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.
I don't think that the message meant 2013. If it did then I apologize for misunderstanding it.
However, I still believe that the message implied that silver price was below $10/Oz in early 2000s, before last bull market, and PAAS price was about the same as it is now.
That's correct: silver price was lower when PAAS was under 10 before 2005. This "discrepancy" has an explanation, but it might be a bit lengthy and/or complicated.
It would be more concise to say that present share price is under pressure because of bad earning numbers. Company has negative earnings and, if dividend /buyback taken into consideration, negative cash flow. It is not an exception, all silver miners are in the same situation and so all of them have depressed share price, in many case similar to numbers predating last bull market.
Ladies and Gents,
It is the most peculiar fact that my alias continues living actively on this message board without my participation. First of all, I have to express my gratitude to distinguished participants remembering my past contributions and continuing referencing my thoughts and intentions. Please note, however, that your references cannot be considered as definitive proofs of my thoughts and intentions.
Also, I feel obliged to explain that I do not follow RBY and great majority of other gold miners at the moment. I do not have any gold mining stocks in my portfolio and, frankly, I am not looking right now to add them. It can be said that my investment interests and preferences are in different market sectors. It does not mean, by the way, any sinister implications to gold mining. I have to mention this only because it may help someone to cure own obsession and/or at least see that I am not obsessed with little details of gold mining such as linear forecasting and so on.
Please, accept my best wishes for happy and healthy holiday season, great New Year and success with all your investments that obviously includes this stock. I would also suggest that in case you have questions, you could go to one of the boards where I still post and talk to me there. Good luck.
PS: my best intention would be avoiding more posts to this thread or any other threads of this message board.
Also, it must be added here that my sincere wishes of success do not cover Sewells ans Piopuke. The reason is clear enough.
Frankly, I don't even know who is Armstrong. Regarding numbers, if 700-800 is taken as input then silver price can be deduced easily enough. 700-800 means extremely deep bear market; gold/silver ratio would go to 80s and silver price would be in 9s.
Predictions come and go and it is always possible to find guys predicting very strong uplift in gold price and the opposite group telling that gold goes to dumpster. As a rule, I don't look at both prognostications. It is very difficult to predict gold/silver price. It depends mainly on derivative markets and the latter is hardly accessible for any researcher. It is no surprise that most "gold gurus" use very primitive tools to assess/explain gold moves; they use what they can use. It makes every prognostication of this kind highly unreliable and often harmful to practical investment.
I think any mining stock should be analyzed, firstly, based on present metal price. It happens sometimes that good/bad prognostication for metal price is used as an excuse to disregard company-specific facts and numbers reflecting present situation. Shortly speaking, if someone is interested to make an investment then he must understand present company business in black-and-white terms and make investment decision based on it. General thoughts about future gold price can only complement the decision; it should never substitute it.
I don't think that the best time to buy comes when "things are at their bleakest". It would be correct to say that it is perfect if you buy when it's the bleakest and, voila, next day things start improving. That would be the best, but unfortunately, it includes the second part (improving) which timing is unknown. There are also situations when everything looks already the bleakest and still tomorrow comes and situation continues deteriorating.
In my opinion, the best way to buy (i.e. invest) is to do it based on fundamentals, assuming that you consider to invest for long time. In this respect, one should find at least some fundamentals supporting the buying proposal. Yes, it is true, that things can change suddenly and fundamental picture can be deceptive and even the most anti-fundamental buy can yield the best results and so on. That's all true, but still buying based on fundamentals (i.e. on numbers and facts) has better chance to succeed, imho.
Yes, management had real chance to look like geniuses now, if they would keep the hedge. As it stands now, silver price doesn't leave any room for profitable silver mining. It is a race for survival. It is possible that silver miners have at least 1-2 years ahead of low silver prices. Hopefully, management will admit reality and re-consider dividend and production policies.