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A nice move in the metals today, and a bit of a catch up move from the related products like mining companies.
The Greek vote of confidence on the government should be announced after the bell, around midnight Greece time, and 5 PM EDT. This could move the markets ahead of the FOMC announcement tomorrow.
A Bloomberg poll of economists suggests that Bernanke will not end his stimulus program at the end of June, but perhaps change the appearance of it.
A special thank you to the many who send in helpful links and suggestions, often on a daily basis: Bill and Andrew, Malcolm and Michael, Dominique, Ursel, Craig, Jim, Janet, Don, Don Gerardo, Erik, Steve, Srinath, Shino, Chris, Rodd, Wis, Bob, Mikel, Blondie, Dave, Thomas, Tim, Joel, Richard, Lenny, Gary, Rob, Normand, Pierre, Stacy, DaveK, Peter, Max, Philip, Michel, Pandu, Prem, Bryan, Toby, Gwein, Nick, Larry, Petra, Harvey, Adrian, Warren, Francesco, Gonzo, Kohei, Kuzo, Bruce, Sookie's CouponGuy, Sean, James, Jimmy, Toby, Scott, Philippe, Gregory, Pete, Hugo, Ilene, and all the rest. I do not generally give hat tips, but these patrons stand out almost daily.
And of course, props to my unofficial editor Larry S. who helps tremendously by catching even the typos, awkward phrasing, and even the few malapropisms that 'escape my eye.' Sometimes I am on the run, and well, you know how that goes. As they say in central Europe, 'old age is no joke.' And sometimes this effort makes me feel old beyond my 59 years. lol.
Gold and silver were 'stepped on' several times during the day, as the usual antics that accompany a major FOMC meeting have already begun. Since the Fed is expected to say something about the son of QE2, we should expect the powers that be to step on gold rallies to help buttress confidence in paper.
There was a minor to-do on the weekend as the long expected changes in high leverage off exchange trading began to become visible in the markets, with a couple of dealers curtailing paper trading in the metals. I view this as of little consequence, and perhaps bullish because it is the paper market that is used to manipulate the price of the metals lower, although not so much effect because the ruling is only for retail traders, and not the big commercials.
The news events this week will be any developments in the Greek sovereign debt situation, the FOMC decision on Wednesday (two day meeting) that may very well give the markets some insights into the nature of what will follow QE2, and of course the Russell 2000 rebalancing on Friday which may drive specific stocks as they move on and off the list.
Today was one of the lightest stock volume days of the year, so any moves may have an exaggerated affect on short term prices.
I thought this press release from a silver mining company was interesting relative to the divergence between the miners and the metals which was featured last week.
By means of disclosure I have a very small trading position in this company, and as a caution I have to advise that it is highly volatile. As such I do not possess a profound knowledge of their operations. I do not like to mention individual companies at all, but it is difficult to reference a share buyback otherwise.
I tend to trade actively in the miners, and hold bullion, so I may not have this position for long even at the end of the week. This is in no way any endorsement of this company or any suggestion about its future performance.
I would expect other companies with the appropriate cash flows and positions to employ this type of relief from the short selling that has been plaguing them, as well as the headwinds of the recent stock market decline. But the divergence between miners and metals predates the stock market correction.
This might also be a period of acquisition and consolidation as we had seen in the Canadian juniors as oil made its moves higher.
The countervailing trend of course is the stock market weakness which weighs on all equities to varying degrees. A stock market 'crash' would hit the miners rather badly.
Generally I prefer to own bullion for the long term, rather than taking a leveraged play in the miners which are unsuitable for investment purposes for the average portfolio due to the risks which must be taken into account.
If you speculate with leverage, the odds are very high that you will lose money. I don't think I can state it more plainly than that.
SILVERCORP ANNOUNCES SHARE REPURCHASE PROGRAM
VANCOUVER, British Columbia – June 17, 2011 – Silvercorp Metals Inc. ("Silvercorp" or the "Company") intends to commence a Normal Course Issuer Bid to acquire up to 10 million common shares from June 29, 2011 to June 28, 2012, representing 5.7% of the Company's 175,047,941 common shares currently issued and outstanding. The Company is taking this action because it believes that prevailing market conditions have resulted in Silvercorp's shares being undervalued relative to the immediate and long term value of Silvercorp's portfolio of producing and development properties in China and Canada.
Purchases will be made at the discretion of the Directors at prevailing market prices, through the facilities of the TSX and/or the New York Stock Exchange (NYSE) in compliance with regulatory requirements. There can be no assurance as to the precise number of shares that will be repurchased under the share repurchase program. Silvercorp may discontinue its purchases at any time, subject to compliance with applicable regulatory requirements. The Company intends to hold all shares acquired under the issuer bid for cancellation. The Normal Course Issuer Bid is subject to regulatory approval.
Directors and senior officers of the Company are not aware of any previously undisclosed material changes or plans or proposals for material changes in the affairs of the Company, nor do any of them have the present intention to sell shares of the Company during the Normal Course Issuer Bid.
