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"Plunge Protection Team" related?
http://www.zerohedge.com/news/2013-10-11/massive-sell-order-takes-out-gold-bidstack-sends-metal-three-month-lows
You got that right (nothing is normal). Wall Street increasingly toxic by the day.
Of course, this would be dubbed a conspiracy theory, but the idea of a high level and secretive "Plunge Protection Team" buying massive derivative bets against PM's with virtually unlimited funds, in order to prop up their toxic supply of ultra low interest U.S. Treasuries, would explain the seemingly unexplainable. Clearly, something extraordinary is going on in the markets, nothing is normal.
Excerpt from Wikipedia
Former Federal Reserve Board member Robert Heller, in the Wall Street Journal, opined that "Instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thereby stabilizing the market as a whole." His statement has been used to claim that the Fed actually did act in that way. Some mainstream analysts call those claims a conspiracy theory, explaining that such claims are simplistic and unworkable.[13] Author Kevin Phillips wrote in his 2008 book Bad Money that while he had no interest "in becoming a conspiracy investigator," he nevertheless drew the conclusion that "some kind of high-level decision seems to have been reached in Washington to loosely institutionalize a rescue mechanism for the stock market akin to that pursued...to safeguard major U.S. banks from exposure to domestic and foreign loan and currency crises."[14] Phillips infers that the simplest way for the Working Group to intervene in market plunges would be through buying stock market index futures contracts, either in cooperation with major banks or through trading desks at the U.S. Treasury or Federal Reserve.[15]
http://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets
There's a possibility people are starting to unload equities due to govt shutdown.
Wondering about the outsize sell off also.
Toofuzzy
I am guessing its margin calls and stop loss sales, hopefully some strong hands picking up these shares.
Someone's beating the hell out of my baby. Naked shorting?
It should be exploding, not sure why the big sell off.
The Q3'13 earnings will be a trigger for Silver Wheaton. It has done relatively better compared to many peers. While many stocks have declined by more than 20% from the recent highs due to the correction in prices of precious metals, Silver Wheaton has fallen around 14%. On a 3 month basis, it has appreciated by 33% which highlights the out-performance. The company did not do too well in the last earnings, as the revenues declined by 17% and the net income fell by nearly 50%. The cash margins and operating cash flow declined. A recent article on seekingalpha predicts that the company may post an 11% increase in revenues in Q3'13 while the net margins may decline. The decline is expected to lower the dividends. Increased contribution of Gold to the company's revenues may put pressure on margins, and even the silver's profit margin will decline to around 80%. Gold is expected to contribute 32% to the revenues in Q3 compared to 29% in Q1'13. However, Silver Wheaton remains a preferred bet because of its low risk business model and higher profit margins compared to the gold mining companies. It is important that the correction in the prices of precious metals gets over soon. The outlook is still much better than what it was in June, and many believe that the June lows will hold, if tested. There have been more investments in smaller companies. Pershing Gold (PGLC) has obtained $20 million funding recently, with its Director Barry Honig making significant investments. This indicates the faith of the top managers in the prospects of the sector. The relative strength of Silver Wheaton indicates that it is a good bet for the long term provided the gold / silver prices show sustained strength. In case of a rebound, Silver Wheaton may do better.The valuations may start to get a bit stretched in case the stock goes much higher from here.
$SLW - Silver Wheaton Remains The Best Play In Metals Video
http://seekingalpha.com/article/1704682-silver-wheaton-remains-the-best-play-in-metals?source=email_rt_article_readmore
Silver: there is no substitute
http://investorintel.com/gold-silver-intel/silver-substitute/
Posted on September 17, 2013 by Ty Dinwoodie
Silver may be one of the most useful metals known to man and a hedge against inflation, but the price of silver still has a long way to travel before reaching its peak. From industrial applications to its relative value (meaning silver’s attractiveness measured in terms of risk, liquidity and purchasing power), it’s not difficult to make a cogent argument that the white metallic element remains one of the most undervalued commodities.
Industrial uses of silver are abundant. Ranging from manufacturing, nanotechnology and high-tech, silver is an essential component with countless applications. Its unique elemental properties make it impossible to substitute and its uses span almost every sector of industry. That said, silver prices have yet to reflect the growing number of applications and uses for the precious metal, despite so many fundamentals suggesting the price of silver should rise.
When silver peaked in 2011, its price didn’t even match the all-time high set in January 1980. Silver is the only major commodity not to have reached a new all-time high during the past 3 years; silver is still cheaper than it was 33 years ago (without being adjusted for inflation). According to some economists and analysts, silver prices are tremendously depressed.
silver 5When compared to energy commodities, gold and even stocks, silver remains heavily undervalued. Gold and silver typically trade within a range of 20 to 70 ounces of silver to the price of one ounce of gold. At the time of writing — with the silver spot price at $21.74 per ounce and gold trading at $1,309.50 an ounce — the gold/silver ratio is approximately 1:62 (meaning 62.2 ounces of silver to one ounce of gold). Traders often use this ratio as a gauge to decide when it is best to move from gold to silver or from silver to gold. When the ratio approaches 1:70, investors buy silver and sell gold. When the gold/silver ratio nears 1:20, investors are selling silver to buy gold. This ratio, which has been historically important to both commodity traders and long-term investors alike, suggests that silver is ready for a rally.
Even after rising an exceptional 400+% from its 2003 low (the average silver price in 2003 was $4.85 per ounce), silver is still significantly undervalued when compared to numerous other commodities — setting the stage for an increase in the white metal’s price, regardless of the changes in other commodity prices. Silver has the fundamentals driving dual-demand growth in consumption and also investment.
Ty Facts:
Symbol: Ag? (from the Latin word for silver, argentums)
Atomic number: 47
Number of protons/electrons: 47
Number of neutrons: 61
Classification: transition metal
Crystal structure: face-centered cubic
Color: gold ?(just kidding… silver)
Characteristics: soft, ductile, tarnishes
Silver is found naturally by itself, as an alloy with gold or in an ore (a rock containing various metals and elements). Silver is often found in copper and lead ores.
Silver is found in deposits in Canada, Mexico, Peru, Bolivia, Australia, and the United States. Mexico leads the world in silver production, with Peru right behind — while citizens of the United States are the top silver buyers.
Along with gold and copper, silver is one of the most precious metals.
Silver is mentioned in the first book of the Bible (Genesis) and many ancient languages have a word for silver. Words for silver and money are the same in at least 14 languages.
The word silver is from the Anglo-Saxon word seolfor. No other English word rhymes with silver.
Slag heaps found in Asia Minor indicate that silver was being separated from lead as early as 4,000BC.
It is estimated that approximately 50 billion ounces of silver have been mined in the world since 3,000BC.
Silver has been coined to use as money since 700BC.
In ancient Egypt and Medieval Europe, silver was often more valuable than gold.
There are four one-ounce silver coins on my desk, used as paperweights.
Approximately 17 times more silver than gold exists in the world.
Sterling sliver is the name given to an alloy (combination of metals) that is at least 92.5% (.925) silver by weight. The other 7.5% is made up of other metals, usually copper.
Because of its ability to take the highest polish, silver has a greater reflectivity than even gold.
Of all the metals in existence, silver is the best conductor of electricity.
Silver is harder than gold, but softer than copper.
- See more at: http://investorintel.com/gold-silver-intel/silver-substitute/#sthash.HhQf6aT0.dpuf
$SLW - Silver Wheaton Can Rise To $32
http://seekingalpha.com/article/1692462-silver-wheaton-can-rise-to-32?source=email_rt_article_readmore
Volatile price activity in the precious metals markets has been one of the most important investment stories of the year, and recent rebounds in both gold and silver are starting to stabilize after a period of broad selling pressure. Similar moves were seen in Silver Wheaton (SLW), and the stock is still showing losses of nearly 30% year-to-date. But while recent weakness in earnings and revenues justify some of these moves lower, the fundamental picture is supported by some clear positives that suggest the sell-off has reached its end. As the global economy continues to show clear signs of recovery, the outlook for Silver Wheaton is strong and this year's bear moves have created some excellent buying opportunities for long term investors.
Initially, it is important to look at what was driving the declines in the first place. In the early parts of this year, Silver Wheaton saw 20% declines in the prices it was able to charge its customers and this put major pressure on earnings and revenues. Earnings dropped to $91 million operating margins dropped by 21% and revenues fell to $167 million (17% lower than what was seen last year).
During the second quarter, production at Silver Wheaton rose by 30% on an annual basis, to reach a new record at 8.6 million silver-equivalent ounces. Unfortunately, this progress did not filter into sales at the same rate. Second quarter sales rose by only 4% (at 7.2 million ounces), and this created a broader picture for the company that failed to live up to its long term reputation within the industry. But now that this weakness has been priced-in there is growing reason to believe the stock could see significant gains in the coming quarters.
Valuations, Demand, Operational Efficiency
One of the areas where Silver Wheaton's streaming model firmly holds its position as an industry leader can be seen in its low silver costs, which come in at $4.14 per ounce, on average. And even with the revenue and earnings weakness, the company is still showing margins above 50% which is evidence of a well-managed, highly-efficient operational framework. Silver Wheaton's impressive cost structure and peerless business model is now supported by rising demand in emerging markets, and this has been one of the main catalysts for the rallies that have been seen since the summer. As the global economy continues to recover, so will demand for silver with all of its applications in industrial settings. This will help and limitations in silver buying that might otherwise be reserved for more risk-averse settings.
With the stock now trading at 17.2 times earnings and the broader rebounds in precious metals suggesting a price floor is now in place, prospects for additional bull runs in Silver Wheaton look increasingly likely. It will continue to be important to watch for potential delays in the Pascua-Lama mining project (one of the company's central gold investments) but, on the whole, the project should drive the company's earnings outlook rather than detract from it. Low valuations, emerging market demand, and a consistently efficient business model point to an excellent scenario for investors with longer term time horizons. Watch for the stock to continue making gains well into next year.
SLW Chart Perspective
(click to enlarge)
Declines in SLW since last October look to be bottoming out in the 18.10 region, with prices making a strong advance to overcome Fibonacci resistance at 26.90. This sets the next target at the 61.8% retracement of the drop from 41.50, which comes in near 32. This outlook makes the stock a buy on dips as long as support in the 23.60 area remains valid.
I can't believe the volatility of silver and SLW.
I was hoping to sell a few shares at $30 before it pulled back. I would have been able to buy it back now.
If it goes down to $20 I will buy a few more shares.
Toofuzzy
SLW the favorite silver mining pick: "Investment analysts seem to like Silver Wheaton best of this group of four streaming companies, and we find it difficult not to concur."
http://seekingalpha.com/article/1689902-precious-metal-streamers-analyst-watch-august-edition?source=yahoo
I need to sell some first before I buy more when it goes down.
I was hoping my GTC sales order for $30 would have been taken out but no such luck. Maybe next cycle.
Toofuzzy
Silver is probably going down to $20 again. I would love to buy Slw at around 24 dollars again
Silver went up today. I wonder why SLW went down?
I put in a GTC order to sell 10% of my shares at $30
Toofuzzy
I put in a GTC order to sell 10% of my shares at $30
I tried selling some Jan $13 calls I bought but there is no bids even at par (current price - $13 ) so I will probably call then at expiration and receive the shares.
Toofuzzy
Hi eqdruid
>>>>my portfolio is up almost 600% this year, I must be doing something right.
I guess so if you can do that consistently year by year.
If I do 20% / year I am happy. This year is good for me so far also but not that good. About 26% so far. I am not good at picking individual stocks. I own everything and just trade different funds up and down.
Toofuzzy
I sold slw with nice gain, my portfolio is up almost 600% this year, I must be doing something right. But I do understand your investing philosophy, good luck.
Hi Eqdruid
I hope you didn't sell out this morning. The 7% gain in SLW more than made up for the losses in almost everything else I own.
At about $28 I will either sell off 5% of my shares or put a stop loss order in for that amount.
Good Luck
Toofuzzy
>>>>I disagree with you, why watch your portfolio go down while you can take profit and invest in better opportunities around you, after all earnings season is here for some great companies. Check out some of the retail companies.<<<<
Because EVERYTHING I own (except for SLW) is down 1% on average today while SLW is up 1% Not that I am smart enough to know that and with the earning announcement I thought SLW might pull back some. But I guess investors are looking to forward earnings with higher silver prices.
PS: I don't buy retail, tastes change. I don't buy airlines (something to do with gravity >grin<), and I don't buy companies that are building new corporate offices.
Toofuzzy
>>>>>I disagree with you, why watch your portfolio go down while you can take profit and invest in better opportunities around you, after all earnings season is here for some great companies. Check out some of the retail companies.<<<<
Unfortunately I do not know what will go up or down in the next year. If I did I would only own that. So I own everything. Well almost. I jsut trade the price up and down selling 100 sh for instance and buying back 120 shares with the same money. I got in to SLW a lot higher than where it is now but it doesn't matter. Bought more as it went down. I will sell 5% of my shares when it goes over $27.5 if it drops below $20.5 before I sell any I will buy more. If I get to sell at $27.5 my buy price moves up gradually. I don't have to ever be 100% right.
I am not one of the crazies that think silver is going to $75 or $100 but if it goes back up to $50 you will be leaving a lot of gains on the table. By the way most of my gains end up being long term or in a ROTH IRA.
Good Luck
Toofuzzy
I disagree with you, why watch your portfolio go down while you can take profit and invest in better opportunities around you, after all earnings season is here for some great companies. Check out some of the retail companies.
I disagree with you, why watch your portfolio go down while you can take profit and invest in better opportunities around you, after all earnings season is here for some great companies. Check out some of the retail companies.
If you sell out 100% and it doesn't pull back you missed future gains. If you have no more free cash and don't sell and it pulls back you can't take advantage of it.
If you bought $10,000 and it is now worth $12,250, the simplistic explaination of what I do is to sell off $2,350 now. Lets say that is 90 shares. If it goes back down you will be able to buy $112 shares at $20
A couple of round trips of that over the years will really boost your account.
Toofuzzy
It's a 25% gain for me, there's better opportunities right now that I see, will get back in ale later again@ around 21.
>>>> would love to get out @ 26, would be nuce gain for me.<<<
Then what would you do?
I would gradually sell out. The short explaination of what I do is to decide how much you want to own (lets say $10,000 ) When it goes up sell enough to bring you back down to that. Then when it goes down from there you will have the cash to buy at lower prices and bring the value back up. You will always buy low and sell high and NEVER have a realized loss. Takes the emotion out of investing. Get rich slowly.
Check out:
http://web.archive.org/web/20120830055133id_/http://www.aim-users.com/index.html
If you have any questions, ask them here:
http://investorshub.advfn.com/AIM-Users-Bulletin-Board-AIMUSERS-949/
Keep in touch
Toofuzzy
The reaction to the earnings will be seen over the next few days. The company achieved record attributable silver equivalent production of 8.6 million ounces (up 28%). Silver equivalent sales increased by 4% to 7.2 million ounces. The revenues declined by 17% to $166.9 million and the net earnings fell by 50% to $71.1 million. The operating cash flows also declined by 28% to $125.3 million. Importantly, the cash operating margin also declined from $25.01 per silver equivalent ounce in Q2 2012 to $18.28. The debt on books has increased over the last few quarters and the cash on June 30 was $36.3 million compared to $778.2 million on December 31, 2012 and $75 million on March 31, 2013. So, on the face of it, the performance is not too great. Meanwhile, the rise in silver and gold prices has led to a decent rally in mining / streaming company stocks over the last few sessions. Silver Wheaton has appreciated by more than 40% from the 52 week low made in June. Many analysts have mentioned cost of production & leverage as major factors in selecting stocks. An article on investing.com (Drilling for $1300/oz Gold: A look at Nevada's Investment Conundrum), highlights that the importance of reducing cost of production. Even Moody's had expressed similar sentiments about mining companies, wanting them to reduce costs. The outlook for the sector is improving, though things can change suddenly. There are positive signs with companies putting money in development stage companies. Pershing Gold (PGLC) was able to obtain $9 million funding (at market price of the stock) for starting production in 2014. The production cost for Pershing is likely to be around $700-$800 per ounce. For Silver Wheaton, reaction to the earnings will be the crucial factor in determining the immediate future. Hopefully, silver will continue to strengthen so that the mood improves.
I would love to get out @ 26, would be nuce gain for me.
>>>>You are probably right, I am looking @ $26 short term pt on this, unless silver breaks $25 somehow.<<<
Looks like YOU are the one that will be right as long as silver doesn't reverse Wednesday overnight. Silver is over $22 now.
SLW might reach $26 on Thursday!
Toofuzzy
$SLW - Precious Metal Streamers Analyst Watch: August Edition
http://seekingalpha.com/article/1627232-precious-metal-streamers-analyst-watch-august-edition?source=email_macro_view&ifp=0
You are probably right, I am looking @ $26 short term pt on this, unless silver breaks $25 somehow.
>>>>Earnings on Wednesday, this one going to 30+ by end of next week.<<<<
As long as it doesn't do what SPWR did this week in three days after earnings going from $27 to $21
I don't see earnings being anything special concidering the price of silver recently.
But I am
Toofuzzy
Silver Wheaton will have to write off the reserves they booked from Pascua Lama as well as projected profit levels. There will not be any silver for Silver Wheaton from Pascua Lama.There will however be some serious legal costs from lack of due diligeance when they tied in to Barrick's fraud at Pascua Lama..... no title to the actual ore body in Chile? No Pascua Lama Protocol!No Tesoros claims,no ore body to mine, what now sunshine????
Earnings on Wednesday, this one going to 30+ by end of next week.
I could use a few more days like today!
Toofuzzy
$SLW - Will Silver Wheaton Continue To Recover?
http://seekingalpha.com/article/1582382-will-silver-wheaton-continue-to-recover?source=email_portfolio&ifp=0
Silver Wheaton Corp. (SLW) is slowly recovering: Shares of Silver Wheaton jumped by 17.6% during the month. In comparison, the price of silver rose by 1.6% during July, and iShares Silver Trust (SLV) increased by only 1.85%. Will Silver Wheaton continue to rally in coming months? Let's examine the latest developments related to Silver Wheaton.
Let's start with the recent news related to Silver Wheaton and its potential future progress.
Pascua-Lama Agreement
The recent silver streaming agreement between Silver Wheaton and Barrick Gold Corporation (ABX) has reached an impediment; Silver Wheaton extended the completion date to the end of 2016 due to the slow progress of the Pascua-Lama project. This delay led Silver Wheaton to revise down its silver production in 2017. This delay, however, won't adversely affect the company's silver production in 2013. Considering the latest developments in the silver market, perhaps this delay will benefit Silver Wheaton as it will receive back some of its $625 million cash upfront payment; this will enable the company to invest in other projects.
Upcoming Financial reports
Silver Wheaton will come out with its second quarterly financial reports on August 14th. In anticipation of the publication of the quarterly reports, let's examine three key factors that changed during the quarter compared to last year that could affect the company's profit margins, revenues and cash flow situation.
1. The company has augmented its gold production and is expected to produce nearly 145 thousand of ounces of gold in 2013. The sharp rise in gold production is likely to pull up the company's revenues.
The table below shows the expected changes in the company's gold revenues in the second quarter and the potential production and price effect on gold revenues.
(click to enlarge)
2. The prices of gold and silver are much lower than they were in the second quarter of 2012. This will reflect in the decline in the company's profit margin. Moreover, considering that gold has a lower profit margin than silver, the rise in gold production and decline in silver's will also pull down the company's profitability.
3. The production of silver has dwindled in the past couple of quarters and the company is expected to slightly lower its silver production in 2013.
The table below shows the expected changes in the company's silver revenues in the second quarter.
(click to enlarge)
Therefore, I think the upcoming Silver Wheaton financial report will show a rise in gold production, which will result in a rise in net revenues despite the expected drop in silver production and decline in precious metals prices.
$SLW - The Salvation Of Silver And Gold
http://seekingalpha.com/article/1563822-the-salvation-of-silver-and-gold?source=email_portfolio&ifp=0
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in MUX, PZG over the next 72 hours. (More...)
"I don't invest in gold because I'm cheering for the world to fall apart. I invest in gold and silver because I believe the policymakers are guaranteeing the world will fall apart." -Jay Taylor
Despite where gold goes from here, up or down, let's not fool ourselves. With irresponsible debt, reckless deficit spending and endless credit and currency creation, the lipstick is going to come off this multi trillion-dollar pig at some point and it's not going to be pretty.
The magnitude of sovereign debt is so great it cannot be paid down and "will have to be defaulted on," said Dr. Philippa Malmgren, President & Founder of Principalis Asset Management and former Special Assistant to the President of the United States for Economic Policy, in a recent SA article by Emmet Kodesh.
Imagine what might happen if U.S. sovereign debt is defaulted on. For starters the U.S. would lose the faith of the world, something that has made this country and its dollar very special for the last half-plus century. Defaulting could trigger the collapse of the bond market, the stock market and the dollar itself.
We could experience a type of chaos and despair the likes of which we've never seen. You're being tipped-off here to prepare for a possible worst-case scenario.
Those who think the U.S. or any western government can put Humpty Dumpty back together again for a return to the good old days are entertaining delusion.
I do not believe the Fed is going to taper. If it does try to slow its Q easing, it will soon feel the wheels wobbling off its wagon and have to whip the horse with additional stimulus to try and keep the wagon rolling, rolling, rolling. It's a damned if they do - damned if they don't situation.
When you think about how deep into this imaginary recovery process the Fed is, you have to ask yourself "how can they afford to stop QE?" And it's not just the U. S. A. The Federal Reserve and all its central bank counterparts around the world have erected a house of cards by creating and devaluing staggering amounts of currency.
Sure the U.S. stock market currently appears healthy and housing teases to recover, but they're both dosed with Fed-icine regularly, which unfortunately treats only the symptoms not the illness. It's hard to believe a healing is imminent, however an end to the monetary system as we know it, may be. And if and when that happens, it will happen suddenly catching many people off guard.
The purpose of this article is to recognize that reality and suggest how investors and everyday Joes might position themselves on the right side of a wealth transfer if or when the worst-case scenario happens.
I am not a professional financial advisor and my intention is not to tell you what will work for you. Only you know that. This article is to simply illustrate examples of why I think what I think and how I plan to prepare to survive economic collapse and to prosper despite of it.
I believe in the salvation of silver and gold
The metals aren't just precious, they're money. Real money. Gold and silver are even categorized by the International Standards Organization as currency designated by an ISO 4217 currency code. Google it.
Recently, Jay Taylor, radio show host of "Turning Hard Times Into Good Times," said this in an interview with the "Gold Report":
"Fed Chairman Ben Bernanke is in the process of destroying capitalism. Pushing interest rates to zero destroys savings and creates malinvestment… The middle class is being destroyed. That's why, if you are not on Wall Street or in government, you have to own gold and silver because the [fiat] currency is being used to reallocate wealth from most of us to those who rule us from Washington and Wall Street."
Gold is widely regarded as a store of wealth. Silver is historically the money of the people. And it will be silver I use in everyday life to barter for, or purchase the things my family will need such as bread, milk and gasoline when paper currency is no longer trusted. No longer accepted. No longer relevant.
You don't own gold or silver? Stop reading, bookmark this page and go get some. It's on sale! Consider acquiring as much as you can afford.
Not sure what to look for?
I avoid paper metals like a plague and purchase hold-in-hand physical gold and silver. This survivor prefers coins to bars and rounds, and specifically American Eagles, Canadian Maple Leafs and Austrian Philharmonic bullion coins. If you're on a tight budget you can bypass the gold and load up on these silver coin types.
There are reasons why these three government, minted bullion coins are preferred. And there are more reasons why to choose silver over gold (not just as noted above) and also prudent reasons why acquiring government minted bullion coins over privately minted bars and rounds are preferred. However these reasons are beyond the scope of this article today, as are numismatic coins.
So-called "junk silver" coins too, are important to own. Those U.S. dimes, quarters and halves minted prior to 1965 that contain 90% silver. These old coins are easily recognizable, they're fractional, which is important when buying everyday necessities like a bag of groceries (for instance, it will be difficult to make change for an ounce of gold) plus "junk silver" coins are real money with intrinsic value exceeding their denominations, unlike the modern coins in your pocket, which are made of base metals.
NOTE: Stay away from TV advertised coins commemorating, for instance, the World Trade Center or the Freedom Tower, etc., using language like clad in 24 karat gold, with certificate of authenticity, and being marketed by companies with names that sound like official mints. Don't be fooled here.
Ideally, purchase your gold and silver coins from a trusted, local dealer, though there are reputable vendors you can feel comfortable doing business with online. My online dealers of choice are www.providentmetals.com and www.apmex.com. I have never had a problem with either company, ever.
Only when a strong position in physical metals has been established is it time to push on to other precious metals investments. Let's look at some choices.
One paragraph here about ETFs, funds and trusts; they're off my list. Let it be said I am a risk taker, but I don't like asking for trouble. If you are bent on establishing metal positions using ETFs you must learn the risks by engaging in due diligence. A good start to learning about ETFs is to read insights provided in articles written by SA contributor Christopher F. Davis starting here.
Streaming companies are a good way to gain additional exposure to precious metals while avoiding risks associated with the wrong mining stocks. The streaming model is one where the streamer puts monies into a mining company securing the right to buy all, or a percentage of, the mined metals at a significantly low, discounted and fixed price.
Silver Wheaton (SLW) is the largest and best-known streaming company in the game and is selling at a discount at time of this writing. Based on its current agreements, SLW's 2013 forecast for attributable production is approximately 33.5 million silver equivalent ounces, including 145 thousand ounces of gold. By 2017, annual attributable production is anticipated to increase significantly to near 49 million silver equivalent ounces, including 180 thousand ounces of gold.
Another streamer, Sandstorm Gold (SAND), much smaller in scale than SLW also has impressive attributable production lined up. SAND was founded and is operated by CEO and president, Nolan Watson, an entrepreneur who got his start with Silver Wheaton. Helping launch Silver Wheaton, and manage it to success, Watson knows this business like few others.
Watson focuses on high-grade gold mines and is a determined visionary. It is also important to note the company has deep pockets and too, is trading at a bargain at this time with plenty of assets on its receivables ledger for 2014 and beyond.
SLW and SAND are worth your due diligence.
The very same holds true when investing directly in mining companies. As a good rule of thumb invest only in miners where you've done your homework, and those you trust. Here you're looking for good management, as well as good ore-grades, lots of reserves and resources, low-price-to-cash-flow ratios, the ability and strength to get the job done, and those with little to no country risk.
Top tier miners such as Newmont Mining (NEM) and Goldcorp (GG) are solid, low risk investments (though some mining detractors may argue the risk) with impressive resources, reserves and balance sheets. Both are currently priced lower than usual and are indeed where the silver and gold are.
Newmont Mining for instance, boasts proven and probable [P&P] gold reserves of 98.8 million attributable ounces (98.8M oz Au) as recently as December 31, 2011. Goldcorp's numbers as of December 31, 2010, show more than 60 million P&P contained gold ounces (60M oz Au), and 1,293,900 P&P contained silver ounces (1.2939M oz Ag).
I personally like strong junior or small-cap miners like McEwen Mining (MUX) and junior explorers such as Paramount Gold and Silver Corp. (PZG) as they have, in my opinion, greater upside value and growth potential, and these two have the right dynamic ingredients to break out large one day.
Paramount Gold and Silver with multi-million ounce gold and silver properties in Nevada and Mexico is an aggressive, fully funded junior exploration company that is focused on building resources and shareholder value while positioning itself for attractive take-over bids or joint-venture arrangements with top tier miners one day.
McEwen Mining with projects already in production in South and Central America and another project gearing up for production in North America in 2014 is a highly regarded company with great upside potential. Majority owner, Rob McEwen is a miner's miner. McEwen, founder and former CEO of Goldcorp, has a knack for positioning his projects near other successful miners, discovering high-grade resources, and building mines that produce.
McEwen Mining's current assets are 699,041 P&P gold ounces (699.04K oz Au) and 49,083,400 P&P silver ounces (49.083M oz Ag). MUX stock is down, but rising at the moment and Rob McEwen owns 25% of company shares. This is an important consideration when you can be comfortable knowing the company's goals are aligned with those of its shareholders.
Also in McEwen's back pocket is Lexam VG Gold, a micro-cap gold exploration company with five individual projects in the historic Timmins Gold Camp of Ontario, Canada realizing positive and significant drilling results with an ongoing exploration program. This under the radar company is 27% owned by Rob McEwen and it is anticipated here that McEwen will one day merge Lexam VG Gold with McEwen Mining in a move to create another top-tier miner. Owning shares of each of these companies is seen here as an intelligent play.
Also, in this opinion investing in PZG today might result in significant profits in the future. During a meltdown of the economic system where cash becomes trash, (which is the focus of this article) the sky may become the limit for this company's stock. And, like McEwen, Paramount Gold and Silver CEO, Christopher Crupi also has his own skin in the game.
Each of the aforementioned mining and exploration companies have the six important "rule of thumb" qualities mentioned above, and are all good buys at their current prices, and it is believed those companies mentioned here would be powerful assets to own in a crisis.
They too, are worth your due diligence.
Conclusion: In this author's opinion, being on the correct side of a wealth transfer when economic failure occurs is imperative. Preparing one's self for a worst-case scenario by stacking physical silver and gold, and holding metal mining investments that could soar in a crisis, along with securing other obvious necessities, makes clear sense not just for survival but, also for creating wealth.
Good advice is to stay informed.
As NY Times Best Selling Author of, "The Real Crash: America's Coming Bankruptcy - How To Save Yourself and Your Country," Peter Schiff says:
"…when the Fed is forced to make this concession, [increasing QE] it should be obvious to a critical mass that the recovery is a sham. Investors will realize that years of QE have only exacerbated the problems it was meant to solve. When the grim reality of QE infinity sets in, the dollar will drop, gold [and silver] will climb, and the real crash will finally be upon us. Buckle up."
And this, one more piece of powerful opinion I feel compelled to share from Robert Fitzwilson, founder of The Portola Group, who recently said about a financial meltdown for King World News:
"There are no examples in history of any paper currency not culminating in a violent collapse. None. It has been tried by all of our ancestors throughout human history. All examples resulted in failure. The lesson never learned is that humans cannot be trusted with the ability to create money out of thin air. The list of those who have come before us [is extensive]. It is not about a particular culture or a period in time. It just does not work. If the carnage in the bond market continues… we could finally be at that moment where the system reacts chaotically and violently. It is sad, but it is the predictable end to the financial path that was chosen in the mid-1960s."
Nice move in the pre market due to silver jumping in price.
Toofuzzy
They've been there for several years now setting up and look...
The judges found no evidence of contamination due to mine construction....
"Another option is (SLW), which has key advantages over many of the silver miners. Silver Wheaton has comparatively strong margins and is able to lock in products from miners at low rates. This generally insulates the company from many of the industry's central risks and offers some attractive opportunities for those looking to buy into this year's weakness in the metals space."
http://www.thestreet.com/story/11976460/1/why-silver-is-a-better-buy-than-gold.html?puc=yahoo&cm_ven=YAHOO
Silver Wheaton has been slightly more volatile than spot silver moving from above the price when silver was high to slightly below the price when silver was at the bottom. You can make out OK just by keeping the same dollar amount invested which would force you to buy low and sell high.
Toofuzzy
The stock has rebounded from recent lows by around 10%. Most other precious metal stocks have behaved in a similar manner after the sharp fall in June. Streaming companies may have been affected to a lesser extent by the crash in precious metal prices, but the impact cannot be totally ignored. The low risk model helps build some support amongst the analysts at these levels. Silver Wheaton has also increased its exposure to gold to balance its business model recently. The overall outlook for the sector is gloomy, and the break of previous lows has dampened the sentiments. The current bounce needs to hold for many days, and stocks like Silver Wheaton have to rise by another 10% to improve the sentiments. The good part is that the levels are so low that many astute investors are getting more positive on the sector. Respected names like George Soros, Jim Rogers and Jim Grant are getting more positive. Jim Rogers had stated in an interview in May that he would by gold if it touches $1300, and buy more if it touches $1200. Marc Faber had stated that a bounce in gold prices would lead to a stronger bounce in the mining stocks. Further, the prices have already corrected a lot over the past several months, and are below the cost of mining now. This may lead to some adjustments in the supply-demand balance. The valuations are extremely cheap with most companies trading below book value and development stage assets like Pershing Gold (PGLC) trading at a discount to potential. No one can pick the bottom, but it is possible that that is not far from here. Stocks like Silver Wheaton are likely to be preferred in case of a rebound. However, the prices need to stabilize asap to avoid further damage to sentiments.
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