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Silver Wheaton Corp. Message Board

  • seasonedspeculating seasonedspeculating Jan 7, 2008 4:12 PM Flag

    Silver Supply & Demand

    According to Ted Butler, 90% of the above ground supply of silver has now been exhausted. The annual consumption of silver now exceeds the supply. Basic supply and demand economics dictates that silver prices will soon be rapidly rising and could easily double in 2008. With the leverage advantage that SLW offers (nearly no overhead or operating expenses), just how high could SLW rise this year? I don't dare state my estimate for fear of being laughed off of this board. But I'm certainly entitled to make my private estimate. How many of you who post here have the courage to hazzard a guess? Once we have five estimates, I may have the guts to share mine as well. Hint: It's a very high number. SS

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    • Out of all the guys on this board, I respect you the most SS. Wisdom that far exceeds most, it's good to see a trader that bases his decesions on strong and sound fundametals as well as having keen chart and L2 knowledge.

      The DOW is on the edge of the cliff, it printed a triple bottom today, most bearish sign. KB home's estimated loss per share tomorrow when they report, is -$1.08. I think the loss is going to be quite a bit greater than estimates. Will sned the rest of the market down with it.

      I expected a nasty shakeout in the Gold and Silver contracts and stocks right before the 2cd wave up, when I looked at the COT report at the end of Dec.

      The last couple of days was short covering by the instituions, they can get ruthless when they need to cover, doesn't bother me in the least, simply tells me we go up drmatically soon there after.

      As Butler says, the stockpiles are gone. The demand for Silver is about to go exponential as the counrties that are pegged to the US dollar begin to hoard Gold and Silver as a hedge against further declines of their currencies as the dollar declines into oblivion.

      Some exciting days are ahead for us and if you added on the dip or bought in, you have a great entry point.

    • SS,

      I'll take a shot at an estimate for SLW...and since you didn't specify when in 2008, I'll say 12/31/08.

      SLW is supposed to sell 13million ounces of silver in 2007 and 25million ounces of silver in 2009..but for this estimate I'm going to use 13M ounces sold. I too, believe that the price of silver could easily double in 2008, but because this doubling probably won't happen till the latter part of 2008, my average sales price that I'll use will be $23.90 per ounce....since SLW has to pay $3.90 per ounce, that means they'll net approx. $20.00 per ounce...take that times the 13M ounces sold...and you get $260,000,000.00...divide that by the number of shares outstanding.....260M/222M shares....equals $1.17 per share of earnings....now take this time the current PE ratio of approximately 50 (and if the price of silver doubles during the current year, then the PE will also increase significantly, but for now we're going to continue to use the current PE of around 50)...I get a share price of $58.50....while this doesn't include the paydown of the $410M of debt....$58.50 is my estimate and I'm sticking to it.

      Sticking to it for NOW...while reserving the right to become euphoric during the upcoming meteroric rise in the price of silver and therefore inclined to spew nonsensical estimates like $200-$300 per share followed by phrases like, "To the moon" and "this train is leaving the station so get on board"..etc. etc. etc.

      • 2 Replies to hbrown412
      • I like HBrowns prediction.

        I did some analysis in 2006, and it has proved pretty accurate as it relates to the 12.50 price level and 15.00 to 15.50 price level. here is some of what I found:

        I found a report which adjusted silver prices from 1965 to 2005, to constant 2005 dollars. It did this using a CPI adjusted rate so that the 50 to 55 dollar high in 1979 was converted to today's dollars- as an example.
        Here is some of my observations on the data:

        * for a period of 7 years, not consecutive, from 1974 to 1984, the silver spot price held right at $15.00 to $15.50 and in the other 3 years of the 10 year period was substantially higher in today;s dollars;

        * For a period of 5 years, not consecutive, from 1965 to 1987, $12.50 was a support or resistance line, where the price stayed at exactly at $12.50 in today's dollars;

        * For a 3 year period, not consecutive, from 1979 to 1984, silver spot remained above $26 to $28 dollars - in today's dollars;

        THE ANALYSIS:

        Note that within the last year (2006 to 2007), silver spot price went exactly to the 15.00 to 15.50 dollar mark before falling back, this coincides with the 7 year support line created between 1974 to 1984.
        Note also that for a good portion of this year, 12.50 has been an average price, coinciding with support/ resistance line at 12.50 between 1965 to 1987.
        If the silver spot price breaks above 15.00 to 15.50 the next resistance point on the 40 year charts are at, in 2005 dollars, 24.00 or 29.00 spot price.

        Now keep in mind, it previously took years to get through some of these points. That's all I'll say, and, I'm as enthusiastic as anyone else out there.

        So using my spreadsheet and using an even more conservative multiple of 40:

        2007....13 million ounces...Share 48 $CAN....warrant $8.70
        2008....18 million ounces...Share 66 $CAN....warrant $12.36
        2009....24 million ounces...Share 88 $CAN....Warrant $16.73

        Of course, I too haven't factored in paying down debt, more silver acquisition etc.

        Chemaes

      • $23.5 by the end of June
        $34.00 by Jan 1 2008

 
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