Gold and silver are contrarian indicators of US economy. As long as US economy moves forward, PM situation will likely stay bleak.
You know, ted, I suspect that your investment criteria is not the same as ones I use. That's all right, every person is unique.
However, it is hard for me to accept that "PAAS is a steal..." is kind of fact. Frankly speaking, I would not take it as "fact" for any stock :). Don't take it personal and hope you will make it. At the same time, in case your investment record is not too long, try to research fundamentals. If any "facts" exist in stock investment business, then they used to come from fundamental side, not from our attitudes and demeanor.
First of all, it was an option expiration day. Many stocks become volatile on such days.
Also, the stock rose strongly right before the drop; it happened also without news.
In general, PM stocks are trading vehicles now; they can move fast and strong without any news.
Also, do not consider it as offense, but using margins, especially in this sector now, is a very risky idea. Market is always unstable and this sector cannot rely on support from fundamentals.
I think it is a good deal and it creates interesting opportunity here. Certainly, XPL deserves consideration and analysis now. Zinc price may have some problems in short-term, because of Chinese slowdown. However, zinc cycle will likely enter boom period in mid-term.
Hopefully, this stock will see better times ahead. Gold part of the story was tough, but, it seems, this company went out better than many peers.
Why is PAAS the strongest silver miner around? In good times, the comparison would have to be based more on mining-related issues: which company has the best mines. In bad times, as they are now, all mines have problems, profit is either too small or doesn't exist at all. The comparison would have to be based more on financial issues: which company has the strongest balance sheet that allows continuing running and, maybe, even buying some depressed assets on side.
In this respect, PAAS has the strongest balance, as of end of 2014: cash position is $330M, total debt is $60M. It means that net cash position is good $270M. Let see how other silver miners go in this category (net cash position): HL: $-290M (yes, it is negative); CDE: $-210M (negative too); AG $-40M (again, negative); EXK: $3M (at least, it is positive); TAHO: $30M (not too bad, but still not PAAS number).
What else? Sorry, if I missed something.
Financials say it: clear leadership position; competition is not even close. Definitely, real financial analysis must go further, see details behind headline numbers. However, the difference between PAAS and peer financials is too big. Even if the further analysis can find more negatives in PAAS and more positives in competition, it will not change the final verdict.
Hopefully, everyone understands that the points above do not mean that PAAS is a crying buy opportunity. It meant mostly that other silver stocks are not worth much in present silver market conditions. PAAS could be still considered as an "investment grade"; other stocks look too close to "junk" category.
Good morning, Honolulu.
I appreciate your opinion, but I am not quite sure that it is shared by other parties. If anyone has questions then it can be done in other places. As it was mentioned, I still post on other message boards, and adding fire to this place is not something I am looking for.
PS: I apologize for this intrusion, but it seems to me that my alias lived on this board for too long, without my
participation. Hopefully, few people here could grow up at last.
Good luck with your investments, anyway.
Firstly, substantial part of silver supply comes from non-silver miners, producing silver as sub-product. They don't care too much about silver market.
Secondly, silver supply exceeds "non-investment" demand that includes industrial usages, jewelry, silverware, etc. The gap between supply and non-investment demand is closed by "investment" demand. It means people and entities buying silver for hoarding; they don't "consume" it. This investment demand is fickle and lack of it creates oversupply of silver market.
In any case, silver follows gold, because of this "investment" factor. Silver is always considered as gold's little sibling, in investment terms, and silver miners cannot get out of bear market as long as gold is in bear market.
Probably, you heard all of this already. I repeat these points only because your message raises these issues. It is good, imho, when message board discusses serious topics.
Probably, your questions were rhetorical. Please, accept my apologies if they were not.
In case it is not rhetorical, stock longevity can be better assessed through financials. The first step is to check balance sheet (net cash position) and cash flow statement (cash burn rate). Further analysis can take into account future developments, because financial numbers are not static.
In this respect, PAAS has very strong financials, as you definitely know it already. If company cancels dividend then it would be able to go without any troubles for 2-3 years just using present cash hoard. If it doesn't cancel dividend, then it has credit line, recently arranged, that provides big and cheap funds (only 3-4% interest). It can be asserted that PAAS is one of the strongest, financially, PM stocks at the moment.
In other words, this stock is not in financial jeopardy and it creates some room. If you already have shares and you decide to sell, by any reason, then you can still do it on your own terms, i.e. you could wait for a short-term rebound and sell for slightly better price. it is not warranted, but it has chances; stocks always go up and down.
If you don't want to sell shares then share price is less important now and you could wait for sector rebound. Sooner or later PM sector will recover; nothing goes down all times on market. Obvious enough that exact timing is hardly predictable. At least, Chapter 11 is not a threat; so you could always count on future recovery.
Please, don't take my message as too pessimistic. It is not. Good luck with your investment.
I think that zinc is more prized asset at this economic juncture and this company has financial problems. Which asset would you prefer to pick up if you, prospective provider of new funds, have choice?
Yes, it is just a guess, but I think that chances for possible financing go following: 1. Dilution 2. Bongara deal 3. Hamilton deal. By the way, I think that it would be better for present shareholders to have it in backward order, but shareholders never decide.
It seems to me that company will either sell/reduce Bongara interest (probably, to Peruvian partner) or dilute at this level (it would be about 20% dilution). Both scenarios look doable, so I don't think that bankruptcy is a real threat at this point.
You will get back full amount of this withdrawal, when you file your U.S. taxes. The number, "foreign tax credit" will be in your 1099 brokerage form. Remind your accountant to record it properly.
Most likely, silver will be higher on Monday, bolstered by bad job report. It is quite possible that $17 will be reached next week. However, I don't think that it rules out Fed actions in future and it is too early to say whether silver price makes a resolute turnaround at this point.
Financial side of the story is clear; dividend cut would be natural here. The obstacle comes from management; they are stubborn. How long can they continue being stubborn? Who knows. It can continue long enough; this company has cash. It may happen that people, waiting on sidelines, see the situation, eventually, when dividend is cancelled, finally, but company cash got depleted to the point when risk is too high.
Actually, PAAS management is not the worst in the sector; though one should remember that average level of management in PM miners is just awful. This company has better than average operating performance; i.e. these guys can move stuff around mines. The problem is that beyond mining they behave like the most stubborn goldbugs.
Regarding possible improvements, firstly, they should cancel dividend. The whole idea of paying money out of treasury is not healthy and with worsening operating numbers it would be the most logical thing to do for any financially literate managers. Regarding operations, mothballing unprofitable mines etc, it was mentioned correctly that it is impossible to do it overnight. However, it is something that could be done in two years, for sure, and, in this respect, management wasted last two years keeping heads in sand, dreaming about sudden return of silver bull market.
Will they do something now? Firstly, it would involve admitting mistakes and, again, they are stubborn. Also, any operational changes will take time with count starting only when it really starts. Dividend can be still cancelled at once. Most likely, it would cause another drop in share price; it makes unreasonable to buy right now; that's investor perspective.
Continuing on investor perspective, bear market persists and financials worsen. It dictates continuing reduction in investor interest in this sector. It is always possible to try a quick TA trade here or there, but risks continue increasing. The whole sector is not worth of anything serious now.
Final notes: PM miners have zero control over metal price and it comes by very serious reasons. There is no chance for improvements on this issue. Also, I agree with you that "cash cost" is a ridiculous measure; it is a very old issue with this industry. By the way, "all-in" yardstick, started few years ago, quickly loses credibility too.
Good message, Silvercomments. I do not agree with all points but I support many of them. By and large, miners play silly games by promising and delivering record production at silver prices guaranteeing capital losses. What other industry could afford it?
This bear market continues for 2 years already (by the most optimistic count) and companies show no real signs of adjustment. It confirms chronic problems in corporate development; these companies are made for bull markets only.
I didn't notice any relative outperformance in AG share price comparing to other miners. Holding fraction of production on hold for a quarter won't affect market silver price at all. It is enough to say that pure silver producers deliver less silver than copper and zinc miners. However, taking operating steps, such as closing the higher-cost mines, would reduce production gradually and it could become a factor in due time.
Also, I would suggest you to think a bit before giving out estimates of other people experience or abilities. Communicating with people in careless way will just reduce your chance to hear better informed opinions.
Companies have to sell below cost because they have to make payrolls and pay vendor bills. The alternative means closing the business. Hopefully, you understand that in case business is closed, shareholder equity goes to zero.
Despite the general consideration above, PAAS and other silver miners could take few steps to address low silver price. After all, low silver price is not something new, it continues for long time already. The could consider closing the worst (higher-cost) mines and canceling dividend. It seems that most mining companies prefer to swim along hoping than metal prices will recover without any actions on their part.
Sorry, I am not a TA expert. Looking at fundamentals I don't see it as oversold, though it doesn't mean anything for short-term.