Tuesday, November 20, 2012

Buying a Silver Miner

I've been doing a lot of research for the last two weeks on silver miners.

Why? Because the world is running out of silver, that's why. Late last night, I ran into an article on TF Metals site that was absolutely outstanding. I re-read it this morning. I will link it here. http://www.tfmetalsreport.com/blog/4324/guest-post-forces-will-push-silver-over-100-srsrocco

The best part about that blog is that it notes reducing production at the world's biggest silver mines. I had suspected reduced production in the silver market as I looked at revenues (mostly because of falling revenues when silver prices were climbing) but this author does a good job of identifying and quantifying production levels.

I am also going to make a case for why I think it is entirely possible for silver to go supernova all at once- and this has to to do with JP Morgan and their non stop manipulation of the silver market.

I don't really like mining stocks. They tend to go down with the rest of the market. We have been at a market peak for months. This coming year, 2013, is going to bring economic death to our stock market as companies lay off and reduce head counts-desperately trying to save themselves from the punishing hand of Obamacare. This will have a far more dramatic impact than the other things that will happen at the same time. The elite have been transferring wealth like crazy to their children (5 million per year) trying to avoid the death tax which will rise to 55% on estates greater than 1 million in 2013. The rich and elite are also going to have to deal with rising investment and dividend taxes. All in all, 2013 is shaping up to a be a pretty shitty year from an economic standpoint.

I think that there has never been a better time for parking some dough in Eric Sprott's PSLV trust. In fact, I am going to do this first. It has real bullion backing. It is pretty safe. It's a good place to be because you can trust government to always do the easy and wrong thing. They will raise the debt ceiling- they will not cut spending- and they will continue to print away. Absolutely guaranteed. This is the most cowardly bunch of people ever assembled. They will not let us down.

So I've been looking for an unhedged miner that actually produces silver. I would like to see proven reserves, credible assays, stable costs of production, and rising earnings. (That turned out to be nearly impossible although silver was down in the 2nd quarter) After looking at 30 or so silver miners and weeding virtually all of them out, I found one. I was hoping to diversify just a little but I honestly have not been able to find another silver miner that I like. There is one other with a little potential- but there are also a couple of drawbacks. I am gonna slowly wade in rather than overpay in a market that desperately needs a haircut.

The easy gold and the easy silver have already been mined. China may have some left and they are absolutely gorging themselves on precious metals from every corner of the globe. They do not export precious metals.

One last thing. Existing silver has already been mined. The cost today is 33.00. You don't have to worry about assays, production, equipment and fuel, finding new ore bodies, or permitting. JP Morgan and a couple of other banks have been shorting quantities of silver that represent years' worth of production. Actual silver in those quantities- simply does not exist. As more and more buyers remove bullion and demand physical delivery, as production falls, or interestingly enough-when sellers do not sell- there is going to come a time when silver simply goes parabolic. That time will occur when it dawns on people that we are running out of the stuff and that it is a finite supply.

Wouldn't it be nice to already be there when the rest of the world figures that out? I think so.


Anonymous said...

All that @ then no name for the miner...lol

Brian said...

A few blogs ago, I asked people to email me and I sent them an entire list.

If you are interested in the best miners I could find, just shoot me an email. letfreedomringagain@live.com