Thursday, April 05, 2007

Silver a calm happy week.

As far as I’m concerned this has been a good week for metals. Silver has been solid, no jumpy volitility and yet it managed to make a tidy little gain. I like this kind of week as it’s easy on the gut. I’m not expecting any sort of crazed parabolic climb just yet but I do expect more growth into the late spring. I doubt however we’ll have calm happy weeks like this too often. Will we see an attack on metals again by summer? Yes without doubt, the short possitions and the Central Banks all have a vested interest in seeing metals lower but with silver supplies shrinking and sellable Central bank Gold holdings also shrinking this reign of terror is nearing at the end.

Silver stocks are still acting flakey as companies with proven resources, good development news and even growing cash flows are not nessessarily reflecting the rising bullion price. Some of this is a reflection of base metal prices but even some pure silver plays don’t match the price action. I swear I’ve seen some price actions that look like manipulation, is it? I don’t know but with what I’ve seen recently on naked short selling I’m always paranoid when I see mindless swings

I’d like to ask for some reseach help. I was wondering if people have watched the Bloomberg Video on naked short selling called Phantom Shares ? If you have not seen this and trade stocks, please watch this, it’s unbelievable yet apparently true.
Phantom Shares video

I generally avoid buying U.S. dollar valuated stocks on currency concerns so I have little exposure to the U.S. exchanges, but I’d really like to know if this kind of fraud is practiced on Canadian markets? Is there anybody in the know that can tell me if they trading and settlement mechanism on the TSX is better than or just as bad as the fraudulent practices on the U.S. markets?

My last post was on silver equities and I neglected to mention one of my other rules for investing that I think is important. I always try to find out how much insider ownership there is in these companies. While it’s not always the case, I believe insiders with substantial stakes in the mine will have better motivation to improve your share price. No doubt there are well run juniors with low insider ownership and high ownership juniors operated by loons and fools but I still feel better knowing that the people running it are sharing my risk.

I’ve had 2 people write me directly asking for either my opinion on a junior or a list of what I hold. I’m loath to do this as I’m an amateur investor not an advisor. This kind of discussion invites abuse and trolls intent on pumping stocks and I’m not ready to deal with these issues on this site at this time. I don't do primary research on my stocks but poach information from others when I can then follow it up with other sources. I can’t authenticate everything I use so I would be uncomfortable making equity recommendations. I admit I do quote and discuss other peoples silver analysis but I have done enough research to accept the silver argument as true, I cannot be so adamant on all the equities I’ve taken the plunge on.

It’s funny that I believe the silver story so much and yet my best pick in the last year was Lionore a nickel play now about to be purchased. Nickel worked down to a ½ day supply and its price when nuts, Silver will have a similar supply crunch in a couple of years and my 300% gain on Lionore will look like a joke. Shortages do happen, look to nickel or better yet uranium, for an example of what will happen to silver when the deficit eats up the last above ground supply. Buy physical, accumulate and hold. Repeat for several years, and then retire.