Silver Stocks Comparative Valuations
Silver
Stocks--Comparative Valuations
Report # 57
Wed, July 15th, 2005
Table of
Contents:
You can click on these links to "jump to" that part of this report.
[Introduction]
[Summary list of Silver Stocks]
[My Methodology]
[Weekly Commentary]
[My Conference Schedule]
[General Commentary on Silver]
[WHERE and
HOW to BUY SILVER BULLION]
[The money chart]
[Disclaimers, Warnings, and Advice]
[Company profiles]
[Company profiles with the most resources, and least
cost]
[Profiles of Explorers]
[Links]
[Silver Stocks I own]
[Archive of
about 40 of my past essays]
[Archive of
past Silver Stock Reports]
[Subscribe to the "look
at my portfolio". ($39/mo.)]
[Subscribe to my Private
Placement notice list] send a blank email to: pp@silverstockreport.com
[Subscribe
to this Weekly Silver Stock Report (FREE)] send a blank email to: subscribe@silverstockreport.com
Contact me: j@silverstockreport.com
Silver at $7/oz. is about 300 times
cheaper
than historic norms lasting for 1000's of years. The amount of
silver in a silver dime was historically worth a day's wage, whether
100 years ago in the U.S. or whether it was a Roman denarius 2000 years
ago. At $7/oz., those same dimes are worth about 50
cents each, and you can buy about 300 silver dimes with a day's wage of
$150. So, if you invest $5000 to get a bag of silver at $7/oz.,
and if silver exceeds it's historic valuation, then a $5000 bag of
silver
would be worth about $1.5 million in today's money... that bag of
silver would include 10,000 silver dimes--and at a "dime a day", that's
enough silver dimes for 38 years, working
5 days a week.
The reason that silver is
cheap today is that no nation on earth is using silver as money.
The world uses broken paper promises, instead.
Monetary demand for silver started to end in the late 1800's, and
finally ended in
the late 1960's. Interestingly, starting with the end of World
War II, and the beginning of the electronic age, the trend has been to
consume, in industry & electronics, nearly all the silver ever
mined since the beginning of time; 7/10ths of an ounce of silver per
person, per year, in modern industrial nations. I estimate that
modern electronic life has consumed 36 billion out of 40 billion ounces
of silver mined since the world began.
Known, above-ground, refined silver may be limited to less than 300
million ounces. That's less than 1/20th of an ounce of accessable
silver per person on the planet. Including unknown stockpiles of
refined silver (perhaps up to 4 billion ounces such as unknown
quantities of silver jewelry in India), there is still probably less
than one ounce of silver per person on the planet.
Investors are beginning
to become
aware of the silver shortage, and thus, in 2002, Hecla mining (silver)
was the top performing stock on the NYSE. In 2003, silver stocks,
on average, were up 314%. Silver prices
peaked recently at $8.40/oz. in April 2004... Silver may reach
about $15-25/oz. in the next year. By the time paper money fails,
as it always does, I
believe silver prices will exceed historic norms of about an ounce of
silver for a day's wage,
due to the shortage that was caused by 60 years of industrial
consumption.
This report is the fruit of my work of
telling other investors about silver and silver stocks, and the
collective wisdom
of the feedback I get from my
readers... I don't always have time to respond to all emails, but
you can mail me, Jason Hommel, at j@silverstockreport.com
This report lists the market capitalizations for about 72 silver stocks. There are
about 28 silver stocks that
list reserves,
resources (and exploration potential) which I
calculate by using my "ounce in the ground" formula. There are
about 44
explorers. There are about 30
additional "silver" stocks with incomplete
information. This report goes
out now to over 15,000 investors.
Additions &
Changes
from
last week are in bold.
Kitco
reports silver at $6.94/oz. as
of Friday, 1:34 PM West Coast, US, which
was used to calculate the following
figures. The CAN $ / US $ conversion factor is
.8189. I will use .82
for ease. At today's prices, it takes 61 oz. of silver to buy 1 oz. of
gold.
Summary list of Silver Stocks:
How to read the
table below:
It starts on the left with:
The Stock Symbol that works at Yahoo! Finance, then, the (Company name)
is in parenthesis, then / The
number that follows the company name, below, represents the company's
total
resources, divided by the market cap as denominated in silver; thus, it
is the number of silver ounces
"in ground" that you gain title to when you trade away one ounce of
silver to buy 1 oz. of silver's worth of stock. The number is
just one potential valuation method, in this case, a possible
expression of leverage that silver stocks can give you, the higher the
number, the better. / Next, I list the valuation price change
since last report (and stock
dilution, and resource changes,
if any) as "up" or "down" or "even". / Finally, there are
additional comments (EXPT is "exploration potential") Company names in bold have
summaries below with updated information since the last report.
Click on the name to see the summary below. This first list contains
the
companies with information about
reserves/resources/exploration
potential. The list is ordered/ranked based on the resource
picture. The most expensive (with the fewest silver resources
given their market cap) are listed first.
- GRS
GAM.TO (GAMMON LAKE)
3.2 --producer,
owns 26%
of
Mexgold
- FSR.TO FSLVF.PK (FIRST SILVER)
4.3 --producer, (not profitable '05 1Q.) unhedged, owns bullion
- PAAS (PAN
AMERICAN SILVER)
4.3 --producer, (not profitable '05
1Q.)
large market cap, cash rich
- SIL (Apex Silver)
4.9 --one property explorer in Bolivia, cash rich.
- CHD.V CHDSF.PK (CHARIOT RSCS)
4.8 --explorer, with inferred
resources, massive
dilution
- WTZ WTC.TO (WESTERN SILVER)
5.6 -- (16 EXPT) large mine startup
cost.
copper & zinc bonus
- * CFTN.PK (CLIFTON MINING)
5.3 -- (126 EXPT) (order
their colloidal
silver now online 10% off)
- PJO.V (PALMAREJO
GOLD CORP)
6.1 NEW --drilling in Mexico, high grade.
- MFN MFL.TO (MINEFINDERS)
7.6 --significant gold bonus, $35 mil
cash
on hand.
- * SVL.V STVZF.PK (SILVERCREST)
7.9 --Silver in
Central America, 11.5 oz. of
silver/T over 313 feet
- SVM.V
(Silvercorp
Metals Inc.)
9.1 NEW Very high Grade Silver, In China.
- IAU.TO ITDXF.PK (INTREPID
MINRLS)
10.1 --exploring in Mexico & Argentina, large EXPT.
- SSRI SSO.V (SILVER STANDARD)
11.2
--large
company, 20+ properties, owns
silver
bullion
- FAN.TO FRLLF.PK (FARALLON RSCS)
11.8 --(20 EXPT) low grades, silver 1/3;
also gold & zinc bonus.
- FR.V
FMJRF.PK
(FIRST MAJESTIC)
16.1 (55 EXPT) --producer in Mexico.
- * CZN.TO CZICF.PK (CDN ZINC)
18.6 down
--large zinc bonus, low
start
up
costs, great
EXPT
- ORM.V OREXF.PK (OREMEX RES)
18.8 (50 EXPT) --Discovery! 20 oz.
silver/T over 292 feet!
- GGC.V GGCRF.PK (GENCO RECS)
19.1 --producer in
Mex. Plans to expand and acquire
- * IMR
IMR.V (IMA
EXPL)
19.6
--(58
EXPT)
in Argentina 83
oz. silver/T over 35 meters!
- *ABI.V ABMBF.PK
(ABCOURT
MINES)
21 --large zinc bonus, + existing infrastructure
- SHSH.PK (SHOSHONE SILVER)
21.3 --leased properties; need
payments;
in Coeur
d'Alene
- YZC.V (Yukon Zinc)
23.1 --huge
zinc
bonus
60%
zinc, 25% silver.
- *
MGN (MINES
MGMT)
27.6 --60% copper bonus (low grades), start up
cost ~ $250
mil
- * SRLM.PK (STERLING
MINING)
29.3
--(69 EXPT) acquired the Sunshine
in Coeur
d'Alene
- * CSG.TO CSGLF.PK (CAPSTONE GOLD) 30 down (112 EXPT)
(In Mexico, resources are historical)
- HDA.V HUSIF.PK (HULDRA SILVER)
32.2 --very tiny, zinc bonus,
low
start up costs.
- RDV.TO RDFVF.PK (REDCORP VEN)
34.6 --60%
gold bonus (May '05, not
feasible.)
- * ASM.V ASGMF.PK (AVINO SILVER)
39.7 down
-- to own 100% of the Avino mine
* = I own shares
Next list: Exploration companies or producers with limited information
on resources. This list is in order (roughly) by market cap, the
highest market cap companies are listed first.
- MGR.V
MGRSF.PK (MEXGOLD RSCS)
-- bonanza grade
discovery on Jan 13th, 2004
- CDY
CDU.V (CARDERO RSCS) --silver, copper, & iron explorer,
19 properties
- AOT.V
ASOLF.PK
(ASCOT RSCS) -- owns percentage of Cardero,
CDU.V
- BCM.V BCEKF.PK
(BEAR CRK MINING)
- * OTMN.PK (O.T. MINING) very
large exploration potential; recently discovered copper porphyry 1200
ft. long.
- MCAJF.PK
(MACMIN LTD) --In Australia
- MAI.V
MNEAF.OB
(MINERA ANDES) (gold bonus)
- * EDR.V
EDRGF.PK (ENDEAVOUR SILVER) A PRODUCER in Mexico
- TVI.TO TVIPF.PK
(TVI PACIFIC) --A PRODUCER
of a dore silver bar 96% silver, 4%
gold
This next list has silver exploration companies with market caps under about $30 million
(Market cap = total number of shares
fully diluted, times the share price. It's what the company is
"worth" in the market place, given the stock price, and is one of the
important numbers I calculate each week in these lists.)
- ECU.V ECUXF.PK (ECU SILVER MINI) --A
PRODUCER 50% gold bonus
- SPM.V SMNPF.PK (SCORPIO MINING)
- * MMGG.OB (METALLINE MINE) --zinc/silver
(historic high grade silver) (low cost revolutionary oxide zinc process)
- EXN.V EXLLF.PK (EXCELLON RSCS) --A PRODUCER
This next list has silver exploration companies with market caps under about $20 million
- MAG.V MSLRF.PK (MAG SILVER)
- * KRE.V KREKF.PK (KENRICH ESKAY) --Near
Eskay Creek
- * CBE.V CBEFF.PK (CABO MINING) --Historic
Silver and Cobalt district
- EGD.V EGDMF.PK (ENERGOLD MINING)
- SDR.V SDURF.PK (STROUD RSCS) (partners with
Amerix) --in Mexico
- APM.V (Amerix Precious Metals Corp)
(partners with Stroud) --in Mexico
- EPZ.V ESPZF.PK (ESPERANZA SILVR)
- QTA.V QURAF.PK (QUATERRA RES)
- SML.V SMLZF.PK (STEALTH MNRLS)
- SRY.V (STINGRAY RSCS)
- NJMC.OB (NEW JERSEY MIN)
This next list has silver exploration companies with market caps under about $10 million dollars:
- PXI.V PNXPF.PK (Planet Exploration Inc.)
- KG.V KDKGF.PK (KLONDIKE GOLD)
- MMG.V MMEEF.PK (MCMILLAN GOLD)
- GPR.V GPRLF.PK (GREAT PANTHER RES)
- APE.V (Apogee Minerals Ltd.)
- SSV.V (SOUTHERN SILVER EXPLORATION)
- * CMA.V CRMXF.OB (Cream Minerals Ltd) --Low
grade, large "exploration potential"
- TM.V TUMIF.OB (TUMI RESOURCES) (TUY Frankfurt
Exchange) --recently acquired rights to buy new projects in
Mexico.
- * PDO.V (PORTAL RESOURCES LTD) --New
Discoveries in Argentina
This next list has silver exploration companies with market caps under about $5 million dollars:
(The real "penny stocks" are those with the smallest market caps, not
the lowest share price!)
- IPT.V IMPJF.PK (Impact Minerals)
- *
GRG.V (GOLDEN ARROW RESC)
IMR.V spin-off. 35
properties
- PCM.V
PAOCF.PK (PAC
COMOX RES)
- MTB.V
(Mountain
Boy Minerals Ltd
-
LSM.V
LASCF.PK
(Langis Silver & Cobalt Mining Co Ltd)
- TBLC.PK (TIMBERLINE RES)
--in Cour d'Alene
- *
AUN.V
AUNFF.PK (AURCANA CORP)
- LEG.V
LEGCF.PK
(LATEEGRA RSCS) --Near Eskay Creek
- CLZ.V
(Canasil Resources Inc)
- ASLM.PK (AMER
SILVER MINI) -- In Cour d'Alene
- *
MVE.V (Minvita Resources) --Near Eskay Creek
* = I own shares.
There are expanded profiles on each company, way
below. But
before I get to that, let me discuss my methodology, and the problems
with it.
See the number above, listed after each company in the first
list? That number represents the number of silver ounces in the
ground that you get when you buy an ounce of silver's worth of
stock. The number treats all reported ounces in the ground as
equal, however, they are NOT EQUAL. Some ounces in the ground are
more certain and others are more speculative. Some are higher
grades, some are lower grades. Some have been well drilled,
others have less drill results. They range from most certain to
least certain such as: "proven & probable reserves," and then,
"measured & indicated resources", and then, "inferred
resources." A reserve has
a feasibility study produced for it. A resource, does not.
According to 43-101 rules, a company
CANNOT add together their differently classified resources, nor can
they add resources to reserves. It is to be left up to the
investors to decide how to value the different resources of different
classifications. I value them here, as all the same. You
may choose to value things differently. For example, 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.
Here's the math on how I calculate that one number, used in the summary
table above. First, I get
a market cap by multiplying the fully diluted shares (which bullishly
assumes all options and warrants will be exercised and converted into
outstanding shares) by the share price in U.S. dollars. Next, I
divide that by the silver price, so the market cap is denominated in
terms of silver ounces. Then, I divide the ounces in the ground
by the market cap as denominated in silver. This produces the
single number of how many ounces of silver in the ground you are buying
when you give up one ounce of silver in your hand, for shares of stock,
instead. This way, you can not only compare silver stocks to each
other, you can compare them to silver directly. This also helps
people in other nations, using other currencies, to value these
companies.
This valuation does not include zinc, or copper, or lead, but
it does include gold at a 1:10 ratio of gold:silver.
I believe that the two most important
numbers that a silver mining company can report are the resources in
the ground, and the number of their fully diluted shares. Of course,
there is much more to a mining company than that, but without those
numbers, it is extremely difficult to even start an evaluation.
This report highlights those key numbers, where possible. If you
think those numbers are also important, please email the executives of
the mining companies you own, and ask them to make sure their numbers
are clearly published at their websites.
Problems with my methodology: My methodology assumes that the
more ounces in the ground, is, in theory, best, given that I expect
much higher silver prices. However, unless the price of silver
really moves much higher, my methodology may not be the best one.
If silver does really move up very high in value as compared to today,
then I expect my methodology to be one of the best predictors of rising
stock values, because more ounces in the ground mean more leverage to
rising silver prices. However, the companies with greater
leverage to the upside usually also tend to have greater leverage to
the downside, and thus, tend to be more volitile.
WARNING: There are many other factors to consider that may be more
important than the single number produced by my
methodology: A resource calculation number does not tell
you the entire picture about a company. The resource calculation number is
designed as a
starting place for further research. Other very important
considerations are as follows: How much existing mining
infrastructure is in place, and what will it cost to put an exploration
project into production? More infrastructure is better, and
higher start up costs are worse and will require further
dilution! How much cash does the comapany have on hand, and how
fast are they spending it? What is the management's attitude
towards money, silver, hedging, debt, and dilution? And how many ounces of silver are expected
to be produced, per year? This is why I
list "additional comments" in the company profiles, below.
I don't consider grade to be too important (although I list it when I
can), because I consider the cost to mine to be the more important
consideration. The "cost to mine" is determined in a feasibility
study, which is the last thing produced before trying to raise money
for final construction of a mine. And usually, they cannot even
count silver as a resource unless it is at least somewhat feasable to
mine at today's prices for silver. And this is why I count all
the ounces as the same. If a low grade ore can be mined more
cheaply, and if a higher grade ore costs more to extract, and if it has
to be somewhat economically feasible even at these low silver prices to
be counted, it balances out quite nicely.
My methodology is the natural result of my study of the silver market
and my religious views. To read about my religious views, see my
other web site,
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. See Ezekiel 38. Also,
see my essay: Biblical
Guidelines for Managing your Money
See my June 18, 2004
article: I'm
insanely bullish on silver.
To quickly "tab" down to the company you are interested in, note the
symbol. Then hit "control-F" to "FIND" the symbol below.
___________
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/
WEEKLY COMMENTARY (All new in this section):
This is the first full silver stock report since February.
---------------------
I was interviewed on Al Korelin's Radio show at the Vancouver show in
June, 2005:
http://www.kereport.com/
Segment 18 –
Ski-racer-turned-precious-metals-analyst Jason Hommel got our attention
late in 2002, when he explained
the math behind his contention that gold could rise to $32,567 per
ounce. Jason has two websites: silverstockreport.com
and bibleprophesy.org. Today,
Jason tells us how the Bible supports
gold and silver as money, and why the world will ultimately reject
all fiat currencies.
--------------------
Readers on my email list stand to
benefit tremendously from the increase of knowledge of silver stocks
that my readers have brought to my attention and are now on this
list. Other leading analysts seem to be in the dark about how
many
good silver junior exploration stocks exist with substantial,
well-defined, silver resources.
Adrain Day wrote, on June 8, 2005:
Silver Attractive, Though Only A Few
Good Stocks Benefit
http://www.kitcocasey.com/displayArticle.php?id=147
Like Harry Schultz, Richard Russell,
and many others, they seem to think that there are only about 5 silver
stocks available.
--------------------
I know of three minerals have run up
over 1000%
recently: Molybdenum, Selenium,
and Indium.
Molybdenum has run up nearly 1000% recently. See:
The
Molybdenum Discussion Board
I have invested in one Moly Stock:
Idaho General Mines
http://www.idahogeneralmines.com/
27.5 million shares fully diluted
(June 2005)
About $30 million market cap.
The reason why I invested was that I was offered shares in a PP at
$.40, while the stock was trading at about $.75/share.
Furthermore, Idaho General Mines is further along the process than many
others, with a completed feasibility study, showing they can produce
moly at about $3.50/lb., whereas prices for moly are up to about $35/lb.
Here is a brief letter I recently
received from Idaho General Mines.
Dear
Jason,
It was a pleasure speaking with you
yesterday. Idaho General appreciates and values your investment.
We welcome the opportunity to further our discussions with you
regarding IGM I and our world-class molybdenum project (Mount Hope)
that we just completed an extensive feasibility study on and are now
beginning with the permitting phase. Mount Hope is undisputedly
the world’s largest undeveloped high grade molybdenum deposit.
Mount Hope is the most economically deserving deposit worthy of being
put into production in the United States since the Henderson Mine came
on line in 1976.
Key Investment Highlights:
-- Mount Hope is economically robust
with exploration upside.
-- Project is expected to have low operating
costs that can withstand metal price down cycles and generate
outstanding margins at mid and peak cycle prices.
-- Idaho General expects to generate
additional value from other projects including Hall-Tonapah (Cu-Mo);
Margaret (Cu, Mo, Au)
-- Idaho General has major mining company
expertise in a junior company.
-- Idaho General is not known to the capital
markets, contributing to a substantial discount to net present value.
-- Price Per Share: $1.10 (6/22/05)
-- 52 Week Range: $0.05 - $1.75
-- Shares O/S (basic) 14.5 M; fully diluted
27.5 M
-- Cash (5/31/05): $1.5 M
-- Debt (5/31/05): $0.0 M
-- Market Capitalization (basic) $15.9 M;
fully diluted $30.2 M
Key Mount Hope Metrics from
feasibility study includes:
-- Life of Mine Total Molybdenum Production:
700 M lbs.
-- Molybdenum price assumption: $7.00/lb.
-- Life of Mine cash operating cost: $3.40/lb.
-- Initial Capex: $406MM
-- IRR: very good at $7.00/lb
-- Minable Tonnes: 300 M tonnes
-- Ore Grade: 0.098% Mo; approx. 2 lbs.
Mo/tonnes milled
-- Metallurgical Recovery: 91%
-- Pit Life: 21 years
-- Low Grade Stockpile Adds: 9 years with 134
M tonnes
-- Total Processing Life: 30 years
-- Throughput Rate: 40,000 tonnes/day
-- Technical Grade Molybdenum (TMO) Produced
(20 yr average): 28.5 M lbs/yr
-- High Quality Deposit with 225,000 ft of
drilling in 169 drilled holes
-- Open Pit Mine: 2.75 to 1 stripping ratio
As you may know, the spot price for
molybdenum has increased a greater percentage than any other metal over
these past 24 months climbing from $5.00/lb to $39/lb. Global
demand for molybdenum from China, India, S. Korea, Japan, and the
United States is on the rise, and sets a challenge for the global
mining community as demand continues to out-strip production. The
increase in demand for molybdenum in the United States and Europe is
in-part being driven by the increasing uses and applications of
stainless steel, as well as, the development of space-age alloys.
In 2004, world production was estimated at 324 million pounds and world
consumption was estimated at 341 million pounds, a deficit of 17
million pounds. So, if demand continues at the accepted
consensus of 6% per annum, then who will fill this supply/demand
gap? We believe Idaho General Mines with our Mount Hope project
can help fill this gap.
Once you have had the time to review
this brief description of Mount Hope and would like to explore any
thoughts and ideas that might be mutually beneficial regarding this
investment opportunity please give me a call.
Sincerely,
Robert L. Dumont
VP Business Strategies &
Development
(509) 838-1213
rldumont@idahogeneralmines.com
---------------
RETRACTION!
A few months ago, in the
article on Silver & IMA Exploration, the article I co-authored stated:
"The CEO of Aquiline,
also a principal in other
mining ventures, has earned a reputation as something of a serial
litigant, and is currently involved in a separate mining lawsuit in
Australia."
However, the CEO of Aquiline, Mark
Henderson, emailed me, and I spoke with him on the phone, and in fact,
he is NOT involved in a separate mining lawsuit in Australia.
---------------------
Here's a tip. Call the smallest companies directly. If
you can put $20,000 to $100,000 into a single stock, and not let that
be more than
10% of your portfolio, you generally don't need to wait for the company
to "offer" a private placement deal. You can sometimes get them
to create a PP
deal for you, personally. Just call them up, find out as much as
you can about the company's plans, and if you like the deal, then tell
them you
want to buy $100,000 worth of stock in a private
placement.
-----------------------------
It has really been bothering me that I use Federal Reserve notes.
I've been thinking of them as "unjust weights and measures." And
what bothers me most is that the Bible says that we ought not to have
an unjust weight and measure in our house or purse!
But perhaps "unjust weight and measure" is an inaccurate description of
paper dollars? I suppose the word
"dollar" was originally defined as a measure and weight of gold or
silver, as
based on the definition of the word "dollar". But a paper dollar
is not, and never was, a weight and meausure of gold or silver! A
paper dollar was a promise
to deliver an amount of gold or silver, on
demand. Thus, a paper dollar is a promise of a measure, not the
measure itself. Further, the dollar today is also not a weight
nor measure, it is a promise, and specifically a broken promise.
Many people have said that they do not understand what I mean when I
say the dollar is an unjust weight and measure. Perhaps that's my
fault,
because a more accurate description of dollars is simply:
"broken promises".
--------------
How our monetary system, and the overvalued dollar, helps and hurts the
average guy...
How it helps:
1. Imports are cheaper, cheap things from Wal-Mart.
2. Extra paper money creates a "boom" of extra economic activity;
higher housing prices create a housing boom & more contruction
jobs. More investment dollars can create a "tech boom" as we saw
with internet stocks.
3. Government spending creates a "source" of new money into the
economy, and thus, jobs.
4. Booming housing prices allow people to refinance, at lower
rates.
5. Creates the opportunity to buy gold and silver very cheaply.
How it hurts:
1. Exports are relatively expensive, so we can't compete with
overseas, & we lose jobs.
2. All dollars are now vulnerable to losing 95% of value,
overnight.
3. The U.S. dollar is vulnerable to other nations selling dollars
for gold (China, or Japan).
4. Bankrupt companies who borrow money to stay alive make it hard
to compete. (GM & Ford)
5. Easy money leads to making bad investments; houses, stocks,
and bonds are all overvalued.
6. "Capital gains" on housing, stocks, bonds, are really no gain
at all, but a symptom of the inflation and devaluation of the dollar.
7. Those who have invested in gold and silver have lost much
since the peak in 1980.
-------------------------------
While in Vancouver in June, I was interviewed by Nick Nickolas of
mininginteractive.com You can watch the 10 minute clip
here:
http://www.mininginteractive.com/media/jason-h/jason-h.htm
--------------
Questions
to think about:
What does it mean that there are position limits on longs in the silver
market?
Are limits evidence of shortages?
What causes shortages?
Does price fixing cause shortages?
Does a price that is too low cause shortages?
Does a free market price cause shortages, or plenty?
What are the position limits on longs, in silver, for one month? (1500
contracts for 5000 oz. each, or 7.5 million oz.)
What is a possible delivery limit on longs, in silver, for one month?
(1.5 million oz.)
What are the implications of those limits?
What is the average open interest in the COMEX paper silver market?
(100,000 contracts?)
How much larger is the open interest, in silver than the position
limits? (66 times!)
How many times larger is the open interest, in silver, than a possible
delivery limit? (333 times!)
How many times larger is the open interest, in silver, than what is
registered for delivery at the Comex? 500 mill oz. / 40 mil oz. =
12.5 times.
What would be the effect of unlimited and unrestricted naked short
selling in any futures market?
What would be required for a manipulation on the short side to
succeed?
Wouldn't position limits and delivery limits on the longs be required?
Would a price cap on gold and silver help to increase the value of the
U.S. dollar, and all paper currencies?
How much larger is the non-transparent "over the counter" market in
silver than COMEX silver?
What is the chance of default in silver in the paper futures markets on
COMEX?
What is required for a default of delivery of silver to occur?
Is a high price for silver a necessary precondition for default, or is
a lack of silver the cause of a default?
Why did a palladium default occur on the TOCOM in 2000?
What would happen after a delivery default in silver?
Would the end of redeemability of paper money for silver, such as
happened in the 1960's be like such a default?
What happened to the price of gold and silver after 1971, after the
default on redeemine U.S. dollars for gold at $35/oz.?
Which generally comes first, a major price rise, or a delivery default?
Is it harder to get delivery before or after a major delivery default?
If the futures markets have been used since 1980 to contain the price
of silver and gold, what will happen to the prices of gold and silver
if the futures markets blow up?
What would happen if 1% of the value of M3 were to buy gold and silver
within one year?
What would happen if 1% of the value of the bond market were to buy
gold and silver within one year?
What would happen if 1% of CalPERS (The California Public Employees'
Retirement System) (Calpers has $190 billion as of July, 2005) were to
buy gold and silver within one year?
What would the price of silver soar to, if California started to issue
silver coins as payment to California State employees?
----------------------
If you want to know where my money is, what stocks I own,
and in what proportion, please sign up at silverstockreport.com to
the "look at my portfolio".
For all goldismoney.com subscribers, please send a copy of your receipt
(or a past copy of the "look at my portfolio") to support@silverstockreport.com
Only support@silverstockreport.com can issue you passwords. I
cannot. Prior customers can also get a quick copy of the
latest report if you email your receipt, (or a past copy of the "look
at my portfolio") to me here: j@silverstockreport.com
(Neither I, nor my new support staff, has access to the prior
goldismoney customer database, so please send your prior email
recepts, or a past issue.)
------------------------
My Conference Schedule:
I will be attending:
1. August 8-9 Yukon, Canada.
GATA's "Gold Rush 21" http://www.goldrush21.com/
2. Sept, 22-24, Idaho, USA the
3rd Silver Summit. , --I'll be
speaking. http://silverminers.org/
http://www.thesilversummit.com/
3. Oct. 2-3, Toronto, Canada:
There are 4 annual Cambridge House shows
(I usually speak on silver
for a 1/2 hour, and maybe a panel)... see http://www.goldshow.ca/
----------------
To read about my religious views, see my other web site, 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. See Ezekiel 38. Also,
see my essay: Biblical
Guidelines for Managing your Money
----------------
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 unique position... then the best way for me to share this
with you
is to is tell you more precisely where I put my money. It's not
investment
advice. I offer a monthly "look at my portfolio". 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.
It includes which stocks are 9% and more of my portfolio, those between
9% and 6%, under 6%, under 3%, and under 1%.
To order, visit: silverstockreport.com
Price: Monthly rebilling at $39.95. --most convenient, best customer
service
Customer Service: http://www.silverstockreport.com/customerservice.htm
Toll Free Customer Service Hotline: 800-370-4154
-------------------
2 Silver Stock Funds
1. Richard Greene, thundercapital.com
$100,000 minimum, 2 year hold, sophisticated/accredited investors
only. Will use margin, and/or short sell.
2. Philip Judge or Simon Heapes, anglofareast.com Less
than $5000 minimum? No margin or shortselling.
-------------------
General
Commentary on Silver
(slightly modified from last report):
There are several
companies
that are increasingly deciding to hold their cash in the form of silver
bullion. These companies are:
FSR.TO (First Silver Reserve)
SSRI SSO.V (SILVER STANDARD RSC)
SRLM.PK (STERLING MINING)
EDR.V EDRGF.PK (ENDEAVOUR SILVER)
------------------
The Silver Valley in Idaho is bringing back the
use of silver as money. A silver one-ounce coin, a "Sterling" to
be used as a $10 piece.
http://shoshonenewspress.com/index.asp?Sec=News&str=2869
------------------
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.goldmoneybill.org/
--------------------------
There are two excellent annual silver surveys that are sponsored by
industry.
The survey by silverinstitute.org costs $195
http://silverinstitute.org/wssum05.pdf -- 10 page free summary of 2005 report.
The survey by cpmgroup.com costs $150, 162 pages.
http://www.cpmgroup.com/SSpress2004.pdf
--3 page press release.
--------------------------
Here are two U.S. Government produced
reports on silver, containing data on years from 1900 to present, on
U.S. & world production, and U.S. consumption, and U.S.
industry
& government stockpiles.
Report #1
http://www.goldismoney.com/ssr/USsilver.xls
Report #2
http://www.goldismoney.com/ssr/USsilver2.xls
I evaluated these government produced reports in my silver stock report
#36.
In sum, we are running out of silver. The U.S. government had
over 3 billion ounces of silver in 1940, and today, has very little
left, or none.
--------------------------
The Commodities Futures Trading Commission
The CFTC report on the allegations of manipulation in the silver market
http://www.cftc.gov/files/opa/press04/opasilverletter.pdf
-- 9 page report
The CFTC report confirmes much of the research above, and almost
outlines the bullish case for silver!
--My comments on the CFTC report are in silver stock report #34 &
#35
--------------------------
Silver consumption, per
capita, in the U.S. is the same today, in 2004, as it was in 1945.
And what is the per capita consumption of silver in the U.S.
today? 5500 tonnes x 32152 = 177 million ounces of silver used
per 285 million people. 177 / 285 = .62 oz. silver consumed per
year, per person, in the U.S., whether in 1945, or in 2004. Each
person in the U.S. today, on average, uses 6 tenths of an ounce of
silver.
--------------------------
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
----------------------------
My 2005-2010 price predictions for gold and silver:
2005: $595/oz. gold, 50:1 ratio = $12/oz. silver
2006: $1011/oz. gold, 30:1 ratio = $34/oz. silver
2007: $1719/oz. gold, 10:1 ratio = $172/oz. silver
2008: $2923/oz. gold, 5:1 ratio = $ 585/oz. silver
2009: $4,969/oz. gold, 1:1 ratio = $4969/oz. silver
2010: $8448/oz. gold, 5:1 ratio = $1698/oz. silver
2011+: infinity dollars/oz. gold, infinity dollars/oz. silver.
I just moved up the years, one each from last year. The reason
why I'm so bullish is the scarcity of silver, and also, I believe one
single billionaire could move the price, at any time, to $25/oz.
It would be folly of me to suggest that 2005 should see an average of
$8-10/oz. for silver. It could fly high, starting at any time.
I calculate the gold price rise by guessing that by 2010, 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.
----------------------------
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?
Doug's third article is also
excellent: Silver
-- the next big thing in the global
markets? Answering A Few Silver Questions
----------------------------
See the 600 year silver chart to see how undervalued silver
really is:
http://goldinfo.net/silver600.html
----------------------------
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
Over 3600 people have signed 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.
----------------------------
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.
----------------------------
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. Very 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, check the numbers and follow the links:
"The money chart"
1,000,000,000,000: 1 Trillion dollars
1,000,000,000: 1
Billion dollars
1,000,000: 1 Million dollars
$200,000,000,000,000: Estimated total derivative exposure of all banks
in the entire world. (20 x U.S. GDP)
$118,000,000,000,000: World Global Capital Markets (Stocks, Bonds,
&?) Feb 2005 McKinsey
Global Inst.
$75,000,000,000,000: U.S. Govt. unfunded liabilities; social security,
etc.
$46,000,000,000,000: Est. World Money supply 2004; from M2 &
GDP of EU, USA, Japan, & China (see SSR #56)
$45,153,000,000,000: U.S. Household
wealth,
as of first quarter, 2004. (Includes Real Estate, and investments)
$49,000,000,000,000:
World bond market, Fall 2004 PWL
Capital Inc.
$37,000,000,000,000: Total global
equity market capitalization June 2001 UN.ORG
$21,000,000,000,000: U.S. bond market, Sept, '03: IAPF
treas.gov
$12,192,000,000,000: U.S. GDP,
2005 (1Q) http://www.bea.doc.gov/bea/dn/home/gdp.htm
$17,600,000,000,000: Total global market
capitalization of NYSE stocks, Sept. '04 http://nyse.com
$9,700,000,000,000: M3
(money in U.S. banks) July
'05 http://tinyurl.com/vra0
$7,839,000,000,000: US
debt, 7-13-2005 http://www.publicdebt.treas.gov/opd/opdpenny.htm
$2,400,000,000,000: U.S. annual budget 2005
$1,860,000,000,000: World "official" gold mined in all of
history, 145,000 T (4.6 bil oz.) @ $400/oz.
http://tinyurl.com/vrcc
$450,000,000,000:
Estimated silver mined in all of history: 40-45 billion oz? @
$10/oz. http://snipurl.com/93j1
$754,000,000,000: Total U.S. paper currency
& coin in circulation, March 2005 http://www.fms.treas.gov/bulletin/index.html
$753,000,000,000: Annual U.S. current
account deficit (trade deficit) for 2005, (annualized
from 1 Q 2005).
$596,000,000,000: U.S. debt increase (true
deficit)
(Fiscal year '03-'04). http://www.publicdebt.treas.gov/opd/opdpenny.htm
$380,000,000,000: Market Cap of General
Electric (biggest U.S. company)
http://tinyurl.com/vrcn
$291,000,000,000:
Debt of General Motors
(biggest U.S. car company) July 2005
$109,600,000,000: US gold, 261 mil oz., @
$420/oz. http://tinyurl.com/vsr9
$100,000,000,000: all the world's gold
stocks/equities (estimated?)
$75,000,000,000: Money flowed
into
Equity funds in the first quarter, 2004
$16,000,000,000: Market Cap of Newmont July
'05 (biggest gold company in the world)
$8,226,000,000: all the
world's
"primary" silver stocks (80 of them on this list, as of June 25, 2004)
--my own data.
$3,500,000,000: 350 mil oz. of
"identifiable" silver bullion left in
the
entire world, according to GFMS @ $10/oz.
$288,000,000: 40 mil oz. of "registered"
COMEX silver bullion
(1-05-05) @ $7.5/oz. http://tinyurl.com/vrcw
$56,250,000: Limit 7.5 mil oz. of silver @ $7.5/oz. (limit of
1500 contracts per trader) at NYMEX
$11,250,000: Limit 1.5 mil oz. of silver @ $7.5/oz. potential 1
month delivery limit at NYMEX
$100,000: Limit of FDIC insurance per bank account.
$5,000: Limit of average cash withdrawl from small town banks,
without ordering cash in advance.
$300: Limit of average ATM daily withdrawl limit
So, what do all those stastistics mean? (Besides the fact that
real silver, and even paper money, is strictly limited?)
The numbers above are the real
fundamentals of the silver and gold markets. Silver and gold are
money. To study the potential demand for real money, we need to
know how much paper money that exists that could, one day, show up as
demand
for real money.
Note how General Motors has borrowed $290 billion, which is several
times more than the value of the U.S. official gold hoard at $109
billion. How did General Motors borrow more value in paper money
than the entire U.S. has in real money?
Note how the annual budget of the U.S. government, at $2.4 trillion, is
greater than the value of all the gold ever mined in the history of the
world, at $1.8 trillion.
Note how the value of the world bond market, at $49 trillion, far
exceeds the value of the gold in the world, at just under $2
trillion. Bonds are an investment type that directly competes
with gold, and rather poorly in the last few years. Bonds pay
1-5% these days, while gold has gone up from $250/oz. to $450/oz., a
gain of 80% since 2001.
Note how extremely tiny is the silver market, relative to the tiny gold
market, relative to the money and bond markets.
Now, a popular myth is that there is not enough gold and silver to do
the work of money. However, that is not true. If gold and
silver are valuable enough, there is always enough gold and silver to
act as money.
So, how valuable do you think gold and silver will get, when people
start to sell overvalued stocks and bonds for real money, gold and
silver, which are the only real alternatives to protect themselves from
bankruptcies of companies like GM, from bankruptcies of big
banks, and from the continued inflation?
See, the value of bonds will go down, as interest rates must
rise. Interest rates must rise to match the capital gains that
exist in the gold market--to get people back into bonds. But gold
is rising, what, 40% per year? Imagine 50% interest rates in the
bond market to draw people back to bonds! GM will soon not be
able to refinance their $300 billion in debt. Imagine the capital
destruction in the values of the bond market as interest rates rise,
and as bond values move inverse to that from all the selling in the
bond market.
The $49 trillion in the bond market MUST flow into the gold and silver
markets as this process of debt destruction continues.
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 about 60
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 60 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 60 x
10, You will see that bonds and currency are overvalued relative
to select silver stocks by a factor of 154,800 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 154,800 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 stilll fairly cheap on the list. Canadian
Zinc, Sterling Mining, IMA Resources, and perhaps Mines Management and
Cardero are probably the best five
candidates. These all have market caps ranging close to $50-$100
million dollars or more, and are more liquid than many others. (I
used to recommend PAAS and SSRI for this kind of "liquid alternative",
but they are no longer as cheap, and the others have now
increased in liquidity, and are now much more suitable for this kind of
trading.)
----------------------------
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 three to
four
years!
See my prior essay, " Inflation
& Deflation During Hyperinflation "
----------------------------
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 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"
----------------------------
How bullish am I on silver? Here's an interesting way to put it: "60 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 60 times
better. Currently, the ratio is 60
ounces
of silver can buy one ounce of gold or 60:1.
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.
----------------------------
For a list of bullion dealers:
http://www.silverstockreport.com/buybullion.htm
For a list of Brokers that handle Canadian issues and/or pink sheets:
http://www.bibleprophesy.org/SilverStockExtra.html
To track the ticker
symbols of the 72+ stocks on this list at yahoo: (Updated on July
12th, 2005)
TO TRACK THE STOCKS ON THIS LIST: Click on yahoo finance.
Take a minute to register. Sign in. At the top of the page,
click "create" a portfolio. Choose "track your current
holdings". In the large box, copy and paste the following symbols
(Use your mouse to highlight the text below, then use control-C to
copy,
control-V to paste).
XAGUSD=X BHP SLW.TO GMBXF.PK BVN ABX IPOAF.PK CDE HL SIL GRS GAM.TO
FSR.TO FSLVF.PK PAAS SIL CHD.V CHDSF.PK WTZ WTC.TO CFTN.PK PJO.V MFN
MFL.TO SVL.V STVZF.PK SVM.V IAU.TO ITDXF.PK SSRI SSO.V FAN.TO FRLLF.PK
FR.V FMJRF.PK CZN.TO CZICF.PK ORM.V OREXF.PK GGC.V GGCRF.PK IMR IMR.V
ABI.V ABMBF.PK SHSH.PK YZC.V MGN SRLM.PK CSG.TO CSGLF.PK HDA.V HUSIF.PK
RDV.TO RDFVF.PK ASM.V ASGMF.PK MGR.V MGRSF.PK CDY CDU.V AOT.V ASOLF.PK
BCM.V BCEKF.PK OTMN.PK MCAJF.PK MAI.V MNEAF.OB EDR.V EDRGF.PK TVI.TO
TVIPF.PK ECU.V ECUXF.PK SPM.V SMNPF.PK MMGG.OB EXN.V EXLLF.PK MAG.V
MSLRF.PK KRE.V KREKF.PK CBE.V CBEFF.PK EGD.V EGDMF.PK SDR.V SDURF.PK
APM.V EPZ.V ESPZF.PK QTA.V QURAF.PK SML.V SMLZF.PK SRY.V NJMC.OB PXI.V
PNXPF.PK KG.V KDKGF.PK MMG.V MMEEF.PK GPR.V GPRLF.PK APE.V SSV.V CMA.V
CRMXF.OB TM.V TUMIF.OB PDO.V GNG.V GGTHF.PK IPT.V IMPJF.PK GRG.V PCM.V
PAOCF.PK MTB.V LSM.V LASCF.PK TBLC.PK AUN.V AUNFF.PK LEG.V LEGCF.PK
CLZ.V ASLM.PK MVE.V
To learn All about Canadian law, 43-101, about reserves and resources:
http://www.bcsc.bc.ca/Publications/mineral_projects_sept03.pdf
A good web site 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".
----------------------------
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 have made mistakes in the data from time to time. 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.
Contact the company.
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.
Beware of scammers.
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 started an initial valuation process
of the following silver
companies
to guide my own investment decisions.
----------------------------
(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).
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.
----------------------------
(These first several companies below: --all look to be way too
expensive to buy for the silver exposure for
your portfolio. They are listed here, not because I want to cover
them, but because there are many investors who will bring them to my
attention and ask about them if I neglect to mention them.
BHP Billiton Ltd (BHP)
KGHM Polska Miedz
Grupo Mexico SA de CV (GMBXF.PK)
Compania de Minas Buenaventura SA (BVN)
ABX (Barrick)
IPOAF.PK (INDUSTL PENOLES)
HL (HECLA MINING CO)
SLW SLW.TO CHAP MERCANTILE INC (Silver Wheaton)
CDE (COEUR D'ALENE)
BHP Billiton Ltd (BHP)
http://www.bhpbilliton.com/
web.queries@computershare.co.uk
IR
--'produces 40 mil oz. silver
annually from one mine' --the Cannington Silver Mine
Additional comments: unfortunately, BHP has a
84 Billion market cap, (June
2005), so we
can't buy BHP for the silver exposure. IE, $84 Billion / oh, say,
1000 million?????= $84/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.
KGHM Polska Miedz
http://www.kghm.pl/en/index.php
ir@kghm.pl
--KGHM is the world`s sixth-largest coppper producer and second or
third
in silver.
1163 tonnes of silver produced in 2001.
1163 x 32152oz.tonne = 37.4 million ounces of silver produced in 2001
--Copper/Silver mine in Poland.
--Market cap is about $1.52 billion.
Market cap / oz production = $41 per oz. of silver produced per year.
Grupo Mexico SA de CV (GMBXF.PK)
http://www.gmexico.com/
http://www.gmexico.com/Html/contactUs.htm
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 stilll 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/
dhuguet@buenaventura.com.pe
(IR)
NYSE:BVN
- Peru´s largest publicly traded precious metals company
--produces over 10 mil oz of
silver per year
--looks way too expensive for the silver alone: 2.8
Billion market cap.
ABX (Barrick)
http://www.barrick.com/
investor@barrick.com (IR)
533 million shares outstanding (June
2005)
@ $24.91/share
$13,290 million Market Cap
5.5 million oz. / year gold production.
--production hedged out for 2-3 years worth of total production, or
about
13.5 million oz. (2004 annual)
(most notorious hedger of the industry, the "leader")
--price of hedges vary, and were changed from fixed prices, to variable
& floating prices in 2004!
--reportedly, Barrick is trying to "unhedge".
--reportedly, they plan to deliver 1/3 of production to hedges, which
means they "might" be hedge free in about 10 years.
--the size of the hedge, 2004: 13.5
mil oz. gold, at $440/oz., would be valued at $5.9 billion
dollars.
--but they claim to be "debt free", and don't list hedged gold as a
liability on the balance sheet...
(only true if gold is not money)
--cash: $1,398 million (2004 annual)
Silver Reserves & Resources
reported to be 997 million ounces! (2004 annual)
Gold Resources 33 million oz. (2004
annual) (x 10 = 330 mil oz. silver equiv.
Gold Reserves reported to be 89
million oz. (2004 annual) (x 10 = 860 mil oz. silver equiv.
Totals: 997 + 330 + 860 = 2187 mil oz.
"silver equiv.")
$13,290 million Market Cap / 2187 mil oz. = $6.07/oz. silver
You may get "approx" 1.10
ounces in the ground for 1 oz.
silver's worth of stock... but up to 30 million oz. of silver may be
hedged.
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.
Around the spring of 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.
1 Q 2004 note on hedging silver, p.
33: "At March 31, 2004, we had
fixed-price commitments to deliver 22.3 million ounces of silver over
periods primarily of up to 10 years. We also had written silver
call
options on a notional 7 million ounces of silver with an average
exercise price of $5.76 per ounce. These options expire at
various
dates in 2004 and 2005. The options are classified as non-hedge
derivatives for accounting purposes. Looks like they never closed
out the
silver hedge, but that they just bought options or
futures that expired.
I expect silver bullion to continue to outperform ABX
stock at these prices.
I don't really count Barrick as a silver company... (and neither do
they... they list sales of silver as "by-products" and "incidentals" in
the 2004 annual report. Let
me be abundantly clear. I primarily list Barrick because people
ask about it (because many novice precious metals investors own it) to
show how
poorly it compares to all the rest, and to help show how much better
the rest compare. This is a "comparative valuations" report,
after all.
IPOAF.PK
(INDUSTL PENOLES)
http://www.penoles.com.mx
397.5 mil shares outstanding (2003 annual, unchanged since 2001)
@ $4.75/share
$1888 mil MC
419 proven and probable reserves of silver (from 2002 annual report
on web site)
$1888 mil MC / 419 oz. silver = $4.51/oz.
You get "approx" 1.57 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.
Produced 21.5 mil oz. silver 1 Q 2004 (Net earnings of $342.5 million 1
Q 2004)
The word late Feb. 2004 from ECU Mini, who reported to
lemetropolecafe.com, is that Penoles hedged silver at low prices.
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."
From 2003 annual statement, by Dec 31,
2003, Penoles hedged 1.5 million ounces of silver at $5.31/oz.
That looks to be a bad bet, but easily coverable for Penoles.
They bought an option to sell (put) 17 million ounces of silver at
4.94. Another bad bet. Totally wasted money, it appears to
me. They also have an option to buy 8.5 million ounces (call) at
$5.53. Not bad. Such hedging practices, win or lose, make
it more difficult for investors to know and guess the current
operational state of the company. Who knows whether Penoles will
lock in more silver, and take away the upside potential profitability
for shareholders, or even waste money on put options that will never be
exercised.
Whether Penoles hedged an entire 2
years worth of production by Feb, 2004, I don't know, and remains to be
seen. Penoles also engages in hedging dollars in the foreign
exchane markets, further complicating matters.
77 million oz. silver refined by the metals division in 2003,
and
1 mil oz. gold.
They probably refine almost all the silver that comes out of Mexico.
They produce about 48 mil oz.
of silver from their mines 2003, 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 web site or in
the annual report. There
is no need for a Mexican company to comply with Canadian law,
43-101. When CDE recently complied with 43-101, they raised their
total numbers by about 30-50%?
Given the report in March, 2004, that Penoles has hedged silver for
two years, I expect silver bullion to continue to outperform IPOAF.PK
stock at these prices.
HL (HECLA MINING CO)
http://hecla-mining.com/
hmc-info@hecla-mining.com
(208) 769-4100
118 mil shares outstanding (June 2005)
@ $4.15/share
$491 million Market Cap (MC)
no debt, cash: $81 mil (Dec. 31, 2004)
La Camorra gold mine, 563,000 oz gold.) (x 10 = 5.6 mil oz silver equiv.
San Sebastian silver mine, (proven & probable reserves) .4 mil
(down from 8)
Greens Creek silver mine (proven & probable reserves) 33 mil (HL
owns 30% of this, but the 31 mil oz. number reflects that percentage
ownership.)
the Lucky Friday mine (proven & probable reserves) 11 mil.
5.6 + .4 + 33 + 11 = 50 mil oz. proven & probable silver oz.
+ "Mineralized Material" Total Silver:
San Sebastian
Unit
.7 mil oz. silver
Lucky Friday Unit 48.3 mil oz. silver
Sub total 49 mil oz. silver
+ "Other Resources" Total Silver:
San Sebastian Hugh (2) 4.1 mil oz.
at 8 oz./ton
San Sebastian DS & F (3) .7 mil oz.
at 8.6 oz./ton
Lucky Friday Unit (4) 26.8 mil oz.
at 10.3 oz./ton
Greens Creek (29.73%) (5) 10.9 mil oz. at 14.0 oz./ton
Sub total: 42.5 mil oz.
Total silver equiv. reserves & resources = 141.5 mil oz. (Feb 2005)
$491 mil MC / 141.5 mil oz. = $3.48/oz.
Additional comments:
HL likely has more oz. than listed in the "proven & probable"
category
used in this calculation. Vein mining makes reserve calculations
difficult,
and HL has rarely had more than about a 3-4 year picture of reserves
ahead
of them in 100 years of production.
At the NY Gold show in June 2004, I spoke with Vicki Veltkamp, Hecla's
vice
president of investor and public affairs, and I listened to her 15
minute presentation on Hecla at the show. I felt that her
presentation honored my work, since she focused on the fact that Hecla
does not have substantial reportable reserves, due to the nature of
vein mining. She also emphasized that they already had detailed
plans for spending all of their available cash, of $123 million, which
implied that they had nothing left over to buy silver
bullion. Point: HL is not going to buy silver
bullion with their cash anytime soon.
One of Vicki's arguments was that HL only produces 9 million
ounces of silver, and that in a market that produces 500 million ounces
of silver a year, that withholding production would not significantly
move up the price. I think she's looking
at the wrong numbers. HL's market cap has recently ranged from
$600 million to up to $1,000 million. The remaining silver at the
COMEX, available for delivery in the registered category is only about
50
million ounces, not the 500 million ounes annually produced. The
available silver is valued, at $6/oz., at $300 million. HL could
issue 1/4 to 1/3 more stock than they already have outstanding, and use
the proceeds to buy perhaps $300 million worth of silver bullion, and
likely
break the price to sky high levels, which would boost profits
enormously.
If HL mines 9 million ounces of silver a year, at a cost of about
$5-6/oz. (because their profits are slim), then if the silver price
rises to about $33/oz, and other costs remain the same, HL could be
making $250 million dollars per year. It seems the largest silver
companies have absolutely no vision about how they can affect the
markets, and take a leadership role in the world of silver.
I urged Vicki that HL should use their stock or cash, if not for buying
silver bullion, then to acquire other silver companies, since I believe
their stock is overvalued. Vicki said HL does look at many
acquisition opportunites, and would be interested in looking at others.
I expect silver bullion to continue to outperform HL
stock at these prices.
SLW SLW.TO (Silver Wheaton)
http://www.silverwheaton.com
169 mil shares fully diluted.
178 mil oz. reserves & resources
@ $3.24/share
$548 mil MC / 178 mil oz. = $3.07/oz.
Operating cash flow est. at $7/oz. = $30.4 million.
Annual Silver Production, 2005 est: 9.8 million ounces.
CDE
(COEUR D'ALENE)
http://www.coeur.com
coeurir@coeur.com (208) 769-8155
or (800) 624-2824
240 mil shares outstanding (June 2005)
not fully diluted
@ $3.41/share
$818 mil MC
July 15th, 2004: Cour Presents Resources in Cdn 43-101 form:
http://biz.yahoo.com/cnw/040715/id_coeur_d_alene_mine_1.html
Total of proven & probable reserves: 196 mil oz. silver (Feb 2005)
Total of measured, indicated, and
inferred resources: 76 mil oz. silver, 1.4 mil oz. gold.
Total silver equiv: 90 mil oz.
(43-101 reporting increased the number from 189
mil to 279 mil oz. silver). Before, Cour only reported reserves.
(Produced 14.2 mil oz. silver in latest fiscal year (early 2004)
$818 mil MC / 286 mil oz =
$2.86/oz.
You get "approx" 2.44 ounces
in the ground for 1 oz. silver's worth of stock.
Additional comments:
Beware of dilution!!! At the end of
1999, there were 30 million shares out. Today, there are 240
million.
I expect silver bullion to continue to outperform CDE
stock at these prices.
---------------------------------
The above list marks the end of the companies that I consider to be
"very expensive". I
don't
intend to make any further updates for perhaps the next year, unless
their stock prices fall dramatically, perhaps by over 50% to 75% in
many cases. Otherwise, I just don't see that re-evaluating those
expensive companies is worth my time.
---------------------------------
---------------------------------
GRS GAM.TO (GAMMON LAKE)
http://www.gammonlake.com/
gammonl@sprint.ca
(902) 468-0614
83.5 mil shares fully diluted (April
30 2005)
+ 17 million special warrants
100 mil shares fully diluted (April 30, 2005)
@ $6.57/share
$657 mil MC
Cash on hand of $75 mil Cdn April 2005
Total Ocampo "1.85-million gold ounces and 76.7-million silver ounces
in the
measured and indicated categories and a further 2.55-million gold
ounces and
127.8-million silver ounces in the inferred category."
Inferred: 2.55 mil oz. gold, 127.8 mil oz. silver
Silver equiv = 25.5 mil oz. + 128 mil oz. = 153.5 mil oz.
Measured & Indicated: 1.85 mil oz. gold, 77 mil oz. silver
silver equiv = 18.5 mil oz. + 77 mil oz. = 95.5 mil oz.
Total silver equiv: 249 mil
oz.
Ocampo
now has proven and probable RESERVES of 56 million oz. of silver, and
2.2 mil oz. gold. Reserves are a higher classification than resources,
and come from a bankable feasibility study.
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.
249 + 49 = 298 mil oz. (231 oz. in report #49)
$657 mil MC / 298 mil oz.= $2.20/oz.
You get "approx" 3.15 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: Nov 11th, 2004 Gammon
Lake resources Inc. annouces completion of bankable feasibility study
for phase one of the Ocampo Gold-Silver Project.
"Independent Study Demonstrates
Extremely Robust Economic Potential with Annual Production of 170,000
oz. of Gold and 6.2 Million oz. of Silver and an IRR of 65%."
Project
life: 6-7 years, calculated with an est. market gold price of $400 and
silver price of $6.50
"Overall, a total of 130,000-metres have been drilled in more
than 800 holes since the inception of the Gammon Lake Ocampo Project"
At 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
38.7 mil shares fully diluted (1 Q,
2005)
@ $1.80/share Cdn x .82 US/Cdn = $1.48 US
$57 mil MC
Cash on hand, 2005 1Q: $3 million Cdn.
From the Company's main page:
"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.)
(The company appears to mine about 2
million ounces of silver per year, so perhaps by mid 2005, that would
be 7 million ounces mined out from reserves and resources?) 42 - 7 = 35
mil oz.
(The company recently retracted these
"historical" estimates.)
First Silver owns 200,000 ounces of refined silver, preferring to hold
silver, rather than paper dollars!
12 + 30 = 42 mil oz.
$57 mil MC / 35 mil oz. = $1.63/oz.
You get "approx" 4.26 ounces
in the ground for 1 oz. silver's worth of stock.
Additional comments: --a high grade, producing miner.
The high grades, about
300g/ton, are a plus. They are also actively exploring,
another plus.
1st Q, 2005, profits were nil, due to
higher costs.
First Silver is unhedged, and remain committed to remaining unhedged.
PAAS (PAN AMERICAN SILVER)
http://panamericansilver.com/
info@panamericansilver.com
(604) 684 -1175
72.3 mil shares fully diluted (Mar,
2005) from 1 Q 2005 report
@ $14.60/share
$1056 mil MC
Cash in hand, 1 Q, 2005: $106 million
+ 2.7 mil oz. silver (payable)
10 silver properties (3 in production)
estimated to produce 15 million
ounces in 2005
Company lost $2.9 million 1 Q,
2005. The company
locked in prices for zinc and lead, and lost $6 million, unrealized,
marked to market at the end of the quarter.
Reserves & Resources through Dec.
31th, 2004 from
http://panamericansilver.com/operations/reserves_resources.htm
Proven & Probable: 147.5 mil oz. silver
Measured & Indicated: 233.6 mil
oz. silver
Inferred: 266.2 mil oz. silver
647 million oz. silver total.
$1056 mil MC / 647 mil oz. = $1.63/oz.
You get "approx" 4.25 ounces
in the ground for 1 oz. silver's worth of stock.
Additional Comments: Investors
can buy Pan American silver at just over the spot price, ranging from
$.70 (50-99 oz.) to as low as $.45 (5000 oz. minimum) over the spot
price through the Northwest Territorial Mint. See: http://www.silverpa.com/pricing.html
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!
PAAS LOST
MONEY, first quarter, 2005.
The reason silver investors are
investing in companies such as PAAS is for the upside potential of
rising silver prices, and the leverage that silver stocks offer. This leverage
did not exist, I suppose, as mining costs must have risen faster than
silver prices.
PAAS plans to produce 15 million
ounces of silver in 2005. Therefore, for every dollar the silver
price rises, (IF other
costs remain flat), PAAS expects to earn an
extra $15 million, perhaps a small number for the large market cap.
Doing the math on that, PAAS would need about an extra $100 million in
annual
profits to get to a "reasonable" P/E ratio of 10. This would
require the silver price to rise to $13.33/oz. Why? Becuase
by then, I would
expect the price of PAAS to be fairly valued at a market cap of about
$1000 million, with a P/E of about 10. In the meantime, however,
you
could invest in silver bullion, and double your money.
Therefore, I think silver bullion may outperform PAAS shares. On
the other hand, if stock buyers bid PAAS up so that it has a P/E of
about 20 by the time silver is $13.33/oz., (if that happens by next
year, and is actually a reasonable expectation for a major) then PAAS
and silver bullion may perform about the same.
Given that I expect silver and PAAS to
perform about the same from these prices, and given that stocks are
more risky, I would not buy PAAS even if they were to buy silver
bullion with spare cash. Yet, I advocate that PAAS buy silver
bullion. Why? Because it would help their
shareholders. To be abundantly clear, I support buying silver
properties as being a better investment than silver bullion at this
point. However, either silver bullion, or silver properties, are
better than paper money, which PAAS has been holding for over a year
now.
SIL (APEX SILVER)
http://www.apexsilver.com/
information@apexsilver.com
(303) 839-5060
47.7 million shares outstanding (March
31, 2005) (not fully diluted?)
@ $13.47/share
$643 mil MC
cash on hand: ~ over $500 million
San Cristobal (Bolivia) (proven & probably reserves) 454 mil silver
(The revised capital cost estimate amounted to $560 million)
(Produced zero silver in 2002)
7.8 billion pounds of zinc, and 2.9 billion pounds of lead
$643 mil MC / 454 mil oz = $1.42/oz.
You get "approx" 4.90 ounces
in the ground for 1 oz. silver's worth of stock.
Additional comments: @ $13.35/share, about 78% of the value (market
cap) of the company can be represented by the cash they have in
hand.
22%, or about $141 million, would then be
left over to represent the silver property. Perhaps there
is a
downside of 22%. However, if cash goes to zero value as silver
rises
in value, their "cash hoard" could evaporate!
See my silver stock report #40 for
reasons why Apex will not likely use their cash to buy silver bullion
while they wait for higher silver prices.
Apex silver primarily has institutional
investors.
"Apex has rights in some 100 mineral-exploration
holdings at 34
properties in countries such as Bolivia, El Salvador, Mexico, and Peru."
Apex has a lot of zinc. That's an added bonus that is not factored in
to my method of valuation.
Apex is not mining now,
but are waiting for higher silver prices. George Soros,
Billionaire, owns a bit of
this one, his group of funds owns over 14% I read recently. There
are several
other
zinc / silver plays on this list that investors might also consider:
Canadian Zinc, or Metalline
WTZ WTC.TO (WESTERN SILVER) (formerly Western Copper)
http://www.westernsilvercorp.com
info@westernsilvercorp.com
Jay Oness Toll Free: 1-888-456-1112
50.5 mil shares fully diluted (Dec 2004)
@ $8.27/share
$418 mil MC
(not actively mining, no debt)
$64 million Cdn cash raised in Dec. 2004 financing, in addition to $14
mil Cdn previously.
The capital cost to get the mine going is estimated to be US $148
million
Western
Silver Completes Pre-Feasibility Study on Chile Colorado Zone at
Penasquito
The total measured
and indicated sulfide resource at
Peñasquito, including the March 31, 2004 resource estimate at
the
nearby Chile Colorado deposit, now stands at 272.96 million tonnes,
containing 273.86 million ounces of silver, 3.61 million ounces of
gold, 1,779 million pounds of lead and 4,503 million pounds of zinc.
274 mil oz. silver + 36 mil oz. silver equiv (gold) = 310 mil oz.
+ 29 mil oz. of inferred silver oxide resource.
They have two other zones that could each duplicate the success
of each of the other two. So up to a Billion... oz. of silver as
"exploration potential"!
Feasibility: 2006-7 production timeline.
$418 mil MC / 339 oz. = $1.23/oz.
$418 mil MC / 1000 oz. = $.42/oz. --exploration potential
You get "approx" 5.6 ounces
in the ground for 1 oz. silver's worth of stock.
Exploration Potential = 16
Additional comments: Western Silver has a large zinc
bonus, a copper bonus, and a gold bonus!
WTZ's
silver page: "Why
Silver?" While acknowleding the silver
fundamentals as produced by the Silver Institue, and shrinking
supplies, it says nothing about silver as money. WTZ acknowledges
their role is to make sure their shareholders are "well positioned to
take advantage of any shortage of supply or rise in the price of
silver."
Western Silver was formerly Western Copper... Copper now at $1.35/lb!
Note the capital cost to get the mining started: $148 million
dollars.
WTZ also has the following other metal resources:
4.5 billion pounds of zinc x $.58/lb = $2.61 billion
673 million pounds of copper x $1.30/lb = $874 million
1.3 billion pounds of