# Silver Stocks (PAA/SLW/FR)



## moneyisfornothing (Feb 18, 2012)

with silver hovering the psychological area of 30 bux ( and i really mean psychological support), i am looking at the detested atm miners in the TSX .
PAA specially hitting all time lows.
after jobs report tomorrow i may buy some.
anyone?:hopelessness:


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## moneyisfornothing (Feb 18, 2012)

i guess silence speaks for itself:hopelessness:


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## Spudd (Oct 11, 2011)

I really want some PAA but I don't have any spare change right now.


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## moneyisfornothing (Feb 18, 2012)

Spudd said:


> I really want some PAA but I don't have any spare change right now.


spudd i am very tempted also
expected a selloff on silver to lower levels that did not happen.
IMO
silver and gold are still in waiting mode in regards to possible QE3 which IMO will not happen , unless this mkt sells off 15-30%.
it closed unchanged today which still tells me that silver ain't out of the woods.
hope u get some cash freed up and buy at the right time.
cheers


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## PMREdmonton (Apr 6, 2009)

I think Silver will be a big winner in the coming commodity supercycle and probably will be a bigger winner than gold.

Right now my long-term favourites are Uranium > Rare earths > Silver > Hydrocarbons > Aluminum > Copper > Iron-ore > Gold

The reason why I like silver is because it is so important in many processes in the tech, industrial and healthcare worlds. It tends to be consumed in these processes. Most of the silver that has ever been mined is just gone and this is different than the other precious metal of note lately - gold. Silver has a big industrial use base and many companies would pay through the nose if they had to to secure a stable supply of silver. 

So I like Silver and I like companies that can produce silver at low cost, have huge reserves, have mines in geo-politically safe areas, pay a dividend and are a cheap on an earnings basis.

My favourite right now is Hecla which has a horrific looking chart. Most of the issues with them right now is one of their main mines has been closed for the year for maintenance. It is just a temporary disturbance and the mine has been operational for many years and will be operational again next year which will be a catalyst for the stock. The market just loves to drop companies down 30% for a very short-term blip on a long-life asset like a high-grade silver mine. This mine is in the US and they have large reserves and huge parts of their landholdings which likely contain large amounts of silver which they haven't even bothered drilling yet because they have so many years of proven reserves on the books as is. Thankfully they started a dividend last year but it is not a huge one. It is, however, linked to the price of Silver so it will go up with the price of silver.

I think Pan-American Silver and First Majestic will also be good investments.

Silver-Wheaton will also be great because of their royalty structure and all the probable growth in supply they will get at locked-in low prices. I only wish they bumped up their divy a bit more.


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## moneyisfornothing (Feb 18, 2012)

PMREdmonton said:


> I think Silver will be a big winner in the coming commodity supercycle and probably will be a bigger winner than gold.
> 
> Right now my long-term favourites are Uranium > Rare earths > Silver > Hydrocarbons > Aluminum > Copper > Iron-ore > Gold
> 
> ...


all that u mentioned above is in the known PMR.
HL
has good volume and is also at all time lows .
problem is that silver is overpriced atm IMO, same as gold.
and reason being is that the USD is being held at the bottom , it ain't rising to above 80 level on the index.
the euro is bound to go lower but has not yet.
therefore the main cause here is the indexation to the dollar for pricing those metal.
if the US dollar runs higher and mkts colapse somewhat , i will buy silver and silver and gold stocks.
in the meantime , just daytrading when possible.
by the way have u noticed the volume of stocks traded on friday.
on the other handed oil trade at a 6 month high on ICE and CME, therefore someone bought a lot of oil on friday and the bears cashed billions by unloading that many contracts in 3 straight days of losses.
cheers

P.s if u REALLY like rare earths buy avalon then .


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## PMREdmonton (Apr 6, 2009)

moneyisfornothing said:


> all that u mentioned above is in the known PMR.
> HL
> has good volume and is also at all time lows .
> problem is that silver is overpriced atm IMO, same as gold.
> ...


I do like rare earths but the problems is that most with desirable assets (heavy rare earths) are still fairly far away from meaningful production.

The second part that scares me is they can have a good deposit but poor metallurgy for extraction and this part isn't always obvious early on to the outside observer.

The third part I don't like is the Chinese can always flood the market with cheap rare earths if they want to crush competition. I don't think we can have meaningful expansion of a more friendly supply until the end-users sign long-term agreements to buy mined rare earths at attractive prices to the mining operations so they know there will be a market at their present cost structure. This uncertainty has wreaked havoc with Molycorp this year which is the main near-term supplier that just did some vertical integration with the purchase of Neo-Materials which I really liked earlier this year - the Chinese changing policy on a whim really hurt them. The main other reason I don't like Molycorp is most of their deposits are light rare earths which aren't in nearly so tight a supply and aren't used as much in the high tech industries.

In this space I have looked at avalon, lynas, Quest and Great Western but haven't taken the plunge on any of them just yet as the risk-reward picture hasn't been clear to me yet. If they were closer to production for some of the good heavy rare earths with clearly metallurgy and good idea of attainable margins I'd be more inclined to dip my toes in.

I have invested some in Uranium, Silver and Hydrocarbon producers. I even have a couple of gold stocks bought on the recent dip but I'm not sure about these as long-term picks. These are more of a contrarian play because of how beat up they have been as of late. With the expansion in production coming in silver and gold from Goldcorp I expect them to take off soon.


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## marina628 (Dec 14, 2010)

I bought physical silver back in January to go with my canned goods and bomb shelter .


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## moneyisfornothing (Feb 18, 2012)

marina628 said:


> I bought physical silver back in January to go with my canned goods and bomb shelter .


marina
30 bux is psychological support.
i have posted what solid supports are.
GL with ur silver:hopelessness:


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## PMREdmonton (Apr 6, 2009)

You never know what will happen in the short-term.

The long-term fundamentals are very good for silver but unknown for gold which is more of a speculator's choice as it has little value other than as a precious metal. Many industries would be brought to their knees without silver and the need for it is growing every year while the available supply is contracting.


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## moneyisfornothing (Feb 18, 2012)

available supply is contracting....
are you kidding me?
in the first quarter alone china reduced imports of silver by 25% to begin with.
with europe entering a major recession what are the odds for china to really have a hard landing?

link below

http://www.silverinstitute.org/site/supply-demand/
and ... do not forget how much the fed has in stockpiles


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## PMREdmonton (Apr 6, 2009)

What I mean is that silver is consistently being consumed. Gold is not consumed. That is the big difference between the two.

All the gold that has ever been mined is still lurking about.

I think only a fraction of the silver that has been mined is still available in precious metal form.

The demand for silver in modern electronics and medicine is increasing quite fast even as its use in film is dissipating.

Right now I like gold and silver. Long-term I do not like gold.


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## moneyisfornothing (Feb 18, 2012)

since when gold is not consumed PMR?
india is the largest consumer of gold for jewelry , followed by china.
the largest Gold bullion holders in the world are who?
guess what .... the U.S and germany.
and one may ask why is that.
the numbers above show the highest ever production of silver recorded since 2002.
same with silver scrap recovery.
i am not here to try and prove anything to you .
i really don't know at this time why gold has not retraced to the 1500 bux support level.
IMO it is the hope of QE 3 only holding these levels and the good ole CFTC manipulation in regards to position limits on the exchange.
till the CME changes the specualtive limit positions it will hover around 1600.
as soon as a margin hike appears it will be brought to its knees.
barclays ... the largest silver manipulator is doing the same , otherwise silver would be trading already at 26 /28 bux area.
i think that clears my views in regards to both.
either way GL in ur endeavours.


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## PMREdmonton (Apr 6, 2009)

Gold is not consumed in the sense that it is still physically around.

Silver is actually eaten up in industrial processes and then lost to the ecosystem.

That's the difference that I'm getting at.


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## rusty23 (Jan 25, 2012)

SLW has 20% percent profit jump but missed est by 2cent/share. Down to almost 52 week low, good entry point?


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## PMREdmonton (Apr 6, 2009)

It depends on what you think of the price of silver.

They basically buy into silver mines early by giving the mining company some money to complete the mine upfront. They then collect a certain percentage of the revenue once the mine is producing.

So this is a stock that doesn't have too much operating risk as they pay upfront into mining operations and can have many, many streams of income from different miners to hedge the risk of an individual mining operation. As they bought in to many operations when silver price was much lower they have been tremendously leveraged to the price of silver and have shot up with the price of silver.

I happen to be a long-term silver bull so I think SLW is probably a good investment in the long-term. What happens the next couple of years, I am not sure. 

If you want to buy into the upside maybe buy some out of the money calls far into the future. That way you don't have to put up much capital. You will miss out on the dividend but I don't think it is huge anyway.


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## canadianbanks (Jun 5, 2009)

Right now gold and silver stocks are very cheap, however they can still get a lot cheaper. If you believe they have a bright future then you should invest in tranches as the price goes down.


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## Argonaut (Dec 7, 2010)

I think Silver Wheaton is looking like a great buy right now and will probably initiate a position in the next two days. I wager it has about 50% upside, and minimal downside at current levels. The dividend is small, but perhaps a little better than a big bank savings account which is not bad compared to paying a MER for owning SLV instead.

Question for those in the know: If I were to buy the US version of SLW for the superior options market, how would this affect my dividends received as a Canadian investor? Would they be in US dollars, and would they have a withholding tax?


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## humble_pie (Jun 7, 2009)

Argonaut said:


> ... If I were to buy the US version of SLW for the superior options market, how would this affect my dividends received as a Canadian investor? Would they be in US dollars, and would they have a withholding tax?



silver wheaton is another canadian miner that pays its dividends in US dollars (most mid & large sized canadian miners pay divs in USD.) So willy-nilly one should keep slw in US account in order not to get stiffed FX fees by the broker.

this does not mean one has to buy in US acct or pay in US dollars. One could buy in canadian acct, pay in CAD & after settlement ask broker to journal stock to US side of the account. (be sure to request this, some accounts are not clear online about US or canadian holdings.)

SLW is canadian, therefore there will be no US withholding tax on dividends.

also the dividend will generate eligible canadian dividend tax credits, if it's an eligible dividend to begin with. The T5 slip that will report divs, grossups & div tax creds will be in US dollars, though.

i just have one caution, if this is a questrade account. The foregoing is what *should* happen at questrade. However from time to time one hears of problems that they have ...


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## Argonaut (Dec 7, 2010)

Thanks humble, I did end up buying SLW on the Canadian side because I have more C$ kicking around. Your idea about journaling the shares is a good one though, and I'll likely request it next week. One good thing about Questrade is that it has distinct separation between Canadian and US positions/cash.


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