Shine Shine on me Silver

I've heard all the talk that "Silver is in a bubble". I've also heard all of the J.P. Morgan silver short conspiracy theories. The reality is, Silver is in backwardation, and that backwardation is growing steeper every day. This is a classic supply/demand story in the short term, and ultra-bullish for price. Originally I had pegged $35 as my target for $SILVER this year -- I think we may have to up that to $40. Will $SILVER come back to life after that? Probably, but I wouldn't be shorting it here. Try to find a 100oz or 1000oz bar for delivery -- let me know how that works out for you.

To quickly address the J.P. Morgan Short issue -- If JPM is really short, they are probably short in the OTC market against some other big counterparty (producer, other bank). In fact, they may actually be LONG in COMEX as a hedge to their OTC short position.

Taking another look at Intel

Although highlighted favorably in Barron's over the weekend, Intel (INTC) has been dead money for 10 years. I own it already because it is a steady dividend payer (3.3%) with growth in revenues of about 25% over the past 10 years, and it sells for a 10.5 P/E.

To accumulate more of the stock, it would take a compelling fundamental or technical reason. One appeared today -- what seems to be an inverse H&S with a neckline @ $22 and the head at $17.5. This would put the target price close to $27.

To see the INTC Stock Chart with the inverse H&S, Click here

If we see a breakout above $23, it might be time to load up the truck.

Lightening up my spec commodity longs

Sold Monsanto (MON) @ $73 ($54.59 cost basis) for 33.7% gain
Sold Mosaic (MOS) @ $85 ($73.5 cost basis) for 15.6% gain
Sold Oil Service HOLDRs (OIH) @ $164 ($144 cost basis) for a 13.8% gain

Back in Wheaton

Silver Wheaton that is. $34.50 no stop. The backwardation in silver suggests significant price appreciation is ahead for the metal itself and I'm slapping a $45 price target on SLW for the next 6 months.


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Out of Exxon

Sold ExxonMobil @ $83 (purchased @ $67), 26% total return with dividends.

Will replace with another oily major (Chevron, Conoco?) on more of a pullback.