How high can Bayhorse Silver really go? some more figures A couple of people have pointed out that $10 to produce an ounce is a more a conservative figure than $7, and I agree with them. Using that more conservative figure, I thought that I’d make a detailed post giving some clear targets as to where BHS can go at different silver-prices.
First of all, some precedents. The average penny silver stock went up 150x in price between 1962 and 1968, when the price of silver merely doubled. In other words, a $1000 investment became $150,000. One stock (Coeur D’Alene Mines) even went up 1000x. Here are some sources for this figure:
“From 1962 to 1968, the average penny silver stock moved upwards over 150 times in price (one went up over 1000x times) due to a mere doubling of the price of silver and speculative fervor on the part of investors.”—Doug Casey, Crisis Investing (1980).
“Spokane continued to roll in silver. The average penny stock appreciated 160 times between 1960 and 1968.”—Dr John Fahey, “Optimistic Imagination: The Spokane Stock Exchange,” Pacific Northwest Quarterly, Vol. 95, No. 3 (Summer, 2004) (https://www.jstor.org/stable/40491757)
See also a rare and interesting book called “Small Fortunes in Penny Gold Stocks" by Norman Lamb, first published in 1973, which contains much rare and interesting data about the ‘60s silver bull market.
150x is obviously the utmost that anybody could hope for, and few penny stocks are likely to attain quite that number at $50 silver, but it points us in the right direction as to the remarkable gains of which these stocks are capable. (First Majestic, Endeavour Silver, and many other household names went 150x from ’01 to ’11—simply check the charts on Google.)
We also learn, from Don Durrett, that that it is common for miners to trade at a 30x cash-flow valuation in miner bull markets. I have found that this can be the case even for one-mine producers. If I am not mistaken, Starcore International Mines, a one-mine producer in Mexico which is similar to Bayhorse, did actually trade at a 30x cash-flow valuation in the ’01 to ’11 miner bull market.
Bearing in mind everything that I have said, to what price might Bayhorse attain for somebody who buys it now, for a minuscule $20-million market cap?
It is generally agreed that Bayhorse can produce 1.3 million silver ounces per annum. At an AISC of $10, this means that Bayhorse could conceivably go 100x at $60 silver. In other words, a $1000 investment would become $100,000.
[1.3 million x 60 – 10 (50) = $65 million cash flow, x 30 = about a $2 billion market cap.)
Extrapolating from here is easy:
At $120 silver, Bayhorse can go 200x.
At $240 silver, Bayhorse can go 400x.
At $480 silver, Bayhorse can go 800x.
At $960 silver, Bayhorse can go 1,600x.
(This last figure means that a $1000 investment would turn into $1.6 million.)
Most people would be happy with making the 100x at $60 silver. But believe me, $960 silver is not necessarily impossible. According to ShadowStats, $960 was actually the true inflation-adjusted ATH for silver, in 1980. That’s when the Dow:Gold ratio went to 1:1 and the Gold:Silver ratio went to 1:14. Calculate a 1:1 DGR and a 1:14 GSR again and you get a similar number for silver today. And a 1:14 GSR is simply the normal, historical GSR. All that the Hunt Brothers did was to expose what the price of silver is when the derivatives market collapses—they “cornered” nothing. (I highly recommend this interesting article from 1980 called “Hunt for Silver” to learn more about the Hunts): https://s3.amazonaws.com/camppictures/CampArchive/Economy/Hunt%20For%20Silver.pdf. The Hunts themselves had a 1:5 Gold:Silver ratio as a fair target. The average historical wage in silver is only 1/10th of an ounce. The mining ratio is 1:8, silver is critical for modern life, and high-grade deposits and stockpiles are utterly depleted because of the criminal manipulation by the banks, so who really knows what is possible.
At any rate, these are my targets. 100x on Bayhorse at $60 silver, and 1000x or even 2000x is clearly possible also should the silver derivatives market break, which I believe is inevitable. It is rare that you can can _demonstrate_ these kinds of gains in a silver stock. As Don Durrett says, only 18 companies in the world, which call themselves silver companies, even produce more than 1 million ounces a-year! (https://youtu.be/m-qYvxpsQ8E?t=909) Even Impact Silver doesn’t produce that many, and its market cap is 7x higher than that of Bayhorse. If you are willing to accept the usual Black-Swan risks associated with a one-mine producer, Bayhorse Silver is quite literally and demonstrably the greatest risk-reward opportunity on earth.