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Endeavour Silver Corp. Message Board

  • JWtechy JWtechy Apr 21, 2011 8:22 PM Flag

    What you own and what you face

    If you are day trading, then just pay close attention to the swings and try not to get run over. I can't help the day traders. If you are looking for an investment and want to get maximum leverage on the "silver" rush, then the miners I believe will out perform over a period of "quarters" even the silver stocks.

    Some recommendaions:

    - You want to play silver and are conservative: Buy the actual physical.
    - You don't want the maintenance: Buy the silver stocks - SIVR, or SLV(JPM holds it back a bit)
    - You want a silver stock that promises actual delivery on demand once per month and guarantees the actual physical, backing the paper? Buy PSLV. Problem here is you pay a steep premium for that privilege. And to date no one has asked for delivery.

    Why I think the miners are the best play: simply put they have a highly levered bottom line advance to the price of silver. They will not fold or be subjected to the tricks that may ensue should all those who hold paper actually want delivery, or at least the big players (sovereigns for example). The miners don't make money without producing the real thing, no paper games.

    The current misguided hedge long silver stocks short miners (in the event of pullback to make more because they are percieved to correct harder) is absolute lunacy in my opinion. All you do is compress an already tight float stock. This "condition" approaching earnings, is the most dangerous retail short play I've seen in my lifetime.

    EXK case in point: It has crap for analyst following. It has incomlete yahoo data. It is newly on the NYSE, it's a Canadian company, it is not on most folks radar. All that, with extreme DD, spells tremendous opportunity.

    So lets look at the current facts:

    - They had a forward projection of earnings of like .56 a share for 2011...it is gone now. Why? because it was based on a projected price of $24 for silver.
    But just the same, given a top and bottom line growth rate in the high double digits, I scaled back my multiple to 35. So with no adjustments, based on the old numbers 35 X .56 gets you a $19 dollar stock price.

    - Reality is silver is a lot higher than $24. Anybody think even in a correction that silver goes back to $24? I didn't think so. So the company gave a quarterly update that reported they achieve an average price of $33 for the quarter. That is almost a %50 percent improvement over the base projection. Lets say it holds there and the average for the year is $33 for silver. That says we take the old $19 target and upsize it to 1.5X or $28.5.

    But we all know, silver is not $33, it closed today over $46. Lets call that a roughly 30% increase from the 33 level. Back of the napkin upgrade to target price 1.3 x 28.5 or $37. This assumes silver stays in the $46 range for most of the year.

    Now, if you buy SIVR at $46, and it closes the year at $56, you made a nice gain.

    If you buy EXK at $11.80 and SIVR closes at $56, you will achieve a price in excess of $37 on EXK, an over 300% gain from current levels. I'll not adjust from the 46 to 56 and leave that to absorb any increase in oil related expenses.

    Although even their, oil is us dollar based, and the Canadian dollar is not in a downward spiral like the us dollar so even that is unfair, but lets leave it for a buffer.

    Bottom line: the miners will significantly outperform silver from this juncture foward.

    So shorty can post all the FUD he or she would like, but at the end of the day, the fundamentals will prevail.

    There is an onslot of other aspects that make this little gem even more attractive...but hey, we'll save it for another day.

    invest with care,
    jw

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    • Silver closed $45, will open $49+, that's $4 delta. Each $1 in silver price advance is $2 or more dollars in EXK price on a medium term sustained basis.

      When EXK beaks, it will run harder then spot.
      fwiw,
      jw

    • Life is a piece of paper white, Whereon each one of us may write His word or two, and then comes NIGHT.

      Greatly begin though thou hast's time

      But for a line, be that sublime,

      Not failure but low aim is crime.

      Moral of the Poem:

      A high aim and a sense of urgency may pervent tardiness and sloth from robbing us of our blessings.

      Prophet Enoch heard a voice from the deep bowels of the Mother earth, Enoch recorded it as "wo wo is me, the Mother of men: I am pained, I am weary, because of the wickedness of my children. When shall I rest and be cleansed from the filthines which is gone forth out of me?

      When will my creator sanctify me, that I may rest, and righteousness for season abide upon my face?

      Then it reports Enoch after hearing this Voice from Mother Earth he wept.. and cried unto the Lord Jesus Christ saying "Oh Lord wilt not have compassion upon the earth?

      Earthquakes in Japan and the rest of the world..just might be telling us all something that Enoch tried telling us.. many years ago.

      Have Good Friday and weekend.. remember the Night has a thousand eyes.....

    • if calls are over priced why not sell them?

    • here is some examples I try to buy deep in the money calls with very little premium on them and sell out of the money calls with lots. EXK I when the stock was somewhere around $9.2 I bought the may $5 call for $4.40 a little later the stock went up to $9.6 or something like that and I sold the may $10 call for $1. so for $3.40 I will make $1.60 if the stock is above $10 which it should be that is a 45% gain next example I bought CDE $28 June call and sold the $32 may call for $3 spread cost if CDE just stays where it is or goes up I will make 33%. note these trades only take a month at worst and they are as safe as owning stock

    • Keep it up JW! I, and Im sure others here, appreciate your posts.

      • 1 Reply to lulus219
      • Any stock Broker will tell you these Common stocks are FIAT in design by purpose.

        The recent post title (FWIW) regarding the days and outstanding shares going up.

        Its a fact of life with todays poison dart dart deals.

        The poor common shareholder work heard fot their money and invest in these firms only to see the firms Print up more shares as time passes.

        Hey, as long as they give them small return.. the American investors will keep investing.. Hope alive..

        If it was fully diluted it would run to high.. and they don't want you to make to much money..

        Plus, My Cousin said there are other reasons.

        One being the Irish Gypies kids work in groups with their 401 accounts and one controls the accounts.. and they hit the ask price with ton of pressure from the group of 401's money which sends the stock to orbit zone..

        So they have to regulate the price with monitoring the flow and selling to maintain even price action.

        Thats why day trading has become so popular today.

        Stocks tend to be abused by the system of players be it Hedge Funds, or Irish types that know how the systems works..

        Tinkers they are called..

        So the stock market has its own reasons to print up more and more shares.

        All we can do is play within the rules..

    • Right now it is foolish to sell options because implied volatility is so low and the premium isn't as attractive to warrant much risk.

      Implied volatility for both calls and puts has fallen to 70%...A week ago it was at 80%, and now has reverted back to the historic average. Remember when I was saying that calls were overvalued? This is the reason...I was buying heavily yesterday to capitalize on a more favorable risk/reward since a 3 day weekend is a great opportunity for fireworks on Monday.

      With the VIX under 15 again, tremendous opportunity for buying options exists if you locate an underlying with a favorable profile.

      Merely buying ITM options on down days and selling on up days is not as effective as hawking the VIX and watching IV ebb and flow.

      The only times I really sell options are when IV rises 10-20% from the historical average...The premium will evaporate when things settle (as we've seen) so you get better ROI when buying with the VIX low and selling with the VIX high.

      Notice why the Nov calls lost money despite a flat finish? IV dipping...

      I only write options against equities like AAPL and GOOG because they are not takeover targets.

      If you decide to write a covered call against your shares of EXK, be prepared to miss out on a ton of upside if a buyout or deal is made...I've lost out on tens of thousands of dollars trying to generate income from covered calls when good news is released.

      The only writing strategy I'd employ here is a bullish credit spread.

      I'd look much closer into derivatives if you are interested in income generation...The bullish credit spread or a straddle would work well with the current IV.

    • You are all very much welcome. I appreciate the acknowledgement.
      :)
      jw

    • There's no such thing as a sure thing in investing. Any number of things can happen - corporate malfeance, world-wide economic meltdown, to name two. But this, and a few other of the junior miners, comes as close to a sure thing as any stock I have ever owned. Thanks for this thread. And anyone who hasn't read the Motley Fool article posted Tuesday, I think, should do so.

      • 1 Reply to hatchmo52
      • Hatchmo,

        Do you have the champagne on ice for when we get a double or triple here? All I can do is just be quiet and wait for the real value of the miners to catch up with the silver price.

        I think we could see 80-100 silver prices this year! My initial projection was if silver prices are 55ish then EXK should have 200-250 million in net profits going forward. I think that could translate into $50 a share price. Don't know how far it will go, but as I always like to say, having your money here is better than money in the bank.

    • bestdriver4577@sbcglobal.net bestdriver4577 Apr 21, 2011 11:45 PM Flag

      Thank you JW.
      You are one of the few that has given a very logical and informative post. This is only the 2nd. time I have posted on any message board.
      I am an older guy that lost my job two years ago, ran out of unemployment and had to go on Social Security sooner than I wanted to. During my long working career I was lucky enough to have owned and managed four different businesses of my own for a period of 24 yrs.
      I thought I new about business economics until I started trading stocks about a year and a half ago. I, like you thought that a company with no debt, a great product that should normaly rise the share price as the price of silver goes up. But much to my suprise, the share price has been going down.
      I have made many trading mistakes in the short time that I have been trading{stock chasing,selling to early on panic, etc}but I have yet to figure out how to judge if a share price is going up even though the fundamentals and the company numbers look great. I have been beaten up pretty good by low life CEO,s that have sold thier stock after hours at a cheaper price to private investors {SHZ, DRYS,GPL,to name a few that beat me up}but we have no control over situations like that. I love trading stocks but I get dicouraged sometimes when a stock should go up and it doesnt. I just wanted to gain some xtra money for my retirement without having to settle for .20% interest from the banks.
      I will hang in there and would like to again thank you and other traders that give logical and helpful information.
      Have a great Easter.

      best driver.

 
EXK
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