Silver Bull Ready to Charge
Bear markets breed bull markets in exactly the same way bull markets breed bear markets. The worse the bear, the better the bull. The better the bull, the bigger the bear.
Silver is a perfect example. It topped, much to the great surprise of all the silver cheerleaders calling for $300 silver, in April of 2011 at just short of $50 an ounce. Have all silver investors forgotten the plaintive cry of the silver cheerleaders demanding that they “sell everything you own and buy physical silver.” The Sprott Physical Silver Trust was selling silver for $63 an ounce and people were lined up waiting to throw money at them.
The silver bull market from November of 2001 until April of 2011 bred the silver bear market. Some people got it. I did and said so. The cheerleaders mocked me. Silver blew up and it was indeed a top. None of the cheerleaders who were so vocal about my stupidity in calling a top then have ever bothered saying it was a timely call. But even I had no idea of how bad the bear would be. Silver that was nudging $50 then hit $18 and change in late June of this year. That’s brutal. Silver shares got whacked even harder.
But silver bears breed silver bulls. The worse the bear, the better the bull. Ignore the market followers who have figured out that silver has been going down for 30 months and are now predicting lower prices. What were they predicting in April of 2011 at the top? Probably higher prices. They follow markets, they don’t lead them.
I wrote about what I believe will be the next silver company to be bought out back in May of this year. The company is Silver Bull Resources. (SVB-T) They were $.37 a share then with 159 million shares and since then the only thing that has changed is that they are $.34 a share and have advanced a lot. Go figure. With a cutoff grade of 25-g/t silver, you have 163 million ounces of silver in the ground. That’s just over 1 ounce per share. You are buying silver for $.34 an ounce. It cost more than that back in 2002 with silver under $5 an ounce above ground.
Silver Bull just released their PEA (Preliminary Economic Assessment) for their Sierra Mojada deposit in Coahuila, Mexico. It was very positive. The shares went down. Go figure.
The PEA shows a Capex required of $297 million to produce 5.5 million ounces of silver yearly for an 18 year mine life. But I’ve been there and with more drilling, they will expand both the mine life and resource. It really doesn’t make a world of sense to drill off a 40-year mine life, few of us will be around that long.
At $25 silver, the IRR is 29.7% pre tax. Their life of mine operating cost is about $26.54 per tonne. There will be a credit of 65 million tonnes a year for zinc. It’s all very positive.
Silver Bull will be a buy out candidate. I am certain that silver majors are eyeballing them right now. We have had our bottom, it’s been forming for 6 months and sooner or later everyone will get it. But at higher prices. When silver goes through $25, I expect the majors to crawl out of their bunkers and start throwing money at juniors. They are not replacing their resources through exploration, they have to start buying assets and the most beautiful silver queen is Silver Bull.
Silver Bull is an advertiser. I am biased. You alone are responsible for your own investment decisions. The company is very approachable. Do your own due diligence.
Silver Bull Resources