Silver
Stocks--Comparative Valuations
Weekly Report # 46
FRIDAY, August 13th, 2004
A day's wage used to be a silver dime, 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, real
wealth, and cannot go to zero value. 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 silver 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.
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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
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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 $6.60/oz. as of Friday, 2:10 PM West Coast US, which
was used to calculate the following
figures. The CAN $ / US $ conversion factor is
.7640. 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.
- ABX
(BARRICK)
1.1 even --producer, hedger (15? mil oz. gold
hedged, 3 yrs production)
- IPOAF.PK (INDUSTL PENOLES) 1.8 even --producer, mostly family owned, hedged?
- CDE (COEUR D'ALENE)
2.7 even
--producer (also gold) in debt,
produces at a loss.
- SIL (APEX SILVER)
3.5 up --zinc
bonus, low grades, cash rich--$345 million! in debt
- FSR.TO FSLVF.PK (FIRST SILVER)
4.4 up --producer, (not profitable '03 3rd
q.) unhedged
- PAAS (PAN AMERICAN SILVER) 5.2 up --producer, debt free, may hedge to develop
- GRS GAM.TO (GAMMON LAKE)
5.3 way down --producer, owns 26%
of
Mexgold
- MFN MFL.TO (MINEFINDERS)
5.3 way down --significant gold bonus, $35 mil cash
on hand.
- CFTN.PK (CLIFTON MINING)
5.6 down -- (135 EXPT) (colloidal
silver product bonus)
- KBR.TO KBRRF.PK (KIMBER RSCS) 5.8 down --one property, high grades, with
exploration potential.
- * TM.V TUMIF.OB (TUMI RSCS)
7.0 down -- (14 EXPT) recent bonanza grade silver
discovery
- WTZ WTC.TO (WESTERN SILVER) 7.3 even -- (25 EXPT) large mine development cost.
copper & zinc bonus
- SSRI SSO.V (SILVER STANDARD)
7.6 up --large
company,
many properties, owns silver
bullion
- CZN.TO CZICF.PK (CDN ZINC)
10.7 down --large zinc bonus, high grades, low start
up
costs, great
EXPT
- SHSH.PK (SHOSHONE SILVER)
10.8 up --leased properties; need payments; in Cour
d'Alene
- ORM.V OREXF.PK (OREMEX RES) 11.5 down (47 EXPT)
- SRLM.PK (STERLING
MINING)
13.2 up --(31 EXPT) acquired the Sunshine
in Cour
d'Alene
- FAN.TO FRLLF.PK (FARALLON RSCS)
14.4 down --(24 EXPT) low grades, silver 1/3;
also gold & zinc bonus.
- CHD.V CHDSF.PK (CHARIOT RSCS) 15.8 down --explorer, with inferred
resources
- HDA.V (HUSIF.PK) (HULDRA SILVER) 16.7 up --very tiny, zinc bonus, low start up costs.
- ADB.V ADBRF.PK (ADMIRAL BAY)
20.8 up --exploring a silver property
in Mex.
(Huge gas bonus)
- IMR.V
IMXPF.OB (IMA
EXPL)
20.9 down --(84 EXPT) explorer in Argentina
- RDV.TO RDFVF.PK (REDCORP VEN)
21.0 down --60% gold bonus
- GGC.V GGCRF.PK (GENCO RECS)
22.3 down --producer in
Mex. Plans to expand and acquire
- * SVL.V STVZF.PK (SILVERCREST)
22.6 down --(44+
EXPT) --(Silver in Honduras, Latin America)
- ABI.V ABMBF.PK (ABCOURT MINES) 25.3 down --large zinc & small gold bonus
- *
MGN (MINES
MGMT)
26.0 up --60% copper bonus (low grades), start up
cost ~ $250
mil
- EXR.V EXPTF.PK (EXPATRIATE)
31.4 down --significant zinc bonus
60%
zinc, 25% silver (got out Atna)
- *
PLE.V (PLEXMAR RES
INC)
32.6 down --just acquired 2 new projects
- * ASM.V ASGMF.PK (AVINO SILVER) 36.8 down --will own 49%-100% of the Avino +4 other silver props.
- UNCN.OB (UNICO INC)
90 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.
- HL (HECLA MINING CO) --A PRODUCER
(gold bonus) cash rich.
- MGR.V MGRSF.PK (MEXGOLD RSCS) -- bonanza grade
discovery on Jan 13th, 2004
- CDU.V CUEAF.PK (CARDERO RSCS)
- AOT.V ASOLF.PK
(ASCOT RSCS) -- owns percentage of Cardero,
CDU.V
- SPM.V
SMNPF.PK (SCORPIO
MINING)
- *
FCO.TO FCACF.PK (FORMATION CAPTL) Cobolt (and Sunshine silver
refinery)
- * OTMN.PK (O.T. MINING) very
large exploration potential
- TVI.TO TVIPF.PK
(TVI PACIFIC) --A PRODUCER of a dore silver bar 96% silver, 4%
gold
- * NPG.V NVPGF.PK (NEVADA PAC GOLD) Large "exploration
potential" (owns 1 silver & 10 gold properties)
- * MMGG.OB
(METALLINE MINE) --zinc/silver (historic high grade silver) (low cost
revolutionary oxide zinc process)
- MCAJF.PK
(MACMIN LTD)
- * FR.V FMJRF.PK
(FIRST MAJESTIC) --A PRODUCER Modernized a former producer. Acquiring
properties.
- 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.)
- ECU.V ECUXF.PK
(ECU SILVER
MINI) --50% gold bonus
- IAU.V ITDXF.PK
(INTREPID MINRLS) "exploration potential"
- MAI.V MNEAF.OB
(MINERA ANDES) (gold bonus)
- * EDR.V
EDRGF.PK (ENDEAVOUR GOLD) A PRODUCER (I could not yet
find a listing of resources or reserves)
- CAUCF.PK
(CALEDON RES)
- * CBE.V CBEFF.PK (CABO MINING)
--Historic Silver and Cobalt district
- SDR.V SDURF.PK
(STROUD RSCS)
- APM.V
(Amerix Precious Metals Corp) (NEW BULLET GP)
- QTA.V QURAF.PK (QUATERRA RES)
- PXI.V
PNXPF.PK (Planet Exploration Inc.)
This next list has silver exploration companies with market caps under about $15 million
- NJMC.OB (NEW
JERSEY MIN)
- EPZ.V ESPZF.PK
(ESPERANZA SILVR)
- MAG.V MSLRF.PK
(MAG SILVER)
- EXN.V EXLLF.PK
(EXCELLON RSCS)
- SRY.V (STINGRAY
RSCS)
- * KG.V KDKGF.PK
(KLONDIKE GOLD)
- SML.V SMLZF.PK
(STEALTH MNRLS)
- DNI.V DMNKF.PK (DUMONT NICKEL)
exploring Clifton's
property
- * KRE.V KREKF.PK (KENRICH ESKAY)
- BCM.V BCEKF.PK
(BEAR CRK MINING)
- * CMA.V
CRMXF.OB (CREAM MINERALS) Low grade, large "exploration potential"
- CHMN.PK
(CHESTER MINING)
- MMG.V MMEEF.PK
(MCMILLAN GOLD)
- GPR.V GPRLF.PK
(GREAT PANTHER)
This next list has silver exploration companies with market caps under about $7 million dollars:
- ROK.V ROCAF.PK
(ROCA MINES INC)
- EGD.V EGDMF.PK
(ENERGOLD MINING)
- GNG.V
GGTHF.PK (GOLDEN GOLIATH) --Historic silver
district in Mexico
- LEG.V LEGCF.PK
(LATEEGRA RSCS)
- TBLC.PK (TIMBERLINE RES)
- 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!)
- PDO.V (PORTAL DE ORO RS)
- * AUN.V
AUNFF.PK (AURCANA CORP)
- ASLM.PK (AMER
SILVER MINI)
- PCM.V PAOCF.PK (PAC
COMOX RES)
- BGS.V BLDGF.PK
(BALLAD GLD SLVR)
- GRG.V (GOLDEN ARROW RESC) IMR.V spin-off. $3.6 mil MC, 35
properties
- MTB.V (Mountain
Boy Minerals Ltd)
- BBR.V BBRRF.PK
(BRETT RES)
- CLZ.V (Canasil Resources Inc)
- LSM.V LASCF.PK
(Langis Silver & Cobalt Mining Co Ltd)
- 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.
___________
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):
The last few weeks, while the silver
price was low, I took the time to focus on some very fundamental and
abstract issues, such as the fact that silver and gold are not
commodities or products that can be patented or
copyrighted. Most people appreciated the way I presented
the issues, but many people also want practical advice they can use
right away. So, what follows is some basic trading advice.
As silver rises in price again,
liquidity and volume of the silver stocks will increase, as many new
people will be drawn to invest in the silver stocks.
Therefore, I thought I should review
some trading advice for my readers (especially the new readers).
I really wanted to go over things that I have found to be particularly
helpful for me regarding trading the silver stocks.
Please note: I trade mostly in
an IRA account, where there are no tax consequences to buying and
selling and trading shares. If your tax situation is different,
you may need to adjust accordingly. I also have a very long-term
view, and a large portfolio. If you will need your money back
soon, or if you have less money, again, you may need to adjust your
views accordingly.
Although it is not my concern, because
my personal situation is different, my guess is that until and unless a
person has at least $5,000 to $10,000 already invested in silver
bullion, and an extra $2000 minimum to invest in silver stocks, then he
should not be buying silver stocks at all. Stocks are for "risk
capital", not one’s personal savings. Save in silver bullion
first; bars and coins, and then, put your extra money out for
investment with other people, into stocks.
If a person is self-employed or has an
irregular income, he will need a larger base of silver, before
investing in stocks. A good rule of thumb to know when to invest
in stocks is if your holdings of silver bullion grow so large that it
would scare you if your home was robbed and your safe broken
into. One main reason to invest in stocks is to diversify, for
the sake of safety, so that if you lose your bullion, you still have
some wealth.
1. Diversify. Please
diversify. If you are buying the very tiny market cap silver
exploration stocks, I really think you should own a minimum of about
ten of them. And if you own ten, you ought to research at least
20. If you are just beginning to buy, and if you have not found
ten yet, but if you are eager to get started, then start with buying
silver bullion. You need to diversify and spread out your silver
stock holdings because stocks and exploration is risky. They say
that only 1 in 1000 exploration projects turns into a mine, and that
this is why many exploration companies will have plenty of
projects. I think that if the silver price is too low, that ratio
of 1/1000 is probably correct, but as the silver price rises, many more
will be turned into mines. If you are going to diversify into ten
companies, you probably don't need any single company to be more than
10-20% of your portfolio. My own personal rule is to never
purchase anything to get it to over 10% of my portfolio (except
silver), but I'm willing to let a stock become a much higher percentage
of my portfolio if the stock performs well. I also try to invest
the most in those stocks that I feel will move up the most. So,
if I think a stock has more potential than the rest of my portfolio, I
will sell anything and everything I can to buy the one with the most
potential--but I'll still put no more than 10% of my portfolio into
anything.
2. Use limit orders when buying
or selling a silver stock. A market order is a way for you to
give your money away. Many people use market orders because it's
easier, and many people are too lazy to do the 7th grade math needed to
place a good order. A market order is when you say you want to
buy or sell 1000 shares at any price, or the market price. But
the silver stocks are so illiquid, there may not be a market
price. Occasionally, the spreads can widen to 40%, or even
70%! MTB.V moved up 40% on low volume, and Huldra moved up 70% on
recent volume.
Be patient when buying or selling, but
not too patient. Get the stock you want, but don't overpay.
Sell the stock you want, but don't sell at the market and push the
price down. Try to sell at the high price, and try to buy at the
low price, (in the bid/ask spread) like a market maker would.
Example: Let's say you want to
invest $2000 U.S. into a stock that has a bid of .51 Cdn and an ask of
.56 Cdn, and you are buying the stock on the pink sheets. First
of all, don't look at the pink sheet price because that price is
usually wrong or outdated; instead, look at the price on the Canadian
markets. Next, check the exchange rate, it's usually .7541 or
something like that. Multiply that number by the Cdn prices so
that you get: .384591 and .422296, which are the US prices for the bid
and ask. If you are very patient, or if you think the stock might
move down to fill your order, you may place a limit order at .38 or
.39, and then wait a few days to a week. If you are in more of a
hurry to get your order filled, and want the stock "today", you'd more
likely place a limit order of .42 to .43. If you have a lot of
money to invest, and you are in a hurry, you can safely assume that
your buying will move up the market, and if your order is not being
filled, you might place a limit order a few cents higher, perhaps 10%
higher, perhaps at .47. Sometimes, you will be fortunate to have
a higher limit order filled at a lower price than your maximum.
Personally, I tend to take the latter approach. I wait, and wait,
and wait until I see a real great deal, and then, I don't worry if I
pay 10% more to get the shares I want, because usually, I figure that
the stock has a more than 50% upside potential anyway, and I don't want
to miss out on the opportunity by the time I strike to buy. I
should probably try to be more patient, but my experience as a larger
trader is that, in retrospect, I would have been better off on some of
my best trades if I was only able to purchase a little more, if even at
a higher price.
3. Never use stop loss
orders. You just can't use stop loss orders in the tiny market
cap silver stocks. First of all, they sector is way too volatile,
meaning, the prices move up and down too much. For example, if
the spread between the bid and the ask (the prices to buy and sell) is
10%, you are likely not going to get your limit order filled unless you
place a limit order at the higher price, as I explained above.
But if you turn around, and then place a stop loss order 10% below your
purchase price, you can lose your stock the same day, as a 10-20% price
move is rather typical.
Personally, I can't use stop loss
orders if I own stock from a private placement and if there is a hold
time on the shares. I'd first have to wait for the hold time to
end. Second, I can't use stop loss orders, because, in many
cases, I have too much money invested. In many of the stocks I
own, the number of shares I own is about 3-5 times the daily volume, or
more. Therefore, when the price drops and the volume shrinks, I
could not sell all my shares even if I wanted to. This factor is
somewhat of a protection for me in this silver bull market, because it
forces me to stay in. (And it also takes me a long time to buy in
to what I want.)
The other reason that stop loss orders
are very bad for you is, again, because of the small volume and lack of
liquidity. If you place a stop loss order that is 30% under the
low price, someone else may come along and sell a mere 100 shares "at
market" in a weak market when there are no bids, in order to move the
price down to your stop loss order price! This is called "running
the stops", and, to my knowledge, is legal. Don't give away your
shares cheaply, and don't advertise that you will sell your shares at a
low price. That's what a stop loss is like, so don't do it.
4. Think about becoming a market
maker. All you need to do is to place two limit orders.
Place a low priced order to buy, and a higher priced order to
sell. Make sure that you have the cash to fill your buy order,
and make sure you have the shares to fill your sell order. And,
as easy as that, you are suddenly a market maker, one of the guys who
creates the "spread" for a stock. There may be very little
competition at times, which allows you to create a larger spread.
If the spread is large, that's your opportunity to become a market
maker, and help to narrow the spread. If the spread is narrow,
but the blocks of shares on offer are small, that's another opportunity.
Personally, I don't like being a
market maker. The reason is that I don't like to hold cash, and
I'd rather remain fully invested in the silver stock market at all
times, because I think the silver price is just way too
explosive. (Nevertheless, people call me a market maker because
the things I write can move the markets, and help to change the
price--but I have never placed two limit orders to create the bid/ask
spread.)
I know many make good money as market
makers. You have no inventory, don't have to send out any
products, and you can do everything on your computer. Just move
your price range up or down as your cash or shares grow. You can
also be a market maker with just some of your money, and just some of
your shares, and keep the majority fully invested. When you
become a market maker, you are providing a valuable service, helping
others to buy and sell at better prices, and also, you are helping to
invite people to buy, who otherwise, might be scared away from the tiny
silver stock market due to the large spreads, and bad prices.
5. Buy the laggards, which are
those that have not moved up as much as many other silver stocks.
Also, buy those stocks that are significantly cheap as compared to
their recent prices. Not all stocks move up at the same
rate at the same time. Use this to your advantage. You can
keep track of all 85 silver stocks on my list, and more, and hopefully,
be better informed than others in the market.
6. Take profits, and re-invest
them. The hardest thing in the world, emotionally, for many
people, is to sell your favorite stock that you bought a lot of because
it was such a great value--that then goes on to become a very large
percentage of your portfolio. Remember, that "great value"
evaporates as the stock rises in price. If it was such a great
value when you bought it, it might not be such a great value after the
price rises from 100-500%, but only be a good value. Sell the
good values for the great values. There is no need to hold your
stock until it reaches a "mania" value, because there are many
alternatives. If you find you have something to sell, and if you
don't know what else to buy, then buy silver bullion, or buy the ticker
symbol CEF, a bullion fund that holds 50 ounces of silver for one ounce
of gold.
Take profits, and buy silver
bullion! If we silver stock investors are successful, our silver
stocks will go up faster than silver bullion. Therefore, as our
silver stocks move up in value, we will need to continually sell the
stocks to buy more silver bullion, just to keep the level of silver
bullion in the portfolio at the same level! I believe we should
own an increasing percentage of silver bullion as the bull market
continues. The reason is safety. Bullion cannot go to zero,
and it is the most liquid thing there is. Highly liquid silver
bullion is the perfect counterbalance for a portfolio of very illiquid
silver stocks.
7. Don't be a momentum
player. Be a value investor. Know the
difference. Technical investing methods tend to stop
working when everyone else is doing them. Being a value investor
works because there are always good values around. The reason to
buy silver, is that it is a great value. Therefore, be
consistent, and buy low priced stocks that are great values.
Don't buy a stock simply because it has been moving up in the recent
past.
8. Don't trade too much.
Trading too much simply hands your money over to your broker. Sit
and hold in a bull market, unless you see some amazing opportunities
that you simply "must buy".
9. Don't make emotional
decisions. Have no regrets. You cannot change the things
you have done in the past. You can only take action in the
present, based on what you have learned in the past. So, take
action. Make a decision. Realize that making no decision is
also a decision. Buy or sell or hold based on your
research. Trust the truth, and trust your ability to determine
the truth, more than anything else, even me or the trading guidelines
on this list.
-----------------
Even more practical, here are some specific examples of stocks that are "on a dip"; four I own, and four I don't.
CBE.V CBEFF.PK (CABO MINING) (I own shares) http://www.cabo.ca/ is the cheapest it's been in 6 months since I wrote an article about it on February 10th. Market
Perspective & Cabo Mining - Hommel.
KRE.V KREKF.PK (KENRICH ESKAY) (I own shares) http://www.kenrich-eskay.com/,
this week, took a nosedive down from .49 to .40, but the bid dropped
all the way to .31! Nothing traded under .40 as far as I can
tell, but that was a classic opportunitiy for someone to place a low
bid beneath .40, just in case. As I was already fully invested,
this was the kind of opportunity that I could not take advantage
of. I purchased KRE at about .85 in a private placement, the
price of which was lowered to .55 because the price did not hold up
during the placement period.
CMA.V CRMXF.OB (Cream Minerals Ltd)
(I own shares.) http://www.creamminerals.com/cream/main.htm
, for a while, has languished about 50% down from where I purchased it, at .59 Cdn, last trading at .295 Cdn.
AUN.V AUNFF.PK (Aurcana Corp) (I own
shares) http://www.aurcana.com/, is also about 50% below my purchase price of .22 Cdn, now trading at .105 Cdn.
Here are four more stocks that are likely good buys that I don't own (I
not buying them, partly because there's no way I'm selling stocks such
as the ones above at today's prices to get them, and partly because I'm
not even sure they represent better values than the stocks above.):
TVI.TO TVIPF.PK (TVI PACIFIC) http://www.tvipacific.com one of the largest silver exploration companies, is trading at .11, down from .39 (52 wk high)! That's 72% down!
PCM.V PAOCF.PK (PAC COMOX
RES) http://www.pacificcomox.com/ a tiny microcap, is trading at .05, down from .20 (52 wk high)! That's 75% off!
QTA.V QURAF.PK (QUATERRA RES) http://www.quaterraresources.com/
is a good example. On Friday, it had 10 times the normal volume,
because of positive drilling results announced, but traded at a paltry
.335, down from .85 (52 wk high)! 61% off!
UNCN.OB (UNICO INC) http://www.uncn.net/
has found some financing, yet, amazingly, trades as low as 4 cents,
only a penny higher than its 3 cent low of about a year ago, and is
well off it's 52 week high of about $.195. 79% off!
-----------------
For Euorpean investors who would like
to avoid the 17% VAT on buying silver bullion, I think I may have found
an investment vehicle for you to own silver bullion. It's the
Anglo Far East Bullion company, they offer a silver bullion
account. The drawback is they hold your silver for you, and there
are storage and transaction fees (much less than 17%). http://www.anglofareast.com/
-----------------
This week, I paid a neighbor's kid a few dollars to work for 2 hours to go and
find all the emails of all the silver companies on this list. I think he found about 10-15 more than I had. (The kid
decided to invest the whole wad into silver quarters afterwards!) He
and I were only able to compile 72 emails. But now the company profiles in this list are more complete.
-----------------
Here is a good way to study
the sentiment of the gold and silver market! Study the traffic,
or number of web visitors, to the biggest gold and silver sites on the
net. Click here: http://www.alexaranking.com/
Book mark it! Type in the following links, just like this:
kitco.com then hit return, and on the next line, type in
gold-eagle.com, and then goldseek.com. Click the "display traffic
rankings" button at the bottom center. The number listed is the
rank, or the total number of web sites on the internet that have more
traffic than those sites. kitco.com has more traffic than
gold-eagle.com, as it has the highest rank (lowest number). Just
like 1st is a higher rank than 10th. Next, click the "view"
button. It will give you a webpage about the site, and it
contains a traffic rank chart, that shows not the number of visitors,
but it shows the relative popularity of the site, as compared to the
rest of the internet. The six month chart does not show
much. The two year chart is more instructive. It shows a
decrease in traffic to gold-eagle.com since 2004. The chart for
kitco.com shows nearly the same thing. Interestingly, the
two-year chart for goldseek.com shows increasing traffic for
2004. But goldseek does not have as many visitors as kitco,
and goldseek is also a newer gold/silver site. The traffic to
kitco and gold-eagle may be a better barometer of overall market
sentiment for gold and silver.
----------------
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.
----------------
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
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/
web.queries@computershare.co.uk IR
--'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
ir@kghm.pl
--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/
http://www.gmexico.com/Html/contactUs.htm
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/
dhuguet@buenaventura.com.pe (IR)
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/
investor@barrick.com (IR)
535 million shares outstanding (1 Q
2004)
@ $18.72/share
$10,015 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."
$10,015 million Market Cap / 1710 mil oz. = $5.86/oz. silver
You may get "approx" 1.13 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)
@ $3.75/share
$1491 mil MC
419 proven and probable reserves of silver (from 2002 annual report
on website)
$1491 mil MC / 419 oz. silver = $3.56/oz.
You get "approx" 1.85 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
@ $3.25/share
$696 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)
$696 mil MC / 279 mil oz =
$2.49/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, in
my opinion. I would rather own silver, as it moved in price from
$6 to $10. And in the meantime, CDE may well move in price from
$6.49/share down to $2.16/share (assuming no further dilution, and a
reduction to a more reasonable $333 million market cap), and by then,
with silver at $10, CDE may have a P/E ratio of 10, and a huge heavy
debt load of $180 million dollars that may take up to 6 years of
possible profits to pay off.
At $2.16/share, $10 silver, and a P/E of 10: $333 mil MC / 189 mil oz.
= $1.76/oz. = You'd get about 5.68 oz. of silver for each silver
oz. worth of stock.
I expect silver bullion to continue to outperform CDE
stock at these prices.
SIL (APEX SILVER)
http://www.apexsilver.com/
information@apexsilver.com
(303) 839-5060
47.4 million shares outstanding (late May, 2004) (not fully diluted)
(derived from share price & market cap, late May, 2004)
@ $18.10/share
$858 mil MC
cash on hand: ~ $390 million March
2004
San Cristobal (Bolivia) (proven & probably reserves) 454 mil silver
(forecast capital costs for construction to total approximately $435
million)
(Produced zero silver in 2002)
7.8 billion pounds of zinc, and 2.9 billion pounds of lead
$858 mil MC / 454 mil oz = $1.89/oz.
You get "approx" 3.49 ounces
in the ground for 1 oz. silver's worth of stock.
Additional comments: Apex's
webpage on silver, "Commodity Fundamentals" says nothing about silver
as money. Unbelievable and shameful! Unless you count this
phrase, "As a
precious metal, it has been a source of human adornment since the
beginning of time." At
least they recognize that silver is a precious metal, and at least they
recognize it has been precious since the beginning of time.
That's a start!
Bullishly, they note: "As a result of the silver inventory
drawdown, by the end of 2002, the worldwide stockpile of refined silver
has been reduced to levels sufficient to satisfy less than
approximately six months of the existing demand."
A positive article was written about Apex in Business Week Online:
A Bright Gleam On Apex -- Friday June 4
"Apex has rights in some 100 mineral-exploration holdings at 34
properties in countries such as Bolivia, El Salvador, Mexico, and Peru."
The article's analyst notes that in 2-3 years, when/if production comes
online, "At silver's current price of $6 an ounce, Apex could earn $2
to $3 a
share, he figures. If silver runs up to $10, earnings could hit $6, he
says."
I note that this means that at a P/E of 10, if production comes online,
Apex may more than tripple in 3 years to $60/share, while silver nearly
doubles. That's not much leverage, given the increased
risks of mining and owning a public company, and given that management
of Apex seems to not recognize that silver is money, and debt is aweful.
March
16th, Apex raises $144 million in a convertable debenture deal to help
finance the development of San Cristobal. They now have 350/435,
or 80.4% of the capital costs needed for construction. Raising
the last bit should now be very easy to do. If, while raising
money, they held their cash in the form of silver bullion, they would
probably not need to raise any more cash at this point, since silver
has moved up over 50%.
See my silver stock report #40 for
reasons why Apex will not likely use their cash to buy silver bullion
while they wait for higher silver prices.
Apex silver primarily has institutional
investors.
Apex has a lot of zinc. That's an added bonus that is not factored in
to my method of valuation. Zinc
prices have been heading up soon, so that's another bonus. Plenty of
zinc is especially good if zinc is moving up in price. Zinc hit a
recent high of $.51/lb., from a low of about $.35/lb. For zinc prices,
see http://www.metalprices.com
Apex is not mining now,
but are waiting for higher silver prices. George Soros,
Billionaire, owns a bit of
this one, his group of funds owns over 14% I read recently. There
are several
other
zinc / silver plays on this list that investors might also consider:
Canadian Zinc, Expatriate, or Metalline (I own Metalline, but not SIL.)
I do not have an idea on whether or
not SIL will out perform silver bullion or not. It's hard to say,
because of that huge zinc bonus.
FSR.TO FSLVF.PK (FIRST SILVER)
http://www.firstsilver.com/
info@firstsilver.com (604)
602-9973 or (888) 377-6676
38.6 mil shares fully diluted (March 2004)
@ $1.90/share Cdn x .76 US/Cdn = $1.44 US
$56 mil MC
From the Company's main page:
"As at December 31, 2001, First Silver's mineable reserves were 12
million ounces of silver and inferred resources totaled 30 million
ounces of silver. The mine is developing a 1000 plus meter exploration
drift to upgrade currently identified inferred resources to mineable
ore reserves and to discover new reserves." (12 + 30 = 42 mil oz.)
(The company appears to mine about 2
million ounces of silver per year, so perhaps by mid 2004, that would
be 5 million ounces mined out from reserves and resources?) 42 - 5 = 37
mil oz., (new number.)
12 + 30 = 42 mil oz.
$56 mil MC / 37 mil oz. = $1.51/oz.
You get "approx" 4.36 ounces
in the ground for 1 oz. silver's worth of stock.
Additional comments: This is
a high grade, producing miner. The high grades, about
300g/ton, are a plus. They are also actively exploring,
another plus.
1st Q, 2004, FSR.TO earned $1.45
million Cdn?, or 4 cents/share, ending a string of losses for the 6
quarters prior. Seems as if their break even cost to mine is
$6.00/oz silver. Produced 565,332 oz. silver for the quarter, and
1288 oz. gold.
First Silver is unhedged, and remain committed to remaining unhedged.
PAAS (PAN AMERICAN SILVER)
http://panamericansilver.com/
info@panamericansilver.com
(604) 684 -1175
70 mil shares fully diluted (April, 2004)
http://panamericansilver.com/s/CorporateInformation.asp?ReportID=26039
@ $13.57/share
$950 mil MC
10 silver properties (3 in production)
produced 7 mil oz. silver in 2001:
Reserves & Resources through Dec. 11th, 2003 from
http://panamericansilver.com/s/ReservesAndResources.asp?ReportID=25303
743.2 million total
$950 mil MC / 743 mil oz. = $1.28/oz.
You get "approx" 5.16 ounces
in the ground for 1 oz. silver's worth of stock.
Additional Comments: PAAS is
hosting the 2004 Silver survey summary by GFMS for the
Silver Institute
On PAAS's page on silver fundamentals, it says little about silver as
money. Except maybe for the following phrases: "Many analysts
forecast continuing weakness in the US dollar in 2004, which should
bode well for higher silver prices." and "
The outlook beyond 2004 is also promising for the silver market, due to
continuing investment demand..."
Pan
American of Canada buys Morococha silver mine in Peru for US$35 million
This $35 million acquisition is a
great deal for PAAS, and a minor help for PAAS shareholders.
According to the press release above, the silver mine produced 3.5
million ounces of silver a year, at a cash cost of $3/oz., which is
great! At $6.50/oz, that's $3.5 x 3.5 mil oz. = $12.25 million
per year profit after cash costs! That gives the acquisition a
P/E ratio for the mine's acquisiton cost of under 3! What a
deal!
Unfortunately, PAAS shareholders are
paying way above that when they buy the stock today. After this
acquisition, PAAS should have a "2004 silver production forecast
to 13 million
ounces from 10.1 million ounces and will reduce forecast cash costs to
below $
3.50/oz, bringing anticipated total costs to less than $4/oz for the
year." Now, at $6.50/oz, that's $2.5 x 13 mil oz. = $32.5 million
per year profit, after cash costs, excluding management expenses? That gives a P/E ratio for
PAAS of about $1000 / $32 = 31. Therefore, considering the two
P/E ratios, 31 compared to
under 3, PAAS stock is over ten times
overvalued compared to other silver mining opportunities that exist in
the market, such as the property they just purchased.
PAAS stilll refuses to recognize that silver is money,
and
they refuse to hold their money in the form of silver.
PAAS had a very meager profit of $1.3
million, second quarter, 2004. I certainly would not get excited
about paying nearly a billion dollars in market cap to get an annual
earnings of $5 million. That's a P/E ratio of 200!
What if your silver company decides to lock in silver prices at $8, and
hedge years of production to "protect the shareholders and provide
exposure to the high $8/oz. price," only to watch silver prices head
past $25 and past $50/oz? Your stock could get wiped out in
bankruptcy, and your investment could go to zero value! This is
the danger of
stocks! Your investment is subject to the whims of management!
WARNING: PAAS says at
their website that they may
hedge
silver, in order to finance mine construction.
http://panamericansilver.com/s/CorporateProfile.asp
"Pan American is loath to give away the upside on any
of its silver production, especially at current low metal prices, and will do so only to the
minimum extent required as a condition of prudent mine financing."
In my opinion, hedging prudence
depends entirely on the price level to which silver will rise as
denominated in dollars. Since I believe the potential is for
silver to cross over $2000 to $4000 per ounce (on the way to infinity)
in a monetary collapse, I would never hedge silver and never lock in a
dollar price for long term production. If PAAS will, it goes to
show that they don't view silver as money, which is a counterproductive
management philosophy for a shareholder who intends to invest in PAAS
for the exposure to rising silver prices.
My opinion is that it is NEVER prudent to go into debt, or lock in
silver prices to finance a mine. If PAAS cannot raise capital on
the markets by issuing shares, then they should not be financing new
mine
construction. If the market will not support new mine
construction,
then the market does not need more silver. PAAS and CDE should
learn
to trust the free market process, and avoid debt.
GRS GAM.TO (GAMMON LAKE)
http://www.gammonlake.com/
gammonl@sprint.ca
(902) 468-0614
62 mil shares fully diluted (Feb 27th, 2004)
@ $4.65/share
$288 mil MC
Total Ocampo Inferred: 1,124,000 oz. gold, 50,438,000 oz. silver
Silver equiv = 11.24 mil oz. + 50.44 mil oz. = 62 mil oz.
Total Ocampo Measured & Indicated 2,207,800 oz.
gold, 108,438,000 oz. silver
Silver equiv = 22 mil oz. + 108 mil oz. = 130 mil oz.
Total Ocampo Measured & Indicated plus Inferred = 182 mil oz.
Gammon owns 26.3% of Mexgold,
MGR
Since Mexgold owns 185 mil oz. of "target exploration potential", 26.3%
of that is 48.6 mil oz.
182 + 49 = 231 mil oz.
$288 mil MC / 231 mil oz.= $1.25/oz.
You get "approx" 5.28 ounces
in the ground for 1 oz. silver's worth of stock.
**Note** most of Mexgold's oz. that are added in are an "exploration
target" not yet "inferred resources".
Additional comments:
At prices of a 64:1 silver:gold ratio at $425/oz gold and $6.60/oz
silver, the resources are worth $1048 million of silver, and $1411
million worth of gold. Cash cost is $85/oz. Life of mine is
7 years.
GAMMON LAKE INTERSECTS 1-METRE OF 390 GRAMS PER TONNE GOLD
AND 1,402 GRAMS PER TONNE SILVER
(13.2 OUNCES PER TONNE GOLD-EQUIVALENT) June 10
MFN MFL.TO (MINEFINDERS)
http://www.minefinders.com/
info@minefinders.com
39.1 mil shares fully diluted 1 Q 2004
@ $6.21/share
$242 mil MC
Cash on hand, Fully Diluted: C$34 million
"over 3.5 mil ounces of gold resource and 160 mil ounces of silver"
--Dec. '03
silver conversion = 3.5 x 10 = 35 mil + 160 mil oz. silver = 195 mil
oz. silver
At 70:1 ratio, 3.5 x 70 = 245 "silver equiv" of gold, and 160 mil of
silver = 405.
245/405 = 61% of the mineral value is in the gold, 39% silver.
At 10:1 ratio, 35/195 = 18% of the mineral value is in the gold, 82%
silver.
"In addition to the resources already drilled, Minefinders controls a
strong portfolio of
properties in Nevada, Arizona, and Mexico which have the potential
to host new
multi-million ounce discoveries over the next few years."
$242 mil MC / 195 mil oz. = $1.24/oz.
You get "approx" 5.31 ounces
in the ground for 1 oz. silver.
Additional Comments: At 70:1 silver to gold ratio, over half
of MFN is in gold, so consider this a significant gold bonus.
Minefinders reports increased Measured and Indicated Resource at Dolores
August 9, 2004 (The increase was by
10%, and I don't see how the numbers relate to my previous numbers,
which were higher, and may have included a total that was based on more
properties?)
KBR.TO KBRRF.PK (KIMBER RESOURCES)
http://www.kimberresources.com
info@kimberresources.com
(604) 669-2251
31.6 mil shares fully diluted (Apr
20, 2004)
http://www.kimberresources.com/sharestructure.html
@ $1.68/share Cdn x .76 US/Cdn = US $1.28
$40 mil MC
from http://www.smartstox.com/reports/kbr.pdf
30 mil oz. silver resources Measured & indicated, plus inferred
540,000 oz. gold x 10 = 5.4 mil "silver equiv."
$40 mil MC / 35.4 mil oz. = $1.14/oz.
You get "approx" 5.79 ounces
in the ground for 1 oz. silver's worth of stock.
Additional comments: Kimber Reports Significant Drill Hole On Carmen Deposit
A one property company. The Carmen
gold-silver deposit on their Monterde property in the Sierra Madre belt
of Chihuahua State, Mexico. Significant
exploration potential.
It was reported by a press release that 16%-17% of KBR.V is owned by
silver bull Jim Puplava of http://www.financialsense.com,
which I think is a rather solid endorsement of the company.
CFTN.PK (CLIFTON MINING)
http://www.cliftonmining.com/
clifton@cliftonmining.com
801-756-1414 (303) 642-0659 Ken Friedman
47 mil shares fully diluted (May 2004)
@ $1.05/share US
$49 mil MC
http://www.cliftonmining.com/wsreview.htm --source of 100
mil oz. resources est.
http://www.cliftonmining.com/resource.htm
From: http://www.siliconinvestor.com/stocktalk/subject.gsp?subjectid=13531
"A previous geologist has talked about a possible resource of
1 billion oz. of silver, and 5 million oz. of gold."
100 mil oz. silver
+500,000 oz. gold x 10 = 5 mil oz. silver equiv.
= 105 mil oz. silver.
up to 1000 mil oz. silver "exploration potential".
Clifton has a complex JV agreement with
Dumont Nickel. In sum, here is what Keith Moeller VP, Clifton
Mining Company wrote to me: "If Dumont produces a positive
feasibility study on an individual property piece, then they
gain a 50% interest in that piece alone, not in the rest of the
property. If they spend more than 5 million dollars (US) on any
one piece and they produce a positive feasibility study on that piece,
then they will gain
a 60% interest in that one piece of property, not in the rest. If they
stop at any time or fail to produce a positive feasibility, then they
will gain no interest in any of our property. Right now we have
around