Silver Stocks--Comparative Valuations 
Weekly Report # 45
by Jason Hommel
goldismoney.com

FRIDAY, August 6th, 2004

A day's wage used to be a silver dime, or a silver quarter, or maybe a silver dollar.  A silver dime today costs about 48 cents, at $6.74/oz. for silver.  About 900 million oz. of silver are consumed annually, and just under 600 million ounces mined annually.  Oddly, there is is seven times as much refined gold as silver...  Buy real silver, it is scarce, and it is real wealth.  By the time paper money fails mankind once again, as it always does, any silver dime you can lay your hands on will probably be worth more than what $100 to $200 will buy you today.  You can buy it now, or work for it later. 

This week's report lists the market capitalizations for 85 silver stocks.  There are 31 silver stocks that list reserves, resources (and exploration potential) which I calculate by using my "ounce in the ground" formula.  There are 54 explorers.  There are about 30 additional "silver" stocks with incomplete information. Additions & Changes from last week are in bold. 

Please try to read the entire report before sending me an email.  This report goes out now to over 11,000 investors each week. 
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If you are an Accredited or Sophisticated investor and want information I may find out about private placement opportunities in some of the very best silver stocks in my opinion, (This is not a solicitation for any stock, and I'm not brokering any securities) you can sign up to receive such a notice by adding yourself to my private placement list at http://www.goldismoney.com/subscription-pp.php

To read about my religious bias, see my other web site, 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.  See Ezekiel 38.  Also, see my essay: Biblical Guidelines for Managing your Money

Kitco reports silver at $6.74/oz. as of Friday, 2:55 PM West Coast US, which was used to calculate the following figures. The CAN $ / US $ conversion factor is .7619.  I will use .76 for ease.  

How to read the table below:
Stock Symbol that works at Yahoo! Finance (Company name) / The number that follows the company name, below, represents the company's resources, divided by the market cap as denominated in silver; thus, it is the number of silver oz. "in ground" that you gain title to when you trade away one ounce of silver to buy 1 oz. of silver's worth of stock.  The number is the expression of leverage that silver stocks can give you, the higher the number, the better. / Next, I list the valuation price change since last week (and stock dilution, and resource changes, if any) as up/down or even.  / Finally, there are additional comments (EXPT is "exploration potential")

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

This first list are the companies with information about reserves/resources/exploration potential.  The list is ordered/ranked based on the resource picture.  The most expensive (with the fewest silver resources given their market cap) are listed first. 
  1. ABX (BARRICK)                                   1.1 down  --producer, hedger (15? mil oz. gold hedged, 3 yrs production)
  2. IPOAF.PK (INDUSTL PENOLES)            1.8 down --producer, mostly family owned, hedged?
  3. CDE (COEUR D'ALENE)                           2.7 down --producer (also gold) in debt, produces at a loss.
  4. SIL (APEX SILVER)                                  3.6 down  --zinc bonus, low grades, cash rich--$345 million! in debt
  5. GRS GAM.TO (GAMMON LAKE)            4.8 down --producer, owns 26% of Mexgold
  6. FSR.TO FSLVF.PK (FIRST SILVER)        4.6 up  --producer, (not profitable '03 3rd q.) unhedged
  7. MFN MFL.TO (MINEFINDERS)               4.8 even  --significant gold bonus, $35 mil cash on hand.
  8. PAAS (PAN AMERICAN SILVER)               5.3 down  --producer, debt free, may hedge to develop
  9. CFTN.PK (CLIFTON MINING)                   5.5 down -- (130 EXPT) (colloidal silver product bonus)
  10. KBR.TO KBRRF.PK (KIMBER RSCS)       5.6 down  --one property, high grades, with exploration potential.
  11. * TM.V TUMIF.OB (TUMI RSCS)              6.9 up -- (14 EXPT) recent bonanza grade silver discovery
  12. WTZ WTC.TO (WESTERN SILVER)             7.3 down  -- (26 EXPT) large mine development cost. copper & zinc bonus
  13. SSRI SSO.V (SILVER STD RSC)                     8 up --large company, many properties, owns silver bullion
  14. ORM.V OREXF.PK (OREMEX RES)          10.3 down  (42 EXPT)
  15. SHSH.PK (SHOSHONE SILVER)                   11.0 down  --leased properties; need payments; in Cour d'Alene
  16. CZN.TO CZICF.PK (CDN ZINC)                10.5 up  --large zinc bonus, high grades, low start up costs, great EXPT
  17. FAN.TO FRLLF.PK (FARALLON RSCS)      13 up  --(22 EXPT) low grades, silver 1/3; also gold & zinc bonus.
  18. SRLM.PK (STERLING MINING)                    14.0 up --(33 EXPT) acquired the Sunshine in Cour d'Alene
  19. HDA.V (HUSIF.PK) (HULDRA SILVER)        18.6 up   --very tiny, zinc bonus, low start up costs.
  20. CHD.V CHDSF.PK (CHARIOT RSCS)          19.0 down  --explorer, with inferred resources
  21. RDV.TO RDFVF.PK (REDCORP VEN)         19.5 down --60% gold bonus
  22. GGC.V GGCRF.PK (GENCO RECS)              19.5 up --producer in Mex.  Plans to expand and acquire
  23. IMR.V IMXPF.OB (IMA EXPL)                   19.7 down --(79 EXPT) explorer in Argentina
  24. * SVL.V STVZF.PK (SILVERCREST)            20.2 up  --(59+ EXPT) --(Silver in Honduras, Latin America)
  25. ADB.V ADBRF.PK (ADMIRAL BAY)           22.7 down --exploring a silver property in Mex. (Huge gas bonus)
  26. ABI.V ABMBF.PK  (ABCOURT MINES)        24.8 down --large zinc & small gold bonus
  27. * PLE.V (PLEXMAR RES INC)                        27.5 up  --just acquired 2 new projects
  28. * MGN (MINES MGMT)                                27.6 up  --60% copper bonus (low grades), start up cost ~ $250 mil
  29. EXR.V EXPTF.PK (EXPATRIATE)               29.2 down  --significant zinc bonus 60% zinc, 25% silver (got out Atna)
  30. * ASM.V ASGMF.PK (AVINO SILVER)       33.2 up --will own 49%-100% of the Avino +4 other silver props.
  31. UNCN.OB (UNICO INC)                              70.6 down --lease on largest property, expriesSept 1 2004.
* = I own shares

In the chart above, since last week, 12 stocks were up, 1 was even, and 18 were down. 

Next list: 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)             --A PRODUCER (gold bonus) cash rich.
  2. MGR.V MGRSF.PK (MEXGOLD RSCS)       -- 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) --A PRODUCER of a dore silver bar 96% silver, 4% gold
  10. * NPG.V NVPGF.PK (NEVADA PAC GOLD)   Large "exploration potential"  (owns 1 silver & 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)  --A PRODUCER Modernized a former producer. Acquiring properties.
  13. BZA.V ABZGF.PK (AMER BONANZA)
This next list has silver exploration companies with market caps under about $30 million
(Market cap = total number of shares fully diluted, times the share price.  It's what the company is "worth" in the market place, given the stock price, and is one of the important numbers I calculate each week in these lists.)
  1. ECU.V ECUXF.PK (ECU SILVER MINI)      --50% gold bonus
  2. IAU.V ITDXF.PK (INTREPID MINRLS)  "exploration potential"
  3. CAUCF.PK (CALEDON RES)
  4. MAI.V MNEAF.OB (MINERA ANDES)      (gold bonus)
  5. * EDR.V EDRGF.PK (ENDEAVOUR GOLD)  A PRODUCER (I could not yet find a listing of resources or reserves)
  6. * CBE.V CBEFF.PK (CABO MINING) --Historic Silver and Cobalt district
  7. QTA.V QURAF.PK (QUATERRA RES)
  8. EPZ.V ESPZF.PK (ESPERANZA SILVR)
  9. PXI.V  PNXPF.PK (Planet Exploration Inc.)
  10. SDR.V SDURF.PK (STROUD RSCS)
  11. APM.V  (Amerix Precious Metals Corp) (NEW BULLET GP)
This next list has silver exploration companies with market caps under about $15 million
  1. NJMC.OB (NEW JERSEY MIN)
  2. MAG.V MSLRF.PK (MAG SILVER)
  3. EXN.V EXLLF.PK (EXCELLON RSCS)
  4. * KG.V KDKGF.PK (KLONDIKE GOLD)
  5. SML.V SMLZF.PK (STEALTH MNRLS)
  6. SRY.V (STINGRAY RSCS)
  7. DNI.V DMNKF.PK (DUMONT NICKEL)            exploring Clifton's property
  8. * KRE.V KREKF.PK (KENRICH ESKAY)
  9. BCM.V BCEKF.PK (BEAR CRK MINING)
  10. * CMA.V CRMXF.OB (CREAM MINERALS) Low grade, large "exploration potential"
  11. MMG.V MMEEF.PK (MCMILLAN GOLD)
  12. CHMN.PK (CHESTER MINING)
  13. GPR.V GPRLF.PK (GREAT PANTHER)
This next list has silver exploration companies with market caps under about $7 million dollars:
  1. ROK.V ROCAF.PK (ROCA MINES INC)
  2. EGD.V EGDMF.PK (ENERGOLD MINING)
  3. GNG.V  GGTHF.PK (GOLDEN GOLIATH)  --Historic silver district in Mexico
  4. LEG.V LEGCF.PK (LATEEGRA RSCS)
  5. TBLC.PK (TIMBERLINE RES)
  6. * AUN.V AUNFF.PK (AURCANA CORP)
  7. TUO.V TEUTF.PK (TEUTON RES)
This next list has silver exploration companies with market caps under about $4 million dollars: (The real "penny stocks" are those with the smallest market caps, not the lowest share price!)
  1. PDO.V (PORTAL DE ORO RS)
  2. PCM.V PAOCF.PK (PAC COMOX RES)
  3. BGS.V BLDGF.PK (BALLAD GLD SLVR)
  4. GRG.V (GOLDEN ARROW RESC)          IMR.V spin-off. $3.6  mil MC, 35 properties
  5. ASLM.PK (AMER SILVER MINI)
  6. BBR.V BBRRF.PK (BRETT RES)
  7. MTB.V (Mountain Boy Minerals Ltd)
  8. CLZ.V (Canasil Resources Inc)
  9. LSM.V LASCF.PK (Langis Silver & Cobalt Mining Co Ltd)
  10. 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 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.  The resource calculation number is 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.
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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):  

Most of those stocks that were up this week in the first chart of 31 stocks had greater leverage to the silver price, with more ounces in the ground than the rest.  The largest market cap stocks, that are considered the "bellweather" stocks, were down.  I don't think you can use the performance of the overvalued silver stocks as an indicator of where investor sentiment lies regarding silver.  I think the good performance this week among the small cap stocks, that are supposedly more risky, and with greater upside potential, goes to show that the silver bullion price is likely to continue going up.  If we see a really strong move up in these silver junior stocks, say, to where they are all priced where you can hardly buy title to more than 20 ounces of silver in the ground with an ounce of silver's worth of stock, then I think we will see a very strong move up in silver, exceeding $8.40 again. 

Then again, silver might lead the way.  I say that's possible for two reasons.  First, people may not believe that silver will head higher until it breaches $8.40, the recent top.  In that case, investors may avoid the silver stocks for a while.   This was the pattern in the gold stocks in early 2003, where gold led the way, and the stocks held back, as if investors remained in disbelief of the continuing gold bull. 

But then again, part of what was responsible for the lull in gold stocks was the strength of the S.A. Rand, and the strength in the Canadian dollar, and the strength of the Aussie dollar, and the rise in commodity prices, all of which reduced profits of gold miners overseas, as the dollar weakened against gold.  While such currency issues may have an affect on overseas silver explorers in Mexico, Peru, Canada, and Argentina, such currency issues will not be a factor in the silver market among domestic explorers, such as in Cour d'Alene, Montanna, or Nevada.  It's something to watch out for as the silver bull market continues, especially if due to the falling dollar.

Also, it might be possible that silver gets all the press, and the silver stocks remain undiscovered by the masses.  I'm trying to prevent that, by making this silver report freely available. 

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This week, I was interviewed on the Radio by Victor Adair on "Money Talks" at cknw.com radio, that went out over Western Canada  You can listen to the broadcast at http://www.cknw.com/audiovault/audiovault.cfm  Select Aug 2, Monday, 6:00 pm.  When the show pops up, advance forward to the time:16:40.  I was on for about 10 minutes.  I went over the basic reasons why silver will outperform gold: the short supply of above ground refined silver, the deficit, the lack of current monetary demand, and the return of monetary demand, the huge size of the bond market that is paying 1% returns, and the tiny sized of the silver market that has grown over 50% in the last year.  I gave a silver price expectation, up to $13-35 or so in the next two years, to ultimately over $2000/oz if we return to using silver as money.  I briefly mentioned my methodology in this report, that I buy stocks for the leverage, the more ounces in the ground more cheaply, the better.  I also mentioned Sterling mining, that acquired the Sunshine mine, a company story that is briefly mentioned at goldismoney.com.  I goofed, saying they have "over 130 million" ounces in resources, it's actually over 180 mil oz. in resources at the Sunshine, and perhaps up to 550 mil oz. all total.  Finally, I say I believe that people should buy silver bullion first for the safety, and stocks next, only if they have the available time to devote to study silver stocks.   And, I mention that I offer the "look at my portfolio" if people are interested in stock tips. 

So, what was the marketing result of this interview?  Two signups on Monday.  Oh boy!  Maybe my webmasters won't quit!

But that's better than 0-1 per week as it has been for months now since the silver price collapsed.  But this reduced investor interest goes to show the price is not likely to collapse downward from here, because investor interest could hardly be any lower.   Just this week, with the silver price moving up again, investors are just beginning to look at silver again--as is also evidenced in the good performance among the silver juniors. 

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The Anglo Far East Bullion company has offered me a service.  They will be hosting a conference call titled, "SILVER'S EXPLOSIVE FUTURE" with Jason Hommel. (August 27th at 6.00 PM west coast Pacific time) --available to the first 200 people who register at
http://www.anglofareast.com/teleconference.html

The Anglo Far East Bullion company is also working on a web-broadcaster for the call so that it can be available live
on-line and are hoping that this maybe will be available in time for this month's call. 

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About a year and a half ago, in Jan 2003, when I first began writing about the potential of gold to reach in excess of $30,000/oz., the biggest objections were not that such a figure would be impossible.  Many agreed with me that the gold price may exceed infinity dollars per ounce as the dollar dies out and paper money fails completely. 

The main objection that I had the most difficulty in answering was a series of fears about the government.  People were scared of confiscation.   Many people were terrified that if gold rose "too much", that a mysterious "they" would simply come and steal it away, and thus, "there was no point in investing in gold at all".  But they fail to realize the ongoing confiscation of inflation.  Silver and gold that you own is the only thing you can buy to protect yourself from government confiscation!

Or, they feared that if their stocks gained too much, that the mines would be "nationalized", or their portfolios seized.  That's how demoralized people had become!  Today, people are disinterested, or discouraged, but not nearly so demoralized.  Today, many silver investors are rather spirited--many having recently written to the CFTC and Eliot Spitzer to demand that they watch or investigate the excessive paper shorting of silver at the COMEX.  Today, the paper shorts are probably more afraid than bullion investors.

And yet, some people, even today, continue to think that "the Fed is in control" or that "the silver price will not move up until the manipulation ends".  Or that "they won't let it rise."

But, recently, fears have diminished.  Few write to me about it anymore.  I can partly see why.  Gains have been realized across a wide spectrum of silver stocks, which, as a group, were up 314% in 2003.  There were at least ten gold or silver stocks that went up ten fold in 2003.  How can people say that "they will come and take it all away if we have 100% gains" after there have been many cases where 1000% gains have been safely realized?

But let me rebuke such fears anyway, as I have finally realized the problem with the confiscation fears, and the fears of manipulation or government control.  Yes, it took me about a year and a half to realize this, and I realized it this week:  Such fears are due to disobedience to God!  God has commanded us to not fear men, it's as simple as that! 

Matthew 10:28  "And fear not them which kill the body, but are not able to kill the soul: but rather fear him which is able to destroy both soul and body in hell."

Hebrews 13:6 So that we may boldly say, The Lord is my helper, and I will not fear what man shall do unto me.

Can we really have no fear of men who can kill the body?  The answer is simple:  as Christians, we have the resurrection hope!  Jesus died for us, and was raised to life to immortality, to prove that we, too can live forever!  This should give all Christians boldness to stand for truth and righteousness, and against all lies and deception, even in the face of death.  If you cannot maintian your faith and testimony in the face of a death threat, you are not a Christian.
Luke 12:8 Also I say unto you, Whosoever shall confess me before men, him shall the Son of man also confess before the angels of God:
Luke 12:9 But he that denieth me before men shall be denied before the angels of God.

These people who fear government more than God... who would rather keep their money in paper assets such as bonds paying 1% rather than gold or silver that have moved up over 50%...  well, they are being disobedient to God.  We ought to fear God more than governments.  And this means we must obey God first, in all things.  And what sort of things has God said about paper money?  Quite a lot!  For God has also said that unjust weights and measures are an abomination, and he has told us to not be usurers. 

Leviticus 19:35  Ye shall do no unrighteousness in judgment, in meteyard, in weight, or in measure.

Proverbs 20:10  Divers weights, and divers measures, both of them are alike abomination to the LORD.

Deuteronomy 25:15  But thou shalt have a perfect and just weight, a perfect and just measure shalt thou have: that thy days may be lengthened in the land which the LORD thy God giveth thee.

Luke 6:35  But love your enemies, do good to them, and lend to them without expecting to get anything back. Then your reward will be great…

Deuteronomy 23:19  Thou shalt not lend upon usury to thy brother; usury of money, usury of victuals, usury of any thing that is lent upon usury:

I find Deut 25:15 particularly interesting, because it implies long life is a result of using just weights and measures.  Today, we have the failing social security system, and when it fails, many old people will lose everything, and have no support system, all because during their entire lives, they have turned away from using honest weights and measures. What's worse is that younger people may resent them, because the younger people were enslaved to support the dishonest system, and the younger people will also lose out on their benefits that they paid into the system.  Yet it is not too late for the older generation who are still alive.  The old people can repent, and buy gold and silver, and in doing so, they will prolong their lives, because old people who can no longer work due to infirmity are faced with two crucial choices on how to survive.  Either live on savings, or charity of others!  Their savings must survive if they are to survive!

Bondholders are thus are guilty on two counts (as usurers of unjust weights and measures), if not three (if they fear of government confiscation of gold)! 

Those who fear government more than God are literally worshipping government as God!  Think about that!  We should not percieve government (or those who create paper money) as all-knowing and all-powerful.  Only God is all-knowing and all-powerful.  And furthermore, God is in control of governments on earth, governments are not in control of us!  We only need to obey the government, as long as they are not commanding us to break the laws of God!

Daniel 4:17 This matter is by the decree of the watchers, and the demand by the word of the holy ones: to the intent that the living may know that the most High ruleth in the kingdom of men, and giveth it to whomsoever he will, and setteth up over it the basest of men.

Acts 4:18 And they called them, and commanded them not to speak at all nor teach in the name of Jesus.
19  But Peter and John answered and said unto them, Whether it be right in the sight of God to hearken unto you more than unto God, judge ye.
20  For we cannot but speak the things which we have seen and heard.
21  So when they had further threatened them, they let them go, finding nothing how they might punish them, because of the people: for all men glorified God for that which was done.

Now, let me tell you the most clear proof that those who create paper money are not in control!  (Besides the fact that I mentioned recently about how the gold price has exploded in price in dollars in 1933 and in 1971-80.)

They don't own the silver exploration companies!  The companies are mostly owned by the people who run them.  In most cases, the presidents and principles own from 10-50% of the exploration companies.  The rest is often very tightly held stock, owned by people close to the companies. 

The large multinational banks never invested in the silver stock sector.  Yet, the gold market bottomed out in 1999-2001.  Now, it's 2004!  The big boys who are supposedly so much "in control", have not yet arrived at the party!  Three to five years late!  If they are so "in control" that they created the bottom, then why didn't they buy all the silver and gold exploration stocks in the world at the bottom that they created?  Why did they miss out on the 314% gains in 2003?  Where are they?  How come they are not in control of the silver junior exploration companies?  The total market cap of the entire sector is still a mere $8 billion.  The Federal Reserve sometimes adds $50 billion to the economy in a single day.  It added $7 billion today.  And they don't own the silver stocks.  Imagine that!  And think of the implications!  It proves they are not in control.

And if you are a God fearing person, you should not fear governments.  Because God allows governments to be in control so that they can restrain and punish the wicked.  (Romans 13).  And so what if the government "comes for me" because I advocate bullion, and say that their paper money is evil?  I will be ready to give a testimony to them, and ready to give Godly advice to help out the economy and the people of the nation.

And now I must apologize.  For too long I have avoided mentioning scriptural topics so very important to the topic of gold and silver.  Why?  Because I feared censorship at financial websites, link partners, and potential business partners.  At one point, Nasdaq was going to subscribe to my affiliate program, and advertise goldismoney.com from their main page, but they declined when they saw a link to bibleprophesy.org.   So, for a while, I figured that business success would only come if I tried to tone down Bible references.  I also feared that people would unsubscribe to my report.  I'm sorry.

Ninety percent or more of the people of the USA say they do believe in God.  We Christians are in the vast majority, even if we are not always the most faithful or obedient.  For those who are so offended by any mention of Chrisitianity, that they would unsubscribe, well, they are idiots, twofold, who are shooting themselves in both feet!  Even an atheist or a Jew should take a keen interest in what the Bible (and New Testament) says, because he ought to know what that Christian majority's religion has to say!  After all, we are a rather large market force, and you never know when Christians as a group will start to grow more faithful to their religion!  Well, actually, you can know when.  Christians tend to turn to God when they fall on hard times, financially.   Thus, in a collapse, we will be very likely to start to buy lots and lots of gold and silver, and start to remember what the Bible says. 

And this silver stock report is the most comprehensive anywhere to be found. 

So they better pay attention!

And given our tradition of "freedom of speech and religion" in the USA; I have a right to say what I believe is important in the Bible regarding money, gold and silver.

If you want to unsubscribe, here is the link:
http://www.goldismoney.com/subscription-ss.php

The Bible says I should not cast my pearls before swine anyway, so let them unsubscribe.  That's my boldness for the faith!  Besides, I'm tired of reading the negative complaints and comments anyway.

Thank you to my many Christian readers, who have encouraged me to speak and stand more boldly for our faith!
 -----------------

Speaking of how they "control" silver and gold prices... I've often wondered why the billionaires and multi-millionaires of the world "just don't get it" regarding gold and silver.  Don't they realize the facts of the situation?  Probably not.  I believe these people who have mountains of paper wealth are lied to about the supply of gold and silver.  I think that they are told that the U.S. government has perhaps not 8000 official ounces of gold, but rather, 120,000 ounces of gold or more.  I think this is just a big lie to try and keep these people holding their paper money. 

After all, the gold price did explode twice in recent history, in 1933, and in 1971-80.  And the price will likely explode again.  The bottom line is that paper money, unbacked by gold, is a lie!  That's the lie, and it's an open lie, yet people refuse to see it.

Here is another reason I think "they" don't have a huge mysterious supply of gold and silver.  The Northwest Territorial Mint has two bullion offices in the Pentagon, in order to sell bullion products to them.  If the Pentagon is a buyer, there is not likely a huge mysterious mountain of gold that is off the balance sheets. 

If anything, GATA is right, the governments of the world have much less gold than they officially claim.  GATA says that of the 30,000 tonnes of gold in official government vaults, there is likely 16,000 tonnes missing, as they have been leased out.  Why would the U.S. government have to pressure various nations into selling and leasing their gold hoards, and then reward them after they do so, if we had a mysterious secret hoard of our own?  If the U.S. government has so much gold that they are afraid to sell it on the open market, which would destroy the price, then why are they pressuring nations to lease their gold at 1%???  The lie that they have huge mysterious supplies makes no sense!  Only the continual leasing of gold from central bank vaults explains how the supply/demand deficit is met each year in the gold market.  All the facts show that there is no mysteriously large gold hoard.

The rumors of a large gold hoard are the same old banker's trick.  They put a few gold coins on top of a barrel, and lie and say the entire barrel is full, in order to stave off the bank runs that would not only ruin them financially, but perhaps lead to their hanging!

So, we ought not to be scared of them.  They ought to be scared of us, and God.  After all, God is not on their side.  He's on our side.  And if God is with us, who can be against us?

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

Wheaton River is spinning off their silver properties.  IMA Exploration also recently spun off their silver properties.  I think this is a trend that reflects the fact that investors are tending to pay more for silver stocks than gold stocks.  And why are investors doing this?  I believe investors are paying the high price because they strongly expect the silver price to rise more than the gold price--as I do, too. 

This week, I wrote an essay for gold-eagle.com after it was brought to my attention by vronsky that the gold/silver ratio just broke out of a narrow range to a new high (since the last run up to $8.40).  See my article here:
Silver vs. Gold
Jason Hommel
http://www.gold-eagle.com/editorials_04/hommel080104.html

Key Excerpt:
The value investor rightfully asks himself, "How can silver become less valuable than today's prices, when it is in short supply above ground in refined form, and when more silver is consumed each year than mined, and when there is already less than zero monetary demand due to irrational investor selling?" It cannot go down! The trend cannot continue. It must reverse course. True value must assert itself. And when true value is restored, which is partly determined by the fundamental factor of scarcity, and people recognizing that scarcity, which is what made gold more valuable than silver in the first place, then perhaps silver will be more valuable than gold! Perhaps such conditions will last for an entire generation, or at least until the above ground supply of refined silver exceeds that of gold!


--------------------
Adam Hamilton noticed the continuing uptrend in silver prices, and today came out with an article called
Silver's New Upleg
http://www.gold-eagle.com/gold_digest_04/hamilton080604.html

It looks to me like silver is beginning to curve upward, not trend upward on a line.  Thus, the silver price may accelerate upwards rather quickly, perhaps in the general shape of one side of a parabola.

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

Last week, I wrote my second article that clearly explains why patents, copyrights, and trademarks are contrary to free market principles that every gold and silver miner already understands.  Why do the gold and silver miners "get it", and why did I bring up this controversial topic?  Because miners cannot copyright or patent the products they produce!  Silver and gold cannot be patented or copyrighted.  Nobody has a monopoly to produce gold or silver, and nobody ever will.

I believe this to be an important issue regarding understanding the nature of silver, and the nature of the silver mining business--and you should always understand the product you are investing in!  If you only want to invest in businesses that depend on a patents, copyrights, or trademarks to survive, then you should sell all your silver and your silver stocks.

Society does not need patents and copyrights to create an incentive to produce!  The profit potential, which is available in the free market, gives the incentive to produce.  And the free market is the best way to direct mankind to produce what society needs the most.  The free market is smarter than any central government planners could ever be.  The free market is just, fair, honest, and rewards those who serve society's needs the most.

Why will silver stock investors be rewarded? Because society needs silver.  The world is consuming close to 900 million ounces of silver per year, and is producing just under 600 million ounces per year.  This is unsustainable, and we silver investors will be helping society to meet their needs. 

Anyone who wants to further discuss or research the merits and evils of patent and copyright law is encouraged to visit the following links:

 Kinsella: Intellectual Property Information
Patents Are An Economic Absurdity
Intellectual property : What, why and how ?
The Libertarian Case Against Intellectual Property Rights
cni-copyright: Re: Articles, Books Against Copyright, Trademark, Patent
Directory for Intellectual Property from Free-Market.Net: The Freedom Network

Some people have wondered how I can be against copyright since I'm a writer.  Easy.  I want as many people to be able to read my material as possible.  I always give permission to anyone to use any of my past articles.  In fact, you don't even need to ask me, just take, and copy!

Here is a great example of someone copying some of my work:  It's an e-bay ad for silver bars that copied and added one of my essays on silver!

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&category=3361&item=3924423647&rd=1

I don't know if the link will remain active, since the time will have run out by tonight.  This particular auction was done in a very unique way.  Normally, if you sell silver on e-bay, there is a slight risk that you will sell your silver under the spot price for two reasons.  First, your item up for auction may not be seen by enough people.  Second, the silver price may take off, and the bid price for your item may get left behind.  In this ad, the seller found a way around that problem:  The bid for the silver bars was a "bid on premium"!  The ad said:

You are bidding on PREMIUM. If you bid $0.99 then PREMIUM = $0.99
Winner pays PREMIUM + NEW YORK SPOT PRICE per OUNCE.
ONE LOT - Example:

 Premium = $0.99 x100oz = $99 + $655(ny spot) = $754.00 TOTAL w/ FREE SHIPPING.

Let me be abundantly clear.  Please copy my work and/or essays if you feel it may help you in your business to sell silver or gold!

You can even round up a collection of my past essays, and give them away for free, charge less than me, or charge more than me.  Go for it!  Just do it!  Quote my name or not, quote my website or not.  Go ahead and altar, improve, or change the works as you see fit.
------------------

I'm very bullish on silver stocks and silver, and I have about 16% of my portfolio in silver bullion, and the rest in silver stocks.  However, stocks are not for everybody, and I'll tell you why not.  If you don't have the time, or if you don't have enough money, the stocks are not for you.  Stocks are risky, and can go bankrupt, or lose 75% to 95% of their value.  Silver is safe.  The less money you have to invest, the safer you probably need to keep it.   Silver cannot go to zero value, and silver stocks can.

Here is a letter I recently received that is worth sharing:
I am a complete novice when it comes to stocks. However I have been thinking about investing for
quite some time; I didn't have the money before. But I am in a position where I can invest $500 (a modest amount, I realize).

I've been listening to a weekly radio show on investments, and 'silver' is being profiled quite a bit. I went on the net and read what you wrote on silver. Although it's a bit too much for me to process, it has inspired me to write to you for advice on where to put this $500.

I realize that investments always carry and degree of risk, and would certainly not hold you to anything should it not prove profitable for me.

What say you?

My reply:  Very good question.

Given the size of your money, I would avoid the stocks, and put it into silver bullion from a local dealer.

$500 is the absolute minimum to open a brokerage account, and they will charge you a $30 commission to buy and sell, which is over 10%.

You would do better to get silver itself.

You also do not have the expertise, nor time, to study about stocks, nor do you have the ability to risk losing 100% of your money.

Stocks are so risky, you should diversify into about ten of them.  If you did that, you'd pay a total of $30 commission each, both in and out, which would be $600! 

Your time would be better spent in trying to make more money, even a low paying job, such as getting a second job at McDonald's in the evenings.

After you have about $10,000 in bullion, then consider the stocks.

------------------
My answer may have seemed a bit harsh, but it's the truth.  People want the stocks for the leverage, but if you don't know what you are doing, it's too risky.  What if this person put it into Barrick, and the stock goes under due to hedging?  What if they pick a highly leveraged explorer who fails to raise the necessary capital and the drilling strikes out, and the stock loses 80-100%? 

Silver alone outperformed many of the silver stocks--probably also on average, since about January 2004!  So who is to say that the stocks will always outperform?  --They may not! 

Some silver investors choose to buy CDE or HL, two popular silver stocks on the NYSE.  They reason within themselves that investors will buy those stocks first, because they are well known.  They forget to look at value.  Silver bullion is probably much more well known, and I think, a better value than CDE or HL!

But let's assume that you need to have a bit of knowledge first, to begin playing around with stocks.  How much time should you spend on stocks to make it worth your time?  Perhaps at least an hour or two, per company on this list, over a month.  That's 200 hours or so.  --Before you make your first investment! 

But what is 200 hours in a month?  That's 50 hours a week!   You'd have to quit your job to do it right!  Can you afford that?  If not, then perhaps stocks are not something you should pick as an investment vehicle. 

And what is the expected return from the silver stocks?  At this point, I expect perhaps 100-300% more in a year or two, over silver itself?  So, how much money do you need to invest to be able to earn more than a minimal $10 per hour?  Well, you'd need to earn at least $2000 from your investing "work" to have it pay you at least $10/hour. 

This list is long and intimidating on purpose.  Stay out of the stocks if you don't know what you are doing.  Invest in silver, instead. 

A bullion investor has really just one concern:  Buy silver at the lowest possible price.  That's it.  It's not rocket science, it's called shopping around, and it takes some work.  One suggestion is to advertise that you are buying, and to buy from the public.

This list is a guide, and a time saver.  It may help you to cut down on the time you should really need to do in order to do your due diligence.  But you really should visit the company's websites, email them, and call them, before you invest. 
------------------
On Tuesday, many silver stocks were up HUGE percentages on very little volume.  Check out these numbers!

Symbol:        date    share price    change    volume   volume in USD:

FSLVF.PK    Aug 3    1.64    0.00    +8.11%    38,000    $62,000
TM.V        Aug 3    1.25    +0.14    +12.61%    139,300    $130,000
SVL.V        Aug 3    0.94    +0.18    +23.68%    65,300    $46,000
ABMBF.PK    Aug 3    0.145    0.00    +16.00%    150    $21 dollars!
HDA.V        Aug 3    0.57    +0.24    +72.73%    113,000    $48,000
CDU.V        Aug 3    2.90    +0.50    +20.83%    119,275    $259,000
AOT.V        Aug 3    0.38    +0.06    +18.75%    95,000    $27,000
ECU.V        Aug 3    0.37    +0.05    +15.62%    513,520    $142,000
CMA.V        Aug 3    0.35    +0.05    +16.67%    10,000    $2,600
CHMN.PK        Aug 3    4.00    +0.75    +23.08%    2,000    $8,000

For Tuesday, Aug. 3rd!

Look at one of them, ABMBF.PK!  UP 16% on volume of 150 shares worth twenty one dollars!  Amazing!

------------------
Last week, David Morgan released some very important information about silver to the public in an article that appeared at gold-eagle.com.

http://www.gold-eagle.com/editorials_04/morgan080204.html

Key excerpt:

There have been a few essays on the www.FreeMarketNews.com website of which I am a director. Most of these essays were concerned with China. The very fact that China is hosting the Third Annual China International Silver Conference in late October this year should give any thinking person pause for reflection. Go to www.silver-china.cn/en/

Another interesting point is what I learned about the real Chinese silver views at the Silver and Zinc conference early this year. It must be pointed out that China is devoting a great deal of time money and energy to study silver.

The Silver Institute has kept us well informed about the real Chinese silver story, yet many investors “feel” China is the exporter of silver at all costs. Readers of the Silver Investor have a completely different analysis and sorry Internet readers these people pay us for our research and will do not give it all away for free. I will give you a hint however, just because a commodity lands on the dock on a given day, it does NOT mean that the price on day is the price received.

Moving on to something interesting about China I ran across in my research this past month. An article titled: “The Chinese Silver Standard Economy and The 1929 Great Depression”

This paper was written by Cheng-Chun Lai and Joshua Jr-Shiang Gau, Mr. Lai from the National Tsing Hau University and Mr. Gau Directorate-General of Budget, Accounting and Statistics-Taiwan. I will not go into any detail about this report other in this domain other than to paraphrase the authors, which state the following.

It is often argued that the silver standard insulated the Chinese economy for the Great Depression that prevailed in the gold standard countries during the period 1929-1935. The general argument that the silver standard was a lifeboat to the Chinese economy remains defensible.

The Silver Investor has [received] more questions about how silver does during a depression than probably all other questions combined. Therefore, we suggest that any serious silver student look up Blackwell Publishing Asia and read the referenced article.

http://www.blackwellpublishingasia.com/

I want to emphasize to my readers that this information from David Morgan is extremely important, and very bullish for silver. 

I'm a subscriber of David Morgan's newsletter, and I suggest that my readers who really want to know about silver, should also subscribe at http://www.silver-investor.com

----------------
I'm a raving, unapologetic, confident silver bull.  Very, very bullish.  $2000/oz. or more!  "To infinity and beyond!" 

Now, some people take this and they assume and falsely accuse the worst.  They say I'm a shrill for the banks, helping them lure people into buying silver futures contracts, where people recently got slaughtered in the recent price drop.  That is utterly ridiculous!  There are people who are so afraid, they see ghosts under every rock.  So paranoid, that everyone is out to get them.  I've always rebuked participation in buying paper futures contracts.  I've rebuked it morally, religiously, and practically.  I've never bought futures contracts, and never advocated buying them.  And I don't work for the banks.  I work for God, myself, and you.  Frankly, the banks could not afford me, anyway.  I make too much from the capital appreciation of my own portfolio! 

Every week I link to Ted Butler's work denoucing paper futures contracts as a game of manipluation.  Every week, I link to my own article, my prior essay, "The Moral Failures of the Paper Longs".  This takes up space and make the report longer.  But it is that important--totally vital to the entire issue and understanding of silver. 

Silver and gold do not expire!  Paper does!  Silver and gold are not promises to pay, they are payment in full.  Silver and gold cannot default and go to zero, all paper always has. 

----------------
On a recent trip to the NY gold show, I stopped by the famous brass bull near Wall Street, late at night, and had my picture taken.  It's a bit fuzzy, but it's a cool picture. Possible captions for the picture? I'm a silver bull!  I've got the bull by the horns!  I don't know, just having some fun.
http://www.goldismoney.com/bull.jpg

----------------
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 unique position... then the best way for me to share this with you is to is tell you more precisely 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.  It includes which stocks are 9% and more of my portfolio, those between 9% and 6%, under 6%, under 3%, and under 1%.

To order: http://www.goldismoney.com/articles.php

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.

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

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/

-------------------
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. 

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

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

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/

25 Reasons why the Sound Money Bill Must Be Supported
by Jason Hommel

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 !

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! 

--------------------------
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 are in silver 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.

----------------------------
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
  $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.
            $526,000,000: 52.6 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.

Contact the company.  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.

Beware of scammers.  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 started an initial valuation process of the following silver companies to guide 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 57 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 silver alone: 2.7 Billion market cap.
 -------------- -------------- --------------

ABX (Barrick)
http://www.barrick.com/
535 million shares outstanding (1 Q 2004)
@ $18.86/share
$10,090 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 "unhedge".
--reportedly, they plan to deliver 1/3 of 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."
$10,090 million Market Cap / 1710 mil oz. = $5.90/oz. silver
You may get "approx" 1.14 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 expect silver bullion to continue to outperform ABX stock at these prices.   I don't really count Barrick as a silver company... Let me be abundantly clear.  I primarily list Barrick to show how poorly it compares to all the rest, and to help show how much better the rest compare.  This is a "comparative valuations" report, after all.

IPOAF.PK (INDUSTL PENOLES)
http://www.penoles.com.mx
397.5 mil shares outstanding (2003 annual, unchanged since 2001)
@ $3.85/share
$1530 mil MC
419 proven and probable reserves of silver (from 2002 annual report on website)
$1530 mil MC / 419 oz. silver = $3.65/oz.
You get "approx" 1.84 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 (Net earnings of $342.5 million 1 Q 2004)

The word late Feb. 2004 from ECU Mini, who reported to lemetropolecafe.com, is that Penoles hedged silver at low prices.  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."

From 2003 annual statement, by Dec 31, 2003, Penoles hedged 1.5 million ounces of silver at $5.31/oz.  That looks to be a bad bet, but easily coverable for Penoles.  They bought an option to sell (put) 17 million ounces of silver at 4.94.  Another bad bet.  Totally wasted money, it appears to me.  They also have an option to buy 8.5 million ounces (call) at $5.53.  Not bad.  Such hedging practices, win or lose, make it more difficult for investors to know and guess the current operational state of the company.  Who knows whether Penoles will lock in more silver, and take away the upside potential profitability for shareholders, or even waste money on put options that will never be exercised.

Whether Penoles hedged an entire 2 years worth of production by Feb, 2004, I don't know, and remains to be seen.  Penoles also engages in hedging dollars in the foreign exchane markets, further complicating matters.

77 million oz. silver refined by the metals division in 2003, and 1 mil oz. gold.
They probably refine almost all the silver that comes out of Mexico.
They produce about 48 mil oz. of silver from their mines 2003, 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.

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
@ $3.31/share
$708 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."
July 15th, 2004:  Cour Presents Resources in Cdn 43-101 form:
http://biz.yahoo.com/cnw/040715/id_coeur_d_alene_mine_1.html
Total of proven & probable reserves: 175 mil oz. silver, 1.4 mil oz. gold.  Total silver equiv: 189 mil oz.
Total of measured, indicated, and inferred resources:  76 mil oz. silver, 1.4 mil oz. gold.  Total silver equiv: 90 mil oz.
(This increases the number from 189 mil to 279 mil oz. silver).  Before, Cour was not reporting any resources, only reserves.)
(Produced 14.2 mil oz. silver in latest fiscal year (early 2004)
$708 mil MC / 279 mil oz = $2.54/oz.
You get "approx" 2.65 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,