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A year ago, Vancouver portfolio managers Mark Jasayko and Neil McIver made forecasts about the direction of world currencies, stock markets, gold prices, oil, natural gas, commodities, interest rates, Canadian real estate and carbon credits. They were on the money on every front except interest rates. Here are their fearless forecasts for 2012:

Higher gold prices, flat Canadian stocks seen. In 2012, portfolio managers also forecast higher interest rates, lower real estate prices, loonie between 90 cents and par and flat food costs…

The seasonal sweet spot for silver has just started

Posted by Don Vialoux - EquityClock.com & Timingthemarket.ca

on Monday, 9 January 2012 7:00

The sweet spot for seasonal strength in silver has just started. How does the seasonal trade line up this year?

Equityclock.com notes that the period of seasonal strength for silver during the past 20 years has been from September 16th to April 11th. The “sweet spot” is from the end of December to the end of February. The trade has been profitable in 11 of the past 16 periods including 8 of the past 10 periods. Average return per period during the past 16 periods was 11.0 percent.

Seasonality in silver is influenced by an increase in industrial demand during its period of seasonal strength. Approximately 40 percent of silver is used industrially – in solar batteries, water purification systems, cellphones, circuit boards, plasma televisions and radio frequency identification devices (RFIDs). Growth in excess of 10 percent per year is expected to continue in these sectors. The demand for silver for photography purposes continues, but at a diminished level. Demand for jewelry continues to increase at a slow rate with growing discretionary income despite the higher price of silver. Demand for jewelry has been notable stronger in countries such as China and India

Demand for silver is expected to exceed supply in early 2012 because of an unusual non-recurring event. Thailand is expected to recover from a major flood experienced in the fourth quarter. Thailand is the world’s largest assembler of electronic devices. Many of its electronic assembly plants were shut down by the flood. Demand for silver used in electronic components slipped briefly, but is expected to recover early this year.

 

On the charts, silver Exchange Traded Funds, trust units and related silver equity ETFs have an unusual technical profile. Silver bounced from intermediate support at $26.15 last Thursday and recovered to $29.17 yesterday. Short term momentum indicators including Stochastics, Relative Strength Index and Moving Average Convergence Divergence are deeply oversold and turned positive yesterday.

A wide variety of investment opportunities are available in the sector. Best known and most actively traded security is the iShares Silver Trust (SLV $28.39). Sprott Asset Management offers its Physical Silver Trust (PSLV $14.46). Global X offers the Global X Silver Miners ETF (SIL $21.99), an ETF that holds a diversified basket of 25 silver producer stocks. Holdings include Pan American Silver, Silver Wheaton, Hecla Mining, First Majestic Silver Corp. and Silver Standard Resources. Bull and Bear ETFs that offer two times the daily change in the price of silver also are available in U.S. and Canadian Dollars. Horizons also offers the Horizons COMEX Silver ETF (HUZ $19.22), a unit based on COMEX futures contracts that trades in Canadian Dollars and is hedged against U.S. Dollar fluctuations.

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The above chart represents the seasonality for Silver Futures (SI) Continuous Contract for the past 20 years.

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Don Vialoux is the author of free daily reports on equity markets, sectors,
commodities and Exchange Traded Funds. . Daily reports are
available at http://www.timingthemarket.ca/. He is also a research analyst for
Horizons Investment Management Inc. All of the views expressed herein are his
personal views although they may be reflected in positions or transactions
in the various client portfolios managed by Horizons Investment Management.

Equity Clock is a division of the Tech Talk Financial Network, a market analysis company that provides technical, fundamental and seasonality analysis on a daily basis via TimingTheMarkets.com and EquityClock.com.   Equity Clock’s mission is to identify periods of reoccurring strength among individual equities in the market using methodologies presented by some of the top analysts in the industry, including that of Don Vialoux, author of TimingTheMarkets.com.

Feel free to use any of the content or seasonality studies (charts, timelines, or otherwise) presented as long as a link-back to this site at EquityClock.com is provided.

For further information on indicators used in reports presented on this site, please visit our reference page.


I believe the short squeeze that took Silver to $49.73 in April has taught the commercials how tight the physical silver market actually is, and that the commercials “appear to have no interest in massively shorting silver again”. As a result, I look for silver to make massive gains in the near futures, as the commercials turn and go net long, resulting in $50 silver appearing “cheap” in the near future.

Listen to this Peter Grandich interview right HERE

David Bensimon, who correctly called dramatic market movements throughout 1998-2011 is Michael’s guest tomorrow on the radio broadcast of Money Talks which begins at 8:30 PST.