Silver Stocks - Comparative Valuations; Weekly Report # 21

Friday, Feb 6th, 2004

This week's report lists 95 silver stocks. There are 28 silver stocks that list reserves, resources (and exploration potential.) which I calculate by using my "ounce in the ground" forumula. There are 44 explorers. There are about 23 additional "silver" stocks with incomplete information. Additions & Changes from last week are in bold.

If you are an Accredited or Sophisticated investor and want information I may find out about private placement opportunities in some of the very best silver stocks in my opinion, (This is not a solicitation for any stock, and I'm not brokering any securities) email me with PP in the subject field: jasonhommel@yahoo.com

I can't tell you exactly which silver stocks to buy several reasons. First, I'm not your broker. Second, too many people ask. Third, if I told you what I was buying as I was buying it, you'd buy, and push the price up against me.

The best I can do is tell you where I have already put my money. I offer a monthly "look at my portfolio". Try it for a month, and see if it works for you. I do not issue recommendations, and I don't list number of shares or the size of my portfolio, but I will show the top investments in my portfolio, by rank, updated monthly.

Price: $29.95/month or Price: $295.00/year
To order: http://www.goldismoney.com/available-reports.html

To read about my religious bias, see my other website, bibleprophesy.org There are two essays near the top of the page that explain why I believe the entire world will return to using gold and silver as money again before the end times. Hint, see Ezekiel 38.

If you want to receive an email notice of when and where this FREE weekly report is published, sign up at goldismoney.com Anyone who signs up will also get a FREE e-book that explains the bullish case for gold and especially silver. If you have studied the silver market at all, then the time has come that you ought to be a teacher, and you ought to explain the silver story to all who will listen. goldismoney.com is designed to help spread the word. I suggest you email the url to your address book.

Price of silver is $6.25 as of Friday, 2:25 PM West Coast US, which was used to calculate the following figures. The CAN $ / US $ conversion factor is .7553. I will use .76 for ease.

How to read the following table:
Stock Symbol that works at Yahoo! Finance (Company name) / Silver oz. "in ground"** for 1 oz. silver's worth of stock. / price change since last week relative to silver price change (and stock dilution, if any) / additional comments (EXPT is "exploration potential")

* = I own shares
** = "in ground" counts all "silver oz. in the ground" as the same, but they are NOT EQUAL. Some are more certain and others are more speculative. Some are higher grades, some are lower grades. They range from most certain to least certain such as: "proven & probable reserves," "measured, indicated, inferred resources." This single number next to each stock symbol above represents the approximate number of ounces of silver in the ground you are buying title to when you invest the equivalent of one ounce of silver by buying shares in the company at current prices. (It does not include zinc, or copper, or lead, but it does include gold at a 1:10 ratio of gold:silver.)

At goldsheetlinks.com, they add 100% of proven & probable reserves, but only 70% of measured & indicated resources, and only 50% of inferred resources. I don't do that. I count them as all the same.

To quickly "tab" down to the company you are interested in, note the symbol. Then hit "control-F" to "FIND" the symbol below.

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WEEKLY COMMENTARY (All new in this section):

Last week, I mentioned that New Hampshire was considering issuing silver coins. The proposed legislation has changed. Money Bill, HB 1342, now proposes to use U.S. Treasury minted Silver Eagles and Gold Eagles as money, so as to avoid any legal challenges by the U.S. government. See the following links:

Money bill for NH
by Rep. Dave Buhlman,
http://www.nh-inews.org/articles/04/01/040131a.html

20 Questions and Answers regarding the Money Bill, HB 1342
The Sound Money Bill HB 1342 (HB 1342-FN-A-L)
"AN ACT relating to the designation and use of silver and gold coin as media of exchange with respect to essential sovereign functions in the State of NEW HAMPSHIRE."
http://www.nh-inews.org/articles/04/01/040131aa.html

Harvey Wharfield, long time Boston radio personality, of http://veritasradio.com/ is also supporting the bill.

"HB1342 received an 11-1 Inexpedient to Legislate (ITL) decision from the House Commerce committee..."
http://www.nh-inews.org/articles/04/01/040131a2.html

For more stories on the NH bill, see
http://www.nh-inews.org/
http://www.nh-inews.org/articles/04/01/040131cc.html
http://www.nashuatelegraph.com/apps/pbcs.dll/article?AID=/20040203/NEWS02/202030362

Current status of the NH bill: This is what Henry McElroy & Harvey Wharfield wrote to me after I sent out a notice to my subscribers this week

I'm a subscriber to lemetropolecafe.com . Bill Murphy provides daily commentary on the gold and silver bullion markets. I find the commentary and research and perspective invaluable. As Bill writes, "You don't know the gold market unless you know what GATA knows." From several different research methods, those affiliated with GATA have shown that the central banks have sold about 1/2 of their gold, or over 15,000 tonnes, even though they report it as being still on the books. Bill Murphy also has an extensive network of people who continually provide him with excellent market commentary that appears not only in the daily Midas report, but there are also numerous research papers and other market commentary invaluable for gold investors.

If you are not a subscriber already to the lemetropolecafe.com web site, you owe it to yourself to sign up for a FREE TWO WEEK TRIAL, and read the daily Midas report for the next two weeks. I'm a devout reader of Bill Murphy's commentary.

I also subscribe to David Morgan's website, silver-investor.com To me, David's commentary is WORTH OVER 1000 TIMES MORE than the subscription price. The only drawback is that his letter comes out once a month. David Morgan first advertised Sterling Mining at the front page of silver-investor.com when it was at 50 cents a share, or less. Then, David wrote about Sterling when the stock closed at $1.10/share. The next day, after his newsletter came out, Sterling Mining gapped up to over $2.00/share. Recently, Sterling Mining has hit $13/share. Nice pick, David! Thank you! You don't need a lot of stocks to profit well, you need the right stocks!

I've made some really great investments, but some of the best investments I ever made was subscribing to lemetropolecafe.com and silver-investor.com . And neither of these two men, Bill or David, are paying me to say this.

The very best investment I ever made was reading the Bible, and God is not paying me to say that, either! (But you never know, I have been quite blessed lately.)

This week, GATA endorsed Ted Butler's work by offering to pay his expenses in case he has the opportunity to go see The Honorable Eliot Spitzer, Attorney General, State of New York.

At GATA's sugestion, and Ted Butler's lead, I wrote and sent the following letter:

February 3, 2004

To The Honorable Eliot Spitzer
Attorney General
State of New York
120 Broadway
New York, NY 10271
http://www.oag.state.ny.us/online_forms/email_ag.jsp

To The Honorable Eliot Spitzer:

A crime is taking place at the COMEX. A default is about to occur in both the gold markets and the silver markets. The crime is the creation of excessive and fraudulent paper promises to deliver gold and silver that does not exist. This is a crime of fraud that will hurt market participants as follows: Imagine if you ordered silver bullion from a local coin dealer, and sent in your money, waiting a week for your bullion to arrive, and then, during that week you watch as silver rises from $5-$10/oz. Imagine your happiness as you realize you made the correct investment decision, only, then imagine if you were told that they don't have the silver for you because they have run out. Then, imagine as your money was returned to you, when silver was $10/oz. Your money was not refunded, but you just lost half your money in the form of silver bullion, and then, you'd not be able to buy silver anywhere, as the market seizes up, and really takes off in price from $10/oz. to $50/oz. or higher, due to the default!!!

That is the exact situation that I believe will hit the entire silver market due to the un-backed sales of futures contracts. Millions of silver investors who trusted the integrity of the markets in the U.S. will be devastated because these un-backed promises were allowed to be made, unchecked, and unregulated by the regulation authorities who are either stupid or have been bribed and paid off, or threatened with harm if they did their jobs.

Last year, I wrote to Michael Gorham, Director of Market Oversight
U.S. CFTC (Commodity futures trading commission) and to Neal Wolkoff, Executive Vice President and Chief Operating Officer New York Mercantile Exchange. Their writings reflect that they recognize the problem, and yet, they refused to act. ...

It is time to end the criminal activity, and end the lack of action by the market regulators that allow this crime to go unpunished.

According to the Coin Act of 1792, it was a crime worthy of death to debase the coinage.

Penalty of Death for de-basing the coins. Section 19. And be it further enacted, That if any of the gold or silver coins which shall be struck or coined at the said mint shall be debased or made worse as to the proportion of the fine gold or fine silver therein contained, or shall be of less weight or value than the same out to be pursuant to the directions of this act, through the default or with the connivance of any of the officers or persons who shall be employed at the said mint, for the purpose of profit or gain, or otherwise with a fraudulent intent, and if any of the said officers or persons shall embezzle any of the metals which shall at any time be committed to their charge for the purpose of being coined, or any of the coins which shall be struck or coined at the said mint, every such officer or person who shall commit any or either of the said offenses, shall be deemed guilty of felony, and shall suffer death.

Therefore, surely, it is a crime to allow the continuation of the debasement of our coinage as is occuring through the Federal Reserve System of paper money. We must do something to stop the crime of endless paper promises that interfere with the free market process that stimulate competition that produces an efficient economy and prosperity for all. Such endless paper promises, whether futures contracts, or paper dollars, wreck havoc in our entire economy.

I am acting to stop the fraud, by using the freedom of the press. I write articles on the internet about the fraud and I tell people to stop being deceived by the paper promises. Hundreds of people have written to me to thank me for writing so clearly and for explaining the fraud that is taking place.

Four of my best and most appropriate articles to help you present your case against those who are manipulating the markets in gold and silver, are the following:

Rising Gold Prices will Help the Economy

Letter To Authorities of Silver Markets - 06 January 2003
http://www.gold-eagle.com/editorials_03/hommel010603.html

Response by the CFTC to Mr. Hommel's "Open Letter To the Authorities of the Silver Markets"

The Moral Failures of the Paper Longs

Unlike myself, who, at the present time, can only write, and promote my writings, a man in your position has a greater responsibility to do more to help the people of the United States of America, and the whole world, who is being deceived and defrauded.

You can prosecute and lay criminal charges of conspiracy, racketeering, market manipulation, fraud, and perhaps more, and put away the criminals for good.

May your actions be a preview of this prophecy about the whore who leads the nations astray, and how she is ultimately destroyed by the strength of the kings of the nations.

Rev 17:16 And the ten horns which thou sawest upon the beast, these shall hate the whore, and shall make her desolate and naked, and shall eat her flesh, and burn her with fire.

I pray to God that you will do the right thing, and that you will not be intimidated by the evil. I pray that you will not fear man, nor allow your self to be blackmailed or scared away from doing the right thing. May God grant you the courage, the wisdom, and the boldness, to end the evil of fraud that is plaguing our land and destroying our economy.

Sincerely,

Jason Hommel
goldismoney.com
bibleprophesy.org

cc
James E. Newsome
Chairman
Three Lafayette Centre
1155 21st Street, NW
Washington DC 20581
jnewsome@cftc.gov

--------------------------

We can also email:

Vincent Viola
Chairman
Vviola@nymex.com

Michael Steinhause
Vice-Chairman
Msteinhause@nymex.com

Christopher Bowen
General Counsel
Cbowen@nymex.com

Thomas Lasala
VP - Chief Regulatory Officer
tlasalla@nymex.com

What is so different between silver and silver stocks? Since I will be speaking in general here, when I say "silver", I mean the precious metals. Here's what is different: There is no CEO of silver. Silver issues no press releases. There is no earnings report for silver. No annual reports for silver. No quarterly reports for silver. No SEC filings for silver. There is no insider information for silver. It is impossible for anyone to have any such thing as "insider information" for a precious metal. There is only the people who do their market research and homework, and the people who do not.

The following dealers have, or regularly keep, over 100,000 oz. silver bullion in inventory: Minimum order: 100 oz. gold or 5000. oz. silver: (These are not places to call for small retail orders. For smaller orders, call Greg Westgaard, 1-800-328-1860 Ext. 8889, and tell him Jason sent you.)

If there are any silver bullion dealers who have at least $500,000 worth of silver bullion in inventory on hand, please contact me jasonhommel@yahoo.com , and I will give you a FREE AD, like the ones above, in each week's silver stock report.

The easiest way to buy Comex Silver is through a precious metals brokerage firm such as HSBC bank, or http://www.fidelitrade.com/ that charges around 1% commission, plus delivery fees of about 2-3% depending on how far to ship. Or you could open a commodities trading account with any of the major brokerage houses who are most likely the bullion banks, and take delivery of your contract. There are several problems with this method. First, is the most obvious. These are the paper contracts that are controlling and suppressing the price, that I believe must one day default. Second, the bullion banks, since they are the ones who are likely short silver, will try their hardest to talk you out of placing an order. I have actually had several bullion banks turn me down, and not open a commodities trading account for me when they heard I was going to take delivery of several futures contracts! Their hypocritical excuses are amazing! They will say on one hand that their comissions are too low, and thus, it's not worth their time to open the account for you. And then, they will turn around and also say that you don't want to order silver bullion because the commissions will kill you! Unbelievable hypocrites those shorts! They will also try to scare you with "assay fees" that will be assessed if you try to return 1000 oz. bars to the exchange! But they won't tell you what those fees may cost! I've heard the assay fee is FREE if you use Brinks in LA!

General Commentary on Silver (slightly modified from last week):

Silver stocks were up 314% for 2003! Eighty silver stocks on my list are up, on average, 314% for the year, from Jan 1, 2003 to Dec. 31, 2003. I believe that beats any sector, and any mutual fund in the world for 2003. Anyone know of a better sector or fund?

My 2004-2009 price predictions for gold and silver:
2004: $595/oz. gold, 50:1 ratio = $12/oz. silver
2005: $1011/oz. gold, 30:1 ratio = $34/oz. silver
2006: $1719/oz. gold, 10:1 ratio = $172/oz. silver
2007: $2923/oz. gold, 5:1 ratio = $ 585/oz. silver
2008: $4,969/oz. gold, 1:1 ratio = $4969/oz. silver
2009: $8448/oz. gold, 5:1 ratio = $1698/oz. silver
2010+: infinity dollars/oz. gold, infinity dollars/oz. silver.

I calculate the gold price rise by guessing that by 2009, M3 will have a "gold-value" like it did in 1980, which is to say, M3 was worth 2 Billion oz. of gold or less. It also assumes M3 will about triple in that time. These figures are conservative, because I see no reason that M3 should be valued more than the gold the U.S. actually holds, which is a mere 261 million oz., not billion. Today, the M3 value is $8870 billion / $425/oz. = 19 billion oz. of gold M3 could buy in theory. The silver:gold ratio is also a very, very vague guess, reflective of monetary demand chasing silver, which is more scarce than gold in above ground, refined form. I have no idea when the ratio of 15:1 will be exceeded, I'm just totally guessing. I suppose it could happen this year or next month for all I know. Of course my real price targets are infinity dollars per oz. for both gold and silver when all is said and done, I just don't know how long that will take, nor what year it will be. But my point in producing the price predictions is to show my bullishness for silver and gold.

Let me say how important it is for silver stock investors to own physical silver. There is $334 million dollars worth of silver in the registered category available for delivery at the COMEX. The 59 silver stocks on my list, for which I have information available to calculate market caps, add up to $7090 million as of Dec. 5th, 2003. If silver stock investors move 5% of their silver stock holding to physical silver in the next few weeks, that would be $350 million dollars worth of physical silver, and thus, the silver price would probably hit $10-20/oz. within a few days. And if silver stock investors try to move 20% into physical silver, the silver demand will end the COMEX manipulation tomorrow. We don't need anyone other than ourselves to make "the big breakout" happen at this point.

I wrote an article predicting that Silver Companies will buy silver, and urging Silver Companies to buy silver with their cash, to use silver as money, and sell silver as needed for expenses. See http://news.goldseek.com/GoldIsMoney/1069879327.php

That article is now having an effect! It is being discussed by several large "cash rich" silver companies, who are seriously considering the idea of holding their cash in the form of silver.

A great overview on silver: Douglas Kanarowski's 78 Approaching Forces For Higher Silver Prices

See the 600 year silver chart to see how undervalued silver really is:
http://goldinfo.net/silver600.html

Look at the summary of the world silver survey by GFMS Limited on behalf of The Silver Institute :
http://www.gfms.co.uk/Publications%20Samples/WSS03-summary.pdf

Note, there is virtually no monetary demand. Note, the 2002 mine production (585 mil oz.) is greatly exceeded by industrial, photo, and jewelry demand. (838 mil oz.). Note the chart on page five, "Supply from above-ground stocks".

The difference between mine supply and industrial demand was met by a combination of three factors: 1. Government selling, 2. Private selling, 3. Recycling

U.S. government selling is ending, as their stocks have run out, or will run out. This factor will reverse, because the U.S. government will need silver to continue their coin program, and/or need silver when they wake up and decide they need to replenish their strategic stockpile for domestic security. Silver is a war material. China's selling of silver will also likely turn into buying, as China will need silver for continued industrial development, or when they also lose faith in the U.S. dollar.

Private selling has been rapidly shrinking and is now almost ended, and should turn into buying, and become monetary demand. Monetary demand is everything in the silver supply / demand situation. It's not now. Now, it's nothing. But it will become something incredible, because the dollar is dying.

The following is a "must read": Ted Butler's best ever explanation of how silver is manipulated lower than it should be.
http://www.investmentrarities.com/11-04-03.html

Sign the silver petition to stop the manipulation at the COMEX:
http://www.PetitionOnline.com/comex/

Ted correctly points out that a lower price creates excessive demand from consumers. However, Ted Butler does not point out, and neglects to mention, that a perpetually low price also creates lack of demand from investors who are "trend investors".

I think most silver experts over-analyze all the supply and demand factors of the silver market. No factor is more important than monetary demand. The force of photographic demand is like a light breeze compared to the hurricane or tornado of monetary demand. Monetary demand is everything.

Consider the gold market for a moment: Even short selling at the COMEX is nothing compared to monetary demand. The short position most certainly helps to depress the price of gold as the short position is growing larger. However, it adds fuel to the fire if there is short covering, and thus, it can boost the gold price later. But the commercial short position on the COMEX is next to nothing compared to the non-reported "over the counter" trading that is done that does not appear on the COMEX.

(Numbers in metric tonnes, 32,152 oz. per tonne.)

870 tonnes -- the paper position at the COMEX, 280,000 contracts for 100 oz. each.
5,000 tonnes -- the official number admitted that the central banks have sold.
15,000 tonnes -- the number GATA research shows that central banks have sold / or leased.
30,000 tonnes -- the number of official central bank gold, minus either the 5000 or 15,000 tonnes.
145,000 tonnes -- all the gold mined in the history of the world.
2,600 tonnes -- annual mine supply
4,000 tonnes -- annual demand

And all of that is nothing compared to the amount of dollars out there that exist that could buy gold. $20 trillion bonds, $9 trillion M3 = $29 Trillion. A mere 1% is $290 Billion, which, at $500 /oz. is a massive demand of 18,039 tonnes. Do you understand what that means? That means that far, far less than 1% of dollars, in either bonds or M3 can buy gold, because there simply is not that much gold available.

Long before 1% of U.S. paper dollars tries to buy gold, gold will be going up well over $1000/oz., and silver will be headed up over $50/oz.

To scare away investors--that is the entire reason gold and silver are manipulated in the first place. Only the trend investors can be deceived. The problem is that nearly everyone is a trend investor. So few investors understand value. If people knew the facts and used their brains, the available above-ground refined silver would be gone by tomorrow, and the price would be well over $20-50/oz. But don't trust me, follow the urls and check the numbers:

1,000,000,000,000: 1 Trillion dollars
1,000,000,000: 1 Billion dollars
1,000,000: 1 Million dollars

$33,000,000,000,000: World bond market yr end, '01: http://tinyurl.com/vr7u
$20,200,000,000,000: U.S. bond market, yr end, '02: http://tinyurl.com/vr7g
$11,700,000,000,000: U.S. stock market, yr end, '02: http://tinyurl.com/vr7g
$11,038,000,000,000: U.S. annual GDP, 3rd q.'03 est. http://tinyurl.com/vr9y
$8,879,000,000,000: M3 (money in the banks) Nov. '03 http://tinyurl.com/vra0
$7,001,312,247,818: US debt, 12-31-'03 http://tinyurl.com/bbp
$2,212,000,000,000: U.S. annual budget 2003
$1,860,000,000,000: World gold, 145,000 T @ $400/oz. http://tinyurl.com/vrcc
     $554,995,097,146: U.S. budget deficit, ending fiscal year, 09/30/'03 http://tinyurl.com/bbp
   $274,000,000,000: Market Cap of Microsoft http://tinyurl.com/vrcn
   $180,000,000,000: debt of Ford Motor Co. http://tinyurl.com/vrd1
   $104,400,000,000: US gold, 261 mil oz., @ $400/oz. http://tinyurl.com/vsr9
   $100,000,000,000: all the world's gold stocks (estimated?)
       $7,090,000,000: all the world's silver stocks (59 of them on this list, as of Dec. 5th, 2003)
   $3 24,000,000: 52 mil oz. of registered COMEX silver @ $6.23/oz. http://tinyurl.com/vrcw

So, what do all those stastistics mean?

For a while I was using M3 and dividing that by the US gold (261 million ounces), which implies the us dollar is 84 times more valuable than it should be, and that gold should hit $34,000/oz. after the fraud is destroyed. Today, I realize I need to add in the Bond market, because bonds are an asset class designed to siphon away and replace real money, which is to say, gold. This gives a price of about $111,111/oz. for gold. At $ 430/oz, this implies that US bonds and paper currency is 258 times more overvalued than gold.

Gold is overvalued relative to silver, because at current prices, it takes 66 ounces of silver to buy 1 ounce of gold. Historically, this ratio was 15 or 16. Given the silver shortage, this ratio will hit 10:1 or 5:1, or even 1:1. Thus, gold is perhaps 66 times more overvalued than silver.

Silver is overvalued relative to certain select silver stocks, perhaps by a factor of 3 or 10 or 20 to one.

Thus, if you multiply all those numbers, 258 x 66 x 10, You will see that bonds and currency are overvalued relative to select silver stocks by a factor of 170,000 to one. In other words, if silver stocks reach their true value, and paper currency disappears as it always does, then you might expect certain silver stocks to go up in relative value by a factor of 170,000 times more than they are worth today. By that time, you should definitely sell the silver stocks, and buy gold.

Can silver stocks really appreciate so much? Is there historical evidence for such a crazy thing? Yes.

See http://www.sterlingmining.com/old.html
Excerpt:
"CDE rose from penny stock status (.02 in 1967) to an NYSE-listed, $60 per share stock in 1980. In fact, the average share on the Spokane Stock Exchange rose in value nearly 16000% (yes, sixteen THOUSAND percent), as America could not get enough of silver and silver stocks."

CDE rose by a factor of 3000, or 300,000%, and by 1980, the metals boom was stopped short, and paper money's death was postponed. If paper money dies a death that lasts a generation world-wide, then even greater gains should have been expected.

For this reason, a wise silver stock investor should NEVER sell silver stocks for paper cash. A wise silver stock investor who looks for value would never sell a fairly valued silver stock for an overvalued silver stock that traded for hundreds of thousands of times more value than it should be. Likewise, there is no excuse for a silver stock investor to have any cash or money market or bonds in his portfolio for any reasonable length of time, except for when selling one silver stock to raise the cash for another silver stock, or for when you need to raise the cash to buy silver, or a private placement in another silver stock.

So, if you want some fairly liquid alternatives to cash, in case you don't know what other silver stocks to buy at the time, here they are:
1. Buy silver. You can hold silver in an IRA.
2. Buy CEF. Central Fund of Canada, ticker symbol CEF. It's gold/silver bullion fund. It has 50 oz. of silver for every 1 oz. of gold. The fund is fairly liquid, you can buy it as easily as any other stock, and is a good cash substitute. Unfortunately, given the current ratio, about 60% or more of the value is in gold.
3. Buy a fairly large cap silver stock, with fairly large volume, that is still fairly cheap on the list. SSRI is probably the best candidate, the next might be PAAS.

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The sheer stupidity of big money not recognizing the value of the world's remaining silver is utterly shocking to the rational mind. Clearly, bond holders are utterly deceived, and totally unaware of the situation. All my readers should understand and know that bonds were originally invented to suck the capital and money (gold and silver) away from the people. Bonds today are a paper promise to repay paper. What a con game! Are bond holders conservative and safe? No, they are fools! There is nothing safe about holding a paper promise to receive more paper when we have been experiencing hyperinflation for the past two and a half years!

See my prior essay, " Inflation & Deflation During Hyperinflation "

And the fund investors who buy paper silver futures contracts instead of real silver are a very odd bunch of fools, for they should realize that nobody can deliver the 800+ million ounces of silver promised in the paper contracts and options that does not exist. It's like the paper longs are betting on the bank run happening, but they all are making sure they get at the end of the long line. Instead, they could go front and center, where there is an open window available where you can go and get physical silver, and nobody is there. Idiots! If you know a bank run is going to happen, and you are actually willing to bet on it, then go and withdraw your money before it is too late! Don't bet on it happening, which, if it does happen, your contracts will be defaulted on! Amazingly blind idiots. Wake up!

See also my prior essay, " The Moral Failures of the Paper Longs "

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How bullish am I on silver? Here's an interesting way to put it: "75 times infinity" dollars per ounce.

I believe the dollar will eventually be destroyed, likely within my lifetime, hence the "infinity" part. I believe the ratio of silver to gold may be equal during a spike, when the market realizes that above-ground refined silver is more rare than gold. Thus, silver may outperform gold by a factor of 75 times better. Currently, the ratio is 75 ounces of silver can buy one ounce of gold or 75:1.

I may end up selling silver for gold, some at the 10:1 silver to gold ratio, some more at 5:1, and I would sell any silver remaining at a 1:1 ratio, that we may hit during a supply/demand crunch during a paper money collapse.

How we can tell if silver is leading gold, or if gold is leading silver? IE, which is going up more, faster than the other? The way you can tell is by looking at the ratio. If the silver:gold ratio is going up (say, from 75:1 to 80:1), then gold is moving up faster (because it takes 5 more silver oz. to buy an oz. of gold. If the ratio is going down (from 75:1 to 70:1), then silver is moving up faster. So, keep an eye on the ratio.

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For a list of bullion dealers:
http://www.goldismoney.com/buy-gold.html

For a list of Brokers that handle Canadian issues and/or pink sheets:
http://www.bibleprophesy.org/SilverStockExtra.html

To track the 150 ticker symbols of the 90 stocks on this list at yahoo: (Updated on Jan 30th)
http://www.bibleprophesy.org/SilverStockExtra.html

To learn All about Canadian law, 43-101, about reserves and resources:
http://www.bcsc.bc.ca/Publications/mineral_projects_sept03.pdf

A good website that hosts posting boards for many of the smaller canadian stocks is stockhouse.com
Click on "Bullboards".
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This is a list of primary silver stocks.

I count a company's ounces of gold as 10 oz of silver. Why? Because I have a very strong positive bias in favor of silver over gold.

Given my bias in favor of much, much higher silver prices, then, to me, the grades of silver are far less important than buying more oz. in the ground. More oz. in the ground at a lower cost is the most important consideration for me.

My method is simple. Cost per ounce in the ground. How much do you get (silver reserve totals), and how much does it cost (market cap)? The cost is the market cap divided by the silver reserve totals. Cheaper is better. Buy low, sell high.

Disclaimers, Warnings, and Advice: I have gathered the information below over the course of several months. I believe it is accurate to the best of my ability. I may have made mistakes. I probably did. I'm human. I have collected the information from public sources such as company web sites and public information found at yahoo.com to get the stock prices. This report in no way guarantees the accuracy of the information below, since the information may change at any time. The number of outstanding shares can change as a company engages in new share issues to raise more capital through private placements, or if outstanding warrants (and options) are exercised and converted into shares, or if shares are bought back. Shares can be consolidated, or split. The number of ounces of silver in the ground can also change, as these are often only estimates. The number can also change up or down, depending on drilling results.

This report is not investment advice. This report contains information that may or may not be up to date, and may be inaccurate. I urge you to contact the company and do your own research to verify the information contained in this report.

This report is not an offer to buy or sell any securities. I am not a broker. Only your broker can buy or sell securities for you.

I urge you to consult with your investment advisor to determine whether these kinds of investments are right for you.

I also caution you to be aware of your investment advisor's advice, they are sometimes paid to push things like mutual funds, bonds and other securities that may not be in your best interest to buy. Some investment houses are short physical metal, and thus, they may attempt to strongly discourage you from buying precious metal or precious metals investments. I believe that the propaganda machine in support of frauds such as bonds and the dollar is so strong, that they may even believe what they say when they give bad advice to avoid the safety and protection of precious metals. It is most likely that they simply do not understand the precious metals market as well as you do.

All total estimates of "ounces in the ground" can vary widely. There are "proven and probable reserves" which are the highest category of certainty which is obtained through many drill holes, and then at the least accurate, there are "inferred resources" which are hardest to estimate. Additionally, every miner always has "more silver properties that need to be explored, which probably contain more silver". For the purposes of this report, I have added all those numbers together. It is believed that all these "ounce in the ground" estimates can be profitably mined at $5-6 per ounce silver, or lower. Thus, I believe that when silver trades for $15/oz. or above, that all of these ounces can be mined at a substantial profit.

I may be wrong. (I probably make mistakes in every article, and there have been updates and corrections made each week, especially as prices change.)

Mining is a risky business. You need to be willing to sustain a total loss of your investment for various unforeseen accidents. Silver stock companies can do stupid things to shareholders such as take on debt, or issue more stock at too low prices which reduces the percentage of the company you may own (dilution). Yet, they need to issue shares to raise capital for drilling, and then an even bigger dilution to build a working mine. They may sell YOUR silver too cheaply, or worse, hedge the price of YOUR silver just as it begins to go up if they lock in a price which then proves to be too low if the dollar is destroyed. Mining is a risky business as estimates of assets in the ground can change. There is political risk and environmental risk. They can't franchise the business, are stuck in one location, are subject to government confiscation, or taxes, or union wage negotiations, and corporate looting.

Do your own research. Be responsible for your own investment decisions. Again, please, before investing in a mining company, call up the company, and speak either with the CEO or the Investor Relations contact person.

So, at the very least, check the company web site, read the annual reports, check my numbers, check my math, and email the company. That's what they are there for, to answer your questions, and to speak about the opportunity of the company. Don't trust everything you read over the internet. I am a biased source. I own silver mining stocks. And I'm not a broker, nor an investment advisor. I'm just a private investor trying to make sense of this crazy world, and sharing my information and thoughts on silver companies.

Surely, there are scammers in the mining industry in the past, and there will be scammers in the future. Remember the fraud of Bre-X. The new 43-101 compliance laws put in place after Bre-X will not prevent a "certified" geologist from lying if he feels lying will create a better payoff. The Bible warns, "trust no man", yet at the same time advises us to "cast our bread upon the waters", and to not issue "false allegations" against others. Physical gold and silver provide the "payment in full" as long as the coins or bars themselves are genuine and not fake.

This report may be copied, and transmitted by other people, and may become outdated by the time it reaches you.

I can't tell you how you should invest your money, of course. The reason is that I don't know how convinced you are of the silver bull market, nor do I know how soon you will be needing the money back, so I don't know how long you can wait to see results, nor do I know how much liquidity you need. Nor do I know the size of the money you have to invest. It is very hard to invest large quantities of money in a small market cap stock.

That being said, my investment strategy seems to be working for me, so far. And so, here is how I have valued the following silver companies to make my own investment decisions.

(Market cap is always converted to US dollars and denominated in US dollars because I divide by ounces of silver, which are also denominated in dollars)

(These first three companies, BHP, GMBXF.PK, and BVN produce a lot of silver, but are way to expensive to buy for the silver exposure for your portfolio.)

BHP Billiton Ltd (BHP)
http://www.bhpbilliton.com/
--'produces 40 mil oz. silver annually from one mine'
Additional comments: unfortunately, BHP has a 53 Billion market cap, so we can't buy BHP for the silver exposure. IE, $53 Billion / oh, say, 1000 million?????= $53/oz.

Dear BHP: By all means, keep mining the silver if you want the silver exposure, and want to be in the silver business. But don't sell the silver. Keep it. Let the profits of your entire company accrue as an increasing physical supply of physical silver. In fact, do as Buffett did, and buy more silver if you can. It would be infinitely easier for you to buy silver from yourself than it would be to buy 40 million ounces of silver from the COMEX, which, today, might be impossible.

Grupo Mexico SA de CV (GMBXF.PK)
http://www.gmexico.com/indexi.html
651,646,640 shares (2002 annual report)
@ share price $3.20
$2085 mil MC
"Grupo Mexico ranks as the world's third largest copper producer (copper at $1.12), fourth largest producer of silver and fifth largest producer of zinc."
They produced 28.2 million oz. of silver, worth $129 million, in 2002. (P. 5, annual report.)
Total value of produced metals: $2527 milllion. (but the company lost money in 2002). They mainly produce copper, 900,000 tons worth $1.5 billion in 2002. Thus, silver, at 2002 prices, is only 5% of their production value. Silver is a by-product for them, not a main product.
I don't have silver reserve figures, nor do I see any need to find them or add them, since they are not a primary silver producer, and I don't think anybody would be buying them for the "silver exposure".
If we assume 280 mil oz. of silver (ten years reserve for production), then we still don't have anything exciting for the silver alone.
$2085 mil MC / 280 = $7.45/oz. cost.

Compania de Minas Buenaventura SA (BVN)
Minas Buenaventura
NYSE:BVN
- Peru´s largest publicly traded precious metals company
--produces over 10Moz of silver per year
--looks way too expensive for the silver alone: 3.6 Billion market cap.
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HL (HECLA MINING CO)
http://hecla-mining.com/
hmc-info@hecla-mining.com (208) 769-4100
110 mil shares
@ $8.25 share
$911 million Market Cap (MC)
near zero debt, cash: $125 mil (Nov. 2003)
(est. 2003 production 9 mil oz. silver)
(the La Camorra gold mine, 412,000 oz gold.) ... (x 350/5 = 28 mil silver equivalent oz.)
San Sebastian silver mine, (proven & probably reserves) 8.7 mil (produced 3 mil)
the Greens Creek silver mine (proven & probably reserves) 31 mil (produced 3 mil) Hecla owns just under 30% of it!
the Lucky Friday mine (proven & probably reserves) 14 mil. (produced 2 mil)
Total silver = 32 million oz.
Plus 412,000 oz. gold x 10 = 4.1 mil oz silver equiv.
Total silver equiv. reserves = 36 mil oz.
(Since my method values silver in the ground as a key asset, I should also value the cash as a "silver asset" which will be "marked to market" if silver goes up, and cash goes down. If HL is smart, they should be able to turn the cash into increased "silver exposure" either through buying silver properties, silver equities, or physical silver.)
($125 million cash / $6.23/oz = 20 mil "silver equiv" oz.)
20 + 36 = 56 mil oz.
$911 mil MC / 56 mil "oz." = $16.26/oz.
You get "approx" .38 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments: HL has been holding large amounts of cash. The "silver value" of that cash has been declining rapidly as silver prices move up. They have lost several million ounces worth of silver by holding dollars, instead of silver. A silver miner has more reason to hold their money in the form of silver than any other corporate entity.

Yes, it's easy to be right "in hindsight". But I'm not calling this from hindsight. I had the foresight to call it right, and time has proven me correct. 20 weeks ago, in my very first silver report, I wrote:

Today, HL still holds all that 113 million in cash, and even more: they are up to 125 million in cash. They should have been holding it in the form of silver bullion. The difference recently was $6.46 - $5.25 = $1.21. $1.21/$5.25 = 23%.   17 weeks ago, they could have bought 21.5 million oz. of silver for their $113 million in cash. Today, they can only buy 17.5 million oz. worth of silver for $113 million. Therefore, they have LOST 21.5 mil - 17.5 mil = 4 million oz. equivalent worth of silver by holding dollars instead of silver bullion. At $6.46/oz., that mistake is like a $26 million dollar loss!

HL has more oz. than listed in the "proven & probable" category used in this calculation. Vein mining makes reserve calculations difficult, and HL has rarely had more than about a 3-4 year picture of reserves ahead of them in 100 years of production.

I have been counting their papar cash as if it could be silver, but it still does not help boost their valuation much. They are still the most expensive company on the list. But if HL bought 19 mil oz. of physical silver, they might break the back of the silver market, and significantly boost their own profitability.

Another way to check the value of HL is too look at profit, since they are active miners. They mine 9 million ounces of silver a year. What's the profit on that today? Very little. They had a loss in the 3rd quarter, 2003. Total "cash costs" are $3.68/oz. (It's that low because that figure includes gold credits!) Profit at $ 6.30/oz. is $2.62/oz x 9 mil oz. annual production = $23.6 million annual profit. That gives a PE of 35. That's a very high P/E, which means HL is very expensive.

Why does HL hold $125 million dollars worth of cash at the beginning of a bull market in silver? It makes no sense to me. Cash is trash in inflation. They should be buying physical silver, or, use that cash to buy other silver resources in the ground, like the undervalued silver stocks.

OK, here's another way to get a "guesstimate" of HL's reserves. I will assume they have enough silver to last another 20 years of mining. That's a fair enough time for a mine plan I suppose. I suppose they could run out of silver sooner, or later. They produce 9 mil oz. in a year. 9 mil oz. x 20 years = 180 mil oz.

$911 mil MC / 180 mil oz. = $5.06/oz. that you'd pay for the silver in the ground whey buying HL. HL is still expensive, no matter how I run the numbers.

And in 4 months, nobody has been able to rationally justify this high valuation to me, nobody from the company, and not a single email from any investor. I believe that this stock trades on market perception, reputation, and momentum. As for me, I'm not buying such intangibles. I'm buying silver in the ground, real assets, or exploration potential.

HL was downgraded Jan 6th by CIBC Wrld Mkts from Sector Perform to Sector Underperform http://biz.yahoo.com/c/20040106/d.html?hl

CDE (COEUR D'ALENE)
http://www.coeur.com
coeurir@coeur.com (208) 769-8155 or (800) 624-2824
210 mil shares (Issued 32 mil new shares late Oct. 2003)
@ share price $6.04
$1268 mil MC
cash $38 mil (I think this is an outdated cash figure)
San Bartolome (Bolivia) reserves 146 mil silver
Silver Valley Silver reserves 32 mil silver
Rochester reserves 43 mil silver
Cerro Bayo reserves 3.7 mil silver
Total: 224.7 mil silver
(to Produce 14.6 mil oz. silver in 2003)
$1268 mil MC / 224.7 mil oz = $5.64/oz.
You get "approx" 1.10 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments: A few weeks ago, CDE announded their intention to try and raise $150 million in the capital markets by issuing shares. http://biz.yahoo.com/prnews/031211/sfth014_1.html

The first week of January, CDE announced a deal for $160 million in convertable bonds!   Beware of debt!

CDE continued to lose money in third quarter 2003, a loss of 10 cents/share, and they realized low prices for silver sales, $4.77. I believe they have hedged their gold production at low prices.

Again, their listing of ounces is in the "reserves" category (more certain) not the "resources" category, which is less certain. They may have "resources" but like HL and Industrias Penoles, they give no estimates.

IPOAF.PK (INDUSTL PENOLES)
http://www.penoles.com.mx
397.5 mil shares outstanding (2002 annual, unchanged since 2001)
@ $4.15/share
$1,649 mil MC
419 proven and probable reserves of silver (from 2002 annual report on website)
$1,649 mil MC / 419 oz. silver = $3.93/oz.
You get "approx" 1.58 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments: Industrias Penoles is the world's top producer of refined silver. They actually derrive more revenue from silver than any other source. But they lost money in 2002.

78.5 million oz. silver refined by the metals division in 2002, and 1 mil oz. gold.
They probably refine almost all the silver that comes out of Mexico.
They probably produce about 34 mil oz. of silver from their mines annually, and they have expansion plans.

I think Industrias Penoles should stop mining silver if they are doing it at a loss. Basic econ 101, right? Don't engage in uneconomical activity. Perhaps they have a small gain this year with improved prices? Regardless, they should realize that silver in the ground is an asset, and also that silver in the hand is an asset. If they do make a profit, I hope they decide to keep the form of their profits in silver, or at least, pay out a dividend in silver.

I've heard this stock is tightly held, most is family owned.

Their oz. numbers are "proven & probable reserves", which is much more certain than most of the others which are mostly "inferred and indicated resources." They undoubtedly have "inferred and indicated resources" in addition to the "proven & probable reserves," I just could not find any info on that at the website or in the annual report.

ECU.V ECUXF.PK ( ECU SILVER MINI)
http://www.ecu.qc.ca/indexen.html
ecu@ecu.qc.ca (819) 797-1210
fully diluted shares = 103.3 million (6 January 2003)
@ share price $.28 Cdn x .76 US/Cdn = $.21
$22 mil MC
http://www.ecu.qc.ca/reservesen.html
See the url above for the numbers from the company's website, which are:
Proven & Probable & Possible: 7.6 mil oz silver, 93,000 gold. = 8.5 million "silver equiv" using my method of counting gold as 10:1
"Potential" total: 21.2 mil oz silver, 221,000 oz. gold.
According to my valuation method, that's 2.2 mil oz. of "silver equiv" for the gold, plus the 21.2 mil oz. silver, for a total of 23.4 mil oz.
$22 mil MC / 8.5 mil oz. silver equiv. = $2.64/oz.
$22 mil MC / 23.4 mil oz. silver equiv. = $.94/oz. --exploration potential
You get "approx" 2.3 ounces in the ground for 1 oz. silver's worth of stock.
Exploration potential: 6.6

Additional comments: See also regarding ECU's exploration potential: http://www.ecu.qc.ca/indexen.html
ECU recently recovered title to properties that were in dispute. See: http://tinyurl.com/x691

* CFTN.PK ( CLIFTON MINING) (I own shares)
http://www.cliftonmining.com/
clifton@cliftonmining.com 801-756-1414   (303) 642-0659 Ken Friedman
45 mil shares fully diluted (Oct. 2003)
@ $2.25/share US
$101 mil MC
http://www.cliftonmining.com/wsreview.htm --source of 100 mil oz. resources est.
http://www.cliftonmining.com/resource.htm
From: http://www.siliconinvestor.com/stocktalk/subject.gsp?subjectid=13531
"A previous geologist has talked about a possible resource of 1 billion oz. of silver, and 5 million oz. of gold."
100 mil oz. silver
+500,000 oz. gold x 10 = 5 mil oz. silver equiv.
= 105 mil oz. silver.
up to 1000 mil oz. silver "exploration potential".

My problem is how to quantify that. First, there is the range of potential silver resources. Second, there is the range of potential ownership, which is highly variable, and not subject to the entire property, nor necessarily subject to spending by Dumont, but subject mostly to Dumont doing a positive feasibility study on each of many properties . At the extreme ranges, the values are:
40% to 100% of 105 = 42 - 105 million oz.
40% to 100% of 1000 = 400 - 1000 mil oz. "exploration potential"
$101 mil MC / 42 mil oz. = $2.41/oz.
$101 mil MC / 1000 mil oz. = $.10/oz.
You get "approx" 2.59 ounces in the ground for 1 oz. silver.
Exploration Potential: 61

Additional comments: Note the "exploration potential" is very large.

For more info on what's going on with Clifton, see http://www.dumontnickel.com , JV partner.

To see a video interview:
http://www.wallstreetreporter.com/profiles/CliftonMining.html

Clifton has 25% ownership of a biotech firm that makes a colloidal silver.

The biotech firm has a patent on a "super" colloidal silver solution made with 10,000 volts that adds oxygen that gives it more powerful antibacterial properties, and is safer since it uses less silver, which would prevent "blue skin" argyria. Normal colloidal silver that you can make at home with 30 volts works to kill bacteria by disrupting the oxygen metabolism of the cell wall, killing bacteria with oxygen. The market for safe antibiotics is in the multi Billions of dollars.

I own shares of CFTN.PK.

SIL ( APEX SILVER)
http://www.apexsilver.com/
information@apexsilver.com (303) 839-5060
45,023,760 ordinary shares outstanding. (Jan 30th press release)
@ share price $21.28/share
$957 mil MC
cash on hand: $205.6 million after Jan 30th share offering.
San Cristobal (Bolivia) (proven & probably reserves) 454 mil silver
(forecast capital costs for construction to total approximately $435 million)
(Produced zero silver in 2002)
7.8 billion pounds of zinc, and 2.9 billion pounds of lead
$957 mil MC / 454 mil oz = $2.10/oz.
You get "approx" 2.96 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments: Apex silver primarily has institutional investors.

Apex has a lot of zinc. That's an added bonus that is not factored in to my method of valuation. Several writers have been saying zinc prices will be heading up soon, so that's another bonus. Plenty of zinc is especially good if zinc is moving up in price. And, they are not mining now, but are waiting for higher silver prices. That's also a plus. The management also seems to understand that silver will move upwards a lot. Another plus. Finally, George Soros, Billionaire, owns a bit of this one, just under 10% I read recently. That's a nother plus, in general, for the silver market if Billionaires are paying attention to it. There are several other zinc / silver plays on this list that investors might also consider: CZN.TO, EXR.V, MMGG.OB (I own all three of these, but not SIL.)

KBR.V KBRRF.PK ( KIMBER RSCS)
http://www.kimberresources.com
info@kimberresources.com (604) 669-2251
31.2 mil shares fully diluted (Jan 20, 2004)
http://www.kimberresources.com/sharestructure.html
@ share price $2.07 x .76 US/Cdn = US $1.57
$49 mil MC
from http://www.smartstox.com/reports/kbr.pdf
30 mil oz. silver resources Measured & indicated, plus inferred
540,000 oz. gold x 10 = 5.4 mil "silver equiv."
$49 mil MC / 35.4 mil oz. = $1.38/oz.
You get "approx" 4.5 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments: A one property company. The Carmen gold-silver deposit on their Monterde property in the Sierra Madre belt of Chihuahua State, Mexico. Significant exploration potential.

MFN MFL.TO ( MINEFINDERS)
http://www.minefinders.com/
Shares Outstanding Fully Diluted 34.1 mil
@ share price $8.29/share
$282 mil MC
Cash on hand, Fully Diluted: C$34 million
"over 3.5 mil ounces of gold resource and 160 mil ounces of silver" --Dec. '03
silver conversion = 3.5 x 10 = 35 mil + 160 mil oz. silver = 195 mil oz. silver
At 70:1 ratio, 3.5 x 70 = 245 "silver equiv" of gold, and 160 mil of silver = 405.
245/405 = 61% of the mineral value is in the gold, 39% silver.
At 10:1 ratio, 35/195 = 18% of the mineral value is in the gold, 82% silver.
"In addition to the resources already drilled, Minefinders controls a strong portfolio of properties in Nevada, Arizona, and Mexico which have the potential to host new multi-million ounce discoveries over the next few years."
$282 mil MC / 195 mil oz. = $1.45/oz.
You get "approx" 4.30 ounces in the ground for 1 oz. silver.

Additional Comments: At 70:1 silver to gold ratio, over half of MFN is in gold, so consider this a significant gold bonus. MFN also now lists their resource figures on their website's main page. I'm sure investors appreciate this. I do.

GRS GAM.TO ( GAMMON LAKE)
http://www.gammonlake.com/
gammonl@sprint.ca (902) 468-0614
Fully Diluted 58.7 mil shares (Nov 30, 2003)
@ share price $4.37
$256 mil MC
Completed a $15 million private placement in Nov. 2003, and acquired 100% rights to Ocampo
http://biz.yahoo.com/prnews/031211/to086_1.html
Total Ocampo Inferred: 1,124,000 oz. gold, 50,438,000 oz. silver
Silver equiv = 11.24 mil oz. + 50.44 mil oz. = 62 mil oz.
Total Ocampo Measured & Indicated   2,207,800 oz. gold, 108,438,000 oz. silver
Silver equiv = 22 mil oz. + 108 mil oz. = 130 mil oz.
Total Ocampo Measured & Indicated plus Inferred = 182 mil oz.
Gammon owns 27% of Mexgold, MGR
Since Mexgold owns 55 mil oz. of "silver equiv", 27% of that is 14.85 (15) mil oz.
182 + 15 = 197 mil oz.
$256 mil MC / 197 mil oz. = $1.30/oz.
You get "approx" 4.79 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments: Drill results released Jan 7th: http://biz.yahoo.com/cnw/040107/gammon_lk_drill_rslts_1.html
At current prices of a 64:1 silver:gold ratio at $425/oz gold and $6.60/oz silver, the resources are worth $1048 million of silver, and $1411 million worth of gold. Cash cost is $85/oz. Life of mine is 7 years.

* CZN.TO CZICF.PK ( CDN ZINC) (I own shares)
http://www.canadianzinc.com/
czn@canadianzinc.com 1-866-688-2001
67.3 mil shares fully diluted as of Dec., 2003 (as stated in the proxy, p.8)
80.2 fully diluted shares as of Feb 2, 2003
@ Share Price $1.40 Cdn x .76 US/Cdn = $1.06 US
$85 mil MC
$13.5 million cash, Cdn, no debt.
not mining ($20 mil needed to finish & start the mine) ($100 mil worth of mining infrastructure in place!)
~70 mil oz. (IN ZONE 3 only!! of 12 zones! This company seems to be greatly under-reporting their silver reserves. Their 18 year mine plan consists of zone 3 only, but there are 12 mineralized zones on the property.) Really, perhaps well over 100 mil oz. silver.
$85 mil MC / 70 mil oz. = $1.21/oz.
You get "approx" 5.14 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments: CZN recently bought back a royalty agreement that had a face value of $8.2 million, for 300,000 shares and 250,000 options at $1.25 Cdn.

The additional cash from the recent private placements means that CZN will now be able to drill and explore more of their property. Although the company is now more costly to buy, it is far less risky, given that they now have $13 million in cash.

CZN likely has much more silver in the ground, and has good profit potential.

I would like the company to privide an estimate of the silver on the rest of their properties, but their mine plan consisted only of zone 3 at the moment. The rest must remain "exploration potential" for now.

To get the mine up and running, they might be able to pay back such debt within 2 years, but I would hope they would avoid debt, and raise the capital as the share price begins to approach US $2/share or more, and do a final public offering between US $2-4/share.

I note several very, very positive things about this company.

1. This was the mining operation set up by the Hunt brothers, the major silver investors in the silver spike to $50/oz. in 1980 who were bankrupted by their own debts and margin calls as a result of the COMEX rule changes and silver short sale manipulation. The Hunts spent $50 million building infrastructure to get the mine running. They were 90% complete when bankruptcy hit. The value of those buildings is now $100 million, and the mine only needs about $20 million (CAN) ($15 mil US) to get the mine up and running. That's much cheaper than other cost estimates of other operations.
2. The 70 million oz. of silver estimate is for zone 3 only. But there are 12 zones on the property. The zone 3 estimate is for a 10 year mine plan that involves mining zone 3 at current metals prices.
3. High Grade ores:
12% zinc/ton; = 240 lbs. zinc/ton x 46 cents/lb. = $110/ton for the zinc.
10.1% lead/ton = 202 lbs. lead/ton x 34 cents/lb. = $69/ton for the lead.
6 oz. silver/ton x $5.95/oz. = $35/ton for the silver.
0.4% copper/ton = 8 lbs. copper/ton x 1.07 cents/lb. = $8.5/ton for the copper.
Total: $223/ton! (This price is moving up!)
4. My method of valuation: If I counted the zinc as silver, then the price of this company would be something like four times cheaper than it is based on my "valuation method". If I counted the lead as silver, then this company would be about 4-5 times cheaper.
5. Zinc and base metals prices are moving up strong. 46 cents/lb. for zinc! Check http://www.metalprices.com/ for updates.

I own shares of CZN.TO

PAAS ( PAN AMER SILV)
http://panamericansilver.com/
info@panamericansilver.com (604) 684 -1175
(I updated all key PAAS info this week from the company website)
58.2 mil shares fully diluted. (Sept. 2003)
http://panamericansilver.com/s/CorporateInformation.asp?ReportID=26039
@ share price $15.55/share
$905 mil MC
10 silver properties (3 in production)
produced 7 mil oz. silver in 2001:
Reserves & Resources through Dec. 11th, 2003 from
http://panamericansilver.com/s/ReservesAndResources.asp?ReportID=25303
743.2 million total
$905 mil MC / 743.2 mil oz. = $1.22/oz.
You get "approx" 5.13 ounces in the ground for 1 oz. silver's worth of stock.

Additional Comments: I believe PAAS is one of two silver companies on the list today that is significantly in debt (the other is now CDE).

PAAS recently went into debt in order to ramp up production. I am strongly biased against debt and against producing and selling a valuable asset like silver at today's low prices. But it's a convertible debenture, so the debt can be converted into stock. They know and believe higher silver prices are coming, which is great, and their strategy is to be in solid production mode when the higher price hits.

I think it is extremely important to invest in a company that understands the silver story as reported by Ted Butler, David Morgan, and especially me, because I emphasise the potential of monetary demand. If the company does not understand this, then they are more prone to doing extremely stupid things like perhaps hedging silver at $10/oz. or so, as they will see that as an "unusual spike," instead of the inevitible stopping point on a major rise. What if your silver company decides to lock in silver prices at $8, and hedge years of production to "protect the shareholders and provide exposure to the high $8/oz. price," only to watch silver prices head past $25 and past $50/oz? Your stock could get wiped out in bankruptcy, and your investment could go to zero value! This is the danger of stocks! Your investment is subject to the whims of management!

WARNING: PAAS says at their website that they will hedge silver , in order to finance mine construction.
http://panamericansilver.com/s/CorporateProfile.asp
" Pan American is loath to give away the upside on any of its silver production, especially at current low metal prices, and will do so only to the minimum extent required as a condition of prudent mine financing."

My opinion is that it is NEVER prudent to go into debt, or lock in silver prices to finance a mine. If PAAS cannot raise capital on the markets by issuing shares, then they should not be financing new mine construction. If the market will not support new mine construction, then the market does not need more silver. PAAS and CDE should learn to trust the free market process, and avoid debt.

On July 30th, 2003, PAAS got $75 million in cash from a debenture debt financing deal.
http://tinyurl.com/yrv8
On July 30th, 2003, silver was $5.10/oz.
http://www.kitco.com/charts/historicalsilver.html

On Jan 9th, silver was $6.46/oz., a $1.36/oz. increase over $5.10, or an increase of 27%

PAAS's "working capital" (or non-working, depreciating, paper dollars) was $92.8 million on Sept. 30, 2003 or 18.19 mil oz. silver equiv. Check the link.
http://www.panamericansilver.com/i/pdf/2003_Q3.pdf
If PAAS averaged holding $92.8 million dollars from July to Jan 9th, then they lost the equivalent of 27% on their "money".
On Jan 9th, $92.8 million at $6.46 can only buy 14.36 million oz. of silver. So, PAAS lost (18.19 - 14.36 = 3.83 mil oz.) which, at $6.46/oz., is $24.74 million dollar loss worth of silver by holding dollars instead of silver bullion during that time period. Capital spending was only $3.5 million during the third quarter, so they did not need to use the money right away--they should have kept it in the form of silver bullion, obviously.

FSR.TO FSLVF.PK ( FIRST SILVER)
http://www.firstsilver.com/
info@firstsilver.com (604) 602-9973 or (888) 377-6676
38.6 mil shares fully diluted (Jan 2004)
@ share price $1.56 Cdn x .76 US/Cdn = $1.22 US
$47 mil MC
From the Company's main page at their url:
"As at December 31, 2001, First Silver's mineable reserves were 12 million ounces of silver and inferred resources totaled 30 million ounces of silver. The mine is developing a 1000 plus meter exploration drift to upgrade currently identified inferred resources to mineable ore reserves and to discover new reserves."
12 + 30 = 42 mil oz.
$47 mil MC / 42 mil oz. = $1.12/oz.
You get "approx" 5.6 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments: This is a high grade, producing miner. The high grades, about 300g/ton, are a plus.   They are also actively exploring, another plus.

3rd quarter, 2003, FSR.TO produced 389,154 oz. silver, and 604 oz. gold. and revenue was $2.09 million for the 3rd quarter. They produced at a loss, (a penny per share). They are unhedged, and remain committed to remaining unhedged.

* TM.V TUMIF.OB ( TUMI RSCS) (TUY Frankfurt Exchange) (I own shares)
http://www.tumiresources.com
nicolaas@attglobal.net Nick Nicolaas IR (604) 657 4058
23.7 fully diluted shares (Dec. 2003)
@ share price 1.47 CAN x .76 US/Cdn = $1.12 US
$26 mil MC
20 mil oz resource up to 50 million oz. silver potential but needs to be explored and drilled.
500,000 gold resource x 10 = 5 mil oz. silver equiv.
Debt free, 2 projects in Mexico.
Raised $2.7 million Nov. 14, 2003
$26 mil MC / 25 mil oz. = $1.06/oz. ***I'm using this number***
$26 mil MC / 50 mil oz. = $.52/oz. (exploration potential)
You get "approx" 5.9 ounces in the ground for 1 oz. silver's worth of stock.
Exploration Potential: 12 (plus more after bonanza silver discovery late November.)

Additional comments: Last week, I used the wrong price for Tumi.   I used the ".OB" price, which is the U.S. price, and then I "converted" to US dollars. Oops! One reader emailed me about my mistake.

Tumi soared in late November, after the company announced a bonanza grade silver discovery after drilling. This should significantly increase the numbers for their "exploration potential", but no word yet on the increase. It takes time for the geologists to estimate all of that, but investors went crazy over it immediately.

Tumi is focused on becoming a "premiere junior silver explorer." It's good to see the focus is in the right metal. Doing active drilling to prove up their projects and increase "resources". Nick Nicolaas really understands the silver story, beliving silver has much greater appreciation potential than gold.

Look at: Tinka TK.V (tumi's sister company)
A pretty big gold/copper property in Peru (Tumi owns 30% of it)...
That could mean significantly increased assets for Tumi.

I own shares of TM.V.

WTZ WTC.TO ( WESTERN SILVER)
http://www.westernsilvercorp.com
(formerly western copper) --And copper prices are headed up, too, (copper at $1.12) now.
info@westernsilvercorp.com Jay Oness Toll Free: 1-888-456-1112
40.1 mil fully diluted (After Dec. 16th 2003 financing)
@ share price $5.65/share
$226 mil MC
(not actively mining)
$16 million in cash in the till (4 mil + 12 mil financing)
From the "SNC Lavalin Resource Calculation" March, 2003.
Indicated 158.8 mil oz. silver
Inferred   54.6 mil oz. silver
Total 213.4 oz. silver.
Total 1.94 oz. gold x 10 (at 10:1) = 19.4 silver equiv.
Got $3 mil CAN cash, no debt.
The capital cost to get the mine going is estimated to be US $148 million
Penasquito silver/gold. 213 mil oz silver. just over 2 mil oz. gold. from Chile/Colrado zone.
Brechia zone will double the numbers, and infilling inferred to indicated: probably in Jan will have 500 mil oz. silver, 5 mil oz gold.
Exploration potential: 500 mil oz. silver, 5 mil oz. gold, from
http://www.mips1.net/mgn03.nsf/UNID/SBAY-5SUBN6
Two other zones that could each duplicate the success of each of the other two. So up to a Billion... oz. of silver as "exploration potential"!
Feasibility: 2006-7 production timeline.
$226 mil MC / 233 oz. = $.97/oz.
$226 mil MC / 1000 oz. = $.23/oz. --exploration potential
You get "approx" 6.42 ounces in the ground for 1 oz. silver's worth of stock.
Exploration Potential = 28

Additional comments: Note the capital cost to get the mining started: $148 million dollars.
WTZ also has the following other metal resources:
3.73 billion pounds of zinc
673 million pounds of copper
1.3 billion pounds of lead

SSRI ( SILVER STD RSC)
http://www.silver-standard.com/
paull@silverstandard.com (604) 689-3856 or (888) 338-0046
41 mil shares (Oct. 2003)
+ 4.4 mil shares, Jan 19th PP.
45.4 mil shares (or more), Jan 19th, 2004
@ share price $11.87/share
$539 mil MC
debt free, cash: $Cdn 60 mil
not mining or producing
15 silver properties
measured and indicated resources totaling 300.4 million ounces of silver
plus inferred resources totaling 366 million ounces of silver = 666 mil oz.
2.2 mil oz. gold. Silver equiv = 22 mil oz. silver. (22+666=688 mil oz.)
$539 mil MC / 688 mil oz. = $.78/oz.
You get "approx" 7.97 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments: Silver Standard Closes Cdn$43.7 Million Private Placement, January 19 http://biz.yahoo.com/bw/040119/195506_1.html

I believe this is extremely bullish for SSRI and the entire silver market sector. The price for a unit was Cdn $14.80 (with a half warrant), (or about US $11.54).

This is extremely bullish for SSRI, because investors should trust the decision of the buying power of Cdn $43 million. Big money wants into the silver market! Current SSRI investors can have Cdn $43 million worth of confidence that the share price may exceed the warrant price of Cdn $18.50/share or about US$14.43!

What will SSRI do with all that money? Their best option is to buy more silver properties, or acquire other silver junior exploration companies. In the press release, SSRI stated, " The company continues to review potential silver project acquisitions ..." They may buy out some of the other junior silver stocks on this list! Their second best option is to buy physical silver in between now, and the time when they buy properties or choose to develop their properties to production.   Either way they spend this money will be beneficial for the entire silver sector.

SSRI really is the "silver standard". SSRI has the largest market cap this far down the list, which makes it a more attractive target for people with larger amounts of money to invest.

SSRI continues to add to reserves, either through exploring, or through acquisitions. This company seems to really understand the silver story, and helped to educate me as an investor.

I attended a two hour SSRI presentation after the Gold show in SF in late November. For the most part, their properties are very well drilled, and they have a fairly solid idea on how much silver oz. in the ground they have. They started their plan to acquire silver properties and become a "silver company" in about 1993, which explains why they have such a large market cap, and so many good properties with so many ounces of silver.

Some investors like SSRI because of the diversification --SSRI owns many silver properties. I say you can get a similar kind of diversification by owning stock in many silver companies.

ORM.V ( OREMEX RES) (no PK symbol yet?)
http://www.oremex.com/s/Home.asp
info@oremex.com
Fully Diluted: 24,012,928
@ share price $.89 x .76 US/Cdn = .68
$16 mil MC
Have $5 million cash in the bank as of Dec. 2003.
holds the right to acquire a 100% interest in six mineral properties in Mexico.
Oremex will focus on the exploration and development of the Tejamen Silver Property and the San Lucas Silver Property.
They are hoping to explore for up to 100 mil oz. silver by drilling over the next year.
--Experienced team of geologists and managment that have put other properties into production:
Anthony R. Harvey, Chariman, has put 14 properties into production in his 40 year career.
http://www.oremex.com/s/TejamenSilver.asp?ReportID=68653
for an inferred resource of 8.4 million metric tons at a grade of 89 g/t Silver (2.86 opt) and 0.2g/t Gold (0.006 opt).
2.86 x 8.4 = 24 mil oz. silver at Tejamen (one of six properties)
$16 mil MC / 24 mil oz. = $.68/oz.
$16 mil MC / 100 mil oz. = $.16/oz. --exploration potential
You get "approx" 9.24 ounces in the ground for 1 oz. silver's worth of stock.
Exploration Potential: 39

MGR.V MGRSF.PK ( MEXGOLD RSCS)
http://www.mexgold.com/
18.7 mil shares outstanding
@ share price $2.67 Cdn x .76 US/Cdn = $2.03 US
$38 mil MC
inferred resource: 45 mil oz. silver + 1 mil oz gold.
1 mil oz. gold = + 10 mil oz. silver equiv
"The estimate does not address significant additional mineralized structures known to be present on the property, or the potential for large strike extensions of known high-grade zones."
$38 mil MC / 55 mil oz. = $.69/oz.
You get "approx" 9.05 ounces in the ground for 1 oz. silver's worth of stock.

Additional comments: Gammon Lake is a large shareholder, 26.7%. The quote above comes from Gammon's website. http://www.gammonlake.com/corporate_profile.htm

* SRLM.PK ( STERLING MINING) (I own shares)
http://www.sterlingmining.com/
RDemotte@aol.com Ray DeMotte 208/676-0599
just under 10 mil shares fully diluted (early Jan. 2004)
@ share price $10.25
$102 mil MC
Cash on hand: $1.1 million (an increase, reflecting the increased number of shares from 7 to 9 million)
~185 mil oz. reserves + resource, Sunshine alone
Quote from: http://www.sterlingmining.com/jun112003.html
"The prior operator last estimated the mine reserves at 26.75 million ounces of silver, 10.36 million pounds of copper and 7.05 million pounds of lead (or approximately 28.85 million ounces of silver-equivalent), as well as an additional resource of 159.66 million ounces of silver. "
~100 mil oz. other properties: the 10 sq. miles around the 1/2 sq mile of the Sunshine (rough guess--needs to be explored) even though--these extra 100 mil oz. are in the "explorer" category. They need to be drilled and found, although I've heard of estimates as high as 400 mil oz. total for SRLM.PK
$102 mil MC / 185 mil oz. = $.55/oz.
$102 mil MC / 500 mil oz. = $.20/oz. (exploration potential)
You get "approx" 11.36 ounces in the ground for 1 oz. silver's worth of stock.
(Exploration potential is 31. )

Additional comments: I wrote an article on SRLM in late Dec. See: Sterling Mining

Ray DeMotte really, really understands the silver story, and has been aggressively acquiring silver properties. Sterling continues to consolidate its land position around the Sunshine mine.

Sterling Mining acquired the Sunshine mine. Sunshine was one of the big three: Hecla, Couer, & Sunshine. Sunshine went bankrupt. Sterling got the property a few months ago cheap, because they were quick & willing to pay cash. Other buyers wanted to do a full study before making an offer. This company's share price went ballistic as a result. But the company is still way undervalued. Just do the math, people. I own a substantial share of SRLM.PK There were a few great articles written lately for SRLM. See the company web site, above. The best factors, I feel, are as follows:
1. The Sunshine mine is an existing mine that was mining at a profit. The company went bankrupt, not the mine. So there will be no great capital costs for start up, only minimal costs.
2. The Sunshine sits on 1/2 sq. mile, and was never fully explored. Sterling Mining owns 10 square miles of property surrounding the Sunshine, right in the heart of silver country, the location of CDE and HL, the other two big companies at the top of this list.
3. The management of Sunshine understands the silver story. They are on a mission to acquire distressed silver properties at today's cheap prices. See also: December 14, 2003: "In light of the continued low silver price, Sterling has this year begun holding back into inventory a portion of this year's silver coins minted."

I own shares of SRLM.PK

FAN.TO FRLLF.PK ( FARALLON RSCS)
http://www.farallonresources.com/fan/Home.asp
(604) 684-6365 Erick Bertsch
73.8 mil shares fully diluted as of Oct 31, 2003
@ share price $1.00 Cdn x .76 US/Cdn = $.76 US
$56 mil MC
Exploration and development in Mexico.
See also hdgold.com (Hunter-Dickinson)
On 4 sulphide deposits out of 16, 29 mil ton grading 89 grams silver/t and 1.57 g gold/t.
Conversion: 89 grams x .0353 oz/gram = 3.14 oz.
RE: those 29 mil tons, they "anticipate increasing resources to 50 mil tonne range..."
3.14 oz. x 29 mil tons = 91 mil oz. silver
1.6 mil oz. gold x 10 = 16 mil oz "silver equiv".
Total: 107 mil oz. silver equiv.
(Exploration potential = x 1.7 = 181)
$56 mil MC / 107 mil oz. silver equiv. = $.52/oz.
$56 mil MC / 181 mil oz. silver equiv. = $.31/oz. --exploration potential
You get "approx" 12.01 ounces in the ground for 1 oz. silver's worth of stock.
Exploration potential = 20

Additional comments:

Nothing done or drilled on the property since 1999. Why not?


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