“Urgent Silver Opportunity” (Stephen Leeb)

“The World’s Largest Silver Resource Base Has Now Become Attractively Priced”

So goes the headline for Dr. Stephen Leeb’s new teaser ad — and he tells us that we should …

“Buy now for stunning potential growth!”

It’s no surprise that Leeb is a commodity booster — he got a lot of attention for peak oil pronouncements in the past, and was often quoted in oil’s run to nearly $150 back before the bubble burst … and he’s still pushing a commodity-focused strategy, commenting, like most of his ilk, on the pressure that the Chinese are bringing to bear with their demand for copper and oil, and on the failing fiat currencies of the world.

Not that I necessarily disagree with the broad premise, of course, though I’m wrong at least as often as he is.

He tells us that “Silver prices could easily climb to $90 an ounce over the next few years,” which would obviously be a boon for any silver miner worth his zinc. So which silver investment is he teasing today?

Well, to get the word from the Doctor’s mouth you’ll have to pony up $249 every three months for a subscription to Leeb’s Real World Investing … he’ll toss in a silver Eagle, he says, for each payment, but that’s still a pricey commitment for many. So shall we look at the clues and see which stock it is that he’s all hot and bothered about?

I thought you’d like that plan. Very well then, some clues please?

“As silver prices rise, shares of most silver producers could rise even faster. And one in particular looks very appealing.

“The company owns the world’s largest silver resource base, amounting to some 286.8 million ounces of proven and probable reserves, plus another 532.1 million ounces inferred. At today’s prices, that’s worth over $13 billion.

“Yet, right now you can buy shares in this silver company for a very attractive price. The company has just opened its first silver mine and production is only just getting started. This year it is expected to reach 7 million ounces – increasing to 8-10 million ounces next year. By then silver prices may be considerably higher, which could boost the company’s profits considerably.

“And there’s a kicker. The company also owns gold resources of 26.2 million ounces proven and probable, plus another 16.3 million inferred. Which means it will also profit from the current long-term bull market in gold.”

Does that sound like any of our big silver mining friends? Indeed, Leeb is a bit off with a few of those clues, but as confirmed by the all-powerful Thinkolator this must be … Silver Standard Resources (SSRI in NY, SSO in Toronto).

SSRI does indeed claim 286.8 million ounces of silver in their “proven and probable” reserves category, which is a fraction of their total measured, indicated and inferred reserves base. And they did just start up commercial production at their first mine late last year, that being Pirquitas in Argentina. They do not have any proven and probable gold reserves to speak of yet, though, the 26.2 million ounces is almost all from the Snowfield and Brucejack properties in British Columbia (and it’s actually 26.31 million ounces of measured and indicated, and another 16.25 of inferred). “Proven and probable” is going to require more drilling (which they are doing), and possibly the electrification of the area that has been teased by Matt Badiali and others (Snowfield and Brucejack are in NW British Columbia, the area that Badiali teased as the “golden triangle” poised to profit from the new NW transmission line planned to bring electricity to the area and make mining more affordable — for what it’s worth, I speculated that SSRI might be one of Badiali’s picks, too, though the clues weren’t detailed enough to confirm).

Silver Standard has taken a tumble in the markets recently, as have so many others — over the past year it has been down a bit while Silver itself was up about 30%, and lower-risk “silver streamer” Silver Wheaton has more than doubled. SSRI is a pretty big stock for a silver miner, with a market cap a bit over a billion dollars, but it does have just the one mine in production now so the shares can be very volatile based on the prospects for their other major prospects, including those gold resources as well as (mostly silver) mines and exploration targets in Peru, Mexico and elsewhere. The Peruvian mine, San Luis in Ancash, Peru, is the most advanced, it has a completed feasibility study as of this month, but the other projects are quite a ways from pulling stuff out of the ground. Still, even with just one mine operating SSRI is expected by analysts to turn a profit soon, with estimated earnings of 30 cents per share this year and 46 cents next year — still expensive, if that was all you were buying, with a forward PE of 38, but certainly any projections for SSRI have to assign some value to their other gold and silver resources and reserves.

Of course, if silver goes back to $12 an ounce … look out below.

I’ve stated before that I find SSRI intriguing thanks to their current production and possible future projects, particularly the possible boost if they’re able to make Brucejack and Snowfields feasible and book those reserves in the coming years, but I don’t know that there’s a particular rush (though Leeb calls this an “urgent opportunity”), and I’ve never owned shares of this one myself. If you’re excited about silver, Luke Burgess has been telling us that SSRI is “Wall Street’s Favorite Silver Stock” for quite a while and teasing out his favorite “next SSRI” candidate, which I revealed back in September was CDE (the teaser is still running as of the last week or so, I haven’t re-checked but I imagine the details are unchanged) — you can see that article here if you’re looking for other silver ideas.

Or if you’ve some favorite ideas for investing in silver I’m all ears — share them with the world by using the friendly little comment box below. I don’t personally own any primary silver miners right now, though I’m sure there’s some minor silver mining exposure in my portfolio and I do own some silver coins. If you’ve ever subscribed to Leeb’s Real World Investing, just click here to share your experiences with your fellow investors at Stock Gumshoe Reviews (we have only a couple reviews of that particular letter, but you can see all of the Leeb newsletters reviewed here). Thanks for sharing your thoughts!


Related Gumshoe Articles

Leave a Reply

22 Comments on "“Urgent Silver Opportunity” (Stephen Leeb)"

avatar

stockcrazy10
Guest
0
May 20, 2010 4:49 pm

" I speculated that SSRI might be one of Badiali’s picks, too, though the clues weren’t detailed enough to confirm)…."

You're right!

Adrian
Guest
0
Adrian
May 20, 2010 4:54 pm

I am a holder of SSRI. The shares took a big hit in January when president and CEO Bob Quartermain suddenly and unexpectedly "resigned". The shareprice has been under pressure ever since. Wouldn't be surprised if it were a takeover target now given its massive underperformance over the last year. In terms of other primary silver producers I like First Majestic (FR.TO) and Great Panther (GPR.TO). Precious metals are highly volatile right now though so be careful about opening new positions at the moment.

john
Guest
0
john
May 20, 2010 5:18 pm

My favorite silver stocks are Minera, MAI, & Impact, IPT both in Toronto. Minera is MNEAF:US OTC. MAI produced almost 5,000,00 oz silver & over 70,000 oz gold last year, with an advanced portfolio of silver projects in Argentina & also has gold & one of the largest undeveloped copper projects in the world.http://www.minandes.com/s/home.asp IPT is also a producer, & has an extensive portfolio of advanced silver projects in Mexico, http://www.impactmin.com/s/Projects.asp I own both…..john

noam
Guest
0
noam
May 20, 2010 5:32 pm

Rich, you say cash in hand is king!
Are you not worried about the massive cash printing in US and Europe? How much will your cash be worth next year?

jeff
Guest
0
jeff
May 20, 2010 5:41 pm
I hold GG, SLW, CDE (some worries about countries that may have political turmoil… which is most of 'em these days with Europe preparing to high dive into an empty pool), and HL as a buy-out candidate for GG (because HL has not been a particularly good performer for me), as they have properties in the same neck of the woods. The last couple of days have been KILLING. (I note that SCC, basically a short – double inverse – ETF for Dow Consumer Services, has been green through this rough patch for my gold/silver stocks (+$1.42/share at the mome).… Read more »
eaglefl
Guest
0
May 20, 2010 6:14 pm

SSRI is one of Outstanding Investments so called "Slingshot" silver opportunities. The other two are Hecla (HL) and Yamana (AUY). Their slingshot idea refers to the leverage in mines with large amounts of silver in the ground. The argument is that as gold increases in price, silver moves at a greater percentage and the slingshot mines even a greater percentage. There's no date on the report I have but SSRI is in their portfolio since 2005; Hecla since 2008 and AUY since 2006 so their picks are all long-term plays.

Shaun
Guest
0
Shaun
May 20, 2010 1:34 pm

I've slowly been accumulating Canadian Zinc (CZN) as I feel the Hunt Brothers were on to a good thing at Prairie Creek. Somewhat speculative still but when the Prime Minister excludes them from a mining ban in the expanded Nahanni then it seems the likelihood of final permits being issued are pretty high.

Marc P
Guest
0
Marc P
May 20, 2010 10:14 pm

Hey Devan…Thanks for the head's up about SAC. I've just had a peek at the president's message and it certainly warrants further investigation and DD.
The only caveat for me is Bolivia as the main mining concern. Nevertheless, it looks like a reasonable enough risk given the reward potential.
I've made money with Nova Gold and hopefully Greg can work his magic here too.

brian
Guest
0
brian
May 20, 2010 10:56 pm

Enter text right here!SSRI has been around for over 40 years and with Quatermain at the helm until recently. This is a very conservative well run miner, with tons of cash and institutional backing. No hype with SSRI. They are on the edge of greatness as SLW was a few years ago,

craig
Guest
0
craig
May 24, 2010 7:58 am

Mag Silver. Bought 10,000 shares yrs. ago @ $1.50/share. Yr later, went to $18/share .Stock took beating while company's prospects were getting better and better. Now $6.33/share and a takeover candidate. If silver goes to new highs and they don't sell out, stock will hit $30; actually, that might be a bit conservative!

Edw. G.
Guest
0
Edw. G.
May 24, 2010 11:26 pm

Coul this be the 'unkown' that has located a $514B silver find undr the great wall of China, has approval to proceed with development, and will begin delivery 'soon?

Art
Guest
0
Art
May 27, 2010 10:18 am

Stephen Leeb cost me a lot of money. I'll never listen to him again.

Tom Szabo
Guest
0
June 11, 2010 6:23 am
Sorry, a bit late to the party…but let me get this straight, the guy wants $1,000 a year so he can recommend a silver stock… and it is Silver Standard?!? Pathetic, though in our proprietary silver producer model Silver Standard does come out near the top of the pack thanks mostly to the imputed value of the Snowfield and Brucejack projects, and the stock is pretty cheap as he says. If you want a bit less "obviousness", the two most attractive silver stocks at the moment are Fortuna Silver and First Majestic. These two provide the best combination of safety,… Read more »
Tan
Guest
0
Tan
August 31, 2010 10:25 pm

Right – US Silver Corp – USA on the TSXV

Also Genco Resources with the Guitarra Mine in Mexico – ten times expansion to 3000 t/day………

Peaceful Warrior
Guest
0
Peaceful Warrior
October 1, 2010 8:13 pm
Here's what in my opinion has the potential for greatness within the next couple of months. Genco Resources (TSX:GGC) Genco is a Mexican Silver miner turnaround story. This was previously a $4 stock, when a few years ago, it was mining Silver profitably. Because of politics and other issues, the stock has declined to where it is today. Recently with management changes, a new NI 43-101 compliant technical report and feasibility study completed the company’s fortunes are improving. On September 20, 2010, Silvermex Resources (SLVXF, TSX:SMR) offered a merger with the company. Here is the interview with the CEO done… Read more »
Gravity Switch
Admin
11
May 20, 2010 6:44 pm

Ah, there's a blast from the past! That was a McCoach teaser target several years ago:http://www.stockgumshoe.com/2007/12/mccoachs-best-idea-ruperts-paradise.html — took a big hit later on, but I see it's been coming back pretty steadily over the last year. Maybe we'll see those teasers start to run again, the Hunt Bros. story is too good to pass up.

stockcrazy10
Guest
0
stockcrazy10
May 24, 2010 8:34 pm
Gary Olin
Guest
0
Gary Olin
May 31, 2010 9:50 am

Right on!! In early 2008 he was saying "SOFT :LANDING". The BRICs were going to bail he U.S. out of its bubble. Sure.
Suddenly his website has been bombarding me with panic articles. I keep "unsubsicribe" ing but they keep coming under new titles. The guy must be desperate.

paul mack
Guest
0
paul mack
August 29, 2010 4:39 pm

it will be wort more when you dump the democrats in office.

paul mack
Guest
0
paul mack
August 29, 2010 4:40 pm

* worth more.

Peaceful Warrior
Guest
0
Peaceful Warrior
October 1, 2010 8:13 pm

Tan, check out the latest interview done with Anderson yesterday, it sets things straight, especially with the new merger :http://seekingalpha.com/instablog/503905-marco-g/97873-bonanza-aztec-silver-interview-with-with-genco-in-merger-with-silvermex-ggcirf-tsx-ggc

BILL CARSON
Guest
0
BILL CARSON
March 1, 2011 10:25 pm

tHERE IS ONLY ONE SILVER STOCK TO OWN AND IT DOESNT EVEN OWN A MINE.

THE SILVER STREAMER SILVER WHEATON

wpDiscuz