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-- Posted 20 March, 2004 | Digg This Article
FRIDAY, March 19th, 2004
This week's report lists 98 silver stocks. There are 31 silver stocks that list reserves, resources (and exploration potential.) which I calculate by using my "ounce in the ground" forumula. There are 45 explorers. There are about 22 additional "silver" stocks with incomplete information. Additions & Changes from last week are in bold.
If this is the first time you have seen this report, please try to read the entire report before sending me an email. This report goes out now to 7245 investors each week in email, and I do not have time to respond to all the questions from new readers--questions that are already answered in this report. After you have read the report, I would be more than happy to try and answer your question, as it may help me to provide additional commentary on the silver market. (I'm not the person to ask about any specific stock. Contact the company, not me. I will not answer questions about why I buy or sell--I buy when I think cheap, and I sell when I either think expensive, or that I feel that cheaper opportunities exist elsewhere.)
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 (As of this week, for the first time in a while, I know of no private placement opportunities at the present time that are not already oversubscribed. But I do know of a few potential opportunities that may be available in the near future.)
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 $7.53 as of Friday, 2:45 PM West Coast US, which was used to calculate the following figures. The CAN $ / US $ conversion factor is .7495. I will use .75 for ease. Because silver rose so much this week, and many of the silver companies did not rise by an equal percentage, then, in terms of silver, their prices were "down".
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) .42 up --current producer (gold bonus) cash rich.
- ABX (BARRICK) 1.1 even --infamous hedger (18 mil oz. gold hedged, 3 yrs production)
- CDE (COEUR D'ALENE) 1.2 down --current producer, (gold bonus) in debt.
- IPOAF.PK (INDUSTL PENOLES) 1.8 down --current producer, mostly family owned.
- SIL (APEX SILVER) 3.4 down --large zinc bonus, low grades, cash rich--$345 million! in debt
- CFTN.PK (CLIFTON MINING) 3.8 down -- (94 EXPT) (colloidal silver patent bonus)
- ECU.V ECUXF.PK (ECU SILVER MINI) 3.9 down --(13 EXPT) --50% gold bonus
- MFN MFL.TO (MINEFINDERS) 4.3 down --significant gold bonus, $35 mil cash on hand.
- KBR.V KBRRF.PK (KIMBER RSCS) 4.8 down A one property company, high grades, with exploration potential.
- PAAS (PAN AMERICAN SILVER) 5.1 down --current producer, in debt.
- GRS GAM.TO (GAMMON LAKE) 5.2 down --current producer, owns 26% of Mexgold
- HGM.V HOGOF.PK (HOLMER GOLD) 5.3 new --silver project in cuba, large gold project bonus.
- WTZ WTC.TO (WESTERN SILVER) 5.5 up -- (24 EXPT) large mine development cost.
- FSR.TO FSLVF.PK (FIRST SILVER) 5.6 up --current producer, (not profitable '03 3rd q.) unhedged
- SSRI SSO.V (SILVER STD RSC) 7.0 down --multi-property company, understands silver story
- CZN.TO CZICF.PK (CDN ZINC) 7.1 down --large zinc bonus, high grades, low start up costs, great EXPT
- * TM.V TUMIF.OB (TUMI RSCS) 7.3 down -- (15 EXPT) recent bonanza grade silver discovery
- ORM.V OREXF.PK (OREMEX RES) 9.7 down (40 EXPT)
- MGR.V MGRSF.PK (MEXGOLD RSCS) 8.8## down (##exploration target) -- bonanza grade discovery on Jan 13th
- SRLM.PK (STERLING MINING) 11.8 down --(32 EXPT) acquired the Sunshine in Cour d'Alene
- FAN.TO FRLLF.PK (FARALLON RSCS) 14 even --(24 EXPT) low grades, silver 1/3; also gold & zinc bonus.
- EXR.V EXPTF.PK (EXPATRIATE RECS) 16 down --significant zinc bonus 60% zinc, 25% silver
- * SVL.V STVZF.PK (SILVRCRST MINES) 18 even --(33++ EXPT) --(Silver in Honduras) ++ acquired silver props.
- RDV.TO RDFVF.PK (REDCORP VENTURE) 20 down --60% gold bonus
- ADB.V ADBRF.PK (ADMIRAL BAY RSCS) 20 down --actively expanding resources. (Huge gas bonus)
- HDA.V (HUSIF?) (HULDRA SILVER) 20 down --very tiny, no debt, zinc bonus, low start up costs.
- GGC.V GGCRF.PK (GENCO RESOURCES) 23 down
- CHD.V CHDSF.PK (CHARIOT RSCS) 23 even (explorer, with inferred resources)
- * MGN MNMM.OB (MINES MGMT) 23 even --60% copper bonus (low grades), start up cost ~ $250 mil
- ASM.V ASGMF.PK (AVINO SILV GOLD) 24 down --owns 49% of the Avino+ 4 other silver props. (silver bonus)
- UNCN.OB (UNICO INC) 58 up --lease expiring on largest property, June 1 2004.
* = I own shares
Explorers (by market cap):
- EZM.V EZMCF.PK (EUROZINC MINING)
- MCAJF.PK (MACMIN LTD)
- CDU.V CUEAF.PK (CARDERO RSCS) 45-77 "exploration potential"
- AOT.V ASOLF.PK (ASCOT RSCS) -- owns percentage of Cardero, CDU.V
- * 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)
- IAU.V ITDXF.PK (INTREPID MINRLS) 7 "exploration potential"
- 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) 36-183 "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
- * FR.V FMJRF.PK (FIRST MAJESTIC) -- Bought a former silver producer. Acquiring silver properties.
- SPM.V SMNPF.PK (SCORPION MINING)
- MMM.TO MMAXF.PK (MINCO MINING)
- BZA.V ABZGF.PK (AMER BONANZA)
- * EDR.V EDRGF.PK (ENDEAVOUR GOLD) A PRODUCER (I could not yet find a listing of resources or reserves)
- DNI.V DMNKF.PK (DUMONT NICKEL) exploring Clifton's property
- SML.V SMLZF.PK (STEALTH MNRLS)
- NBG.V NBULF.PK (NEW BULLET GP) 37 - 105 "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)
- 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 PAOCF.PK (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):
Out of the mouths of babes. This week, an 11-year-old who I will call Jed wrote: "I think people should buy silver because they might be rich in the future. They might be rich because we might change back to using silver. Also if people don't start buying silver they might be poor in the future."
That says it all, doesn't it? What an incredible introduction to an essay on silver! Even an 11-year-old can understand and express the essential fundamentals of the silver market--perhaps more simply and eloquently than I can. Silver is real money, and paper is not! The wisdom of Jed continues: "But also there's a downside if you buy a lot of silver right now you might be poor right now so don't buy as much as possible. When I got my first [batch] of silver I thought that I should sell it all. I sold [half] of it but then I realized how much more money it is than a green piece of paper. So now whenever I get money I buy silver." I love it! Jed recognizes that becoming rich requires saving money, and that requires you to not spend recklessly, and he understands that saving in silver is best!
Jed concludes: "I think people should buy silver right now because it isn't that much money. And in the future it will be a lot of money. I think silver will be at $13 in the next year. I think it will be that much money because more and more people are starting to realize that silver is worth a lot so the price will go up."
I think Jed is a very bright kid. And I also think that his wisdom and market commentary is far superior to most of the market commentary you will ever read on silver. His commentary even included a price prediction, followed by a solid reason why that price should be reached! Thank you Jed!
In the interest of full disclosure, Jed has been investing in silver since $5.25/oz. a few months ago, and he's been watching the price rise since then. Before he wrote his commentary, I told Jed, "The better you write, the more you will be paid." The ultimate test of the value of Jed's commentary is your feedback. Therefore, I have decided to do the following: I did not tell Jed this, but I have decided to pay Jed one silver quarter (worth about $1.35) for every positive email I receive (minus one silver quarter for each negative email) in the next week that mentions Jed by name. Send your comments, rebukes or encouragement for Jed, to jasonhommel@yahoo.com
I believe Jed's commentary was far superior to the silver analysts quoted in the mineweb article this week, "Silver set for a fall?"
http://trinity.mips1.net/MGGold.nsf/Current/42256E2B005E0A2E42256E5800703E8C?OpenDocument
For example, let's examine the lunacy of several statements by the "respected" analysts in the above article: "...analysts predict the metal’s stay at the top will be short-lived as its fundamentals remain suspect." First of all, the article was written on Monday, March 15, and by Friday, March 19th, we see that $7 was not "the" top, since silver hit $7.72 only a few days later, on Friday. Second, the statement clearly shows that analysts don't understand the first thing about the fundamentals of the silver market, because they apparently have no clue about the differences and similarities between silver and paper money.
Here is another foolish statement by an analyst quoted in the mineweb article: "Philip Newman, an analyst at consultancy GFMS, says $7/oz was reached because of the poor liquidity in the Silver market. He said any transaction, however small, could cause the large price fluctuations. Newman said it was difficult to justify the current price..." Obviously, if the silver market is small, and the paper money market is huge, then this implies something very special and that something tremendous is about to happen. But it does not mean the change in valuations is unjustified. On the contrary, it means the change in valuation is very justified! Lots of paper money, and very little silver left... an 11-year-old can understand the obvious implications of that, but an experienced analyst does not understand!
Next, another analyst, Michael DiRienzo Acting Executive Director and Secretary at the Silver Institute, thinks that "the big question for the silver market" is "demand for the silver enriched photographic paper." Excuse me, but the 11-year-old and I disagree. The big question for the silver market is how much paper money there is, and how little silver is left.
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Let me open up and be as truthful with you as I can be. It's all I can do.
In January, 2003, I wrote one article on silver and Cardero Resources. I received positive feedback and I got a few silver stock tips in email, which I acted on slowly and then more quickly as time went by. It was hard to buy a few of them, because as I bought, the stocks that were so cheap (and it seemed, priced near bankruptcy) moved up in price strongly. It was hard to buy them without moving the price. And the stocks were not liquid at all. Part of me wanted to keep it a total secret, and another part of me wanted to tell the world of the amazing investment opportunities I'd found. But realistically, the last thing I wanted to do was write about the companies that I thought were great buys--because I was still struggling to buy them at great prices!
Finally, about 6 months ago, I wrote my first of what would be these weekly articles... and I was very nervous about writing. I was nervous because I felt that if I let the information out, the opportunities would be lost. After all, the prices of my favorite stocks that I was buying would take off.
The results 6 months ago after my first weekly silver report were astounding. The stocks that I thought were undervalued on the list all exploded in price, and the overvalued ones all dropped. I was astounded, and the results continued to amaze me for weeks! And this list of stocks grew in number, and more people signed up to receive it. I had no idea it would be so popular, and have such a positive effect. Soon, based on the crushing load of incoming email, I became more bullish on silver than ever before, because so many people would write and tell me that they were going to be buying many of the silver stocks on my list, and/or buying silver bullion. And they still write. If the email to me is any indication, this silver bull market is really just barely getting started, and nobody knows where it will top.
We are nowhere near a top, in my opinion, based on my unique experience doing this. My perspective is fresh, because I'm young and I don't have the long time experience. I'm 33, going to be 34 in April.
So, how do I make money by producing and giving away this list for free? Several ways.
1. The biggest money maker, by far, is capital appreciation of my portfolio. People like my overall viewpoint, they learn about silver stocks they otherwise might not know existed, and silver stocks in general have been rising rapidly.
2. The next biggest money maker is through private placement finder's fees. This is much, much less, but it's certainly worth it. You, too, can make between 3% and 15% finder's fees if you let wealthy investors know about private placements that are taking place.
3. The third way I make money is through signups to goldismoney.com, and this is not a big money maker compared to the finder's fees. This third way pays for the webmaster team that handles and hosts goldismoney.com, and it pays for the advertising to expand my market reach.
I'm sharing this with you to help you become more successful investors, and to help out the entire silver market. You can do the same things I'm doing, and become your own focal point for a group of investors. Although initially, I didn't want to tell anyone that I was buying silver stocks because I didn't want the prices to move up against me, it greatly helped me when I did, because I became aware of other silver stocks in the process, and I learned a lot more.
If you had any hesitation about telling other people that silver is real money, and that paper money is fraud, please realize you will be better off if you spread the word. It boils down to this: Do you want to help the world return to honest money, or would you rather the fraud of paper money continue?
Part of me wants to keep it quiet about how easy it is to make money from finder's fees from private placements. I don't want the competition, obviously. But another part of me realizes the truth, which is this: I know that if lots of people can be motivated by the truth about money, and by the finder's fees, to go out and convince wealthy investors to invest in silver stock private placements, then it will help silver and silver stocks. Here's now. First, wealthy investors will become educated about silver. Second, wealthy investors will invest in silver stocks. Third, as wealthy investors make money from silver stocks, they will be even more attracted to silver and silver stocks. Fourth, any new silver that is produced by investing in silver stocks will increase world silver production by a small amount that will still be miniscule compared to monetary demand.
You, too, can help your investments do well by telling other people about silver, and silver stocks. You should do what you can to spread the word about your investments. You will be rewarded, just as I have been. Your investments will do better, and you will learn more about the importance of being an advocate for truth. It's very rewarding, both monetarily and spiritually!
If you are young, then do as I did, and spend your time relentlessly convincing your family to invest in silver and silver stocks. If you have family that is wealthy, then pound away at them, again and again, until they see why silver is such a great investment. You owe it to your family to sound the alarm loud and clear. Convincing your family is a sale that you cannot afford to lose. When hard times come, I'm sure you will be greatly rewarded. Perhaps they will put you in charge of managing their full portfolio after they see some astounding initial results.
For me, the hardest part about deciding to write about silver and silver stocks was not the risk that I'd be wrong, after all, I believed I was right. The hardest part was my fear that I would positively influence the market, and that my investment opportunity would be gone. I think I was right in that I have positively influenced the silver market, but the investment opportunities are not gone. Today, I see more opportunities in silver stocks than ever before. So many of the best silver stocks have only moved up 3-4 fold and they have room to move up 30 fold or more from their initial levels due to the insanely low price that silver had been for so long.
Let me tell you one very encouraging thing about wealthy investors, and how you can earn some good money with finder's fees. Wealthy investors are generally very, very arrogant. They believe they own the world. And generally, they do. (But God really owns it, of course). They also believe that if there is money to be made in a market sector, that people will be forced to come to them to ask them to help fund development. This is also generally true. Therefore, the arrogant wealthy investors are just waiting for someone to come along and educate them about silver and silver bullion. So, wise wealty investors are surprisingly willing to listen when you tell them about the 300% plus gains for silver stocks for 2003. They will want a piece of the action. Many will want a piece of the action in a very desperate way. Eventually, they will panic, and will look directly to you for advice if you have been the one feeding it to them about silver and silver stocks. In this way, you will easily earn your finder's fees by telling rich people that you know about silver, and silver stocks, and private placements when you find out about them. This is my open invitation to compete with me now. Take advantage of it. Let's go make some money and help to change the world in the process.
I'm an optimist. I believe that all paper money world wide is dying, and as it dies, I will make a bundle in the process, and the economy of the USA and the rest of the world will be greatly improved by that. When frauds collapse, and debt slavery is destroyed as precious metals prices head to the moon, boom times are sure to follow, as they always do.
Trust no man. That's why you buy silver. It's payment in full. Silver is not a promise to pay that can be broken. 90% silver bullion cannot be counterfeited. Coining counterfeits is not worth the effort. But do check your bags to make sure they are real silver, and not clad coin bags, which sometimes appear.
Oh yes, you don't have to trust me about silver. Read this article:
Is Silver Scandal On the Horizon?
Posted March 16, 2004
By Kelly Patricia O Meara
http://www.insightmag.com/news/2004/03/30/National/Is.Silver.Scandal.On.The.Horizon-632699.shtml
The claims by the COMEX in that article are ridiculous. The CFTC source lied when he said, "The hypothetical [that longs would request their silver] has never happened, so the amount of deliveries are always a small number relative to the size of the amount of positions traded."
That's a total lie, because in 1980, the event that never happened, did happen. The longs were asking for delivery, and the shorts could not come up with the silver, and that's why there were limit up days to $50/oz., and rule changes, and specific requests by the exchange to the Hunts that they do not request delivery of silver. The hypothetical happened again when Warren Buffet bought silver in 1997, when his order for silver was not all filled with physical, and the shorts were screaming bloody murder and market manipulation by some large mysterious longs. It took Warren Buffet's announcement that he was the one buying silver to shut them up. The hypothetical has happened, and will happen again.
Furthermore, position limits are already an ongoing market default, because it shows that they cannot honor agreements to deliver silver in size. Think about that. Position limits! If you can't buy what you want to buy with your money, then your money is no good! The dollar is already no good when it comes to buying silver in size. What would be the point of having position limits unless the shorts already lacked the ability to deliver silver in size?
So, not only is the CFTC statement a lie, "The hypothetical [that longs would request their silver] has never happened," but their argument is irrelevant. It's like saying, "we have not yet defaulted (the lie), so therefore, a default is impossible". Isn't that crazy? It's ridiculous, and totally irrelevant! Arguing about the likelihood of a default, is pointless after the default!!! The entire purpose of the discussion of the chance of default is to determine whether default is imminent, and what can be done to prevent it. And preventing such defaults is the whole reason for the existence of the CFTC to begin with. They are so stupid they probably don't even know they got themselves into trouble at this point. These CFTC clowns are crooks, idiots, scammers, and liars. Mice in charge of the cheese. They should be prosecuted to the fullest extent of the law today, for obstruction of justice, issuing false statements, and negligence of duty!
But before spending money to insure the prosecution of such criminals, it's best to obtain money while it's cheap. Buy silver today, prosecute for delivery failures tomorrow.
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Ted Butler had some very positive comments to say about some of my efforts on behalf of silver. Ted was writing that silver miners should either buy silver, or withhold silver from the market. Go see what what Ted wrote in his weekly commentary, "A Modest Proposal" at http://www.investmentrarities.com/ or http://www.butlerresearch.com/ An exerpt:
To be fair, similar solutions have been suggested before by others. For instance, Jason Hommel made a recent suggestion that the silver miners should invest all, or most, of their corporate cash in real silver. This was too radical an idea for the miners, although it should be pointed out that had they followed his suggestion, immense profits would have resulted. And since then, the silver companies have raised staggering amounts of new corporate cash.
On November 26, 2003, when silver was about $5.25/oz., I wrote the article in which I suggested the miners invest their cash in silver bullion before it hit $7/oz.: http://news.goldseek.com/GoldIsMoney/1069879327.php
I have no way of knowing whether any of the large cash rich silver companies have actually bought silver bullion yet. For all I know they are buying bullion, but not telling, because they are trying to buy silver in secret, and plan to announce it after the fact. This would be the wisest course of action. I do know that nearly all the cash rich silver companies received my article, not only from me, but also from many of my readers. So they are aware. And now, they are either painfully, or profitably, aware of the recent price rise in silver, based on what they did.
The two biggest objections I have heard about my suggestion are these:
1. "It is not the job of the silver mining company to "speculate" in silver bullion and play the role of a bullion bank." --But on the contrary, it is also not the job of a silver miner to speculate in paper dollars, and play the role of a patsy and customer of their mortal enemies, the banks that issue paper money that competes with silver money. Every investment carries risk. The least risky investment is the default investment that says "I'm not investing in anything right now," which is not cash, but gold and silver bullion. You own real money, gold and silver, when you refuse to invest in anything else. And that's my suggestion... go back to using gold and silver as the "default" position. Use it as you would use cash. Cash is too risky, because it can go to zero value, but bullion cannot go to zero value. Silver miners ought to at least keep their cash in the form that is most appropriate to their investors, which can only be silver--not gold, and not the Canadian dollar, not the U.S. dollar, not the Argentine dollar, nor any other paper currency! This is not a complicated issue!
2. "It is too risky to invest in silver bullion, because the price may go down." --On the contrary, if silver bullion is too risky, then nobody should be investing in silver mining stocks at all, because the mining stocks are always more volatile than silver bullion, which is the safest investment that exists. If a silver miner thinks silver bullion is too risky, then they should close their doors, abandon their mining claim, and walk away, and let others take over the risks of mining!
My idea is not "radical," it's rational. Unfortunately, in a world awash with lunatics and insane persons, the rational ideas are too radical to accept. But at least now, anyone can see the wisdom of my idea. As Ted wrote, "had they followed his suggestion, immense profits would have resulted."
In the real world, companies that produce a product actually pay people to endorse their products. Shoe companies like Nike and Reebock pay high profile athletes to wear their shoes and appear in commercials. Ski companies pay top racers to ski on their skis and hold them up in the finish line high over their heads to make sure everyone can see the skis they are using.
In the real world, silver investors and stock holders are the owners of production of silver. Silver investors should expect our representatives, the silver mining companies, to endorse silver as a product, and we should expect them to use silver in the best way that silver can be used, which is as money. If they refuse to use silver as money, and if they refuse to endorse our product, they should be fired! Company executives should be fired, and silver stocks should be sold in preference for companies who do endorse silver as money, and who use it as money.
Therefore, at the present time, I do not own any of the large, paper money cash rich silver companies. I only own silver exploration companies. Exploration companies do not really have a choice to hold cash as silver, since they hold so little cash. And they could not hedge production and lock in low prices for silver even if they wanted to, because they are not yet producers.
I'm not even asking that silver miners spend money on ads to promote using silver as money (I'll do that myself). I'm merely asking that they, themselves, walk the walk, and actually use their own product, and use silver as money.
Next week, I will be spending plenty of money on some major internet ad campaigns to help promote the silver story. Hopefully, ads will run at cnn, forbes, and perhaps nasdaq soon. These are not the type of ads that would be "indicative of a top". If the ads run, it will be because they "snuck through" any systematic efforts to keep the masses in the dark about silver. I'm saying this because I know that very long term silver investors tend to think that any mainstream ad should somehow mean it's a top. I do not believe that will be the case here. Thank you for all of your support.
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Regarding the arrogance of wealthy investors. Those who are short silver right now are mostly the "commercial" dealers, most likely bullion banks. They have more dollars than almost anyone else in the world. I do not think they are yet engaging in any panic short covering yet. Maybe one of the largest dealers has been exiting, and that's about it. The reason I believe there is not yet a panic to buy silver among the short sellers is that physical silver is still not yet declining from the 52.5 million oz. in the registered category at the COMEX. That 52.5 million ounces has remained remarkably constant for months now. This means they are somehow able to maintain that silver even as physical demand and investor demand is increasing, which is pushing up prices from the $5/oz. level. They may feel that silver is their "ammunition" to be used in case they need to push silver prices down. That pile of silver, the 52.5 million oz. represents about 10% of their paper contracts. As their experience as bankers shows them, less than 1% of depositors ever demand their money, and less than 1% of futures contract holders ever demand delivery. Therefore, they may still feel safe. Also, they likely are on the receiving end of physical silver that was locked in at much lower prices. Therefore, they are making money on the difference in the physical market. The ones who are hurting badly are the miners, like Penoles, who locked in low prices by hedging.
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Recently, I have been raising money for two private placements that I just bought into. I also sold a bunch of stocks in my portfolio, in order to buy into these two private placements. To see which stocks these were, you have to sign up for a "look at my portfolio", which is produced monthly, and the next look will be released on, or just after April 1.
Price: $29.95/month or Price: $295.00/year
To order: http://www.goldismoney.com/available-reports.html
If you have any questions about billing or order fulfillment, you need to contact my support staff at support@goldismoney.com and not me.
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General Commentary on Silver (slightly modified from last week):
See my new article: Biblical Guidelines for Managing your Money
As the New York Times, January 11, 1859, page 2 said---
"It is well known that the most colossal fortunes the world ever saw have been based on silver mines..."
--quote found by Charles Savoie
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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 generally have, or regularly keep, over 100,000 oz. silver bullion in inventory: (These are generally 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.)
Northwest Territorial Minthttp://www.nwtmintbullion.com/1-800-344-6468 (also sells palladium 1 oz. bars!)
American Coin and Vault 5523 North Wall Street Spokane, WA 99205 (509) 326-7512 California Numismatics (will accept small retail orders) 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. If there are any silver bullion dealers who have at least $500,000 worth of silver bullion in inventory on hand, please contact me jasonhommel@yahoo.com , and I will give you a FREE AD, like the ones above, in each week's silver stock report.
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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 $2,360,000,000,000: U.S. annual budget 2004 $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 $272,000,000,000: Market Cap of Microsoft (03-2004) http://tinyurl.com/vrcn $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 (estimated?) $7,090,000,000: all the world's silver stocks (59 of them on this list, as of Dec. 5th, 2003) $395,000,000: 52.5 mil oz. of registered COMEX silver @ $ 7.53 /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 100 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
115 mil shares
@ $8.00/share
$924 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 / $7.53/oz = 16 mil "silver equiv" oz.)
16 + 36 = 52 mil oz.
$924 mil MC / 52 mil "oz." = $17.77/oz.
You get "approx" .42 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: 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.
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
Some have noted that HL stock is now lagging the silver price. Sometimes, they use this as an indicator that the silver price might not continue upwards. I think that's hogwash. I think HL stock is lagging because it is the most expensive silver stock on my list that I know of, the most expensive by far, whether you value by PE ratio, or by resources in the ground. Therefore, the lagging share price for HL may reflect not an anticipation that silver is headed down, but rather, the realization among market participants that HL is overvalued relative to all other silver stocks. After all, that's what that means when HL was downgraded from Sector Perform to Sector Underperform, which happened on Jan 6th by CIBC, which was about the peak on the HL price chart.
Under-priced silver stocks continue to outperform in a shocking way, as share prices of silver juniors skyrocket.
I believe silver bullion will continue to skyrocket, and I expect silver bullion to continue to outperform HL stock at these prices.
ABX (Barrick)
http://www.barrick.com/
535 million shares
@ $22.23/share
$11,893 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."
$11,893 million Market Cap / 1710 mil oz. = $6.95/oz. silver
You get "approx" 1.08 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.
I believe silver bullion will continue to skyrocket, and I expect silver bullion to continue to outperform ABX stock at these prices.
CDE (COEUR D'ALENE)
http://www.coeur.com
coeurir@coeur.com (208) 769-8155 or (800) 624-2824
213 mil shares (Issued 32 mil new shares late Oct. 2003)
@ $6.82/share
$1454 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)
$1454 mil MC / 225 mil oz = $6.46/oz.
You get "approx" 1.2 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.
I believe silver bullion will continue to skyrocket, and I expect silver bullion to continue to outperform CDE stock at these prices.
IPOAF.PK (INDUSTL PENOLES)
http://www.penoles.com.mx
397.5 mil shares outstanding (2002 annual, unchanged since 2001)
@ $4.55/share
$1,808 mil MC
419 proven and probable reserves of silver (from 2002 annual report on website)
$1,808 mil MC / 419 oz. silver = $4.32/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.
The word late Feb. 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.
Given the report that Penoles has hedged silver for two years, I believe silver bullion will continue to skyrocket, and I expect silver bullion to continue to outperform IPOAF.PK stock at these prices.
SIL (APEX SILVER)
http://www.apexsilver.com/
information@apexsilver.com (303) 839-5060
45,023,760 ordinary shares outstanding. (Jan 30th press release)
@ $22.36/share
$1006 mil MC
cash on hand: $350 million after Jan 30th share offering, and March 16th convertable debenture.
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
$1006 mil MC / 454 mil oz = $2.22/oz.
You get "approx" 3.40 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: 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%.
Apex is now the most cash rich silver stock on the list. About $350 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 in significant size for sale available anywhere.
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 under 10% I read recently. That's another plus, in general, for the silver market if Billionaires are paying attention to it. There are several other zinc / silver plays on this list that investors might also consider: CZN.TO, EXR.V, MMGG.OB (I own MMGG.OB, 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. I expect most of the other stocks on this list to outperform or significantly outperform silver bullion in the long run from today's prices.
CFTN.PK (CLIFTON MINING)
http://www.cliftonmining.com/
clifton@cliftonmining.com 801-756-1414 (303) 642-0659 Ken Friedman
45 mil shares fully diluted (Oct. 2003)
@ $1.85/share US
$83 mil MC
http://www.cliftonmining.com/wsreview.htm --source of 100 mil oz. resources est.
http://www.cliftonmining.com/resource.htm
From: http://www.siliconinvestor.com/stocktalk/subject.gsp?subjectid=13531
"A previous geologist has talked about a possible resource of 1 billion oz. of silver, and 5 million oz. of gold."
100 mil oz. silver
+500,000 oz. gold x 10 = 5 mil oz. silver equiv.
= 105 mil oz. silver.
up to 1000 mil oz. silver "exploration potential".
Clifton has a complex JV agreement with Dumont Nickel. In sum, here is what Keith Moeller VP, Clifton Mining Company wrote to me: "If Dumont produces a positive feasibility study on an individual property piece, then they gain a 50% interest in that piece alone, not in the rest of the property. If they spend more than 5 million dollars (US) on any one piece and they produce a positive feasibility study on that piece, then they will gain a 60% interest in that one piece of property, not in the rest. If they stop at any time or fail to produce a positive feasibility, then they will gain no interest in any of our property. Right now we have around 7 different pieces of the property that have "Stand Alone" mine potential. If Dumont stakes or purchases any property within five miles of the joint venture property, then we automatically receive a 50% interest in that property."
My problem is how to quantify that. First, there is the range of potential silver resources. Second, there is the range of potential ownership, which is highly variable, and not subject to the entire property, nor necessarily subject to spending by Dumont, but subject mostly to Dumont doing a positive feasibility study on each of many properties . At the extreme ranges, the values are:
40% to 100% of 105 = 42 - 105 million oz.
40% to 100% of 1000 = 400 - 1000 mil oz. "exploration potential"
$83 mil MC / 42 mil oz. = $1.98/oz.
$83 mil MC / 1000 mil oz. = $.08/oz.
You get "approx" 3.80 ounces in the ground for 1 oz. silver.
Exploration Potential: 94
Additional comments: Note the "exploration potential" is very large.
For more info on what's going on with Clifton, see http://www.dumontnickel.com , JV partner.
Clifton has 25% ownership of a biotech firm that makes a colloidal silver. The biotech firm has a patent on a "super" colloidal silver solution made with 10,000 volts that adds oxygen that gives it more powerful antibacterial properties, and is safer since it uses less silver, which would prevent "blue skin" argyria. Normal colloidal silver that you can make at home with 30 volts works to kill bacteria by disrupting the oxygen metabolism of the cell wall, killing bacteria with oxygen. The market for safe antibiotics is in the multi Billions of dollars.
See the human study data released on their colloidal silver product:
Clifton Mining Company - New Human Study Data Released
ECU.V ECUXF.PK (ECU SILVER MINI)
http://www.ecu.qc.ca/indexen.html
ecu@ecu.qc.ca (819) 797-1210
fully diluted shares = 103.3 million (6 January 2003)
@ $.59/share Cdn x .75 US/Cdn = $.44
$45.7 mil MC
http://www.ecu.qc.ca/reservesen.html
See the url above for the numbers from the company's website, which are:
Proven & Probable & Possible: 7.6 mil oz silver, 93,000 gold. = 8.5 million "silver equiv" using my method of counting gold as 10:1
"Potential" total: 21.2 mil oz silver, 221,000 oz. gold.
According to my valuation method, that's 2.2 mil oz. of "silver equiv" for the gold, plus the 21.2 mil oz. silver, for a total of 23.4 mil oz.
Exploration potential:
From http://www.ecu.qc.ca/english/pdf/Annual_rep.pdf
page 6 (or 8), the company says: "Exploration will mainly be targeted to verify the silver-bearing potential of certain properties, in line with the objective of increasing our reserves from 37 million to 100 million silver-equivalent ounces." (note, the 100 mil oz. "silver equiv" spoken of by the company undoubtedly counts gold as silver at the normal ratio, not my 10:1 ratio. Therefore, my 23.4 mil oz. re-calculation is 63% of their 37 mil oz. number, and so, likewise will I count 63% of their 100 mil oz. target)
ECU.V is also exploring other gold properties.
$45.7 mil MC / 23.4 mil oz. silver equiv. = $1.95/oz.
$45.7 mil MC / 63 mil oz. silver equiv. = $.60/oz.
You get "approx" 3.86 ounces in the ground for 1 oz. silver's worth of stock.
Exploration potential = 12.55
Additional comments: Although ECU stopped trading this week, it's most likely nothing to worry about. Simple reporting requirements or concerns that will probably be resolved soon.
See also regarding ECU's exploration potential: http://www.ecu.qc.ca/indexen.html
ECU recently recovered title to properties that were in dispute. See: http://tinyurl.com/x691
MFN MFL.TO (MINEFINDERS)
http://www.minefinders.com/
Shares Fully Diluted 34.1 mil (Late 2003?)
@ $9.95/share
$339 mil MC
Cash on hand, Fully Diluted: C$34 million
"over 3.5 mil ounces of gold resource and 160 mil ounces of silver" --Dec. '03
silver conversion = 3.5 x 10 = 35 mil + 160 mil oz. silver = 195 mil oz. silver
At 70:1 ratio, 3.5 x 70 = 245 "silver equiv" of gold, and 160 mil of silver = 405.
245/405 = 61% of the mineral value is in the gold, 39% silver.
At 10:1 ratio, 35/195 = 18% of the mineral value is in the gold, 82% silver.
"In addition to the resources already drilled, Minefinders controls a strong portfolio of properties in Nevada, Arizona, and Mexico which have the potential to host new multi-million ounce discoveries over the next few years."
$339 mil MC / 195 mil oz. = $1.74/oz.
You get "approx" 4.33 ounces in the ground for 1 oz. silver.
Additional Comment
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