The Introduction of a silver ETF could send shockwaves through financial markets

Silver futures started its upward journey on last Wednesday on market speculation that Barclays Global Investors may eventually win approval from the Securities and Exchange Commission to launch a silver exchange-traded fund. Chinese gold prices finished lower ahead of a holiday next week, while European gold was trading marginally lower.

However, with the outlook for the US economy mostly improving this week, prior to the President's State of the Union speech on Tuesday along with the new Federal Reserve chiefs statements, and the overbought levels of precious metal stocks, indicate a correction is in the very near future.

The relentless sharp rise in price of commodities especially oil and metals, sends a strong signal for a strong market correction. I am expecting to see Crude Oil to remain in the spotlight this week.

US crude oil futures ended higher for the second straight day on Friday as supply worries over Iran and Nigeria overshadowed hefty increases in US petroleum inventories reported at midweek. Crude for March delivery settled $1.50 higher, or 2.3 per cent, $67.76 a barrel, after hitting a session high of $67.95.

Benjamin Train
January 30, 2006
Below are some articles I thing you may enjoy.


Funds lift silver to new peak, platinum sets record
By Atul Prakash

LONDON (Reuters) - Silver set a 19-year high on Friday, before faltering in New York on profit taking, as funds poured money into the metal on speculation that a silver-backed exchange-traded fund (ETF) might spur demand.

Silver led New York precious metals higher this week after taking the baton from gold which hit 26-year highs a week ago.

But by Friday the complex looked tired, except for platinum, which continued to another record.
At the COMEX division of the New York Mercantile Exchange March silver closed unchanged at $9.605 an ounce, snapping a four-day winning streak. It peaked in early trade at $9.80 the loftiest benchmark price since April 1987.

"We are seeing a short term impetus to the market on the back of the ETF story," said Jeremy East, global head of precious metals at Commerzbank.

"Looking at it now, we could easily see silver up at $10."

Silver, used in jewellery, photography and electronics, has jumped more than 11 percent this week on reports that Barclays Global Investors' iShares Silver Trust might be approved in the United States.

Each share would be worth 10 ounces of silver. The security would require the purchase of silver bullion to guarantee it.

"Buying interest is fuelled by the apparently almost certain prospect of a silver ETF," RBC Capital Markets said in a report.

"The Silver Users' Association fears that an ETF will remove enough stocks to drive the market into a serious deficit," the report said, adding silver inventories had fallen to less than 600 million ounces from 1.4 billion in 1991. Spot platinum rose to its highest ever level of $1,065/1,070 an ounce, and closed at $1,064/1,068 in New York.

NYMEX April platinum futures rose $7.60 to $1,072.70 an ounce.

Analysts said current high prices were not sustainable, but the near-term momentum was positive.
"We continue to warn that all the precious metals are vulnerable to a sharp correction although we suspect that fundamental demand for gold and platinum will support these metals more than silver and palladium in the event of a correction," John Reade, analyst at UBS Investment Bank.

ETFs DRIVE DEMAND

Exchange traded funds, aimed at drawing investment capital, are designed to reflect the price of specific goods and trade like listed stocks on any exchange.

Gold ETFs are traded on some of the world's major stock exchanges and have accumulated 425 tonnes, valued at about $7.6 billion. An amount equal to 20 percent of investment in gold ETFs might generate 4,500 tonnes of silver demand, analysts say.

Alan Williamson, analyst at HSBC Bank, said in a note if the funds were a central bank, they would now collectively rank as the world's twelfth largest gold holder. Gold holdings by central banks and the IMF is estimated at around 31,000 tonnes.

COMEX February gold went down $1.10 to $558.80 an ounce. Spot gold rose as high as $563.90 an ounce before easing to $559.20/0.10 in New York, down from $559.70/560.60 on Thursday. Friday's afternoon London fix was at $561.75.

Gold reached a 25-year high last Friday at $567.60.

"Anti-inflationary and safe-haven hedging look set to provide good support in the coming sessions, particularly after the victory by Hamas in the Palestinian elections," said James Moore, analyst at TheBulliondesk.com.
Hamas swept to victory over the long-dominant Fatah party in the Palestinian polls, and Israel immediately ruled out talks with any government involving the Islamic militant group.

Gold has been firm because of worries about rising energy costs, dollar instability, fears of attacks on the U.S. mainland and tension in the Middle East including Iran's nuclear intentions.

NYMEX
March palladium eased 50 cents to $278.00 an ounce.
Spot palladium was last indicated unchanged at $272/276.


SILVER ETF PACKS PUNCH
Friday, January 27, 2006
Todd Stein & Steven McIntyre Texas Hedge Report
For more information, go to http://www.texashedge.com

In our articles titled "Silver ETF: Shock & Awe" and "Powerful Silver ETF", we highlighted how the introduction of a silver ETF would send shockwaves through the financial markets. We used the introduction of the U.S. gold ETFs (tickers: GLD & IAU) as a model of what would happen to physical silver demand once the silver ETF (proposed ticker: SLV) starts trading on the Amex. Now that a little more than one year has passed since the gold ETFs were introduced, let's take another look at just how much demand for silver could be impacted.

In their first twelve months of trading, GLD & IAU (the two gold ETFs) accumulated well over 7 million ounces of gold in their vaults. Then, in the following three months, an additional 3 million ounces have poured in. At $558/oz, this means that nearly $6 billion of new demand has been created by the two U.S. gold ETFs over their first fifteen months. Some shifting from physical bullion to the ETFs may have occurred, but near as we can tell, it has been negligible as most of the demand created by the ETFs is truly new.

If silver, through its ETF, can add over time in dollar demand what GLD & IAU did in just 15 months, we are talking about an additional 600+ million ounces being taken off the world market. With silver trading at around $9.60/oz, $6 billion in incremental investment demand would translate more precisely into about 625 million ounces of the grey metal. This would almost certainly wipe out the entire world's identifiable supply of above ground silver (about 550 million ounces according GFMS). Is it any wonder why the SUA (Silver User's Association) is trying to cry "uncle" to the SEC in the hopes of putting the kibosh on the silver ETF?

Now before you back up the truck and start hoarding silver bars, please realize that we do not expect 600+ million ounces to be sucked up anytime soon as a result of the silver ETF. Furthermore, we are skeptical that GFMS is able to pin down the above ground silver supply at 550 million ounces when there could theoretically be large unknown amounts of silver sitting in China and India and/or private hoards.

With all that said, we do think the 500-600 million ounces in relatively easily liquidated above ground ounces is a conservative place to start for liquid silver inventories. The real question then becomes how much silver is likely to be consumed over the next year or two by the impending silver ETF which, thanks to recent rumblings by Barclays and Amex, appears closer to getting approved by the SEC.

Read the entire article at: http://www.freemarketnews.com/

Platinum breaks all-time U.S. record high at $1,068.00 per ounce!

The spot price of platinum climbed to a fresh all-time high of $1,068.00 today on a number of supportive factors, analysts said. London Gold Fix $562.25 +6.60 LME COPPER STOCKS 101,500 metric -1,575 tns COMEX Gold stks 7.169 ml oz Unchanged COMEX SILVER stks 122.8 ml oz +407,054 oz

Wednesday, January 25, 2006
FreeMarketNews.com

The spot price of platinum today climbed to a fresh all-time high of $1,056 an ounce on a number of supportive factors, analysts said. At midday, platinum was quoted at $1,056/oz, up $7/oz from the metal’s previous close.

Platinum was higher on the strength in the rest of the precious metals complex, with gold close to its recent long-term high, and silver having climbed to a fresh 18-year high, London-based HSBC analyst Alan Williamson said.

Silver had been boosted by gains in base metals, UK-based TheBullionDesk.com analyst James Moore wrote. Silver also tracks movements in base metals because of its industrial applications such as its use in batteries, brazing and soldering as well as catalysts.

Other supportive factors for platinum had been the strong rand, which was last at R6,0056 to the US dollar from late trade yesterday of R6,0250, increased speculative positions in platinum, which had taken the total length in platinum to within 200,000 oz of its record high, Williamson added.

According to the Trend Traders Report by Neal Weintraub that trend will continue for some time. For market trade pattern trends visit: www.PatternTrapper.com

Read the entire story at: BusinessDay.co.za
http://www.businessday.co.za/articles/markets.aspx?ID=BD4A144266


Wednesday, January 25, 2006 Market Closing Report
Dow Closes Down 2, Nasdaq Finishes Down 5

Stocks fell Wednesday asdeclining oil prices sent the energy sector lower and investors continued their jittery reactions to corporate earnings. Broader stock indicators were lower.

Declining issues outnumbered advancers by roughly 9 to 7 on the New York Stock Exchange, where volume came to 1.92 billion shares, up from 1.88 billion traded at the same point on Tuesday. According to preliminary calculations, the Dow Jones industrial average fell 2.48, or 0.02 percent, to 10,709.74. The Standard & Poor's 500 index fell 2.18,or 0.17 percent, to 1,264.68 and the Nasdaq composite index fell 4.60, or 0.2 percent, to 2,260.65.

Nervousness about unrest in Nigeria and Iran's nuclear ambitions helped send the energy sector lower. Crude oil futures fell, dropping 10 cents a barrel to $66.75 in trading on the New York Mercantile Exchange. Bonds fell, with the yield on the 10-year Treasury note rising to 4.47 percent from 4.39 percent late Tuesday. The dollar rose against other major currencies; gold prices also climbed.

Energy stocks, such as Halliburton Co. and Valero Energy Corp. fell alongwithcrude oil futures, pulling the Standard & Poor's 500 index lower on a day when most other sectors were nearly flat. Trading has remained erratic after last Friday's big drop, which sent the Dow down 213 points. The sell off followed a strong start to 2006, which sent the major indexes to multi-year highs.

Natural Gas and Crude Oil seen strong despite falling gas prices

Sun Jan 8, 2006 11:33 AM ET
By Ben Berkowitz

NEW YORK, Jan 8 (Reuters) - Warm weather and recovering production after a rough hurricane season are dragging down natural gas prices from last month's peak, but investors in gas producers are holding their positions on the belief that prices will remain at current historically high levels.

Since hitting a record peak of $15.78 per million British thermal units (mmBtu) on Dec. 13, the price of natural gas (NGc1: Quote, Profile, Research) has fallen nearly 37 percent.

Yet in the same period the AMEX Natural Gas Index -- made up of some of North America's top gas producers such as Williams Cos (WMB.N: Quote, Profile, Research) , Apache Corp. (APA.N: Quote, Profile, Research) and El Paso Corp. (EP.N: Quote, Profile, Research) -- has fallen just 2.4 percent.
In fact, over the last year every member of that index but one is up at least 10 percent, and seven of the 15 members are up more than 50 percent.

Investors say that the decline in natural gas prices is mostly immaterial because the price is still high -- the fuel traded between $2 and $6 from 2000 through the start of 2005. And no one was building long-term valuation models for natural gas companies on prices in the $12-to-15 range.

"The fact that the price has fallen back below $10, I don't think has a long-term impact on the fundamental valuation of the companies," said Ben Halliburton, chief investment officer of Tradition Capital Management. Halliburton said he sees gas prices in the $8-to-$10 range through the end of the decade....

... Read the entire article at:
http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh21844_2006-01-08_16-33-23_n08327460_newsml

Charter 2.0 Release Desk-top Stock Charting Software

Frank at Technicator.net has released his new Charter 2.0 stock charting software, an update to his charting software which pulls charts from Stockcharts.com. Charter 2.0 is a sophisticated and comprehensive, desk-top stock market tool that will help you select top performing equities. It works great, download it for free and experience it for a week. I think you may like it.

Click Here to Download Charter 2.0

From The Technicator Investment Blog Web site....
Charter 2.0 is a sophisticated charting software that contains many of the popular technical indicators and chart annotating tools for stocks. You can load up charts that vary durations from 1 minute intraday to 10 years. Moreover, mix and match groups of indicators to go with a stock chart and then annotate on them to further analyze the stock technically.

You can also organize stocks with the new watch list function. Furthermore, there are several categorized daily stock picks for endless investment ideas.

Advanced Charting Capability:
Large, vivid charts of stocks and indices. You can chart daily, weekly, or intraday using candlesticks OHLC, or line formats. Each chart overlay contains adjustable parameters which the user can adjust at his/her own disposal.

Technical Indicators:
Display up to 12 moving averages while choosing up to 5 separate technical indicators at once. Technical indicators include CCI, RSI, MACD, Money Flow, On Balance Volume, Accumulation/Distribution, Bollinger Bands, Price Relativity, Fast/Full/Slow Stochastics.

Personal Stock Watch List:
Add an unlimited amount of stock symbols to a personal watch list that you can save/add/delete stocks.

Daily Stock Picks:
Each day, manually updated by Technicator.NET, a big list of stock picks categorized by Top Stocks, Bottom Stocks, What’s HOT, and What’s NOT. Treat yourself every day into a sea of potential stocks to trade.

Free of Charge:
Free to everyone. The program does ask for support by clicking on an advertisement that would otherwise only take 5 seconds to deal with. Don’t worry; this doesn’t happen (once per 50 chart loads). This way, you get to use the program for free, no money out of your pocket, my advertisers pays me a couple of peanuts so I can keep the website running. Optionally, if you insist, you can purchase an ad-free version of Charter 2 for $100 by emailing me. It really isn’t necessary unless the tool has made you the big bucks and you feel like giving back, which is highly possible.

…and more! Start using Charter and discover this amazing research tool.

Technical Indicators Defined
January 5, 2006 @ 5:42 pm · Posted under Others

http://gotfrank.com/stockpicks/?p=296

Charter 2.0 offers many technical indicators for your research needs. The advanced technical chartist would know what to do with the right away, but most people don’t have a clue. Knowing how to use various technical indicators (or use a combination of a couple for added assurance) would add value to your investment research. You can sharpen your trade timing and get better entry/exit pricing. I spent over a year learning this stuff and I wanted to give back to my readers on what I learned and how you can be a better chartist. Below, I put together resources for every feature available for my program Charter 2.0. Feel free to bookmark it if you can’t go through everything in one sitting.

TECHNICAL INDICATORS:

Commodity Channel Index (CCI)
The CCI, when used in conjunction with other oscillators, can be a valuable tool to identify potential peaks and valleys in the asset’s price, and thus provide investors with reasonable evidence to estimate changes in the direction of price movement of the asset.
Learn More: Commodity Channel Index

Relative Strength Index (RSI)
The RSI compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset.
Learn More: Relative Strength Index

Moving Average Convergenge-Divergence (MACD)
A trend-following momentum indicator that shows the relationship between two moving averages of prices.
Learn More: MACD

Chaikin Money Flow (CMF)
The Chaikin Money Flow oscillator generates bullish signals by indicating that a security is under accumulation. It is based on calculations from the Accumulation/Distribution by Chaikin.
Learn More: Chaikin Money Flow

On Balance Volume (OBV)
A method used in technical analysis to detect momentum, the calculation relates volume to price change. OBV provides a running total of volume and shows if this volume is flowing in or out.
Learn More: On Balance Volume

Accumulation/Distribution (ACC/DST)
ACC/DST measures supply and demand by discovering if investors are generally “Accumulating” (buying) or “Distributing” (Selling) a certain stock by identifying divergences between stock price and volume flow.
Learn More: Accumulation/Distribution

Bollinger Bands (BB Width)
BB Width is the measurement of the width between the top and bottom bollinger lines. When the BB width is small (tight bollingers), then it may indicate and a price expansion will soon occur.
Learn More: B.B. Width, Bollinger Bands

Price Relative To (Price Relative)
The Price Relative compares the performance of one security against that of another.
Learn More: Price Relative

Fast/Full/Slow Stochastics (Stochastics)
Stochastics measures oversold/overbought conditions. When it is above 80, it is in the overbought region and when it is under 20, it is oversold.
Learn More: Stochastics

OVERLAYS:
Moving Averages:
Simple Moving Average (MA or SMA) and Exponential Moving Average (EMA)SMA is basically the average price for a given period. ie: MA(50) is the average price for the past 50 days (if you are looking at daily ticks).EMA is like SMA except it weighs the most recent tick heavier in the average price calculation.
Learn More: Moving Averages

Zig-Zag
Its purpose is to filter out random noise and compare relative price movements.
Learn More: Zig-Zag Lines

Price by Volume
The length of each bar on the side is determined by the cumulative total of all volume bars for the periods during which the closing price fell within the vertical range of the histogram bar.
Learn More: Price By Volume

Parabolic SAR
Parabolic SAR sets trailing price stops for long or short positions. It is also referred to as the stop-and-reversal indicator.
Learn More: Parabolic SAR

CHART ANNOTATIONS:
Use the line tool to connect top to top to or bottom to bottom to draw a trend line or price channel. You can even connect a top to a bottom (which should lead to a future bottom) or a bottom to top (which should lead to a future top).

Keep in mind that a lower high is almost always bearish except if the stock is consolidating and a higher low is, in the other sense, bullish. Remember that you can make a parallel line to a top trend line or bottom trend line to find the other line to make a channel.

If you want to edit a line or anything annotated on the chart, select the arrow tool on to top of the chart and select a line to edit it. Note that you can also change the line width/color/ or make dashes.

Another useful annotating tool is the Fibonacci retracement tool. You start it at a price bottom and drag it to the next top. Stocks usually retrace back to the 38.2%, 50%, or 61.8% level. If price bounces off the 38.2% level, it is very bullish. At 61.8% it may indicate it is the last time turning up (could mean bearish).

Learn More: Annotating Charts

For your reference, go here to get Charter 2.0. I hope these resources will help you grow as a technical analyst. Enjoy!

I suggest that you Join The Technicator mailing list to keep up to date on the developments of Charter 2.0 and investment ideas he writes about.

Join The Technicator Mailing List: Subscribe Now for FREE!