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Gold/Mining/Energy : Corner Bay Silver (BAY.T) -- Ignore unavailable to you. Want to Upgrade?

To: Claude Cormier who wrote (249)	10/21/1999 12:47:00 PM
From: ahhaha	Read Replies (1) \| Respond to of 4409

If BAY can do it in an effective bear market in silver, then I guess high tech companies can do it in roaring industrial bear markets. In a similar risk class the high tech company cleans BAY on performance. The only environment in which to prefer the latter is with rapidly rising silver prices and rapidly rising interest rates. As for BAY with flat silver prices BAY goes sideways. Others on this thread seem to think BAY will persist upward since they will be finding more and more silver. The problem is that finding more and more means cost diseconomies of scale. This is the opposite phenomenon of that experienced by the larger miner with idle resources. The small miner incurs unscaled costs at an unwieldy rate since they aren't outfitted to cope with scale. Trying to rapidly grow is a little like trying to bite off more than can be chewed. Also, it takes bigger and outside infusions of capital in order to achieve the new scale. The capital has its own hidden costs. The expected return is therefore capped and the stock after the greedy public runs it up and the players jump off, returns to the random walk of its previous level. People extrapolate past stock behavior and claim that that will persist. Scale growth is not linear in cost. That is often forgotten both in mining and high tech.