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As some of you may or may not know that the Silver ETF was just approved and began trading on Friday. There is a great article on resourceinvestor.com that sums everything up quite nicely.

The thing that I find quite puzzling is how little Silver Barclays has bought. If they plan on buying as many ounces as they originally planned, they are going to be scrambling to get it. Supply is very tight already and with the Barclays beast trying to buy even more, we could see a push to $20 sooner than you'd think.

Ironically, I was talking to Eric Coffin at the Calgary Resource Conference and he suggested that Silver might go down after the announcement of the Silver ETF because he didn't think Barclays was "stupid enough to not have bought enough silver already." Well I guess Barclays isn't as smart as we give them credit for being because to me it looks like they're caught with their pants down.

Many of the speakers at the Calgary Resource Conference mentioned that using technical analysis is a good way to pick entry points into stocks you like.

I have always been very cautious with technical analysis but I am starting to learn more about it. And the more I learn, the more I like it. Whether it will make me more money, I'll let you know.

Anyways, Silvercorp has been consolidating now for a couple weeks after it's huge money making run and I think it is getting ready for blast off once again.

Take a look at this chart and some of the markings I added:

For those of you who are not familiar with technical analysis, here is a wonderful description and example of Double Bottoms. 

What we need now is a push past $21. I am quite sure that the financing will close tomorrow and there will be a news release. (Bob Bishop, one of the best newsletter writers, mentioned that buying a stock during its financing is usually profitable.) Then it looks like the push towards $56, my target, should continue.

Robert Kiyosaki is one of the wealthy investors that I like to listen to. He has been a long time pusher of investing in real estate up till about a year ago (for the US). But unlike so of his counterparts like Donald Trump who refuse to admit that there is a real estate bubble in the US, Kiyosaki has been warning about the effects and telling wise investors to sell. I respect that.

A couple years ago, I was reading one of his books and I remember him warning about the internet stocks bubble. More over, he was advising to sell your internet stocks and begin to buy gold stocks and commodity stocks. He said he thought that was the next sector to boom and he said he was starting to invest in that sector himself.

So as you can see, Kiyosaki is a very good predictor of trends. In another one of his books I read, his goal is to become a billionaire. If he continues to be spot on with his predictions, he should get there very soon.

Anyways, Yahoo Finance has been publishing short Kiyosaki musings on their site. I think they are quite useful to read. Here are some of my favorites so far:

The price of silver is continuing to push higher nearly every day.

I am also delighted to see that silver is continuing to outperform gold.

The thing I think we have to keep in the back of our minds though is that Silver does best near the end of commodity bull markets. Now, I still think we have 2 or 3 years left in this huge bull market but nonetheless, we must keep our eyes open for any signs of the end. 

I was reading some commentary that suggested that Silver may fall on the announcement of the ETF and thought that was impossible. However, now that we have gone up so much, perhaps a 1 or 2 dollar fall doesn't seem out of the question.

This would probably be just a little pullback.

But, the other thing that could possibly happen would be a exponential motion upwards. That's exactly what's happening with uranium anyways... 

BOSTON (MarketWatch) -- A highly anticipated exchange-traded fund tracking silver prices may usher in a correction from multidecade commodity highs if it follows the pattern of gold ETFs, analysts say.

 

Although the silver ETF has yet to gain final regulatory clearance, precious-metal traders are eagerly awaiting the fund in registration from Barclays Global Investors. Some are speculating it could launch as early as this week on the American Stock Exchange after silver prices reached a 22-year high of $11.815 an ounce Monday.

Analysts, though, say the introduction of the silver ETF could actually set up a price pullback in the days and weeks following the start of trading.

There are already seven ETF-like products listed on exchanges in the U.S., the U.K., Australia and South Africa that track gold prices, and the launches have been marked by an interesting trend, according to J.P. Morgan analyst Anindya Mohinta in London.

 

The most successful gold ETF launches were Gold Bullion Securities on the London Stock Exchange in December 2003, and StreetTracks Gold Trust  in November 2004 on the New York Stock Exchange. For example, investors put an estimated $550 million into the StreetTracks Gold Trust on its first day of trading, and the fund currently houses over $6 billion.

Mohinta found gold prices rose by up to 12% in the 90-day periods leading up to the ETF launch dates, only to fall between 7% and 10% in the corresponding period after the listing date.

So far in 2006, through Monday's close, silver futures are up more than 32%, fuelled in part by the ETF talk.

 

If approved by regulators, the silver ETF would be backed by silver held in a vault, which matches the set-up of existing gold ETFs. Barclays has filed to issue 13 million shares of the silver ETF, with each share representing 10 ounces of the metal. This requires a physical backing of 130 million ounces of silver, or 12% of the global physical demand and equal to the silver inventory on the New York Mercantile Exchange, according to J.P. Morgan.

 

Mohinta said he doubts that the entire 13 million-share allocation will immediately sell out, pointing to the common practise of using mining stocks such as Pan American Silver Corp.  to get exposure to silver without holding the physical metal. Stocks have the added benefit of dividends, he added.

 

"Larger, more sophisticated players already have an abundance of investment alternatives" such as futures and options contracts to invest in silver and other commodities, noted Tim Evans, senior analyst at IFR Markets in New York.

Precious-metals prices are also notoriously volatile and given to wide performance swings.

Evans said the rush of commodity ETFs such as the silver fund does have a tendency to trigger euphoria, but "their introduction quite often occurs at market tops, bringing small investors into markets they don't fully understand at just the wrong moment."

 

"While silver can get to $15 or $20 before it's all said and done, the actual launching of the silver ETF could mark a short-term top for silver," added Peter Grandich, editor of the Grandich Letter, noting that the silver ETF could represent a "buy the rumour, sell the news" trade.

Analysts are also warning about potential confusion over the tax structure of precious-metals ETFs. Under current tax law, long-term gains from the sale of silver are taxed as "collectibles" like artwork. Therefore, if held for more than a year, gains on the silver ETF would be taxed at a maximum rate of 28%, compared with 15% for so-called long-term gains on stocks. If sold in less than a year, gains are taxed as ordinary income