Monday, February 17, 2014

Silver Wheaton Corp Best Of The Pick

Over the last 12 months, silver has dropped from a high of $30.45 to a low of $18.50. This is a drop of 39% which is considered severe. Lately, the price of silver has picked up in tandem with the rising price of gold. Presently gold is at $1318.70 and silver is at $21.40. This means that gold price is 61.62 times higher than that of silver. 

In August 2011, gold reached a high of $1,889.60 and silver was at $50. Thus at that time gold was 37.79 times higher than silver. Many people thought at that time the ratio of 37.79 between gold and silver was too wide and would surely narrow. Obviously, they were wrong. What about now? Will the price of gold and the price of silver drifted more apart.  

Gold experts say that the logical ratio is 16. But the market, more often than not, does not follow logic. Therefore, there is no certainty of what's going to happen next. At best we can only guess. With a chart, this is made easier and more intelligent  than just mere guessing.

The above chart SLW shows that the stock has formed a round bottom. It is now poised for a good run-up. With silver price improving, silver mining companies are the ones that will benefit most.

In Bursa Malaysia, there is not even a single silver stock.  So, if you want to invest in silver, what are the options available to you. You can buy physical silver, open a silver account, or buy silver stocks overseas.

Among the many silver stocks that are listed in the NYSE, I like Silver Wheaton Corporation (SLW) which is the largest silver streaming company in the world. 

A silver streaming company is one that makes payment upfront to mining companies for the right to purchase all or some of the silver produced in the mines at a very low price. Lately SLW has also ventured into gold streaming. I feel this counter has the potential to move up fast. I like the business model of the stock.

There are many articles about SLW at Seeking Alpha. Please do your own research before buying the stock. The last traded price was U$25.38 per share. This is a good entry point, in my opinion.

You buy at your own risk.