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-- Posted 6 March, 2004 | Digg This Article
FRIDAY, March 5th, 2004
This week's report lists 101 silver stocks. There are 30 silver stocks that list reserves, resources (and exploration potential.) which I calculate by using my "ounce in the ground" forumula. There are 49 explorers. There are about 22 additional "silver" stocks with incomplete information. Additions & Changes from last week are in bold.
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) email me with PP in the subject field: jasonhommel@yahoo.com
I can't tell you exactly which silver stocks to buy several reasons. First, I'm not your broker. Second, too many people ask. Third, if I told you what I was buying as I was buying it, you'd buy, and push the price up against me. If this sounds wrong, it's not. It's common sense, and it's how the market works. People bring what they have to sell to the market place and advertise it. That's capitalism and the free market at work. If you tell me about a silver stock not on this list, I expect that you would have invested in it first. I wouldn't want to put your recommendation on this list, and drive up the price of your hot undervalued silver stock before you buy your great tip! So, buy it first, and then tell the world what you did and how smart of an investor you are and how much homework you did to find your favorite unknown silver junior.
So, because I have a market reach, I also receive a lot of tips about silver stocks. And thus, I may have invested in some of the best ones that came my way. If you believe I may have an edge based on my work and position... then the best way for me to share this with you is to is tell you where I put my money. It's not investment advice. I offer a monthly "look at my portfolio". Try it for a month, and see if it works for you. I do not issue recommendations, and I don't list number of shares or the size of my portfolio, but I will show the top investments in my portfolio, by rank, updated monthly.
Price: $29.95/month or Price: $295.00/year
To order: Click here
To read about my religious bias, see my other website, bibleprophesy.org There are two essays near the top of the page that explain why I believe the entire world will return to using gold and silver as money again before the end times. Hint, see Ezekiel 38. To read more about my religious bias when it comes to investing, see my new essay, Biblical Guidelines for Managing your Money
If you want to receive an email notice of when and where this FREE weekly report is published, sign up at GoldIsMoney.com Anyone who signs up will also get a FREE e-book that explains the bullish case for gold and especially silver. If you have studied the silver market at all, then the time has come that you ought to be a teacher, and you ought to explain the silver story to all who will listen. GoldIsMoney.com is designed to help spread the word. I suggest you email the link to your address book.
Kitco reports silver at $6.95 as of Friday, 4:11 PM West Coast US, which was used to calculate the following figures. The CAN $ / US $ conversion factor is .7566. I will use .76 for ease.
How to read the following table:
Stock Symbol that works at Yahoo! Finance (Company name) / Silver oz. "in ground"** for 1 oz. silver's worth of stock. / valuation price change since last week relative to silver price change (and stock dilution, and resource changes, if any) / additional comments (EXPT is "exploration potential")
- HL (HECLA MINING CO) .41 even --current producer (gold bonus) cash rich.
- ABX (BARRICK) 1.04 down --infamous hedger (18 mil oz. gold hedged, 3 yrs production)
- CDE (COEUR D'ALENE) 1 even --current producer, (gold bonus) in debt.
- IPOAF.PK (INDUSTL PENOLES) 1.6 even --current producer, mostly family owned.
- SIL (APEX SILVER) 2.9 up --large zinc bonus, low grades, cash rich--$200 million!
- CFTN.PK (CLIFTON MINING) 3.0 even -- (69 EXPT) (colloidal silver patent bonus)
- MFN MFL.TO (MINEFINDERS) 4.0 up --significant gold bonus, $35 mil cash on hand.
- ECU.V ECUXF.PK (ECU SILVER MINI) 4.3 up --(11.5 EXPT) --50% gold bonus
- PAAS (PAN AMERICAN SILVER) 4.8 down --current producer, in debt.
- GRS GAM.TO (GAMMON LAKE) 4.8 up --current producer, owns 26% of Mexgold
- * CZN.TO CZICF.PK (CDN ZINC) 5.1 down --large zinc bonus, high grades, low start up costs, great EXPT
- KBR.V KBRRF.PK (KIMBER RSCS) 5.2 even A one property company, with exploration potential.
- FSR.TO FSLVF.PK (FIRST SILVER) 5.5 down --current producer, (not profitable '03 3rd q.) unhedged
- WTZ WTC.TO (WESTERN SILVER) 5.5 down -- (23 EXPT) large mine development cost.
- SSRI (SILVER STD RSC) 6.5 up --multi-property company, understands silver story
- * TM.V TUMIF.OB (TUMI RSCS) 6.9 up -- (14 EXPT) recent bonanza grade silver discovery
- ORM.V OREXF.PK (OREMEX RES) 8.9 even (37 EXPT)
- MGR.V MGRSF.PK (MEXGOLD RSCS) 9.2* up (*exploration target) -- bonanza grade discovery on Jan 13th
- * SRLM.PK (STERLING MINING) 9.4 up --(25 EXPT) acquired the Sunshine in Cour d'Alene
- FAN.TO FRLLF.PK (FARALLON RSCS) 12 even --(21 EXPT) low grades, silver 1/3; also gold & zinc bonus.
- * EXR.V EXPTF.PK (EXPATRIATE RECS) 15 down --significant zinc bonus 60% zinc, 25% silver
- * ADB.V ADBRF.PK (ADMIRAL BAY RSCS) 18 down --actively expanding resources. (Huge gas bonus)
- * SVL.V STVZF.PK (SILVRCRST MINES) 19 down --(34++ EXPT) --(Silver in Honduras) ++ acquired silver props.
- HDA.V (HUSIF?) (HULDRA SILVER) 20 down --very tiny, no debt, zinc bonus, low start up costs.
- * ASM.V ASGMF.PK (AVINO SILV GOLD) 21 down --owns 49% of the Avino+ 4 other silver props. (silver bonus)
- CHD.V CHDSF.PK (CHARIOT RSCS) 21 down (explorer, with inferred resources)
- * MNMM.OB (MINES MGMT) 22 down --60% copper bonus (low grades), start up cost ~ $250 mil
- GGC.V GGCRF.PK (GENCO RESOURCES) 23 new to the list.
- RDV.TO RDFVF.PK (REDCORP VENTURE) 23 down --60% gold bonus
- UNCN.OB (UNICO INC) 55 even --lease expiring on largest property, June 1 2004.
* = I own shares
Explorers (by market cap):
- III.TO IPMLF.PK (IMPERIAL METALS)
- EZM.V EZMCF.PK (EUROZINC MINING)
- * IMR.V IMXPF.OB (IMA EXPL)
- TVI.TO TVIPF.PK (TVI PACIFIC) --current producer of a dore silver bar 96% silver, 4% gold
- * FCO.TO FCACF.PK (FORMATION CAPTL) Cobolt (and Sunshine silver refinery)
- MCAJF.PK (MACMIN LTD)
- * CDU.V CUEAF.PK (CARDERO RSCS) 37-64 "exploration potential"
- AOT.V ASOLF.PK (ASCOT RSCS) -- owns percentage of Cardero, CDU.V
- IAU.V ITDXF.PK (INTREPID MINRLS) 7 "exploration potential" (drilling results caused the stock price to double)
- MAG.V MSLRF.PK (MAG SILVER)
- CAUCF.PK (CALEDON RES)
- MAI.V MNEAF.OB (MINERA ANDES) (gold bonus)
- * NPG.V NVPGF.PK (NEVADA PAC GOLD) 31-157 "exploration potential" (owns 1 silver property, 10 gold properties)
- * MMGG.OB (METALLINE MINE) --zinc/silver (historic high grade silver) (low cost revolutionary oxide zinc process)
- * OTMN.PK (O.T. MINING) very large exploration potential
- MMM.TO MMAXF.PK (MINCO MINING)
- BZA.V ABZGF.PK (AMER BONANZA)
- QTA.V QURAF.PK (QUATERRA RES)
- EDR.V EDRGF.PK (ENDEAVOUR GOLD)
- * FR.V FMJRF.PK (FIRST MAJESTIC) -- Bought a former silver producer. Acquiring silver properties.
- DNI.V DMNKF.PK (DUMONT NICKEL) exploring Clifton's property
- SML.V SMLZF.PK (STEALTH MNRLS)
- MAN.TO MMALF.PK (MANHATTAN MNRLS) --Protests in Peru, and Peru revoking the property rights, hurt the price.
- * NBG.V NBULF.PK (NEW BULLET GP) 30 - 85 "exploration potential"
- SDR.V SDURF.PK (STROUD RSCS)
- * CBE.V CBEFF.PK (CABO MINING) --Historic Silver and Cobalt district
- EXN.V EXLLF.PK (EXCELLON RSCS)
- EPZ.V ESPZF.PK (ESPERANZA SILVR)
- BCM.V BCEKF.PK (BEAR CRK MINING)
- NJMC.OB (NEW JERSEY MIN)
- HGM.V HOGOF.PK (HOLMER GOLD)
- SPM.V SMNPF.PK (SCORPION MINING)
- CHMN.PK (CHESTER MINING)
- * KG.V KDKGF.PK (KLONDIKE GOLD)
- GNG.V GGTHF.PK (GOLDEN GOLIATH) --Historic silver district in Mexico
- MMG.V MMEEF.PK (MCMILLAN GOLD)
- * KRE.V KREKF.PK (KENRICH ESKAY)
- EGD.V EGDMF.PK (ENERGOLD MINING)
- LEG.V LEGCF.PK (LATEEGRA RSCS)
- SHSH.PK (SHOSHONE SILVER)
- BGS.V BLDGF.PK (BALLAD GLD SLVR)
- AUN.V AUNFF.PK (Aurcana Corp)
- SRY.V (STINGRAY RSCS)
- PCM.V (PAC COMOX RES)
- BBR.V BBRRF.PK (BRETT RES)
- TUO.V TEUTF.PK (TEUTON RES)
- ASLM.PK (AMER SILVER MINI)
- ROK.V ROCAF.PK (ROCA MINES INC)
- CBP.V CPBMF.PK (CONS PAC BAY MIN)
* = I own shares
** = "in ground" counts all "silver oz. in the ground" as the same, but they are NOT EQUAL. Some are more certain and others are more speculative. Some are higher grades, some are lower grades. They range from most certain to least certain such as: "proven & probable reserves," "measured, indicated, inferred resources." This single number next to each stock symbol above represents the approximate number of ounces of silver in the ground you are buying title to when you invest the equivalent of one ounce of silver by buying shares in the company at current prices. (It 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.
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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WEEKLY COMMENTARY (All new in this section):
For about the last year, people have been wondering if the next contract month at the COMEX would be the big silver squeeze with runaway prices as more silver is demanded than the shorts can deliver. Still not yet, it's not yet the big squeeze. And by the big squeeze, I mean runaway prices to $50-$100/oz and beyond due to delivery defaults. We are down to less than 715 contracts (at 5000 oz. ea) left, and so, most were sold or rolled over for May delivery. That's only 3.75 mil oz. of contracts left, yet there remain 52 million oz. registered for delivery. COMEX is a game where gamblers play. Most contract holders, the paper longs, are not interested in real delivery. Yet the world has just about run out of silver, and COMEX is about the only place left to get it in size. It's like the paper longs are only interested in silver if others are interested in silver, and nobody wants to be the first to get it. They all want to be last in line after it runs out. What irony! Fools, I say. The good news is that with the March contract still way open with plenty of time left, and with plenty of silver in the registered category, the bigger players can now buy multiple futures contracts with a very large degree of confidence that they will get physical delivery almost immediately. I was not so sure whether or not a major delivery default would happen a month ago.
On Sunday, Bill Murphy of http://www.lemetropolecafe.com reviewed three big items he's heard through his list of contacts, that he has reported, that indicate that silver is very scarce right now:
*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. *We heard one European group was going to the silver derivatives market to secure future supply because they couldn’t find enough physical to satisfy a $250 million buyer order. *One other European group was said to be buying up all the silver they could find on that continent. To get these kinds of insights on what is happening in the silver and gold markets, you can sign up for a FREE TWO WEEK TRIAL at http://www.lemetropolecafe.com. An annual subscription is $150. (I'm a subscriber.)
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On Sunday, David Morgan of http://www.silver-investor.com released his monthly newsletter. His subscription at $100/year is well worth the price. (I'm also a subscriber.) David also refuted bearish comments on silver from Andy Smith of Mitsui Metals. He notes that nearly all industry silver analysts forget to note the potential monetary demand for silver. I completely agree! He reports that some COMEX deliveries are being made with silver bars minted in 2003, suggesting that we are about out.
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On Monday, an excerpt from my e-book (the part about gold) was featured on page 3 of the February issue of Goldview at http://www.europeangoldcentre.com/
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Here is a news article that supports my basic methodology for evaluating silver stocks (but the story is about gold) Personal view: Get your gold while it's still in the ground
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On Thursday, I started running paid advertising heavily on the internet on several web sites. On Friday, the silver price was up by 25 cents. Any correlation? I think so; but, all the new people got to see was the e-book. They saw the ad for this free silver stock report (which they have not seen until now). I do know this... the silver price has been roaring since I started producing this report about 25 weeks ago. It could be good timing on my part, but my silver stock reports also may be affecting the market! I also know that this report comes out on the weekends, and typically that's when a lot of people see it for the first time. I also know that I've seen the silver price rocket up on Monday mornings on several occasions recently. The feedback I get from people who read this report for the first time is amazingly positive. This weekend, many people will see this report for the first time, because of the internet ads that I told everyone I was going to run. I believe that this report is helping to drive the market into silver. Honestly, I would not be working so hard if people did not appreciate this report, and encourage me so much with their emails and actions.
This week, a link to this report is going out in email to perhaps about 6000 email addresses, (up from about 4500).
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Last month, in Silver Stock report #20, I wrote that the bank of Japan could not buy gold on the open market at anywhere near today's prices, because any significant purchases of gold for their reserves would drive the gold price way, way up and probably past $1000/oz. Here was my math on that:
Thus, when finance minister Tanigaki says, "As it might affect the gold market..." I and my readers should easily and quickly know that's an understatement. Now, I know Tanigaki did not say he was going to put all his reserves into gold. On the other hand, he did not even say he was going to buy any gold at all! Nevertheless, IF the equivalent of $673 billion tried to buy gold, well, no matter how many dollars are spent, I don't think anyone could get any more gold from the market than about 2000 tonnes within a year, since that is probably all that is reasonably available, given the current supply/demand statistics of 2500 tonnes mine supply, and 4000 tonnes of existing demand. And if you divide that out, it may give us a price target for gold if $673 billion tried to buy it. 2000 tonnes / 32152 oz./tonne = 64.3 million ounces of gold. $673 billion dollars is $673,000 million dollars. $673,000 million dollars / 64.3 million oz. of gold = $10,466/oz.
This means that if the bank of Japan tried to spend $673 billion on gold, it would likely push the price up to over $10,000/oz.
This week, a report in the Hindu Business Line said nearly the same thing, that it would be "virtually impossible" for the Bank of Japan to buy gold in any reasonable quantity in proportion to their dollar reserves!
From: http://www.thehindubusinessline.com/2004/02/25/stories/2004022500201200.htm
Key Excerpt:
``For example, if Japan wanted to match the proportion of gold in its reserves as the ECB (initially) then 15 per cent would equate to a requirement to purchase nearly 6,800 tonnes. Given that this represents 2.6 years' of mine output, such a purchase scheme is virtually impossible to transact in anything other than a massive off-market transaction,'' Mr Naqvi remarked.
Thank you Mr. Naqvi for telling it straight!
I cannot overemphasize how important it will be for the precious metals markets when monetary demand returns to the sector after having abandoned it for so long.
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One of my favorite market commentators is Bill Bonner of http://www.dailyreckoning.com
I was reading his new best selling book, "Financial Reckoning Day--Surviving the Soft Depression of the 21st Century" this week. On page 55, he writes:
"Charts of market manias tend to be symmetrical. Sharp upward spikes on the left-hand side are mirrored by sharp downward spikes on the right. Long gentle inclines on the left are usually followed by long, gentle declines on the right."
I tend to agree, in that the value of paper money will rise and fall. However, on the graph of the chart of the value of gold, as denominated in paper money, the chart will NOT show a rise and fall. As the value of paper money returns to it's intrinsic value (that of waste paper), the gold price as denominated in dollars heads towards infinity dollars per ounce. Thus, the chart will show the up trend line, but never a downtrend line. It does not go up to $10,000/oz., and then come back down to $20/oz. For example, gold at one time, was $20/oz. Then, it was revalued to $35/oz. never again to return to $20. Then, another gold default came, and the price moved up again. The decline in the gold price from $850/oz in 1980 was the unusual thing. The reality is that the price will most likely spike up, never to come back down again. The cycle is that paper money will return to its true value (as nothing) and gold and silver will return to their true value (as money).
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This week, I got an email from a man who suggested I should count the gold as silver at the current silver to gold ratio, about 60:1, instead of the ratio I use, which is 10:1. I get these comments/complaints from time to time. However, let's all note that when I started this weekly report about 25 weeks ago, the silver to gold ratio was at 75:1, and now it's at 58:1. If I was counting gold as silver back then at 75:1, then, by now, a lot of that "silver equivalent value" would have evaporated and disintegrated by now! And real assets DO NOT DISINTEGRATE! Example: If one oz. of gold was originally counted as 75 ounces of silver, it would only count as 58 ounces of silver today. Probably by the time silver hits 30:1, I will stop counting gold as if it were silver altogether, and just list it as a "non quantifiable gold bonus", much like I list a "zinc bonus" or "copper bonus" today.
I'm investing in silver, not gold, and for a reason. The reason is that I believe the ratio has the potential to reach parity or a 1:1 ratio. And to count gold as silver is simply "fraud" and lies, because gold is not silver. Gold is gold. Gold has it's own supply and demand dynamics, and so does silver.
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Let me admit, as an investor in silver, and as a believer in silver and sound money, and as I hate the fraud of the paper dollar, I promote silver, and I promote silver stocks. Why not? I think silver and silver stocks will provide the best return, and why should I not advocate my beliefs? One way I have been doing this is that I opened an imaginary trading account at http://www.marketocracy.com
I love marketocracy.com, and I think their concept is amazing. They let anyone in the world sign up to manage imaginary money, according to a few rules. The best investors with the best track records for each quarter of the year become their "top 100". And then, marketocracy creates real world mutual funds that mirror the best performing portfolios. This way, they have the best "imaginary" investors of the world (for the last quarter) essentially directing where real money should be invested. I believe they have about 60,000 participants now, trying to manage these imaginary portfolios.
Here are the two key rules for running your fund of $1 million: For the majority of the quarter,
* No one stock can exceed 25% of your portfolio assets (most of the time).
* Half your portfolio must be made up of stocks of 5% (or less) of your portfolio assets (most of the time).
A minor rule, also, (but affects me greatly) is that you cannot invest in stocks on the Canadian Venture or Toronto exchanges, and you can't invest in pink sheets stocks. Unfortunately, this severely limits the investment choices for silver stocks. As such, below is NOT my ideal and NOT my real portfolio, due to those restrictions. It is also a "trading" portfolio, since you cannot participate in private placements, but must purchase all stock on the open market, and this is not realistic if you have over a million dollars, and thus qualify as being a "sophisticated/accredited" investor. But it is an interesting exercise, and you may be interested to see how this imaginary portfolio has been performing since I signed up in Mid December:
As of Friday, March 5th, my silver stock portfolio at marketocracy was ranked #3 (out of 60,000 or so?) for the last 30 days. (I only started in December, so I don't have a 90-day performance yet.) To see this, go to http://www.marketocracy.com and click on "rankings" at the bottom center. My portfolio return was 12.15% over the last 30 days for the period ending Feb 20th. Of course, those invested in silver stocks right now often see gains in excess of 15% in one day in certain stocks. For example, on Friday, March 5th, MMGG was up 19%, KG.V was up 19%, MSLM.PK was up 15%, MERG.PK was up 20%, GPSB.OB was up 18%--all in one day. Here is how my imaginary portfolio is allocated:
DIVERSIFICATION Cash: $22,670.48
DIVERSIFICATION | Symbol | Price | Shares | Value | Current Return | Portion of Fund | | |
|---|
| MMGG | $3.10 | 107,844 | $334,316.40 | 67.54% | 25.00% | Details | First 50% | | MNMM | $7.05 | 36,922 | $260,300.10 | 24.13% | 19.46% | Details | | VGZ | $4.76 | 12,940 | $61,594.40 | 7.10% | 4.61% | Details | | MFN | $9.93 | 6,200 | $61,566.00 | 20.03% | 4.60% | Details | Second 50% | | CEF | $5.71 | 10,600 | $60,526.00 | 7.48% | 4.53% | Details | | WHT | $2.91 | 20,700 | $60,237.00 | 5.87% | 4.50% | Details | | WTZ | $7.38 | 8,160 | $60,220.80 | 24.12% | 4.50% | Details | | PAAS | $17.59 | 3,400 | $59,806.00 | 30.46% | 4.47% | Details | | GSS | $6.14 | 9,700 | $59,558.00 | -6.67% | 4.45% | Details | | SIL | $22.85 | 2,600 | $59,410.00 | 28.63% | 4.44% | Details | | CDE | $7.41 | 7,900 | $58,539.00 | 45.79% | 4.38% | Details | | SSRI | $16.26 | 3,600 | $58,536.00 | 22.19% | 4.38% | Details | | HL | $7.93 | 7,200 | $57,096.00 | 6.13% | 4.27% | Details | | GPXM | $0.34 | 163,240 | $55,501.60 | -22.49% | 4.15% | Details | | NJMC | $0.71 | 14,780 | $10,493.80 | -1.51% | 0.78% | Details |
To remain in "compliance" I have to "trade" quite often, perhaps 1-2 times a week to bring the fund back into compliance if a stock moves up too much, because there are not enough silver stocks that qualify "not PK, not .V, not .TO" to properly diversify into. And there is so much growth taking place, often the small positions will exceed 5%, and I will be required to sell a stock, and re-diversify the proceeds to keep the portfolio in compliance with the rules.
Since there are so few silver stocks to choose from that marketocracy will allow me to trade in, the fund basically cannot make any distinction between stocks, and only allows me to really "pick" two or three stocks to be over 4.5%. The rest are in there only for the diversification factor. Please don't consider this list an endorsement of all the stocks in the portfolio above. Also, I have a few gold stocks included, again merely because there are not enough silver stocks to choose from.
Now, here's the kicker! This marketocracy.com is a wonderful idea, since it makes excellent use of competition, which is the natural result of the free market. People have to compete to be in the top 100! It also means that the funds run by marketocracy will generally be chasing returns in the best sectors, as they are pulled toward stocks by market momentum. Thus, if I qualify for the top 100 by the end of the first quarter, and if keep my fund in compliance, real money will be forced to be invested into the above silver stocks as a real world marketocracy fund will be forced to diversify into my holdings.
Momentum investors will be drawn to the silver stocks not only through marketocracy, but also through seeing the returns and the charts. The real world will be affected as silver stocks outperform nearly everything else, and momentum investors will increasingly be drawn into to the silver stock sector, like moths to a flame...
If you'd really like to help me "pull" money into the silver sector, or if you want to help pull real money into your favorite silver junior stocks, go ahead an open an account at marketocracy, and fill it with silver stocks!
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I have a Federal Court case I'm fighting... I'm fighting for the right to work without a social security number, without suffering discrimination.
I was going to speak before the 9th circuit and give a 10-minute oral argument on March 10th. But the court concluded that my case (where I'm fighting for the right to work without a social security number) was adequately presented in the briefs, and decided they did not need to hear any oral arguments in my case. And so, my case was finally and formally "submitted without oral argument" to the 9th Circuit court. And so, now I await their decision. I'm asking for them to overturn the Federal District court's dismissal, and to order the District court to give me the jury trial, which I have a right to according to law.
For more information about my case, see http://www.bibleprophesy.org/squaw.htm
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Horror story with Wells Fargo! My webmaster is handling order processing for goldismoney.com through his merchant account with Wells Fargo. Wells Fargo decided to put a "hold" on about 50% of the money, without telling my webmaster that monies were being withheld. Sound fraudulent? Yes! Also, they would credit the account only once every two weeks, but with no accounting of totals, so the money was always "behind". So, good thing we kept track of our order totals, or there would be no way to check to see if they were not paying us! So, we have changed merchant accounts and are using another bank. Have I mentioned how I hate the banking system? They act like we are the ones who might default on them, but they are holding our money, and defaulting on payment to us!
It's like when you walk into the bank and try to cash a check and they put a hold on it, or ask for a thumbprint "for your protection". What? I don't need "protection", I need my money, cash, so I can go to the bullion dealer! They say it's in the event of default or fraud, but the only fraud going on is the banks not paying you your money! They are the ones actively engaged in fraud by not paying, and by engaging in fractional reserve banking! Done venting... Got gold and silver? It cannot default on you, the metal is payment in full.
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For the last several years, I have been trying to determine how God wants me to be a "wise steward". To that end, I have been paying attention to what the Bible has to say about money. See my new article: Biblical Guidelines for Managing your Money
General Commentary on Silver (slightly modified from last week):
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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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.nh-inews.org/
http://veritasradio.com/
Current status of the NH bill:
The bill will live until the November elections. It'll have a different #,
but we now have 6 months or so to get EVERYONE we need on board.
Thanks to you for your efforts. Now, the fund raising part begins
so we can take it to the other states ! More on that later.
For now - V I C T O R Y is in sight !
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The following dealers have, or regularly keep, over 100,000 oz. silver bullion in inventory: Minimum order: 100 oz. gold or 5000. oz. silver: (These are not places to call for small retail orders. For smaller orders, call Greg Westgaard, 1-800-328-1860 Ext. 8889, and tell him Jason sent you.)
American Coin and Vault 5523 North Wall Street Spokane, WA 99205 (509) 326-7512 California Numismatics (will accept small retail orders, as small as you want.) http://www.golddealer.com/ Richard Schwary 1-800-225-7531 Engles Coin Shop Minimum order: 100 oz. gold or 5000. oz. silver.(317) 875 0614 3520 Founders Lane, Indianapolis, IN 46268 Miles Franklin Ltd. http://www.milesfranklin.com St. Louis Park, Minn. Bob Sichel 1-800-814-3224 They believe their exclusive wholesaler is one of the top 5-6 wholesalers in size in N. America.
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The easiest way to buy Comex Silver is through a precious metals brokerage firm such as HSBC bank, or http://www.fidelitrade.com/ that charges around 1% commission, plus delivery fees of about 2-3% depending on how far to ship. Or you could open a commodities trading account with any of the major brokerage houses who are most likely the bullion banks, and take delivery of your contract. There are several problems with this method. First, is the most obvious. These are the paper contracts that are controlling and suppressing the price, that I believe must one day default. Second, the bullion banks, since they are the ones who are likely short silver, will try their hardest to talk you out of placing an order. I have actually had several bullion banks turn me down, and not open a commodities trading account for me when they heard I was going to take delivery of several futures contracts! Their hypocritical excuses are amazing! They will say on one hand that their comissions are too low, and thus, it's not worth their time to open the account for you. And then, they will turn around and also say that you don't want to order silver bullion because the commissions will kill you! Unbelievable hypocrites those shorts! They will also try to scare you with "assay fees" that will be assessed if you try to return 1000 oz. bars to the exchange! But they won't tell you what those fees may cost! I've heard the assay fee is FREE if you use Brinks in LA!
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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Let me say how important it is for silver stock investors to own physical silver. There is $ 334 million dollars worth of silver in the registered category available for delivery at the COMEX. The 59 silver stocks on my list, for which I have information available to calculate market caps, add up to $7090 million as of Dec. 5th, 2003. If silver stock investors move 5% of their silver stock holding to physical silver in the next few weeks, that would be $350 million dollars worth of physical silver, and thus, the silver price would probably hit $10-20/oz. within a few days. And if silver stock investors try to move 20% into physical silver, the silver demand will end the COMEX manipulation tomorrow. We don't need anyone other than ourselves to make "the big breakout" happen at this point.
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I wrote an article predicting that Silver Companies will buy silver, and urging Silver Companies to buy silver with their cash, to use silver as money, and sell silver as needed for expenses. See http://news.goldseek.com/GoldIsMoney/1069879327.php
That article is now having an effect! It is being discussed by several large "cash rich" silver companies, who are seriously considering the idea of holding their cash in the form of silver.
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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?
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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 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
Sign 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. So 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, follow the urls and check the numbers:
1,000,000,000,000: 1 Trillion dollars
1,000,000,000: 1 Billion dollars
1,000,000: 1 Million dollars
$33,000,000,000,000: World bond market yr end, '01: http://tinyurl.com/vr7u $20,200,000,000,000: U.S. bond market, yr end, '02: http://tinyurl.com/vr7g $11,700,000,000,000: U.S. stock market, yr end, '02: http://tinyurl.com/vr7g $11,038,000,000,000: U.S. annual GDP, 3rd q.'03 est. http://tinyurl.com/vr9y $8,879,000,000,000: M3 (money in the banks) Nov. '03 http://tinyurl.com/vra0 $7,001,312,247,818: US debt, 12-31-'03 http://tinyurl.com/bbp $2,212,000,000,000: U.S. annual budget 2003 $1,860,000,000,000: World gold, 145,000 T @ $400/oz. http://tinyurl.com/vrcc $554,995,097,146: U.S. budget deficit, ending fiscal year, 09/30/'03 http://tinyurl.com/bbp $274,000,000,000: Market Cap of Microsoft http://tinyurl.com/vrcn $180,000,000,000: debt of Ford Motor Co. 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 (estimated?) $7,090,000,000: all the world's silver stocks (59 of them on this list, as of Dec. 5th, 2003) $364,000,000: 52.5 mil oz. of registered COMEX silver @ $ 6.95 /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 59 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 66 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 59 x 10, You will see that bonds and currency are overvalued relative to select silver stocks by a factor of 152,000 to one. In other words, if silver stocks reach their true value, and paper currency disappears as it always does, then you might expect certain silver stocks to go up in relative value by a factor of 152,000 times more than they are worth today. By that time, you should definitely sell the silver stocks, and buy gold.
Can silver stocks really appreciate so much? Is there historical evidence for such a crazy thing? Yes.
See http://www.sterlingmining.com/old.html
Excerpt:
"CDE rose from penny stock status (.02 in 1967) to an NYSE-listed, $60 per share stock in 1980. In fact, the average share on the Spokane Stock Exchange rose in value nearly 16000% (yes, sixteen THOUSAND percent), as America could not get enough of silver and silver stocks."
CDE rose by a factor of 3000, or 300,000%, and by 1980, the metals boom was stopped short, and paper money's death was postponed. If paper money dies a death that lasts a generation world-wide, then even greater gains should have been expected.
For this reason, a wise silver stock investor should NEVER sell silver stocks for paper cash. A wise silver stock investor who looks for value would never sell a fairly valued silver stock for an overvalued silver stock that traded for hundreds of thousands of times more value than it should be. Likewise, there is no excuse for a silver stock investor to have any cash or money market or bonds in his portfolio for any reasonable length of time, except for when selling one silver stock to raise the cash for another silver stock, or for when you need to raise the cash to buy silver, or a private placement in another silver stock.
So, if you want some fairly liquid alternatives to cash, in case you don't know what other silver stocks to buy at the time, here they are:
1. Buy silver. You can hold silver in an IRA.
2. Buy CEF. Central Fund of Canada, ticker symbol CEF. It's gold/silver bullion fund. It has 50 oz. of silver for every 1 oz. of gold. The fund is fairly liquid, you can buy it as easily as any other stock, and is a good cash substitute. Unfortunately, given the current ratio, about 60% or more of the value is in gold.
3. Buy a fairly large cap silver stock, with fairly large volume, that is still fairly cheap on the list. SSRI is probably the best candidate.
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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 the 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: "59 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 59 times better. Currently, the ratio is 59 ounces of silver can buy one ounce of gold or 59:1.
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.html
For a list of Brokers that handle Canadian issues and/or pink sheets:
http://www.bibleprophesy.org/SilverStockExtra.html
To track the 150 ticker symbols of the 90 stocks on this list at yahoo: (Updated on Jan 30th)
http://www.bibleprophesy.org/SilverStockExtra.html
To learn All about Canadian law, 43-101, about reserves and resources:
http://www.bcsc.bc.ca/Publications/mineral_projects_sept03.pdf
A good website that hosts posting boards for many of the smaller canadian stocks (that Yahoo! finance does not have boards for) is stockhouse.com
Click on "Bullboards".
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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 may have made mistakes. I probably did. I'm human. I have collected the information from public sources such as company web sites and public information found at yahoo.com to get the stock prices. This report in no way guarantees the accuracy of the information below, since the information may change at any time. The number of outstanding shares can change as a company engages in new share issues to raise more capital through private placements, or if outstanding warrants (and options) are exercised and converted into shares, or if shares are bought back. Shares can be consolidated, or split. The number of ounces of silver in the ground can also change, as these are often only estimates. The number can also change up or down, depending on drilling results.
This report is not investment advice. This report contains information that may or may not be up to date, and may be inaccurate. I urge you to contact the company and do your own research to verify the information contained in this report.
This report is not an offer to buy or sell any securities. I am not a broker. Only your broker can buy or sell securities for you.
I urge you to consult with your investment advisor to determine whether these kinds of investments are right for you.
I also caution you to be aware of your investment advisor's advice, they are sometimes paid to push things like mutual funds, bonds and other securities that may not be in your best interest to buy. Some investment houses are short physical metal, and thus, they may attempt to strongly discourage you from buying precious metal or precious metals investments. I believe that the propaganda machine in support of frauds such as bonds and the dollar is so strong, that they may even believe what they say when they give bad advice to avoid the safety and protection of precious metals. It is most likely that they simply do not understand the precious metals market as well as you do.
All total estimates of "ounces in the ground" can vary widely. There are "proven and probable reserves" which are the highest category of certainty which is obtained through many drill holes, and then at the least accurate, there are "inferred resources" which are hardest to estimate. Additionally, every miner always has "more silver properties that need to be explored, which probably contain more silver". For the purposes of this report, I have added all those numbers together. It is believed that all these "ounce in the ground" estimates can be profitably mined at $5-6 per ounce silver, or lower. Thus, I believe that when silver trades for $15/oz. or above, that all of these ounces can be mined at a substantial profit.
I may be wrong. (I probably make mistakes in every article, and there have been updates and corrections made each week, especially as prices change.)
Mining is a risky business. You need to be willing to sustain a total loss of your investment for various unforeseen accidents. Silver stock companies can do stupid things to shareholders such as take on debt, or issue more stock at too low prices which reduces the percentage of the company you may own (dilution). Yet, they need to issue shares to raise capital for drilling, and then an even bigger dilution to build a working mine. They may sell YOUR silver too cheaply, or worse, hedge the price of YOUR silver just as it begins to go up if they lock in a price which then proves to be too low if the dollar is destroyed. Mining is a risky business as estimates of assets in the ground can change. There is political risk and environmental risk. They can't franchise the business, are stuck in one location, are subject to government confiscation, or taxes, or union wage negotiations, and corporate looting.
Do your own research. Be responsible for your own investment decisions. Again, please, before investing in a mining company, call up the company, and speak either with the CEO or the Investor Relations contact person.
So, at the very least, check the company web site, read the annual reports, check my numbers, check my math, and email the company. That's what they are there for, to answer your questions, and to speak about the opportunity of the company. Don't trust everything you read over the internet. I am a biased source. I own silver mining stocks. And I'm not a broker, nor an investment advisor. I'm just a private investor trying to make sense of this crazy world, and sharing my information and thoughts on silver companies.
Surely, there are scammers in the mining industry in the past, and there will be scammers in the future. Remember the fraud of Bre-X. The new 43-101 compliance laws put in place after Bre-X will not prevent a "certified" geologist from lying if he feels lying will create a better payoff. The Bible warns, "trust no man", yet at the same time advises us to "cast our bread upon the waters", and to not issue "false allegations" against others. Physical gold and silver provide the "payment in full" as long as the coins or bars themselves are genuine and not fake.
This report may be copied, and transmitted by other people, and may become outdated by the time it reaches you.
I can't tell you how you should invest your money, of course. The reason is that I don't know how convinced you are of the silver bull market, nor do I know how soon you will be needing the money back, so I don't know how long you can wait to see results, nor do I know how much liquidity you need. Nor do I know the size of the money you have to invest. It is very hard to invest large quantities of money in a small market cap stock.
That being said, my investment strategy seems to be working for me, so far. And so, here is how I have valued the following silver companies to make my own investment decisions.
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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). A private placement is done usually before there is ever an 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 three companies, BHP, GMBXF.PK, and BVN produce a lot of silver, but are way to expensive to buy for the silver exposure for your portfolio.)
BHP Billiton Ltd (BHP)
http://www.bhpbilliton.com/
--'produces 40 mil oz. silver annually from one mine'
Additional comments: unfortunately, BHP has a 53 Billion market cap, so we can't buy BHP for the silver exposure. IE, $53 Billion / oh, say, 1000 million?????= $53/oz.
Dear BHP: By all means, keep mining the silver if you want the silver exposure, and want to be in the silver business. But don't sell the silver. Keep it. Let the profits of your entire company accrue as an increasing physical supply of physical silver. In fact, do as Buffett did, and buy more silver if you can. It would be infinitely easier for you to buy silver from yourself than it would be to buy 40 million ounces of silver from the COMEX, which, today, might be impossible.
Grupo Mexico SA de CV (GMBXF.PK)
http://www.gmexico.com/indexi.html
651,646,640 shares (2002 annual report)
@ $4.00/share
$2606 mil MC
"Grupo Mexico ranks as the world's third largest copper producer (copper at $1.24), fourth largest producer of silver and fifth largest producer of zinc."
They produced 28.2 million oz. of silver, worth $129 million, in 2002. (P. 5, annual report.)
Total value of produced metals: $2527 milllion. (but the company lost money in 2002). They mainly produce copper, 900,000 tons worth $1.5 billion in 2002. Thus, silver, at 2002 prices, is only 5% of their production value. Silver is a by-product for them, not a main product.
I don't have silver reserve figures, nor do I see any need to find them or add them, since they are not a primary silver producer, and I don't think anybody would be buying them for the "silver exposure".
If we assume 280 mil oz. of silver (ten years reserve for production), then we still don't have anything exciting for the silver alone.
$2085 mil MC / 280 = $7.45/oz. cost.
Compania de Minas Buenaventura SA (BVN)
Minas Buenaventura
NYSE:BVN
- Peru´s largest publicly traded precious metals company
--produces over 10Moz of silver per year
--looks way too expensive for the silver alone: 3.6 Billion market cap.
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HL (HECLA MINING CO)
http://hecla-mining.com/
hmc-info@hecla-mining.com (208) 769-4100
110 mil shares
@ $7.93/share
$916 million Market Cap (MC)
near zero debt, cash: $123 mil (Feb., 2004)
(est. 2003 production 9 mil oz. silver)
(the La Camorra gold mine, 412,000 oz gold.) ... (x 350/5 = 28 mil silver equivalent oz.)
San Sebastian silver mine, (proven & probably reserves) 8.7 mil (produced 3 mil)
the Greens Creek silver mine (proven & probably reserves) 31 mil (produced 3 mil) Hecla owns just under 30% of it!
the Lucky Friday mine (proven & probably reserves) 14 mil. (produced 2 mil)
Total silver = 32 million oz.
Plus 412,000 oz. gold x 10 = 4.1 mil oz silver equiv.
Total silver equiv. reserves = 36 mil oz.
(Since my method values silver in the ground as a key asset, I should also value the cash as a "silver asset" which will be "marked to market" if silver goes up, and cash goes down. If HL is smart, they should be able to turn the cash into increased "silver exposure" either through buying silver properties, silver equities, or physical silver.)
($123 million cash / $6.95/oz = 17.7 mil "silver equiv" oz.)
18 + 36 = 54 mil oz.
$916 mil MC / 54 mil "oz." = $16.96/oz.
You get "approx" .41 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: Hecla Had Record Silver Production at Record Low Costs in 2003; Generates 90% Increase in Income before Environmental Accruals; For the Period Ended December 31, 2003COEUR D'ALENE, Idaho--(BUSINESS WIRE)--Feb. 12, 2004--Hecla Mining Company (NYSE:HL) (NYSE:HL-PrB) today reported 2003 year-end income before environmental accruals of $17.1 million and a 48% increase in gross profit compared to 2002. This compares to income before environmental accruals in 2002 of $9 million, a 90% increase year-on-year. Gross profit was $35 million in 2003 compared to $23.7 million in 2002, with 62% of 2003's gross profit coming from Hecla's silver properties. Hecla's cash flow provided by operating activities increased 28% in 2003, to $26 million. In the third quarter of 2003, Hecla recorded a noncash accrual for estimated future environmental costs of $23.1 million. Primarily because of this accrual, Hecla's net loss for 2003 was $6 million compared to net income in 2002 of $8.6 million.
Wow. 90% increase in income, but still a net loss after the "future environmental costs".
Hecla would have made more money if they took their 100 million dollars, and bought silver bullion at $5/oz., to obtain 20 million oz. of silver. At $6.95, they would have made $1.95 per ounce, or $40 million on the silver bullion investment alone.
HL has more oz. than listed in the "proven & probable" category used in this calculation. Vein mining makes reserve calculations difficult, and HL has rarely had more than about a 3-4 year picture of reserves ahead of them in 100 years of production.
I have been counting their papar cash as if it could be silver, but it still does not help boost their valuation much. They are still the most expensive company on the list in terms of cost per oz. of silver in the ground. But if HL bought 18 mil oz. of physical silver, they might end the silver manipulation, and significantly boost their own profitability.
Another way to check the value of HL is too look at profit, since they are active miners. "In 2003, Hecla produced 9.8 million ounces of silver at a record low average total cash cost of $1.43 per ounce." (Cash costs are that low, and good, because that figure includes gold credits!)
Here's another way to get a "guesstimate" of HL's reserves. I will assume they have enough silver to last another 20 years of mining. That's a fair enough time for a mine plan I suppose. I suppose they could run out of silver sooner, or later. They produce 10 mil oz. in a year. 10 mil oz. x 20 years = 200 mil oz.
$916 mil MC / 200 mil oz. = $4.58/oz. that you'd pay for the silver in the ground when buying HL. HL is still expensive, no matter how I run the numbers.
And in 4 months, nobody has been able to rationally justify this high valuation to me, nobody from the company, and not a single email from any investor. I believe that this stock trades on market perception, reputation, and momentum. As for me, I'm not buying such intangibles. I'm buying silver in the ground, real assets, or exploration potential.
In the Feb Press release, Baker said, "The fact that after a hundred-plus years of operation we are producing more silver at lower costs than at any time in our history points to the quality of the mining districts in which we're located. We expect these districts to continue to allow us to generate growing production at the lowest costs in the industry, while generating excellent returns on investment."
Low mining costs do not necessarily generate excellent returns on investment if you are considering buying HL stock, if the stock is at a high price. You need to consider the price of the stock in order to determine whether there will be excellent returns for your stock purchase! The way to do that, is to look at the P/E ratio. Although Hecla had a gross profit of $35 million in 2003, they had a net loss! But let's forget the environmental cost for a moment. Even a profit of $35 million is not that great if the market cap of the stock is about twenty times that (oh about $700 million), because if you assume the rosy picture of the year 2003 will stay the same, you'd have to wait 20 years to recoup your investment and just break even!!!
Baker may be referring to Hecla generating good returns on the investment that Hecla has made into their own company. Perhaps they spent a few million and are now have expectations to earn more millions. But Baker also completely ignores the investment opportunity cost, and loss, that Hecla has suffered from holding $123 million in fraudulent paper money, cash, instead of holding silver, like Hecla should have been doing by now.
Earth to Hecla: Is silver useful as money, or not? It's a simple question, and your actions speak volumes.
HL was downgraded Jan 6th by CIBC Wrld Mkts from Sector Perform to Sector Underperform http://biz.yahoo.com/c/20040106/d.html?hl
ABX (Barrick)
http://www.barrick.com/
535 million shares
@ $21.18/share
$11,330 million Market Cap
5.5 million oz. / year gold production.
--production hedged out for 3 years, or about 18 million oz. (most notorious hedger of the industry, the "leader")
--price of hedges locked in near the market lows, perhaps $340/oz. on average, nobody knows for sure, because Barrick will not say
--reportedly, Barrick is trying to "unhedge".
--reportedly, they plan to deliver 1/3 of production to hedges, which means they will be hedge free in about 10 years.
--the size of the hedge, 18 mil oz. gold, at $400/oz., would be valued at $7.2 billion dollars. At $500/oz, it's $9 billion.
--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 "rich" of about $1 billion dollars.
Silver Reserves reported to be 850 million ounces!
Gold Reserves reported to be 86 million oz. (x 10 = 860 mil oz. + 850 silver = 1710 mil oz. "silver equiv."
$11,330 million Market Cap / 1710 mil oz. = $6.62/oz. silver
You get "approx" 1.04 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: 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.
Barrick boasts a "cash cost" of $189/oz., for gold for 2003, yet their cash has dropped from $2 billion down to $1 billion. It could be due to the hedging, locking in precious metals prices at low prices, and/or hedge covering that explains the monetary loss in the light of their low cash costs.
CDE (COEUR D'ALENE)
http://www.coeur.com
coeurir@coeur.com (208) 769-8155 or (800) 624-2824
210 mil shares (Issued 32 mil new shares late Oct. 2003)
@ $7.41/share
$1556 mil MC
cash $38 mil (I think this is an outdated cash figure)
San Bartolome (Bolivia) reserves 146 mil silver
Silver Valley Silver reserves 32 mil silver
Rochester reserves 43 mil silver
Cerro Bayo reserves 3.7 mil silver
Total: 224.7 mil silver
(to Produce 14.6 mil oz. silver in 2003)
$1556 mil MC / 224.7 mil oz = $6.93/oz.
You get "approx" 1 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: A few weeks ago, CDE announded their intention to try and raise $150 million in the capital markets by issuing shares. http://biz.yahoo.com/prnews/031211/sfth014_1.html
The first week of January, CDE announced a deal for $160 million in convertable bonds! Beware of debt!
CDE continued to lose money in third quarter 2003, a loss of 10 cents/share, and they realized low prices for silver sales, $4.77. I believe they have hedged their gold production at low prices.
CDE looks like they owe both gold and dollars. A double debt warning for CDE investors!
Again, their listing of ounces is in the "reserves" category (more certain) not the "resources" category, which is less certain. They may have "resources" but like HL and Industrias Penoles, they give no estimates.
IPOAF.PK (INDUSTL PENOLES)
http://www.penoles.com.mx
397.5 mil shares outstanding (2002 annual, unchanged since 2001)
@ $4.53/share
$1,801 mil MC
419 proven and probable reserves of silver (from 2002 annual report on website)
$1,801 mil MC / 419 oz. silver = $4.30/oz.
You get "approx" 1.62 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.
The word last week is that Penoles has hedged several year's worth of silver, that is, they have locked in contracts at set prices. Set when prices were lower. How much lower, and at what price, is anyone's guess. As reported at lemetropolecafe.com, "We know the market is so tight even the world’s largest silver producer, Mexico’s Penolas, wasn’t thrilled about supplying 1 million ounces for a special project with ECU Silver, led by their extremely able CEO Michel Roy."
78.5 million oz. silver refined by the metals division in 2002, and 1 mil oz. gold.
They probably refine almost all the silver that comes out of Mexico.
They probably produce about 34 mil oz. of silver from their mines annually, and they have expansion plans.
I've heard this stock is tightly held, most is family owned.
Their oz. numbers are "proven & probable reserves", which is much more certain than most of the others which are mostly "inferred and indicated resources." They undoubtedly have "inferred and indicated resources" in addition to the "proven & probable reserves," I just could not find any info on that at the website or in the annual report.
SIL (APEX SILVER)
http://www.apexsilver.com/
information@apexsilver.com (303) 839-5060
45,023,760 ordinary shares outstanding. (Jan 30th press release)
@ $22.85/share
$1081 mil MC
cash on hand: $205.6 million after Jan 30th share offering.
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
$1081 mil MC / 454 mil oz = $2.38/oz.
You get "approx" 2.91 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: Apex is now the most cash rich silver stock on the list. Over $200 million! Amazing. Their plan, as they have stated all along, is to wait until higher silver and zinc prices to develop their deposit. I wonder if they will be smart, and hold their "cash" in the form of silver bullion while they wait for silver bullion to go up in price? Seems so basic even a child could understand it. One key problem standing in the way is that there are position limits on paper longs, and thus, APEX could not probably not buy that much silver bullion even if they wanted to. Ironic, isn't it? It is the most natural and sensical thing for Apex to buy silver while they wait for higher silver prices, and doing so would push up the price, but they likely will not act, and almost cannot act due to the problem of scales of size. This, to me, is so bizzare, I cannnot fathom it. I think I understand a lot, but this.... it is simply mind boggling. It's the result of a system so out of balance, it's insane, and the rational mind has no answer for the bizzare things we see today.
Look, COMEX is the last place on earth to buy silver now, in any really big size. Reports are coming in from all over that there is no bullion available anywhere.
$364,000,000: 52.5 mil oz. of registered COMEX silver @ $6.95 /oz. http://tinyurl.com/vrcw
My advice to Apex would be to buy every bit of silver they can get. Even hold out a sign, put up a website, hire people to take the orders, and start buying silver, in all forms, at 10% and even 15% above the spot price. Just make yourself become the "market maker" and start buying silver from all over like a sponge soaking up water. Let the silver find you! In the long run, a 10-15% commission is nothing when the trade is this good. There may be position limits at the COMEX, but it's not illegal to offer to pay what you are willing to pay to the free market. Forget the COMEX, and make your own market!
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 is now up to $.51/lb., from a low of about $.35/lb. For zinc prices, see http://www.metalprices.com
And, they are not mining now, but are waiting for higher silver prices. That's also a plus. The management also seems to understand that silver will move upwards a lot. Another plus. Finally, George Soros, Billionaire, owns a bit of this one, just un
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