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Pan American Silver Corp. Message Board

  • warmcamp warmcamp Jun 19, 2013 6:03 PM Flag

    Maybe pleasant, but still incorrect

    A SeekingAlpha article (‘3 Highly Profitable…’, news link posted on Yahoo webpage) proclaims three “highly profitable silver companies” such as SLW, PAAS and AG. It says that these companies have “production costs that are comfortably below the current price of silver”. Firstly, SLW is not a miner and talking about “production cost” for them is not right.

    Anyway, SLW lapse is not the main problem. It is quite possible that the author honestly believes that some pleasant words are needed to help investments owned by him and his friends. Good intentions. However, making too visible error about “production cost” costs his credibility too much. Shortly speaking, no silver producer can have production cost (i.e. full cost of doing business) below current silver price, unless this silver miner can undertake painful operational changes to reduce operational expenses. It should be noted that these changes cannot be implemented quickly and, moreover, not every silver miner has luxury to make these changes.

    Using artificially low “cash cost” numbers renamed as “production cost” was not excusable in old times, when many people were just ignorant about “cost” issue. Doing the same now, after the same SeekingAlpha posted bunch of highly educational and valuable Hebba articles, is not excusable anymore.

    Present sector conditions are extremely difficult and they require high alert and awareness on individual investor side. Wrong decision can result in huge losses. It is always bad to pump stocks; doing it now for silver stocks is, in my opinion, irresponsible and can harm other people.

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