Silver Standard Resources: Uninspiring Stock Price

Includes: GLD, SSRI
by: Bob Kirtley

Silver SSRI and HUI 24 May 2010.jpg

SSRI looked to be improving, however, it has been sold off heavily of late which is disappointing. As we can see when compared with silver or the gold bugs index (HUI) it is still lagging behind. This raises the question of whether we should be reducing our exposure to Silver Standard or be giving some thought to picking up a bargain at these price levels.

On January 25th, 2010 we reported that Silver Standard Resources Incorporated: Robert Quartermain Resigns and commented as follows:

In our humble opinion SSRI are losing a top draw member of the management team who will be difficult to replace. The news of his resignation has no doubt impacted on the share price and a lot rests on who the replacement will be and just how fast they can fill this slot. We still rate the company highly but our plan to buy a few Call Options on this stock will have to go onto the back burner until the dust settles and the full impact of this change is accounted for in the price of the stock.

Despite investors displaying their displeasure by shunning this stock they still have a very bright future once the dust settles and they begin hitting their predicted targets.

The jewel in the crown is the Pirquitas Mine, which is Silver Standard’s first major mining operation, with commercial production being achieved on st December, 2009. At full production the mine will produce an average of approximately eight to ten million ounces of silver and 2,500 tonnes of tin annually, which puts Pirquitas among the largest primary silver mines in the world.

Production for the full year 2010 is expected to be seven million ounces of silver at an average cash production cost of $10.00 per ounce of silver (net of by-product credits) and $14.00 per ounce total cash operating costs including royalties and taxes, a real class asset.

We haven’t sold any of our shares in SSRI but neither are we are buyers at the moment. For now the best we can do is sit on the fence and observe developments, should the stock price drop further for no other reason than Silver Standard is just not a fancied stock, then we may take the plunge and acquire a few more shares.

Have a good one.

Got a comment then please add it to the bottom of this article, all opinions are welcome and very much appreciated by the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.

Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation (SLW), with both returning a little over 100% profit.

Disclosure: Long SSRI