Silver, above ground, is more rare than gold! There is seven times as much gold above ground as compared to silver!

Monday, May 6, 2013

Physical gold-silver shortage could benefit undervalued miners

by Jeb Handwerger

We may see a very powerful rebound

When it looks as though things couldn't get worse for precious metal mining equities (GDX), that may be just the time to buy for contrarians. Not only are the junior miners (GDXJ) sloping to historic decade lows but gold (GLD) bullion, which has held up considerably well in comparison, has been hit hard recently by short selling, bearish bank reports and margin calls.

Now after this recent decline there is a palpable sense of panic and fear throughout the resource markets. This is the biggest decline since 2008 and 2003 when all the bad weather bears sold and missed out on 200% reversal moves in the mining indices.

Don't make a similar mistake now. As I stated before,

we should see a bounce. Hold on and add as we may be approaching a major bottom. I wrote recently that we may see a very powerful rebound as short covering and record investment demand returns to the precious metal sector.
All of the summer soldiers have left the battlefield. Only the long term value investors remain and they couldn't be happier as there are bargain basement discounts galore throughout the resource industry.

Mining is a difficult business that requires capital and meticulous operation management. Investors have been burned by the majors where we have witnessed a major decline in earnings and profits as costs soar.

Barrick (ABX) came out with better than expected earnings recently and rallied the entire gold mining sector on increasing volume. Interesting this comes right after panic selling and capitulation. Long term value investors are able to get a dividend paying stock with cash flow at $2 below book value.

Barrick announced incredible, better than expected numbers from its Cortez Trend properties in Nevada where cash costs are incredibly low. At the same time the Pascua Lama mine has become a disaster, which they should probably just shelve and take a write down.

The major miners are facing challenges with rising production costs from projects that are extremely capital intensive. In the past, they have done a poor job in their acquisitions into high cost mines in questionable jurisdictions.

MAKE SURE YOU GET PHYSICAL SILVER IN YOUR OWN POSSESSION. Don't Buy SLV, or Futures or Pooled Accounts or any other BS paper silver product .Remember anything on paper is worth the paper it is written on. Go Long Stay long the bull market have even started yet
Silver Shortage
GOLD is the money of the KINGS, SILVER is the money of the GENTLEMEN, BARTER is the money of the PEASANTS, but DEBT is the money of the SLAVES!!!