I am currently in trades for both Silver and Silvercorp (SVM). The former is proving quite promising while the latter is disappointing to say the least. Considering that the metals and the gold stock index (the HUI) are now firmly moving north it is frustrating than my SVM trade is showing only a miniscule spread betting profit.

Being one of the lowest cost silver producers, with a dividend to boot I thought the investment herd would be going gaga of this stock the minute silver managed to climb $14.00.  Alas it is not to be. So far that is.

With the company producing in China maybe there is an element of country risk worrying potential buyers. Or maybe it’s a case of the major producers moving up in price before the smaller ones. Who knows? The price in all likelihood will resolve itself to the upside. Hopefully it will do that soon and not take out my current sell stop in the low $3.00’s.  

At least for the time being this mini downtrend has been halted just above that level. It’s bite my nails time until it decides it wants to move up again. One way or other it will not be too long before the situation resolves itself up or down.

If the price can overcome that small series of lower highs on the above chart then I am taking an educated guess we will see $4.00 range  before you can say “silver shortage”, and I can stop biting my nails until the next trade comes along.

As for the general equity markets I feel quite comfortable saying I have no idea what the hell they are up to. Topping for now I guess.  But whether they collapse to new lows I am not so convinced. Because I am flat the indexes right now I am happy to just see how this all plays out. Of course if they do tank then it is quite possible they will take gold and silver stocks down with them.

The chart I find most intriguing of all is that of the $US dollar. It seems the whole world’s fate is determined by what the dollar is up to. The emotional side of me is predicting an imminent dollar collapse because the fundamentals just aint getting better. However I am well aware of my own biases when it comes to opinions about the dollar. Many of which have been fuelled by reading far too many end of the world scenario’s from overzealous gold bugs.

Of course the dollar sucks but what are the alternatives? Technically the chart sucks too but charts always suck prior to them reversing course. Like the indexes I have no idea what will happen next although many commentators are saying were headed alot lower. I guess it all depends on whether the 78-80 level holds or not.

Market sentiment is a hard thing to judge at the best of times. Depending on what section of the investing world you visit daily will give you a different indication of current market sentiment. I am a PM bug at heart so most of my time is spent monitoring the talk on precious metals related sites.

From what I see sentiment among this crowd is far too bullish for its own good, which does cause me to worry somewhat. I have lost count of the times I have read about “moon shots”, “$1300″ price targets, “cyclical lows” and “bullish Elliot wave counts” in recent weeks. It all makes me want to throw up. The same guys were calling $750 gold not so long ago.

I don’t like to be contrarian for contrarian’s sake but I do want to point out that we are at a seasonally weak time for the precious metals something that seems lost on the rampant bullish gold crowd right now. That said I am long silver and I hope I am stunningly wrong in reading market sentiment. Nothing would be better now than a “moon shot” to $30.

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Tags: Commodities, Gold, Markets, Precious Metals, Sentiment, Silver, US Dollar

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