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-- Posted 20 April, 2004 | Digg This Article
FRIDAY, April 16th, 2004
This week's report lists 102 silver stocks. There are 30 silver stocks that list reserves, resources (and exploration potential.) which I calculate by using my "ounce in the ground" forumula. There are 48 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 over 8900 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
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.
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
Kitco reports silver at $7.12/oz. as of Friday, 2:15 PM West Coast US, which was used to calculate the following figures. The CAN $ / US $ conversion factor is .7435. I will use .74 for ease.
How to read the following table:
Stock Symbol that works at Yahoo! Finance (Company name) / Silver oz. "in ground" for 1 oz. silver's worth of stock. / valuation price change since last week relative to silver price change (and stock dilution, and resource changes, if any) / additional comments (EXPT is "exploration potential")
Due to silver moving down so much this week (12.5% down), if a company did not move down as much, then, relative to the silver price, the company is "up", even if the share price, in dollars, is down. All companies that are "down", were down more than the silver price was down.
- ABX (BARRICK) 1 down --infamous hedger (18 mil oz. gold hedged, 3 yrs production) hedged?
- IPOAF.PK (INDUSTL PENOLES) 1.5 down --current producer, mostly family owned, hedged?
- CDE (COEUR D'ALENE) 1.3 even --current producer, (gold bonus) in debt.
- SIL (APEX SILVER) 3.7 down --large zinc bonus, low grades, cash rich--$345 million! in debt
- CFTN.PK (CLIFTON MINING) 3.5 up -- (84 EXPT) (colloidal silver patent bonus)
- GRS GAM.TO (GAMMON LAKE) 3.7 up --current producer, owns 26% of Mexgold
- FSR.TO FSLVF.PK (FIRST SILVER) 4.2 up --current producer, (not profitable '03 3rd q.) unhedged
- MFN MFL.TO (MINEFINDERS) 4.5 up --significant gold bonus, $35 mil cash on hand.
- KBR.V KBRRF.PK (KIMBER RSCS) 4.5 up A one property company, high grades, with exploration potential.
- PAAS (PAN AMERICAN SILVER) 5.5 down --current producer, in debt.
- * TM.V TUMIF.OB (TUMI RSCS) 6.1 down -- (12 EXPT) recent bonanza grade silver discovery
- WTZ WTC.TO (WESTERN SILVER) 7.0 down -- (24 EXPT) large mine development cost. copper & zinc bonus
- HGM.V HOGOF.PK (HOLMER GOLD) 7.1 down --silver project in cuba, large gold project bonus.
- MGR.V MGRSF.PK (MEXGOLD RSCS) 7.1## up (##exploration target) -- bonanza grade discovery on Jan 13th
- ORM.V OREXF.PK (OREMEX RES) 8.0 up (34 EXPT)
- SSRI SSO.V (SILVER STD RSC) 8.3 down --multi-property company, understands silver story
- CZN.TO CZICF.PK (CDN ZINC) 8.9 up --large zinc bonus, high grades, low start up costs, great EXPT
- SRLM.PK (STERLING MINING) 15 up --(40 EXPT) acquired the Sunshine in Cour d'Alene
- RDV.TO RDFVF.PK (REDCORP VENTURE) 17 even --60% gold bonus
- FAN.TO FRLLF.PK (FARALLON RSCS) 17 up --(29 EXPT) low grades, silver 1/3; also gold & zinc bonus.
- * MGN (MINES MGMT) 19 up --60% copper bonus (low grades), start up cost ~ $250 mil
- HDA.V (HUSIF?) (HULDRA SILVER) 20 even --very tiny, no debt, zinc bonus, low start up costs.
- ADB.V ADBRF.PK (ADMIRAL BAY RSCS) 20 up --actively expanding resources. (Huge gas bonus)
- EXR.V EXPTF.PK (EXPATRIATE RECS) 21 down --significant zinc bonus 60% zinc, 25% silver
- * PLE.V (PLEXMAR RES INC) 22 down
- CHD.V CHDSF.PK (CHARIOT RSCS) 22 up (explorer, with inferred resources)
- GGC.V GGCRF.PK (GENCO RESOURCES) 23 down
- * SVL.V STVZF.PK (SILVRCRST MINES) 24 down --(39++ EXPT) --(Silver in Honduras) ++
- ASM.V ASGMF.PK (AVINO SILV GOLD) 25 up --owns 49% of the Avino +4 other silver props. (silver bonus)
- UNCN.OB (UNICO INC) 52 up --lease expiring on largest property, June 1 2004.
* = I own shares
Explorers (by market cap, in millions):
- HL (HECLA MINING CO) .31 down --current producer (gold bonus) cash rich.
- * IMR.V IMXPF.OB (IMA EXPL)
- EZM.V EZMCF.PK (EUROZINC MINING)
- CDU.V CUEAF.PK (CARDERO RSCS) 44-74 "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)
- * MMGG.OB (METALLINE MINE) --zinc/silver (historic high grade silver) (low cost revolutionary oxide zinc process)
- 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) 34-173 "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"
- * OTMN.PK (O.T. MINING) very large exploration potential
- ECU.V ECUXF.PK (ECU SILVER MINI) 4.1 down --(11 EXPT) --50% gold bonus
- 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) 144 "exploration potential"
- * 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) 42 - 115 "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
Silver oz. "in ground" means and 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 into buying shares in the company at current prices. Here's the math on how to get it. 1. Get a market cap in U.S. dollars. Divide that by the silver price, so the market cap is denominated in terms of silver ounces. Then, divide the ounces in the ground by the market cap as denominated in silver. This tells you how many ounces of silver in the ground you are buying when you give up one ounce of silver in you hand for shares of stock, instead.
(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):
Next weekend, April 24-25, I'm heading to the Calgary Calgary Resource Investment Conference. http://www.cambridgehouse.ca/ I decided to go at the last minute, because I was unsure if I would be able to travel to Canada without a passport, due to the new Patriot Acts. I don't have a passport because I don't use a Social Security Number, and without a number, I don't even know if I can even get a passport. But I can travel to Canada, and return to the U.S.A. if I have a driver's license, a birth certificate, and a second form of ID such as a Credit card, all of which I have. So, I hope to see many of you in Canada next weekend.
Because I will be traveling on Friday, and gone all weekend, I will be unable to produce this free weekly report next week. It takes me about 5-7 hours to calculate all the figures by hand each week, not including the time to write commentary, and update company information.
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My marketing efforts are working. And because this weekly report has an interested audience, I'm able to go out and spend money to advertise it, and I'm able to spend money to make it better. One of the things I am planning to produce is a real time summary of this list. They will be updated in a 20 minuted delayed quote or real time basis, instead of just once a week like now. One list will be ranked by my "ounce in the ground" formula, and the explorers will be ranked by market cap. I do not yet know how long until I can get that up and running, but it's one of my goals.
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This past week, silver has been volatile in price, yet, I am now more bullish on silver than ever.
One of the reasons it is so important to avoid futures contracts is to be able to survive the wild changes in price. If you own physical silver, paid in full, you really do not need to care about the major price swings, because they cannot hurt you. You have not lost a single ounce of silver in your possession. If you own a futures contract, you get a margin call when prices go down, and you may end up having to pay more than you can afford, and thus, losing your entire investment.
Volatility helps the shorts, in more ways than the obvious, which is that they MAY get a chance to cover when the prices go down. Volatility also serves the manipulators with another big purpose: to confuse and scare people away from investing in silver. People do not understand why big price swings will occur, and thus, they will be more likely to say to themselves, "I do not understand silver, and thus, I will not invest in what I do not understand."
The other way volatility scares people away from silver, is that it makes silver seem "unreliable", or "untrustworthy". After all, how can you plan on what your silver should be worth if the price is rapidly moving all over the place?
But the real truth is that silver is reliable and trustworthy, as is gold. It is paper money that is untrustworthy.
The rapid price swings of the metals tend to make people forget that. But are the metals changing in price, or is it the dollar?
Let's consider the way prices are quoted. Dollars per ounce. Everyone focuses on the change of the price of the metal, in terms of dollars. It's as if the metal is changing in price.
But what if prices were quoted in terms of ounces of silver per dollar? Well, of course, then the tendency would be to think that the dollar is changing in value, as measured by the silver!
Look at the following. We saw prices for silver change from a low of about $4.20/oz. to a high of about $8.40/oz, to move back to $7.20/oz by Tuesday. Thus, we think in terms of dollars, since it is the number of dollars that is the important factor.
But imagine if the dollar/silver ratio were quoted in terms of ounces per dollar? The other way to quote the price is simply the inverse. Really, the ratio is the same. Hit the (1/x) button on the Windows scientific calculator to get the inverse.
Instead, prices would be quoted as follows: We saw prices of the dollar recently at a high of .238 ounces of silver per dollar, and then .119 ounces of silver per dollar, and then, prices moved back a bit to .139 oz./dollar.
From this perspective, we are more likely to think in terms of the dollar that is changing in price as denominated by silver, and it is not silver that is changing price!
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Typically, the short sellers massively increase their paper short positions that cause the price to move down. This causes the open interest to go up, as more paper contracts are created. The shorts do this in the hopes of scaring the paper longs into selling. What ends up happening next is that the paper longs get scared, and they end up selling... to the paper shorts. Thus, the paper shorts typically end up covering at least some of their obligations, perhaps 20-30% of their contracts at a lower price. And thus, what we see is a decline in the open interest at the bottom, as the short sellers make profits.
Ted Butler has been reporting this repeatedly, as it has happened as silver moved in the range from $4-$5/oz. as evidence of the ongoing manipulation, and if you think about it, this is the way the markets would be manipulated. By temporarily causing a dip in the price with more contracts available, it typically causes longs to "run scared" and sell.
There are two reasons the paper longs are led to sell. First, they are typically momentum players, and when they see the price going down they may change from long to short. Second, the greedy and leveraged paper longs may receive a margin call, and thus be required to put up more dollars in order to hold on to their paper position. If they cannot afford the margin call, due to over extending themselves, then they are forced to sell, whether they want to or not.
This week, this has not happened. The open interest has stayed the same. I do not know, short term, whether this is bullish or bearish. Perhaps the shorts will pile on harder to drive the price down, and in the process cause the open interest to go up, and thus, increase their risk if prices end up going up. Perhaps the shorts will be able to drive the price down further, perhaps not. Perhaps at a lower price the paper longs will give up and turn sellers, perhaps not. Perhaps a lower price will not ever come.
At this point, all is good. The open interest has essentially remained constant. At this point, the shorts have not yet covered. When the shorts do cover, they will drive the price wildly higher than it is today. Thus, the fireworks for the silver price have not yet started.
My opinion is that this price drop has not yet worked to cause the longs to sell, as it has not yet caused the open interest to go down.
I would have expected Ted Butler to cover this in his weekly commentary, but so far, he didn't. Instead, he focused on something else, something more important. He pointed out the relative prices for silver are much lower as compared to gold and copper. I think it was very important for him to point this out, as I was unaware of this bullish argument for silver. Well done, Ted, for bringing to light this unique perspective! You can read Ted's latest, at: http://www.investmentrarities.com/
Now, I want to move back to how the paper shorts influence the price, as it is fundamental to understanding the silver market, and helps you to understand why the price of silver remains so cheap.
The silver price is largely set by the futures contracts, because if a coin dealer trusts that he can receive silver in the future, at a set price, then he will be more willing to sell silver today, at a price very near to the future price. Thus, endless promises to deliver silver in the future can have just as harmful effect on the price of silver as if real silver were being sold into the market... as long as people trust the paper shorts to deliver the silver.
As we know, the shorts are the large, very wealthy, commercial dealers. Many of my subscribers warn me, "don't fight the commercials". But, in the end, the issue will not come down to promises, the issue will come down to who can fulfill their promises. Do the shorts actually have the silver or not? If they don't, and if they default, then the silver price will skyrocket, and the paper shorts (with near infinite cash but no silver) will have to buy the silver on the open market at an ever higher price.
Some people are scared of the paper shorts, because they think they have endless money at their disposal. Of course they have endless paper dollars at their disposal, but that is not real money. That is monopoly money, and is fraud. Yes, they have endless fraud at their disposal. But they do not have endless silver at their disposal. Silver is money. If you realize, as I do, that silver is money, then you will realize that if they do not have silver, then they are BROKE, and BANKRUPT. A broke and bankrupt entity cannot influence and manipulate markets forever. The game will end when they run out of physical silver. Silver is money, and gold. Paper money is nothing but pieces of paper with numbers on it.
I have written in the past that I think the coin dealers are heroes, because I see that the current prices and situation in the precious metals markets must end in default. The default may financially wipe out certain coin dealers. Imagine yourself as a dealer for a moment. You take an order over the phone. The person says they will send you a check. Let's say you will protect yourself as a dealer, and not even lock in the price until AFTER the check clears. (But most dealers will lock in the price on the day you send the check, well before it clears.) Then, the dealer will place an order from a larger dealer to get you your silver. (What? You didn't think the dealer would sell you HIS silver did you? Of course not. See, the dealer sells you silver, at the current price, only if he can order more silver at that same price, or lower, than the price he sold it to you. The dealer can only stay in business, and make money, on the spread between your price that you bought from him at, and his lower price where he can buy at.)
And every dealer has to, by nature, deal with a larger dealer. That's the nature of the business. But what if the largest dealers are the biggest crooks, and do not have the silver, but are short, and are only "large" because they have plenty of paper money? Perhaps they can sustain paper losses for a time, but not when silver prices rise too fast.
So, eventually, there will be a default. And who will be defaulted on? Probably both the dealer, and the customer who places the order.
This is why the safest way to buy physical silver is with cash, in person, from your local coin dealer that you find in the yellow pages. And if you clean him out and buy all his silver, then it is likely worth your time to contact the coin dealers in the nearest, largest metropolitan city, and call around and ask to see who has enough physical silver to satisfy your order. There is nothing safer than physical silver bullion in your possession, and there is nothing safer than paying for your silver at the time you take delivery. Any other arrangement is a promise. And the entire reason to sell paper, and buy silver, is that you are rejecting the promise, and you are demanding payment in full.
I sincerely believe it is worth paying a small percentage more for your silver from a local dealer than from a dealer over the internet, because when you take delivery in person, there is no default risk. Your local dealer is a hero. If he takes your paper cash, and gives you bullion, he takes on the default risk. Patronize his business. Nevertheless, I do list several places on the internet where you can get silver, and I do this because I have ordered from them, because I do not have access to any local dealers in Sacramento, or San Francisco, or Reno, who can fulfill very large orders in size out of personal inventory. Again, this goes to show how tiny the silver market is, and how little silver bullion there is left available.
Because of my position as a writer on the internet, I have people who email me their horror stories of not being able to obtain silver bullion. They say they place an order, give away their money, and then, the dealer does not ship the silver soon enough... or, they sell the silver, and the dealer does not ship the money soon enough. I do not know whether these stories are true or not, and because of my position, I feel I cannot report such complaints that name a specific dealer. I do not know whether such stories are true, I do not know whether the person wants to stand by their complaint.
According to my religious understanding of complaints, they should be settled in a court, and at the testimony of two or three witnesses. It is not my place to spread unsubstantiated allegations against particular bullion companies that may be in trouble financially.
All I can say is that I have been receiving more complaints against dealers lately, and questions about whether certain dealers are financially stable, and I have no reason to suspect that such complaints are fraudulent. (But in case they are not true, I have to protect myself, and not issue statements which may be libelous or slanderous.) All I can say is, protect yourself by getting silver bullion from your local dealer, and be ready to pay an additional 3% more than the best price quoted on the internet, just for the ability to get silver, "default free."
Remember to negotiate. If your local dealer's price is too high, and if he will not negotiate his price to a level you will find acceptable, then consider running a newspaper ad in your local paper, offering to "buy silver", and compete with him! Remember, everything can be negotiated! You may be able to buy silver at 10-20% under the spot price from your neighbors who want ready cash. Simply run an ad that says, "BUYING SILVER. PAYING TOP DOLLAR. Call 1 555 XXXX" I had a friend do this who lives in a large metro area, and he got ten calls in a few days (many from people who just wanted to talk), and it more than paid for the $170 ad. He got one guy who was willing to sell 10, 100 oz. bars at a dollar under the spot price. That's a savings of $1000 under the spot price, and you will usually pay at least 30 cents over the spot price if you buy 100 oz. bars from a dealer! Yes, you will be paying "top dollar" if you offer from between 3.5-4 times face value for 90% junk silver coins that sell for up to 5.5 times face value.
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Here is a letter sent to me:
First I want to thank you for your brilliant, dedicated research and your
efforts to spread the word regarding gold and silver.
I guess I am a rather new comer to the acceptance of gold and silver as
one of the best places to have one's money. It took me awhile because I
saw gold bugs buying back in the late 80s when gold was $440. They missed
out on other investment opportunities, and even in with this current gold
bull market, they have yet to recover their investment.
I bought gold in December of 2002, and started acquiring silver in
November of last year. The person I bought some 90% silver coins from
signed me up for your weekly silver letter. I have been studying what
you, and others, have to say, and I'm convinced that you all are right —
silver is one of the best (possible the best) investment opportunities
now.
Recently you said that if a person really believed in silver, he should
be 100% invested in it. Again, I agree with you. Since our house is paid
for, a large portion of our net worth is tied up in home equity. To get
at that with out having to sell the house, we are getting a line of
credit against the equity. I know you and apparently most of your
readers, believe that being in debt, is not good, but other than selling
the house, I can think of no other way to leverage the equity of our home
and invest it in silver. I don't like being in debt, but I believe that
silver is going to go sharply higher in price, and if I don't take out a
loan at prime plus ¼ percent, I will miss out on it. Do you think taking
out a loan against the house and investing in silver is a smart
move?
You asked how people are invested now. I have about 12% in gold, about
10% in silver, 13 percent in cash in a brokerage account and the rest in
the house. I'm not including our IRAs, or my wife's 401k.
I want to buy bullion with the money from the line of credit on the
house. I believe that real estate is nearing the top of its values. I
think that bullion would be safer and easier to sell to pay off the loan.
I will not use all of the loan, but keep a bit back to use to make the
interest only payments. I would like to have some investment in stocks,
so I will use money in the brokerage account for that. One that I like is
an opportunity for Excellon. They have a "silver
unit" investment. Each unit is $1,100 and would be repaid in
three years with 200 ounces of silver. It also includes 1,000 warrants to
buy the stock for .325 Canadian dollars. What do you think of this
investment?
This past week, you spoke of the difficulty in investing your money in
some of the silver mining stocks. Many are low cap thinly traded
companies and as you say, your own buying can drive their price upward
away from you. It would seem that when the time to sell came, the same
could apply, only then it would drive the price downward away from
you.
I realize that if I buy the right stocks, there is a chance of much
greater appreciation than on the bullion alone. Of course, stock trades
will always be taxable, but bullion could be sold, and no tax
consequences recognized. Not that I would do that of course. (The
appropriate disclaimer.) But buying the right stocks can be tricky. I
notice in your fantasy portfolio, you have done very well, but there are
some losers, and had you invested that portfolio in silver bullion, you
would have done about as well.
I should mention that at 61 (closer to 62) I am much older than you, and
don't have the time for any mistakes. Not that anyone wants to make them,
but a young man has time on his side to right those wrongs. Even with all
the studying I can do, along with following the experience of folks like
you, I will likely have my money in some stocks that will not appreciate
as much as the metal. If we are both right about the underlying premise
for investing in silver, I will make money on bullion. I can buy and
sell, and the amount of money I have to invest will have no effect on the
price.
Your idea that silver companies should use their cash on hand to buy
silver bullion was brilliant. I hope they will take your advice. I am
telling people I know about silver and encourage them to read things that
people like you and Ted Butler have to say about it.
I did send you and e-mail saying that I would be interested in private
placements. I guess I need to take some risks in the stock market to get
higher yields, but I think that to have the most of my assets invested in
physical silver makes the most sense for me. What do you think?
Again thank you for all you are doing to spread the truth.
XXX XXXXXX
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“Liberties surrendered to the state are like objects in space that fall
into a black hole — they are gone forever.”
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Here is my response to that letter:
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[My comments about Excellon deleted.]
I think you are right that you should have most of your money in
physical silver.
My stocks are all in an IRA account, so they also appreciate, "tax
free".
I would recommend that you sell your house, and rent. This way, when
housing prices collapse, you will not have to "walk away" from, or
default, on your mortgage. Also, you would not want to pay it back in
full, even in silver, if your house was worth much less.
Example: Your house is worth $200,000 today. So, you take out a
$100,000 equity line, and put it in silver. So, then, your house goes
down to $100,000 in value, and your silver goes up to $200,000 in
value.
Fine? Not really, you just lost how much??? $100,000 in home equity,
and to pay back the mortgage in the panic with silver gains,
you lose 1/2 of your silver, which is
1/2 of what you could have had if you sold in the first place.
End result, you own your home again, paid off the loan, and have
$100,000 in bullion at $15/oz.
Option B:
However, if you sold your $200,000 home, you could buy $200,000
(nearly) of silver bullion, which grows to $400,000. In the meantime,
you rent... You never lose home equity, and you have 4 times as much
silver at $15/oz, which is still just the start of the rally.
Eventually, silver moves up beyond $150/oz, and you have $4 million. Then, you
buy back about 3-4 homes at $50,000 each, and you still have a
fortune in silver..
I'd choose, and strongly recommend, option B.
Never keep overvalued assets. Sell them. Very basic.
--Jason Hommel
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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 recently 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.com and 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. We finally got a toll free telephone customer support line. 877-895-6824.
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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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WHERE and HOW to BUY SILVER BULLION
http://www.goldismoney.com/buy-gold.php
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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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?) $363,000,000: 51 mil oz. of registered COMEX silver @ $ 7.12 /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 54 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 54 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 54 x 10, You will see that bonds and currency are overvalued relative to select silver stocks by a factor of 139,000 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 139,000 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 55% 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: "54 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 54 ounces of silver can buy one ounce of gold or 54:1.
I may end up selling silver for gold, some at the 10:1 silver to gold ratio, some more at 5:1, and I would sell any silver remaining at a 1:1 ratio, that we may hit during a supply/demand crunch during a paper money collapse.
How we can tell if silver is leading gold, or if gold is leading silver? IE, which is going up more, faster than the other? The way you can tell is by looking at the ratio. If the silver:gold ratio is going up (say, from 60:1 to 80:1), then gold is moving up faster (because it takes 5 more silver oz. to buy an oz. of gold. If the ratio is going down (from 60:1 to 40:1), then silver is moving up faster. So, keep an eye on the ratio.
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For a list of bullion dealers:
http://www.goldismoney.com/buy-gold.php
For a list of Brokers that handle Canadian issues and/or pink sheets:
http://www.bibleprophesy.org/SilverStockExtra.html
To track the 163 ticker symbols of the 100+ stocks on this list at yahoo: (Updated on April 2)
http://www.bibleprophesy.org/SilverStockExtra.html
To learn All about Canadian law, 43-101, about reserves and resources:
http://www.bcsc.bc.ca/Publications/mineral_projects_sept03.pdf
A good 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)
http://www.buenaventura.com/
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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ABX (Barrick)
http://www.barrick.com/
535 million shares
@ $21.92/share
$11,727 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."
$11,727 million Market Cap / 1710 mil oz. = $6.85/oz. silver
You get "approx" 1.04 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: Over the years, Barrick has hedged their production, which many claim has helped to depress the price of gold and silver, by artificially adding to supply. (Barrick's promises becoming the extra supply.) The declining price of the precious metals has put other miners out of business, which Barrick has acquired at low prices. If Barrick goes bankrupt due to their hedges, and rising gold and silver prices, then perhaps Barrick's many properties will, once again, be sold at distressed prices.
Barrick boasts a "cash cost" of $189/oz., for gold for 2003, yet their cash has dropped from $2 billion down to $1 billion. It could be due to the hedging, locking in precious metals prices at low prices, and/or hedge covering that explains the monetary loss in the light of their low cash costs.
About a year ago, perhaps spring 2003, ABX made an announcement about covering 30 million ounces of silver they sold short. Then, a large buyer showed up in the futures contracts for about that amount. I do not know whether, or how, that has yet been resolved.
I believe silver bullion will continue to skyrocket, and I expect silver bullion to continue to outperform ABX stock at these prices.
IPOAF.PK (INDUSTL PENOLES)
http://www.penoles.com.mx
397.5 mil shares outstanding (2002 annual, unchanged since 2001)
@ $5.15/share
$2047 mil MC
419 proven and probable reserves of silver (from 2002 annual report on website)
$2047 mil MC / 419 oz. silver = $4.89/oz.
You get "approx" 1.46 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. 2004 is that Penoles has hedged several year's worth of silver, that is, they have locked in to sell mostly all their silver at low 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 in March, 2004, 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.
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)
@ $5.89/share
$1255 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)
$1255 mil MC / 225 mil oz = $5.58/oz.
You get "approx" 1.28 ounces in the ground for 1 oz. silver's worth of stock. (Last week, my calculations for CDE was off by more than 15% for some unknown reason. I had 1.45 instead of 1.28 as it should have been.)
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.
SIL (APEX SILVER)
http://www.apexsilver.com/
information@apexsilver.com (303) 839-5060
45,023,760 ordinary shares outstanding. (Jan 30th press release)
@ $19.51/share
$878 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
$878 mil MC / 454 mil oz = $1.93/oz.
You get "approx" 3.68 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.
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)
@ $1.89/share US
$85 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"
$85 mil MC / 42 mil oz. = $2.02/oz.
$85 mil MC / 1000 mil oz. = $.085/oz.
You get "approx" 3.52 ounces in the ground for 1 oz. silver.
Exploration Potential: 84
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
ABL signs a contract with GNC. (April) Clifton's biofirm's colloidal silver product will be on the shelves of this mass market health food and fitness stores, GNC. Congradulations to Clifton!
GRS GAM.TO (GAMMON LAKE)
http://www.gammonlake.com/
gammonl@sprint.ca (902) 468-0614
Fully Diluted: 62 mil shares (Feb 27th, 2004)
@ $7.26/share
$450 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.
$450 mil MC / 231 mil oz.= $1.95/oz.
You get "approx" 3.65 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)
@ $2.49/share Cdn x .74 US/Cdn = $1.84 US
$71 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.
$71 mil MC / 42 mil oz. = $1.69/oz.
You get "approx" 4.20 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: This is a high grade, producing miner. The high grades, about 300g/ton, are a plus. They are also actively exploring, another plus.
3rd quarter, 2003, FSR.TO produced 389,154 oz. silver, and 604 oz. gold. and revenue was $2.09 million for the 3rd quarter. They produced at a loss, (a penny per share). They are unhedged, and remain committed to remaining unhedged.
MFN MFL.TO (MINEFINDERS)
http://www.minefinders.com/
Shares Fully Diluted 34.1 mil (Late 2003?)
@ $9.07/share
$309 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."
$309 mil MC / 195 mil oz. = $1.59/oz.
You get "approx" 4.49 ounces in the ground for 1 oz. silver.
Additional Comments: At 70:1 silver to gold ratio, over half of MFN is in gold, so consider this a significant gold bonus. MFN also now lists their resource figures on their website's main page. I'm sure investors appreciate this. I do.
KBR.V KBRRF.PK (KIMBER RSCS)
http://www.kimberresources.com
info@kimberresources.com (604) 669-2251
31.2 mil shares fully diluted (Jan 20, 2004)
http://www.kimberresources.com/sharestructure.html
@ $2.45/share x .74 US/Cdn = US $1.81
$57 mil MC
from http://www.smartstox.com/reports/kbr.pdf
30 mil oz. silver resources Measured & indicated, plus inferred
540,000 oz. gold x 10 = 5.4 mil "silver equiv."
$57 mil MC / 35.4 mil oz. = $1.60/oz.
You get "approx" 4.46 ounces in the ground for 1 oz. silver's worth of stock.
Additional comments: Kimber Reports Significant Drill Hole On Carmen Deposit
A one property company. The Carmen gold-silver deposit on their Monterde property in the Sierra Madre belt of Chihuahua State, Mexico. Significant exploration potential.
It was reported by a press release that 16%-17% of KBR.V is owned by silver bull Jim Puplava of http://www.financialsense.com, which I think is a rather solid endorsement of the company.
PAAS (PAN AMERICAN SILVER)
http://panamericansilver.com/
info@panamericansilver.com (604) 684 -1175
61.5 mil shares fully diluted (Feb 27, 2004)
http://panamericansilver.com/s/CorporateInformation.asp?ReportID=26039
@ $15.77/share
$970 mil MC
10 silver properties (3 in production)
produced 7 mil oz. silver in 2001:
Reserves & Resources through Dec. 11th, 2003 from
http://panamericansilver.com/s/ReservesAndResources.asp?ReportID=25303
743.2 million total
$970 mil MC / 743 mil oz. = $1.31/oz.
You get "approx" 5.45 ounces in the ground for 1 oz. silver's worth of stock.
Additional Comments: Pan American Silver Announces US$55 Million Common Share Financing
Pan American of Canada buys Morococha silver mine in Peru for US$35 million
This $35 million acquisition is a great deal for PAAS, and a minor help for PAAS shareholders. According to the press release above, the silver mine produced 3.5 million ounces of silver a year, at a cash cost of $3/oz., which is great! At $6.50/oz, that's $3.5 x 3.5 mil oz. = $12.25 million per year profit after cash costs! That gives the acquisition a P/E ratio for the mine's acquisiton cost of under 3! What a deal!
Unfortunately, PAAS shareholders are paying way above that when they buy the stock today. After this acquisition, PAAS should have a "2004 silver production forecast to 13 million ounces from 10.1 million ounces and will reduce forecast cash costs to below $ 3.50/oz, bringing anticipated total costs to less than $4/oz for the year." Now, at $6.50/oz, that's $2.5 x 13 mil oz. = $32.5 million per year profit, after cash costs. That gives a P/E ratio for PAAS of about $1000 / $32 = 31. Therefore, considering the two P/E ratios, 31 compared to under 3, PAAS stock is over ten times overvalued compared to other silver mining opportunities that exist in the market, such as the property they just purchased.
I believe PAAS is one of two silver companies on the list today that is significantly in debt (the other is now CDE).
What if your silver company decides to lock in silver prices at $8, and hedge years of production to "protect the shareholders and provide exposure to the high $8/oz. price," only to watch silver prices head past $25 and past $50/oz? Your stock could get wiped out in bankruptcy, and your investment could go to zero value! This is the danger of stocks! Your investment is subject to the whims of management!
WARNING: PAAS says at their website that they will hedge silver, in order to finance mine construction.
http://panamericansilver.com/s/CorporateProfile.asp
"Pan American is loath to give away the upside on any of its silver production, especially at current low metal prices, and will do so only to the minimum extent required as a condition of prudent mine financing."
My opinion is that it is NEVER prudent to go into debt, or lock in silver prices to finance a mine. If PAAS cannot raise capital on the markets by issuing shares, then they should not be financing new mine construction. If the market will not support new mine construction, then the market does not need more silver. PAAS and CDE should learn to trust the free market process, and avoid debt.
* TM.V TUMIF.OB (TUMI RSCS) (TUY Frankfurt Exchange) (I own shares)
http://www.tumiresources.com
nicolaas@attglobal.net Nick Nicolaas IR (604) 657 4058
23.7 fully diluted shares (Dec. 2003)
@ $1.65/share Cdn x .74 US/Cdn = $1.22 US
$29 mil MC
20 mil oz resource up to 50 million oz. silver potential but needs to be explored and drilled.
500,000 gold resource x 10 = 5 mil oz. silver equiv.
Debt free, 2 projects in Mexico.
Raised $2.7 million Nov. 14, 2003
$29 mil MC / 25 mil oz. = $1.16/oz. ***I'm using this number***
$29 mil MC / 50 mil oz. = $.58/oz. (exploration potential)
You get "approx" 6.14 ounces in the ground for 1 oz. silver's worth of stock.
Exploration Potential: 12 (likely plus more after bonanza silver discovery late November, 2003.)
Additional comments: Tumi soared in late November, after the company announced a bonanza grade silver discovery after drilling. This should significantly increase the numbers for their "exploration potential", but no word yet on the increase. It takes time for the geologists to estimate all of that, but investors went crazy over it immediately.
Tumi is focused on becoming a "premiere junior silver explorer." It's good to see the focus is in the right metal. Doing active drilling to prove up their projects and increase "resources". Nick N
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