It looks like all the Silver ETFs are going to push into the new year at all-time highs! Silver is trading at levels not seen in over 30 years and all the silver ETF contracts are making new record highs today.
Double Silver ETF - AGQ is up over 137% on the year.
The largest ETF - SLV is up almost 65.91% on the year.
SIVR is up 65.80% on the year as well.
Other less active silver funds like DBS and USV were up 65.10% and 64.45% respectively.
Closing the year at new all time highs bodes well for these markets in 2011 as well at least in the beginning of the year. Many market watchers including myself expect silver to explode to new all time highs ($50+) before this bull market is ultimately over. Whether that happens in 2011 remains to be seen.
It should be another interesting year!
Happy New Year!
Friday, December 31
Monday, December 13
Silver ETF Trend Remains Bullish
The short trade in silver using the double short silver etf - ZSL only netted $130 before the silver market found support. This market remains incredibly strong and can't even go through an overdue correction. After watching the action unfold last week I sold ZSL and purchased the silver mining etf - SIL which is the Global X Silver Miners.
The precious metals miners have been outperforming the metals since the rally began in August. During the credit crunch the miners fell much harder than metal prices so they still remain at a substantial discount to the metals on a historical basis. The following chart shows the large cap miners represented by GDX and you can see they have not made up the gap that was created during the decline in 2008. SIL didn't start trading until after the crash so that's why I used GDX for the illustration.
The precious metals miners have been outperforming the metals since the rally began in August. During the credit crunch the miners fell much harder than metal prices so they still remain at a substantial discount to the metals on a historical basis. The following chart shows the large cap miners represented by GDX and you can see they have not made up the gap that was created during the decline in 2008. SIL didn't start trading until after the crash so that's why I used GDX for the illustration.
Tuesday, December 7
Taking Another Shot At ZSL - Short Silver ETF
The silver market blasted to another new high just over $30 per ounce and everyone is bullish so it's time to take a trade on the short side. The lowest risk way to do this is using the double short silver ETF - ZSL. It's so beaten down that I was able to buy it at $10.50 per share and I'm only going to risk it to today's low so it's a pretty small bet.
I don't think the ultimate top is in for silver, but this could easily be a short term top that will lead to a moderate correction. If you look at the chart below, you can see that the Relative Strength Indicator (RSI) failed to make a new high as the Silver ETF - SIVR went to new highs. This is called Divergence and is often a sign that the market is getting over bought and is due for a correction.
The largest Silver ETF - SLV stopped right at the psychological $30 level.
I don't think the ultimate top is in for silver, but this could easily be a short term top that will lead to a moderate correction. If you look at the chart below, you can see that the Relative Strength Indicator (RSI) failed to make a new high as the Silver ETF - SIVR went to new highs. This is called Divergence and is often a sign that the market is getting over bought and is due for a correction.
The largest Silver ETF - SLV stopped right at the psychological $30 level.
Thursday, December 2
Brazil ETF Review - Putting The B In BRIC
The lead country in the emerging market BRIC community is Brazil. Rich in natural resources the Brazilian economy has been growing rapidly this past decade along with commodity prices.
The oldest and most established Brazil ETF is EWZ from iShares. As you can see from the chart below this ETF had a tremendous run from 2003-2008 then came crashing down with the rest of the global markets losing a whopping 70% only to turn around and regain much of that ground in 2009 rising as much as 150%. It's no wonder long term emerging markets investors have to develop nerves of steel in order to not get shaken out of their positions.
For the past year and a half there has been a better performing ETF available and this one is a small cap Brazil ETF that trades under the ticker symbol BRF. You can see by the chart below that BRF has been dramatically outperforming EWZ. When you think about it that makes sense because Small Caps normally outperform Large Caps following a recession. If this is true in developed nations, it's probably even more true for emerging countries. However, it will be interesting to see what happens to these Emerging Country small caps when the next financial crisis hits... I imagine it wont' be pretty.
There are several other newer Brazil ETFs as well, these include:
BRAQ - The Global X Brazil Consumer ETF
BRXX - A Brazil Infrastructure ETF
BRAZ - Global X Brazil Mid Cap ETF which focuses on mid-cap stocks.
The way things are going it's only a matter of time before Brazil will no longer be considered an Emerging Market. It seems to be developing at a rather fast pace!
The oldest and most established Brazil ETF is EWZ from iShares. As you can see from the chart below this ETF had a tremendous run from 2003-2008 then came crashing down with the rest of the global markets losing a whopping 70% only to turn around and regain much of that ground in 2009 rising as much as 150%. It's no wonder long term emerging markets investors have to develop nerves of steel in order to not get shaken out of their positions.
For the past year and a half there has been a better performing ETF available and this one is a small cap Brazil ETF that trades under the ticker symbol BRF. You can see by the chart below that BRF has been dramatically outperforming EWZ. When you think about it that makes sense because Small Caps normally outperform Large Caps following a recession. If this is true in developed nations, it's probably even more true for emerging countries. However, it will be interesting to see what happens to these Emerging Country small caps when the next financial crisis hits... I imagine it wont' be pretty.
There are several other newer Brazil ETFs as well, these include:
BRAQ - The Global X Brazil Consumer ETF
BRXX - A Brazil Infrastructure ETF
BRAZ - Global X Brazil Mid Cap ETF which focuses on mid-cap stocks.
The way things are going it's only a matter of time before Brazil will no longer be considered an Emerging Market. It seems to be developing at a rather fast pace!
Wednesday, December 1
Short Bond ETFs Spike Sharply Higher
Just yesterday long term bonds were rallying on a worsening European debt crisis but what a difference a day makes. Today all the Short Bond ETFs rallied sharply and closed with very strong gains as bond prices collapsed following the latest ADP jobs report.
Active Bond ETF Performance:
The Direxion 3x Leveraged Short Bond ETF - TMV closed up $2.51 or 6.36%
TBT the 2x Leveraged Short Bond ETF closed up $1.46 or 4.20%
TLT - the most actively traded Treasury Bond ETF closed down $2.51 or 2.56% on nearly twice the normal daily volume.
LQD - the investment grade corporate debt held up better losing only .61% as a stronger economy tends to reduce the risk premium between corporate bonds and government treasuries.
Municipal Bond ETF - MUB was down almost 1% ending a rebound rally from the $99 low set a couple weeks ago. It will be interesting to see if it can retest and successfully hold the old lows if the long term bond market continues to unravel.
Active Bond ETF Performance:
The Direxion 3x Leveraged Short Bond ETF - TMV closed up $2.51 or 6.36%
TBT the 2x Leveraged Short Bond ETF closed up $1.46 or 4.20%
TLT - the most actively traded Treasury Bond ETF closed down $2.51 or 2.56% on nearly twice the normal daily volume.
LQD - the investment grade corporate debt held up better losing only .61% as a stronger economy tends to reduce the risk premium between corporate bonds and government treasuries.
Municipal Bond ETF - MUB was down almost 1% ending a rebound rally from the $99 low set a couple weeks ago. It will be interesting to see if it can retest and successfully hold the old lows if the long term bond market continues to unravel.
Gold ETF Funds - Reviewed
With Gold near all time highs there is strong investor demand for all types of Gold ETF products. Initially during the first stages of a bull market people tend to favor the metal and large cap mining stocks.
The top Gold ETF Funds are: GLD, IAU and SGOL
The leading Gold Mining ETF is GDX
Then as speculative fever takes over investors (and especially traders) become more aggressive so they move into Leveraged Gold ETFs such as: DGP and UGL. They also move from the large cap gold stocks into the small cap or "Junior" mining stocks which tend to be much more volatile. The best ETF to capture the movement of these small cap miners is GDXJ which is only a year old but already trades over 2,200,000 shares per day on average.
During strong bull markets you will find that Silver generally outperforms gold as well just as the Nasdaq tends to outperform the S&P500 during strong stock market rallies.
Once the tide turns, which they always do then investors will be looking for ways to play the down side. There are several short gold etf products to choose from:
DGZ is the only one that is an unleveraged short gold etf.
UGL is a double short Gold ETF
DZZ is a double short Gold ETN
If you compare the performance of DZZ and UGL you will see they have very similar characteristics but the actual contract risk in a time of crisis may differ. Some pundits say that ETNs have more contractual risk because of the way they are structured.
The top Gold ETF Funds are: GLD, IAU and SGOL
The leading Gold Mining ETF is GDX
Then as speculative fever takes over investors (and especially traders) become more aggressive so they move into Leveraged Gold ETFs such as: DGP and UGL. They also move from the large cap gold stocks into the small cap or "Junior" mining stocks which tend to be much more volatile. The best ETF to capture the movement of these small cap miners is GDXJ which is only a year old but already trades over 2,200,000 shares per day on average.
During strong bull markets you will find that Silver generally outperforms gold as well just as the Nasdaq tends to outperform the S&P500 during strong stock market rallies.
Once the tide turns, which they always do then investors will be looking for ways to play the down side. There are several short gold etf products to choose from:
DGZ is the only one that is an unleveraged short gold etf.
UGL is a double short Gold ETF
DZZ is a double short Gold ETN
If you compare the performance of DZZ and UGL you will see they have very similar characteristics but the actual contract risk in a time of crisis may differ. Some pundits say that ETNs have more contractual risk because of the way they are structured.
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