Gold, silver, copper, and zinc all soaring!
Silver Stock Report
by Jason Hommel, Jan 26, 2006
We are probably in a better position that even I can realize, so forgive me for my excitement and wordiness today, as I try to understand, and explain, our good fortune!
Silver, exploding to new highs: $9.50/oz. now!
Gold, exploding to new highs: $567/oz. earlier today.
Copper, exploding to new highs: $2.20/lb., showing no sign of slowing; with world stocks at 2 days inventory!
Zinc, exploding to new highs: $1.04/lb. up nearly 100% in 6 months; and ready to outperform for several years!
You see, my largest investments are silver stocks, and since silver is often found with copper and zinc, these "added bonuses" just got a lot better--so much better I can hardly keep up with it, mentally.
Why is hyperinflation hitting the zinc and copper prices so strongly? Will it continue, as many expect, and why? Why these basic industrial materials? hmmm... Copper wires carry electricity, zinc is used to rust proof steel, but it's got to be more than just the new Chinese industrial demand for steel and electricity, right?
It may just be that zinc and copper are exploding in price because they are suppressing the price of gold and silver! See the goldrush21.com DVD for proof of the gold price suppression--I will not elaborate on that point here, the DVD does a fine job.
You see, back in our industrial revolution in the 1800's to 1900's, we were living in a gold standard. Back then, silver and gold were real money, and had substantial value. The point is that back then, copper and zinc were produced abundantly and cheaply as byproducts of gold and silver mining. With high precious metal values, we had an abundance of cheap copper and zinc and lead and all sorts of other minerals that helped to fuel our industrial revolution.
Today, there is a bigger industrial revolution than we ever had. China & India! But, alas, gold and silver prices today are so low, that silver is the byproduct of copper and zinc mining! It's backwards! Today, there is no multi-year abundant supply of excess copper and excess zinc from highly profitable gold and silver mining!
Today, our government leaders seem to think that all we need is cheap oil, and they go to war over it, partly also to protect their paper dollar printing racket. But the world needs more than cheap oil and fraudulent paper money! (It could even be argued that the wars are driving up the price of oil, but I digress.) We also need cheap copper and cheap zinc, and that can only be achieved if all of society uses honest money, which will make gold mining and silver mining profitable enough to produce the zinc and copper in the abundance that we also need.
The real beauty of the gold price suppression, and excess creation of paper money that is now heading to China to help fuel their economic development, is that their schemes are failing, as copper and zinc are soaring, and are now ready to continue soaring for the next 2-3 years, or as long as China continues to industrialize.
The beauty of this is that for us silver investors, we get this surprising bonus in our exploration stocks, because silver is found with copper and zinc, giving us a bonus that I did not really predict. (See what a lousy investor I am?) Generally speaking, industry can move counter cyclical to rising gold and silver prices--But I do expect, and have predicted, that rising silver and prices will be bullish for the economy in the long run!
Rising Gold Prices Will Help The Economy - 02 December 2003
Furthermore, rising copper and zinc prices are further proof that silver and gold prices are not in a bubble, and not ready to "top" out any time soon. This is proof of hyperinflation, and that gold and silver have much much higher to go. The inflation/deflation argument is about dead, but in 2003, I was one of the few to recognize that hyperinflation had continued for 2 years at that time. Today, hyperinflation has been going on for four years now. See Inflation & Deflation During Hyperinflation - 06 November 2003
See the following articles for confirming opinions on the great outlook for copper and zinc, from highly informed executives of major mining companies who know the mining supply/demand issues in copper and zinc--because it's their industry, and business to know about all the other copper and zinc projects in the world, because it's their job to look for, and acquire them!
Copper, Zinc Rise to Records on Signs of Growing Chinese Demand --Jan. 25
Copper and zinc rose to record highs in London on speculation that sustained economic growth in China, the world's largest consumer of industrial metals, will boost demand for all commodities.
Copper used in wire and pipe has surged 56 percent in the past year, and zinc used in stainless steel is up 78 percent. . .
Prices probably will keep rising in the next two to three years because supply isn't expanding fast enough to meet demand from China, said Greig Gailey, chief executive officer of Zinifex Ltd., the world's second-largest zinc producer.
``It is difficult to see new mines coming in the next two to three years'' that are needed to meet rising demand, Gailey said in an interview from Davos, Switzerland, where he is attending the World Economic Forum. He declined to give a forecast for prices.
China's zinc consumption is expanding because of demand from steelmakers, who use the dark-gray metal to rust-proof steel. Chinese steel production rose 25 percent to a record last year, making it the world's biggest steelmaking nation.
(Increased steel demand will also be great for moly and IGMI!)
Copper inventory monitored by the LME dropped 1.5 percent to 101,500 tons today, the LME said. That's equals to less than three days of global consumption.
Developing new Metals Deposits Gets Tougher --Jan. 25th
"The President of Canada's Falconbridge Mining asserted Tuesday that new metal supply will be constrained by lower grades, the scarcity of new discoveries, reduced exploration expenditures, and the scarcity of mining professionals in traditional mining nations."
"Regent suggested that the supply of new metals will be constrained due to the lack of new discoveries and long lead times to bring on new supply when and if it's discovered. For example, the rate of copper discoveries needs to increase by two thirds, but in fact, has only increased 25%."
ZINC SUPPLY SHORTFALL SET TO ELIMINATE INVENTORIES IN 2005
Now, at one point, I was an investor in Yukon Zinc, formerly Expatriate Resources,--and I was invested for the silver alone, and considering the zinc as a bonus. I learned a bit about the bullish outlook for the zinc market from them, back when zinc prices had bottomed at $.35/oz. But unfortunately for them, they don't understand money, and did not learn about silver and money from me, for if they did, they would not be considering hedging (pre-selling) their production of gold and silver, as they just announced today.
If you are an investor in Yukon Zinc for their silver, I urge you to either call the company, and express your concern over the fact that they are even thinking about hedging, or you may just decide to sell their stock for a better valued silver/zinc company, such as MMGG, and here is a brief comparison:
Yukon Zinc YZC.V
291.1 million shares fully diluted
@ $.435/share x .86 Cdn/USD = $.37USD
$109 million Market Cap
3.2 billion pounds of zinc resource at Wolverine
to produce annually: 113 million pounds of zinc at Wolverine
Metalline Mining (MMGG.OB)
19.8 million shares fully diluted
$29 million Market Cap
4.9 billion pounds of zinc resource
to produce annually: 398 million pounds of zinc.
Target price for Metalline
(based on Yukon Zinc share price & zinc production):
398/113 = x / 109
x = $384 million market cap / 19.8 mil shares = $19.39/share for MMGG
Target price for Metalline
(based on Yukon Zinc share price & Wolverine zinc reserves):
4.9 / 3.2 = x / 109
x = $167 million market cap / 19.8 mil shares = $8.43/share for MMGG
Understandably, Yukon Zinc also has drill defined silver, and MMGG does not. But MMGG does have silver that was very high grade. Former silver production at MMGG's property was 310 million ounces of silver!
"The Sierra Mojada Property has produced in excess of 10 million tons of high-grade ore that graded in excess of 30% lead, 20% zinc, 1% copper and 1 kg (31 ounces) silver per ton that was shipped directly to the smelter. The district has never had a mill to concentrate ore. All of the mining was done selectively for ore of sufficient grade to direct ship; mill grade ore was left unmined."
For further research on MMGG:
http://greattrades.blogspot.com/ --mentions a target price for MMGG between $7-12, using three entirely different methods than I used!
MMGG message board:
Finally, I would like to point out several benefits shared by all three companies that I've been promoting lately: OTMN, IGMI and MMGG.
All three of these companies do not have JV agreements. This makes them much more attractive to be bought out by a major, and it makes them all much easier for other investors to evaluate. I've seen JV agreements that are harder to understand than the deposit itself! What a pain those agreements can be! JV agreements may have made sense in a world of depressed metal prices, for "survival" and to "keep things going". But in a world of wildly bullish metal prices, when retail investors will need to evaluate companies, and in a world where major mining companies like BHP with a hundred billion dollar market cap can gobble up any of these companies in a heartbeat, I think it's better to "keep it simple!"
All three of these companies are in North America. OTMN is a Canadian company, with copper in Montana. IGMI is an Idaho company with moly in Nevada. MMGG is an Idaho company with zinc in Mexico.
All three of these companies are run by men with tremendous foresight to acquire their projects first, in this "first come, first served" world.
All of these companies deal in superlatives. IGMI is the low cost leader for future moly production, as well as the biggest deposit, with the highest grades. MMGG is the low cost leader for future zinc production, with very high grades of zinc, with nearly as much zinc as Apex silver! OTMN has no idea of grade yet, but their copper prophyry may be the biggest on earth, and that appeals to the majors.
Unlike the tech boom, when you really had little idea on which companies would make an ultimate success, mining, I think, is much easier, once a deposit has been drilled, and grades defined, and becomes a leading low cost project, which is the case for MMGG and IGMI (but not OTMN). There are simply so few great projects, as the executives of the major mining companies above testified about. Yes, there is always risk, but these companies are really poised for success.
You may not believe it, because it's hard to fathom, and opportunities like this are never presented by wall street. Right now, the public is still clueless, following the likes of Jim Cramer into buying the next "Indian Google" REDF, which soared 25% on his recommendation, as $190 million in volume poured into his stock recommendation today. By the time the public will demand these mining shares, we won't know what hit us.
Here's a stock that really soared: Titanium Metals (TIE). Soared from $4/share to $72/share in the last two years. Who would have predicted it? Guess what? Titanium is used mostly in aircraft steel, and TIE's business is to provide such things for the aircraft industry, which is booming, as nations like India want to increase their jet fleet something like ten fold. Jet engines also use high moly steel, amazingly enough.
Will companies like IGMI and MMGG outperform TIE? We'll see.
And I still have yet to share with you the most bullish news of all in the silver market!
I have long been telling you about the silver shortage feared by the silver users, announced ever since the SUA has asked the SEC to deny the proposed Barclay's Silver ETF, or Exchange Traded Fund, which will make it easy to buy silver in a trading account, just like a stock.
(By the way, you can also buy CEF, which has 50 oz. of silver for every 1 oz. of gold, and keeps 95% or more of assets in physical gold and silver bullion)
Well, it looks like the SEC will soon approve the silver ETF, and this news may have been responsible for silver soaring more than 25 cents/oz. today.
See the follwing news items:
Barclays' Silver ETF Takes One Giant Leap for Bull-kind --Jan 25th
Silver, platinum prices set new highs --Jan 25
Shine On – Part II: SEC Proposes Rules for Silver ETF Trading --Jan 24th
The SEC on the Silver ETF:
The SEC is asking for comments from the public about the silver ETF. If you would like the SEC to approve the silver ETF, you can tell the SEC about it here:
Click here to tell the SEC to allow free trade in silver:
Final disclaimer: I own shares of OTMN.PK, IGMI.OB, MMGG.OB, (along with many other silver exploration and mining companies) and none of the companies has paid me to write about them.
Excerpt from my article: Bible Verses on how to Manage Money
Do not take advantage of other people--treat them as brothers. If you must lend, then lend, but take no usury. Do not be a usurer. In the modern world, this means you cannot invest in bonds, nor CD's, nor a savings account, nor Treasury bills, nor junk bonds. Taking usury is extortion, and enslaving others.
Luke 6:35-37 But love your enemies and be good to them. Lend without expecting to be paid back. Then you will get a great reward, and you will be the true children of God in heaven. He is good even to people who are unthankful and cruel. Take thou no usury of him, or increase: but fear thy God; that thy brother may live with thee.
Thou shalt not give him thy money upon usury, nor lend him thy victuals for increase.
Deuteronomy 23:19 When you lend money, food, or anything else to another Israelite, you are not allowed to charge interest.
Exodus 22:25 Don't charge interest when you lend money to any of my people who are in need
Ezekiel 22:12 In thee have they taken gifts to shed blood; thou hast taken usury and increase, and thou hast greedily gained of thy neighbours by extortion, and hast forgotten me, saith the Lord GOD.
Nehemiah 5:7 So I thought it over and said to the leaders and officials, " How can you charge your own people interest?"
Although the Israelite could lend money to someone who was not an Israelite, they could NOT lend to a stranger who lived among them--because they were to treat strangers who lived with them as brothers, as themselves. Christians are to love our enemies, see Luke 6:35 above...
Leviticus 19:33 And if a stranger sojourn with thee in your land, ye shall not vex him.
Leviticus 19:34 But the stranger that dwelleth with you shall be unto you as one born among you, and thou shalt love him as thyself; for ye were strangers in the land of Egypt: I am the LORD your God.
Free market economists tell us that the immigrant is great for a nation. These people are entrepreneurs. Generally smarter, & braver than their countrymen, they make us better off. They enable us to trade more with their home nation.
If they come to do menial labor, that's great, as we generally don't want to have to do that kind of work ourselves.
And if they come to do high paying intellectual labor, that's great, because that kind of work generally produces more for the company (and nation) that employs them.