On the 18th June 2008 we made an additional acquisition of Pan American Silver Corporation (PAAS) as our research suggested that the downside for this stock looked limited. Since then PAAS has increased by $3.62 to close today at $34.68.

Despite gold making gains today and silver putting on another $0.20 to continue its run and hit $18.30/oz, many of the silver stocks including PAAS were sold off.

At times the HUI just does not follow the gold or silver prices, so it remains to be seen if the stocks will take off and play catch up or if gold and silver will come back down again. The day to day aberrations are interesting but they really don’t bother us as we are in a multiyear bull market and where gold and silver goes so will the quality gold and silver stocks go, eventually.

Our mailbag includes questions as to when we should sell Pan American Silver Corporation? Well the chart has changed since we bought it as we can see the technical indicators have moved from an oversold position to an overbought one. Some short-term traders will be happy to take some profits at this juncture expecting a pull back, which is fine. Our take on this situation is that we are happy to own PAAS as it forms part of our core position for what we see as a major rally in the 4th quarter of 2008.

Having said that if PAAS experienced a dramatic spike then we may take some money off the table but for now we will hold on tight. Just an observation but PAAS recouped $0.31 in after hours trading.

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