I was amazed when I looked back to a silver article we posted in late August.
Back then the plan for silver was simple: with silver breaking out above $30, buy the metal AND a few of the best miners.
Since that article, QE3 and other central bank action cracked the whip on the metals market. With the dust settled, investors holding the “poor man’s gold” are up a solid 13%.
First, let’s get a pulse for the silver market.
Back in late August, silver made a breakout move from its $28 trading range.
Today, after a summer of printing from central banks the world over, the metal has found a perch near $34.
“But it’s early October, Matt!” you may say.
“Isn’t it time for the metal markets to cool off!?”
Cool off? If what I heard this morning is any indication, this metal move is just getting started.
Today I talked to my favorite source for forecasting silver’s next move, Steve Agopian from American Futures Trading. Steve has an uncanny eye for the metals market and always has something valuable to share. Today, his thoughts are timelier than ever…
“In the past nine years between the beginning of October to sometime before the third week of June (when the July options expire), the July Silver futures on average have moved up by 54.5%” Steve says.
Just think about that for a second. Although the market has short-term ups and downs, for the past nine years silver buyers in October, on average, were making 54% by Spring.
“The smallest move on the upside was 17.5%” Steve continues, “and the largest was 125%.”
Better yet, “There were no negative years” Steve tells us.
If you’re looking to get in to the silver market today, history is certainly on your side.
Using Steve’s average estimate (54%) along with his low-end estimate (17%), silver is poised to jump above $40 or even as high as $54, by June.
Add it all up and I like the outlook for silver, a lot. The metal has more sling-shot potential than gold and with central bankers putting the pedal to the metal, silver could head much higher.
As you and I discussed back in late August you can play this move with the metal or the miners…today let’s focus on the two miners we covered back in August.
Unbeknownst to many investors, Goldcorp (GG: NYSE) is one of the world’s top-5 silver producers (No. #4 in 2011 with 28.8Moz produced.) With 20% of its cash coming from silver production, Goldcorp sits in the sweet spot of the precious metals market. A major gold producer with a lot of silver? Sign me up!
Since our August article, Goldcorp is up nearly 10%. Not too shabby for a month and a half’s work – but as you can see, not as profitable as holding just the metal itself.
The real superstar in the silver space was a pure-play miner, Coeur d’Alene Mines Corporation (CDE: NYSE.)
Coeur d’Alene, according to 2011 data, is the world’s No. #8 silver producer, with annual output close to 20moz. Since our August write-up, share prices are up 33% — that’s amazing! Compare that to the appreciation in silver prices over the same time frame (13%) and you’ll see that holding this pure-play silver miner was the way to go.
Here’s what you’re probably thinking “I wish I would’ve bought Coeur d’Alene back then! How obvious!”
If you missed the latest move, don’t worry. Considering the historical data above, there’s lot more in store for the silver market. And a pure play like Coeur d’Alene is still a great way to play it.
Here’s the kicker. In August, while silver prices were on the move higher, Coeur d’Alene initiated a share buyback program. So not only is this miner on tap to produce more silver than it did in 2011 (over 19Moz) it’s also helping to increase shareholder value by buying back $10 million worth of its own shares.
Looking forward the plan is to buy back $100 million in shares total – so we’re only 10% of the way there. Add it up and this is a strong vote of confidence for shareholders.
So with this pure play you’re looking at a company with a proven track record of producing LOTS of silver. And now, at a time when they are raking in cash they have the forethought to stack some of that money in the form of a buyback.
The future is up for silver…and same goes for Coeur d’Alene.
Keep your boots muddy,
Source: Daily Resource Hunter