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I recently had the occasion to visit Idaho's famed Silver Valley,
what could possibly be the area play of the 21st century. For now it's barely
noticed in the precious metals community and not at all by the general
public. One crosses into Silver
Valley (via highway 90)
and enters a bubbling cauldron of silver-related activity. Real estate prices
are on the rise (yes, Virginia,
some houses now cost $100,000 there). Locals gather daily for drinks and
chatter at various Wallace cafés, bars and restaurants. I was
fortunate to join a couple of such outings. Here are some bits of information
extracted from the conversations that readers might find interesting:
a) Silver
Valley goes through
booms and busts inline with corresponding cycles in metals mined in the area
- mainly silver, but also lead, zinc and gold. Presently, the district
happens to be coming out of its worst slump ever.
b) Pickup in the exploration/mining activity is
obvious.
c) Pickup in the non-mining life and activity is unquestionable.
New businesses are being formed or contemplated, old ones are being revived
and a new spring in the walk of the populace is evident.
d) Prices on commercial real estate in Wallace have
roughly doubled in the last year. This boom has little to do with real estate
booms elsewhere in the country, as it is driven by local development factors,
not by "own a house at any price" craze.
e) Most people in the area own shares of local
mining companies and think the area will thrive with silver price sustained
above $8.
f) More importantly, the population understands and
welcomes mining. There is a craze of entirely different nature taking hold of
the district. Silver in the form of 10 Sterlings
coin is being used in the towns and hamlets of the valley. More and more
businesses are getting on board and adopting silver as means of payment. You
can buy breakfast, lunch and dinner with silver and wash it down with drinks
of the silver revolution paid for in silver. (Manic revolutionists amongst
the sturdy populace are actually determining the "official drinks"
of the revolution, while tipping the waitress in silver).
Imagine sitting down for dinner, and everyone at the
table takes his silver out and puts it on the table. Craziness? - Perhaps.
But the locals believe this boom will compare to 1968 and 1979/80 like
tsunami compares to a mild ripple. Try buying a commercial building in
Wallace, a.k.a. "the capital of the revolution." Just try. None for
sale. They tell me only 15 months ago you could pick one up for a song!
Claim staking rush is under way in the hills. Bunker Hill's famed Bob Hopper has his own radio show
(see www.silverminers.com). Some 125 local mining
stocks that investors chased up to dizzying heights in 1980, are now down to
less than 20, and these are steadily rising without anyone really paying
attention. Major silver companies Hecla Mining and Coeur D'Alene Mines went
from being penny stocks to sporting market caps over $1 billion in three
short years. And silver hasn't broken $10 yet. Mineral exploration is
expanding for the first time in many years, and is now starting to spread
district-wide. Another number of 1 billion got my attention. That's where
whispers among local mining industry insiders put silver ounces in the
ground. You read that right. One billion ounces of silver is waiting to be
mined in those hills. They can't say it out loud. I just did.
What is so special about the Silver Valley?
Silver runs deep here, and recorded production compares favorably to any
other district in the world. Most geologists agree - there is a lot more
silver underground. It is a fact that these hills have never been explored
using modern techniques, and the "upper country" has not been
explored for decades. Existing mines kept getting such rich grades
underground that they didn't bother with exploration of the "upper
country" (up the hill). Often up to 3,000 feet. Every
commentator agrees that above ground supplies of silver are declining. When
production is less than consumption this must be true. So what if silver
price is taking its sweet time to take off? Better for the rest of us
investors! I have read Dave Bond's articles, and thought he was exaggerating
the potential of the area. Now being in the valley and having seen things on
and in the ground (I toured the Sunshine and Bunker Hill
mines) I think he was underestimating it.
Silver Valley stocks exploded in
2003/2004. Sterling Mining went from $0.35 to $14 before settling at $6 in
the recent correction, Merger Mines went from $.03 to $1.35, Chester Mining
from under $.50 to $6, you get the idea - percentage returns can dwarf
investments elsewhere by a long shot. The good news is most of these stocks
are still unknown. You would think after trading these stocks since 1880's
locals know a thing or two about these stocks. I think they do. Many of these
stocks have razor thin floats, good land positions, and compared to 1980
little competition for investor dollars. Remember even the precious metals
community hasn't fully participated yet, what do you think will happen when
the general public realizes silver is on the move?
I met with writer Dave Bond who introduced me to the
silver fraternity. Surprisingly friendly when they have the time, most are
working day and night to position themselves before
the boom starts in earnest. Ok, so maybe the famous analysts have the latest
Tanzanian potential gold bonanza to tout, and maybe they do not own shares,
and maybe they have the latest drill results to shout about. But what about
the elephant in the room - the Silver
Valley? They have
everything they need to mine every ounce of metal in those hills. If you're a
silver bull, and you ought to be if you read thus far, do yourself a favor,
look it up.
Buy silver? Buy stocks? Buy one? Buy all? They will
all go up in a silver boom (I hesitate to predict when it occurs, read the
experts, hah). If there is one point I brought home, it's this: why buy
exploration companies kicking dirt in the middle of nowhere that may never
find anything, when you can buy companies with proven properties, great
infrastructure, in mining friendly area with low cost of living, ready labor
and what have you, at comparable prices or cheaper? What is the down side
risk? Whatever the risk, it sure as hell is no greater than in many high
fliers with properties elsewhere around the world. And it sure as hell is not
in finding the metal. The ounces are there!
I give no recommendations. That is your job and the
job of your advisors. But if you hear, as I did, Ray DeMotte of Sterling
Mining say "You are standing on 185 million ounces of silver," you
might want to call your broker and ask how it measures up against other
silver positions in your portfolio.
And if you want to hear it first hand, they are
having an investment summit in September (see www.thesilversummit.com). Just
remember to stock up on Silver Sterlings before you hit the town. Rumor has
it shops in Wallace will refuse to take greenbacks for a day. A revolution?
You betcha! A silver revolution.
Do I own some of these stocks? No, I own most of
them! If you are like me looking for the American Dream, right now dreams are
coming true in Northern Idaho.
By : Sean
Rakhimov
Editor, www.silverstrategies.com/
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