Daily Stock Pick of the Day - Thurs., Nov 4, 2010

Stocks rallied a bit at the end of the day’s session to close higher. The response to the Fed’s announcement that will buy $600 billion in long-term Treasurys, starting next month and into next year, in order jump-start our economy’s lackluster growth. The Dow closed 26 points higher at 11,215. The S&P rose 4 points and the Nasdaq rose 6 points, closing at 1,197 and 2,540 respectively.


In economic news, ADP reported that private sector jobs rose by 43,000 from September to October (seasonally adjusted). September’s data was initially reported as a loss of 39,000. On Friday, the government will release it’s October non-farm payrolls report which is expected to show an increase of about 60,000 jobs.

Today’s stock pick of the day is: Silver Wheaton (SLW). Silver Wheaton is in what the call the “silver streaming business”. This means they make upfront, cash payments to finance the mine. In return, they get the right to buy the secondary metals that are produced from that mine. Silver Wheaton derives 95% of it’s revenue from the sale of silver on long-term contracts purchased from counterparties. With the recent run-up in gold, silver has followed in similar fashion and Silver Wheaton has enjoyed the benefit of  earnings and revenue growth over the past year. They have mines all over the world, including Mexico, Chilie, Argentina, Peru, Sweden, Greece and Portugal. This helps them reduce their exposure to the geopolitical risks.

Sliver has been in demand recently, just like gold. In times of uncertainty, political or economic, silver and gold become more attractive investments compared to paper currency. Silver Wheaton has been at record highs over the past month and over the past three months, has risen about 40%. It’s closing price today was $29.61 and making a small entry on any mild pullbacks could be a good starting point in which to build.

As always, stay cautious and happy trading!

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