SWC; a compelling
April 29, 2010
To believe in one's dreams is to spend all of one's life
article titled the
Palladium; the stealth bull market, we explored the
Palladium bull market and laid down the criteria necessary
for Palladium to trade to the 800 ranges. We are going to
post some of the excerpts of this article below before we
take a look at Still water mining (SWC).
through the 1st resistance point at 375 with relative ease
and is now attempting to break past an even stronger zone of
resistance. The $465-$475 ranges make up a zone of very
strong resistance, and most likely it will take several
attempts before palladium manages to break past this zone;
once it does though it should be clear sailing to the
$465-$475 ranges which should have provided a zone of strong
resistance, was once again taken out with ease, indicating
that Palladium is in an extremely strong upward bullish
phase. What is even more astounding is the fact that it has
managed this in the face of a strengthening dollar; it is
the only precious metal that continues to put in a series of
new highs in tandem with a rising dollar.
will now need to trade past the 465-475 ranges for 12 days
in a row. If it can achieve this, it will set up the base
for a rally that could take it all the way to the 800-890
ranges. If we had to put a time frame on this, we would say
that once it trades past the 465-475 ranges for the
suggested period of time, it could hit these targets within
managed to trade past the $465-475 ranges for more than 12
days in a row, laying the ground work for a move to the
$800-$890 ranges. If Palladium maintains this momentum it
could end up striking these targets a lot faster than we
originally projected; potentially, it could hit these
targets before the year is over.
two palladium producers in North America, PAL and SWC, but
SWC has a much stronger pattern and so our focus for now
will be on this chap.
had a tremendous run in the past 52 weeks and those who
opened up positions early in the game and held onto them are
now sitting on decent gains. As we do not like to chase a
trend (we like to get in before the crowd jumps in) we are
going to offer our long term and short to intermediate term
views on this Stock.
can close above $18 on a weekly basis, the odds of it
testing its 3 year highs will be rather strong. We would not
be surprised if after testing the $23.00-$24.00 ranges SWC
experienced a small bout of profit taking. If during this
round of profit taking SWC manages to stay above $12, then
the next leg up should lead to a test of $30.
leg of the battle would begin in $34-$36 ranges; if SWC can
close above this level twice on a weekly basis (in other
words remain above this level for 2 weekly closes in a row)
or trades above this mark for 9 days in a row, the next
target will fall in the $48-$51 ranges.
bull market does not begin until its all time high is taken
out; for SWC this would mean trading past the intra day high
of 50.81 and above the closing high of 46.625. Once in the
true bull phase, SWC should be able to at least double in
price before putting in a long term top; this would equate
to a target of roughly $100-$120.
intermediate term outlook
chart clearly illustrates that SWC has had a stellar run in
the past 12 months; from low to high it has risen over 150%.
Thus it would be normal to expect a bout of profit taking to
take hold anytime. As long as it does not close below $12 on
a weekly basis, the short to intermediate term outlook will
remain bullish and a break past $18.00 for 3 days in a row
could result in SWC trading to a new 3 year high. In the
short term, we would be slightly cautious on how much new
money we deployed into SWC as it would be best to wait for a
pullback before committing new funds.
stats on SWC
P.E. of 11.91
sales growth for the past 5 years has been 25%
cash on hand 201 million
debt 195 million
shares held by insiders is a very healthy 52%
shares held by institutional and mutual owners is 35% and
this accounts for 72% of the float.
Additional factors that support a bullish outlook for
sources of Palladium are rather limited. Over 80% of the
world’s Palladium is concentrated in just two countries,
Russia and South Africa, with Russia's accounting for nearly
half of the total Palladium supply. Russia has 3 sources of
Palladium, the Norilsk Nickel mine, Gokhran and the Russian
Central bank. Norilsk mines are the main source of
palladium in Russia and production peaked back in the late
eighties and output started to fall from the 90’s, primarily
due to lack of investment. Once prices started to rise in
the 90’s Norilsk started to invest more money into
production and supplies of PGM’s started to rise. However,
production has started to fall again and to meet these
supply short falls the Russian government has been selling
Palladium from its stockpiles. This programme has now come
to an end and with it roughly 125,000 pounds of Palladium
will suddenly vanish from the supply chain. This is going
shock the system (the shock process might already be
underway) for taking out such a huge amount of Palladium of
the market just when demand is rising is the perfect recipe
to precipitate a run on Palladium as companies start to
hoard supplies for fear of not having enough of the metal on
hand. This could perhaps explain why Palladium is the only
precious metal to put in a series of new highs in the face
of a rising dollar.
world Palladium supplies fell by 1% in 2009 to 6.31 million
ounces despite a 5% increase in South African output to 2.48
million ounces. This increase was off set by a drop in
Canadian production due to the closure of the Lac des Lles
mines at the end of 2008.
let’s not forget the massive amount of interest the New
Palladium and Platinum ETF’s are creating. These two ETF’s
are gobbling up huge amounts of Platinum and palladium. As
of March 2010, PALL holds roughly 520,000 ounces of
Palladium; this ETF is barley 4 months old and its
Palladium holdings have already surged past the 500,000
ounce mark. It took the London based Palladium ETF over 2
years to accumulate the same amount.
in the lower supplies, increased demand due to the Palladium
ETF, voracious increase by the Chinese for Palladium and the
eventual hoarding of this metal by the automotive sector
when they realise that they could be facing a shortage, all
go to ensure that Palladium has a long way to go before a
long term top is in place. Our suggestion is use strong pull
backs to add to your positions in both SWC and Palladium
bullion whenever the opportunity presents itself.
term outlook for SWC is extremely bullish. The current
pattern is projecting a high probability that its all time
high will be taken out; the if factor has been removed and
has been replaced with the when factor. In between one
should expect a lot of volatility; remember that good things
never come about easily; if they do they were not worth it
to begin with. Unlike Palladium bullion, there are two
factors that come into play for SWC. One is the price of
bullion and the second is the overall health of the equity's
markets. If the markets are experiencing a strong correction
then SWC might not move up as fast as it normally would,
even if Palladium prices are rising. Therefore, it would be
wise to have a position in both Palladium bullion and SWC.
term targets for SWC now fall in the $100-$120 ranges. This
could one day be viewed as a conservative target; once the
real bullish phase of a rally begins it’s not unusual for a
stock to at least double in price. A real bull market begins
when the all time high is taken out; in this case, it would
be $46.625. From a long term perspective SWC has just begun
its bullish run.
Do not use a hatchet to remove
a fly from your friend's forehead.