Getting Back On the Silver Bull

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

This past week, global stock markets corrected across the board, and the S&P 500 fell 2.1% for the week. The third year of a bull market is often choppy, and 2011 has done nothing to change that pattern.

The biggest news in your Bull Market Alert portfolio was in connection with Bank of Ireland (IRE) which soared 42.53% on Friday, after passing the latest round of European stress tests for banks. Friday’s trading is a good example of why I continue to recommend that you hold onto this stock, along with National Bank of Greece (NBG). If these banks survive — and my bet is that if ANY are going to survive in Ireland and Greece, it will be these two — you can make 5x to 10x your money on these picks. But, as you have seen, the road there is both uncertain and bumpy. That’s also why I have always said that you should view these positions more like options than stocks.

This week’s Bull Market Alert re-visits a theme that was in the headlines a few months ago — the bull market in silver — through the ProShares Ultra Silver ETF (AGQ). This is a leveraged ETF that provides daily investment results (before fees and expenses) that correspond to twice (200%) the daily performance of silver bullion as measured by the U.S. Dollar fixing price for delivery in London. Here’s why I think silver’s time has come, once again.

First, precious metals of all stripes exploded higher during last week’s frenzied trend of shifting away from paper assets and into the commodities sector. Gold closed at an all-time record high near $1,600 per ounce. And last Friday, silver broke through the $37.50 level that has served as resistance since the sharp sell-off in late April. Now that it’s through that level, silver’s previous high of just under the $50.00 per ounce mark now stands as the next major target for the market to overcome.

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So why silver and not gold? The silver market’s recent performance has lagged significantly, compared to gold. Silver is about 20% off of its all-time highs, whereas gold is already pushing through new highs. And overall, technical indicators for silver have turned very strongly bullish. That suggests that silver now is well-positioned for surpassing its previous top.

So buy the ProShares Ultra Silver ETF (AGQ) at market today, and place your stop at a very wide $150.

Here’s a word of warning. Because of its leverage, this position is not for the faint hearted. You may see huge swings in the price, even in intraday trading. So, you may want to take a smaller position in this recommendation than normal. That’s also why I am not recommending options on this pick.

Portfolio Update

Alliance Resource Partners L.P. (ARLP) corrected 4.33% this past week. Could ARLP be the "perfect stock." Still trading above its 50-day moving average, ARLP is a BUY.

Avago Technologies (AVGO) dropped 6.45%. Now right at its 50-day moving average, AVGO remains a BUY.

CROCS Inc. (CROX) dropped 3.57% this past week, giving back its previous week’s gains. Still in a firm bullish trend, and trading above its 50-day moving average, CROX remains a BUY.

Hansen Natural Corporation (HANS) dropped back 3.35% this past week. Use this pullback in an otherwise bullish chart to add to your position.  This stock remains a BUY.

Bank of Ireland (IRE)
soared 16.98% this past week, as the stock jumped 42.53% on Friday, after news that the bank passed the latest round of European stress tests for banks. With this bet on the Irish bounce trading below its 50-day moving average, IRE remains a HOLD.

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National Bank of Greece SA (NBG) dropped 6.15% this past week. NBG passed the stress test of last week, and its performance was sullied only by the fact that two other Greek banks failed these same tests. Now trading below its 50-day moving average, NBG is a HOLD.

Novo Nordisk A/S (NVO) traded flat this past week, yet again. Novo Nordisk derives 64% of its total operating profits from its diabetes-care division. The remaining 36% comes from biopharmaceuticals. Building on some momentum this week, NVO remains a BUY.

Rayonier Inc. (RYN) dropped 2.37% this past week, pulling back from its recent record highs. This pullback is a good time to add to your position. RYN remains a BUY.

Toyota Motor Corp. (TM) was flat this week. Japan’s Nikkei 225 Stock Average climbed 2.9% since the start of June, posting the biggest increase among 24 developed countries in the MSCI World Index, according to data compiled by Bloomberg. Toyota has climbed 4.9% since June 17, after announcing that production is rebounding faster than expected. Above its 50-day moving average, Toyota is a BUY.


 

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The recent “relief rally” took a predictable break after a rapid run in the major market indexes.

The economic uncertainty plaguing Greece over previous months has rolled on through to Portugal, and now has its sights set on Italy. This negative sentiment is causing grief not only for European markets, but for markets all over the globe. The DOW Industrial Average came out on top last week, posting a 0.98% loss, while the S&P 500 Index and NASDAQ Composite Index fared w

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