-- Posted 5 October, 2009 | | Discuss This Article - Comments:
The Wallace Street Journal
Wallace, Idaho – The official endings of Summer and The Silver Summit came early last week, with the departures of blue sky, warm temperatures, and of our dear friend Georg Stangel, of Stein-am-Rhein, Switzerland, who comes to the Summit every year and then repairs to Wallace for a few days of merriment with his friends.
With a record 58 exhibitors, a record turnout of 1,000 folks, speakers like Hugo Salinas-Price, John Embry, Bill Murphy, Jeff Christian, Michael Dirienzo and David Morgan, and coverage by MineWeb, the Korelin Economics Report and local print and television media, The Silver Summit has established itself as the world's premiere silver conference. Not bad for a little impromptu bash that began just seven years ago on the back of a cocktail napkin at an after-hours joint in Wallace – put together by one Shauna Hillman, a Wallace photo archivist and shop-owner who'd never so much as even attended a mining or resource conference before.
Our first Silver Summit – Shauna named it – was a closely-kept secret insofar as we had the job of publicity, and did not want a bunch of reporters showing up to report on an empty room. Somewhere between 35 and 50 folks came, along with Hecla, Coeur d'Alene Mines, New Jersey Mining, Mines Management, Bunker Hill and Kimberly Gold to name them all. Companies like Silver Wheaton and U.S. Silver, now regulars at The Silver Summit, hadn't even been born in 2003.
At Silver Summit 2008, the Big Washout on the Big Board was well under way, with Lehman, Bear Sterns and Merrill Lynch either dead or on life-support. We grinned smugly, secure in our investments in silver and gold mining stocks. Little did we know, in late September 2008, that the Big Washout would become a tsunami in the precious metals stocks as well. Nothing in our fundamentals had changed, and metal prices held steady, but anybody with publicly traded mining shares got hammered. No-one was spared. We watched Hecla turn nearly vaporous at $1. Teck looked for awhile like they were going under. Our favorite juniors plummeted from a buck to pennies and nickels. Indeed, the entire mining sector looked like the old Spokane OTC penny market.
On the other hand, how badly we got whacked, we were at least left with Something. Which is a lot more than you can say for some CNBC-watchers who bought Lehman, Bear Sterns and GM in those agonal days.
Another Big Washout on the Big Board is in the works, of this we're sure. The talking heads speak of the ongoing “jobless recovery.” Say what? If people in the manufacturing and resource sectors are out of work, what part of the current and near-future aspects of the economy is in recovery? As Peter Schiff noted last week, if you think there's something to this “jobless recovery” nonsense, he's got a breakfast of fat-free bacon and an egg-less omelette for you. Well, goodness, the Financials, of course, the very institutions that brought this shit-rain down upon us in the first place (with the complicity and duplicity of the United Snakes Congress and the U.S. Fed, of course.) The looming question is why companies like U.S. Silver (of the small caps) and Hecla (of the large caps) are still trading at a fraction of their book values.
You've got to ask yourself, honestly, if the small caps are the place to be, considering the set-your-hair-afire performance of (by silver-sector standards, anyway) of the big dogs. A year ago, Teck was $2.60 and today it's $26.26 – a 10-bagger!; Hecla was 99 cents 52 weeks ago and is $4.06 today, still a minor slice of its book value; Silver Standard has bounced back up from $5.35 a Silver Summit ago to $25.60 at this year's Summit.
Our favourite profitably-producing juniors haven't recovered nearly as nicely: Silvercorp, which mines lead and silver underground in China from its world class Henan-Found property, climbed up from $1.19 a year ago to its current $4.88; Metanor, Quebec's premiere gold-making up-and-comer, crawled out of its 26-cent hole but is still a mere 81 cents; U.S. Silver bottomed at 3 cents but is still just a dime higher; First Majestic saw the depths of 87 cents and is now a healthy $2.45, but . . .? If the producing juniors could do as well as Teck, we could all burn our mortgages and buy yachts somewhere warm.
To reiterate: The underlying fundamentals of all these companies haven't changed one whit. Veins and grades do not disappear overnight. Costs, given the respite in energy prices, have probably dropped. Precious metal prices, rather than cratering, have plateaued rather nicely as if they are not even anticipating the impact of Obamanomics and its hugely inflationary consequences. Means we're in the cat-bird's seat. We're the stealth market.
Funds run by Lehman and others, and investment bankers, bought heavily in to the mining stocks at all levels a few years ago, and made fortunes, but our miners were the first to be kicked to the curb as these outfits scrambled to recover some of the liquidity they'd lost in the derivatives Ponzi scheme. That's why we crashed. It wasn't because of our fundamentals. It's our understanding that the funds are out of the game, either for lack of cash or under orders from Bernanke-Paulsen-Geithner not to goose the price of gold and silver. God forbid some U.S.- or Canada-based fund should provide capital for a mineral-producing enterprise! Better we should prop up a bunch of filthy banksters, n'est-ce pas? Which means that the only folks left in the junior mining sector (and perhaps big chunks of the senior mining sector as well) are us little people, who aren't in here to get Bernie-style rich but merely to grow our wealth in an intelligent way so we can hold the cops at bay when they come for our guns and our groceries.
The Silver Summit, and silver-mining stocks, may be the only game in town that is too small to fail and too big to be busted. Silver is the people's money; the Silver Summit is the people's conference. Our clients mine money, as Phil Lindstrom used to say. Which means we've nowhere but upwards to go.
David Bond, Editor
-- Posted 5 October, 2009 | | Discuss This Article - Comments: