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« Hecla Mining Company beaten up! | Main | Precious Metals Update »
Sep252008 Portfolio Update 24 September 2008

Silver chart 25sep08

As we write silver is trading at $13.25/oz, as it reclaims some of the ground lost in the recent sell off. Our strategy remains pretty much the same in that we still expect a terrific end of year rally in silver prices. As you know we have been buyers over the summer but this correction certainly hit us hard, however we have not hit the sell button and we will continue to hold fast. Our cash position improved with two successful options trades so we will be looking to deploy these funds over the next week or so. The above chart shows the 40% drop in silver prices and the subsequent bounce back to $13.00.

Here is a summary of the silver stocks we are currently invested in or following:

Hecla Mining Company (HL) – Initially we bought this stock for $5.27 - a quality silver stock which was going along nicely and then we thought Hecla was overbought, as it hadn’t corrected with other silver stocks, therefore we took profits on Hecla at $11.89, the stock price then dropped so we bought it back at $9.72, getting a 18% discount on our shares. On the 14th April we sold 50% of this stock for $11.79 in order to lock in some profits as we anticipated a fall. On the 18th June 2008 we re-purchased Hecla’s shares for $9.61. We also purchased Call Options on Hecla, which are detailed in the Traders Corner section below. Hecla closed yesterday at $5.53, having been down to $4.50, so we need to see this stock make some serious progress.

Pan American Silver Corporation (PAAS) – Initially we bought this stock for $18.00 and on the 23rd August we gave another BUY signal on PAAS when we said “We made a further purchase today at $24.10” giving us an average purchase price of $21.50. On January 31st, 2008 we sold about 50% of our shares for an average price of $36.65, locking in a profit of around 70.32%. On the 18th June 2008 we re-purchased PAAS shares for $31.06 and on 16 July 2008 we made another purchase at $36.53. They closed on Friday at $25.48, having been down to $18.00.

Silver Wheaton Corp (SLW) – Originally bought for $9.41 and made another purchase on 15 July 2008 at $15.61 and a further purchase on 6 August 2008 at $11.43. SLW closed yesterday at $10.14 having traded as low as $8.00.

Silver Standard Resources Incorporated (SSRI) Initially we bought this stock for $19.98 and on the 20th August we gave another BUY signal when we wrote “we think Silver Standard is at a good level to buy at the moment and we bought today at $28.99” giving us an average purchase price of $24.48. On January 31st, 2008 we reduced our exposure by selling around 50% of SSRI for an average price of $34.82 locking in a profit of 42.22%. SSRI closed yesterday at $21.23 having traded as low as $15.50.

Eagle Plains Resources Limited (EPL) – We bought this stock for around $0.53, it closed on Friday at $0.17, having traded as low $0.14, a very disappointing performance by this stock. We will continue to hold for now and keep a close eye on it.

Endeavour Silver Corp (EXK) – We initially bought Endeavour for $3.97 and on 7th December 2007 we bought more shares saying; “EXK is down from over $5.50 and as it has been beaten down so much we are signalling a BUY again on this stock and recently we bought for an average price of $4.10 per share and doubled our position.” We have wrote and expressed our disappointment as we had tried again to buy more of EXK but our order was not filled, so we decided to be patient and not chase it. However our patience was rewarded when we secured EXK for $3.26 on the 2nd April 2008. This purchase being the largest we have ever made in EXK. Yesterday EXK closed at $2.27. We recently wrote an article about Endeavour being at ‘stink bid’ price levels when it was briefly changing hands at $1.50. At the time we didn’t have the courage to make another purchase, which no doubt we will regret. Endeavours results are encouraging and the news flow is positive so we will continue to hold tight.

Minco Silver Corp (MSV) - Bought for $2.80 as a speculative move, yesterday it closed at $1.25, which is more or less its low point during this sell off. Again we will continue to hold and hope for some signs of a recovery with this stock.

Traders Corner:

We have purchased Call Options on Hecla Mining Limited, they are the JAN09 series with a strike price of $10.00 and we paid $1.00 for these contracts they are now trading at $0.55. We have placed a sell order on these contracts at $2.00 even though they have got off to a bad start. They don’t expire until January so we are fairly relaxed with this trade. Options are very volatile so be prepared to experience wild swings in either direction.

We continue to look for short term trades on silver and silver stocks as we have done in the past. Our short-term trades have worked out reasonably well for us so far. However, the next up leg could happen just as quickly as the latest sell off landed on us. We are looking to be fully invested over the next few weeks and then it will be a question of holding on tight for a rally taking us through until about February 2009. The summer has past and we find ourselves in a world full of financial turmoil, the outcome of which will be the continuing demise of the dollar and an ever-increasing recognition of both silver and gold as the only place to be.
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Have a sparkling week.

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Reader Comments (2)

When you are fully vested in the next few weeks, please let us know what you did so that some of us may do the same.


September 25, 2008 | Unregistered CommenterEmtea


We publish every trade we make within minutes of doing it and always have done, so you will be aware of what we are buying and why.

September 27, 2008 | Unregistered CommenterSilver Prices

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