-- Posted 1 April, 2006 | | Source: SilverSeek.com
Do you have one of these monuments or its equivalent in your backyard? No, me neither. Monuments are just stone anyway. What gave it its prominence has long since been dug up, played-out, and hauled away. It took only 21 years to completely deplete the greatest single mining strike in history. A portion of the plentiful booty went to establishing the
Hearst publishing empire.
But, if while digging fence holes in your back lawn you did strike a vein how would you handle it? You'd have cores drilled, assayed, and the inferred resources determined, of course. The geological reports indicated that your property had precious metals bearing ore sufficient enough to yield 45M ounces of silver. Documented. Certified. Not a
Comstock strike to be sure, but enough to pay off your car loan and credit card.
News of your strike swept the county, then the state, and finally the financial community. The spot price of silver took an immediate hit of $2.50, dropping from $18 to $15.50 in a heartbeat. You just got a 14% haircut on silver you haven't even taken out of the ground. The one-day drop triggered more selling from the Mom and Pops. After four days silver drifts down to $12.60, and no new buyers in sight. They've moved on.
You're not greedy (none of us good guys are), but you still want the maximum value for your property restored, or at least protected from further price erosion. Whether you like it or not you're in the mining business. The only shareholder at this point is yourself. The only overseer is your wife. That's cool.
What are you going to do? While asking trusted friends, legal counsel, and family and pondering its disposition, you begin to notice that the silver price has begun to creep up again ever so stealthfully. Two months after the word of your strike had broken the silver price was back up, but now over $22. Why? Hadn't big shot mining companies and bankers called you offering to help you mine your bonanza and get it to market? They would help you get rich. Your answer came like a thunderbolt. Right at the beginning of CNBC's Squawk Box, Bob Pisani reporting from the floor of the NYSE, revealed from inside sources in a derisive and scolding tone, that Mr. Privy Silvervein had decided not to bring his silver hoard out of the ground. How could Mr. Silvervein do that! Shame, shame. Didn't he realize that it was in the national interest to share it with those who needed it. The country needed it, after all. Silver responded by tacking on another $4 quicker than a blink of an eye.
Offers to buy your property came at you from all quarters. One even offered you the equivalent paper dollar amount of $72 per ounce! Ounces that were still in the ground, at that. You and your wife began to realize that your silver was worth more in the ground than above it.
This is what you decide to do. You process enough of the ore to give you a roundabout yield of 10,000 ozs. every six months after all expenses. Of course, if silver continues its rapid ascent you mine even less. Production maintained at this level should provide you and your closely knit family and friends income for 2,250 years. As people around you are still accepting paper as money, you'll want to hedge against downturns by holding some fiats, too. Just in case. But, you know better by reading history not to mine and dump as they did with Comstock. So much so that a silver "inflation" occurred (silver lost value). In the
1930s you learned that silver went as low as 26 cents an ounce. And that from a centuries old price of $1.29.
From that point you draw up an irrevocable perpetual trust for your descendents. You can put in there anything you want. You can require each unborn grandchild thereafter to be Christian home-schooled or tutored. College not required or recommended until certain specified changes evident. You could specify they must be proficient in a trade or profession. State certification not required. Be charitable in their own right. You define when their silver annuity shall begin. Special dispensation allowances can be made for family disabilities. I think you get the idea.
Fortunately, for today's bankers and silver users, today's miners - with a few exceptions - don't look at mining as do Mr. & Mrs. Privy Silvervein. Today's miners look to adding reserves to those which they are doing their utmost to deplete at any price. Mining lives are diminishing rapidly. There are shareholders to satisfy. Most are fools like
Newmont's Murdy who saw their earnings plunge 67% due to rising cost pressures. These CEOs are like hamsters running on treadmills for the bankers.
Who can know, but with more like him perhaps we'll have other mining executives besides Mr. & Mrs. Silvervein who work for their families and shareholders and not the bankers.
Could the United States at some point become a geo-political risk putting the Silvervein hoard in jeopardy of being confiscated? Future Silverveins just can't pack up their lode and move that easily. But, that's something as responsible citizens they still have time to work on, don't they.
- - CV
-- Posted 1 April, 2006 | |
