A Bullish Bounce in Silver

Nicholas Vardy

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

Your Bull Market Alert portfolio recovered somewhat during the last, holiday-shortened week. Both Nabors Industries (NBR) and ELEMENTS Rogers International Commodity Agricultural ETN (RJA) ended the week higher. Millicom International (MICC) and Novo Nordisk A/S (NVO) also rose as well. Overall, most of your positions are HOLDs, and will remain there until they creep back above their 50-day moving averages.

This week’s Bull Market Alert pick shifts your attention back to silver through Vancouver-based Silvercorp Metals (SVM) — a star performer among the world’s silver mines.
Few asset classes have been as much in the headlines in 2011 as silver. “Poor man’s gold” hit a 31-year high of $49.82 per ounce in late April, before collapsing more than 30% to a low of around $32. But last week, silver staged a comeback, posting a weekly gain of $2.90, or 8.3%. That was its best week since the week of April 18.  
Silvercorp is China’s largest primary silver producer, having produced 1.05 million ounces of silver in the company’s most recent fiscal quarter. That capped a record year of 5.3 million ounces of silver production and marked the company’s fifth consecutive year of production growth. In doing so, Silvercorp sustained its enviable five-year track record as the lowest cost producer of silver among its industry peers.
Silvercorp’s cost structure is remarkable. In Q4 of 2011, the company produced silver at a cash cost of negative $7.61 per ounce — and that number actually fell from earlier in the year. And with $206 million in cash on its balance sheet, no long-term debt, and strong operations, Silvercorp sees a world of opportunity to expand its business.
That all said, this bet on Silvercorp is primarily a bet on a technical bounce in silver and silver stocks. Last week, the stock broke out of a clear downtrend that had taken the stock from its 52-week high of $16.32 to under $10 a share. Since then, the stock has recovered to over $11.00. Other, more short-term technical indicators also show that odds are that the stock is set to make a substantial recovery.
So buy Silvercorp Metals (SVM) at market today, and place your stop at $9.40. If you really want to push the pedal to the metal on this recommendation, buy the December $12 calls (SVM111217C00012000). Here’s a word of warning: hold onto your hat. This is a seriously volatile stock.
Portfolio Update
Alexion Pharmaceuticals (ALXN) ended the week 3.87% lower. With the stock trading below its 50-day moving average, ALXN remains a HOLD.
Alliance Resource Partners L.P. (ARLP) rose 0.50% this past week. For now, though, trading below its 50-day moving average, ARLP is a HOLD.
UltraShort Euro ProShares (EUO) pulled back slightly from your entry price on Wednesday. Remember, the purpose of this position is to hedge on your European banking positions. Bad news from Europe will be good news for you here. EUO is a BUY.
Bank of Ireland (IRE) ended the week 5.07% lower. The stock rallied sharply on Friday upon news that it will unveil plans early this week for its junior bondholders to exchange 2.8 billion euros ($4 billion) in debt for shares in the bank. Trading below its 50-day moving average, IRE remains a HOLD.
Millicom International (MICC) ended the week 2.0% higher. With the stock technically strong, and the global telecom sector coming back into vogue, Millicom remains a BUY.
Nabors Industries (NBR) rose 2.8% this week. I am looking to time our exit on this, as it bounces back toward the $30 level. Until then, NBR is a HOLD.
National Bank of Greece SA (NBG) fell 2.26% this past week. Look for this position to bounce big if new austerity measures are announced this week. NBG remains a HOLD.
Novo Nordisk A/S (NVO) ended the week slightly higher. This is a solid company with terrific fundamentals. Trading below its 50-day moving average, NVO remains a HOLD.
Rayonier Inc. (RYN) fell 2.68% this past week. Japan’s lumber-related imports are supposed to increase to the highest level since 2008, and RYN is listed as one of the companies likely to benefit from this increased demand for wood raw material. RYN is BUY.
ELEMENTS Rogers Intl Commodity Agri ETN (RJA) rose another 1.2% this past week. Trading just below its 50-day moving average, this bet on agricultural food prices remains a HOLD.
Sohu.com (SOHU) fell 3.29%, hit by negative sentiment surrounding Chinese stocks. Seriously oversold, this stock is due for a bounce. Still trading below its 50-day moving average, Sohu is a HOLD.
Toyota Motor Corp. (TM) rose 2.88% this past week. Trading above its 50-day moving average, Toyota is a BUY.


share on:

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE

share on:


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income PRO (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader


Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor