Silver Wheaton Corp. (SLW) Stock Price Predictions for 2011

Silver Wheaton Corp. (SLW) is one of the Canada's top mining companies. If you have any interest in silver, you probably have heard of the company. For those unfamiliar with the Canadian miner, it is important to know how silver miners move in relation to the silver market.

Silver Miner's Relationship with Silver

Silver miners tend to act like leverage silver ETFs, meaning that if silver is up 1% then silver miners tend to move up 2%. However, you should not blindly believe that all miners will move up in leverage with silver. In the mining business, there are many miners who are, for lack of a better word, frauds. It is important that you research the mining company you want to invest in, especially if they are junior miners, before you take a long position.

Silver Miner's Relationship with the Stock Market

While silver miners tend to move with silver, these companies also are effected by the general price movement of the stock market. For instance, if silver is up 1% but the stock market is down 1%, you may find that silver miners are flat for the session. So when you take a long position in silver miners, you have to make sure that both the silver market and the stock market are in a confirmed bull market.

Silver Wheaton Corp.'s historical performance

Silver wheaton Corp's has had one of the most impressive performances of any stock, mining or otherwise, in the past ten years. If you had invested $1,000 in SLW five years ago, you would have about $10,000 today. That is a 1000% return compared to a 2% return for the S&P and a 110% return on silver, in the same time period. Since, Silver Wheaton Corp. is one of the largest silver miners in Canada, it is one of the most stable silver companies to invest in for 2011.

Silver Wheaton Corp.'s Price Prediction for 2011

In order to predict Silver Wheaton Corp's price, you have to look at how the S&P, Gold and Silver will perform in 2011.

The S&P is in the third year of a Presidential cycle. And in the third year of a Presidential cycle, the S&P rises an average if about 21%. And that number is higher when different political parties share power between the White House and Congress. That means that the S&P could rise close to 30% in 2011.

Gold has rising for 11 straight years. Gold is rising an average of 12% per year. And with QE2 and possibility more money printing on the way, gold should continue to rise.

Silver tend to amplify its move when both Gold and the S&P rise. That means that silver should outperform the S&P and Gold with a rise of about 40% to 50% to the $50 an ounce mark in 2011.

With Gold, the S&P and Silver all predicted to rise in 2011, Silver Wheaton Corp should outperform all three by a wide margin. SLW tends to double its performance of silver. And since silver is predicted to rise about 50%, look for Silver Wheaton Corp. to double in price from 36.64 to a target of $72 a share before the end of 2011.

If you want to invest in Silver Wheaton Corp., you can simply buy the stock with the symbol (SLW). For those who want to use options and speculate on big price moves, look for the following factors.

• Open a call spread when the S&P, Gold and Silver are all above their 20-Day moving average. The call spread should include buying a call option at the money and sell a call spread out of the money. So for instance, if the price of SLW is 40 on March 1. The you should buy an April 40 Strike Call and Sell an April 42 Strike Call.
• Look at the months of March, April, November and December. Or more specifically, avoid the summer months and the beginning of the year. The summer tends to be flat and not a good month to speculate on big price moves. And, in the beginning of the year, there tends to be some selling, especially if there was a big bullish move to end the previous year. People tend to sell in January and February because they can wait a whole year and four months before they pay capital gains on their profits.

Summary

Silver Wheaton Corp. should outperform the price of silver with a 100% rise to the 72 dollar level. For those who want to speculate, look at time frames when the S&P, Gold and Silver are all above their 20 day moving average. And open call spreads, at the money, six to eight weeks from expiration.