SILVER

[warpig]

It's extremely difficult to gauge where this will end up IMO. At the moment I think it can be best described as a game of chicken. Extreme backwardation pushing the price higher, trying to free up physical in the market and traders poised to take profits. I wonder who will flinch first... Ben Davies@KWN said in this weeks interview, that he felt silver would rise to somewhere between $38-44 on this run. I'm still surprised the Japanese crisis had such little effect on the market...

 

I wonder if silver will go on to test the old $50 high next. If it goes through $50 easily that would be really bullish!

[G0ldfinger]

No takers so far?

 

I know some of you are invested in Silver Wheaton, which, to my great displeasure, I haven't come around yet to do. Now, silver is NOT finished here, I see $100 minimum. I.e., Silver Wheaton also has a long ways to go, even if we see a lot of volatility on the way ahead.

 

What's the breakdown of the important facts? Here is what I think I remember:

 

(1) For every share, 5 ounces silver in the ground ("silver streaming").

(2) Cost per ounce silver streaming: $4.

(3) Cost per share: $43.36 (at time of posting)

(4) Potential profit per share as is (with silver at $37.65/oz): 5*($37.65-$4) - $43.36 = $124.89

(5) Potential profit per share as is (with silver at $100.00/oz): 5*($100-$4) - $43.36 = $436.64

(6) Growth story not even taken into account yet.

 

Do I get the basic simplified facts right here, or am I missing something crucial? Cheers!

[dpmiller83]

No takers so far?

 

 

I've been contemplating dipping in to SLW as part of a drive to get a little more exposure in stocks.

 

Ace has made a few comments on stocks here: http://www.greenenergyinvestors.com/index.php?showtopic=2717&view=findpost&p=210787 and comments on SLW - he might be able to offer you a sounding board!

 

I'm finding mining shares quite daunting to be honest - there is so much to take in and research!

[Pixel8r]

Robert Prechter - aka Mr. Elliot Wave - Is An Idiot

 

Prechter announced to the world last week that he shorted gold and silver. I don't recall the entry levels, but his stop-loss on silver was set at 38.50. That position was stopped out this morning at a nice loss for his loyal followers. Rest assurred that Prechter, like Gartman, was only issuing a subscription newsletter recommendation and not using his own money.

 

I remember back in 2002 when Prechter announced to the world that he was shorting gold just below $400, boasting that he would be covering his short at $50. How's that trade looking? In fact, Prechter has been making short calls quite frequently during this entire 10-yr, so far, bull market. We haven't even really started Stage 2, which is when the big institutions finally pile into gold and silver and mining stocks. In fact, John Embry was commenting last week that he was seeing money flowing out of major mining stock funds during March. Thus, not only have we not really started the middle phase of a classic bull market, all signals are pointing to much higher prices in gold and silver before pre-bubble Stage 2 really gets underway.

 

Prechter and Gartman will continue to lose money for their subscription faithful and a lot of other hacks will come onto CNBC and Bloomberg and Fox Business and make themselves look like idiots with their lack of knowledge of this market. As long as Governments globally continue to print and spend money, gold and silver will continue to move inexorably higher.

 

POSTED BY DAVE IN DENVER AT 8:49 AM

[Pixel8r]

No takers so far?

 

 

It's a no brainer to me, I have been adding any spare cash to this when I can't see anything else interesting since Jan '09.

[G0ldfinger]

Prechter announced to the world last week that he shorted gold and silver. I don't recall the entry levels, but his stop-loss on silver was set at 38.50. That position was stopped out this morning at a nice loss for his loyal followers.

...

I remember back in 2002 when Prechter announced to the world that he was shorting gold just below $400, boasting that he would be covering his short at $50. How's that trade looking?

Muhahaha, you couldn't make this stuff up, could you?

[G0ldfinger]

Cheers for the replies on SilverWheaton. I am considering swapping some of the silver bullion for SWL instead of gold bullion should the ratio go lower.

[Perishabull]

Muhahaha, you couldn't make this stuff up, could you?

 

 

Definitely CIA. How else could someone tell you to short PMs and buy US treasury bonds and actually mean it - come on !!!

 

He's a bond salesman with a technical analyst's hat on.

 

 

PS They are printing so many copies of Elliott Wave Principle that it's value is becoming worth less and less (reminds me of something else). Where can I short Prechter?

 

 

 

Now there is your deflation

[Pixel8r]

Cheers for the replies on SilverWheaton. I am considering swapping some of the silver bullion for SWL instead of gold bullion should the ratio go lower.

I don't know what the capital gains tax laws are like in Germany, but I have been selling my CGT allowance from my PM holdings and putting it into mining shares for the last couple of years. This year I did a swap, from silver to gold, and a sell to top up my ISA for the year.

 

 

 

[Pixel8r]

Definitely CIA. How else could someone tell you to short PMs and buy US treasury bonds and actually mean it - come on !!!

 

He's a bond salesman with a technical analyst's hat on.

 

 

PS They are printing so many copies of Elliott Wave Principle that it's value is becoming worth less and less (reminds me of something else). Where can I short Prechter?

But, but his ad says on here that to safeguard your financial future you need to get his 12-page letter.

[warpig]

£24.00/t.oz

[Carlton]

No takers so far?

I've traded this one a few times but the stock has always seemed expensive to me. Their margins are great, but the multiple is still high.

 

For 2010 they earned $290 mln, or $0.81/sh. A P/E multiple of 15 would suggest a share price of $12.15; the current multiple is 53.

 

Now, they project that production will increase from 24 M ozt. Ag to 43 M ozt. by 2015, a factor of 1.79.

 

If this production increase is achieved and their profitability per ounce, let's say, doubles, then:

$290mln x 2 x 1.79 = $1038 mln in earnings. Assuming no dilution, this results in $2.90 per share. A multiple of 15 suggests a share price of $43.50.

 

Today SLW is $44.10.

 

The business model is great but the shares look expensive.

 

----------------------------------------------------------

 

Also, their reserves are:

942 M ozt. P&P

494 M ozt. M&I

 

So, 2.6/sh P&P and 4/sh including M&I.

 

Thus, buying the shares today you are paying $16.96 per ozt. for P&P and $11.03 per ozt. including M&I. For many miners this would be expensive. But, perhaps with SLW's business model these valuations are appropriate.

 

Source: http://www.silverwheaton.com/Theme/SilverWheaton/files/2011-04-01%20Fact%20Sheet.pdf

[andrew]

Thanks GF and Carlton for the thoughts on SLW.

 

I mostly like to buy physical and do very little share buying, and at the moment and for some time have my pension and ISA sitting in cash. I have to accept that my nature really is not that of a trader.

 

I have thought of buying SLW but hesitate because it feels uncomfortable to me that SLW and the general stock market has gone so far so fast.

 

We can look back at 2008 and see that a good panic pushes almost everything down hard.

 

So what to do?

 

I find myself waiting for a good correction, but that may never come.

 

Maybe a steady accumalation.

 

It feels like your damed if you do, and damed it you don't.

 

I know that what I've said is more about the psychology of investing, but that is the part I have the most trouble with.

 

Carlton what does P&P and M&I mean?

[Pixel8r]

P&P = Proven & Probable

 

M&I = Measured & Indicated

[Pixel8r]

I've traded this one a few times but the stock has always seemed expensive to me. Their margins are great, but the multiple is still high.

 

For 2010 they earned $290 mln, or $0.81/sh. A P/E multiple of 15 would suggest a share price of $12.15; the current multiple is 53.

 

Now, they project that production will increase from 24 M ozt. Ag to 43 M ozt. by 2015, a factor of 1.79.

 

If this production increase is achieved and their profitability per ounce, let's say, doubles, then:

$290mln x 2 x 1.79 = $1038 mln in earnings. Assuming no dilution, this results in $2.90 per share. A multiple of 15 suggests a share price of $43.50.

 

Today SLW is $44.10.

 

The business model is great but the shares look expensive.

 

----------------------------------------------------------

 

Also, their reserves are:

942 M ozt. P&P

494 M ozt. M&I

 

So, 2.6/sh P&P and 4/sh including M&I.

 

Thus, buying the shares today you are paying $16.96 per ozt. for P&P and $11.03 per ozt. including M&I. For many miners this would be expensive. But, perhaps with SLW's business model these valuations are appropriate.

 

Source: http://www.silverwhe...act%20Sheet.pdf

I don't think Silver Wheaton is a stock for trading more a buy and hold, they have a great growth record and fixed costs of $4 per ounce. I also think that they will be realising more than double the profit by 2015, they over doubled their earnings last year ($290M vs $117M)

 

Looking at this graph below you can see that their reserves are at around 5 Oz per share which equals around $8.82 per Oz at todays price + you get the future growth for free.

 

[G0ldfinger]

$39?

 

Show me 40!

[Carlton]

I don't think Silver Wheaton is a stock for trading more a buy and hold, they have a great growth record and fixed costs of $4 per ounce. I also think that they will be realising more than double the profit by 2015, they over doubled their earnings last year ($290M vs $117M)

 

Looking at this graph below you can see that their reserves are at around 5 Oz per share which equals around $8.82 per Oz at todays price + you get the future growth for free.

 

Technically, their reserves (ounces in the P&P category) amount to 2.6 ozt. per share. Yes, if you include all three categories (P&P, M&I, and Inf) their reserves & resources add up to 5 ozt. per share, but that's a more liberal analysis.

 

Regarding their profitability:

 

If their profitability per ounce triples and they hit their prod. targets, then:

$290 x 3 x 1.79 = $1557 mln in earnings / 358 M shares = $4.25eps x 15 (p/e multiple) = $65.25

 

Yes, I suppose their profitability per ounce could more than triple, but now we're projecting (hoping for?) very rosy scenarios.

 

SLW is a great company, but their stock is not cheap, and I personally see better value elsewhere.

 

*This post is not investment advice!

[Pixel8r]

Technically, their reserves (ounces in the P&P category) amount to 2.6 ozt. per share. Yes, if you include all three categories (P&P, M&I, and Inf) their reserves & resources add up to 5 ozt. per share, but that's a more liberal analysis.

 

Regarding their profitability:

 

If their profitability per ounce triples and they hit their prod. targets, then:

$290 x 3 x 1.79 = $1557 mln in earnings / 358 M shares = $4.25eps x 15 (p/e multiple) = $65.25

 

Yes, I suppose their profitability per ounce could more than triple, but now we're projecting (hoping for?) very rosy scenarios.

 

SLW is a great company, but their stock is not cheap, and I personally see better value elsewhere.

 

*This post is not investment advice!

I agree that there is better value to had elsewhere, as I said previously I have been adding to SLW on pullbacks when I can't find anything else interesting. I recently added a few on the pullback to $30 and more recently at $39.5.

 

I wouldn't be buying on any day but do feel they are one worth adding to on any pullback. When silver gets hits before options expiry seems to be a good time.

 

Out of interest which stocks do you find interesting at the moment? I have been buying recently Pinetree Capital & Medusa Mining.

 

 

 

[Pixel8r]

GSR now 36.85, well done on this call GF.

 

[Jake]

GSR now 36.85, well done on this call GF.

 

When the ratio was about 70:1 you wouldn't have thought it possible, the lines on that chart looked too steep. So a great call.

Looking at how the blue has fallen like a dagger down to the red line now 3 times, is the general feeling to swap for gold or hold hold hold down to... 25? I have been absent a while following these and other threads what with all the action here in Japan.

[emel]

GSR now 36.85, well done on this call GF.

An amazing call. And one I didn't quite think would play out like it has so far. My original plan was to start swapping Gold to Silver from ratio 40 down to 35. I started this at 40, but with things moving so quickly, I've cooled my jets. I now believe we will definitely see 30, maybe even 25. I see a greater potential for growth in Silver rather then Gold right now.

[andrew]

Yes GF a brilliant call !

 

Like Jake I thought such a rapid drop was unlightly.

 

I take my hat off to you.

[Errol]

http://silverliberationarmy.com/

[G0ldfinger]

Thanks for all the praise.

 

I made this prediction the first time somwhen in 2007, before the big spike up in 2008, just where you see that coiling pattern around 52:1. When the ratio exploded up to 82:1, I looked like a moron for a while. But I never thought it could last. The fundamentals...

[Carlton]

...Out of interest which stocks do you find interesting at the moment? I have been buying recently Pinetree Capital & Medusa Mining.

Two of my favorite long-term sleepers are Revett Minerals and Mines Management, though Revett has not been a sleeper lately.