Silver Stocks Comparative Valuations

Silver Stocks--Comparative Valuations

Weekly Report # 49

by Jason Hommel
silverstockreport.com
goldismoney.com

Friday, Sept 3rd, 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 86 silver stocks. There are 32 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. This report goes out now to over 11,700 investors each week. Additions & Changes from last week are in bold.

Quick links to other areas in this report (Index of this report):
[Summary list of Silver stocks]
[My Methodology]
[Weekly Commentary]

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[Subscribe to my Private Placement notice list (FREE)]
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[My Conference Schedule]
[General Commentary on Silver]
[WHERE and HOW to BUY SILVER BULLION]
[The money chart]
[Disclaimers, Warnings, and Advice]
[Company profiles]
[Company profiles with the most resources, and least cost]
[Profiles of Explorers]
[Links]
[19 Silver Stocks I own]
[Archive of about 40 of my past essays]
[Archive of past Silver Stock Reports]

Kitco reports silver at $6.54/oz. as of Friday, 6:19 PM West Coast US, which was used to calculate the following figures. The CAN $ / US $ conversion factor is .7691. I will use .77 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 down --producer, mostly family owned, hedged?
CDE (COEUR D'ALENE) 2.3 up --producer, (also gold) in debt, produces at a loss.
SIL (APEX SILVER) 3.3 down --zinc bonus, low grades, cash rich--$345 million! in debt
FSR.TO FSLVF.PK (FIRST SILVER) 4.4 down --producer, (not profitable '03 3rd q.) unhedged
PAAS (PAN AMERICAN SILVER) 4.7 even --producer, debt free, may hedge to develop
GRS GAM.TO (GAMMON LAKE) 4.8 up --producer, owns 26% of Mexgold
MFN MFL.TO (MINEFINDERS) 5.0 even --significant gold bonus, $35 mil cash on hand.
CFTN.PK (CLIFTON MINING) 5.8 down -- (139 EXPT) (colloidal silver product bonus)
KBR.TO KBRRF.PK (KIMBER RSCS) 5.9 up --one property, high grades, with exploration potential.
WTZ WTC.TO (WESTERN SILVER) 5.7 up -- (20 EXPT) large mine development cost. copper & zinc bonus
SSRI SSO.V (SILVER STANDARD) 7.5 up --large company, many properties, owns silver bullion
* TM.V TUMIF.OB (TUMI RSCS) 7.9 down -- (16 EXPT) recent bonanza grade silver discovery
* PLE.V (PLEXMAR RES INC) 8 way up --just acquired options on 2 new projects
ORM.V OREXF.PK (OREMEX RES) 10.1 down (42 EXPT)
CZN.TO CZICF.PK (CDN ZINC) 10.8 up --large zinc bonus, high grades, low start up costs, great EXPT
SHSH.PK (SHOSHONE SILVER) 11.8 up --leased properties; need payments; in Cour d'Alene
SRLM.PK (STERLING MINING) 13.1 down --(31 EXPT) acquired the Sunshine in Cour d'Alene
FAN.TO FRLLF.PK (FARALLON RSCS) 13.3 up --(23 EXPT) low grades, silver 1/3; also gold & zinc bonus.
CHD.V CHDSF.PK (CHARIOT RSCS) 16.2 down --explorer, with inferred resources
IMR.V IMXPF.OB (IMA EXPL) 17.6 up --(70 EXPT) explorer in Argentina
HDA.V (HUSIF.PK) (HULDRA SILVER) 20.1 down --very tiny, zinc bonus, low start up costs.
* SVL.V STVZF.PK (SILVERCREST) 21.1 down --(41+ EXPT) --(Silver in Mexico, El Salvador, Guatemala)
RDV.TO RDFVF.PK (REDCORP VEN) 20.6 even --60% gold bonus
GGC.V GGCRF.PK (GENCO RECS) 21.8 down --producer in Mex. Plans to expand and acquire
ADB.V ADBRF.PK (ADMIRAL BAY) 22.4 up --exploring a silver property in Mex. (Huge gas bonus)
* MGN (MINES MGMT) 22.9 up --60% copper bonus (low grades), start up cost ~ $250 mil
ABI.V ABMBF.PK (ABCOURT MINES) 26.5 up --large zinc & small gold bonus
EXR.V EXPTF.PK (EXPATRIATE) 27.4 up --large zinc bonus 60% zinc, 25% silver (got out Atna)
* ASM.V ASGMF.PK (AVINO SILVER) 36.8 down --will own 100% of the Avino mine +4 other silver props.
* CSG.TO CSGLF.PK (CAPSTONE GOLD) 42 NEW (155 EXPT) (In Mexico, resources are historical)
UNCN.OB (UNICO INC) 105 down --lease on largest property, $3 million due by August 31, 2005

* = I own shares

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
* OTMN.PK (O.T. MINING) very large exploration potential
SPM.V SMNPF.PK (SCORPIO MINING)
* FCO.TO FCACF.PK (FORMATION CAPTL) Cobolt (and Sunshine silver refinery)
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.
ECU.V ECUXF.PK (ECU SILVER MINI) --A PRODUCER 50% gold bonus
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.)

IAU.TO 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) (formerly NEW BULLET)
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.

My methodology is the natural result of my study of the silver market and my religious views. To read about my religious views, 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

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

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/

WEEKLY COMMENTARY (All new in this section):

To Silver, From Gold
Yi-Chang Wang
http://www.gold-eagle.com/editorials_04/wang090104.html

Wang looks at the value of gold florins in 1252 in Florence. Those values completely justify my prediction that an ounce of gold should be worth about $35,000 of today's money. Gold would have to regain a value of $35,000/oz in today's purchasing power to have the purchasing power that it did in 1252 in Florence!

My number of $35,000/oz., is not based on "inflation" that makes a loaf of bread cost 100 fold also! No! My number of $35,000/oz. is based on gold going up 100 fold, while the price of everything else stays the same! And Wang clearly understands that in his article. He even acknowledges that silver, being more rare than gold in refined form above ground, may well exceed a value of $35,000/oz. as denominated by what those dollars would buy today!

Wang used a completely different methodology to arrive at the same result. People should pay serious attention to this. We are not kidding around with pie-in-the-sky numbers. We are showing what gold is worth when people are not deceived by paper money. One day, paper money will fail, as it always has, and then, it will be worthless. And then, the only alternatives will be gold and silver, but gold will be valued over 100 times more than it is today.

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SILVER - Investment Opportunity Of The Decade - Greene
http://www.gold-eagle.com/editorials_04/greene082804.html

I thought Greene's article was outstanding.
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Steve Saville writes "Gold verses Silver"
http://www.kitco.com/ind/Saville/sept12004.html

People have come to expect me to comment on these things, so here's my take on Saville's paper. Saville reasons that as the S&P index performs well, silver outperforms gold, according to lining up the gold/silver ratio chart for the past 10 years. And as the S&P goes down, then gold outperforms silver. I see a modest correlation quite clearly. Saville reasons that this relationship will continue.

The problem I have with this analysis is that the correlation is only for the past 10 years. Yet gold and silver have a 6000 year history. The correlation makes sense, as long as silver has no monetary demand, and as long as industrial use is primarily due to demand as reflected by S&P index performance. However, there is a shortage of silver that is becoming more widely recognized. Also, there is industrial demand for silver in other economies, such as China and Germany, the economies of which are not reflected by the performance of the S&P. Furthermore, if monetary or investment demand for silver actually takes hold, due to vast under-performance of stocks and bonds as interest rates rise, and if this happens at the time silver is scarce, then the correlation will no longer apply.

I believe it is a mistake to take a trend of the recent past, and extrapolate into the future. Things change, especially when circumstances change. So, I disagree with Saville's report.
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As many of you know, I don't cover gold stocks, and I don't often discuss gold news.

For gold stocks: The Gold Report (www.theaureport.com) is an electronic magazine dedicated exclusively to the gold sector. It includes general commentary on the precious metals sector and specific investment recommendations by industry portfolio managers, top analysts and newsletter writers. FREE SUBSCRIPTION

http://www.theaureport.com

But this week, there was some amazing gold news!

A mining company in Australia, the Sons of Gwalia, went bankrupt, and defaulted on gold delivery obligations. I believe this "default to deliver gold" may be the biggest gold news in the last 30-40 years.

See: http://sg.biz.yahoo.com/040830/15/3msd3.html

The counterparties list reads like a "who's who" of the banks that have been noted by GATA as selling gold, and capping the price!

Citigroup Inc. (C) is understood to be the company's biggest hedging counterparty, with an exposure of between A$100 million and A$150 million.

Other counterparties include: BankWest, a unit of HBOS Plc (HBOS.LN); Goldman Sachs Group Inc. (GS); JP Morgan (JPM); Dresdner Bank AG (DRB.YY); Commonwealth Bank of Australia (CBA.AU); Australia & New Zealand Banking Group Ltd. (ANZ) and HSBC Holdings Plc (HBC).

The biggest gold news I've seen so far in recent years was the Washington Agreement where European central banks agreed to limit gold sales to 400 tonnes per year. So much gold was being sold and leased prior to that agreement, that the announcement literally drove the price of gold straight up in 1999, up about $70/oz in about a week or so. That agreement spelled the bottom of the gold market, because many market participants realized how dangerous it could be to continue to lease gold and hedge gold at low prices if prices were to then rise. In fact, right after that agreement, Ashanti and Cambior, two gold miners that were heavily hedged almost went bankrupt, but were bailed out by the banks who agreed to give them more time, and who also continued to suppress the gold price.

Earlier, LTCM, Long Term Capital Management, a hedge fund rumored to be short 400 tonnes of gold, was also bailed out by the banks, at Greenspan's request or demand.

But today, the gold price is not peaking out at $330, but is humming along at $400-$425/oz., and this time, it looks like there is no bail out or forgiveness by the bullion banks.

This event may be bigger than the collapse of the gold pool in 1968, and even bigger than the default of the dollar in 1971. Think about the difference: Who owed gold to whom in those last gold defaults? The big boys (governments) owed gold to the little guys. The gold pool owed to the people, and the U.S. government (Federal Reserve) owed gold to the little guy who held dollars.

Today, this gold default is in reverse. The little guy, the miner, is defaulting on the big banks! It's opposite!

So, what happened the last time there were gold defaults in 1971? The little guy went on to bid up the price of gold.

This time, the big banks are getting screwed, and I predict they will bid up the price of gold.

And who has more money to bid up the price of gold? Today, I suspect that it is the banks and governments.

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Jim Sinclair of jsmineset.com has warned of the dangers of hedging, yet he buys futures contracts, and I have never understood what I see as this inconsistency. So, I sent the following to Jim:

Dear Jim,

I am very interested in your comments regarding Sons of Gwalia and their hedging. You wrote:

"Several years ago, I spent six figures advertising in various mining journals and other publications trying to make my point that the gold industry was digging its own grave. In return I was ignored.

Now the perpetrators of these heinous practices are getting their just reward and their shareholders are getting screwed."

Yet, I note that you buy futures contracts for gold. Now, do you even know who your counter parties are?

How do you know that you are not financing the very hedging that you said was bad? Or are the bullion banks your counterparties? But they are the same counterparties who finance mines like Sons of Gwalia, correct?

Therefore, are you not financing the very hedging you warned about?
Isn't that rather hypocritical, or foolish, or both?
I've warned you repeatedly about the moral failures of the paper longs, and you have ignored me, just as others have ignored you. Three times now, I've sent you my essay for comment, and I've heard nothing.
http://www.gold-eagle.com/editorials_03/hommel012203.html

As of today, I've probably spent only $50,000 on ads, not yet six figures, but getting there. Perhaps you have heard of my name by now?

You think you are right today, but perhaps tomorrow, I will be right. I hope that if I am proved right about futures contracts, that it will not be financially painful for you, but rather that you will benefit, because I think you deserve a good reward.

I await comments from you, and I plan to make comments to warn my small group of readers.

I sent this letter on Tuesday, and by Friday, I have not heard from Jim Sinclair, which is not unusual.

(My note. I don't know exactly how much I've "spent" on ads. I'm including all the money that has gone to my webmaster team at goldismoney.com, which allows and generates ad money, in addition to the out-of-pocket advertising money I've spent.)
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Where is a lot of money located these days?

Pension plans! There are government sector pension plans, and private sector pension plans, under-funded plans, and over-funded plans, and all of that money in those retirement plans needs to be invested in something that will provide a good return.

With bonds paying 1%, and with silver increasing in value from 50-100%, it's quite a "no-brainer"these days where one's money should be invested. But for the slow of mind, they will get it sooner or later, and billions and trillions of dollars will soon be screaming to invest in gold and silver.

If the Washington Agreement did not wake them up, perhaps the bankruptcy of the Sons of Gwalia, or another hedged miner, will. I note that Barrick is very slowly reducing their hedges... we'll see what happens there.

We have to hand it to GATA. GATA long predicted that the Sons of Gwalia would go bankrupt due to their excessive hedges. To really know what is going on in the gold market, I really suggest you subscribe to GATA's lemetropolecafe.com. I subscribe to two places, to lemetropolecafe.com, and to silver-investor.com. I read the Midas report at lemetropolecafe.com nearly every day.

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I think the concept of a retirement plan that is managed by somebody other than yourself is rather incompatible with freedom. It's much more like a system of slavery, because slaves are not expected to be able to take care of themselves, but rather, slaves need someone to take care of them. Freedom means that you are responsible for your own welfare, and that you are capable of making your own decisions on where to invest your own money.

According to the Bible, the worker should be paid his wages daily, and wages should not be withheld.

Leviticus 19:13 Thou shalt not defraud thy neighbour, neither rob him: the wages of him that is hired shall not abide with thee all night until the morning.

If wages are withheld until retirement, then the employer is robbing his worker, and the worker is allowing himself to be robbed!

I predict it will end badly, as the people are being defrauded also through paper money and paper bonds. Quite simply, people should not concentrate their wealth into so few hands. A person who has $5 billion to manage simply will not be as capable of getting a return as good as if 1000 people managed $5 million each individually. Why not? Because 1000 people have more collective wisdom than one person does, and the money can seek out smaller and better investment opportunities.   Quite simply, the free market makes better decisions than a dictatorship, and that is a principle that also applies to managing money.

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Due to my desire to obey the Word of God, and not continue the fraud of the dollar, I have decided to ask people if they would like "silver instead" each and every time I go to buy anything. I simply say something like, "I can pay in dollars or silver, your choice. The silver rounds are worth 7 dollars each ($7.25 on Monday, $7 by Friday again)."

First try was the movie theater. The girl took silver. It was $10 for two tickets, so I gave her two rounds, and said I needed $4 in change, which she gave me.

Second try was the concession stand. The guy said he didn't know if he was "authorized". I said you can buy them if you want, but he declined.

Third try was the service station, when buying a $5 item. The girl bought one round for her own use.

Fourth try, dinner, burgers, pizza, and two beers, $30. The manager said he'd happily take the silver.

Three out of four is not bad for a first try. Who says people will not accept silver, or that we need government to get people to accept it? Just offer it at a fair price, and watch what happens!

Fifth try, another service station, for gas. The gal said she could not take silver, but wanted to buy one instead, but only had $5 in her pocket. Silver Not accepted.

Sixth try: A burrito shop. $5. The business owner said "I wouldn't know what to do with it." Not accepted.

Seventh try: Dinner out.  Silver Not accepted. But the bartender took a silver round as a tip for two drinks. (It was a huge tip.)

Eighth try: Local grocery store. $20. The cashier said she'd have to consult with the manager, who was busy in a meeting. Silver Not accepted.

Ninth try: Round Table Pizza. $30. The cashier called over the manager. He said he didn't know if the banks would take it. I assured him that they would not take it. Silver Not accepted.

Tenth try: Christian bookstore. Two silver rings that say "Fear Not". $25. The cashier didn't feel she had the authority. Silver Not accepted.

Eleventh try: pet shop. $17. The cashier called over the manager/owner. He said he didn't know how to account for it, or whether his wife would let him, but he said he'd consult with her.   I said, "As Christians, we are not allowed to purposely defraud people with paper money, but we'll let you have paper if you want it. I don't care what you accept, it's just for my conscience's sake." Even after we paid with cash, the manager was offering excuses for difficulty with accounting for it. I think I really got to him. It was quite a testimony, I feel.

Twelve try: Pizza for the boys. Silver Not accepted.

Thirteenth try: Smokes. (I don't smoke.) Silver Not accepted.

So, 3 people took silver out of our first 13 tries. Selling silver was not the point. It is obedience.

For a long time, I was fearful about letting people in my town know I had silver or was interested in silver. I was scared because I know of the potential increase in value. However, when that time comes that silver has increased in value more than 100 times, and when paper money dies, and silver money reigns supreme, yes, there will be a lot of jealousy. However, by the time that comes, I want to have offered silver to as many people as possible, as a testimony against them. They will remember the day when they had a choice to accept silver or not, and they will remember that they chose fraudulent paper money. Their memory, and their conscience, will not let them cry foul or blame me for hoarding. Because I offered silver, at a fair price. They will have nobody but themselves to blame. Offering silver is the greatest protection against confiscation and societal jealousy that there is. We should all do it.   Offer silver, at a fair price, for everything you buy, not to "push silver" but to pierce the conscience of businessmen. I plan to continue to pierce the hearts of men whereever I go. From this day forward, I plan to always offer silver for everything I buy. If they say no, it won't bother me a bit--in fact, it's better for me if they say no, because I want my silver! But offering silver is a protection, and it's obedience to God to not defraud my fellow man, and to deal in just weights and measures.

And when I go back to the same stores I regularly frequent, I will ask again, each time. And if they put in place a policy to not accept silver, I will continue to offer silver. Let their choice be institutionalized, and their own choice will condemn them all the more as paper money continues to go up in smoke.

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I continued to encourage PAAS to own silver bullion, instead of cash, at the Yahoo! PAAS message board, by refuting some accusations and misunderstandings presented by Sarah_Oz on the topic. Her awful post had 27 recommendations, and although her comments were attacked, they were not properly refuted, and so I felt I had to say something.

Re: Reality Check by: jasonhommel Long-Term Sentiment: Strong Sell	08/29/04 04:30 pm Msg: 22455 of 22455
RE: Yesterday, PAAS announced their latest efforts to make the company even more profitable. ... My answer: You are invested in PAAS for the profits? What profits? The P/E of 200 for 1Q 2004? You are invested in PAAS for the leverage to silver, make no mistake. Owning silver bullion, instead of paper money, will INCREASE the leverage to silver price increases. Let's talk potential profits. If PAAS can produce silver at $2.50, and if they can double production by 2007 at that price, and produce 14 million ounces of silver (double 2001 numbers), they may have profits of $4 x 14 mill oz., or 56 million. $1031 mil MC / $56 mil = 18 P/E ratio! Make no mistake, you are invested in PAAS for the leverage to rising silver prices! RE: Having already eliminated all long-term debt, their heady goal is to become the foremost primary silver miner in the world. For, you see, silver miners don't grow larger or more influential by buying silver. My answer: You are totally wrong, they must buy silver to grow! You just listed the acquisition of a silver mine. Without acquiring silver, a silver miner is reducing his asset base to zero. RE: They do so by mining and SELLING silver. My answer: Selling silver is what successful miners do when the price is right, when it is economical. Selling 100 ounces of silver, to earn 1 ounce of silver (1% profits), is NOT economical, because you cannot buy title to 100 ounces of silver in the ground for one ounce of silver! Profits must exceed replacement cost! PAAS profits are LESS than the cost of their latest acquisition! Don't get me wrong, the Mexican mine is a good acquisition, but they are not making the money to acquire that, they SOLD STOCK to acquire that mine--which was also a good decision, because PAAS stock is rather expensive, about ten times as expensive for an investor to acquire silver in the ground, than was their recent acquisition. Thus, a wise silver stock investor will buy silver stocks that are valued about ten times cheaper than PAAS, at about the acquisition cost of PAAS's recent acquisition. My take is that PAAS mines and sells silver, to draw in stock buyers, who want to own a "producer" regardless of the profits. Then, with a pumped up stock value, they can write their own ticket to acquire more silver by diluting the stock. PAAS plays the paper game very well. But the shareholders who own an overvalued stock do not benefit. The tallest trees in the woods do not grow to outerspace. The primary way that holders of an overvalued stock like PAAS can benefit, is if the price of silver really moves up a lot. PAAS shareholders really need higher silver prices, perhaps far more than silver bullion investors! RE: Now silver speculators (like Ted, his SMU buddy, and, of course, the multilingual Gabby) make money in a somewhat different way. They do it by BUYING silver cheaply and SELLING it at a higher price. ...(rant removed)... A producer is a producer. A speculator is a speculator. A demagogue is a person who purposely tries to confuse the two in the general public's mind for their own benefit. My answer: And a fool is a fool. A shareholder of a silver producing company with no earnings stands to make money only one way: selling the shares to another fool, or waiting for silver prices to head to the sky. One way that PAAS could help out their foolish shareholders is to take their cash, that they have been sitting on for over a year, and buy silver bullion with it. They have enough to move the market, and they will be acting to increase their leverage to silver prices, which would be entirely consistent with shareholder's interests. Nobody should own PAAS unless they expect higher silver prices. Meanwhile, holding cash, while waiting for higher silver prices, as PAAS is doing, is an action that only fools can approve.
Posted as a reply to: Msg 22418 by Sarah_Oz

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Speaking of fools...

I just saw a late night infomercial that should be extremely encouraging to precious metal investors. It's promoting a system called "4X", and they have a software system that allows people to trade currencies internationally, 24 hours a day, 6 days a week, in the forex spot market. Why is this such good news? Because it heralds the end of paper money, worldwide. The big boys need someone to sell to, and so they must sell to the public! To do that, they must invite the public into their trading arena!

When speculation in papar assets becomes more profitable than producing real wealth, that is the sign of the impending death of that paper currency! What can your paper currency buy if people stop producing real wealth??? I had just seen the first part of the comercial for the first time, and I said out loud, "When farmers can make more money speculating in currency, than in farming, that will be the beginning of the end." Sure enough, a few seconds later in the commercial, they showed a large chicken farmer on his laptop, saying that his time is precious and that he intends to close down (not sell) his chicken farming business because he cannot compete with farmers overseas. Instead of raising chickens, he was planning to trade currencies full time on his laptop!

You would be amazed at the statements made by the people giving the testimonials, that showed their ignorance. Such as, "I think I know what I'm doing, [sounding entirely like she does NOT]" Or, "I'm just going to trust the software [that gives me the trading advice]." Not only were these people stupendously ignorant, they were all planning on using the exact same trading tool and system, basically, the software system being sold that teaches them to become a momentum or trend trader. Not only that, they made it appear as if an idiot could follow the software's advice. "If the line is green, you know the trend is up." A thinking person would recognize that this is a recipee for disaster! Fools all trading in the same way, not knowing what they are doing? Scary! Yet the promotion seemed entirely dependant upon showing that "any idiot could do it". Again, scary!

We live in an age of lies. Paper currencies are lies. Our government lies. The comercials lie! Well, they say the truth when, at the bottom, they disclaim, "Results shown are not typical. Your results may vary."

Giving away specific trading advice just does not work, because not everyone can take advantage of the same one single opportunity, and because there are always plenty of opportunities available! People have to think for themselves. That's what works. People thinking for themselves is how the free market works, and the free market works best.

I am perhaps the most bullish silver writer that I know. However, I also know that if everyone in the world sold everything, and bought silver, that would not work to produce wealth or a working economy. One day, it will be a better investment to invest in something other than silver. One day, it will be time to take the silver, and sell it, to invest in something else, such as farming, or producing any number of products that people need to live or to improve their lives.

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I have significant comments on SSRI this week. See the profile below.
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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

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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%.

I have two web sites, and two different customer support teams. If you have any questions about billing or order fulfillment, you need to contact the appropriate support staff team, and not me. I manage a large portfolio, create this weekly report, handle private placements, do radio interviews, web marketing, go to the gym, try to live a life, and I don't have time to process billing requests. I don't bill any cards anyway, and I can't check your order status. My support staff handles all of that.

To order at: http://www.goldismoney.com/articles.php
Price: Various packages ranging from one month to one year, from $34 to $295 --most savings
Customer Service: support@goldismoney.com The toll free telephone customer support line is: 877-895-6824.

To order at: silverstockreport.com
Price: Monthly rebilling at $39.95. --most convenient
Customer Service: http://www.silverstockreport.com/customerservice.htm
Toll Free Customer Service Hotline: 800-370-4154

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You can sign-up, or unsubscribe, to this report at http://www.goldismoney.com/subscription-ss.php or silverstockreport.com. Help your loved ones avoid the ongoing collapse of the dollar. Protect your inheritance. Please tell your friends and family about this silverstockreport.com

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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

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I will be speaking in Idaho at the Silver Summit in September 23-24
Specifically: Thursday, Sept 23rd at 10:00AM, for one hour (maybe more) planned to be in the Idaho Room, North
(No extra cost, no pre-registration. I don't do futures contracts! So, it's first come, first served--like silver itself, and like private placements. Get there early if you think it will be busy. I can't tell what kind of crowd there will be. When I spoke in Vancouver in June, about 10-15 people had to stand.)
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/

Toronto schedule:
SUNDAY, Oct. 3
10:30-11:00 Workshops - 1/Bishop2/Hommel 3/

MONDAY, Oct. 4
1:00 Panel - Stock Picks/E. Coffin, MCRoulston/Taylor/Hommel/Turk

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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

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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)

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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
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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

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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.
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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.

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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

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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.
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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

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

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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.

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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

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

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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.

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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.
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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.

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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)
$9,274,000,000,000: M3 (money in U.S. banks) July, '04 http://tinyurl.com/vra0
$7,337,786,947,237: US debt, Aug. 20-04 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.
          $358,000,000: 51.1 mil oz. of "registered" COMEX silver bullion @ $7/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 60 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 60 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 60 x 10, You will see that bonds and currency are overvalued relative to select silver stocks by a factor of 154,800 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 154,800 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. Canadian Zinc, Sterling Mining, IMA Resources, and perhaps Mines Management and Cardero are probably the best five candidates. These all have market caps ranging close to $50-$100 million dollars or more, and are more liquid than many others. (I used to recommend PAAS and SSRI for this kind of "liquid alternative", but they are no longer relatively cheap, and the others have now increased in liquidity, and are now much more suitable for this kind of trading.)

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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 "

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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"

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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.

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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 web site 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".
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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.

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(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.

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(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.
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ABX (Barrick)
http://www.barrick.com/
investor@barrick.com (IR)
535 million shares outstanding (1 Q 2004)
@ $19.76/share
$10,572 million Market Cap
5.5 million oz. / year gold production.
--production hedged out for 3 years worth of total production, 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 "might" 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.")
$10,572 million Market Cap / 1710 mil oz. = $6.18/oz. silver
You may get "approx" 1.06 ounces in the ground for 1 oz. silver's worth of stock, if the silver and gold was not 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.

Around the spring of 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, but that they just bought options or futures that expired.

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)
@ $3.95/share
$1570 mil MC
419 proven and probable reserves of silver (from 2002 annual report on web site)
$1570 mil MC / 419 oz. silver = $3.75/oz.
You get "approx" 1.75 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 web site or in the annual report. There is no need for a Mexican company to comply with Canadian law, 43-101. When CDE recently complied with 43-101, they raised their total numbers by about 30-50%?

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
@ $3.66/share
$783 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.
(43-101 reporting increased the number from 189 mil to 279 mil oz. silver). Before, Cour only reported reserves.)
(Produced 14.2 mil oz. silver in latest fiscal year (early 2004)
$783 mil MC / 279 mil oz = $2.81/oz.
You get "approx" 2.33 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.

There is one very important factor that CDE investors need to consider, especially if they are hoping that the stock will return to a historic price. CDE stock prices, in my opinion, are highly unlikely to return to historic prices. And why? Because of the recent massive dilution. At the end of 1999, there were 30 million shares out. Today, there are 214 million. You MUST take that information into account when looking at a long-term historical price chart. For example, the price in 1996 was $20/share, but there were less than 30 million shares? If so, then the market cap was $600 million ($20/share x 30 million shares). Today, the market cap typically exceeds the previous historic price of $20/share and $600 mil MC! $3.63/share x 214 mil shares = $777 mil MC, which shows that CDE is more expensive today at $3.63/share ($777 mil MC) than it was at $20/share ($600 mil MC).

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)
@ $19.11/share
$906 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
$906 mil MC / 454 mil oz = $1.99/oz.
You get "approx" 3.28 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)
@ $1.86/share Cdn x .77 US/Cdn = $1.43 US
$55 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.
12 + 30 = 42 mil oz.
$55 mil MC / 37 mil oz. = $1.49/oz.
You get "approx" 4.38 ounces in the ground for 1 oz. silver's worth of stock.

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

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

First Silver is unhedged, and remain committed to remaining unhedged.

PAAS (PAN AMERICAN SILVER)
http://pa