Source: Bob Moriarty for Streetwise Reports 02/16/2018
Bob Moriarty of 321 Gold recommends doing the math to profit from silver, and describes a silver miner he believes is “on to something.”
For all the braying of donkeys on the web of whatever size and flavor, the fact remains that at any given day and time no one knows what the correct price for silver or gold might be.
Is $1,360 the right price for gold and $16.51 the right price for silver? Is $50,000 right for gold and $2,000 for silver? Is gold really worth only $750 or will it become worthless, as John McAfee said recently in December just before nailing the very top in “Bitcon”?
We just don’t know and investors are being forced into listening to whatever guru does the best job of fulfilling their fantasies.
There actually is a far easier and more profitable way to make money. In reality I suppose it’s the only way to make money. If you notice carefully, of the dozens of resource websites, how many of them actually give you information you can profit on? For all the whining of jackasses, how often do they give you signal rather than noise?
I discovered something that works well for me. I wrote about it in Nobody Knows Anything.
You should buy cheap and sell dear.
That’s so simple it confuses people. It’s simple, but not easy.
As I write, gold is quoted at $1,360.70, silver at $16.89. It was different yesterday and will change again on Monday because everyone else is as clueless about the correct price as you and I are. But.
But.
If we ignore the dollar and take it out of the equation entirely, we can price gold in terms of silver and perhaps that will give us an idea of what is cheap and what is expensive. If we bother to do the math, right now, it takes 80.56 ounces of silver to buy one ounce of gold. However, we still don’t know what is cheap and what is expensive.
So we do a tiny bit of research on our own since we are the people who profit from our wise investments. We learn that in the last 150 years, the ratio of silver to gold has varied from about 16–1 to 100–1. And we can presume that unless aliens land tomorrow in ships made of pure gold, for the immediate future the silver-to-gold ratio would be in that 16–1 to 100–1 range. So simple math shows us that right now silver is cheap relative to gold and gold is expensive relative to silver.
That’s a signal, not noise. There is a difference.
If we take it a little further we can see that relative to real estate, the stock market and works of art, commodities in general are cheap. So we buy what are cheap—commodities—and within commodities we buy what is cheap: silver.
I like both silver and platinum right now because commodities are at a 5,000-year low relative to about everything. I don’t want to be sitting in paper assets that are about to fly off to Bitcon heaven as $500 billion did since mid-December. I want to own something real or a fractional ownership of a company producing something real.
Bayhorse Silver Inc. (BHS:TSX.V) may well fit the bill.
I say that mining is the art and science of extracting minerals from the ground at a profit. Mining is not poking a bunch of holes in the ground until a project looks like a giant Swiss cheese. Counting ounces is not mining: It may eventually contribute to profit but for the most part, counting ounces is an expense.
Bayhorse Silver is in production at the 100%-owned Bayhorse Mine. Owning a mine in Oregon created its own set of problems. Oregon isn’t against mining per say, but they are against processing that ore. So Bayhorse did a couple of thing outside the box. They aren’t drilling until the cows come home. The production decision was based on a Herdrick 1981 technical report showing about 3 million ounces of high-grade silver and 1.2 million ounces of lower grade material. There is no feasibility study and they smile as they say they don’t need one while recognizing the lack of a feasibility study adds risks while saving loads of money.
CEO Graeme O’Neill is using the “by guess and by golly” mining technique. The Spanish and Romans didn’t need an NI 43-101, yet today the industry pretends that adding reams of paperwork to a mining project somehow reduces risk.
How remarkable is that? Until you can figure out a way to eliminate human stupidity mining companies will fail on a regular basis no matter how many tons of paper were generated in government required reports.
Graeme O’Neill realized that if the grade is high enough, you could make a whole lot of mistakes and still make money. And obviously wasting billions of dollars drilling useless holes has put more juniors out of business than a lack of ore. He also recognized that if the rules in Oregon wouldn’t allow process within the state, shipping costs to more mining friendly states would be key.
He did a lot of research and concluded that if they brought in a Steinert ore sorting machine from Germany they could raise the average grade of the ore from 17/20 opt (ounces per ton) to 150/160 opt, making shipping costs reasonable.
I love it. He’s guessing they will produce about 640,000 to 1,280,000 ounces of silver this year. I’m so sick of guys presenting me formal 43-101-blessed numbers and promptly blowing up their companies.
Life is a risk. Most people will end up dying in bed, so if you do the math, it seems to make sense to avoid going to bed so you can reduce the risk of dying.
What’s wrong with guessing what your production will be? If Graeme is wrong we can always hang him from the nearest yardarm.
The silver industry is filled with some idiots talking about how silver is the most valuable war material, and if the U.S. ever got into a war, silver would rocket to between $50 and $100 an ounce. We know exactly how that worked out. At one time, under Nobel Peace Prize winner Obama, the U.S. had seven wars going on at one time. According to my Bomar Brain, that means silver should have gone up to somewhere between $350 and $700 an ounce. All by itself.
One of the few silver bugs with any sense is David Morgan. He did an interview with O’Neill that you should listen to. There is a boatload of blue sky potential for a lot more ounces. I think Bayhorse is on to something. I like good guesses.
Bayhorse also has a major project or set of projects in the Silver Valley in Idaho. The company has about 1.6 million warrants in the money that would bring in another $1.2 million, so I think they are fine for cash for now. And there are another 5 million warrants at $0.25, and the stock price isn’t far off that now.
I like the company a lot. I happen to believe that silver is cheap compared to about everything else. When the Everything Bubble bursts—and it looks as if it has started—silver might be valuable to have around.
I really like asking the accountant what the grade of ore is and how much money we can make mining and processing it. That’s the way it worked for a couple of thousands of years with great success.
I don’t own Bayhorse but I am biased a lot. They are an advertiser. They do an excellent job of telling their story and I believe will be very successful. With a $10 million USD market cap, I think they are cheap.
Bayhorse Silver
$0.20 (Feb 15, 2018)
KXPLF-OTCBB 65 million shares
Bayhorse Silver website
Bob and Barb Moriarty brought 321gold.com to the Internet almost 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.
Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.
Disclosure:
1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. Bayhorse Silver is an advertiser on 321 Gold. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned are billboard sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.
( Companies Mentioned: BHS:TSX.V,
)