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Minyan Mailbag: Silver Stories


My plan, which very well might be flawed, is to patiently await further slippage before getting aggressive again.



Welcome back! I really enjoyed your commentary back on Realmoney and this week found out about Minyanville. Apparently you've been sharing your insights for a while but I just found out about it a couple of days ago from one of my firm's clients. I signed up last night and was reviewing some of the posts from the last couple of days.

You mentioned on the Buzz that another Minyan pointed out the oversold condition in Pan American Silver (PAAS). I traded Pan American on the run-up in silver, but exited before the Peru election. I've been following it since then and would like to share what I've found. I have no current position, so you know, but that is subject to change.

The run-off was supposed to occur on May 9th but there was a recount because the second place finish was too-close-to-call. It was decided a couple of days ago and the most recent poll had Humala (the nationalist candidate) trailing to Garcia 57% to 43%. In the two or three weeks before the first general election, Humala picked up about 10% and still enjoys a majority of support in rural areas. The run-off, which was supposed to occur on May 9th, is scheduled for May 24th and, by law, polls in can't be conducted in the week leading up to the election.

I don't see Humala making up this gap in the next two weeks. How this relates to PAAS is that the stock is trading well below were it did a month ago (when silver was trading at much lower prices) and the company is not hedged against rising prices. First, this undervaluation could provide some protection if silver prices decline in the next two weeks. Secondly, as the election nears, the risk of Humala winning and raising the taxes on miner's decreases and PAAS could play catch-up to a lot of the other metal producers. In my opinion, the oversold condition has been created by a fundamental situation which is looking more and more unlikely.

I hope this insight helps and I look forward to becoming a long-time member of your community.

Regards, Minyan Ross

Minyan Ross,

Thanks ever so much for reaching out and giving the critters a shot. Are they an 'unconventional' approach to financial literacy? Sure, but I would argue that they're just what we need as we edge through these particularly unconventional times. The Minyanville community is an awesome collection of human capital (both Minyans and Professors) and the Buzz & Banter is a unique information delivery mechanism. Please feel free to offer input and insight as to your thoughts as we pride ourselves on the vibes of our Minyanship. Also, be on the lookout for exciting new upgrades to our product mix, which is the first in a series of steps designed to improve the Minyan experience.

With regard to Pan American Silver (PAAS), I've dabbled in this stock and Standard Silver (SSRI)--as well as a little Mines Mgmt (MGN)--as my silver equity proxies throughout the upswing in the metals. I'm currently 'small potatoes' in the group after some pedal to the metal (pun intended) coming out of MIM2 in Ojai. As a newbie Minyan, I'll share that I have believed (for a few years) that metals and energy are the tech and financials of yesteryear and will continue to perform, both on an absolute basis and on a relative basis. My plan, which very well might be flawed, is to patiently await further slippage before getting aggressive again. You may also be interested in a thread shared last week on the Buzz, which discussed metal equities vs. the underlying commodities as a function of the (Bolivian style) nationalization risk.

Finally, as a neophyte Minyan, I wanna put Minyans in the Mountains III on your radar for this coming summer. Last year, as we mingled in Ojai, Professor's Greg Weldon and Laurie McGuirk (all the way from Australia) held a metals break-out session that highlighted alotta names, trends, thoughts, insights and vibes regarding thy precious ones. We hosted other side-sessions--in energy, biotech, sentiment, advanced technical analysis--which we'll add to this year (Bonds with Bennet anyone?). This 'Sundance of Finance' will also feature some snazzy keynotes and four fantastic panels, not to mention Minyan Golf, Minyan Softball, Kid's Camp, Spa Stuff and some Colorado style ranch parties. This is who we are, Ross, and it's our once-a-year soiree that highlights the virtues of human capital.

Thanks again for the newfound Minyanship and I hope to shake paws soon.


Position in PAAS
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