Jesus Ray. Did you actually say this stuff??
Ray Hughes gave this analysis of PAASF over on the
Silver thread about a year ago. A share price of
$5.60 puts us below the 7% premium Ray talks about, $8 to $8.50 would be fair value,
based on his model.
Message 3674128
Talk : Gold/Mining : Silver prices
| Previous | Next | Respond |
To: +TD (859 )
From: +Ray Hughes Wednesday, Mar 11 1998 1:33PM ET
Reply # of 1768
TD,IMO silver may be the nearest thing to a
guaranteed winner among all the metals, and I was a Wall Street based metals Securities
Analyst,
specializing in metal price modeling, for over 30
years. And, PAA mgmt. has about the sharpest, most
aggressive leader in the whole silver camp. Ross
Beaty is a real ball of fire.
However, with regard to the 650 million ounces of
silver, a great portion is in Russia and some
observers discount a big portion of the Russian
silver for inumerable reasons everyone is familiar
with. So, use half the Dukat resource - say about
200 million oz. - and add in about 300 million oz.
from the other sources.
Hence, divide 500 million by fd. shares yielding
18+ oz./share.
Next, like all options (metals shares are just
options on the underlying) PAA's option premium
varies with change in sentiment regarding the
underlying asset. In PAA's case, from about 7% on
the low side to about 15% os silver price on the up side.
PAA trading strategy:
1 - Subtract cash from market capitalization.
Remainder is option premium for PAA as silver play.
2 - Calculate premium % to current silver price.
3 - Buy when premium drops close to 7% - sell when
premium approaches 15%.
4 - Look for annual seasonal rally in silver for
best trading opportunity
5 - Annual silver rally (X-mas season jewelry
making, photo film making for holidays, etc)
October - ending late Jan. - early Feb.
Ultimately, silver production deficit will exhaust
remaining excess inventory. Problem is, no one
really knows how much silver is available from old
stocks - old coins, jewelry, antiques, etc. 2 years
- 3 years, maybe more, but shortage is inevitable.
Then, monster short squeeze just like 1979 - 1980
and briefly, silver price could well exceed any
fundamental value (about $10/oz.) on the squeeze.
Optons on COMEX futures will be dynamite!!
Take it from an old silver player.<<<<<<<
I think I'll go back to the BWR thread. |
