Wednesday, February 1, 2012

BUY US Silver @ $2.38

Near the end of yesterday's session I decided to buy shares of US Silver (USSID) for $2.38. I have followed this company fairly closely for the past 4 years. I was looking for a silver miner to compliment my gold miner positions and as events are now strongly favoring this company's stock, I think this is a good time to buy and hold.

There is quite a bit about US Silver I would like to write about but unfortunately this post will have to be short.

The company has just done a 5 for 1 reverse split. This condensed the shares outstanding to just 61.8M, while boosting the share price from the 45 cent area to $2.40. Also, the company is in an advanced stage of receiving a listing on the AMEX exchange.

Its silver mines are in northern Idaho. 

2011E per share earnings are .06, 2012E .09. 
PE 7.9 and 5.3 respectively.

Gross Margin (TTM) 40.19%. 
Net Profit Margin (TTM) 18.73%.
1.7X tangible Book Value

Debt = 0
Cash per share = .44

Return on Assets (TTM) 21.87%
Return on Investments (TTM) 23.30%
Return on Equity (TTM) 25.82%


  1. Hi John

    It's interesting about your buy and hold decision on US Silver. Did you see Alf Field's article on silver over at Goldseek? I greatly respect Alf's work on gold. It's based on EW and his gold predictions are uncannily falling into place. He reckons that we are entering wave 3 of 3 for both gold and silver - this wave being the strongest. His views seem to be similar to yours.
    By the way, I use a bit of simple EW myself along with Gary and Doc's writings. I think EW compliments cycle theory - although many people ridicule it.

    All the best


  2. Ian - I did not know of Alf Field's article at the time I purchased US Silver, but I have read
    it since. My thought, for now, is that if the only way for sovereign nations to continue functioning
    (US and EURO, for starters) is to debase their currencies while they do their best to resist the deflation
    that a depression inevitably brings, then gold is going to do very well and silver is going to do even
    better. If the US Silver stock is to take a near term swoon I think I will just continue to hold it as
    the bigger picture suggests strongly to me that the swoon will be temporary.

    I also believe that there is ZERO likelihood that gold revisits the $1524 low of late December as its price has
    broken convincingly above the downtrend line established by the Sept 2011 high. This leads me to believe
    that either we are in the 'A' wave of the traditional ABCD pattern that has endured throughout the entire secular
    bull market beginning in 2001, or we are going to see that pattern once and for all obliterated as the current 'A'
    wave does the unthinkable - which is to surpass the high of the preceding 'C' wave ($1921). 'A' waves never surpass
    the preceding 'C' wave top. But if this is the beginning of the final parabolic phase of the entire secular bull
    market I suspect patterns that worked in the past may be completely over run. Time will tell.

    In any event - as long as the US postures or actually does print more and more currency to avoid the 2008 deflationary
    experience - precious metals and their miners should perform very well. In the event that this scenario is not exactly
    what plays out I am buying miners that have strong balance sheets, are comparatively under priced in terms of their
    price to book value, and have exceptionally strong earnings projections. My strategy is to buy value and wait for the
    market to reward me.

  3. John, Do you know of any way to anticipate private placements or bought deal share offerings? These financing's generally tank the share price without warning, in my experience. One of many reasons to only hold short term it seems. Bruce

  4. Hi Bruce - no, I don't know of any sure fire way to do that. However, I tend to apply
    a bit of common sense to my analysis and that helps generally. For example, a company
    that has recently announced one of these things - their share price has usually gotten
    clobbered, and usually excessively clobbered. In that case, buying may not be such a bad
    idea. Another example, two companies have roughly equal appeal, but one has no cash and
    the other has a bucket full. I would not be interested in the first case. Another example,
    I read a lot of background material about the company. How many mines do they have, what
    is the consistency of their profitable production or what project do they desperately think
    they need to get off the ground to make the company fly? If they are not a consistent earner
    I wonder if they will decide to sell stock to boost their balance sheet. And if they are
    needing to get a mine into operation but don't have much else going for them I also am leery.

    It's a guessing game, for sure. But some common sense can probably slim down the odds for
    stepping out the window of the 13th floor.

  5. Hi John,

    Gold finally made its move down into a daily cycle low. I have the current 4 hr count on bar 44.

    If you're planning to buy this cycle low, will you wait for a swing on the 4 hr, or wait for TSI signal on 4 hr (or shorter time frame like 1 hr or 30 min), or both (swing low and TSI signal on 4 hr), or some other signal (like a swing low on the daily)?

    I'm thinking that the 4 hr count will run a little long because the last cycle was short. But at 44 bars, it's already long.

    Thanks, John.

    Have a great weekend!

  6. John, Short article about 21 month cycle in gold titled 'The Next 17 Months for Gold' on Kitco. Bruce

  7. For those who would like to read this interesting article: