Silver Stocks--Comparative Valuations 
Weekly Report # 42

by Jason Hommel
goldismoney.com

FRIDAY, July 9th, 2004

This week's report lists 111 silver stocks.  There are 31 silver stocks that list reserves, resources (and exploration potential) which I calculate by using my "ounce in the ground" forumula.  There are 51 explorers.  There are about 30 additional "silver" stocks with incomplete information. Additions & Changes from last week are in bold. 

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To read about my religious bias, see my other website, bibleprophesy.org There are two essays near the top of the page that explain why I believe the entire world will return to using gold and silver as money again before the end times.  Hint, see Ezekiel 38.  To read more about my religious bias when it comes to investing, see my essay, Biblical Guidelines for Managing your Money

Kitco reports silver at $6.45/oz. as of Friday, 3:00 PM West Coast US, which was used to calculate the following figures. The CAN $ / US $ conversion factor is .7586.  I will use .76 for ease.  

How to read the following table:
Stock Symbol that works at Yahoo! Finance (Company name) / Silver oz. "in ground" for 1 oz. silver's worth of stock. / valuation price change since last week relative to silver price change (and stock dilution, and resource changes, if any) /  additional comments (EXPT is "exploration potential")

Company names in bold have summaries below with updated information.  Click on the name to see the summary below.

Companies with information about reserves/resources/exploration potential.  The list is ordered based on the resource picture.  The most expensive (with the fewest silver resources given their market cap) are listed first. 
  1. ABX (BARRICK)                                   1 down  --infamous hedger (15? mil oz. gold hedged, 3 yrs production)
  2. CDE (COEUR D'ALENE)                        1.4 down --(also gold) in debt, produces at a loss.
  3. IPOAF.PK (INDUSTL PENOLES)           1.7 even --current producer, mostly family owned, hedged?
  4. SIL (APEX SILVER)                               3.3 even  --zinc bonus, low grades, cash rich--$345 million! in debt
  5. GRS GAM.TO (GAMMON LAKE)            3.4 even --current producer, owns 26% of Mexgold
  6. FSR.TO FSLVF.PK (FIRST SILVER)        4.4 down  --current producer, (not profitable '03 3rd q.) unhedged
  7. PAAS (PAN AMERICAN SILVER)             4.5 up  --current producer, debt free, may hedge to develop
  8. MFN MFL.TO (MINEFINDERS)               4.6 down  --significant gold bonus, $35 mil cash on hand.
  9. CFTN.PK (CLIFTON MINING)                 4.7 up -- (111 EXPT) (colloidal silver patent bonus)
  10. KBR.TO KBRRF.PK (KIMBER RSCS)        5.0 up  One property, high grades, with exploration potential.
  11. WTZ WTC.TO (WESTERN SILVER)         5.8 down  -- (21 EXPT) large mine development cost. copper & zinc bonus
  12. SSRI SSO.V (SILVER STD RSC)               7.1 even --large company, many properties, owns silver bullion
  13. * TM.V TUMIF.OB (TUMI RSCS)              9.2 down -- (18 EXPT) recent bonanza grade silver discovery
  14. CZN.TO CZICF.PK (CDN ZINC)                9.1 down  --large zinc bonus, high grades, low start up costs, great EXPT
  15. ORM.V OREXF.PK (OREMEX RES)            9.4 even  (39 EXPT)
  16. SHSH.PK (SHOSHONE SILVER)                  10.6 down   leased properties needing payments, near SRLM.PK, CDE, HL.
  17. SRLM.PK (STERLING MINING)                  12.6 up --(30 EXPT) acquired the Sunshine in Cour d'Alene
  18. FAN.TO FRLLF.PK (FARALLON RSCS)       13.9 down  --(24 EXPT) low grades, silver 1/3; also gold & zinc bonus.
  19. IMR.V IMXPF.OB (IMA EXPL)                    14.6 down --(58 EXPT) explorer in Argentina
  20. CHD.V CHDSF.PK (CHARIOT RSCS)           19 down   (explorer, with inferred resources)
  21. GGC.V GGCRF.PK (GENCO RECS)              17.9 down --producer in Mex.  Plans to expand and acquire
  22. RDV.TO RDFVF.PK (REDCORP VEN)         18.1 down --60% gold bonus
  23. * SVL.V STVZF.PK (SILVERCREST)         20.8 down  --(60+ EXPT) --(Silver in Honduras, Latin America)
  24. ADB.V ADBRF.PK (ADMIRAL BAY)            25.3 down --exploring a silver property in Mex. (Huge gas bonus)
  25. * PLE.V (PLEXMAR RES INC)                     24.4 up  (just acquired 2 new projects)
  26. * MGN (MINES MGMT)                              26.2 up  --60% copper bonus (low grades), start up cost ~ $250 mil
  27. EXR.V EXPTF.PK (EXPATRIATE)               28.4 up  --significant zinc bonus 60% zinc, 25% silver (got out Atna)
  28. ABI.V ABMBF.PK  (ABCOURT MINES)      28.5 up --large zinc & small gold bonus
  29. HDA.V (HUSIF?) (HULDRA SILVER)         36 down   --very tiny, zinc bonus, low start up costs.
  30. * ASM.V ASGMF.PK (AVINO SILVER)      43.9 down --will own 49%-100% of the Avino +4 other silver props.
  31. UNCN.OB (UNICO INC)                              59 down --lease on largest property, needs $1 mil by Sept 1 2004.
* = I own shares

Exploration companies or producers with limited information on resources.  This list is in order (roughly) by market cap, the highest market cap companies are listed first.
  1. HL (HECLA MINING CO)            .45  --A PRODUCER (gold bonus) cash rich.
  2. MGR.V MGRSF.PK (MEXGOLD RSCS)     9  -- bonanza grade discovery on Jan 13th, 2004
  3. CDU.V  CUEAF.PK (CARDERO RSCS)
  4. AOT.V ASOLF.PK (ASCOT RSCS) -- owns percentage of Cardero, CDU.V
  5. SPM.V SMNPF.PK (SCORPIO MINING)
  6. * FCO.TO FCACF.PK (FORMATION CAPTL)  Cobolt (and Sunshine silver refinery)
  7. * OTMN.PK (O.T. MINING)  very large exploration potential
  8. MCAJF.PK (MACMIN LTD)
  9. TVI.TO TVIPF.PK (TVI PACIFIC) --current producer of a dore silver bar 96% silver, 4% gold
  10. * NPG.V NVPGF.PK (NEVADA PAC GOLD) 26-130  "exploration potential"  (owns 1 silver property, 10 gold properties)
  11. * MMGG.OB (METALLINE MINE) --zinc/silver (historic high grade silver) (low cost revolutionary oxide zinc process)
  12. * FR.V FMJRF.PK (FIRST MAJESTIC)  -- Bought a former silver producer. Acquiring silver properties.
  13. BZA.V ABZGF.PK (AMER BONANZA)
  14. ECU.V ECUXF.PK (ECU SILVER MINI)      --50% gold bonus
  15. IAU.V ITDXF.PK (INTREPID MINRLS) 7 "exploration potential"
  16. CAUCF.PK (CALEDON RES)
  17. MAI.V MNEAF.OB (MINERA ANDES)      (gold bonus)
  18. * EDR.V EDRGF.PK (ENDEAVOUR GOLD)  A PRODUCER (I could not yet find a listing of resources or reserves)
  19. MAG.V MSLRF.PK (MAG SILVER)
  20. * CBE.V CBEFF.PK (CABO MINING) --Historic Silver and Cobalt district
  21. QTA.V QURAF.PK (QUATERRA RES)
  22. EPZ.V ESPZF.PK (ESPERANZA SILVR)
  23. PXI.V  PNXPF.PK (Planet Exploration Inc.)
  24. SDR.V SDURF.PK (STROUD RSCS)
  25. APM.V  (Amerix Precious Metals Corp) (NEW BULLET GP)
  26. NJMC.OB (NEW JERSEY MIN)
  27. EXN.V EXLLF.PK (EXCELLON RSCS)
  28. * KG.V KDKGF.PK (KLONDIKE GOLD)
  29. SML.V SMLZF.PK (STEALTH MNRLS)
  30. SRY.V (STINGRAY RSCS)
  31. DNI.V DMNKF.PK (DUMONT NICKEL)            exploring Clifton's property
  32. * KRE.V KREKF.PK (KENRICH ESKAY)
  33. BCM.V BCEKF.PK (BEAR CRK MINING)
  34. * CMA.V CRMXF.OB (CREAM MINERALS) 228 "exploration potential" (low grades)
  35. MMG.V MMEEF.PK (MCMILLAN GOLD)
  36. CHMN.PK (CHESTER MINING)
  37. GPR.V GPRLF.PK (GREAT PANTHER)
  38. EGD.V EGDMF.PK (ENERGOLD MINING)
  39. GNG.V  GGTHF.PK (GOLDEN GOLIATH)  --Historic silver district in Mexico
  40. LEG.V LEGCF.PK (LATEEGRA RSCS)
  41. TBLC.PK (TIMBERLINE RES)
  42. * AUN.V AUNFF.PK (AURCANA CORP)
  43. TUO.V TEUTF.PK (TEUTON RES)
  44. PCM.V PAOCF.PK (PAC COMOX RES)
  45. BGS.V BLDGF.PK (BALLAD GLD SLVR)
  46. ASLM.PK (AMER SILVER MINI)
  47. BBR.V BBRRF.PK (BRETT RES)
  48. ROK.V ROCAF.PK (ROCA MINES INC)
  49. MTB.V (Mountain Boy Minerals Ltd)
  50. LSM.V LASCF.PK (Langis Silver & Cobalt Mining Co Ltd)
  51. CBP.V CPBMF.PK (CONS PAC BAY MIN)
* = I own shares. 

There are expanded profiles on each company, way below.  But before I get to that, let me discuss my methodology, and the problems with it.

See the one number above listed after each company in the first list?  That number represents the number of silver ounces in the ground that you get when you buy an ounce of silver's worth of stock.  The number treats all reported ounces in the ground as equal, however, they are NOT EQUAL.  Some ounces in the ground are more certain and others are more speculative.  Some are higher grades, some are lower grades.  Some have been well drilled, others have less drill results.  They range from most certain to least certain such as: "proven & probable reserves," and then, "measured, indicated, or inferred resources."   A reserve has a feasibility study produced for it.  A resource, does not.

Here's the math on how I calculate that one number.  First, I get a market cap by multiplying the fully diluted shares (which bullishly assumes all options and warrants will be exercised and converted into outstanding shares) by the share price in U.S. dollars.  Next, I divide that by the silver price, so the market cap is denominated in terms of silver ounces.  Then, I divide the ounces in the ground by the market cap as denominated in silver.  This produces the single number of how many ounces of silver in the ground you are buying when you give up one ounce of silver in your hand, for shares of stock, instead.  This way, you can not only compare silver stocks to each other, you can compare them to silver directly.  This also helps people in other nations, using other currencies, to value these companies.
This valuation does not include zinc, or copper, or lead, but it does include gold at a 1:10 ratio of gold:silver.  At goldsheetlinks.com, they add 100% of proven & probable reserves, but only 70% of measured & indicated resources, and only 50% of inferred resources.  I don't do that.  I count them as all the same.

I believe that the two most important numbers that a silver mining company can report are the resources in the ground, and the number of their fully diluted shares. Of course, there is much more to a mining company than that, but without those numbers, it is extremely difficult to even start an evaluation.  This report highlights those key numbers, where possible.  If you think those numbers are also important, please email the executives of the mining companies you own, and ask them to make sure their numbers are clearly published at their websites.

Problems with my methodology:  My methodology assumes that the more ounces in the ground, is, in theory, best, given that I expect much higher silver prices.  However, unless the price of silver really moves much higher, my methodology may not be the best one.  If silver does really move up very high in value as compared to today, then I expect my methodology to be one of the best predictors of rising stock values, because more ounces in the ground mean more leverage to rising silver prices.  However, the companies with greater leverage to the upside usually also tend to have greater leverage to the downside, and thus, tend to be more volitile.   

Other factors to consider that the single number produced by my methodology does not:  A resource calculation number does not tell you the entire picture about a company.  It is only designed as a starting place for further research.  Other very important considerations are as follows:  How much existing mining infrastructure is in place?  The more the better, so think of it as a "bonus".  How much cash does the comapany have on hand, and what is their burn rate?  What is the management's attitude towards money, silver, hedging, debt, and dilution?  This is why I list "additional comments" in the company profiles, below.

I don't consider grade to be too important (although I list it when I can), because I consider the cost to mine to be the more important consideration.  The "cost to mine" is determined in a feasibility study, which is the last thing produced before trying to raise money for final construction of a mine.  And usually, they cannot even count silver as a resource unless it is at least somewhat feasable to mine at today's prices for silver.  And this is why I count all the ounces as the same.  If a low grade ore can be mined more cheaply, and if a higher grade ore costs more to extract, and if it has to be somewhat economically feasible even at these low silver prices to be counted, it balances out quite nicely.

To quickly "tab" down to the company you are interested in, note the symbol. Then hit "control-F" to "FIND" the symbol below.
___________
If I use a word you don't understand and is not listed in the dictionary at www.m-w.com you can look up the meaning at http://investorwords.com/

See my June 18, 2004 article:
I'm insanely bullish on silver.

WEEKLY COMMENTARY (All new in this section):  

On Wednesday of this week, I sent the following article to various internet web publishers.  I did not send it to my email list.  If you did not see this yet, you need to click on the link below:

25 Reasons why the Sound Money Bill Must Be Supported
by Jason Hommel
http://www.gold-eagle.com/editorials_04/hommel070804.html

One comment to me in email was, "Your gold-eagle article on the sound money bill was great. It should be forwarded to every state politician in the country. It sure would be great if a state or two followed through"  I agree.  I wrote it for them.  I don't know how many state politicians there are in the nation.  Perhaps 100 per state, on average?  If so, that's 5000 or so?  But how can I track them down?  Does someone have an email list handy?  If so, I'd be happy to use my bulk mail software to send it to them.  I just do not have the time or ability right now to forward this.  Please forward my article to YOUR state politicians.  Thank you.


The Politics of our Fraudulent Monetary System:  Are you Voting for it?
by Jason Hommel

In the U.S. republic (today working as a democracy) politics is all about money, because the people have discovered they can vote for government benefits.  Republicans would have you believe we need a "fiscally responsible" government, with lower taxes, and lower spending, reduced government, and a balanced budget.  It's a hard sell when people want more government handouts for themselves.  However, Republicans have given us higher taxes, higher spending, bigger government, and a huge budged deficit of $700 million.  During my lifetime, I saw that Republicans generally voted for fewer spending items than Democrats, and that the Democratic Congresses typically increased spending much more than Republicans.  But by the time Republicans gained control of Congress under Bush, did spending stop, or go down?  No, it went up more than ever before!

Democrats would have you believe we need a "fiscally responsible" government, with higher taxes (on the few rich) to be able to pay the bills, and increased spending for the poor who are "left behind" in this economy with the rich always getting richer, and they want reduced military spending.  (It's an easier sell to the masses, it's called "buying votes".)   But the Democrats, who at one time were the champions of silver over 100 years ago, are hopelessly naive when it comes to understanding free market forces that create real wealth for the people.  They push for things like a minimum wage, which puts poor people out of work, and limits entry level jobs, and creates businesses that cannot afford to pay to service their customers, and that's uneconomic!  Democrats tend to push for increased regulation on businesses, which strangles economic growth and wealth creation.

Neither political party seems to understand or care that our monetary system is broken because it is a debt based system.  This debt-based system requires that ever more money is created so that everyone can continue to pay the interest on loans, otherwise, they go bankrupt.  (And I'm not even saying that's bad!)  Currently, although the Federal Government is going into debt at the rate of $700 billion to $1 trillion per year, bankruptcies are at a major high of about 1 in 70 per year.  So, it's still not working!  And the only way money is created in this system is to borrow more, or print it outright.

When the government borrows more, it borrows from the Federal Reserve (money that they create for a penny a bill, or create out of nothing if they do it electronically), and the Fed ends up owning a government bond, that, in theory, has "value".    Where the value comes from, is odd.  First, value comes from the supposed ability of the U.S. government to service the interest on the debt, by either borrowing more from the Fed, or tax from the people.   Isn't that funny?  That's like saying they can do it, as long as they can keep doing it!   So, second, value comes from the fact that this is a deception, and they can continue to deceive people into thinking this process creates wealth.

Now, consider the two processes:  to borrow from the Fed, or tax the people.  The Fed, in turn, usually tries to sell the bonds to the public and to the banks.  If the Fed sells a bond (that is ultimately worthless, but currently very overvalued), they sell it and receive money from the public, just as if they had taken money from the public through a tax!  Money is taken from the people, either way, and that's the point!

Bonds are really insidious and heinous instruments, because they are so heavily marketed to old people, as being "the safest investment you can own."  And this is so ridiculous!  Bonds are not keeping up with inflation, and the value can go to zero in two different and entirely separate ways!  Inflation to zero, or default to zero!   One part of me is angry, because these old people are being deceived.  Another part of me feels no pity for them, because I think these old bondholders are simply getting what they deserve.  After all, they have had their entire lives to figure out the scam of paper money, and work to end it during their lifetimes, and they still just don't get it.   The fraud of the creation of paper money happened on their watch, and as bondholders, they are helping to keep the fraud alive! 

So, what happens when the Fed can't sell bonds anymore, and is actually propping up the bond market by buying bonds?  Because that's what has been happening lately!  Yes, that's right, the Fed is buying bonds to help keep people from selling them.  Sounds crazy and counter-intuitive, but it works.  See, if the Fed buys bonds, it keeps values high.  As values are kept high or trending high, people will try and get ahead of the fed, and buy more, or at least, continue to hold.  See, most everyone today is a trend investor.  They will tend to sell bonds if bond values start dropping.  Thus, the Fed is buying bonds, to help keep investors from panic selling, in mass.

So, what is this doing?  Well, remember the $700 billion to $1 trillion the U.S. government is borrowing?  That's coming from the Fed, and foreign nations who buy our bonds.  In fact, the Fed is even pumping out more money, because it is creating money out of thin air to purchase bonds from the public, too!  Normally, the Fed would be selling that $700 billion in bonds, but they can't.  The bond market is not buying, and has not been buying for months now.   This is what is driving interest rates up, and it's why market rates are so much higher than the Fed funds rate.

This is the force that is creating the massive commodity price increases.  This money creation by the Fed.  They may just as well have printed up $700 billion to $1 trillion outright.  The increase in M3 certainly shows it.   M3 increased by about $4.5 trillion in the last five years, about $1 trillion per year!

Under a debt based money system, there are two ways to help people repay their debts.  First, "monetize the debt", or print money to pay it off, which is highly inflationary.  The Fed's purchase of bonds, without selling bonds, in a situation of massive government deficits, is similar to this process, but in reality, it is shifting the debt burden from people, to the government.

See, one of four main entities must continue to borrow greater and greater amounts of money, or otherwise, the repayment of debt will take the money out of the system and send it back to the Fed, which is from where it came.  And there is never enough money for everyone to pay back paper money, because although paper money is created when people borrow, the interest for the repayment of debt is not created.

Therefore, if government really did pay back debt, it would mean there is less money for everyone else, and others would end up going bankrupt at faster rates.

The four primary borrowers are the U.S. government, corporations, the general public, or foreign nations.   Unless the average of these continue to borrow more money into existence than others are paying back, then there will be a major monetary collapse from increased bankruptcies.    Therefore, if the government really did have a balanced budget (meeting the $700 billion deficit), and if, what's more, if it really did pay back the $7 trillion debt, what would happen?

Well, there is $9 trillion in the banks in M3.  The only way for government to pay back the $7 trillion debt, is to tax all savings at a rate of about 7/9 or 78%.

But that's a bad example, of course, because there is not $9 trillion just sitting there in the banks, waiting to be taxed.  That's the number of how much money the banks owe their depositors, and most of it, perhaps 98.5% is loaned out, gone into the wind!

And there is no tax on savings anyway, there is a tax only on incomes, which only brings in about $1.6 trillion per year.  But why would the government need to take the people's money to pay back the debt, when the government created that money in the first place by borrowing from the Fed?  It makes no sense!

The way the politicians frame the argument is that the people, somehow, need to help the government pay back its bills.  Ridiculous!  The government stole it all from people who hold dollars in the first place through the process of inflation, which is the printing up the money through the process of borrowing it from the Federal Reserve!

In reality, it's the banks, the Federal Reserve, who need to pay us back!  The banks only keep 1% or less of deposits in the form of paper cash.  The rest, 99%, is loaned out.  The reserve requirement for smaller local banks, under $6 million, is zero!   See my essay, "Major Frauds of the U.S. Monetary System"
http://www.gold-eagle.com/editorials_04/hommel022604.html

See, we did not borrow from them (when the government stole our money in the form of mandatory taxes, and then spent more on programs we did not want).  They borrowed from us!  The banks took our deposits, and loaned it out recklessly to the government, and then got together to create the "Federal Reserve" so they could borrow from an infinite supply of paper money in order to stave off their own bankruptcy to their depositors!

Literally, the government is already bankrupt to the Fed, to the banks and to bondholders.  And the banks that run the U.S. government are also already bankrupt to us!  They are both trying to prevent and delay their own bankruptcy, and prevent our bankruptcy to them, through massive inflation.

Give to Ceasar what is Ceasar's.  Give the bonds back to the government.  Give the cash back to the government.  And buy silver instead.  Gold and silver protect from bankruptcy.

Have you ever thought about bankruptcy?  If a company goes bankrupt, the company's shareholders, who put up the money to get the company going, get nothing.  But those who loan money to the company, the bondholders, get the company, and end up with newly issued stock.

But what happens when a bank goes bankrupt?  Why don't the depositors, who are the lenders, get to own the bank afterwards?  Why don't depositors end up owning a share in the bank?  After all, the bank still has assets, the money that was loaned out!  Very strange, isn't it?

Know what happens when a bank goes bankrupt?  The lenders, the depositors, get zero.  Literally, the same customer might have a $200,000 house that he owned outright.  If he takes out a $100,000 loan, and puts $100,000 in the bank in cash, watch what will happen next.  If the bank goes bankrupt, the cash goes to zero.  (That was before the FDIC scam, which is not enough to insure all deposits, but that's another issue.)  Then, the bank may be sold to another bank in an auction, and the other bank gets to try to collect on the loans.  So, the customer who lost the $100,000 in cash, now can't pay his mortgage, and the bank then forecloses on the house, too!  So, in the end, the customer, who had a house, now has nothing, but it's the bank who said they were bankrupt!  Quite a scam, isn't it, and yes, that happened to banking customers in the Great Depression in the 1930's as perhaps 5000 banks declared bankruptcy!

And what, again, are U.S. bonds backed by?  The full faith and credit of the almighty U.S. government.  But government today has proven itself, over and over again to be a bankrupt liar that is inflating the money supply like crazy!  How can anyone trust a known liar?  Fools!

I don't know which way the money supply will go, whether it will grow through continued inflation, or shrink through bankruptcies, repayment of debt and a balanced budget.  But to me, it does not matter.  Either way, paper money is fraud, and silver money is real.

If you own silver, you know you own something that is both real and honest and true, and it's value is at historic lows.  It's popularity among the general public is about zero, which proves it's a great investment.

The beauty of gold and silver is that they cannot be created endlessly to stave off bankruptcy.  The reality of limited money (gold and silver) is reasserting itself.  Today, the process of reality returning has begun, and it's been in process for about 3-5 years now, since the bottom of the gold market in 1999-2001.  This process must continue, because you can't delay bankruptcy forever.  See, depositors wise up.  People always wise up.  And frauds always collapse.  And I'm betting on it.

This is an election year.  Most who vote in the election are going to vote for either a Democrat or Republican.  It's one person, one vote, every two to four years.  There is another vote that goes on, and it is continual, and it is "one dollar, one vote".  For every dollar that people keep in the banks, or in bonds, they help to prop up the entire banking and governmental system.  For every dollar that people sell in preference for gold or silver, they are voting for a real change to the bankrupt system.  We need not vote for an independent political party (although that would be better than voting for the same two teams), we simply need to buy gold and silver, and stop holding money in the banks, or bonds.  Yes, it's that simple, and we can create major political change any time we like.  By buying silver, I've already voted, and I didn't even need to register.  Have you?

 ---------------------
Looks like they are voting in Russia, as they storm the banks.  The Russian people clearly understand capitalism better than Americans these days, since Russia just reduced reserve requirements from 7% down to 3.5%.  Our reserve requirements are 0.5%. 

New bank crisis in Russia? 07/07/2004
Crowds of customers of Alpha-Bank have blocked the Moscow branches of the bank.
http://english.pravda.ru/main/18/89/358/13308_bank.html

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So, it's $200,000 for a lunch date with Warren Buffett. 

http://money.cnn.com/2004/07/09/news/newsmakers/buffett_lunch.reut/index.htm?cnn=yes

Interesting.  Let's talk about Warren for a second.  He spent 2% of his fund on silver to get 129.7 million ounces.  I heard he was threatened by the U.S. government to not buy more, which I believe.  At the time, his purchase was about 1/5th of world inventories, back in 1997.  Today, that's about half of world inventories.   He stated the reason he bought was due to the publically available and positive figures for supply and demand in the silver market.  The only figures he could be referring to are the two reports by the silverinstitute and the CPMgroup.  And that's all that anyone needs.  Silver will likely be Warrent's best investment over the next few years.  He'd buy more, but he's too scared of the Government.  And you don't need to spend $200,000 to get the best investment advice.

Warren's record?  About 20% returns per year over 25 years. 

Silver stocks' record in 2003?  314% return.  What more do you need to know? 

Oh, you want to buy on a dip?  We've got that right now, too!
---------------------

On Wednesday, before silver moved up so much, I wrote for this commentary:
Silver has been trading in a range around $6 since it crashed from $8.40.  It seems invester interest is at an all time low, plus, it is combined with the summer duldrums.  I suppose fewer people want to trade right now, and many are on vacation.  Well, that's just fine by me.  Last summer was a great buying opportunity too!  In fact, silver really started taking off in the summertime.  

Many stocks right now are about 50% off.  The beautiful part about keeping a list like this is that I can quickly run through the list to determine things like this.  Here are all the stocks (out of 80) that were more than half off, on Wednesday of this week.

Clifton, high of about $2.40, down to $1.00;
Tumi, TM.V, high of $2.29, down to $1.02;
Canadian Zinc, high of $2.04, down to .77
Sterling Mining, high of about $14, down to $6.35
Genco, high of $1.70, down to $.75
Silvercrest, high of $1.92, down to $.78
Huldra, high of $.75, down to $.27
MGN, high of $9.70, down to $4.72
Expatriate, high of $.63, down to $.26
Avino, high of $3.00, down ot $1.23
Unico, high of $.195, down to $.055

Scorpio, high of $4.00, down to $1.80
Tvi Pacific, high of $.39, down to $.15
Minera Andes, high of $.89, down to $.36
Mag Silver, high of $2.65, down to $1.20
Planet Exploration, high of $1.95, down to $.79
Quaterra Resources, high of $.85, down to $.39
America Bonanza, high of $.485, down to $.185
Dumont Nickel, high of $.77, down to $.225
Stealth Minerals, high of $.76, down to $.28
Cream Minerals, high of $.90, down to $.34
Golden Goliath, high of $.72, down to $.235
Lateegra Resources, high of $.41, down to $.20
Aurcana, high of $.24, down to $.12
Ballad Gold and Silver, high of $1.09, down to $.25

-------------------------
Copper!

I read that China is making a bid for Noranda.   Noranda is the world's 9th largest copper producer.
I also read that there is a 4 month wait for copper deliveries.

Therefore, the long awaited default is already occurring, in copper.

I wonder, is this a default of futures contracts, or dollars?  What good are dollars if you can't use them to buy the raw materials that you need?

Shortages are evidence of communism.  Communism is an economic system that does not work.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society (destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose."
-- John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff

The USA has turned communist, and China is embracing capitalism.  No joke.

Some of the arguments that people make who hold dollars, and who defend dollars, say, "If we all just hold on to dollars, it will all be ok."  Yes, and that's communism, isn't it?
------------------

 TO TRACK THE STOCKS ON THIS LIST:  Click on yahoo finance.  Take a minute to register.  Sign in.  At the top of the page, click "create" a portfolio.  Choose "track your current holdings".  In the large box, copy and paste the following symbols (Use your mouse to highlight the text, then use control-C to copy, control-V to paste).  Current as of July 9th!

XAGUSD=X BHP GMBXF.PK BVN ABX CDE IPOAF.PK SIL GRS GAM.TO FSR.TO FSLVF.PK PAAS MFN MFL.TO CFTN.PK KBR.TO KBRRF.PK WTZ WTC.TO SSRI SSO.V TM.V TUMIF.OB CZN.TO CZICF.PK ORM.V OREXF.PK SHSH.PK SRLM.PK FAN.TO FRLLF.PK IMR.V IMXPF.OB CHD.V CHDSF.PK GGC.V GGCRF.PK RDV.TO RDFVF.PK SVL.V STVZF.PK ADB.V ADBRF.PK PLE.V MGN EXR.V EXPTF.PK ABI.V ABMBF.PK HDA.V ASM.V ASGMF.PK UNCN.OB HL MGR.V MGRSF.PK CDU.V CUEAF.PK AOT.V ASOLF.PK SPM.V SMNPF.PK FCO.TO FCACF.PK OTMN.PK MCAJF.PK TVI.TO TVIPF.PK NPG.V NVPGF.PK MMGG.OB FR.V FMJRF.PK BZA.V ABZGF.PK ECU.V ECUXF.PK IAU.V ITDXF.PK CAUCF.PK MAI.V MNEAF.OB EDR.V EDRGF.PK MAG.V MSLRF.PK CBE.V CBEFF.PK QTA.V QURAF.PK EPZ.V ESPZF.PK PXI.V PNXPF.PK SDR.V SDURF.PK APM.V NJMC.OB EXN.V EXLLF.PK KG.V KDKGF.PK SML.V SMLZF.PK SRY.V DNI.V DMNKF.PK KRE.V KREKF.PK BCM.V BCEKF.PK CMA.V CRMXF.OB MMG.V MMEEF.PK CHMN.PK GPR.V GPRLF.PK EGD.V EGDMF.PK GNG.V GGTHF.PK LEG.V LEGCF.PK TBLC.PK AUN.V AUNFF.PK TUO.V TEUTF.PK PCM.V PAOCF.PK BGS.V BLDGF.PK ASLM.PK BBR.V BBRRF.PK ROK.V ROCAF.PK MTB.V LSM.V LASCF.PK CBP.V CPBMF.PK PDO.V ATN.TO AUN.V LEG.AX MAR.AX MTB.V MSLM.PK SBUM.PK FWGO.OB MERG.PK SMLM.PK SIBM.OB SIVE.PK MEMLA.PK SLSR.PK SDSI.PK HRNS.PK GPXM.OB GSPG.OB AAG.V ANMCF.PK LSM.V LASCF.PK RRM.V LMA.V HGM.V HOGOF.PK EZM.V EZMCF.PK

------------------

Limited Time Special Offer!
Buy 1 Annual Subscription to Jason's Monthly Top Picks and get ALL other articles FREE!

Because I have a market reach, I also receive a lot of tips about silver stocks.  And thus, I believe I may have invested in some of the best ones that came my way.  If you believe I may have an edge based on my work and position... then the best way for me to share this with you is to is tell you where I put my money.  It's not investment advice.  I offer a monthly "look at my portfolio".   I do not issue recommendations, and I don't list number of shares or the size of my portfolio, but I will show the top investments in my portfolio, by rank, updated monthly.

 Price: $39.95/monthly, or $49.95 for a single month, or $295.00/year
To order: http://www.goldismoney.com/available-reports.html

If you have any questions about billing or order fulfillment, you need to contact my support staff at support@goldismoney.com and not me.  I manage a large portfolio, and I don't have time to process billing requests.  I don't bill any cards, my support staff handles all of that.  The toll free telephone customer support line is:  877-895-6824.
Limited Time Special Offer!
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-------------------

When I attended the Vancouver gold show, mid June, I was interviewed on the radio by the Korelin Economics Report. See http://www.kereport.com/recent.htm

I will be speaking in Idaho at the Silver Summit in September 23-24
http://www.silverminers.org/summit/index.html

-------------------
 I will be speaking in Toronto at the Cambridge Gold Show on October 3-4.
http://www.goldshow.ca/

-------------------
Several people wrote to Coast to Coast on my behalf, to help me get on the show.  I have not yet heard from them. 
http://www.coasttocoastam.com/info/guestrequest.html

-------------------

SAFES: Need a safe to store your silver?  Steve Miele in Grass Valley at the Sports & Swap shop can deliver a safe anywhere in the U.S., and can have a safe custom built to your specifications, such as to hold silver bullion.  Call Steve at (530) 272-4179.  If you get a very large, refridgerator-sized, heavy safe, in excess of 1000 pounds, you have to have it delivered to a local loading dock or Freight dock, and then arrange delivery from there, which is a bit complex, because you may need to hire several people at such a freight dock to operate a fork lift.  (Sorry, I had the phone number wrong last week.)

General Commentary on Silver (slightly modified from last week):

Now, I think it's time that the silver community started a letter writing campaign to the editors of newspapers around the world, to tell them about silver.  The following links contain email addresses for hundreds of different newspaper's "letters to the editor"

http://www.awolbush.com/papers.html
http://www.results.org/website/article.asp?id=428
http://www.waronfreedom.org/activists/emleted.html
http://www.goldismoney.com/editorsemails.html

This final link lists the email addresses for about 200 world newspapers, and about 100 U.S. newspapers, so you can email them all at once.  You have to copy the list, and paste it into your email, and there are direct instructions on tips for submission of letters to the editor.  Most editors, most papers, want letters of 250 words or less, and many also want your full name, address and telephone number.  So the task is easy.  But if 500 people write letters on the silver market to about 300 newspapers around the world, I believe wonderful things will happen.

Here is a sample letter:

May 21, 2004

Dear Editor,

I'm a silver investor.  I believe paper money is fraudulent.  There is over 30 trillion dollars, U.S., worth of bonds in the world, but less than 2 trillion dollars worth of gold, according to gold.org. 

As of April, 2004, the size of M3, the money in U.S. banks, has reached 9.1 trillion dollars, yet due to fractional reserve banking, the total of U.S. currency and coin in circulation is only 724 billion dollars as reported by treas.gov.

At silverinstitute.org and cpmgroup.com, they each report that silver has been in a deficit for about 15 years, where world mine supply has been about 500 million ounces, scrap supply about 200 million ounces, and industrial and jewelry demand about 800 million ounces.  The difference, about 100 million ounces, has come from investor and government selling, drawing down reserves of silver.  Known supplies of refined silver are down to about 250 to 600 million ounces.   At the COMEX, they are down to 48 million ounces of silver left that is registered for delivery, which you can see at nymex.com. 

The governments of the world are printing up too much paper money, and the world is running out of real money, silver.  I believe this will lead to the price of silver rising dramatically in value, around the world.

I urge your readers to verify the statistics I have provided, and to make their own decisions.

Sincerely,

Jason Hommel
Grass Valley, USA
Goldismoney.com
(530) 274 3450

When I sent out my letter above to that list, I received about 70 "undeliverable/delivery has failed" messages.   I sent it BCC, or "blind carbon copy", which means it may be interpreted as spam.  It may have had more of an impact if I sent out my letter to each address individually, but I just didn't have the time to do that this week.  Maybe next month.

I also did not include my full address, which some editors require.  But I'd rather keep a bit of privacy in that regard.

------------------
I wrote an article:
Miners to Use Silver as Cash - 27 November 2003
Apparantly, I was about 6 months too early in my predictions, but that's ok, I'm a very long term thinker and investor.  I did not miss the mark by too much time, and if you think in terms of decades, I was right on the mark.

 There are several companies that are increasingly deciding to hold their cash in the form of silver bullion.  These companies are:

SSRI SSO.V (SILVER STANDARD RSC)
SRLM.PK (STERLING MINING)
NPG.V NVPGF.PK (NEVADA PACIFIC GOLD)
EDR.V EDRGF.PK (ENDEAVOUR GOLD)

 ------------------
The Silver Valley in Idaho is bringing back the use of silver as money.  A silver one-ounce coin, a "Sterling" to be used as a $10 piece.
http://shoshonenewspress.com/index.asp?Sec=News&str=2869
------------------

 The sponsors of the Sound Money Bill in New Hampshire are now looking for donations so they can take this to other states!

For news on the New Hampshire Sound Money Bill, that proposes to use U.S. Treasury minted Silver Eagles and Gold Eagles as money see:
http://www.goldmoneybill.org/

Current status of the NH bill:
The bill will live untill the November elections. It'll have a different #,
but we now have 6 months or so to get EVERYONE we need on board.

Now looking to raise $25,000 to $35,000 for "phase II", to get set up with an office and staff training..
Looking to raise $500,000 for "phase III", to take this to about 5 other states.

Send any donations you can, to:
[These are not political campaign donations.]

SOUND MONEY FOR AMERICA,
c/o Henry W. McElroy,
15 Iroquois Rd, Nashua, NH  03063
ANY AMOUNT, ANY LEGAL TENDER CURRENCY - U.S. OR FOREIGN !

Video copies of the sound money bill press conference are available for a $35 donation.

For more info, contact
Rep. Henry W. McElroy, NH State Representative
Sponsor of the bill
603-233-5892

Harvey Wharfield
978-635-9586

We also need assistance with the following. 

1.  Please contact your local representative to your state government.  Find out whether they might support a similar "sound money bill" in your own state. 

To contact your state rep to the federal goverment, see http://www.house.gov/writerep/
To contact your state rep to your local state government, you will have to find that on your own.  Try searching for "contact state representative california" and replace the name of your state in the search.

2.  If you know of any local representaives to your state government, who may be GOOD, LIKE MINDED REPRESENTATIVES, SENATORS, and GOVERNORS, who may like to support, or sponsor, a sound money bill in your state, please tell them about the NH initative.  Copy the above, and send it along to them.  And call Henry W. McElroy or Harvey Wharfield, and let them know of the other reps who may assist the cause.

3.  If you have an email list to people who may be interested in gold and silver as money, or who may be good conservatives, please send out this notice to the list, so the project can move forward! 

25 Reasons why the Sound Money Bill Must Be Supported
by Jason Hommel
http://www.gold-eagle.com/editorials_04/hommel070804.html

--------------------------
There are two excellent annual silver surveys that are sponsored by industry.

The survey by silverinstitute.org costs $195, 87 pages.
http://www.silverinstitute.org/wssum03.pdf -- 8 page free summary of last year's reeport.

The survey by cpmgroup.com costs $150, 162 pages.
http://www.cpmgroup.com/SSpress2004.pdf --3 page press release.

 The two reports present the case that about 500 million oz. of silver are mined each year, about 200 million oz. of silver comes from scrap, and about 100 million oz. of silver comes from investor dis-hoarding, either by individuals or government sources, in order to meet the annual demand of about 800 million oz. of silver by industry & jewelry.  This is wildly bullish, because investors are net selling more than buying, and I think the potential of investor demand is huge, and can be measured by seeing how much paper money there is in the world.
--------------------------

Here are two U.S. Government produced reports on silver, containing data on years from 1900 to present, on U.S. & world  production, and U.S. consumption, and U.S. industry & government stockpiles.

Report #1
http://www.goldismoney.com/ssr/USsilver.xls
Report #2
http://www.goldismoney.com/ssr/USsilver2.xls

I evaluated these government produced reports in my silver stock report #36.

In sum, we are running out of silver.  The U.S. government had over 3 billion ounces of silver in 1940, and today, has very little left, or none.

--------------------------

The Commodities Futures Trading Commission

The CFTC report on the allegations of manipulation in the silver market -- 9 page report
The CFTC report confirmes much of the research above, and almost outlines the bullish case for silver!
--My comments on the CFTC report ar in ssilver stock report #34 & #35

--------------------------
Silver consumption, per capita, in the U.S. is the same today, in 2004, as it was in 1945.

And what is the per capita consumption of silver in the U.S. today?  5500 tonnes x 32152 = 177 million ounces of silver used per 285 million people.  177 / 285 = .62 oz. silver consumed per year, per person, in the U.S., whether in 1945, or in 2004.  Each person in the U.S. today, on average, uses 6 tenths of an ounce of silver. 
--------------------------

See my article: Biblical Guidelines for Managing your Money

As the New York Times, January 11, 1859, page 2 said---
"It is well known that the most colossal fortunes the world ever saw have been based on silver mines..."
--quote found by Charles Savoie

----------------------------

WHERE and HOW to BUY SILVER BULLION
http://www.goldismoney.com/buy-gold.php

----------------------------
My 2004-2009 price predictions for gold and silver:
2004: $595/oz. gold,  50:1 ratio = $12/oz. silver
2005: $1011/oz. gold,  30:1 ratio = $34/oz. silver
2006: $1719/oz. gold,   10:1 ratio = $172/oz. silver
2007: $2923/oz. gold,  5:1 ratio = $ 585/oz. silver
2008: $4,969/oz. gold,  1:1 ratio = $4969/oz. silver
2009: $8448/oz. gold, 5:1 ratio = $1698/oz. silver
2010+: infinity dollars/oz. gold, infinity dollars/oz. silver.

I calculate the gold price rise by guessing that by 2009, M3 will have a "gold-value" like it did in 1980, which is to say, M3 was worth 2 Billion oz. of gold or less.  It also assumes M3 will about triple in that time.  These figures are conservative, because I see no reason that M3 should be valued more than the gold the U.S. actually holds, which is a mere 261 million oz., not billion.  Today, the M3 value is $8870 billion / $425/oz. = 19 billion oz. of gold M3 could buy in theory.  The silver:gold ratio is also a very, very vague guess, reflective of monetary demand chasing silver, which is more scarce than gold in above ground, refined form. I have no idea when the ratio of 15:1 will be exceeded, I'm just totally guessing.  I suppose it could happen this year or next month for all I know.  Of course my real price targets are infinity dollars per oz. for both gold and silver when all is said and done, I just don't know how long that will take, nor what year it will be.  But my point in producing the price predictions is to show my bullishness for silver and gold.

----------------------------
I wrote an article predicting that Silver Companies will buy silver, and urging Silver Companies to buy silver with their cash, to use silver as money, and sell silver as needed for expenses.  See http://news.goldseek.com/GoldIsMoney/1069879327.php

That article is now having an effect!  It is being discussed by several large "cash rich" silver companies, who are seriously considering the idea of holding their cash in the form of silver. 

----------------------------
A great overview on silver: Douglas Kanarowski's 78 Approaching Forces For Higher Silver Prices

See also Douglas Kanarowski's article:  What Impact Will Digital Photography Have on Silver?

Doug's third article is also excellent: Silver -- the next big thing in the global markets? Answering A Few Silver Questions

 ----------------------------

 See the 600 year silver chart to see how undervalued silver really is:
http://goldinfo.net/silver600.html

----------------------------
Look at the summary of the world silver survey by GFMS Limited on behalf of The Silver Institute :
http://www.gfms.co.uk/Publications%20Samples/WSS03-summary.pdf

Note, there is virtually no monetary nor investment demand. Note, the 2002 mine production (585 mil oz.) is greatly exceeded by industrial, photo, and jewelry demand. (838 mil oz.).  Note the chart on page five, "Supply from above-ground stocks".

The difference between mine supply and industrial demand was met by a combination of three factors: 1.  Government selling, 2.  Private selling, 3.  Recycling

U.S. government selling is ending, as their stocks have run out, or will run out.  This factor will reverse, because the U.S. government will need silver to continue their coin program, and/or need silver when they wake up and decide they need to replenish their strategic stockpile for domestic security.  Silver is a war material.  China's selling of silver will also likely turn into buying, as China will need silver for continued industrial development, or when they also lose faith in the U.S. dollar.

Private selling has been rapidly shrinking and is now almost ended, and should turn into buying, and become monetary demand.  Monetary demand is everything in the silver supply / demand situation.  It's not now.  Now, it's nothing.  But it will become something incredible, because the dollar is dying.

----------------------------
The following is a "must read":  Ted Butler's best ever explanation of how silver is manipulated lower than it should be.
http://www.investmentrarities.com/11-04-03.html

Over 3400 people have signed the silver petition to stop the manipulation at the COMEX:
http://www.PetitionOnline.com/comex/

Ted correctly points out that a lower price creates excessive demand from consumers.  However, Ted Butler does not point out, and neglects to mention, that a perpetually low price also creates lack of demand from investors who are "trend investors". 

I think most silver experts over-analyze all the supply and demand factors of the silver market.  No factor is more important than monetary demand.  The force of photographic demand is like a light breeze compared to the hurricane or tornado of monetary demand.  Monetary demand is everything.
----------------------------

Consider the gold market for a moment:  Even short selling at the COMEX is nothing compared to monetary demand.  The short position most certainly helps to depress the price of gold as the short position is growing larger.  However, it adds fuel to the fire if there is short covering, and thus, it can boost the gold price later.  But the commercial short position on the COMEX is next to nothing compared to the non-reported "over the counter" trading that is done that does not appear on the COMEX.

(Numbers in metric tonnes, 32,152 oz. per tonne.)

870 tonnes -- the paper position at the COMEX, 280,000 contracts for 100 oz. each.
5,000 tonnes -- the official number admitted that the central banks have sold.
15,000 tonnes -- the number GATA research shows that central banks have sold / or leased.
30,000 tonnes -- the number of official central bank gold, minus either the 5000 or 15,000 tonnes.
145,000 tonnes -- all the gold mined in the history of the world.
2,600 tonnes -- annual mine supply
4,000 tonnes -- annual demand

And all of that is nothing compared to the amount of dollars out there that exist that could buy gold. $20 trillion bonds, $9 trillion M3 = $29 Trillion.  A mere 1% is $290 Billion, which, at $500 /oz. is a massive demand of 18,039 tonnes.  Do you understand what that means?  That means that far, far less than 1% of dollars, in either bonds or M3 can buy gold, because there simply is not that much gold available. 

Long before 1% of U.S. paper dollars tries to buy gold, gold will be going up well over $1000/oz., and silver will be headed up over $50/oz.

----------------------------
To scare away investors--that is the entire reason gold and silver are manipulated in the first place.  Only the trend investors can be deceived.  The problem is that nearly everyone is a trend investor.  Very few investors understand value.  If people knew the facts and used their brains, the available above-ground refined silver would be gone by tomorrow, and the price would be well over $20-50/oz.  But don't trust me, check the numbers and follow the links:

"The money chart"

   1,000,000,000,000: 1 Trillion dollars
         1,000,000,000: 1 Billion dollars
                1,000,000: 1 Million dollars
$45,153,000,000,000: U.S. Household wealth, as of first quarter, 2004. (Includes Real Estate, and investments)
$33,000,000,000,000: World bond market, yr end, '01:  http://tinyurl.com/vr7u
$26,400,000,000,000: World stock market, June 2002: http://www.nyse.com/press/1044027443845.html
$20,200,000,000,000: U.S. bond market, yr end, '02:  http://tinyurl.com/vr7g 
$11,447,800,000,000: U.S. GDP, 2004 q1 http://www.bea.doc.gov/bea/dn/home/gdp.htm
$11,300,000,000,000: NYSE U.S. stock market, April, '04 (363 bill/s x $31.14/s ave.) http://nyse.com (See: Market info: quick facts)
  $9,101,000,000,000: M3 (money in U.S. banks) April, '04  http://tinyurl.com/vra0
  $7,183,392,668,476: US debt, 5-18-04   http://www.publicdebt.treas.gov/opd/opdpenny.htm
  $2,360,000,000,000: U.S. annual budget 2005 http://tinyurl.com/3xbd2
  $2,572,160,000,000: Marcos/Phillipine "black/unofficial" gold: 200,000 (to 500,000) Tonnes @ $400/oz. (Book: "Gold Warriors")
  $1,860,000,000,000: World "official" gold mined in all of history, 145,000 T @ $400/oz. http://tinyurl.com/vrcc
     $300,000,000,000: Estimated silver mined in all of history: 30-40 million oz?  @ $10/oz.
     $724,174,342,365: Total U.S. paper currency & coin in circulation, Dec. 31, '03  http://www.fms.treas.gov/bulletin/index.html
     $700,000,000,000: U.S. annual budget deficit (current). 
     $272,000,000,000: Market Cap of Microsoft (03-2004) http://tinyurl.com/vrcn
     $222,000,000,000: M3 increase (money in U.S. banks) from Jan 2004 to April 2004 (in three months).
     $180,000,000,000: Debt of Ford Motor Co. (03-2004) http://tinyurl.com/vrd1
     $104,400,000,000: US gold, 261 mil oz., @ $400/oz. http://tinyurl.com/vsr9
     $100,000,000,000: all the world's gold stocks/equities (estimated?)
       $75,000,000,000: Money flowed into Equity funds in the first quarter, 2004
         $8,226,000,000: all the world's "primary" silver stocks (80 of them on this list, as of June 25, 2004)
         $6,710,000,000: 671 mil oz. of "identifiable" silver bullion left in the entire world, according to GFMS @ $10/oz.
            $639,000,000: 63.9 mil oz. of "registered" COMEX silver bullion @ $10/oz.  http://tinyurl.com/vrcw

So, what do all those stastistics mean?

For a while I was using M3 and dividing that by the US gold (261 million ounces), which implies the us dollar is 84 times more valuable than it should be, and that gold should hit $34,000/oz. after the fraud is destroyed.  Today, I realize I need to add in the Bond market, because bonds are an asset class designed to siphon away and replace real money, which is to say, gold.  This gives a price of about $111,111/oz. for gold.  At $ 430/oz, this implies that US bonds and paper currency are 258 times more overvalued than gold.

Gold is overvalued relative to silver, because at current prices, it takes 68 ounces of silver to buy 1 ounce of gold.  Historically, this ratio was 15 or 16.  Given the silver shortage, this ratio will hit 10:1 or 5:1, or even 1:1.  Thus, gold is perhaps 68 times more overvalued than silver.

Silver is overvalued relative to certain select silver stocks, perhaps by a factor of 3 or 10 or 20 to one.

Thus, if you multiply all those numbers, 258 x 68 x 10,  You will see that bonds and currency are overvalued relative to select silver stocks by a factor of 139,000 to one. In other words, if silver stocks reach their true value, and paper currency disappears as it always does, then you might expect certain silver stocks to go up in relative value by a factor of 139,000 times more than they are worth today.  By that time, you should definitely sell the silver stocks, and buy gold.

Can silver stocks really appreciate so much? Is there historical evidence for such a crazy thing?  Yes.

See http://www.sterlingmining.com/old.html
Excerpt:
"CDE rose from penny stock status (.02 in 1967) to an NYSE-listed, $60 per share stock in 1980. In fact, the average share on the Spokane Stock Exchange rose in value nearly 16000% (yes, sixteen THOUSAND percent), as America could not get enough of silver and silver stocks."

CDE rose by a factor of 3000, or 300,000%, and by 1980, the metals boom was stopped short, and paper money's death was postponed.  If paper money dies a death that lasts a generation world-wide, then even greater gains should have been expected.

For this reason, a wise silver stock investor should NEVER sell silver stocks for paper cash.  A wise silver stock investor who looks for value would never sell a fairly valued silver stock for an overvalued silver stock that traded for hundreds of thousands of times more value than it should be.  Likewise, there is no excuse for a silver stock investor to have any cash or money market or bonds in his portfolio for any reasonable length of time, except for when selling one silver stock to raise the cash for another silver stock, or for when you need to raise the cash to buy silver, or a private placement in another silver stock. 

So, if you want some fairly liquid alternatives to cash, in case you don't know what other silver stocks to buy at the time, here they are:
1.  Buy silver.  You can hold silver in an IRA.
2.  Buy CEF.  Central Fund of Canada, ticker symbol CEF.  It's gold/silver bullion fund.  It has 50 oz. of silver for every 1 oz. of gold.  The fund is fairly liquid, you can buy it as easily as any other stock, and is a good cash substitute.  Unfortunately, given the current ratio, about 55% or more of the value is in gold.
3.  Buy a fairly large cap silver stock, with fairly large volume, that is stilll fairly cheap on the list.  SSRI is probably the best candidate.

----------------------------

The sheer stupidity of big money not recognizing the value of the world's remaining silver is utterly shocking to the rational mind.  Clearly, bond holders are utterly deceived, and totally unaware of the situation.  All my readers should understand and know that bonds were originally invented to suck the capital and money (gold and silver) away from the people.  Bonds today are a paper promise to repay paper.  What a con game!  Are bond holders conservative and safe?  No, they are fools!  There is nothing safe about holding a paper promise to receive more paper when we have been experiencing hyperinflation for the past two and a half years! 

See my prior essay, " Inflation & Deflation During Hyperinflation "

----------------------------
And the fund investors who buy paper silver futures contracts instead of real silver are a very odd bunch of fools, for they should realize that nobody can deliver 800+ million ounces of silver promised in the paper contracts and options that does not exist.  It's like the paper longs are betting on the bank run happening, but they all are making sure they get at the end of the long line.  Instead, they could go front and center, where there is an open window available where you can go and get physical silver, and nobody is there.  Idiots!  If you know a bank run is going to happen, and you are actually willing to bet on it, then go and withdraw your money before it is too late!  Don't bet on it happening, which, if it does happen, your contracts will be defaulted on!  Amazingly blind idiots.  Wake up!

See also my prior essay, "The Moral Failures of the Paper Longs"

----------------------------

How bullish am I on silver?  Here's an interesting way to put it: "68 times infinity" dollars per ounce.

I believe the dollar will eventually be destroyed, likely within my lifetime, hence the "infinity" part.  I believe the ratio of silver to gold may be equal during a spike, when the market realizes that above-ground refined silver is more rare than gold.  Thus, silver may outperform gold by a factor of 68 times better.  Currently, the ratio is 68 ounces of silver can buy one ounce of gold or 68:1.

I may end up selling silver for gold, some at the 10:1 silver to gold ratio, some more at 5:1, and I would sell any silver remaining at a 1:1 ratio, that we may hit during a supply/demand crunch during a paper money collapse.

How we can tell if silver is leading gold, or if gold is leading silver?  IE, which is going up more, faster than the other?  The way you can tell is by looking at the ratio.  If the silver:gold ratio is going up (say, from 60:1 to 80:1), then gold is moving up faster (because it takes 5 more silver oz. to buy an oz. of gold.  If the ratio is going down (from 60:1 to 40:1), then silver is moving up faster.  So, keep an eye on the ratio.
 
----------------------------
For a list of bullion dealers:
http://www.goldismoney.com/buy-gold.php

For a list of Brokers that handle Canadian issues and/or pink sheets:
http://www.bibleprophesy.org/SilverStockExtra.html

To track the 163 ticker symbols of the 100+ stocks on this list at yahoo:  (Updated on April 2)
http://www.bibleprophesy.org/SilverStockExtra.html

To learn All about Canadian law, 43-101, about reserves and resources:
http://www.bcsc.bc.ca/Publications/mineral_projects_sept03.pdf

A good website that hosts posting boards for many of the smaller canadian stocks (that Yahoo! finance does not have boards for) is stockhouse.com
Click on "Bullboards".
----------------------------

This is a list of primary silver stocks. 

I count a company's ounces of gold as 10 oz of silver. Why? Because I have a very strong positive bias in favor of silver over gold.

Given my bias in favor of much, much higher silver prices, then, to me, the grades of silver are far less important than buying more oz. in the ground.  More oz. in the ground at a lower cost is the most important consideration for me. 

My method is simple. Cost per ounce in the ground. How much do you get (silver reserve totals), and how much does it cost (market cap)? The cost is the market cap divided by the silver reserve totals. Cheaper is better. Buy low, sell high.

Disclaimers, Warnings, and Advice: I have gathered the information below over the course of several months. I believe it is accurate to the best of my ability. I have made mistakes in the data from time to time. I'm human. I have collected the information from public sources such as company web sites and public information found at yahoo.com to get the stock prices. This report in no way guarantees the accuracy of the information below, since the information may change at any time. The number of outstanding shares can change as a company engages in new share issues to raise more capital through private placements, or if outstanding warrants (and options) are exercised and converted into shares, or if shares are bought back. Shares can be consolidated, or split. The number of ounces of silver in the ground can also change, as these are often only estimates. The number can also change up or down, depending on drilling results.

This report is not investment advice.  This report contains information that may or may not be up to date, and may be inaccurate.  I urge you to contact the company and do your own research to verify the information contained in this report.

This report is not an offer to buy or sell any securities.  I am not a broker.  Only your broker can buy or sell securities for you.

I urge you to consult with your investment advisor to determine whether these kinds of investments are right for you. 

I also caution you to be aware of your investment advisor's advice, they are sometimes paid to push things like mutual funds, bonds and other securities that may not be in your best interest to buy.  Some investment houses are short physical metal, and thus, they may attempt to strongly discourage you from buying precious metal or precious metals investments.  I believe that the propaganda machine in support of frauds such as bonds and the dollar is so strong, that they may even believe what they say when they give bad advice to avoid the safety and protection of precious metals.  It is most likely that they simply do not understand the precious metals market as well as you do.

All total estimates of "ounces in the ground" can vary widely. There are "proven and probable reserves" which are the highest category of certainty which is obtained through many drill holes, and then at the least accurate, there are "inferred resources" which are hardest to estimate. Additionally, every miner always has "more silver properties that need to be explored, which probably contain more silver". For the purposes of this report, I have added all those numbers together. It is believed that all these "ounce in the ground" estimates can be profitably mined at $5-6 per ounce silver, or lower. Thus, I believe that when silver trades for $15/oz. or above, that all of these ounces can be mined at a substantial profit.

I may be wrong. (I probably make mistakes in every article, and there have been updates and corrections made each week, especially as prices change.)

Mining is a risky business. You need to be willing to sustain a total loss of your investment for various unforeseen accidents. Silver stock companies can do stupid things to shareholders such as take on debt, or issue more stock at too low prices which reduces the percentage of the company you may own (dilution). Yet, they need to issue shares to raise capital for drilling, and then an even bigger dilution to build a working mine. They may sell YOUR silver too cheaply, or worse, hedge the price of YOUR silver just as it begins to go up if they lock in a price which then proves to be too low if the dollar is destroyed. Mining is a risky business as estimates of assets in the ground can change. There is political risk and environmental risk. They can't franchise the business, are stuck in one location, are subject to government confiscation, or taxes, or union wage negotiations, and corporate looting.

Do your own research.  Be responsible for your own investment decisions.  Again, please, before investing in a mining company, call up the company, and speak either with the CEO or the Investor Relations contact person.

So, at the very least, check the company web site, read the annual reports, check my numbers, check my math, and email the company. That's what they are there for, to answer your questions, and to speak about the opportunity of the company. Don't trust everything you read over the internet. I am a biased source. I own silver mining stocks. And I'm not a broker, nor an investment advisor. I'm just a private investor trying to make sense of this crazy world, and sharing my information and thoughts on silver companies.

Surely, there are scammers in the mining industry in the past, and there will be scammers in the future.  Remember the fraud of Bre-X.  The new 43-101 compliance laws put in place after Bre-X will not prevent a "certified" geologist from lying if he feels lying will create a better payoff.  The Bible warns, "trust no man", yet at the same time advises us to "cast our bread upon the waters", and to not issue "false allegations" against others.  Physical gold and silver provide the "payment in full" as long as the coins or bars themselves are genuine and not fake.

This report may be copied, and transmitted by other people, and may become outdated by the time it reaches you.

I can't tell you how you should invest your money, of course. The reason is that I don't know how convinced you are of the silver bull market, nor do I know how soon you will be needing the money back, so I don't know how long you can wait to see results, nor do I know how much liquidity you need. Nor do I know the size of the money you have to invest. It is very hard to invest large quantities of money in a small market cap stock.

That being said, my investment strategy seems to be working for me, so far. And so, here is how I have valued the following silver companies to make my own investment decisions.

----------------------------
(Market cap is always converted to US dollars and denominated in US dollars because I divide by ounces of silver, which are also denominated in dollars)

The Market Cap is the usual tool to value a company.  It is what the company "costs to buy" if you could buy the entire company, all the shares, at the latest share price.  It is calculated by multiplying the share price, by the total number of shares that the company has issued.  In reality, you could almost never buy an entire company at the price of the Market Cap, but only a small portion.  Usually, even small buying pressure, such as trying to buy 1% of a company, can push up the price of a stock by up to 10-50% higher.  In my reports, I list Market Cap in terms of millions of dollars as "$75 mil MC".

To calculate the Market Cap, I try to get and use the number of "fully diluted shares".  A company creates shares when they sell them to investors in what are called "private placements", or "initial public offerings" (IPO).  These usually consist of shares and warrants, sold for cash that the company will need to grow and expand.

The "outstanding shares" is the number of shares that exist out there if you count them all, and it does not count the warrants, which are like options. The investor can "exercise the warrants" which is a right, but not an obligation, to buy more shares from the company at the set price of the warrant.

If the company does well, and the stock price moves up, all the warrants will be, or should be, exercised and converted into shares, especially if they become "in the money", and the warrants are significantly cheaper than the stock price.

Now, "fully diluted shares" is the total number of shares, plus the warrants, counting warrants as if they were all exercised and became fully trading shares.  I think "fully diluted shares" is a better number to use to calculate market cap than by using "outstanding shares" as most do.

Finally, I go beyond valuing a company based on Market Cap alone; instead, I value a company by dividing the Market Cap by the assets of the company, which are usually the silver reserves in the ground.  Thus, I can get a sense of what you are getting for what you are paying.   And then, I denominate the whole thing in terms of silver, and not dollars, to get a more constant measure.

----------------------------
(These first four companies, BHP, GMBXF.PK, KGHM and BVN  produce a lot of silver, but look to be way too expensive to buy for the silver exposure for your portfolio.)

BHP Billiton Ltd (BHP)
http://www.bhpbilliton.com/
--'produces 40 mil oz. silver annually from one mine'
Additional comments:  unfortunately, BHP has a 53 Billion market cap, so we can't buy BHP for the silver exposure.  IE, $53 Billion / oh, say, 1000 million?????= $53/oz.

Dear BHP:  By all means, keep mining the silver if you want the silver exposure, and want to be in the silver business.  But don't sell the silver.  Keep it.  Let the profits of your entire company accrue as an increasing physical supply of physical silver.  In fact, do as Buffett did, and buy more silver if you can.  It would be infinitely easier for you to buy silver from yourself than it would be to buy 40 million ounces of silver from the COMEX, which, today, might be impossible. 

KGHM Polska Miedz
http://www.kghm.pl/en/index.php
--KGHM is the world`s sixth-largest coppper producer and second or third in silver.
1163 tonnes of silver produced in 2001.
1163 x 32152oz.tonne = 37.4 million ounces of silver produced in 2001
--Copper/Silver mine in Poland.
--Market capitalisation is about  $$1.52 billion.

Grupo Mexico SA de CV (GMBXF.PK)
http://www.gmexico.com/indexi.html
651,646,640 shares (2002 annual report)
@ $4.00/share
$2606 mil MC
"Grupo Mexico ranks as the world's third largest copper producer (copper at $1.24), fourth largest producer of silver and fifth largest producer of zinc."
They produced 28.2 million oz. of silver, worth $129 million, in 2002.  (P. 5, annual report.)
Total value of produced metals: $2527 milllion. (but the company lost money in 2002).  They mainly produce copper, 900,000 tons worth $1.5 billion in 2002.  Thus, silver, at 2002 prices, is only 5% of their production value.  Silver is a by-product for them, not a main product.
I don't have silver reserve figures, nor do I see any need to find them or add them, since they are not a primary silver producer, and I don't think anybody would be buying them for the "silver exposure".
If we assume 280 mil oz. of silver (ten years reserve for production), then we stilll don't have anything exciting for the silver alone.
$2085 mil MC / 280 = $7.45/oz. cost.

Compania de Minas Buenaventura SA (BVN)
http://www.buenaventura.com/
NYSE:BVN
- Peru´s largest publicly traded pprecious metals company
--produces over 10 mil oz of silver per year
--looks way too expensive for the silverr alone: 3.6 Billion market cap.
 -------------- -------------- --------------

ABX (Barrick)
http://www.barrick.com/
535 million shares outstanding (1 Q 2004)
@ $20.99/share
$11,229 million Market Cap
5.5 million oz. / year gold production.
--production hedged out for 3 years, or about 15 million oz.  (most notorious hedger of the industry, the "leader")
--price of hedges locked in near the market lows, perhaps $340/oz. on average, nobody knows for sure, because Barrick will not say
--reportedly, Barrick is trying to "unheedge".
--reportedly, they plan to deliver 1/3 oof production to hedges, which means they will be hedge free in about 10 years.
--the size of the hedge, 1 Q, 2004: 14.7 mil oz. gold, at $400/oz., would be valued at $5.9 billion dollars. 
--but they claim to be "debt free", if you ignore the gold they owe for delivery, at locked in, low prices.  (only true if gold is not money)
--cash: $850 million
Silver Reserves reported to be 850 million ounces! 
Gold Reserves reported to be 86 million oz.  (x 10 = 860 mil oz. + 850 silver = 1710 mil oz. "silver equiv."
$11,229 million Market Cap / 1710 mil oz. = $6.57/oz. silver
You may get "approx" 1.02 ounces in the ground for 1 oz. silver's worth of stock, if the silver isn't hedged.

Additional comments:  Barrick earns $26 million in first quarter.  x4 = $104 million, which gives a P/E ratio of 103.  Ouch, that's high.  The hedge book loss was $10 million. 

Over the years, Barrick has hedged their production, which many claim has helped to depress the price of gold and silver, by artificially adding to supply.  (Barrick's promises becoming the extra supply.)  The declining price of the precious metals has put other miners out of business, which Barrick has acquired at low prices.  If Barrick goes bankrupt due to their hedges, and rising gold and silver prices, then perhaps Barrick's many properties will, once again, be sold at distressed prices. 

About a year ago, perhaps spring 2003, ABX made an announcement about covering 30 million ounces of silver they sold short.  Then, a large buyer showed up in the futures contracts for about that amount. 

1 Q 2004 note on hedging silver, p. 33:  "At March 31, 2004, we had fixed-price commitments to deliver 22.3 million ounces of silver over periods primarily of up to 10 years.  We also had written silver call options on a notional 7 million ounces of silver with an average exercise price of $5.76 per ounce.  These options expire at various dates in 2004 and 2005.  The options are classified as non-hedge derivatives for accounting purposes.

Looks like they never closed out the silver hedge, like they said, but that they just bought options or futures that expired, or maybe were rolled over.  I don't know whether they stilll have paper contracts that offset their hedges.  In fact, perhaps the dip in the silver price can be explained by the options that Barrick wrote on some silver? 

I don't really count Barrick as a silver company, but it's listed here for comparison's sake, and due to popular/continuous demand.

I expect silver bullion to continue to outperform ABX stock at these prices.

CDE (COEUR D'ALENE)
http://www.coeur.com
coeurir@coeur.com (208) 769-8155 or (800) 624-2824
214 mil shares outstanding (June 2004) not fully diluted
@ $4.00/share
$856 mil MC
"Current cash, cash equivalents and short-term investments stand at approximately $252.7 million at January 31, 2004, giving effect to recent $180 million offering of 1.25% Senior Convertible Notes due 2024, net of offering costs."
"At the beginning of 2004, silver reserves totaled 175 million ounces and gold reserves 1.4 million ounces."
175 + 14 = 189
(Produced 14.2 mil oz. silver in latest fiscal year (early 2004)
$856 mil MC / 189 mil oz = $4.53/oz.
You get "approx" 1.42 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments: CDE's page on silver, "The Value of Silver" says nothing about silver as money.  Unbelievable!

Wheaton recommends rejecting the CDE buy out offer:
Wheaton Does not Intend to Pursue the Coeur D'alene Mines Proposal: Recommends Shareholders Vote IAMGold Combination
Monday May 31
http://biz.yahoo.com/bw/040531/315071_1.html
Interestingly, as one reason, Wheaton says: CDE has a history of losses and negative operating cash flow.

Quarterly Loss Reduced From $31.2 Million a Year Ago to Just $3.0 Million in 2004's First Quarter
As of May 5th, CDE announced: No silver or gold hedge positions in place.

For the full year 2003, the Company reported a net loss of $67.0 million, or $0.40 per share, compared to a net loss of $81.2 million, or $1.04 per share in 2002.

Why does CDE continue to mine and sell silver at a loss?  Why has CDE borrowed $180 million to continue expanding this business plan?  Why couldn't CDE have raised the money from issuing more shares?  Why has CDE stock increased over seven times from about 30 million shares outstanding at the end of 1999 to 214 million shares outstanding by the first quarter 2004?  How was CDE able to secure such favorable terms for a loan? "giving effect to recent $180 million offering of 1.25% Senior Convertible Notes due 2024, net of offering costs."" Who did CDE borrow money from?  Who stants to gain if CDE continues to produce silver at a loss? 

If CDE produced silver at a loss during the first quarter 2004, how much money will they make if silver hits $10/oz?  Perhaps the break-even price for production is a constant $8.00/oz.?  Regardless of their "cash cost" numbers.  If so, and if CDE produces 15 million oz. of silver per year, then at $10/oz., CDE may make up to $30 million dollars, at the most, from their silver production, if none of their other costs like energy costs rise in price due to inflation.  Mining uses a lot of energy, just so that you know, so I don't think it is likely that CDE will have profits even with higher silver prices in the $8-10 range due to inflation.   Given that CDE has a market cap of up to $1000 million dollars, CDE just is not worth it at all, in my opinion.  And neither would CDE stock be worth the price if they had a market cap of $300 million, in my opinion.  I would rather own silver, as it moved in price from $6 to $10.  And in the meantime, CDE may well move in price from $6.49/share down to $2.16/share (assuming no further dilution, and a reduction to a more reasonable $333 million market cap), and by then, with silver at $10, CDE may have a P/E ratio of 10, and a huge heavy debt load of $180 million dollars that may take up to 6 years of possible profits to pay off. 

At $2.16/share, $10 silver, and a P/E of 10: $333 mil MC / 189 mil oz. = $1.76/oz.  = You'd get about 5.68 oz. of silver for each silver oz. worth of stock.
I expect silver bullion to continue to outperform CDE stock at these prices.

IPOAF.PK (INDUSTL PENOLES)
http://www.penoles.com.mx
397.5 mil shares outstanding (2002 annual, unchanged since 2001)
@ $3.90/share
$1550 mil MC
419 proven and probable reserves of silver (from 2002 annual report on website)
$1550 mil MC / 419 oz. silver = $3.70/oz.
You get "approx" 1.74 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments:  Industrias Penoles is the world's top producer of refined silver.  They actually derrive more revenue from silver than any other source.  But they lost money in 2002.  Produced 21.5 mil oz. silver 1 Q 2004

The word late Feb. 2004 from ECU Mini, who reported to lemetropolecafe.com, is that Penoles has hedged several year's worth of silver, that is, they have locked in to sell mostly all their silver at low prices.  Set when prices were lower.  How much lower, and at what price, is anyone's guess.  As reported at lemetropolecafe.com, "We know the market is so tight even the world’s largest silver producer, Mexico’s Penolas, wasn’t thrilled about supplying 1 million ounces for a special project with ECU Silver, led by their extremely able CEO Michel Roy."

78.5 million oz. silver refined by the metals division in 2002, and 1 mil oz. gold.
They probably refine almost all the silver that comes out of Mexico.
They probably produce about 34 mil oz. of silver from their mines annually, and they have expansion plans. 

I've heard this stock is tightly held, most is family owned. 

Their oz. numbers are "proven & probable reserves", which is much more certain than most of the others which are mostly "inferred and indicated resources."  They undoubtedly have "inferred and indicated resources" in addition to the "proven & probable reserves," I just could not find any info on that at the website or in the annual report.

Given the report in March, 2004, that Penoles has hedged silver for two years, I expect silver bullion to continue to outperform IPOAF.PK stock at these prices.

SIL (APEX SILVER)
http://www.apexsilver.com/
information@apexsilver.com (303) 839-5060
47.4 million shares outstanding (late May, 2004) (not fully diluted)
(derived from share price & market cap, late May, 2004)
@ $18.99/share
$900 mil MC
cash on hand: ~ $390 million March 2004
San Cristobal (Bolivia) (proven & probably reserves) 454 mil silver
(forecast capital costs for construction to total approximately $435 million)
(Produced zero silver in 2002)
7.8 billion pounds of zinc, and 2.9 billion pounds of lead
$900 mil MC / 454 mil oz = $1.98/oz.
You get "approx" 3.25 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments:  Apex's webpage on silver, "Commodity Fundamentals" says nothing about silver as money.  Unbelievable and shameful!  Unless you count this phrase, "As a precious metal, it has been a source of human adornment since the beginning of time."  At least they recognize that silver is a precious metal, and at least they recognize it has been precious since the beginning of time.  That's a start! 

Bullishly, they note:  "As a result of the silver inventory drawdown, by the end of 2002, the worldwide stockpile of refined silver has been reduced to levels sufficient to satisfy less than approximately six months of the existing demand."

A positive article was written about Apex in Business Week Online:
A Bright Gleam On Apex -- Friday June 4

"Apex has rights in some 100 mineral-exploration holdings at 34 properties in countries such as Bolivia, El Salvador, Mexico, and Peru."

The article's analyst notes that in 2-3 years, when/if production comes online, "At silver's current price of $6 an ounce, Apex could earn $2 to $3 a share, he figures. If silver runs up to $10, earnings could hit $6, he says." 

I note that this means that at a P/E of 10, if production comes online, Apex may more than tripple in 3 years to $60/share, while silver nearly doubles.   That's not much leverage, given the increased risks of mining and owning a public company, and given that management of Apex seems to not recognize that silver is money, and debt is aweful.
March 16th, Apex raises $144 million in a convertable debenture deal to help finance the development of San Cristobal.  They now have 350/435, or 80.4% of the capital costs needed for construction.  Raising the last bit should now be very easy to do.  If, while raising money, they held their cash in the form of silver bullion, they would probably not need to raise any more cash at this point, since silver has moved up over 50%.

See my silver stock report #40 for reasons why Apex will not likely use their cash to buy silver bullion while they wait for higher silver prices.

Apex silver primarily has institutional investors.

Apex has a lot of zinc. That's an added bonus that is not factored in to my method of valuation. Zinc prices have been heading up soon, so that's another bonus. Plenty of zinc is especially good if zinc is moving up in price.  Zinc hit a recent high of $.51/lb., from a low of about $.35/lb. For zinc prices, see http://www.metalprices.com

Apex is not mining now, but are waiting for higher silver prices.  George Soros, Billionaire, owns a bit of this one, his group of funds owns over 14% I read recently.  There are several other zinc / silver plays on this list that investors might also consider: Canadian Zinc, Expatriate, or Metalline (I own Metalline, but not SIL.)

I do not have an idea on whether or not SIL will out perform silver bullion or not.  It's hard to say, because of that huge zinc bonus. 

GRS GAM.TO (GAMMON LAKE)
http://www.gammonlake.com/
gammonl@sprint.ca (902) 468-0614
62 mil shares Fully Diluted: (Feb 27th, 2004)
@ $7.12/share
$441 mil MC
Total Ocampo Inferred: 1,124,000 oz. gold,   50,438,000 oz. silver
Silver equiv = 11.24 mil oz. + 50.44 mil oz. = 62 mil oz.
Total Ocampo Measured & Indicated   2,207,800 oz. gold,  108,438,000 oz. silver
Silver equiv = 22 mil oz. + 108 mil  oz. =  130 mil oz.
Total Ocampo Measured & Indicated plus Inferred = 182 mil oz.
Gammon owns 26.3% of Mexgold, MGR
Since Mexgold owns 185 mil oz. of "target exploration potential", 26.3% of that is 48.6 mil oz.
182 + 49 = 231 mil oz.
$441 mil MC / 231 mil oz.= $1.91/oz.
You get "approx" 3.37 ounces in the ground for 1 oz. silver's worth of stock.
**Note** most of Mexgold's oz. that are added in are an "exploration target" not yet "inferred resources".

Additional comments: 
At prices of a 64:1 silver:gold ratio at $425/oz gold and $6.60/oz silver, the resources are worth $1048 million of silver, and $1411 million worth of gold.  Cash cost is $85/oz.  Life of mine is 7 years. 

GAMMON LAKE INTERSECTS 1-METRE OF 390 GRAMS PER TONNE GOLD AND 1,402 GRAMS PER TONNE SILVER  (13.2 OUNCES PER TONNE GOLD-EQUIVALENT) June 10

 FSR.TO FSLVF.PK (FIRST SILVER)
http://www.firstsilver.com/
info@firstsilver.com (604) 602-9973 or (888) 377-6676
38.6 mil shares fully diluted (March 2004)
 @ $2.11/share Cdn x .76 US/Cdn = $1.60 US
$62 mil MC
From the Company's main page at their url:
"As at December 31, 2001, First Silver's mineable reserves were 12 million ounces of silver and inferred resources totaled 30 million ounces of silver. The mine is developing a 1000 plus meter exploration drift to upgrade currently identified inferred resources to mineable ore reserves and to discover new reserves."
12 + 30 = 42 mil oz.
$62 mil MC / 42 mil oz. = $1.47/oz.
You get "approx" 4.38 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments: This is a high grade, producing miner.  The high grades, about 300g/ton, are a plus.   They are also actively exploring, another plus.

1st Q, 2004, FSR.TO earned $1.45 million Cdn?, or 4 cents/share, ending a string of losses for the 6 quarters prior.  Seems as if their break even cost to mine is $6.00/oz silver.  Produced 565,332 oz. silver for the quarter, and 1288 oz. gold.

They are unhedged, and remain committed to remaining unhedged.

PAAS (PAN AMERICAN SILVER)
http://panamericansilver.com/
info@panamericansilver.com (604) 684 -1175
70 mil shares fully diluted (April, 2004)
http://panamericansilver.com/s/CorporateInformation.asp?ReportID=26039
@ $15.10/share
$1057 mil MC
10 silver properties (3 in production)
produced 7 mil oz. silver in 2001:
Reserves & Resources through Dec. 11th, 2003 from
http://panamericansilver.com/s/ReservesAndResources.asp?ReportID=25303
743.2 million total
$1057 mil MC / 743 mil oz. = $1.42/oz.
You get "approx" 4.53 ounces in the ground for 1 oz. silver's worth of stock.

Additional Comments:  PAAS is hosting the 2004 Silver survey summary by GFMS for the Silver Institute

On PAAS's page on silver fundamentals, it says little about silver as money.  Except maybe for the following phrases: "Many analysts forecast continuing weakness in the US dollar in 2004, which should bode well for higher silver prices." and " The outlook beyond 2004 is also promising for the silver market, due to continuing investment demand..."

  Pan American of Canada buys Morococha silver mine in Peru for US$35 million  This $35 million acquisition is a great deal for PAAS, and a minor help for PAAS shareholders.  According to the press release above, the silver mine produced 3.5 million ounces of silver a year, at a cash cost of $3/oz., which is great!  At $6.50/oz, that's $3.5 x 3.5 mil oz. = $12.25 million per year profit after cash costs!  That gives the acquisition a P/E ratio for the mine's acquisiton cost of under 3!  What a deal! 

Unfortunately, PAAS shareholders are paying way above that when they buy the stock today.  After this acquisition, PAAS should have a "2004 silver production forecast to 13 million ounces from 10.1 million ounces and will reduce forecast cash costs to below $ 3.50/oz, bringing anticipated total costs to less than $4/oz for the year."  Now, at $6.50/oz, that's $2.5 x 13 mil oz. = $32.5 million per year profit, after cash costs.  That gives a P/E ratio for PAAS of about $1000 / $32 = 31.  Therefore, considering the two P/E ratios, 31 compared to under 3, PAAS stock is over ten times overvalued compared to other silver mining opportunities that exist in the market, such as the property they just purchased.

PAAS stilll refuses to recognize that silver is money, and they refuse to hold their money in the form of silver.
What if your silver company decides to lock in silver prices at $8, and hedge years of production to "protect the shareholders and provide exposure to the high $8/oz. price," only to watch silver prices head past $25 and past $50/oz?  Your stock could get wiped out in bankruptcy, and your investment could go to zero value!  This is the danger of stocks!  Your investment is subject to the whims of management!

WARNING: PAAS says at their website that they may hedge silver, in order to finance mine construction.
http://panamericansilver.com/s/CorporateProfile.asp
 "Pan American is loath to give away the upside on any of its silver production, especially at current low metal prices, and will do so only to the minimum extent required as a condition of prudent mine financing."

In my opinion, hedging prudence depends entirely on the price level to which silver will rise as denominated in dollars.  Since I believe the potential is for silver to cross over $2000 to $4000 per ounce (on the way to infinity) in a monetary collapse, I would never hedge silver and never lock in a dollar price for long term production.  If PAAS will, it goes to show that they don't view silver as money, which is a counterproductive management philosophy for a shareholder who intends to invest in PAAS for the exposure to rising silver prices. 

My opinion is that it is NEVER prudent to go into debt, or lock in silver prices to finance a mine.  If PAAS cannot raise capital on the markets by issuing shares, then they should not be financing new mine construction.  If the market will not support new mine construction, then the market does not need more silver.  PAAS and CDE should learn to trust the free market process, and avoid debt. 

MFN MFL.TO (MINEFINDERS)
http://www.minefinders.com/
39.1 mil shares fully diluted 1 Q 2004
@ $7.00/share
$274 mil MC
Cash on hand, Fully Diluted: C$34 million
"over 3.5 mil ounces of gold resource and 160 mil ounces of silver" --Dec. '03
silver conversion = 3.5 x 10 = 35 mil + 160 mil oz. silver = 195 mil oz. silver
At 70:1 ratio, 3.5 x 70 = 245 "silver equiv" of gold, and 160 mil of silver = 405.
245/405 = 61% of the mineral value is in the gold, 39% silver.
At 10:1 ratio, 35/195 = 18% of the mineral value is in the gold, 82% silver.
"In addition to the resources already drilled, Minefinders controls a strong portfolio of properties in Nevada, Arizona, and Mexico which have the potential to host new multi-million ounce discoveries over the next few years."
$274 mil MC / 195 mil oz. = $1.40/oz.
You get "approx" 4.60 ounces in the ground for 1 oz. silver.

Additional Comments:  At 70:1 silver to gold ratio, over half of MFN is in gold, so consider this a significant gold bonus. MFN also now lists their resource figures on their website's main page.  I'm sure investors appreciate this.  I do. 

KBR.TO KBRRF.PK (KIMBER RESOURCES)
http://www.kimberresources.com
info@kimberresources.com (604) 669-2251
31.6 mil shares fully diluted (Apr 20, 2004)
http://www.kimberresources.com/sharestructure.html
@ $1.90/share Cdn x .76 US/Cdn = US $1.44
$46 mil MC
from http://www.smartstox.com/reports/kbr.pdf
30 mil oz. silver resources Measured & indicated, plus inferred
540,000 oz. gold x 10 = 5.4 mil "silver equiv."
$46 mil MC / 35.4 mil oz. = $1.29/oz.
You get "approx" 5.00 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments:  Kimber Reports Significant Drill Hole On Carmen Deposit

A one property company.  The Carmen gold-silver deposit on their Monterde property in the Sierra Madre belt of Chihuahua State, Mexico.  Significant exploration potential.

It was reported by a press release that 16%-17% of KBR.V is owned by silver bull Jim Puplava of http://www.financialsense.com, which I think is a rather solid endorsement of the company.