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Silver Exchange Fund (SLV) on AMEX
Trading Opportunity Long SLV : Short Silver Producers

Technical observations of

Bob Hoye
Institutional Advisors
May 2, 2006

Now that the Silver ETF is trading, we can look forward to more strength in the bullion vs the stocks. While the ETF will understandably attract new money to the sector over time, there will also be a shift in money from the mining stocks to the bullion.

In the case of the Gold ETF (GLD), the 'go to stocks' started underperforming on the first day of trading (11/18/04). Gold prices appreciated by 2% through 12/03/04, but the stocks failed to make new highs. The subsequent correction saw a 10% price break in the bullion and a 15-25% break in the stocks into April-May.


[click on chart to enlarge]

As can be seen from the following examples, silver stocks are already underperforming bullion.

As of mid-day on April 28th (not shown on the charts) the silver price is up 8% while the silver stocks are up 3% to 4.5%.

[click on chart to enlarge]

-Bob Hoye
Institutional Advisors


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