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Pan American Silver Corp. Message Board

  • gw240 gw240 Aug 7, 2001 12:47 PM Flag


    If the price of silver spikes suddenly.
    Is'nt this caused by a demand / supply imbalance?

    If the spike was caused by an imbalance.
    How does the market "know" when there is an imbalance?

    If there are no definite qty's at any single momemt. (ie. known shares)
    How is a proper valuation arrived at?

    Is the price based strictly on what an individual is willing to pay for it?



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    • --continued from previous post--

      As to how you find out a company's hedging policy, it's the same challenge you have in figuring out what any public company might be doing between public announcements, quarterly conference calls, or whatever.

      PAAS management is as solid as any in their commitment not to hedge their silver product; still, the directors or, if the board has delegated the authority, management could change the policy at any time. So all of us PAAS longs listen carefully at every confernece call for reassurance, which so far has always been forthcoming. OTOH we have never seen $4.16 silver before, and we can imagine that the pressures are tremendous. At least the company is sitting on a little bit of cash from the insider bargain offering.

      When you've done a little more homework, and if you're interested in takeing a bigger position in PAAS, why don't you call them up in Vancouver and talk to Rosie. She's pretty accessible and can refer you to specific assurances that mgt has given in the past.

      You might consider attending some investor conferences where you can meet and exchange ideas with like minded investors. The Jim Blanchard New Orleans Conference is probably the best known and best attended gathering of bears, contrarians, and gold bugs. www dot neworleansconference dot com.

      Two additional good sources of info: the yahoo NEM thread, and www dot lemetropolecafe dot com website (you can get a free trial membership to access their chat boards).

      You're in good shape with a cost basis of $3.30. Most of us PAAS longs, including the Smartest Man In The World Mr. Bill I Am Not A Monopolist Gates, have a much higher average cost.

      To buy low and sell high you have to buy low. Good luck.


    • Yes, the price is whatever someone is willing to pay. Yes, in a normally functioning market, the price will rise when all of the sellers willing to accept, say, $4.16 have sold. Then a high price will have to be bid.

      The challenge with silver is that there are two markets: the paper market, where buyers do not demand physical delivery, and the physical market, which is much smaller. In the paper market there is "leasing" in which the long guy pays the short guy one or two perecnt per year of an artificially low price, is free to consume the metal, and will cover somewhere down the road, when he presumes the price will be even lower.

      It is fair to say that the "real" market price of silver is the lease rate, not the nominal price per ounce.

      Those who have been accumulating physical silver can tell you that it seems to be getting tougher and tougher to deliver. A few years ago you would order five or ten bags and they'd be ready in a day or two; that is, the only delays were for transportation logistics. Last time I ordered ten bags it took two weeks to get delivery. What does that mean? I don't know. But I wish Warren Buffet would buy another 120 Moz, for physical delivery. Then maybe we'd see how deep this market really is.

      Maybe the biggest problem we have is that at $4.16/oz silver is just too bulky for serious investors to want physical delivery!



      • 3 Replies to crm_discriminator
      • I'm not sure I have a handle on the leasing concept. The way I understand it. It is preselling future products.
        Is that close?

        What are the leases backed by?
        Physical property?
        (ie ownership of stock in mines)

        If the leases are not backed by physical than they are in essence, as you seem to be saying "shorting" the value of silver.

        Are there any limits to how far out leasing terms can go?

        Who establishes the leasing terms?
        Who regulates this industry (leasing)?

        At some time there will come a crossover when the future cost of mining the product will exceed the future leasing rate.

        What happens with those leases?

        If you buy stock in a mining company are you buying ownership in leases too?

        Sorry for all the questions.
        Just trying to get a handle on this.
        With everything I read concerning the demand exceding the supply it defies economic principles that the price would continue down.


      • What form of silver do you buy (bars, junk coins) and where do you buy it from? What do you think of the 40% Kennedy half dollars? I like the fact that they can't be worth less than $1000 due to face value of the coins.

      • I am doing my part and ordering like crazy. I am not getting delivery fast at all!

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