010 when we wrote:

Just a quick note to let you know that we have decided to take profits today and have sold all of our Call Options on Silver Wheaton Corporation (SLW). The profits were too good for us to refuse so we are taking the cash and going back to the sidelines.

We had four tranches as follows:

December 2010 $26.00 Calls @ $1.55, now at $4.20 for a gain of 170%
December 2010 $30.00 Calls @ $0.58, now at $1.81 for a gain of 212%

and

January 2011 $26.00 Calls @ $2.00, now at $4.75 for a gain of 137%
January 2011 $27.00 Calls @ $1.64, now at $4.10 for a gain of 150%.

So as we can see the change in strategy has worked out fairly for us and for those who have followed us into and out of these trades.

Looking down the road a short way we still expect gold prices to go dramatically higher even from this point, however, we also believe that silver prices will outperform them.

Apart from the ocaisional options trade on one of our sites the lions share of this activity is taking place on skoptionstrading.com where we have logged 53 winners and out of 55 trades. We are now considering capping the membership, so move now if you don’t want to miss out.

We currently have a number of open trades which we are pleased to say are all in positive territory.

sk chart 19 Nov 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today?

Stay on your toes and have a good one.

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Disclosure: I am Long SLW.