Valuing Jr silver dreams

[Scorpio]

Lest we all forget, there are a few things to consider in addition to 'how much resources a Jr has on the books.'

When you are looking at the Jr's you need to account for:

infrastructure ie roads and power and water
mining equipment
site building facilities
labor
site housing if needed
security
smelting facilities
transportation
marketing
to name just a few

If after all of that and more, they can still pull it out of the ground at a profit, then you have a possible mine that can worry about....

currency fluctuations
strikes
management costs
market prices
mining cave ins
water infiltration
pumping water out of site
and so on.

Just because a miner/explorer has 'silver in the ground' does not mean it will ever get it out of there at a profit. There are a lot of pieces to the puzzle standing there with their hands out.

Once I take a real good look at it, I wonder just how many management teams really have what it takes to run a successful mining business. In the standard SM's, how many companies have outstanding mgt teams? This is what percentage of the total number of companies out there? I believe mining is more challenging than building x widgets at x price to sell to x people.

Yes, the rewards can be extraordinary with Jr's, but so can the risks.

S

[FoundingFathers]

Scorpio -

Your analysis, thoughts and insight into the Pm stocks (especially the Jr.s) is
excellent and much appreciated!


FF

[WhiteGold]

Dang, you know how to really depress me! You have me ready to sell all my juniors now LOL. You and Mogombo scare the heck out of me :) :D


WhiteGold

[G-khan]

I too thank you for your great insights. You keep things real simple and basic for those of us just venturing into these stocks. You are one of the most level headed people I know.. Your hired..........

[G-khan]

Originally Posted by WhiteGold

Dang, you know how to really depress me! You have me ready to sell all my juniors now LOL. You and Mogombo scare the heck out of me :) :D


WhiteGold

I think scorpio is just saying take the time to look them over carefully. Consider the problems the company faces and whether or not they can pull it off to get at the metal for a profit. Right now as Gold and Silver continue to rise almost all Jrs will be lifted with the rise. Some will do a lot better than others and these are the gems to find. He is pointing out how to pick out a gem from the many rocks that are on the ground. I would not go out and sell - just try and make sure you have real mines that will make real profits.

[Ander]

Thanks scorpio...

And I just bought a couple junior miners yesterday ;p


I feel very good about Sterling Mining (SRLM), as they own the Sunshine mine, and land around it, not quite so sure about a couple others.


I am also worried about what will happen to metals stocks in a general market crash. I used to think they would go up or at least stay even, but many people seem to think otherwise.

I think I'll focus on buying more physical silver for now...

[Scorpio]

Khan is right, I am just trying to point out that there are pitfalls everywhere.

2 sides to a silver coin as it were.

Ander,
typically if SM stocks go down hard, gold and silver stocks get hammered also as they get caught in the psychology of the event. That is why many here espouse the idea of having physical + stocks.

S

Originally Posted by Scorpio

Ander,
typically if SM stocks go down hard, gold and silver stocks get hammered also as they get caught in the psychology of the event. That is why many here espouse the idea of having physical + stocks.
S

Nice to know... Well I'm unvoluntarily alright then :P Do gold stocks go back up after? I mean: do they still profit alot from economic crashes?

[silverback]

This raises an interesting question, hopefully someone who's been in the market longer than I can answer it. Do junior miners get hit as hard as the majors in a crash? I find it hard to believe that the stockholders of SRLM or MAG will be stampeded over a general SM event.

SRLM has sure been on a tear lately,I lightened up just enough to get my original investment back last week,but I have high expectations going forward.

MAG is moving nicely this week, wish I knew why.

Great advice about juniors and junk stocks in general,it disturbs me how much the PM stock psychology resembles that of the Nasdaq, companies with no earnings and questionable business plans seem to outperform based on good PR while solid producers and professional explorers lag. That won't be the case in the longer run, I try not to be the last one through the door in the spec plays,take some profit now and then, and ride for free if you can so it doesn't hurt so much if a few of your juniors don't make it for whatever reason.

[Ander]

I owuld think that the juniors might have more volatility....but then again you may be right, they could be held by stronger hands who understand the case for silver and gold....


Of course, there is another effect: if the general market crashes, folks may see it as a buying op and sell mining shares to buy other things...
It makes some sense that we follow them down.


I really like SRLM, but I got in a bit late. Still I have gained on it, and think it will go higher. I'll be holding for the long run on that one, maybe selling a bit if it rises a lot, and buying physical, mabe buying more if it takes a drop.


When I get some more money, I'll be buying some 1 oz rounds and 10 oz bars... (silver of course)

Also looking for a point to sell the remainder of my stocks. I think I will keep that in cash, to buy more mining stocks when the market falls. (if they drop with it, its an opportunity). It'll be especially good, because with the market drop I will KNOW I am right even more than I do now, and yet the mining stocks will still be on sale. ;)

I just unloaded my cash to buy mining stocks on the dip monday....time to free up some cash.

I think the decline in the money supply is a good indicator that the rally will now stall / fall is coming. Thanks to the folks here for posting about the money supply, and its recent decline...

The fed's massive injection of liquidity is the only thing that been keeping this horse going...

Whn you give a completely exhausted horse a shot of speed, it'll take one last lap around the track, but it sure isnt healthy, and it'll just make the eventual collapse even worse.

[Scorpio]

Another thing that was talked of by another is:

"A gold bull is like nothing else you have ever seen"

Many talk of a buy and hold in gold to prevent ever having to chase the market.
PM's are so psychology motivated, that one day gold and silver could open big up for whatever reason and never look back. This did happen to Duck stocks, and the PM bull really hasn't even caught on yet.

In a calamitous event, it is very possible that PM stocks take an initial dive, and then move rapidly higher. It is also possible that conventional wisdom is out the door and they move higher while everything around them is declining.

Point being, don't trade it unless you are willing to accept the consequences.

There is a difference in having trading positions and core positions vs buying and selling because of greed to try to achieve more shares. That's great if you pull it off, but is stressful to the nth degree.

Don't forget guys that we are the only ones in here playing right now besides the big boys. There are no regular people in PM's right now. They are still chasing the SM dream. One day when you hear about SRLM and others in a coffee shop from a waittress, you will look for the exit, and be very surprised when you pull up the recent quote to bail.

I think we will all be surprised at the magnitude and rapidity of the move once it begins. That is why I do not recommend trading it. Patience and contentedness work here long term. You know you have the fundamentals on your side, it is only a question of when the major jumps start occurring.

I am the contrarians contrarian, as I try to point out the good and the bad to something. This is in the effort to make sure that the early birds to PM's catch their worm.

S

[lhslancers]

mag was written up on allpennystocks.com and jumped .18 yesterday pump and dump?

[WhiteGold]

Thanks Scorpio, I was just joking around, but your original article brought forth items that really should be thought about before investing in juniors/explorations.

The stocks are fairly new to me as I like to accumulate physical metals, so please keep the down to earth common sense information flowing because many of us appreciate sound advice.


WhiteGold

[silverback]

Ander,

That's what I thought about SRLM when I bought in around $2.50, "Too bad I'm getting in so late" What an amazing run that stock has had and it's only getting started!

[Libertarian_Guard]

Take a look at Gammon Lake (AMEX) GRS up over 8% today. It's still under $5.00 and sure to fly, if Ag ever gets some legs under it.

[Ander]

I definitely appreciate your comments scorpio, its always important not to lose focus, and look at the current situation. We want to be able to sell when the metals stocks become overvalued....we need to look carefully at when that stage will occur.

I really hope I'm not getting into the juniors too late....I didnt even know about them before recently, dangit! (And not long before that I didnt even know about the silver story...)

But SRLM is up over 5% today, with silver not even moving. Youve gotta love that. Of course, that just means it has a higher valuation in comparison to silver, sigh...

[Ander]

Ofcourse, now SRLM is flat... :p

Dang volatility.

[IrishGold]

Originally Posted by Libertarian_Guard

Take a look at Gammon Lake (AMEX) GRS up over 8% today. It's still under $5.00 and sure to fly, if Ag ever gets some legs under it.

Uh oh! Libertarian_Guard you said the word "Gammon" in the same thread in which Scorpio posted, and to top it off, it's the same thread in which G-khan told Scorpio, "Your hired.........."

Now G'khan is going to think Scorpio and I have conspired with you to get his Gammon!
He is very touchy about that!!!!
I could tell you stories that would curl your hair!
A 'gator got his Gammon

[Libertarian_Guard]

Apologies are allways gratuitously extended for any raw nerves that may be steped on from time to time.

But Gammon does control a nice big chunk of SILVER old Mexico.

[G-khan]

Originally Posted by Libertarian_Guard

Apologies are allways gratuitously extended for any raw nerves that may be steped on from time to time.

But Gammon does control a nice big chunk of SILVER old Mexico.

Yes and G-khan controls a chunk of Gammon shares that I plan to continue to control despite the fact Irish and scorpdude having other plans.

I also have ARQRF.OB and that did even better today...
+9.64%
I sold my Fidelity Gold Fund and used the proceeds to purchase some new stocks. I have to give scorpdude credit I used his wisdom for most most of my picks.

In fact he was the one who suggested to get Gammon at 1.70 and I did..

That damn old Grizzley is going to get a big head again if I talk too good about him.. If that damn bear was not so ugly I would

[lhslancers]

Hommel's dinner must taste real good tonight. EXR.V up 64% today on serious volume. i wonder what his picks will do if we get an upside breakout around the time of the conference?

[G-khan]

Originally Posted by lhslancers

Hommel's dinner must taste real good tonight. EXR.V up 64% today on serious volume. i wonder what his picks will do if we get an upside breakout around the time of the conference?

Wow....... 64% in a day I think this will become more common......... Huge moves as the market is so small compared to SM or Bonds. When Silver well runs dry you can bet we get some big moves there too. Well 1.50 a day is limit but spot prices may go up more. So Silver could open limit up for days in a row to catch up to spot. Limit up for Gold is 75.............

When the general public decides to enter look out as it will be a sight to see that will make that NASDAQ run up look slow and small - Gold Rush!

I still see no problems with Silver breaking its old high of over 50 an ounce. Fundamentals have not changed and demand will increase as investors jump on board...

[lhslancers]

If anybody really cares or follows this kind of stuff, Arch Crawford wants to go home very long the metals this weekend. He's wrong a lot.

[lhslancers]

For all you chicken longs out there, just take a look at a chart of netease. There is a LOT more to come. Just don't get cute and pick tops