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-- Posted 3 April, 2004 | Digg This Article
FRIDAY, April 2nd, 2004
This week's report lists 102 silver stocks. There are 32 silver stocks that list reserves, resources (and exploration potential.) which I calculate by using my "ounce in the ground" forumula. There are 46 explorers. There are about 24 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 well over 8000 investors each week in email.
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
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 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 $8.12 as of Friday, 3:44 PM West Coast US, which was used to calculate the following figures. The CAN $ / US $ conversion factor is .7606. I will use .76 for ease. Silver continues to rise, from Friday to Friday for the past 6 weeks. Report #28: $7.71, #27: $7.53, #26: $7.03, #25: $6.95, #24: $6.70, #23: $6.49
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) .29 even --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 even --current producer, (gold bonus) in debt.
- IPOAF.PK (INDUSTL PENOLES) 1.6 down --current producer, mostly family owned.
- SIL (APEX SILVER) 3.6 even --large zinc bonus, low grades, cash rich--$345 million! in debt
- ECU.V ECUXF.PK (ECU SILVER MINI) 4.1 down --(11 EXPT) --50% gold bonus (trading still halted)
- GRS GAM.TO (GAMMON LAKE) 4.2 up --current producer, owns 26% of Mexgold
- FSR.TO FSLVF.PK (FIRST SILVER) 4.3 way up --current producer, (not profitable '03 3rd q.) unhedged
- CFTN.PK (CLIFTON MINING) 4.4 even -- (105 EXPT) (colloidal silver patent bonus)
- MFN MFL.TO (MINEFINDERS) 4.4 up --significant gold bonus, $35 mil cash on hand.
- PAAS (PAN AMERICAN SILVER) 5.0 up --current producer, in debt.
- KBR.V KBRRF.PK (KIMBER RSCS) 5.1 down A one property company, high grades, with exploration potential.
- HGM.V HOGOF.PK (HOLMER GOLD) 5.2 down --silver project in cuba, large gold project bonus.
- WTZ WTC.TO (WESTERN SILVER) 5.3 up -- (23 EXPT) large mine development cost. copper & zinc bonus
- * TM.V TUMIF.OB (TUMI RSCS) 5.7 up -- (11 EXPT) recent bonanza grade silver discovery
- CZN.TO CZICF.PK (CDN ZINC) 7.7 down --large zinc bonus, high grades, low start up costs, great EXPT
- MGR.V MGRSF.PK (MEXGOLD RSCS) 7.7## up (##exploration target) -- bonanza grade discovery on Jan 13th
- SSRI SSO.V (SILVER STD RSC) 7.9 down --multi-property company, understands silver story
- ORM.V OREXF.PK (OREMEX RES) 8.6 up (35 EXPT)
- SRLM.PK (STERLING MINING) 15 down --(39 EXPT) acquired the Sunshine in Cour d'Alene
- RDV.TO RDFVF.PK (REDCORP VENTURE) 18 down --60% gold bonus
- HDA.V (HUSIF?) (HULDRA SILVER) 18 up --very tiny, no debt, zinc bonus, low start up costs.
- * PLE.V (PLEXMAR RES INC) 19 up
- EXR.V EXPTF.PK (EXPATRIATE RECS) 19 down --significant zinc bonus 60% zinc, 25% silver
- ADB.V ADBRF.PK (ADMIRAL BAY RSCS) 20 down --actively expanding resources. (Huge gas bonus)
- * SVL.V STVZF.PK (SILVRCRST MINES) 20 even --(36++ EXPT) --(Silver in Honduras) ++ acquired silver props.
- FAN.TO FRLLF.PK (FARALLON RSCS) 20 way down --(33 EXPT) low grades, silver 1/3; also gold & zinc bonus.
- * MGN (MINES MGMT) 22 up --60% copper bonus (low grades), start up cost ~ $250 mil
- CHD.V CHDSF.PK (CHARIOT RSCS) 23 down (explorer, with inferred resources)
- GGC.V GGCRF.PK (GENCO RESOURCES) 25 down
- ASM.V ASGMF.PK (AVINO SILV GOLD) 25 even --owns 49% of the Avino +4 other silver props. (silver bonus)
- UNCN.OB (UNICO INC) 63 down --lease expiring on largest property, June 1 2004.
* = I own shares
Explorers (by market cap, in millions):
- * IMR.V IMXPF.OB (IMA EXPL)
- EZM.V EZMCF.PK (EUROZINC MINING)
- CDU.V CUEAF.PK (CARDERO RSCS) 44-75 "exploration potential"
- AOT.V ASOLF.PK (ASCOT RSCS) -- owns percentage of Cardero, CDU.V
- MCAJF.PK (MACMIN LTD)
- * FCO.TO FCACF.PK (FORMATION CAPTL) Cobolt (and Sunshine silver refinery)
- TVI.TO TVIPF.PK (TVI PACIFIC) --current producer of a dore silver bar 96% silver, 4% gold
- * FR.V FMJRF.PK (FIRST MAJESTIC) -- Bought a former silver producer. Acquiring silver properties.
- * NPG.V NVPGF.PK (NEVADA PAC GOLD) 35-176 "exploration potential" (owns 1 silver property, 10 gold properties)
- SPM.V SMNPF.PK (SCORPION MINING)
- MAG.V MSLRF.PK (MAG SILVER)
- IAU.V ITDXF.PK (INTREPID MINRLS) 7 "exploration potential"
- * 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
- CAUCF.PK (CALEDON RES)
- MMM.TO MMAXF.PK (MINCO MINING)
- MAI.V MNEAF.OB (MINERA ANDES) (gold bonus)
- * EDR.V EDRGF.PK (ENDEAVOUR GOLD) A PRODUCER (I could not yet find a listing of resources or reserves)
- BZA.V ABZGF.PK (AMER BONANZA)
- DNI.V DMNKF.PK (DUMONT NICKEL) exploring Clifton's property
- EXN.V EXLLF.PK (EXCELLON RSCS)
- BCM.V BCEKF.PK (BEAR CRK MINING)
- NJMC.OB (NEW JERSEY MIN)
- * CMA.V CRMXF.OB (CREAM MINERALS)
- * KG.V KDKGF.PK (KLONDIKE GOLD)
- * CBE.V CBEFF.PK (CABO MINING) --Historic Silver and Cobalt district
- SML.V SMLZF.PK (STEALTH MNRLS)
- NBG.V NBULF.PK (NEW BULLET GP) 40 - 113 "exploration potential"
- SDR.V SDURF.PK (STROUD RSCS)
- CHMN.PK (CHESTER MINING)
- EPZ.V ESPZF.PK (ESPERANZA SILVR)
- GNG.V GGTHF.PK (GOLDEN GOLIATH) --Historic silver district in Mexico
- MMG.V MMEEF.PK (MCMILLAN GOLD)
- SHSH.PK (SHOSHONE SILVER)
- * KRE.V KREKF.PK (KENRICH ESKAY)
- EGD.V EGDMF.PK (ENERGOLD MINING)
- PCM.V PAOCF.PK (PAC COMOX RES)
- LEG.V LEGCF.PK (LATEEGRA RSCS)
- BGS.V BLDGF.PK (BALLAD GLD SLVR)
- * AUN.V AUNFF.PK (AURCANA CORP)
- SRY.V (STINGRAY RSCS)
- TUO.V TEUTF.PK (TEUTON RES)
- ASLM.PK (AMER SILVER MINI)
- BBR.V BBRRF.PK (BRETT RES)
- 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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If I use a word you don't understand and is not listed in the dictionary at www.m-w.com you can look up the meaning at http://investorwords.com/
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WEEKLY COMMENTARY (All new in this section):
As measured in silver, my dollars are going up in smoke, and we are experiencing unbelievable hyper-inflation. By the time silver hit $8.20, it will be up 100% from when silver was at $4.10 about a year ago. To me, that means inflation is running at nearly 100%, since the thing I most want to buy, silver, is up that much. Silver is still cheap. It has not kept pace with oil or steel or even eggs, all of which are up over 100%. True, some people look to gold as the best measure of inflation, but I know that silver is better than gold, so I have to look to silver.
Why are gold and silver going up in price? Because over the years, the Fed and the banking system have put Trillions of dollars and bonds into circulation, and there are only millions of dollars of silver available, and people are waking up to the reality of the situation!
Look, I have proof! Yes, besides the fact that there are trillions of dollars and millions left worth of silver, which I post each week, in a table. Here are three key figures:
$20,200,000,000,000: U.S. bond market, yr end, '02: http://tinyurl.com/vr7g
$8,879,000,000,000: M3 (money in the banks) Nov. '03 http://tinyurl.com/vra0
$422,000,000: 52 mil oz. of registered COMEX silver @ $8.12 /oz. http://tinyurl.com/vrcw
What I also mean to say is that I have proof that people are waking up to this reality, and acting on it! First, the number of people who have subscribed to this free report is rapidly climbing and is over 8000 now. Second, according to my survey of my readers, most are now looking to buy more silver bullion, in preference to silver stocks, although many plan to buy more silver stocks, too!
Last week, I discussed the importance of portfolio allocation to silver stocks, and I asked a three-part survey question.
1. How much of your overall net worth, your total assets, including home equity, is invested in the overall silver market (silver bullion plus stocks)?
2. Considering your overall silver investments, what percentage is in silver bullion, and what percentage is in silver stocks, and what percentage is in futures contracts?
3. What percentage of your overall portfolio do you plan to allocate to silver and silver stocks?
The 49 responses to that survey are at the following link, which proves that there is growing investor interest in silver:
http://www.bibleprophesy.org/goldismoney/silverallocation.html
In addition to the link above which proves there is a rapidly growing, but still tiny, group of people who are telling me they plan to buy more silver, let's review some of the "big picture" reasons why this silver bull market will continue, and why a top is nowhere in sight:
Silver will definitely outperform gold from here, due to many reasons, as follows: 1. The supply/demand deficit, meaning, silver's industrial consumption and total demand exceeds mine supply, and these fundamentals are better for silver than for gold. 2. There is a physical shortage of silver because of decades of industrial consumption. There is less silver available now than gold. 3. The necessity for silver by industry that must have silver, or not produce their products that need it. 4. The historic ratio was 16:1 for silver to gold in terms of price, but it stands now at a very low 50 to 1, for silver to gold. 5. The short position in silver is astronomically large, much larger than for gold, given the available silver and yearly mine supplies, and this has to be paid back, which will drive up the price. 6. The supply of silver is rather inflexible due to most production being a byproduct of other mining. 7. You get "too much" silver for your money today, and is historically undervalued by astronomical factors, such as a day's wage being a silver quarter or silver dollar, historically, when there was plenty more silver than today. 8. Silver is unknown as a good investment to the common man who is still regularly selling inherited silver. 9. No other commodity will also have huge monetary demand, except for gold, except silver is better than gold for the above reasons mentioned, and more, such as, poorer people cannot afford gold, but they can afford silver.
Now, in this weekly report I have been noting for the past 6 months that there are about 52 million oz. of silver in the registered category at the COMEX. This is the silver that is ready for delivery against a futures contract, and is where the shorts need to place their physical silver before fulfilling their obligations. Therefore, I had been falsely assuming that this 52 million oz. of silver is available to purchase at low prices. I was also assuming, perhaps correctly, that the goal of the paper short sellers is to keep prices low. My main assumption was wrong, because I was assuming that all of this silver is up for sale by the short sellers. It may not be. You or I, as longs, can buy a futures contract, stand for delivery, take our wearhouse receipt, and hold the silver in either category, as "registered" or "eligible". That means that I could own some silver, at the COMEX, in the registered category, and not be a seller until well over $100/oz. Therefore, we should not assume that the 52 million oz. in the registered category is even available for sale! The silver in the registered category may, or may not, be owned by the short sellers!
What I am saying is that the world may have already hit the supply/demand crunch right now, and that we may be days away from serious price increases. There are too many stories of delayed delivery, or no silver available for delivery, and there are too many buyers who are desperate to get real silver that very few people, and few dealers, have.
And the big price increases have not yet hit. The reason for this is that the short sellers have not yet covered. They are more heavily short more ounces of silver now than they have ever been. Open interest is now around 120,000 contracts, so that means they owe about 600 million oz. of silver! Usually, when they massivly increase their short positions, they knock down the price, but this is not happening now!
This scares me. We could see silver double in price by next week, and I thought I could anticipate this before it happened, and sell a few more silver stocks to get silver bullion, for my own "optimal" allocation of 20-25% bullion. But I only have 16% in bullion now. Unfortunately, with the price moving this fast, there is no way I want to sell any silver shares for silver. My problem is that I have a three day hold time if I sell some shares, and I have to be "in cash" for three days until the trade clears and I can use any cash to buy bullion. With the price of silver moving like it is, and given my sudden realization that there may not be 52 million oz. of silver for sale at these prices, I'm tempted to move more of my portfolio into bullion, perhaps even up to 30%, but if I do, the silver price may be at $9 to $10 by the time my cash clears! As I said, scary. The other issue is that a default in silver is clearly coming. Would I risk 5-10% of my portfolio to a potential delivery default?
Yet, by Friday, I noted that many of the silver stocks are beginning to outpace silver again, as noted by the "up" notes, verses the "down" notes in the summary table at the top of this list.
Besides, trading too much makes the brokers rich. It's time for me to "be right, and sit tight".
Given all these fundamental issues, I especially do not like chartists and the technical indicators. The chartists, to me, who analyse every little squiggle on the price chart, are looking at the wrong things. The dollar/silver price chart contains absolutely no information about how many extra dollars they have fraudulently and excessively created. Therefore, the price chart contains no information about how high the price will go in terms of dollars. If the price of silver, in terms of dollars, reaches infinity dollars per ounce, the price chart will look like a single backwards capital letter "L". There will be a flat line at the bottom, and a straight vertical line on the far right. We could hit the far right on the chart at any day now, if not already.
Therefore, drawing any kind of sloping line on a chart to determine where the price of gold or silver in terms of dollars will reach at a given time, is madness, and assumes that the dollar is not fraud. That's the false assumption of the chartists! Remember that.
Now, it was a long time ago that I realized this principle, of what would happen if the price of gold or silver would reach infinity dollars per oz., and what that would look like on a chart. Such a price reduces all the analysis of the price movements today to miniscule, and irrelavent, proportions. This is why I'm not a chartist, but rather, a fundamentalist, and why I look at things such as how many dollars they have printed, and why I take the time to educate others about these relatively unknown facts.
There are several implications that follow this realization. First, charting and drawing sloping lines is ridiculous, as I have mentioned. Second, the eventual price movements of gold and silver will take the vast majority of people by complete surprise, because there are too many chartists, and too many people who have been deceived by the fraud of the dollar. Third, you cannot predict when a vertical line will hit when looking at tiny squiggles that may preceed it, because all the tiny movements are reduced to zero in comparison to a vertical line that reaches to infinity.
There is one basic assumption of these chartists that upsets me, and that I set out to deliberately disprove in the marketplace by writing articles on silver companies. Their false assumption is that they can somehow determine where prices will go by looking at the chart! I attempted to disprove this assumption by picking an incredible investment, and then by keeping quiet about it until releasing an article about it to a wide audience. I think I did this with Cabo Mining. My goal was not only to raise the price of Cabo mining in a dramatic way, but to create an illustration of what should happen when large numbers of people become educated about silver bullion!
So then, let me show you a nearly vertical line on a chart. Look at the chart for Cabo Mining. You can look up CBE.V at Yahoo! finance, or view the chart at the company website at http://www.cabo.ca/investors.html
The price was about 50-60 cents Cdn a share until I wrote an article on Cabo on February 10th. Market Perspective & Cabo Mining - Hommel
Then, the price moved up over 100% in a week, to about $1.00 to $1.30/share Cdn. Of course, the price did not reach infinity, but I strongly feel that I helped to create a "wall" - type vertical line on a chart. And what caused it? Not a preceeding special formation of wiggles, but rather, it was the article that taught people the fundamentals! More people became educated about the fundamentals of the assets of Cabo Mining, and so, the price changed to reflect that increased awareness among investors.
I believe a similar thing will happen to silver!
What was the key fundamental about Cabo Mining? Cabo Mining controls 60% of the area in Cobalt, Ontario, which is known as the "silver capital of Canada". This area is known for a historical production of about 500 million ounces of silver. Yet the market cap of Cabo Mining was about $7 million dollars! No wonder the share price went vertical, as silver was just becoming a hot investment after being totally neglected! Today, the Market Cap of Cabo is merely about $14 million US (with a share price of $1 Cdn). The fundamentals of Cabo have changed somewhat since my article, as Cabo went on to announce two private placements, one for $5 million at $.75/share Cdn and another for $5-6 million at $.83/share Cdn. Thus, today, I think Cabo is an even better value, since they are now likely well funded, and the silver price is significantly better. Note, the private placements will increase the market cap of Cabo, due to the dilution, and issuance of new shares.
My point is that the price of silver could move like the price of Cabo did. Within a week, the price of silver could double, or nearly triple! It all depends on how many people become educated about the fundamntals of silver, as people were educated about the fundamentals of Cabo!
So, what will happen to the price of Cabo next Monday? Well, since February 10th, I believe my readership has significantly increased, perhaps doubled from under 4000 to over 8000 email addresses. Although I do not know for sure, I believe that the price of Cabo may rise once again, as a new group of investors learns about Cabo.
This raises another point that I would like to discuss. Too many people somehow believe that it is wrong to "tout" an investment. My long time best friend actually asked me whether it was illegal to write about a stock! Nothing could be further from the truth. Fortunately, the government of the USA recognizes the God-given right that people have to tell the truth about things! We call it Freedom of Speech, as further protected by the First Amendment to the Constitution. It is well recognized by the SEC. It is illegal to write fraudulent information. The SEC also has two little rules that they require "registered" investment advistors to follow, and although I'm not registered, and I'm not an advisor, I follow the rules to be safe. These rules are that I disclose whether I own the stock, and whether I have been paid by the company. So, in the case of Cabo, yes, I own shares. And no, Cabo did not pay me to write about the stock. In fact, I will disclose two further items that are not required. First, although I owned shares of Cabo already, I bought more as I participated in the private placement at 75 cents, and I'm also probably going to earn a "finder's fee" as I told a few people about Cabo's private placement. I have not yet been paid, so I cannot say that I have been paid. But I do think I will be earning something. Let me break for a moment, and run one of my "ads".
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'm not brokering any securities because I'm nobody's hired agent, and I'm not negotiating any of the deals. Now, there are special rules that apply to brokers, or registered investment advisors. Since I'm neither one of those, I'm less regulated, and more free. You see, a broker is hired to represent the investor who hires him. Nobody has hired me. Nobody has paid me to represent their interests. Therefore, brokers or your paid investment advisors need to tell you whether they have an additional form of payment coming to them if you buy investments that they own. Since you do not pay me because I'm not your broker, I do not have this potential conflict of interest. And of course, if I care, at all, about my reputation and the laws of God, I will not give anyone any bad advice that I would not consider following myself.
Now, with regard to silver, nobody who ever writes about silver needs to disclose whether they own silver or not. Rules that apply to companies do not apply to commodities. Silver, since it is not a company, does no reporting, and pays nobody for advertising. It is what it is. Inert. Lifeless. It is impossible to violate any "insider trading" rules for silver.
This is one of the reasons that silver and gold have remained as ignored investments for so long. Gold and silver cannot directly pay anyone to write about them. And they certainly cannot pay Wall Street fat cats who are working for the big brokerage firms who are in league with the Federal Reserve, and may even practice fractional reserve banking with your brokerage accounts!
There is another rather unique aspect of gold and silver that also restricts advertising, and thus prevents the public from becoming properly educated. Bullion dealers generally get the greatest volume and greatest business when they sell bullion at the lowest price, and buy bullion at the highest price. Therefore, a dealer who spends lots of money on advertising is at a competitive disadvantage with another dealer who may not advertise and therefore have lower costs! The problem is that the people who allow themselves to become educated by one dealer will then shop around for the lowest price, and may not buy from the dealer who spent money on advertising!
Gold and silver are nobody's monopoly. They are money, because every bit of gold and silver is similar enough to all the others, to be fungible, or easily exchangable. Gold and silver are not copyrighted, not patented, not trademarked. Oh, of course, people try to put their own marks on gold or silver bars and coins, and try to say which mark is better, whether a "JM" or "Englehard" bar, or whether an American Eagle or Austrian Philharmonic, but that doesn't really work in the marketplace that much. Bullion buyers are not fooled, and will not buy into, nor value more highly, such "idol-making," and will generally buy whichever form of gold or silver is at the lowest price.
(This is also why I don't buy or advocate numismatics. It's the principle of the matter, morally, for me. In a world of good and moral people, where sentiment for idols is nearly non-existant, who would even pay even 20% over the bullion price for an old idol made of gold or silver that "looked good"? And I'm certainly not going to start worshipping idols and pay high prices for them just because my neighbors are doing so.)
Therefore, I again want to encourage you to tell your family and friends about gold and silver bullion--the "just weights and measures" that we should be using. Neither gold, nor silver, nor I, can pay you, but your own investments in gold and silver are more likely to go up, and you may save your family and friends from the calamity of the falling dollar. At the very least, your attempts will be a testimony against them, against their idol-worshipping of the mark of the dollar. (I do have an affiliate program, where people can earn commissions from advertising and linking to goldismoney.com, but it is only available to people who have relatively high traffic websites--at least 100 visitors daily.)
Now, although my family has made the correct choices--by buying silver bullion; yesterday, it began to pain my father emotionally about what is coming. I asked him, "You mean you feel sorry for most of our fellow Americans who have let themselves be defrauded by fraudulent dollars, and who will one day all wake up totally broke, instead of being deeply in debt?" And he said, "You certainly know how to put it." I said, "Look on the bright side. You have complained about how you can hardly afford good help to hire people to repair the deck, or cut down or trim back the trees, or fix the porch, because all these guys charge an arm and a leg. You can't both wish that all Americans remain wealthy, but then turn around and complain when these rich people charge you so much for work. If they become impoverished due to the crashing dollar, you will be able to hire them for $10/day like a worker in a South American nation. See, it's one or the other. So, with the crashing dollar, you will make money on both ends, as both your silver becomes more valuable, and as wages drop when the people become impoverished." He smiled, and saw the bright side.
Look, the only way to protect Americans from this coming calamity is to educate your fellow Americans, and to get them to buy silver bullion--the sooner the better!
Not only do I encourage you to tell others about gold and silver, but please tell me about your favorite silver stock, and why. Please put "SS tip", or "silver stock tip" in the subject of the email: Send to: jasonhommel@yahoo.com . I will copy and post all letters on this topic next week, as I did for the survey questions last week. WORD LIMIT: 500 WORDS. If you want to write more, put it on a webpage, and include a link.
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Why is silver money, and not copper or oil? Well, if you wanted to buy $100,000 worth of oil, at $36/barrel, that would be 2778 barrels. Where would you put the silo? On your front lawn?
Copper is $1.40/lb. If you invest $100,000 into copper, and take it home with you so that you can protect your wealth, you have to carry 71,429 pounds of copper home. Hmmm... I don't think so.
Silver is $8.15/oz. So, if you invest $100,000 into silver, at the spot price, that's 12,269 ounces, or 767 pounds. At $5700 per $1000 face value bag of silver coin, it's also 17.5 bags, which weigh about 55 pounds each, which is 965 pounds. A single person who is in shape can manage moving 17.5 buckts that weigh 55 pounds, and can store it in a $2000 gun safe, which is rather practical. It's the only thing that's remotely even manageable. And, of course, so is gold. But since silver is so much better than gold, lifting silver is worth the work. True, silver is relatively heavy now, but it will become much lighter by the time it crosses $80/oz. The packed gun safe will be worth about a million dollars.
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Because I have a market reach, I also receive a lot of tips about silver stocks. And thus, I believe I may have invested in some of the best ones that came my way. If you believe I may have an edge based on my work and 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.
I just raised prices, once again, to the following:
Price: $39.95/monthly, or $49.95 for a single month, or $295.00/year
To order: Click here
If you have any questions about billing or order fulfillment, you need to contact my support staff at support@goldismoney.comand not me. I manage a large portfolio, and I don't have time to process billing requests. I don't bill any cards, my support staff handles all of that. The new 800 number for customer service that I thought would be live last monday goes live on the 6th.
Right now, I'm being swamped with requests for stock tips. This "look at my portfolio" is the only fair way I know how to help meet this demand. And the money from the signups goes to help me spread the word about silver and advertise, which helps the entire silver industry and all of our investments. If you believe I'm doing a good thing with my work, please consider this a donation. (But only if you can reasonably afford it.)
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General Commentary on Silver (slightly modified from last week):
See my article: Biblical Guidelines for Managing your Money
As the New York Times, January 11, 1859, page 2 said---
"It is well known that the most colossal fortunes the world ever saw have been based on silver mines..."
--quote found by Charles Savoie
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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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BUYING BULLION:
Beware! Don't trade in your dollars (defaulted promises to pay in bullion) for more promises of bullion! What I mean is, we are clearly heading into another situation where delivery default is imminent! Therefore, do not buy a promise, and do not store your bullion with anyone. Go and take delivery in person when you pay. The last thing you want to do is realize the injustice of the fraudulent promise of dollars, and then get stiffed on a failed bullion delivery. Therefore, the safest place to start buying bullion is from your local dealer which you can find in your local phone book. If you buy all they have, then look to another, larger shop that might be a further drive away, and then you might consider one of the nation's largest dealers who are not at the COMEX. And when you take delivery, get a safe! And also a gun! And dogs. And perhaps a security system and alarm. Or more depending on your situation.
WHERE TO BUY BULLION:
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. The dealers in this category may or may not have the best prices, but they do have bullion in large size.
Northwest Territorial Mint --great prices! http://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 & Kenny Edwards 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.
The following locations may not have bullion in large size, but they have outstanding prices:
These guys publish BID/ASK prices:
http://www.ebay.com --I've not yet used it. Not much in size. Mostly small retail orders. Single 100 oz. bars sell several times each day.
http://www.bulliondirect.com/index.jsp --Like e-bay for bullion. I've not yet used it, I especially like bulliondirect, since they publish the bids and asks of various different sellers on a wide variety of bullion products. But there is not much in great size, perhaps only around $100,000 worth. About 5-10 bags of 90% silver coin or up to 100 of the 100 oz. bars.
http://www.tulving.com --Outstanding prices. Sometimes better than bulliondirect.com
http://www.wexfordcoin.com/BullionBar.htm
But remember, the only way to prevent from being defaulted on a delivery default is to bring your cash, in person, to a dealer, and take delivery, in person, the same day.
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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, or talk you out of taking delivery. 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 $422 million dollars worth of silver in the registered category available for delivery at the COMEX (52 mil oz. at $8.12). 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) (Perhaps $10 billion by April?) $422,000,000: 52 mil oz. of registered COMEX silver @ $ 8.12 /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 163 ticker symbols of the 100+ stocks on this list at yahoo: (Updated on April 2!!!)
http://www.bibleprophesy.org/SilverStockExtra.html
To learn All about Canadian law, 43-101, about reserves and resources:
http://www.bcsc.bc.ca/Publications/mineral_projects_sept03.pdf
A good website that hosts posting boards for many of the smaller canadian stocks (that Yahoo! finance does not have boards for) is stockhouse.com
Click on "Bullboards".
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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
@ $8.51/share
$978 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 / $8.12/oz = 15 mil "silver equiv" oz.)
For a while, I was counting cash as bullion. However, since the bullion value of the cash has fallen by half since I started doing that, we can now easily conclude that doing so is like fraud. I can't participate in fraud, so I can no longer count the cash as silver. Cash is trash. Cash value evaporates. Silver value appreciates. The two are not the same.
$978 mil MC / 36 mil "oz." = $21.16/oz.
You get "approx" .29 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
I have thought about moving HL to the "explorer" list, since the have so few reserves and resources. (Just to be fair.)
I believe silver bullion will continue to skyrocket, and I expect silver bullion to continue to outperform HL stock at these prices.
I have never been a big fan of HL. There is a disgruntled HL shareholder who posted the following public announcement to the Yahoo! Finance chat board:
Notice to HL Corporate Management
by: michaelmanley@sbcglobal.net | 03/26/04 12:26 am
Msg: 82722 of 83383 |
As a HL stockholder, I Demand!! that HL Corporation start saving 25% of any silver they produce, in a stockpile to be sold at later and higher silver prices above $10.00 an ounce, using HL’s horde of $100 million cash to finance their current operations and any silver they put aside.
The reasons for this is twofold:
One, from the posts of Zeke and schloss, the following quotation:
"A stock cannot keep going up when the Fabulous Baker Boys (and Miss Vicki) keep increasing their thievery. In the past two years, Miss Vicky--just as an example-- has taken home 3/4 of a million dollars in stock option profits. This is insanity!"
Two, arguments from both Ted Butler and Jason Hommel regarding the profitable certainty of the later selling of silver at higher prices, and the withholding of immediate silver from the market speeding up the coming shortage driven price rise in silver.
As for any greed on HL Management's part in taking unjustified stock options, as far as I am concerned, if HL management acts this decisively in promoting sharper and higher silver price rises; they can have all the greed and stock options they can carry away.
But, if HL management sits on their sloth and does not start this constructive action, with a public announcement, within the next two months (June 1, 2004), then ....
It will be war to the knife, with the following actions taken on my part:
1) I will vote in every stockholder election to dispose of HL management;
2) I will advise any HL stockholders I am in contact with to do the same;
3) I will repeatedly advise any new or existing members of this HL Board, that HL is one of the worse silver mining stocks that I know of, with the lowest reserves per stock dollar, and give them names of alternatives silver mining stocks to purchase; and
4) I will inform any Institutions I am in contact with, whom are holding large amounts of HL stocks, to vote against HL Corporation management in any future elections.
So the ball is in now your court, HL Management. Show us you deserve to participate in the coming bonanza of silver profits by acting decisively, and you can have all the loot you can grasp.
I am waiting for the June 1, 2004 deadline. |
With an average volume of 1.9 million shares traded daily, but with 115 million shares outstanding, I suppose HL stock might not be liquid enough for very large investors to quickly sell at curent prices.
ABX (Barrick)
http://www.barrick.com/
535 million shares
@ $24.10/share
$12,893 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."
$12,893 million Market Cap / 1710 mil oz. = $7.54/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)
@ $7.14/share
$1521 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)
$1521 mil MC / 225 mil oz = $6.76/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)
@ $5.50/share
$2186 mil MC
419 proven and probable reserves of silver (from 2002 annual report on website)
$2186 mil MC / 419 oz. silver = $5.23/oz.
You get "approx" 1.56 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)
@ $22.54/share
$1014 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
$1014 mil MC / 454 mil oz = $2.23/oz.
You get "approx" 3.63 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: A reader emailed me saying that Apex has 35 exploration properties. I have not yet confirmed this report.
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: Canadian Zinc, Expatriate, or Metalline (I own Metalline, but not SIL.)
I do not have an idea on whether or not SIL will out perform silver bullion or not. It's hard to say, because of that huge zinc bonus. 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.
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 .76 US/Cdn = $.45
$46 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.
$46 mil MC / 23.4 mil oz. silver equiv. = $1.98/oz.
$46 mil MC / 63 mil oz. silver equiv. = $.73/oz.
You get "approx" 4.10 ounces in the ground for 1 oz. silver's worth of stock.
Exploration potential = 11
Additional comments: (Still not trading) Although ECU stopped trading last 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
GRS GAM.TO (GAMMON LAKE)
http://www.gammonlake.com/
gammonl@sprint.ca (902) 468-0614
Fully Diluted 58.7 mil shares (Nov 30, 2003)
+3.33 mil special warrant financing (Feb 27th, 2004)
Fully Diluted: 62 mil shares (Feb 27th, 2004)
@ $7.22/share
$448 mil MC
Total Ocampo Inferred: 1,124,000 oz. gold, 50,438,000 oz. silver
Silver equiv = 11.24 mil oz. + 50.44 mil oz. = 62 mil oz.
Total Ocampo Measured & Indicated 2,207,800 oz. gold, 108,438,000 oz. silver
Silver equiv = 22 mil oz. + 108 mil oz. = 130 mil oz.
Total Ocampo Measured & Indicated plus Inferred = 182 mil oz.
Gammon owns 26.3% of Mexgold, MGR
Since Mexgold owns 185 mil oz. of "target exploration potential", 26.3% of that is 48.6 mil oz.
182 + 49 = 231 mil oz.
$448 mil MC / 231 mil oz.= $1.94/oz.
You get "approx" 4.19 ounces in the ground for 1 oz. silver's worth of stock.
**Note** most of Mexgold's oz. that are added in are an "exploration target" not yet "inferred resources".
Additional comments: Drill results released Jan 7th: http://biz.yahoo.com/cnw/040107/gammon_lk_drill_rslts_1.html
At current prices of a 64:1 silver:gold ratio at $425/oz gold and $6.60/oz silver, the resources are worth $1048 million of silver, and $1411 million worth of gold. Cash cost is $85/oz. Life of mine is 7 years.
FSR.TO FSLVF.PK (FIRST SILVER)
http://www.firstsilver.com/
info@firstsilver.com (604) 602-9973 or (888) 377-6676
38.6 mil shares fully diluted (Jan 2004)
@ $2.71/share Cdn x .76 US/Cdn = $2.06 US
$80 mil MC
From the Company's main page at their url:
"As at December 31, 2001, First Silver's mineable reserves were 12 million ounces of silver and inferred resources totaled 30 million ounces of silver. The mine is developing a 1000 plus meter exploration drift to upgrade currently identified inferred resources to mineable ore reserves and to discover new reserves."
12 + 30 = 42 mil oz.
$80 mil MC / 42 mil oz. = $1.89/oz.
You get "approx" 4.29 ounces in the ground for 1 oz. silver's worth of stock.
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