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XMFSinchiruna (27.21)

Why Silver Wheaton is Still Going to $100

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May 09, 2011 – Comments (19) | RELATED TICKERS: SLW , GPL , HL

And you know that it will:

http://www.fool.com/investing/general/2011/05/09/why-silver-wheaton-is-still-going-to-100.aspx

Excerpts:

While leveraged speculators continue to lick their wounds following silver's infamous week of carnage -- which saw $1 billion exiting the iShares Silver Trust (NYSE: SLV ) amid an estimated $99 billion commodities rout -- undaunted long-term investors like this Fool are cheering a welcome buying opportunity.

Especially considering the degree to which silver equities failed to track silver prices higher during the final weeks of the metal's explosive rise, I see a broad array of compelling opportunities staring whipsawed investors squarely in the face. Under the circumstances, I am compelled to revisit a silvery prediction that I made nearly one year ago: That shares of Silver Wheaton (NYSE: SLW) will strike the $100 mark before this precious-metals bull market has run its full course.

.....

However, before investors can invest with confidence on the basis of a targeted 60% production growth spurt, they must first determine their own degree of confidence in those targets. In the case of Silver Wheaton, those projections could scarcely be better supported. Primero Mining produced 33% more silver from the San Dimas mine in the first quarter than prior operator Goldcorp (NYSE: GG) produced in the prior-year period. After delivering the first 3.5 million ounces to Silver Wheaton, Primero retains the rights to 50% of the silver produced each year in excess of that amount. Under the very capable leadership of former IAMGOLD CEO Joseph Conway, I believe that Primero will make the most of that key silver lining.

.....

Along with the continued long-term strength in silver prices that I obviously anticipate -- and the organic reserve growth that I expect from several of the company's key streams -- the final key ingredient to achieve a $100 price tag for Silver Wheaton involves the acquisition of new and robustly accretive silver stream agreements. Incoming CEO Randy Smallwood predicted a "flurry of transactions" once silver backed down a bit from its epic surge, and aims to ultimately amass a stream portfolio that is capable of producing 100 million ounces per year. Even as recent dislocations in the silver market have left behind a stable of enticing equity options -- epitomized by small-cap sensation Great Panther Silver (AMEX: GPL) and old-timer Hecla Mining (NYSE: HL) -- I encourage Fools to keep their gaze firmly fixed upon the superstar of silver streams: Silver Wheaton.

19 Comments – Post Your Own

#1) On May 09, 2011 at 4:39 PM, kdakota630 (29.87) wrote:

Any idea why Copper Fox shot up mid-afternoon today?  I couldn't find anything on the website or with Google.

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#2) On May 09, 2011 at 4:57 PM, XMFSinchiruna (27.21) wrote:

kdakota630

Nothing about the movement struck me as unusual in any way.

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#3) On May 09, 2011 at 5:13 PM, kdakota630 (29.87) wrote:

Really?  Check this chart just after 2pm.

 http://www.google.ca/finance?q=CVE:CUU

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#4) On May 09, 2011 at 6:13 PM, Predaking (29.18) wrote:

Didn't the price of copper surge in the afternoon?

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#5) On May 09, 2011 at 6:56 PM, Valyooo (99.50) wrote:

I loaded up on slw, but all of my miners lagged silver today except for exk....so annoying.  I guess I have to just wait it out

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#6) On May 09, 2011 at 10:25 PM, XMFSinchiruna (27.21) wrote:

kdakota630

Nothing about the movement struck me as unusual in any way.

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#7) On May 10, 2011 at 10:06 AM, reinman60 (< 20) wrote:

News from Caza Gold:

 

Caza Gold Defines Intrusive-Hosted, Bulk-Mineable Gold Target At Balleza Zone, Moris Property, Chihuahua, Mexico

 

 http://www.cazagold.com/news/index.php?&content_id=64

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#8) On May 10, 2011 at 10:34 AM, XMFSinchiruna (27.21) wrote:

It's time to release Hecla's hounds:

http://www.fool.com/investing/general/2011/05/10/its-time-to-release-heclas-hounds.aspx

Can you hear them howling? Hecla's hounds are gnawing at the gate to chew apart every investment thesis that does not include a swift and lasting recovery for the trampled shares of Hecla Mining.

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#9) On May 10, 2011 at 10:34 AM, XMFSinchiruna (27.21) wrote:

reinman60

Very nice ... thanks for posting!

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#10) On May 10, 2011 at 11:39 AM, jesusfreakinco (29.09) wrote:

Doubled down on SLW on this drop.  SLW looks like a bargain right now...   Add to this the divys in the long run from strong cash flow and this is a quadruple bagger in the making ;-)

JFC

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#11) On May 10, 2011 at 11:54 AM, Valyooo (99.50) wrote:

Sinchi,

Stop playing around...give us your real price target...we won't call you crazy ;)

$200?

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#12) On May 10, 2011 at 1:12 PM, adprofessor (93.58) wrote:

Grabbed options on SLW a few days ago and HL this morning (...not on margin).

Added to my GPL and CPFXF on the dip. SCary watching the portfolio drop, but it sure is fun watching run back up!

WIth a little cash left, what you all think of YNGFF (missed the drop), GoldF or CDY at current levels? Or would you stick with more of SLW or HL?

 

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#13) On May 10, 2011 at 2:01 PM, Gonzhouse (24.82) wrote:

As a follow-up to Valyooo, I'd like to get an idea of how to value SLW.  I'm seeing some crazy numbers, even without silver prices increasing.  Sinch, you said that SLW will hit $100 when silver reaches $75;  dissecting SLW's income statement, I agree.  (1) For an 80% increase in production by 2015 WITHOUT A PRICE INCREASE I get a share price near $70.  2) If silver hits $75, SLW will hit $100 WITHOUT A PRODUCTION INCREASE.  3)  Put the 2 scenarios TOGETHER, and I get a $150 price target.

Crazy numbers.

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#14) On May 10, 2011 at 4:11 PM, XMFSinchiruna (27.21) wrote:

Gonzhouse

My $100 estimate of fair value at $75 prevailing silver price takes both the 60% production increase and the silver price into account. I tend to remain absurdly conservative with fair value assessments and price targets, in my opinion, so I would not be surprised to see folks proposing a higher fair value under widely anticipated silver prive scenarios.

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#15) On May 10, 2011 at 7:14 PM, Valyooo (99.50) wrote:

If there is no QE3 (Bernanke said there wouldn't be), do you think silver will lose some of its momentum?

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#16) On May 10, 2011 at 11:07 PM, skypilot2005 (< 20) wrote:

"May 10, 2011 at 1:12 PM, adprofessor (83.16) wrote:

Grabbed options on SLW a few days ago and HL this morning (...not on margin).

Added to my GPL and CPFXF on the dip. SCary watching the portfolio drop, but it sure is fun watching run back up!

WIth a little cash left, what you all think of YNGFF (missed the drop), GoldF or CDY at current levels? Or would you stick with more of SLW or HL?"

Here's some recent info.:

GOLDF:

Pele Mountain Garners International Attention on the OTCQX market for its Rare Earths, Uranium and Gold Projects

http://www.reuters.com/article/2011/05/04/idUS162672+04-May-2011+PRN20110504

 Aurcana Reports Record 2010 Results

http://www.aurcana.com/s/NewsReleases.asp?ReportID=455912

 

 http://www.yukon-nevadagold.com/s/NewsReleases.asp?ReportID=454761&_Type=&_Title=Yukon-Nevada-Gold-Corp.-Reports-a-Significant-Resource-Increase-at-Jerritt-

May 3, 2011 - Yukon-Nevada Gold Corp. (TSX: YNG) (Frankfurt Xetra Exchange: NG6) is pleased to announce a new and increased mineral resource estimate for its wholly-owned Jerritt Canyon operating gold mine in Elko County, Nevada, USA. Jerritt Canyon is operated by Queenstake Resources USA Ltd., a wholly owned subsidiary of Yukon-Nevada Gold Corp. ("YNG" or the "Company").

Jerritt Canyon's measured and indicated mineral resource has increased by 578,000 ounces of gold, representing a 30% increase over 2007 levels. The updated mineral resource estimate incorporates a new 3-D geological model which includes additional drill hole results from January 1, 2008, to January 1, 2011.

The new mineral resource now comprises a measured resource of 1.08 million ounces, an indicated resource of 1.46 million ounces, and an inferred resource of 0.89 million ounces. This new model significantly increases the potential of the property and gives the Jerritt Canyon Geology team additional areas to explore and develop. The updated mineral resources completed to date include the primary work areas: Smith, SSX-Steer, Saval, West Mahala and Starvation Canyon.

Robert Baldock, CEO states, "This exciting new update using advanced modeling techniques clearly demonstrates that strong organic resource growth at Jerritt Canyon is achievable. This positive development confirms that the mines at Jerritt Canyon can deliver resource growth and extended mine life. This growth will continue with an expanded exploration and definition drilling program. Furthermore, the potential to mine past producing and new open pits on the property is clear. In light of the new modeling techniques and increased gold price, re-evaluation of the open pit potential is compelling, and these areas will be targeted in the upcoming drilling program."

Hope this helps.

Disclosure:  I've been adding to my positions in all 3 recently.  I also, changed my mind and picked up some SLW, today.  

Checkout HMNC.  Hondo Minerals.  I purchased on the 4th and I am up a little over 13%.  I learned about them from a co-worker who said her broker recommended them.  She is real attractive so I figured the guy was confident in his recommendation, performed some cursory D. D. of my own the next AM and pulled the trigger. (Don't tell Sinch that is how I select some of my stocks. He'll bar me from his blog.)    :)

reinman60Thanks, for the post.  I wasn't looking at them, today.

Sinch:  Thanks, for revisiting Hecla.  I'd sold and taken them off my watch list on March 15 at a nice profit thanks to you.

Sky Pilot

 

 

 

 

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#17) On May 11, 2011 at 4:20 AM, silvermind (< 20) wrote:

skypilot

 Thanks for the look at Pele Mountain Resources.  They already have 43-101 on $3B of U, if I'm not mistaken, and over $1B in REO ($5 a pound).  Does that sound anywhere close to accurate for a rough in-the-ground value?

 Thanks for the contributions you make to the blog.  In the last blog article you mentioned you found some change under your car seat and bought some GOLDF --- this isn't the first time you mentioned finding $ under your car seat.  Better insure that car!

 

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#18) On May 11, 2011 at 7:38 AM, adprofessor (93.58) wrote:

skypilot2005

Thanks for the reading. I have an order in for YNGFF. I also do like GOLDF for the REO diversity. If the greater visibility occurs from being listed in the U.S., as described in the press release, this itself could drive interest in the stock.

For those who own, disclose it, but also "recommend" and "like" on the blogs you are reading. Social media mentions are key to getting noticed and just a few active people can have significant power. (I really am an advertising professor)

I also like AUNFF but have quite a bit already.

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#19) On May 11, 2011 at 9:27 PM, skypilot2005 (< 20) wrote:

silvermind adprofessor: 

 Thanks, for the kind words.

Valyooo 

"Sinchi,

Stop playing around...give us your real price target...we won't call you crazy ;)

$200?"

I sold my SLW and several other miners recently to increase my cash position due to my macroeconomic concerns.  After reading Sinchi's recent musings and their First Quarter release Monday, I  bought thier shares lower than what I had sold them for earlier this year.

All I need is Sinch's D. D. but, if you need a little more to release the safety, check out thier first quarter performance:

http://www.silverwheaton.com/News/PressReleases/PressReleaseDetails/2011/SILVER-WHEATON-REPORTS-RECORD-PRODUCTION-WITH-NET-EARNINGS-AND-OPERATING-CASH-FLOWS-MORE-THAN-DOUBLING-IN-THE-FIRST-QUARTER11/default.aspx

Can it go lower?  Sure.  But, I just look at that as an opportunity to dollar cost average, lower.

 

Sky Pilot

 

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