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First Majestic and Silver Speculation
750,000 ounces of paper silver? They mine this stuff…and buy paper silver? I’m sure that JPMorgan laughed with glee as they sold them the Comex futures contracts. You can’t make this stuff up! It makes me want to sell my position in the company at the open this morning, but I won’t
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Mr. Neumeyer (like yourself) is a silver bull and employs the use silver futures to trade the volatility in the market. By utilizing some of the top physical metal traders in the world (whom trade approx.. 70% of the world’s silver market), we have access to valuable information. Furthermore, this activity is nothing new… for more than 2 years our shareholders have benefited from this activity. For the first half of 2012, First Majestic has realized a gain of $2.3M; 2011 +$2.4M; 2010 +$2.9M.
Quite frankly, I realize your issue is not with the trading activity; it’s directed at the use of Comex futures. Your concerns have been received and we always appreciate valuable shareholder feedback.
BTW – the use of stops are not practical for professional trading…
We have no real appreciation of the risk of using futures, which after MFGlobal and PFG one would have to acknowledge has some risk of loss of one’s margin associated with it – “concerns have been received” is all that is said.
But it is OK because they are trading off inside information of sorts from top traders and it has been profitable (so far)!
Basically what we have is a miner’s silver flow being used as the base off which the CEO speculates on silver prices. It reminds me of Sons of Gwalia which failed due to a hedge book which blew up when production/reserves were not sufficient to meet the committments – the hedge book part of the business was far too big relative to the operations with little margin for error.
If Mr Neumeyer wants to speculate on silver I’d suggest doing it in separate vehicle like a hedge fund and keep the miner just doing mining. That way the performance of the speculation is clear for all to see and if it blows up it won’t affect the ongoing mining operations.
Or am I just old fashioned?
“My personal blog on all things precious metals. This blog is not endorsed by the Perth Mint (who I work for) in any way. For more background on me and this blog see About This Blog and my LinkedIn Profile.”
2012-08-20 02:24:21
Source: http://goldchat.blogspot.com/2012/08/first-majestic-and-silver-speculation.html
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