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. |
