Wallace Street
Journal
David Bond
February 27, 2004
WALLACE, Idaho - Perhaps only
the Sleepless of us here in the Silver Valley caught the hysterically
funny nature of a snippet of news out of Russia last week. We
saw it mentioned only in the Russian press - it escaped translation
into words which might have raised a few eyebrows in the West.
But we miss nothing here in the Silver Valley - home of the world's
finest and largest deep-shaft primary silver mines. So for those
of you who consider an eight-hour rack some kind of Constitutional
right, we dutifully gather these snippets and pass them along
to you. (And we find it not mildly disturbing that there is more
thoughtful analysis and provocative, investigative reporting
on America in Pravda, Rosbalt, the Moscow Times and the London
Telegraph than there is in the Wall Street Journal [not to be
confused with Wallace Street Journal] or the New York
Times).
Herewith: Last week Aeroflot, the old Soviet Union's flagship
airline - the 80-year-old carrier still features the hammer and
sickle in its logo - announced that come this fall, it will cease
to post its fares in U.S. dollars and instead accept only Euro-based
payments for travel. This, as the U.S. dollar has slumped 10
percent over the past year even against the lowly ruble.
The world's last coal-powered airline, Aeroflot - were it an
American carrier - we would say that it is the perfect combination
of Northern charm and Southern efficiency. Anyone who has had
the misfortune of flying on Aeroflot and lived to tell about
it can regale you with tales of surly service, ratty cabins and
terrifyingly fast approach speeds. Most of Aeroflot's transports
are rigged to be quickly converted to bomber duty and are so
heavy with metal armor they've got a stall speed on the order
of 300 knots. If there is a sober pilot in the cockpit of your
TU or AN or Ilyushin, it is only because he is under-age and
sitting on daddy's lap.
When even Aeroflot won't take U.S. dollars, that should tell
you mountains about what's going on in the world vis-à-vis
the credibility of U.S. fiat currency. This is tantamount to
being kicked out of a hotel on Mediterranean or Baltic while
you're still in your tux. (It will be time, soon enough, to ask
my friends again at Norilsk Nickel in Russia when they will switch
from US dollars to Euros. Last time we spoke on the subject,
they said they had "no immediate plans" to go Euro,
but that was six months ago, and much has happened since then).
The world should have been put on notice that when Nixon pulled
out of the Bretton Woods agreement in 1971, the Fed Note's value
as its "reserve currency" would plunge to zilch. Thirty-odd
years later, it's in the process of doing just that. With all
due respect to analyst Dennis Wheeler (not the Coeur d'Alene
Mines CEO), it's not foreign governments that are pulling the
dollar down. They're trying frantically to prop it up, because
they hold trillions of the little devils in "reserves"
and IOUs, and are watching their net worth circle the drain.How
does this segue to the Silver Valley's silver stash? Well, hang
with me here.
Our dirty little secret is that the shredding Federal Reserve
Note is the nicest advance 2004 Christmas present Greenspan and
Bush could possibly have given us.
Current and necessary corrections in the gold market notwithstanding,
thanks to the circling dollar we're enjoying metal prices across
the entire periodic table that promise a long bull run; old Spokane
Stock Exchange issues that were a drug on the market a decade
ago are seeing unprecedented interest. Long-somnambulant shares
are trading in the tens, even hundreds of thousands per day.
Folks are back in the market, promising stability and liquidity.
Silver Buckle (SBUM) traded more shares Thursday than
it averaged in a month two years ago.
Deals and projects up and down the Silver Valley continue to
ripple. New Jersey (NJMC) has a new website and the beginnings
of a new flotation circuit at its mill near the Sunshine.
Atlas Mining (ALMI) is buying gadgets for its Utah clay
deposit and there's been some sniffing around its shaft south
of Hecla's Lucky Friday. Shoshone Silver (SHSH)
is firming up its land position in the Pend Oreille/Lakeview
district. Sterling (SRLM) got the Sunshine Mine's chippy-hoist
running last week after several months of dogged problem-solving,
and former Sunshine hands Mike McLean and Jim Thomas are back
on the payroll.
(You didn't' hear it from us, but McLean's and Thomas' reappearance
suggests somebody at Sterling is taking a hard look at resuming
the Consolidated-Silver Ramp (CSR) project at Sunshine. This
would give unfettered rubber-tired access to the huge system
of faults and veins around Sunshine's old No. 10 shaft without
the hassle of rehabilitating the shaft).
I am asked, repeatedly it seems these days, for specific Silver
Valley stock picks. I don't give 'em, ain't my job. What I can
say is, look around the fault lines; if a property abuts or straddles
a fault, odds are it will perform in a silver bull market. Consider
also management: Are they sitting on their butts or are they
actively looking to explore and develop their property and improve
their reserves? Or are they waiting for somebody else to do it
for them.
A recent write-up on a property here (we won't name names) caused
quite a stir because the author suggested that gee, in another
15-20 years, it might be another Sterling. Sure. In another 100
years, if you can hold it that long, there's probably a moose
pasture on the dark side of the moon that could make you rich.
Big deal. Look for land position, both in relation to the faults
and in proximity to active operations, and for what management
is doing NOW.
Silver's in the cat-bird's seat. Say we're right, that the dollar
continues to tank. The Poor Man's Gold is a natural safe haven
for a shrinking dollar or during what many anticipate to be a
forthcoming spate of inflation. On the other hand, if the economy
improves, silver's fates as an industrial commodity with unprecedented
versatility and necessity are sealed. Add to this the fact that
silver is the least exposed of all industrial minerals to a downturn
in the current Asian (Chinese) "miracle) and you've got
a recipe for a winner.
Interesting, watching the charts this Thursday. Silver slid down
all day long; the minute the Comex closed, it shot up 19 cents
and may well have broken free of gold. What does this tell me?
It tells me that Ted Butler's silver version of GATA, a conspiracy
of short-sellers, may be alive and well on the Comex, but that
their reach does not extend to the overseas markets and exchanges.
The bastards are outnumbered, and their judgment day is nigh.
David Bond
February 26, 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
|