On January 20, 2011, I made the following Post....I repost it now simply to show that less than two months later, ECU is trading below where I thought it would be if Silver had traded down to $24.28 per ounce. HL is right where I speculated it would go if Silver had traded down to $24.28 per ounce....and PAAS looks like it is headed there fast. All of this with Silver in the $34.70 range....

January 20, 2011:

If one looks at the move in the metals from the lows in July, 2010 to the highs in December, 2010, one sees that a 50% retrace of that strong move up would take $Silver back to the $24.28 area.

The 50% retrace of that same move would take the following stocks to roughly the following prices:

SSRI - $22.78

SLW - $29.99

Paas - $32.25

HL - $8.04

Mvg - $9.38

SVM - $9.73

ECU.to - $1.00

Several of the stocks are almost there. For example, SSRI is there....trading as if silver has fallen all the way to $24.28 already. Positive News and upgrades don't matter, SSRI has had both in the past two weeks.

We've all seen this behavior before...the mining shares get shorted or sold off in an apparent attempt to initiate a sell off in the metal prices.

It usually ends with a day where the metals are down sharply but the mining equities are unchanged or up a little. Sometimes GFI and HMY provided early indications that this dynamic is about to take place....I am hopeful that the fact GFI just went green is a sign this sell off is nearly over.

In 2007, SSRI traded at over 3 times the price of $Silver. In 2008, right before the Paulson Bernanke fiasco, SSRI traded at over 2 times the price of $Silver.

Currently, a share of SSRI trades at a 17% discount to an ounce of $Silver....despite the fact $Silver rallied 80% from its lows in July 2010 to its recent highs...making new 30 plus year highs.

Many of the silver stocks are trading at 50% of where they would be if the share price as a percentage of the price of silver was merely at its 200 week moving average. With silver trading so far above its 200 week moving average of $16.23, this is very difficult to understand, an extreme source of frustration for silver mining equity investors.

Share structure dilution might explain part of this, but the situation still seems wrong.

I think the big problem is the ETF's which have sucked massive capital away from the mining equities. Whe do some of the large institutional investors recognize the disparities and sell the Etf's to buy what can be argued are very undervalued mining equites?