silver - unoved and unwanted - but not for long.

  1. 9,081 Posts.
    Silver is stirring from its long hibernation:

    STRATEGIST LISTS TOP SILVER EXPLORERS

    SAN FRANCISCO (CBS.MW) -- Someday the silver story capture the
    imagination of American investors, says an authority on asset allocation
    and quantitative analysis.


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    The slightly precious metal's price can't seem to keep track with gold
    these days. Earlier this week, when the euro carved a three-year high
    out of the hide of the U.S. dollar, gold's spot price rose as much as $7
    an ounce, or 2 percent. Its poor cousin, silver, rose a few pennies, or
    less than a half-percent.

    Even Friday morning, as the dollar continued to topple from its
    currency perch and U.S. stocks tumbled, gold gained $2, or almost 1
    percent. Silver was flat to down.

    Over the course of a year, the picture is just as dismal. ( See
    one-year comparison chart.
    (http://cbs.marketwatch.com/tools/quotes/advanced.asp?symb=82799W01&sid=&intflavor=advanced&siteid=mktw))
    Silver's price is flat in the one-year span that began January 2002 --
    at $4.85 or so an ounce. Gold's spot price is up 25 percent, to $354 an
    ounce.

    Michael A. Berry sees the psychology of the crowd at work here. The
    former college professor of quantitative analysis, now a brokerage
    strategist, refers to Gustav Le Bon's 1895 book, "The Crowd: A Study of
    the Popular Mind."

    Le Bon explains, "When by various processes an idea has ended by
    penetrating into the minds of crowds, it possesses an irresistible power
    and brings about a series of effects, opposition to which is bootless."
    In real life 2003, this means most Americans, snow-stormed by a
    decades-long rush into stocks, have forgotten how to diversify.

    In the case of silver (and to a lesser extent, gold), I call this the
    Don Quixote effect. No one, except a faithful peasant serf, wants to
    touch the Man of La Mancha with a 10-foot pole. But when the tide turns,
    it turns in a big way. In other words: Don Quixote as rock star. The
    popular mind, says Berry, will embrace investments other than stocks,
    and then the ensuing rush will sweep aside everything in its wake.

    Berry has been a silver fan for years. His work on the subject,
    presented in several papers and speeches, identifies a wide range of new
    demands for silver, an industrial metal. The top strategist at
    small-stock market maker Leeb Brokerage chronicles research that shows
    silver as a possible replacement for the bacteria-battling agent
    chlorine.


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    Medical uses as disinfectants and anti-bacterials are also growing.
    Berry also points to anti-microbial silver compounds that combat
    pathogens, such as Legionnaires Disease, salmonella and e-coli bacteria.
    Silver solutions that could prolong the life of lettuce and other
    produce are also in the works. See: Asset allocations need surgery,
    silver
    http://cbs.marketwatch.com/news/story.asp?siteid=mktw&dist=nwtwatch&guid=%7B9C1E2B48%2D3FA1%2D479D%2DABEC%2D9F09B3462B6F%7D
    .

    Worldwide silver inventories of 400 million or so ounces are a fifth of
    what they were in 1990, says Berry. The former business school professor
    at James Madison University and the University of Virginia favors
    radical shifts in asset allocation for ordinary investors. These include
    silver and gold.

    Several institutions, among them the World Gold Council, are developing
    plans for an exchange-traded fund that would make it simple for ordinary
    folks to buy actual, securitized gold in stock-market trading. For the
    most part, the big Wall Street and London banks routinely ignore gold,
    silver (and agricultural commodities) in their asset allocation models.

    Berry is a believer in silver. He tells me, "Warren E. Buffett
    purchased 129.7 million ounces of silver in 1998. He must believe in its
    worth. George Soros and his Quantum Fund own 32 percent of Apex Silver
    Mines (SIL). Bill Gates owns at least 10 percent of Pan American Silver
    (PAAS)."

    Even with demand for silver increasing about 4 percent a year, most
    investors are giving the metal Man of La Mancha treatment, Berry says.
    This week, I asked Berry for his favorite silver-mining investments.
    Here they are.

    Apex Silver: "Superb management team led by Tom Kaplan, great field of
    geologists and very strong financial backing globally," he says. "This
    team has 470 million proven ounces of silver in Bolivia, and they have
    an exploration plan second to none in the mining industry, which is
    where real wealth will be created. Though they have not yet mined San
    Cristobal
    (http://www.min.tu-clausthal.de/www/lager/excursion/pict_06.htm) (in
    Bolivia), they will control much of the world's silver when the time
    comes."Industrias Penoles SA (IPOAF): "The Mexican miner has focused on
    silver and knows its own backyard the best. Stock is very cheap and they
    are a good management team, with Jaime Lomilin


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    leading the group."

    Western Copper Holdings (WTC). "WTC Toronto is a real up-and-coming
    silver story. They have an open-ore body in the Concepcion del Oro
    region of Zacatecas, Mexico, that has never been explored before. Tom
    Patton, who used to run  exploration for Kennecott, is the key operating
    person, and Tom Turner is the field geologist who knows more about
    Mexican silver deposits than any man alive. Western Copper should list
    on the American Stock Exchange this year."

    Several mining companies, among them gold and silver miner Wheaton
    River Minerals (WHT), which is active in Mexico, have seen their
    Toronto-listed shares gain sharply, 25 percent and more, in the first
    few weeks of AMEX trading.

    Western Copper's shares, traded in Toronto, have quadrupled over the
    length of a year, even with silver prices flat. (Don Quixote is getting
    respect somewhere in investor-land.) "It could double or triple from
    here, and yes, I own the stock," says Berry.


    _______________________________________________________________________

    Berry also lists Cardero Resource (CDU), a Toronto-traded company that
    Robert Bishop of Gold Mining Stock Report
    (http://www.goldminingstockreport.com/), one of the longest-running
    mining exploration publications, highlighted recently. See: 2003 bright
    spots.
    http://cbs.marketwatch.com/news/story.asp?siteid=mktw&dist=nwtwatch&guid=%7B5E9FC4AA%2DB5B8%2D44FD%2D9FF5%2D0482B61F3A19%7D

 
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