Is the silver bull ready to run again?
** This article first appeared in the September issue of The Bull & Bear Financial Report, website www.TheBullandBear.com. It appears here with their kind permission **
The great gold bull has stampeded for the past couple of years, celebrating the end of a ferocious bear market, while the silver bull has slumbered soundly.
But now there may be signs of a new stirring, and a fresh bull run in silver could be in the making.
Anticipation of a move is growing out here in the Idaho silver fields, fueled by a rise in mining stock prices… bullish forecasts for the metal from various market observers, reporters and newsletter writers … and signals of returning investor interest.
Enthusiasm is keen in the nearby Coeur d’Alene Mining District -- the richest documented silver mining region on earth. The Silver Valley has produced more than 1.1 billion ounces of silver over the past century or so, along with lead, zinc, gold, copper and other ores.
Besides the historical link between the prices of the two precious metals, many of the factors that pushed gold stocks up to multi-year highs could also help to lift silver and silver mining stocks. These include higher demand, falling supply, international jitters, terrorism, general economic uncertainty, cyclicality, and -- very importantly -- investor psychology.
So are we now standing on the brink of the next monster silver rally?
Well, frankly, we’re not sure yet. But we’ll say this much. Our firm has been trading silver mining stocks for over 77 years and many of them had fallen deathly quiet for a very long time. However, in recent months we’re seeing obvious signs of life again.
For instance, private placements for silver and gold miners are generating more money, and faster. Hedge funds and well-heeled investors are nosing around local mining outfits. Management changes are erupting as new blood moves into the field. Small investors are calling more often, and we’re hearing from old clients who have been out of touch for quite a while.
In addition, a number of area silver stocks have started to kick up their heels.
Hecla Mining (NYSE:HL) of Coeur d’Alene was last year’s top percentage gainer on the New York Stock Exchange. The stock has traded lately above $ 6.60 -- near a five-year high, and a long way up from its 52-week low of $ 2.58.
Coeur d’Alene Mines (NYSE:CDE), the big primary silver producer just down the street from us, has cut debt from $289 million down to about $19 million. The stock has recently climbed to around $ 2.90 -- a three year high.
Sterling Mining (PinkSheets:SRLM) of CDA two months ago was trading at about 80 cents. Then it took over the fabled Sunshine Mine in the Silver Valley and the stock rocketed up above $3.50.
Mines Management (OTCBB:MNMM) of Spokane climbed from under 20 cents a year ago to over two bucks now, on the strength of an apparently massive but presently uneconomical silver deposit nearby in Montana.
Shoshone Silver (PinkSheets:SHSH) of CDA changed management this summer, and within a month or so the stock tripled, from a dime up to 30 cents.
[Ed. Note: Although we’re talking about silver here, some of the local gold stocks have jumped up too. Kimberly Gold (PinkSheets:KMGM) of CDA is a new stock that opened at a nickel in April and recently hit 90 cents. Gold Reserve (OTCBB:GLDR) of Spokane started the year at $ 1.25 and is now trading up around $ 2.50. Little Squaw Gold (OTCBB:LITS), a Spokane old timer, had a recent management change and quickly climbed from around 12 cents to up above 60.]
So far, the new interest we’re seeing comes mainly from folks with past experience in silver stocks. Many are testing the waters again a bit tentatively, and certainly caution is wise.
We’re not seeing much of John Q. Investor yet, since the general investing public is not much in the picture so far. Usually John Q. doesn’t show up until rallies have already built up a big head of steam. So if the silver bull is ready to run the way the gold bull has, we’re probably still in the very early stages.
And here’s another point we’ll mention. Our nine brokers and traders are a sort of national historic site, with something like 175 years of combined mining stock experience. Of necessity you develop some sort of feel for the market over that much time.
Right now, their general mood is guardedly optimistic. It seems to be this: we could be wrong, but yes, it feels like a strong silver move is getting close.
Of course that’s gut instinct talking, not technical analysis, fundamental evaluation, or sophisticated econometrics. Which might make it worth listening to.
The new enthusiasm has inspired the Silver Valley Mining Association to organize a first-time-ever “Silver Summit Investment Conference” in Coeur d’Alene on Saturday, September 27, with an optional Silver Valley tour the next day.
The main speakers will be Coeur d’Alene Mines CEO Dennis Wheeler; analyst and Silver Investor.com publisher David Morgan; and New Jersey Mining’s Fred Brackebusch. [And recently added: Vicki Veltkamp of Hecla] Sessions on the 27th are free. For more information, see www.thesilversummit.com.
There’s plenty of other news, but we can’t cover it all in this article. That’s another thing that’s different these days. Sometimes there’s so much going on it’s hard to stay on top of it all.
We try to help folks keep an eye on mining developments in our free Pennaluna Prospector email newsletter. You can sign up at our website -- www.pennaluna.com.
Meantime, we’ll have our ear to the ground listening for those silver hoof beats.
The authors -- Ron Nicklas is president of Pennaluna & Company, a NASD broker-dealer and market maker with its main office in Coeur d’Alene, Idaho, and clients in a number of states. Tom Wobker is a principal with the firm. Founded in 1926, Pennaluna trades stocks on all U.S. and Canadian exchanges, Nasdaq, OTCBB and Pink Sheets. Phone 800-535-5329 or visitwww.pennaluna.com.
Disclosure: Pennaluna & Company is a NASD broker-dealer and market maker. As such, it frequently buys or sells stocks for its own account, or in order to make a market. Consequently, Pennaluna may at any time buy or sell or make a market in any stock mentioned herein, and associated persons may also buy, sell or hold such stock at any time. The firm and/or associated persons may also have engaged in private placements or other investment banking activities with any company mentioned. This publication is intended solely to provide readers with information. Mention of a company does not in any manner constitute a recommendation, unless specifically so stated. Information is believed accurate but accuracy is not guaranteed.
Pennaluna & Company