This article was originally published on January 6, 2020. Neither the ad we’re covering nor this article has been updated since then, though I’ve added a small update note at the end. The stock is back to where it was before the first promo pitch was mailed, and the latest emails pointing to this teaser ad are really pitching it as a play on “safe haven” assets during the coronavirus panic.
The questions piling up on my doorstep today are mostly about this “world’s largest silver mine” pitch from Stansberry’s Silver Stock Analyst… so let’s dig right in.
This is the intro from the ad that I saw a bunch of times over the weekend:
“Rare Opportunity to Take a Stake in the World’s Largest Silver Mine – BEFORE the Story Goes Public
“It’s the biggest silver opportunity in 50 years. A tiny, unknown, and less-than $10-per-share firm (with the backing of the world’s 2 best mining investors) has discovered the biggest silver mine in history – and is about to make some people rich.”
Silver Stock Analyst was launched a while back by John Doody, whose Gold Stock Analyst and GSA Top Ten have been successful gold mining advisories for a long time. We’ve covered him many times over the years, I’m not sure the silver version of his advisory has been continuously published (it would have been really hard to sell it to new subscribers over the past several years of weak silver prices), but it theoretically does the same thing as GSA: Look for the top stocks with the best reserves and most promising economics, using a deep dive into the numbers in their geological and economic reports. Doody didn’t shoot for home runs, in my recollection, he was looking for actual producers or near-producers instead of explorers.
But this ad is a little different in that regard, the pitch comes from Garrett Goggin, who is apparently now editor of the Silver Stock Analyst service, and he does reiterate that usually he’s only interested in projects that have been “audited and studied by a third-party, reputable geological firm” … but that he’s pushing the envelope a bit on that this time around.
Here’s a bit from the ad:
“The mining world is filled with fantastic ‘stories’ and ‘promises’ of what could and might be.
“But this opportunity is different, for reasons I’ll explain in a minute. John and I, after a combined 50 years in this business, have never seen anything quite like it.
“We are not analysts prone to hype. Typically, we’re only interested in situations with proven, third-party test results, and hard data… not potential findings.
“But sometimes, to make the biggest gains, you need to get in really early – before the rest of the world catches on. And this is exactly that type of opportunity – it’s the most extraordinary situation I’ve seen in my career.”
So I guess we’re talking about a “discovery” kind of project here, not one that has proven resources and reserves, but apparently it’s huge enough to tempt anyway.
What they’re selling is a subscription to Silver Stock Analyst, naturally, and it’s a “no refunds” deal ($497/yr “on sale” from $3,500 — you can get a credit for other Stansberry letters if you don’t like it, but no cash refund). That includes their silver stock portfolio, which they say includes the only five silver stocks you need to own (one reason why it’s tough to sustain a “silver only” investment advisory is that there are often only a couple dozen “real” silver companies trading in the market, and there aren’t many primary silver mines — silver is more often produced as a byproduct at big copper and gold mines).
But anyway, assuming you don’t want to pony up $497 for something you aren’t sure about, let’s check into it and see what the actual stock is… then you can think it over for yourself and try to get a balanced look at the risks before you make a binding decision about a newsletter subscription. Ready?
OK, here’s how they describe it on the order form:
“In this report, you’ll learn the name, ticker symbol, and everything else you need to know regarding the company that’s trading for less than $10 a share, and is currently in possession of what is soon likely to prove to be the world’s largest silver mine.”
And then in the body of the “presentation” we get a few more clues:
“The silver mine we are talking about is so big, it could produce $510 million worth of silver per year, even at today’s low prices….
“… this project has attracted the attention (and hard cash) of two of the best mining investors in the world.
“The first guy made investors in Tahoe Resources gains of 55% overnight from an acquisition.
“In 2018 alone, his company produced $446 million worth of silver and $268 million worth of gold. After taking his own company public, he’s made investors gains of more than 250%…Are you getting our free Daily Update
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“The other investor amassed millions of dollars for his company by acquiring several small mines over the years. He got his big break in 2002, when he was integral in discovering a mine which would go on to be sold for $216 million just six years later.”
OK, so those are some good details we can check. What else can we feed to the Thinkolator?
Apparently there’s a “Mr. X” involved… this is what we learn about him:
“He’s a special consultant who only gets involved in the biggest and best opportunities in the industry.
“Recently, he’s found at least 250 million ounces of silver in the Alamos Mining District….”
And apparently this story is really brand new… according to Goggin:
“… right now, only a small group of industry insiders even know this silver mine exists. And there are only three analysts who cover it.
“I’m one of them!”
And they’re due to report “official third-party test results” in the first quarter, so “word could leak anytime”.
Anything else? Well, he says this is one of only two “pure silver mines” that contain no other metal (though if it hasn’t actually even gotten its first results verified by a third party, you can be pretty sure it’s still a “project,” not a “mine.”)
But he also says the only other “pure” silver mine was San Bartolomé, discovered in Bolivia in 1545, so these are rare and, to Goggin, exciting.
With many of the primary silver mines and largest silver producers getting a bit old, he thinks that there will be a huge amount of attention for a big new silver discovery… more from the ad:
“There are very few major silver mines in the world. And very few have been discovered in recent years.
“That’s why when the story of this new mine goes public, it’s going to get A LOT of attention… and is going to attract A LOT of money.”
OK, so that’s enough… what’s our secret silver stock? Thinkolator sez this is New Pacific Metals Corp (NUAG on the Venture in Toronto, NUPMF OTC in the US), which was just under US$5 on Friday and is bumping up today thanks to this new attention.
And yes, it is a “discovery” stage mining stock, but it’s not exactly tiny — they have a market cap of about $750 million and have been drilling to expand and define their Silver Sand project in Bolivia for about two years. So it’s not brand new or unknown, but we’ll stipulate that it hasn’t gotten a lot of attention from the investing press.
How else does it match? Well, they are indeed planning to release their 43-101 Resource Report in the first quarter of this year. And the company has actually confirmed that GSA-Silver, which is apparently the service that became Silver Stock Analyst, added them to a model portfolio back in September (the company was responding to heavy new trading action in the stock, which rose about 50% at the time).
The company has reported lots of drilling results this year, much of which sounds quite impressive, and those results have helped to support the share price, so there sure looks to be a lot of silver there… and it is an old “artisanal mining district” with lots of other targets, so they believe that Silver Sand has “district potential” and could become a massive project.
How else does it match? There are several major investors on board, including Silvercorp Metals (SVM owns 29%) and its CEO Dr. Rui Feng (owns 7%, is also CEO of New Pacific), and Pan American Silver (PAAS, 17%). And they did bring on that “Mr. X” as an advisor, that’s Dr. Peter Megaw, co-founder of MAG Silver and an award-winning silver prospector. And yes, they do have only two “real” analysts covering the stock (plus Mr. Goggin makes three).
What will this prospective mine hold? I have no idea, but that resource statement will probably get a fair amount of attention when it comes out at some point in the next few months. That could certainly move the share price, and you can pretty much guarantee that they’ll be out raising money fairly soon for what will presumably be a large and expensive project (they don’t need to raise capital immediately, they have plenty to get through their next budgeted projects and have a cushion of about $30 million at the moment, they say, so if they raise money before the 43-101 comes out I’d be a little worried… but I imagine they’ll raise money not long after it comes out, hoping that the verification of some initial resources will raise the share price).
It’s way too soon to guess where this might go, or how long it will take to get there, but it is a high-grade silver discovery in a country with a pretty good mining infrastructure… though also, to state the obvious, a substantial amount of political risk even if the interim government, if it holds together, is likely to be more business-friendly than the old — there’s been obvious turmoil in the wake of Evo Morales’ departure/coup, with diplomatic disputes and an interim government that will face elections probably in May, and there’s meaningful risk of anti-mining backlash… which makes betting on a long-term project pretty nerve-wracking.
I’m not particularly interested in speculating on a early silver discovery like this, and I would assume that, like most mineral discoveries, it will probably take a decade or more before they actually start producing silver (assuming they make it that far), with plenty of ups and downs along the way as they raise money to do the work and as silver moves up or down… but it does look like a big one, and it could also, thanks in part to the fact that insiders control more than 50% of the company, move pretty quickly if they wish (including on any possible partnerships or a sale if they don’t want to build a mine themselves). They do have an investor presentation up on their website that provides some background, so that’s a good place to begin your research if you’re interested. If you want a somewhat more colorful and skeptical take, you can always check out Mark at IKN’s response to the initial Doody reco.
And here’s a little update as of February 27… this ad has most recently been circulated under a headline of “Warning: Coronavirus (and your money)”, here’s a little taste of the recent email I received:
“Since the virus started making headlines, economic concerns gripping China (and the world) have caused panic and fear in stock prices – all the while, safe haven assets have soared…
“In less than 2 months, gold is up 10% while silver is up nearly 5%…. based on everything I see today, precious metals could be on the verge of an even more explosive move this year.
“Now, if you haven’t invested in or purchased precious metals yet…
“If you missed out on the huge gains so far this year…
“What I’m about to tell you today could be your way to ‘piggyback’ the 2020 precious metals rally.”
New Pacific has released a bit of news since the ad started running, though nothing particularly “big” and investors are still waiting for the resource estimate — here’s the summary from their press release last week, which was mostly an update on some further good drilling results:
“Drilling continues to return broad intervals of near-surface, structurally controlled, silver mineralization within which higher grade zones occur. The 2019 program successfully confirms mineral continuity and defines several high-grade zones on the property: mineralization remains open for expansion to the North and South and at depth. To date no distinctive feeder zones have been intersected. Given the significant drilling in 2018 to 2019, this indicates the presence of a large silver-rich mineral system. The Company’s inaugural NI 43-101 independent resource estimate remains on track for a Q1 release.”
Gold has had a pretty decent run so far this year, probably largely inspired by “flight to safety” sentiment driven by COVID-19 panic (we don’t really know what causes a price swing, of course, but we have to pretend we do), but silver has not. Here’s the year-to-date chart of gold, silver and the S&P 500, just FYI:
There’s often talk about silver being “poor man’s gold”, or reacting far more violently than gold when there’s a run on the precious metals, and that’s sometimes true… that’s what we saw in the price spike of 2016, for example, when silver performed wildly better than gold, but it’s definitely not something you can easily predict in the short term. And, of course, there’s always the “digital gold” talk about bitcoin being the next “store of value, and this is what that year-to-date chart looks like if you throw bitcoin into the mix…
What really stands out for me in the short term is that if you go back just one week, it looks like the “store of value” is gold, and silver and stocks and bitcoin are all things that you sell when you’re feeling panicked. I’m sure I’m reading too much into that, but here’s that chart for just the past week:
So big picture? I don’t know, but when it comes to disaster protection and “store of value” thinking I do old a little silver and a lot more gold, and I feel much better about humanity’s centuries-long confidence in gold than I do about silver or bitcoin. And I don’t really want to buy a big silver discovery, but maybe you do.
I’ll leave it to you to make your own call here — excited about a big potential mine in an old Bolivian mining district? Think they scooped up a bargain and it will be worth billions, or has it already run too far on this Stansberry attention over the past four months? Have other favorites in the silver space that you think are better? Let us know with a comment below.
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