-- Posted 18 March, 2008 | | Discuss This Article - Comments:

The Wallace Street Journal

By David Bond, Editor

The Silver Valley Mining Journal

Wallace, Idaho – Two days past the Ides of March, and smack atop St. Paddy's Day, winter is making its retreat from the lowlands of Spokane and Post Falls. But here in Wallace, up in the Bitterroots, it shows no recognition that it has worn out its welcome. With the snowfall levels having blown out the records set during the winters of 1915-'16 and 1968-'69, the white stuff continues to dust us nightly. Inspired, we intend to propose a new winter slogan to the Wallace Chamber of Commerce, to wit: “Welcome to Wallace, where the snow is never yellow (or grey or black).” At this rate our Ron Paul for President lawn sign won't appear before Labor Day.

We were musing, too, over a cribbage board at our local, the Metals Club, about what was going to happen just next in the financial markets after the Bear Stearns bail-out. The denizens of the Metals Club, most of them working or retired hard-rock silver, lead and zinc miners, pay very careful and close attention to the Dow, the Europe and Asia scenes, the Euro, the Yen, the CHF and the GBP, and of course the spot and futures prices for the precious, base and PGM metals they dig and blast out of the ground – and although they are “just miners,” usually render more salient commentary on economic matters than issue forth from the talking heads on Bloomberg and CNBC.

No doubt by shift-change later today, the topic will be Ambrose Evans-Pritchard's latest screed in the London Telegraph, wherein he gloomily declares: “I believe the forces of debt deflation now engulfing America - and soon half the world - are so powerful that nobody will be worrying about inflation a year hence.” Or perhaps James Turk's warning of counter-party risk spilling into the precious metals funds, or Jason Hommel's concise history of the cascading derivatives collapse. There will be much to ruminate about as the cribbage pegs advance.

Things do not look good for the bigger cities. They've no easy access to critters or firewood, and they've been stripped of their ability even to arm and defend themselves should the crap hit the fan. In our small town of 900, seat of a county of 13,000 in the northeastern corner of a state of not even 1.5 million, there is a lot of griping about rising gas, grocery and ARM costs (unlike the esteemed President of the United Snakes, we notice these things), but there are, like the first green buds of the crocus pushing up bravely through the snow, many signs of hope here in the Silver Valley.

The mines are hiring, not laying off, and wages are approaching what they were in the heady union contracts of the late-1970s – albeit a 2008 Fednote buys about a third of what a 1978 Fednote bought, and miners' pay falls a bit short of the $26,300,000 James E. Cayne was paid in 2006 to run Bear Stearns into the ground, even the $1.9 million Coeur d'Alene Mines CEO Dennis Wheeler paid himself that same year. Hecla will plunk more than $200 million into infrastructure at the Lucky Friday and has just very nicely tidied up its land-holdings around there with its purchase of Independence Lead Mines, a deal that shot IDLS's shares up from the mid-$3 range to a dozen bucks or thereabouts, and didn't hurt HL's respect in the markets, either.

Downstream, U.S. Silver is slogging away at shaft-maintenance issues brought on by years of the afore-mentioned Coeur Mines' neglect of the Galena, with the goal now of long-lasting improvement. Further downstream, the Sunshine Mine is in production and Sterling is dealing with a long line of smelter-owners eager to take the cons. SNS Silver continues to riddle the mountain above the Crescent Mine like a loaf of Swiss cheese, and over at Bunker Hill, a “brand-new, second-hand” mill stands ready to turn out concentrates. A tad to the north of here, gold giant Newmont is partnering-up with locals New Jersey Mining to dig for gold within a 38-square-mile area just north of Murray, Idaho – they're calling it the Toboggan Project.

Smaller deals are afoot as well from the Montana line to Pine Creek, and given the expected flooding in the rivers and creeks if this snow ever melts off, the gold-panners and dredgers are looking forward to a lucrative summer.

So we take the frantic chatter on the financial TV shows perhaps a little less seriously than the folks in the cities and on the coasts. And we take Wall Street's dead cat bounce and the fools who are buying into it this week even less seriously than blowhard Jim Cramer's rant on CNBC just one week ago that “Bear Stearns is just fine.” (In fact, here in Wallace, we take cribbage more seriously than we do Jim Cramer). But if cribbage isn't your thing, watch again the shellacking that gold bull Peter Schiff took on Kudlow & Company's caught just last July for daring to warn that Wall Street's, and the Fed's, houses of cards were about to collapse.

It's all music to a silver miner's ears.