GRASS VALLEY, Calif. (Silver Stock Report) -- Zinc and Lead prices are breaking out and making new highs, and I did not read one single news story on this event today from any source. Shocking. Seems everyone is alseep, thinking we are still in a "correction" for commodities because oil and gold, the heavily manipulated commodities, are still down. Also, nickel, molybdenum, and uranium are headed upwards at full steam.
Zinc broke out and hit $1.73/lb., and lead broke out and hit $.68/lb.
Take a look at the kitcometals charts for zinc, and look at the stocks of the metal in decline:
http://www.kitcometals.com/charts/zinc_historical.html
It's almost the same story for lead.
http://www.kitcometals.com/charts/lead_historical.html
Prices are up, as inventories are in decline. It's doesn't get much more clear than that. Commodities dead? No way.
We have a 2 year structural problem in zinc, where no new major projects will come on line in that time frame, and we have zinc inventories at the LME getting cut in half in the last 6 months from about 230,000 tonnes to 130,000 tonnes with no major price change. Clearly, zinc prices are not high enough.
Furthermore, China is slated to boom for the next 15-20 years.
I twice predicted that zinc would lead the pack (just echoing other news sources, and looking at the obvious).
I said on June 2:
http://www.silverstockreport.com/email/Zinc.html
"And when zinc begins to shortly hit new highs again, above $1.75/lb., I suspect that this "dip" in the metals will be over."
(Read that article for more details on why!)
I said on September 2:
http://www.silverstockreport.com/email/stock_picks.html
"Zinc inventories continue to decline, while zinc prices look ready to break out again above $1.60/lb."
My overall portfolio remains down about 40% from the highs of May 11, 2006. I've "lost" millions of dollars on paper from those highs, (but I'm still up about 40% for the year!). I'm not worried. I can see that zinc inventories are down.
And I know that commodities booms last about 15-20 years, and this one may well last much longer with China booming--since China has over 4 times as high as the population in the U.S.!
Looks like zinc will lead the pack out of this correction in commodities, and the zinc stocks should start booming, too.
Besides the usual zinc/silver stocks you all should already know about that are all on dips (and so it's time to buy), I'd like to bring to your attention a new company that came out this spring. (It's also on a nice price dip.).
Klondike Silver. (KS.V - TSX) It has silver, lead and zinc.
http://www.klondikesilver.com/
The share structure seems difficult to access, in part because the website info is dated Jan. 2006, and in the finance reports, many shares may need to be issued for all the properties, so management has to keep track of a lot. (It kind of seems like many companies turn this into a sort of puzzle game on purpose, so that investors who work to find the information feel as if they are doing "real work". And that bothers me. They should keep it simple, and up to date, and have more respect for their investors than this. I work hard to "keep it simple", and so does kitco and yahoo. The companies should put this info on the front page of their web site, and it should be updated daily, if necessary!)
The finance statement at Sedar filed on Sep 28 2006, for May, 2006, shows about
32 million shares outstanding and
14 million warrants and
3 million options.
On July 31, there was a placement for 7.7 million units of shares and a warrant, for another 15.5 million shares.
Total: 64.5 million shares fully diluted.
@ $.38/share x .88 Cdn/U.S.D. = $.3344
$21.5 million Market Cap, fully diluted.
Take a look at the smartstox interview here:
http://www.smartstox.com/interviews/ks.php
Richard Hughes is famous for his track record of success, and is very highly regarded in the industry by the people I talk to.
Or, read the smartstox report:
http://www.smartstox.com/reports/KS.pdf
See the list of 19 properties klondike has here:
http://www.klondikesilver.com/properties.cfm
The basic story is similar to many, such as Clifton, Cabo, O.T. Mining, & Sterling Mining. Klondike quietly acquired many properties at the bottom of the market to acquire a virtual monopoly in a highly prospective historic silver mining camp (The Slocan camp) of historic high grade producing mines that were never explored with modern methods. Klondike also has a 100 tonne per day mill, and could start mining quickly, cheaply, soon. (Soon was the story 2 years ago.)
Klondike has acquired so many properties this year, I've not even had time to keep up with it. I'm just glad I own some stock, and that the company is doing the right things in this bull market: Acquiring properties (and not so quick to produce). And we ought to be buying stocks.
Timing for this stock: Don't drive this stock too high tomorrow at the open. Be patient. The "correction" may be ending, and now may be the time to buy aggressively, but there are many warrants at $.20, and that will keep downward pressure on the share price, and will help the company bring in more cash to develop properties. Also, there are many other good companies to consider.
Disclaimer: I own over 1/2 million shares of Klondike, and as many warrants.
Copyright (c) Silver Stock Report 2006
Jason Hommel is Editor of Silver Stock Report, a free newsletter with over 23,000 subscribers. Click here to sign up.
