with mining stocks there is always the possibility of something going wrong. aside from the things i have already mentioned, the government of argentina has been making some noises about additional taxes on mining. but since sso recently signed its stability agreement with the secretary of mining and the governor of jujuy province, i don't think that is too likely that they will do anything beyond the 3% royalty.

i recall a gold company whose feasibility study indicated a grade of 5 grams/ton, but when they actually put the mine into production it only graded 4 grams/ton. a difference of 1 gram per ton may not seem like much, but it was a 20% shortfall in revenue. but the priquitas project is so robust that i don't think this will be a problem.

some of the heavy equipment they use is in short supply, and had to be ordered as much as 18 months in advance. their logistics people have already seen to all of this, but all machines can break down, so it is possible, although unlikely that something could happen to delay the project. a large chunk of the market cap is due to this project, so if the commissioning of pirquitas were delayed, the market wouldn't like it.

in the short term i think investors focus more on the price of silver itself. some years ago, quartermain said sso stock had three times the volatility of silver itself. that relationship lasted perhaps through 2006, but now it looks like that ratio is more like 1:1. as we have seen this past week, they pushed the price of silver down, but sso held up around 30.

i don't use options as this stock has been exciting enough for me all by itself. i believe the precious metals markets are so thoroughly manipulated as to make short term forecasting impossible for anyone who doesn't work at a senior level at goldman sachs or morgan stanley.

although the fed and its allies are not toothless tigers, i think it is only a matter of time before the demand for physical silver overwhelms the games being played on the commodity exchanges. my best guess is that they will move heaven and earth to keep gold and silver from blasting through $1000 and $20 respectively until after the election in november. they may lose control earlier, but my guess is that we will have the proverbial "hockey stick" market this year. that is, sideways movement for the first ten months (with the usual sharp moves up and down) followed by a parabolic move in the last two months, as treasury secretary paulson leaves washington, and lets the next administration take the blame for the mess.