When gold and silver crashed, I dialed in my favorite leveraged proxies for close viewing – Royal Gold (RGLD) and Silver Wheaton (SLW).
Both are great businesses – junior miners who don’t actually do any mining. Rather they are royalty companies, who own the gold and silver in the ground respectively, and cut deals with companies who do the actual mining (and pay a cut back to our crew).
Silver Wheaton is a particular favorite that I like to refer to as “a call option on a call option.” If silver’s propensity for insanity is not enough for you, SLW will add some serious juice to your daily silver-induced heart palpitations.
First to SLW, which appears to be making an effort to establish a bottom. I’m not 100% sure this falling safe (or knife) has hit the ground yet, but it bears further watching:
Time for contrarians to jump into SLW? Not quite – but we are intrigued. (via StockCharts.com)
Royal Gold is also nearing a one-month high:
RGLD also attempts to steady the ship. (via StockCharts.com)
Enterprising degenerates could go long at this point and set a stop below recent lows. That being another 10%+ down is too much of a speculation for me at this point, as I’d also prefer to see that 10-day MA (blue line) overtake the respective 20-day EMA (red line) to the upside to signify the return of an uptrend.
But the situation is starting to get interesting, so we will stay tuned.