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Gold Resource Corp Message Board

  • fruitvale3067 fruitvale3067 Jan 11, 2012 2:02 PM Flag

    Interesting post from the SLW board

    it seems as though some silver producers are beginning to take Eric Sprotts advice.

    <Eric Sprott called on silver producers to hold their silver inventories instead of selling and holding cash. From Sprott's article:

    "So here’s the question: we think we understand the value and great potential in silver today, and we know that the buyers who bought in late September most definitely understand it,… but do silver mining companies appreciate how exciting the prospects for silver are? Do the companies that actually mine the metal out of the ground understand the demand fundamentals driving the price of their underlying product? Perhaps even more importantly, do the miners understand the significant influence they could potentially have on that demand equation if they embraced their product as a currency?"

    "...This is where the miners can make an impact. If the largest pure play silver producers simply adopted the practice of holding 25% of their 2011 cash reserves in physical silver, they would account for almost 10% of that US$9 billion. If this practice we’re applied to the expected 2012 free cash flow of the same companies, the proportion of investable silver taken out of circulation could potentially be enormous."

    And today Endeavor Silver Mines makes this announcement:

    "Due to the correction in metal prices in the 4th quarter 2011, Endeavour management elected to hold a significant portion of the Q4 silver and gold production in inventory rather than sell at the lower prices. Management plans to monitor the metal prices closely and sell some or all of the silver and gold in inventory at appropriately higher metal prices, or if the need arises for more cash.

    As a result, the Company sold only 400,000 oz silver and 4,000 oz gold in Q4, 2011 and metal inventories rose to 812,000 silver oz and 3,000 gold oz in bullion and another 168,000 oz silver and 2,400 oz gold recoverable from concentrate as of December 31, 2011. Therefore, revenues dipped 39% in the 4th quarter to US$17.5 million and Endeavour's 4th quarter and 2011 annual earnings will not reflect the ounces withheld from sale and currently in inventory."

    And I say, the fun is about to begin! Especially if other silver miners follow Endeavor's (EXK) lead.>

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    • This is really interesting. Its not as if gold and silver prices are currently at low levels relative to the last 18 months. They must be expecting significantly higher prices this year, I can see this especially with silver.

    • As an owner of GORO, SLW and EXK, I am very pleased that EXK, which is debt free and already has over 100 million in the bank has decided to hold gold and silver instead of more dollars. They may take a hit on earnings from those that are not informed about the large amount of silver and gold they are holding instead of selling at what they consider to be low prices. If more minors refused to sell at depressed prices the paper silver scam would come to an end. JMHO

      • 1 Reply to tomg86402
      • Thanks for the post, Fruit. Good move on EXK's part. GORO began this process a few months ago, prior to Sprott's article. They have begun accumulating gold and silver in the treasury as a precursor to their dividend-in-kind program.

        Seems like GORO management is ahead of the game on many fronts. They have the cash, so why sell the PM's at a lower price now, if they can hold for higher prices later. Fiat currenc is only going to get more watered down anyway.


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