Tuesday, June 02, 2009

Silver play

Here is my updated Silver chart (SLV):

While SLV is a pure play on Silver, there may be a better leveraged play in a silver stock that is grossly undervalued. That's what I have been looking for over the past week and I may have found one, ANV.

Allied Nevada Gold Corp - Weekly

As always, I start with a Weekly chart and as shown above, this chart has just broken out of a year-long sideways pattern. ANV is a relatively new company operating solely in mining-friendly Nevada. It's main asset is the Hycroft Mine which is estimated to contain 8 million ounces of gold and about 120 million ounces of silver. Here's the kicker, only about 1/3 of the gold assays have been assayed for silver. It is now being estimated that Hycroft may contain as much as one billion ounces of silver, which would make it the largest silver mine in the history of Nevada. The current market cap of ANV is about $430M and seems to be based on gold reserves, but not the silver.

Throw in the silver as well as a half dozen other projects of the company in addition to Hycroft and this stock could be undervalued by a factor of ten.

I started a position in ANV this morning and expect to add to it as long as the chart holds up. If it doesn't, all bets are off.

Initial target is $10-12.



Anonymous said...

Time to express appreciation for your suggestions. Thank you. All I need to do now is to choose the ones that take off. I've yet to make any money here - overall - but that is entirely my problem.
Good luck to us all...JBG

Allan said...

JBG: Thanks! As for making something work for you, these are all ideas that I have acted upon in my accounts, some work, some don't. I recommend trying out the Market Club service for a trial and see if that helps you to pull the trigger. There's also a link to Blue Wave at the bottom of this page, pricey but very effective. Don't just rely on a stranger on the Internet to make your decisions, add your own input so that the trade becomes yours, not just mine. Best of luck to you.

TD said...

So glad to see your interest in metals stocks.

The Hycroft Mine has been an "issue" for at least 25 years with various companies, but until recently nothing ever happened. Of course silver prices were low for much of the 25 years and now they are higher. Naturally none of that matters for short term technical analysis, but with mines it's always well to recall Mark Twain's famous definition of a mine.

Anonymous said...

I took a good look at ANV in the stock charts ....it does look good. to my eyes it even looked good to enter at 5 and expect the break above 6.50. many precious metal stocks have the similar look, they held thru march,having really suffered just the single bottom from last october.
I can see 10 as a target but the macd,rsi,cci,MA's are all showing very overbought now from this breakout.so I wouldnt be surprized to see it not get to 10 yet,but to look for a normal correction, maybe back to 6.50 and with a good hold in the 6 /6.50 area,a stronger green light . the volume is good with this breakout,it all looks good except for the overbought indicators.Wouldnt you like this stock as a buy and hold?

Very good web blog Allan.... btw

Rob said...

Interesting & informative blog. Always curious as to others' methodology regarding market timing. After trying to get myself up to speed over the past 12 months in terms of a market timing strategy, I've come to the conclusion that I need an established mechanical trading system to follow to remove the human emotion aspects from the trading equation. Bailed last year on our regional CFA's 'buy & hold' mantra and took control of the reins myself, but still trying to nail down a system.
In some of your site's previous posts/comments, it was mentioned that you combine Market Trade scans with the BWT trading platform. If this correct, was wondering if you could elaborate how the two are combined?
And is it safe to say that between the two systems, that BWT is your platform of choice in terms of actual trading buy/sell signals? Both suitable for all trading time frames (scalping-investing)?
Thanks for sharing your insights with the public.

P.S. 77 degrees & sunny on another perfect Inland Northwest spring day. (Almost) nice enough to make I guy think winter isn't so bad here.