Monday, June 25, 2012

Silver Wheaton (SLW), Miners, and Weak Banking Environment

Silver Wheaton (NYSE: SLW) is positioned to create an awesome future if the ongoing weak banking environment continues for a period of time; which is should.

This is especially true of European banks, which have provided the majority of financing for miners, and which in light of the debt crisis in Europe, are contracting their loans to the industry, providing a potential marvelous opportunity for Silver Wheaton for years into the future.

If Silver Wheaton and its leaders have the will, it's likely they could become one of the leading sources of capital for miners with silver as a by-product, or silver as the main metal being mined.

With the price of silver being under pressure in 2011, that was weakened the position of silver miners, and if that continues on, or if financing continues to be tight, Silver Wheaton would be the go to place of financing for the miners, providing a magnificent opportunity to negotiate some very favorable deals.

At this time Silver Wheaton pays a little over $4 an ounce for silver, with everything above that profit, minus limited costs.

Being a silver streaming company, Silver Wheaton has very little overhead, putting them in a strong financial position.

A strength that Silver Wheaton has over other silver competitors like iShares Silver Trust (NYSE: SLV) is that it doesn't only track the price of silver as the means of generating revenue, but also benefits from the increasing production at mines it has deals in place with.

So when mines come on line or boost production, Silver Wheaton gets a big piece of all of that.

As for risk, there is very little for Silver Wheaton in reference to costs, although there is a risk if the miners have some type of local problems which slow down or halt production.

But having a good number of clients, Silver Wheaton has sufficient protection if there are specific problems with an individual miner. It could slow down some production, and thus revenue, but a steady stream of revenue from other miners would ensure solid results.

For the short and long terms, it appears Silver Wheaton is strongly positioned for fantastic growth, with an estimated 60 percent in growth projected by 2015 by the company.

If more miners come calling for financial deals, and if bankers remain reluctant to finance them, Silver Wheaton could be setting itself up, and its investors, for significant growth for many years to come, as industrial uses of the white metal grow in demand.

Friday, June 22, 2012

Arch Coal (ACI) (CNI) (GLW) (TSCO) (HWD) Ratings, Price Targets

Arch Coal, Inc. (ACI), Canadian National Railway (CNI), Corning Inc. (GLW), Tractor Supply Co. (TSCO) and Harry Winston Diamond (HWD) had ratings and price targets on them adjusted by analysts.

Johnson Rice downgraded Arch Coal, Inc. (ACI) from an "Overweight" rating to an "Equal Weight" rating.

Raymond James (NYSE: RJF) initiated coverage on Canadian National Railway (CNI). They placed a "Market Perform" rating on the company.

JPMorgan Chase (NYSE: JPM) upgraded Corning Inc. (GLW) from an "Underweight" rating to a "Neutral" rating.

Stephens initiated coverage on Tractor Supply Co. (TSCO). They placed an "Overweight" rating on the company.

Desjardins upgraded Harry Winston Diamond (HWD) from a "Hold" rating to a "Buy" rating.

Thursday, June 21, 2012

Jim Rogers Reiterates Call for Bankruptcy Solution

Billionaire investor and commodity expert Jim Rogers reiterated his call for people who have failed to be forced to declare bankruptcy, rather than bailed out.

The end result of that fiasco is the continuation of zombie banks and businesses, as well as governments.

Rogers stated:

My solution would be to let the people who have failed, go bankrupt—declare bankruptcy. The banks lose money, but then you start over; that's the way capitalism is supposed to work.

Avoiding short-term pain through activities like propping up "zombie" companies to avoid the pain of failure has one drawback: it has never worked in the history of economics. Japan has been doing it for decades, and the Nikkei remains 80% off highs made in the '80s.
Rogers is correct of course. He notes that allowing businesses and banks to fail would help to reduce the societal pain that would accompany the continual propping up of failed entities, as if that remains the practice, it would cause the overall society to collapse, resulting in rebellions, and economies that won't recover for decades.

Bankruptcies are in fact a legitimate and healthy practice, as it cleans out the dead wood and brings the healthy companies to the forefront, as businesses and financial institutions would have their healthy parts taken over, while the dead elements of the failed businesses would be permanently buried.

If this isn't allowed to go forward, Rogers sees little hope of any recovery, but rather a dark and bleak future, which is sure to entail wars and social unrest.

Tuesday, June 12, 2012

Silver Wheaton (SLW) CEO Says Silver Will See More Pressure

In an interview, Silver Wheaton (NYSE: SLW) CEO Randy Smallwood said he believes precious metals, including silver, should remain under pressure over the short term because of the ongoing economic crisis in Europe.

“Any strength that comes into the dollar impacts silver." Consequently, over the short term they will “probably see a bit of pressure in the short term,” concluded Smallwood.

Because commodities are acquired in U.S. dollars, those residing outside the United States will pay more for precious metals when the dollar strengthens.

Commenting on the financial health of silver miners, Smallwood added that they're having difficulty acquiring capital because of the fall in price of silver.

The problem is the type of capital being made available via loans would dilute the equity of the miners, something they don't want to participate in.

Smallwood didn't say anything in regard to this, but it does make one wonder if this is an excellent time for Silver Wheaton to enter into more streaming agreements with the miners because of the tight lending market.

The faltering euro zone is also connected to this, as European banks were the top lenders to the miners, and with the challenges there they've tightened up their lending.

Over the long term, because of the growing industrial demand and uses of silver, along with the lower recycling rates, Smallwood says he's extremely "bullish" on the metal over the long haul.

Silver Wheaton closed Tuesday at $27.92, climbing $1.03, or 3.83 percent.

Friday, June 1, 2012

BHP (BHP) Over the Long Term

Mining giant BHP (NYSE: BHP), as with most commodity companies, has been under a lot of pressure, as the ongoing weak global economy, concerns over Europe, and slowing growth in China, has investors concerned over the short - and mid-term growth prospects of the company.

A couple of major items have been weighing on the company. First is the recent announcement that the company won't be putting its money into growth projects, which it had originally expected to pour $80 billion into over the next five years.

Chairman Jacques Nasser said the $80 billion expansion proposed by CEO Marius Kloppers in 2011 won't be happening, although it isn't clear how much will go into expansion going forward.

Nasser added that he expects commodity markets to continue to weaken, as confidence in a global economic recovery deteriorates.

The second major challenges facing BHP is the uncertainty surrounding Olympic Dam project in Australia.

BHP wants to delay the development of the project, while the Australian government is threatening the company, as South Australian Premier Jay Weatherill, who appears clueless and emotionally driven, saying in the Australian National Affairs, May 25th edition, that the reasons given by BHP for the potential delay are "artificial."

This bizarre assessment appears to be completely politically motivated, as the reasons proffered by BHP are totally reasonable, and based upon market and economic conditions and nothing else.

BHP is wise and prudent in delaying the project, and the company surely won't jeopardize itself and shareholders to placate politicians.