Wednesday, June 15, 2011

Silver in solar panels

Silver -- I want to talk about silver. Almost all informed scientists state that as the population of the world grows, we're going to need a lot more energy. Nuclear will be a big help, but because of the disastrous recent experience in Japan many people distrust and will vote against nuclear. Windmill power will help, but to manufacture windmills requires a good deal of rare earths. Here again manufacturers are stymied, that is, unless they buy their windmills in China (China has a virtual monopoly on rare earths).

One of the areas of electricity generation which is very practical and real is the solar panel. Solar panels require silver. Thin film silver requires materials that are more scarce than silver, tellurium and iridium. And so-called organic thin films which have many advantages over solar require a LOT of silver as well.

Thus, in future years as the demand for production of sustainable energy becomes increasingly insistent, there will be a huge demand for silver. So for now, solar and silver are linked together like brothers and sisters. The rising demand for solar energy will put silver in the spotlight as a much-wanted material. Unlike gold, silver will enjoy a huge industrial demand.

Granville -- My old buddy, Joe Granville, invented on-balance volume. Joe's thesis is that volume precedes price. For months, Joe's O-B-V studies have shown deterioration in the internal structure of the NYSE. Joe refers to the internal structure of the NYSE as the true market, and he considers the widely-watched Dow as the cover-up average, the one that often "hides" what the main body of the market is doing.

Writes Joe in his latest mailing, "The average market participant hasn't the vaguest notion of what deep trouble this market is in." Joe's conclusion -- "Now in free fall, the market will determine where support is. Right now there is no support."

Below we see more evidence of deterioration. This is our old friend, the percentage of NYSE stocks that are trading ABOVE their 200-day moving averages. As you can see the percentage has now plunged to 57.58% and it's nearing the halfway level at which time 50% of all the stocks on the NYSE will be trading below their 200-day MAs.

Note that the (blue) 50-day MA of this study is about to drop below the (red) 200-day MA. A cross-over would obviously be bearish.

Ben Bernanke is predicting an up-turn in business later this year. He's certainly not looking at my work.

If the Dow is down this week it will be the seventh week in a row. This is worse than anything that occurred in 1929! This sick market should be ready to rally. But can it?