Firstly, we must point out that we are not financial advisors; we represent a small group of investors in the United Kingdom and also invest our own funds in the precious metals markets. However we will throw our humble opinion into the ring in an attempt to answer our reader’s requests.

This raises the question of whether it is better to invest in the metal itself or to invest in silver stocks?

Kinross Gold Corporation (KGC), has made terrific progress a since it was established in 1993 and is now the third largest primary gold producer in North America by reserves. All its nine mines are in relatively politically stable countries such as the United States, Brazil, Chile and Russia. Canadian based Kinross employs more than 5,000 people worldwide.

On the positive side for gold, we had oil closing at $100.88/barrel and a myriad of billion dollar rescue packages for inept bankers and financial institutions. These actions may well be necessary however they ultimately serve to undermine our confidence in assets of the paper nature. Plus the reasons we gave when we first posted on this site which were as follows:

What a difference a month makes! Gold closed at $731 and the HUI hit 400, which makes the job of writing this update more of a pleasure. We will start with both the chart of the HUI and the chart of gold. Both have moved to higher ground aided by the Federal Reserve who pitched in with a 50 basis points rate cut. The US dollar weakens and gold strengthens as their inverse relationship continues.

So we are all at our desks this morning talking up gold and allowing ourselves the luxury of predicting the spot price, gold futures, silver futures and even the what the close will be for your favorite stock come the end of the week.

On the other hand gold has gained $40.00 over the same period for a gain of 6%.

Silver Standard (SSRI) has a market capitalization of $2.11 billion and is one of the largest stocks in the silver-prices portfolio. There is a school of thought that says the big profits will be confined to the junior silver stocks sector, which we don’t disagree with, however we do believe that quality silver stocks will perform and bring us good returns. Do bear in mind that picking the right junior stock is also difficult as some of them may not find any silver and will not be around when this market explodes across the finishing line. And a gain of 11.47% in one day is not too shabby, probably one of the best silver stock gainers Thursday.

The short answer is no, we do not agree.

The reason we are bringing this to your attention as investors is in response to our mailbag, which currently has a theme of:

As we write, the price of Gold has dipped to below $640.00, rendering the milestone of $700.00 a little more then a dream we once had. Yes, it is tough to see your Gold investment take it on the chin with little or no come back. But,are we not forgetting that this is a seasonal event, and the month of June is probably the worst there is as the summer time blues weigh heavily on the markets.

Apparently we should be looking towards off shore wind farms, wave power and solar panels in our homes. So that secures the green vote but what about keeping warm? Yes we all know about tiny windmills on the shed roof and we have been talking about alternative energy as the answer since I was a kid but the truth is that we are not much further on. Britain still relies on nuclear power for 20% of its electricity but these power plants such as Dungeness and Sizewell are long in the tooth and are due to be decommissioned by 2015. So Britain has to replace that 20% and provide for any extra electricity that may also be required by that date.

Our role play in the board room of the fictional but life like Gigantum Power corporation did help us to come up with what we thought was a bold prediction of $110/lb, which would have been a price increase of 15%. However someone very keen indeed to ensure that they were the winners piped us to it. This price increase equates to 18.9% or 57% for the year so far.

We have had to stop and consider what this means to our target of $200/lb?

Pan American Silver Corp was founded it 1994 and it still follows its aim that it set then, to be the best investment vehicle for investors looking for exposure to silver prices.

Well, so far PAAS has been doing a great job of trackingand even outperforming silver prices, as the chart shows below.

Chris von Christierson, a Chairman and CEO who has over 35 years of business experience in the resources industry leads the management team. He has been instrumental in establishing Rio Narcea as the European Union’s largest gold mining company. His qualifications are top class and include a Bachelor of Commerce degree from Rhodes University, an MA from Cambridge University and OPM at Harvard Business School.

Taking a look at the financial aspects we can see that Rio Narcea has a Market Capitalization $654 million, a P/E of 56, the stock price trades at around $3.98, and average volume is now in excess of 1.0 million shares traded per day which reflects the recent interest the company has generated in the market place.

A commonly known figure amongst gold bugs is just over $2000, which is the figure you get when you adjust the 1980 high for inflation and represent it in terms of today's rapidly devaluing US Dollar. If this is to be the high for gold in the current bull then this would suggest that we have at least another $1000-$1500 rise in gold prices to come.

In other words, from the low at $250 to $2000 we are currently at $650/oz, about 37% of the way through this gold bull market. In the last bull, 37% would put gold at $336.55 in late 1979 on its way to $850 in 1980. This would put gold at the beginning of stage three in the bull market, where prices are about to skyrocket. If this is the case then we only have a few months left in which gold will just about triple!

The first chart clearly demonstrates the sell off that took place last year with the Industrial stocks. The sell off started in May and lasted until August when the recovery started; by October the Industrial stocks had recovered to their May levels.

click to enlarge

The FRG team includes Ph.D.-qualified geologists who employ a system developed in-house which allows them to identify the most promising target sites and to then assess and quantify the magnitude of the resource, thus raising the level of confidence in the potential value of the find. Their management team exude the excitement of olden days pioneers, as their target is to hit the Sweet Spot by discovering tomorrow’s history making deposits.

Geo-politically, Fronteer are actively involved in exploration in three areas of Canada, two in Western Turkey, and two in Mexico.