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   Daily Blog - Tiger Software


Silver Breaches $17.
   "All Aboard. Next Stop $20."

  Will It Again Surge 600%,
In 1979-1980?!
  Silver Stocks To Trade Using TigerSoft



      Send any comments or questions
      to william_schmidt@hotmail.com



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Previous TigerSoft Blogs on Silver:
This is not the first recommendation made here of Silver and SSRI.  Here are the earlier mentions of SSRI.
November 2, 2007  Silver Stocks: A New Run Is Starting   
     October 28, 2007     Evaluating Breakouts: Case Study: The Silver Stock SSRI  SSRI was $39.
     September 19, 2007   Gold Breaks out with Power as Fed Cuts Interest Rates by 1/2%
     June 26, 2007     Silver Is Starting To Tarnish.  SSRI slipped to $26 a month later.
     May 18, 2006    Calling A Bottom Using The Diagonal Lines Command with SSRI.  SSRI was $19.
     February 2, 2006    "Hi-Ho, Silver"...>$10/ounce SIL   SSRI was $20.
     November 29, 2005    Silver Stocks Are Shining      SSRI was $17.

       Silver Breaches $17. "All Aboard. Next Stop $20."

       Will It Again Surge 600%, As
In 1979-1980

             Silver Is Starting to Outperform Gold....Silver Stocks To Trade.

                     In the period September 1978-1980 when Silver made its record advance from $5/ounce to a high
         of $48/ounce there were three violent declines in the stock market.  In the Fall of 1978, the DJI swooned
         14% in less than three weeks.  In the Fall of 1979, the DJI fell 12% in two weeks. And in early 1980
         the DJI sank 18% in 3 weeks.  The steep rise of silver should make us very nervous about the market.
         It shows that it is a very good time to use the lessons on Peerless Stock market Timing.   But also view it
         as a great trading opportunity when we understand the forces at work that are making Silver rise now.

                    Will Silver Now Rocket Upwards as It Did 1979-1980?   The boom  in 1979 and January 1980
        saw silver rise from $6 to $48.  Wouldn't that be nice to see again?  In truth,  I think it's more likely we are
        years away from such an extreme advance.   But it's coming.  Silver started going up in 1967 when the US
        stopped making 90% silver coins.  In 1968 they made 50% silver dimes, quarters and half-dollars.
        After that, silver was no longer used.  It took 13 years of a long advance before silver's final climax upwards
        from $6 to $48, between November 1979 and January 1980.  The Hunt brothers tried to corner the
        silver market in 1980, but created so much hardship for professional shorts that the commodities'
        exchanges limited how many contracts individuals could buy.  Record silver prices brought in a
        large supply of silver coins and jewelry for melting.  It also encouraged industry to look for
        substitutes.  When digital photography took over, silver was dealt a heavy blow.  Eastman Kodak had for
        years been the biggest purchaser of silver.   Interestingly, mine production changed very little
        because of the higher prices.  
Once again, we see surging demand for Silver from industrial sources
        and little increase in the supply from new mines.

                     The yearly new supply of silver from mines has not increased much more than 5% since 2000.
             There just in not enough silver.  Industrial demand has risen steadily:  The trade organization for Silver
             at www.silverinstitute.com is most interesting.

Demand                     1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Industrial Applications 319.5 313.2 336.1 371.3 332.4 336.5 346.8 364.2 405.8 430.0
Photography 217.4 225.4 227.9 218.3 213.1 204.3 192.9 181.0 162.1 145.8
Jewelry 150.6 140.6 159.8 170.6 174.3 168.9 179.2 174.8 173.8 165.8
Silverware 117.7 114.2 108.6 95.6 105.2 82.6 83.0 66.2 66.6 59.1
Coins & Medals 30.4 27.8 29.1 32.1 30.5 31.6 35.6 42.4 40.0 39.8

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                         The four highest trading volume days for the last year have been Down-Days.  I take
                   this as a sign that there may be a very big seller.  It could be a government.  We don't
                   have statistics on government sales of Silver.  Last year Spain was the biggest government
                   seller of Gold. 
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World Silver Supply
(in millions of ounces)
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Mine Production 520.0 542.1 556.8 590.9 606.2 593.8 600.7 622.2 645.7 646.1
Net Government Sales -- 33.5 97.2 60.3 63.0 59.2 88.7 61.9 65.9 77.7
Old Silver Scrap 169.3 193.9 181.6 180.7 182.7 187.5 184.0 181.5 186.4 188.0
Producer Hedging 68.1 6.5 -- -- 18.9 -- -- 9.6 27.6 --
Implied Net Disinvestment 78.9 45.2 42.0 83.5 -- 8.3 -- -- -- --
Total Supply 836.3 821.2 877.5 915.4 870.8 848.7 873.4 875.2 925.6 911.8
             World Silver Demand
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      World Silver Supply Sources:
Supply from Above-Ground Stocks 
(Million ounces) 2005 2006
  Implied Net Disinvestment -77.2 -64.5
  Producer Hedging 27.6 -6.8
  Net Government Sales 65.9 77.7
Sub-total Bullion 16.3 6.4
Old Silver Scrap 186.4 188.0
Total 202.7 194.4

                In the chart below, you can see the three waves upward after 1967 until 1980.  Compared to
        the 13 years rise between 1967 and 1980, we are only in the forth year, if we take the beginning of
        the current rally to be the beginning of 2003 when prices broke above their long base between $3 and $5.
I would say we are on the third wave of a recovery now.  That means exciting gains lie just ahead.
        Look at the chart below and see if you agree.  

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              Silver is used primarily as an industrial metal.  But it also has found many buyers who consider it,
        like gold and platinum, a
very good hedge against the declining dollar, which has fallen 24% since early 2003.
        Someone buying silver in 2003 would have almost tripled their money, easily beating the rate of
        inflation.   In 2003-dollars a $1000 invested in silver would now be worth $2194.
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Dollar's weakness has been accelerated by the recent dramatic cuts in the Discount rate. 
        I think it is a sign of how strong Silver is now that it  has just made a new high above $17.00,
        despite the gathering weakness of the world's   economies.  And as you can see below, the
Silver/Gold Relative Strength Line has just broken above its year-long downtrend.

            "According to The Silver Institute, total industrial demand exceeded 50% of total global fabrication
         demand for the first time in 2006. Supply from the top silver mining countries like Peru, Mexico, China,
         Australia, and Chile dropped 10% at primary mines. Silver prices have risen almost 70% over the past
         two years and could rise even higher."
         ( http://www.fool.com/investing/general/2008/01/29/top-rated-stocks-leaders-loathe.aspx )

      SILVER and GOLD as Inflation Hedges.

                   Gold historically trades 15 to 20 times the price of silver.  So as Gold goes up, so will silver.
          Silver has outstripped Gold since 2003, but gold stocks have recently risen more than silver stocks.
          I think this is because investors historically have rushed to buy Gold stocks when they feared inflation and
          a weak Dollar.  Silver stocks seem relative under-priced.  If silver keeps rising as fast as I
          expect, silver stocks will certainly play catch-up.

                   Gold bugs have long urged investors to see the hand-writing on the wall, as it were
. Here is
         a sample I read this week-end:

The well-documented financial issues in the U.S., keeper of the world’s reserve currency ...
          almost guarantee an ever-more rapid debasement of that currency. The combination of a
          sinking economy and crippling levels of debt ensure that the injection of truly excess liquidity
          lies ahead. For those who doubt me, contemplate the existence of $43 trillion in notional value
          of credit default swaps (CDS’s)...   This alone should be enough to put the fear of God in any
          thoughtful person. Moreover, there is little doubt in my mind that the dollar’s demise will drag
          every other fiat currency in the world down with it. We see evidence every day that the other
          countries can’t tolerate their currencies rising sharply against the U.S. dollar due to competitive
          pressures, and thus they are forced to devalue their currencies to cushion the U.S. dollar’s
          inevitable fall....
(Y)ou ain’t seen nothing yet." 
                   He goes on to argue that Gold and Silver ETFs are the means by which central banks
          hold back the rise of these metals, claiming that "Western central banks are rapidly
          running out of gold to fill the widening gap between burgeoning demand and falling
          mine supply...T
here are numerous central banks in the Far East and Middle East as
          well as the Russian central bank that are awash in U.S.  dollars. To date they have been
          content to maintain the status quo by holding onto these dollars. However, the unending
          flow of U.S. dollars as the result of the U.S.’s continuing massive current account deficit
          is leading to unrest. It is becoming apparent that a number of these countries have reached a
          saturation point on the greenback. As a result, some of the central banks are already
          clandestinely buying gold," (
John Embry Speech to Cambridge House Conference January 2008 Vancouver, B.C.)


  Silver's chart is shown below.  A TigerSoft chart (not below) shows that Silver
out-performing the DJI in early August when it moved above its 50-day ma with a strong,
        positive confirmation by the Tiger Accumulation Index. 
This system is the one we recommend
        generally for commodities.  See the discussion of using TigerSoft charts with food commodities.  
        TigerSoft also gives you some helpful statistics on the typical behavior of SLV for the different
         trading days of the week:

Days of the Week and Silver Price Behavior
                                                            Probability of   Probability of                Probability of
                                                            an Rise.            A Higher Opening       A Higher Opening
                                                                                                                          than Previous Close
                                                            -----------------    --------------------------      ---------------------------
                                     Monday           53.0%                  57.1%                            51.0%                                      
47.0%                  51.9%                           43.1%
                                     Wednesday      56.6%                 
60.3%                           45.2%
60.3%                56.6%                             52.8%
66.0%                73.5%                             48.4% 
          Tuesday is the only day of the week that Silver shows a tendency to retreat.  In general, buying
           on weakness on Tuesday's opening or at Wednesday's close is recommended.

Don't be afraid to buy Silver on weakness.  After 3 straight down days, the chance of it falling
           a fourth day is very limited if the last year is taken as a basis for estimating "streaking probabilities",
           another unique TigerSoft concept.  Regularly higher openings (overseas' demand) for Silver
           since August has been a major factor in the rise.  As said earlier, I take its relative strength breakout
           when compared to Gold to be very significant.                

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SLV/GLD   (Silver versus Gold)  RELATIVE STRENGTH
                         Silver is now outperforming Gold.  That is the messge in the trend-break below.
               This may partly be a result of an announcement this past week that  the International
                Monetary Fund and the Group of Seven rish nations plan to sell Gold.  The Fund holds
                103.4 million ounces of gold worth some $92 billion at current market prices. That is up
                from $23 billion just five years ago.  Before the US can sell, Congressional approval
                will be required. ( http://in.reuters.com/article/businessNews/idINIndia-31847320080209?sp=t... )
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                          Silver Stocks see to be stuck in trading ranges.  It seems as long as silver keeps
                    rising the stocks will have nice trading bounces.  But taken as a group,
Silver Stocks
                    are seriously under-performing Silver. 
We can build a TigerSoft index chart for the
                    leading Silver producers:  PAAS, SSRI, HL, CDE, SIL and SLW. 

Tiger Index of Chart of Silver Stocks --------------------------------
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Silver Stocks - Relative Strength versus Silver              wpe5D.jpg (14227 bytes)
Silver Stocks: Weekly Charts

                           The number of silver stocks we can buy in the US is quite limited.  Rising mining costs
          are taking a bite out of profits.   The stocks have been weaker the SLV, the ETF for silver.  This is
          also explained by investor fears that there will be another leg down for the overall market. 
          The top two, PAAS and SSRI, are discussed below.  Weekly charts of the others are shown, too.
PAAS --------------------------------------------------------------------------------------------
Pan American Silver Corp. 625 Howe Street Suite 1500 Vancouver, BC V6C 2T6 Canada
           Phone: 604-684-1175    Web Site: http://www.panamericansilver.com   Pan American Silver Corp.
           engages in the exploration, acquisition, development, and operation of silver properties. It also focuses
           on copper, zinc, lead, and gold minerals. The company has mining operations in Mexico, Peru, Argentina,
           and Bolivia; and has non-producing silver resources in the United States and Argentina. It owns and operates
           the Quiruvilca silver mine, the Huaron silver mine, and the Morococha silver mine in Peru; La Colorada Mine,
           Mexico; and San Vicente, Bolivia. Pan American's development projects include the Alamo Dorado silver project
            in Mexico and Manantial Espejo in Argentina. The company was founded in 1979 and is headquartered in
           Vancouver, Canada. ( http://finance.yahoo.com/q/pr?s=PAAS )

                    The TigerSoft chart of PAAS shows it is still on a Red Sell.  That optimum system for the last year has
            gained +137% long and short, according to the Red arrows.  Not shown, it is on a short-term buy from
            a trading system that has gained  46% for the last year using only the long-side and the openings the day
            after the signal to trade the stock.  Aggressive buying is weakening noticeably.  But the stock found support
            at its rising uptrendline.  The "strong" buyers in the stock are patient and trade the pull-backs to the rising
            uptrtendline.   Until that is violated, this stock in definitely favored.
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           1/25/2008 -  "Pan American Silver Corp. (PAAS) announced much higher costs than anticipated when it
           reported fourth quarter results Wednesday, prompting Blackmont analyst Richard Gray to reduce his price
           target on the stock.  Mr. Gray called Pan American's average cash costs of C$4.54 per ounce for the
           quarter   "disappointing" when compared with his estimate of C$2.37 per ounce
           ( http://seekingalpha.com/article/61601-pan-american-posts-disappointing-q4-results?source=yahoo )

           The following quote comes from the "Motley Fools":

                              "While I'm not sure I find much value in being the biggest primary silver miner, that's the goal
             of Pan American Silver (Nasdaq: PAAS). The company started out much like Silver Standard Resources
             (Nasdaq: SSRI), buying up uneconomic silver deposits in the '90s. The key difference is that Pan American
             chose to move much more rapidly into production. Silver Standard, which I've written about previously, is still
             largely a call option on the price of its ounces in the ground. Pan American is instead playing the production growth
             game.  We got an operational update last week, when the company reported its fourth-quarter results. On the
             upside, Pan American slightly exceeded its annual production target of 17 million ounces. Any celebration
             on that front has to be tempered by the fact that in its 2003 Annual Report, the company was projecting 20
             million ounces of production by 2006. Production guidance is as much art as science, particularly when operating
             outside of North America. Permitting delays are par for the course, and it's the rare mining company that fails to
            overpromise on production at some point.   Pan American has and will continue to ramp up silver output at an
            impressive rate. The more acute issue is -- you guessed it -- cost inflation. In the previous quarter, the firm's cash
            costs came in above expectations because of equipment failure. There were maintenance issues this time around,
            as well. Issues like currency appreciation, tight labor markets, and falling by-product prices don't leave a whole
            lot of room for production gaffes.   That's not to say the company is careless with its cash, however. While chairman
            Ross Beaty has had a remarkable string of successes with smaller Canadian-listed companies, Pan American is his
            baby. Beaty retains a significant stake -- only the investment funds of Royce & Associates and Bill Gates hold
            larger positions. I've read interviews with Beaty, and he strikes me as extremely entrepreneurial, ethical, and
            shareholder-friendly. To cherry-pick but one Buffett-esque quote: "I just love creating wealth for shareholders
            through building resource companies from the ground up. It's what gets me out of bed in the morning.   If I ever cast
            my lot with a silver producer, Pan American would most likely be the one."

           --------------------   Weekly PAAS Chart -------------------------------------------------------------------
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SSRI ------------------------------------------------------------------------------------------
Silver Standard Resources Inc. 999 West Hastings Street Suite 1180 Vancouver, BC V6C 2W2 Canada
           Phone: 604-689-3846    Web Site: http://www.silver-standard.com   Silver Standard Resources, Inc. engages in the
           acquisition, exploration, and development of silver mineral properties in Argentina, Australia, Canada, Chile, Mexico,
           Peru, and the United States. It owns a 100% interest in the Diablillos silver-gold project located in the province of
          Salta in north-western Argentina; the Pirquitas silver property located in the province of Jujuy in northern Argentina;
          the Bowdens project located in New South Wales, Australia; the Silvertip, Snowfield, and Sulphurets projects located
          in British Columbia, Canada; the Sunrise Lake deposit located in Northwest Territories, Canada; and the Challacollo
          silver project located in northern Chile. The company also holds a 100% interest in the Pitarrilla property located in the
          Durango and the San Marcial silver property located in Sinola in Canada; the Berenguela property located in the province
          of Lampa in southern Peru; the Candelaria silver mine in Nevada; and the Shafter silver mine located in Presidio County,
          Texas. It has an option to acquire a 100% interest in the Veta Colorada silver property located in the state of Chihuahua,
          Mexico. In addition, Silver Standard Resources holds a 55% joint venture interest for the exploration of the San Luis
          property located in the Ancash Department, Peru. Further, the company has an exploration and development agreement
          with Vista Gold Corp. to explore silver resources hosted in the Maverick Springs gold-silver property in northern Nevada.
          It has a strategic alliance with Minco Silver Corporation to pursue silver opportunities in the People's Republic of China;
         and an agreement with Esperanza Silver Corporation for the exploration of silver projects in Peru. The company was
         incorporated in 1946 and is headquartered in Vancouver, Canada.

                     SSRI's chart shows a "false breakout" over 40.  That poses considerable resistance.  It is in the bottom
         of its trading range.  It is on a Red Buy fromt he top TigerSoft system, which has gained 116.4% for the past year.
         buying on the red up arrows and selling short on the red down-arrows.  Aggressive buying has been weaking.
         But the red distribution indicator did not confirm the recent decline.  That is a bullish sign, as is the upside breakout
         in SSRI's relative strength down-trendline.
                     Rising costs of production reduce SSRI's mine's profits.  2007 start up costs at their new Argentine mine
         rose 50% over what they estimated a year ago.   Other mining companies are facing similar cost increases.
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--------------------  Weekly SSRI  Chart -------------------------------------------------------------------

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          ----------------------- SLW Silver Wheaton  (Not Exploration) )  ---------------------------------- 

                           Silver Wheaton (SLW, Toronto) neither mines nor explores for silver but acquires the silver revenue
             stream from other mining companies. It does this by making an up-front investment and a clearly defined cost per
              ounce. It has modest risk, but positive upside should the silver price appreciate.

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           --------- ----------------
HL - Hecla Mines -------------------------------------------------

          Hecla - Daily
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          Hecla Weekly
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           ----------------------- CDE -----------------------------------------------------------------------------------------------
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Weekly SIL   Apex Silver Mines ---------------------------------------------------------------------
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CHARTS IN SUPPORT OF BLOG ===========================

US DOLLAR: 1999-2008.  ============================    
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================= SILVER: 1964-2008 ====================================================






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