SLV Silver ETF vs. SLW Silver Wheaton – Price Divergence

by Olivier on April 20, 2011

Quick update on the silver price development as opposed to major silver mining stocks. I’ll stick to SLW – Silver Wheaton as it is considered to be the bellwether stock in the silver miners realm. Although it is mainly a royalty company it doesn’t change a thing as most miners are still struggling to make new highs although the price of silver is rocketing higher on a daily basis. Today was again telling. SLV is up +2.61% SLW is down -2.73%. The divergence is obvious and looking at the recent price development today’s move shouldn’t come as a surprise.

Now I know there is a lot of talk about manipulation out there. I couldn’t care less. I always answer the same way to these kind of allegations:

  • The markets are what they are.
  • Only price pays.
  • Listen to the charts. Do what they tell you to do.

I’ll be very blunt here. Focus on the charts and price. That’s all you need to know. Everything else is a waste of time and looking for excuses. You will never ever hear anybody complain or cry foul when silver or gold goes up. No manipulation there. You get the point.

So what to do when divergences set up? As I’ve stated in the past, divergences can subsist for quite some time. Divergences alone are not enough to act upon. It is simply the market’s way to tell us to be cautious as price could stall or reverse. In the long run being attentive to price and listening to the message of the market does pays off. Giving in to the urge to be right most often doesn’t pay.

On to the market:

Lots of leaders are acting well. Now lots of people are pointing at the inverse head and shoulders pattern in the S&P 500 which seems to be in play. What originally looked to be like a bearish S&P 500 set-up is now starting to shape up again. With a bit more follow through this indeed looks like the most probable technical scenario. The market is extremely resilient and for now assuming the path of least resistance to be up is the way to go.

My interest is in the future because I am going to spend the rest of my life there. – Charles F. Kettering

My public list with all my charts can be viewed here:

Buenas noches!

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