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Head for the bunkers

Bob Moriarty
July 16, 2008

Well, the US government in its infinite wisdom has put the fate of Freddie Mac and Fannie Mae in the hands of Congress. So 435 brave souls headed for a hotly-contested election this fall get to vote on the right "price" for Freddie and Fannie's shares. Why am I not reassured?

It didn't take one day for the pundits to respond, saying inflation is no longer an issue. Or at least THE issue. "We need to save these companies even if we destroy the economy." And we will. Destroy the economy. When no one is allowed to fail, failure becomes the standard.

For some reason silver companies have been trashed over the past year. Since last year most silver companies have been cut in half, or worse. I visited two wonderful silver companies a little while back. I've been gone and too busy to write about them but now is a good time, both are cheap.

About 7 weeks back, I visited Mexico and got to see two great mining companies. I have written about them before. This was my third visit to Endeavour Silver. (EDR:TSX) It was my second visit to Great Panther Resources. (GPR:TSX).

Great Panther just announced quarterly production of 436,000 ounces of silver equivalent ounces. Based on today's price of $1.14, they have a market cap of about $92.5 million. Call their yearly production 1.75 million ounces of silver equivalent. That makes them worth about $52.85 per production ounce.

Endeavour Silver announced their quarterly production of 515,634 silver ounces about a week ago. They are a pure silver producer. Based on today's price of $3.32 per share, they have a market cap of just about $162 million. I'll call their yearly production 2.06 million ounces of silver. That makes them worth about $78.65 per production ounce.

I want the reader to understand I don't want to make any comparison between the companies because there are other vital factors in determining market cap. Both companies are very well cashed up. Great Panther has about $4.5 million in cash, Endeavour Silver has about $14 million. That's very important today; hundreds of small juniors are on the ropes because they were counting on financing that suddenly dried up.

Both companies are far more developed than a year ago but the share prices have been hammered. It's crazy because both have accomplished everything they said they would. Both have increased 43-101 resources to the point it's obvious they have plans to increase capacity and both are producing silver at a profit.

I encourage readers to go to their websites and do your own due diligence. I want to point the companies out because they are so cheap relative to the market. Silver is going a lot higher and both companies intend to be mid-tier producers. I love the management of both companies.

When the crash hits, and it's coming between now and October, production stories will be the only game in town. I love these companies and I'm proud that we have been associated with them as long as we have.

Great Panther and Endeavour Silver are advertisers. We are biased.

Great Panther Resources
GPR:TSX $1.14 (July 15)
81.1 million shares
Great Panther website

Endeavour Silver
EDR:TSX $3.32 (July 15)
48.9 million shares
Endeavour Silver website

Jul 16, 2008
President: 321gold

321gold Ltd