OK, Ranting Andy, this one is for you. From the G Man, who is very private, a big player, and as savvy as it gets…

Bill,
For what it’s worth between the 2 of us I agree with you about the shares. I have been doing a lot of work on the miners recently and feel like a kid in a candy store. There are so many companies with proven reserves and probable resources and current production that I have been greatly expanding my share holdings. I actually let my silver futures and physical go over the last $10 to deploy more capital in the shares. I have no physical holding in Silver any more. I have the largest position in the miners now. In the last 15 years I remember 2 sectors showing such strong fundamentals, momentum and reasonable valuations. The telecom equipment in the mid 90’s which I missed and the energy services which I nailed. I don’t know if you still own your ECU & SA but I have taken ECU to # 1 and SA to #2. Mexico is clearly turning into a mining miracle. While there are shortages of Silver in Asia, Mexico clearly is an exploration success. If you believe in capitalism you believe somehow finance will facilitate Mexico increasing Silver production dramatically to satisfy Asian demand. In the most recent transactions in the group I calculate Newmont paying 27% of proven value of Gold in the ground for Fronteer, because they paid up for the inferred. Gammon paid 10% of Capital’s proven and the deal looks tremendously accretive. New Gold paid 10% of proven for Richfield. On this basis ECU is worth $5 right now and SA is worth $150. Of course no one could justify paying such a premium currently but any worries about the financials should be thrown out the window. The cash flows in the producing mines are so strong, anyone could steal ECU or SA for a small premium now and get paid back very quickly. AT CURRENT GOLD & SILVER PRICES THESE STOCKS HAVE LIMITED DOWNSIDE! It makes no sense to pay $40 for silver above ground over the long term vs the miners at current valuations with proven reserves and current cash flow. IMO it no longer matters what type of a mine you have the only thing that matters is whether there really is Gold and Silver in the ground and how easily you can get it out. My current positions are the largest ever ranked largest to smallest:

A caveat from the "G" man...

todays midas and the shares vs physical

I think we are in a similar situation to 2008. Fed tried to save subprime> printed> dollar fell> energy soared> recession started> S&P’s collapsed sucking worldwide liquidity with it and all asset classes tanked including Gold. I think this time will be different. I think this is $ collapse, Gold soars. But I don’t want anybody following me for advice; because I do not know what I will be thinking in June. What I said below is my current thinking. It makes no sense to buy Silver at $40 over companies with proven, probable or producing for the long term at current valuations. My mainline scenario is for a currency crisis developing here and now, at the same time a repeat of 2008 is a real possibility. How do you communicate that to retail? I love my miners but I might sell them at lower prices. The $ is the most likely to collapse, but possibly it’s the bond market or maybe it’s the stock market? In the end the Teflon portfolio is probably some combination of physical, miners and T-Bills with no leverage.
Good night,
G