Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Chart on SLV (Mike Paulenoff)

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Since yesterday morning's pivot low at 24.44, right off of the Aug-Nov up trendline, the iShares Silver Trust (NYSE: SLV) has climbed to 25.33 (+3.6% so far), in what looks like the initiation of either of two scenarios. One would be a recovery or intervening upleg within a larger corrective, or digestion, period. The other would be the start of a new bull leg within the ongoing bull phase that will propel the SLV to new highs well above 28.72.

In either scenario, yesterday's pivot low at 24.44 ended a 15% corrective leg and started a rally phase that has a minimum upside target zone of 25.90-26.20 in the hours/days ahead."

0R133BKPY
Originally published on MPTrader.com.

A Little Long – EPP

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How’d that quote go? – “Don’t fight the Fed…”  As of Friday, I am still net short, but have more longs (as a %) than I have had since 2007.

QE 

To be clear, I fundamentally believe most Western economies are circling the bowl; and the Fed is dumping water in, praying it can keep the turd from going down…  it’s just a matter of time.

Since mid-late October sometime, I’ve been taking small bites of EPP (iShares MSCI Pacific ex-Japan) on any drop.  From the iShares site: http://us.ishares.com/product_info/fund/overview/EPP.htm

 

Pros: Given the 20% inflation Ben & Co. just dumped into the bowl, I like the geographic breakdown:

Australia              65.46%

Hong Kong           19.29%

Singapore            12.67%

New Zealand         0.79%

Macau                  0.64%

China                   0.27% (<– and specifically that this is not a large % of the mix)

Additionally, as the world hunger for materials grows, 10% of EPP is BHP Billiton.

 

Cons: I’ve been cautious with the accumulation, as over 46% of this ETF is in Financials.  Sure, as a %, most of the Financials are ANZ banks, but I have such a limited trust of this sector – I can easily imagine some panic-inducing event turning this into a loser faster than the HFT machines can dump it.

 

TA: The price data is strong above the cloud:

EPPcloud 

EPP appears to be at a confluence of support.  I'm holding at this point, and will add another chunk if it can manage to hold the blue line.  If it breaks the overhead green, I’m adding more for what I believe should be another nice leg up:

EPPpara 

Silver Squeeze Still Before Us

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After this recent spike, it is now fashionable for mainstream thinkers to view silver as in a bubble and now will collapse under the weight of speculators running for the exits.  This view is myopic, and will prove costly going into 2011.

First some interesting stats (sources include USGS, Silver Standard, Silver Institute, DFMS Research, London):

  • + The total value of above ground silver comes to only about $40 billion (can you say tiny).
  • + The silver/gold ratio is currently about 63:1, yet the total value of all the investable gold on the planet is about 235 times that of silver.
  • + The ratio of silver to gold in the earth’s crust is 17:1. That’s in the ballpark of the 15:1 average silver/gold ratio that has held sway over the centuries.
  • + The demand for silver well exceeds new mine supply, in 2009 total silver demand topped 889 million ounces, outstripping new mine supplies of 710 million ounces. The difference was made up by scrap recycling.
  • + Silver production is expected to grow by 4%, assuming strong mine activites in gold, zinc and lead production (57% of silver is produced as a by product).
  • + The inventory of above ground silver available for industrial uses is down 80% to 20 million ounces.
  • + Scrap available is down to 162 million ounces.
  • + Demand from new technologies are exceeding reductions from photography.  These include water purification, solar concentrators, anti microbial medical technologies, and electronics
My 2011 imputed supply is 927 million ounces if all scrap is used and inventory entirely depleted, and demand is estimated to be 939 million ounces, which implies a deficit. Price will need to rise to curb demand in 2011. 
Supply is always more fixed in the short term, due to the difficulty in opening new mines, demand is in high growth industries, and in my opinion relatively economically insensitive industries.  But if worldwide economic demand falls, silver production will fall faster than demand because 57% of silver is a by product of other more economically sensitive metals.
So my view is industrial demand remains strong.  Now looking at investment demand. It has increased 20% plus in the last two years, and trends favor that continuing;
  • + European instability, and dollar weakness supports the fear trade in favor of silver.
  • + Sprott recently priced a major purchase of silver for its vaults, and had to scour the world to take delivery.
  • + The Chinese are net buyers, and have been a bid to the market.
  • + The gold / silver price ratio is out of balance and this favors silver prices
  • + Silver is a more convenient investment vehicle than gold for those seeking currency safety.
  • + Current prices assume a stable dollar at todays value, do you think 900 billion dollars of new dollars support dollar strength.
  • + If you believe the silver markets are net naked short, and with industrial consumers looking for supply, a blow up in a demand squeeze is just a OPEX away.
  • + Small markets can lead to big moves, and the direction of that move is in my favor.
This is why I am staying long silver into 2011.  My next post will cover the Pink sheet silver miners I just purchased and why.
Discussions, comments, and smart remarks are welcome.  Bob www.arum-geld-gold.blogspot.com

Solar Storm is Coming (by BKudla)

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As I posted before, the Solar energy industry is producing a glut of solar panels.  Here is a quote by  John Hardy.  "Global annual manufacturing capacity for solar panels may reach 23,500 megawatts next year, exceeding demand by almost 40 percent, according to John Hardy, a solar analyst at Gleacher & Co. in Connecticut. Wind turbine makers will increase capacity to 64,200 megawatts, 30 percent more than expected orders, Bloomberg New Energy Finance forecasts." 

Note also, the glut in Windpower production.  Remember what goes into Wind Turbines, yes, that is right, Rare Earth materials.  I'd be selling on any momo push higher.

Check out these charts on Yingli Solar

If you want to buy solar, make it for your home or business instead. Deals will abound.

www.arum.geld-gold.blogspot.com