Levon Resources Ltd (New) LVNVF

Of Interest...from tonite's Midas

[baba2]

Very interesting to see that Randy Smallwood has come out and stated that Silver Wheaton believes silver has gone about as cheap as it is going to go and therefore the time to make new deals is now. SLW was the pioneer in the silver streaming biz. They invented the game. They got in cheap, real cheap...

Think of how some of those early silver stream deals have paid off for the company. Then as silver ran to $50 they backed off and just banked all the cash flow. Now it appears they are calling the market right again, by stepping up to fund companies that really have no choice but to take the cash and on the terms that are very beneficial for SLW shareholders.

It is not just SLW management that think silver has bottomed. For Hecla to step up and trump a takeover bid to grab US Silver a few days ago suggests that one of the bigger silver producers in the world also believes that silver is cheap here.

Thirdly, consider how many silver producing companies worldwide have come out with their quarterly operating performance recently and announced they are producing less silver now that during the same period last year. I am talking big primary producers like Hecla and Coeur D'elene, big by-product producers like FCX, smaller primary producers like Impact Silver, and smaller by-product miners like RVM and Mercator Copper. There are literally dozens of companies that have come up short in their silver output this year so far compared to last year.

Sure there are plenty of new mines coming on line in the next few quarters. But right now, overall mine production is not increasing at the same pace that would be warranted by nearly two years of silver above $25 an ounce.

Furthermore, lots of silver came to market last year through scrap sales and that flow has declined sharply. In part because once people clean out their holdings of silver and dump it to a scrap bullion dealer, its gone forever. And in part, because the price these dealers offer right now is so low that there is not much incentive for the remaining scrap inventory to be tendered.

So to recap, we have mine supply increasing but at a slower pace than one would expect with high current silver prices. And we have less scrap coming to market. Add in that industrial demand for silver remains firm even with the overall economic weakness. These factors provide fundamental support for higher prices, in line with the action of the big silver companies recently to support the concept that the bottom is at hand.

A final point comes down to investment demand. Sprott completed a secondary offering recently for its silver bullion ETF and the entire allotment was taken down quickly, plus an over-allotment for the dealers. Now contrast that with just about every other financing since late last year. Companies are having to beg, hat in hand, for every dollar they can get. Investment dealers are hurting. Many equity offerings have been pulled altogether, and IPOs have been stalled. Why? Because those who have money are unwilling to risk it right now. But a big silver ETF (a legitimate one by the way) can raise a full allotment in no time at all.

Add in the anecdotal evidence that big money is buying silver in bulk. Add in the evidence that producer hedging has declined. Consider that the short overhang in silver has been sharply reduced during the year, as reported in the COT report. All of these factors tell us that demand is firm. The case can be made that silver is going higher. Much higher in the event of a short squeeze or a delivery default.

China has imported a hell of a lot of silver this year, and again the trend appears that the pace of silver demand in China is growing