Silver Stocks Comparative Valuations
Silver Stocks--Comparative Valuations 
Report # 57
by Jason Hommel
silverstockreport.com
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
Introduction:
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. 
  1. GRS GAM.TO (GAMMON LAKE)            3.2  --producer, owns 26% of Mexgold
  2. FSR.TO FSLVF.PK (FIRST SILVER)        4.3   --producer, (not profitable '05 1Q.) unhedged, owns bullion
  3. PAAS (PAN AMERICAN SILVER)                4.3   --producer, (not profitable '05 1Q.) large market cap, cash rich
  4. SIL (Apex Silver)                                     4.9 --one property explorer in Bolivia, cash rich.
  5. CHD.V CHDSF.PK (CHARIOT RSCS)      4.8   --explorer, with inferred resources, massive dilution
  6. WTZ WTC.TO (WESTERN SILVER)          5.6   -- (16 EXPT) large mine startup cost. copper & zinc bonus
  7. * CFTN.PK (CLIFTON MINING)                5.3  -- (126 EXPT) (order their colloidal silver now online 10% off)
  8. PJO.V (PALMAREJO GOLD CORP)            6.1  NEW --drilling in Mexico, high grade.
  9. MFN MFL.TO (MINEFINDERS)                7.6   --significant gold bonus, $35 mil cash on hand.
  10. * SVL.V STVZF.PK (SILVERCREST)       7.9    --Silver in Central America, 11.5 oz. of silver/T over 313 feet
  11. SVM.V (Silvercorp Metals Inc.)              9.1  NEW Very high Grade Silver, In China.
  12. IAU.TO ITDXF.PK (INTREPID MINRLS)    10.1   --exploring in Mexico & Argentina, large EXPT.
  13. SSRI SSO.V (SILVER STANDARD)             11.2 --large company, 20+ properties, owns silver bullion
  14. FAN.TO FRLLF.PK (FARALLON RSCS)   11.8 --(20 EXPT) low grades, silver 1/3; also gold & zinc bonus.
  15. FR.V FMJRF.PK (FIRST MAJESTIC)         16.1  (55 EXPT) --producer in Mexico.
  16. * CZN.TO CZICF.PK (CDN ZINC)              18.6 down  --large zinc bonus, low start up costs, great EXPT
  17. ORM.V OREXF.PK (OREMEX RES)           18.8  (50 EXPT) --Discovery! 20 oz. silver/T over 292 feet!
  18. GGC.V GGCRF.PK (GENCO RECS)              19.1 --producer in Mex.  Plans to expand and acquire
  19. * IMR IMR.V (IMA EXPL)                         19.6  --(58 EXPT) in Argentina 83 oz. silver/T over 35 meters!
  20. *ABI.V ABMBF.PK  (ABCOURT MINES)     21  --large zinc bonus, + existing infrastructure
  21. SHSH.PK (SHOSHONE SILVER)                    21.3   --leased properties; need payments; in Coeur d'Alene
  22. YZC.V (Yukon Zinc)                                    23.1  --huge zinc bonus 60% zinc, 25% silver.
  23. * MGN (MINES MGMT)                                 27.6  --60% copper bonus (low grades), start up cost ~ $250 mil
  24. * SRLM.PK (STERLING MINING)                   29.3  --(69 EXPT) acquired the Sunshine in Coeur d'Alene
  25. * CSG.TO CSGLF.PK (CAPSTONE GOLD)    30 down (112 EXPT) (In Mexico, resources are historical)
  26. HDA.V HUSIF.PK (HULDRA SILVER)           32.2   --very tiny, zinc bonus, low start up costs.
  27. RDV.TO RDFVF.PK (REDCORP VEN)          34.6 --60% gold bonus (May '05, not feasible.)
  28. * 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. 
  1. MGR.V MGRSF.PK (MEXGOLD RSCS)       -- bonanza grade discovery on Jan 13th, 2004
  2. CDY CDU.V (CARDERO RSCS)  --silver, copper, & iron explorer, 19 properties
  3. AOT.V ASOLF.PK (ASCOT RSCS) -- owns percentage of Cardero, CDU.V
  4. BCM.V BCEKF.PK (BEAR CRK MINING)  
  5. * OTMN.PK (O.T. MINING)  very large exploration potential; recently discovered copper porphyry 1200 ft. long.
  6. MCAJF.PK (MACMIN LTD) --In Australia
  7. MAI.V MNEAF.OB (MINERA ANDES)  (gold bonus)
  8. * EDR.V EDRGF.PK (ENDEAVOUR SILVER)  A PRODUCER in Mexico
  9. 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.)
  1. ECU.V ECUXF.PK (ECU SILVER MINI)  --A PRODUCER 50% gold bonus
  2. SPM.V SMNPF.PK (SCORPIO MINING)
  3. * MMGG.OB (METALLINE MINE) --zinc/silver (historic high grade silver) (low cost revolutionary oxide zinc process)
  4. EXN.V EXLLF.PK (EXCELLON RSCS) --A PRODUCER
This next list has silver exploration companies with market caps under about $20 million
  1. MAG.V MSLRF.PK (MAG SILVER)
  2. * KRE.V KREKF.PK (KENRICH ESKAY) --Near Eskay Creek  
  3. * CBE.V CBEFF.PK (CABO MINING) --Historic Silver and Cobalt district
  4. EGD.V EGDMF.PK (ENERGOLD MINING)
  5. SDR.V SDURF.PK (STROUD RSCS) (partners with Amerix) --in Mexico
  6. APM.V (Amerix Precious Metals Corp) (partners with Stroud) --in Mexico
  7. EPZ.V ESPZF.PK (ESPERANZA SILVR)
  8. QTA.V QURAF.PK (QUATERRA RES)
  9. SML.V SMLZF.PK (STEALTH MNRLS)
  10. SRY.V (STINGRAY RSCS)
  11. NJMC.OB (NEW JERSEY MIN)
This next list has silver exploration companies with market caps under about $10 million dollars:
  1. PXI.V  PNXPF.PK (Planet Exploration Inc.)
  2. KG.V KDKGF.PK (KLONDIKE GOLD)
  3. MMG.V MMEEF.PK (MCMILLAN GOLD)
  4. GPR.V GPRLF.PK (GREAT PANTHER RES)
  5. APE.V (Apogee Minerals Ltd.)
  6. SSV.V (SOUTHERN SILVER EXPLORATION)
  7. * CMA.V CRMXF.OB (Cream Minerals Ltd) --Low grade, large "exploration potential"
  8. TM.V TUMIF.OB (TUMI RESOURCES) (TUY Frankfurt Exchange)  --recently acquired rights to buy new projects in Mexico.
  9. * 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!)
  1. IPT.V IMPJF.PK (Impact Minerals)
  2. * GRG.V (GOLDEN ARROW RESC)          IMR.V spin-off. 35 properties
  3. PCM.V PAOCF.PK (PAC COMOX RES)
  4. MTB.V (Mountain Boy Minerals Ltd
  5. LSM.V LASCF.PK (Langis Silver & Cobalt Mining Co Ltd)
  6. TBLC.PK (TIMBERLINE RES) --in Cour d'Alene
  7. * AUN.V AUNFF.PK (AURCANA CORP)
  8. LEG.V LEGCF.PK (LATEEGRA RSCS)     --Near Eskay Creek 
  9. CLZ.V (Canasil Resources Inc)
  10. ASLM.PK (AMER SILVER MINI)  -- In Cour d'Alene
  11. * MVE.V (Minvita Resources)  --Near Eskay Creek 

* = I own shares. 
My Methodology:
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.
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If I use a word you don't understand and is not listed in the dictionary at www.m-w.com you can look up the meaning at http://investorwords.com/
WEEKLY COMMENTARY (All new in this section):  

This is the first full silver stock report since February. 
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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.

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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. 

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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

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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.


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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

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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.

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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