 Wallace Street
Journal
...another billion
ounces or two
David Bond
February 19, 2004
WALLACE, Idaho - Whither the
price of silver? Nowhere is that question being asked with greater
intensity than here in the Silver Valley, the silver capital
of the world, home of the genuinely Sleepless and the greatest
pile of silver on the planet.
Sitting on reserves that make
Potosi and Comstock look like ma and pa operations - seriously,
we've mined more than either and the old-timer geologists who
really know this camp say there's at least as much still in the
ground as we pulled out, another billion ounces or two
- yeah, we're checking the price on an hourly basis.
Silver's vindication at $6,
should it hold through the summer, sets the next level of genuinely
serious resistance at $10, not $7 or $8. Should it bust $10 some
time this year or next, its next stop will be $20, with not even
a by-your-leave-sir at $15.
Being sleepless, we don't dare
even dream of such great fortune, but that's how market psychologies
seem to work. And the beauty is, we don't need it. At $6, all
kinds of possibilities come alive. We've talked before about
Sterling's aggressive exploration and acquisition activities
in and around the Sunshine Mine. They just got a great
write-up
on Mineweb and when all this was in the planning stages a year
ago, their quest was for $4.50 profitability. Anything above
$4.50 is gravy. They've also added some great exploration and
management people to their payroll.
Hecla and Coeur, so impoverished four years
ago they were in danger of being kicked off the NYSE and down
to the Pink Sheets when their stock prices fell under a buck
and stayed there, will spend a combined $20 million or thereabouts
on exploration and development at, respectively, the Lucky Friday
and the Galena-Coeur complex here. We ain't had that kinda news
since Jimmy Carter was president.
Let's start from the top down.
Wallace Realtors Bob and Linda Davison report a mini land boom;
houses that have stood vacant or at least unwanted for a decade
are all of a sudden just flat gone. Commercial property in the
historic districts of Wallace and Kellogg is trading at a huge
premium, if you can find any of it. Why? Because folks have figured
out that big things are about to happen underneath us, in these
deep, rich mines.
The same can be said of the
Silver Valley's silver-mining stocks. But there are still a few
kittens out there standing to benefit from Coeur's, Hecla's and
Sterling's exploration and development programs.
But hang with us a bit: The
hard-rock mining industry in the Rocky Mountain West has had
its ass kicked by a combination of depressed metal prices and
aggressive social planning (the correct term for environmentalism)
by the United Snakes Government. By some incredible miracle,
and due to the tenacity and integrity of Western miners, a handful
(actually, about three dozen) of the 130 companies that used
to trade on the old Spokane Stock Exchange survived. Their properties
remained permitted, legal. Many did reverse splits, some even
went to Irish dividends, but they kept their noses clean. The
other 100 simply died, or went into shell Never-Never Land. The
rise from the ashes of the past two decades of these surviving
companies is, and will continue to be, nothing short of a miracle.
Many of them benefit from land positions and/or lease-exploration
agreements with the majors.
Let's go down the list.
Silver Buckle (SBUM: you gotta love that symbol)
is a favorite trader among the Sleepless, and has an excellent
land position and long-term lease arrangements with Coeur. Last
trade 44 cents; it's seen six bits before. Right beside 'em is
Placer Creek (PRCK), Chester Mining (CHMN) is an
old-timer, thin float (2.4 million shares) and historically a
dividend payer. It's snuggled up against Sterling's Sunshine
Mine. Sterling recently leased Chester's claims and picked up
an option to buy up to 10 percent of Chester. Chester rode from
a few pennies to $6 last year. Mineral Mountain (MMMM)
and Merger Mines (MERG) also hold promise in a rising
silver market.
Timberline (TBLC and formerly Silver Crystal)
just finalized a 4:1 reverse stock split and put a new management
team together, and is out nosing around for exploration acquisitions.
New Jersey Mining (NJMC) continues to dig at its four
properties and is adding a new circuit to its mill near Kellogg
to process ore from its mines this summer. They've not been the
Silver Valley's most stellar price performer - they're only up
160 percent from a year ago - but their management is rock-solid.
Shoshone Silver (SHSH) has undergone recent management
changes and embarked upon some aggressive exploration and acquisition
activities, both here and in Canada.
The list goes on.
To speculate in any of these
stocks, you have to know their management and you have to have
great faith in silver, which right now is trading at an inflation-adjusted
2,000-year low, up from its 5,000-year low a year ago. Helluva
bull market, eh?
Kodak can crank out press releases
all it wants to, but the whole silver versus digital thing in
photography, the way they spin it, is a red herring. Take an
ounce of silver out of traditional silver-halide film's consumption
stream, and you've just lost an ounce coming back from recycling.
It's a zero-sum game that in the end may benefit silver as people
demand quality halide prints, not perishable ink-jet treacle,
for their digital photos. And here's a little trivia for you:
it takes a gigabyte of computer space to respectably store the
information on a 4"-by-6" black-and-white silver halide
negative.
Will things change? Sure. Profits
will be taken and the market periodically will be slammed. But
what I like about this bull market in silver is that there's
no panic, no hysteria, no visible upside manipulation, no insider
stuff, and the central banks can't screw with it because they
ain't got no silver no more. Neither does the United Snakes government.
Plus, CNN doesn't know about it yet. It's a market driven by
fundamentals and fundament correction that is 2,000 years overdue.
If silver and silver stocks
are not risky enough, and you really want to set your hair on
fire, you can always buy US dollars or CDs paying negative interest
rates.
Now there's a truly
scary thought.
David Bond
February 19, 2004
David Bond covers gold
and silver mining equities for a number of national and international
publishers, including Platts Metals Week, a division of McGraw-Hill.
He lives in Wallace, Idaho, heart of the planet's richest silver
fields, the Coeur d'Alene Mining District. He is former editor
of the Wallace Miner, and holds regional and national firsts
in investigative journalism from the Atlantic City Press Club
(National Headliner) and from the Society of Professional Journalists
(SDX/SPJ) and has edited or written for newspapers on both coasts,
Canada and Alaska.
________________
321gold Inc
|
