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Financial Times continues:
“Now, Slim would certainly have to pay a hefty price to take control of Fresnillo. The company is currently controlled by the Peñoles mining group, which in turn is controlled by another Mexican billionaire, Alberto Baillères.” Here is a link to Neil Hume’s piece at FT.”
Our friend Tyler Durden over at ZeroHedge picked up coverage ahead of the Financial Times piece CLICK HERE.
This morning King World News interviewed James Turk out of Spain once again to get his comments. When asked about the developing story Turk stated, “As I said previously, it is not easy having billions of dollars to invest. The question is how do I put it to work without moving the market? Look at what Warren Buffett did back in 1997 when he acquired his 130 million ounces of physical silver. It took him almost eight months, and the silver price nearly doubled from about $4 to almost $8.
Back then silver was out of favor and the supply was much more plentiful. So, how can a billionaire acquire silver today? The easiest way is to buy a mining company, thereby gaining exposure to what will be a much higher silver price in the future.
As you know Eric, I have targeted $50 for 2011. This would be a roughly 67% increase in the price of silver. Fresnillo produced over 10 million ounces of silver in the latest quarter, so quantifying that over one year would mean roughly 40 million ounces of yearly production.
So, for every $10 increase in the price of silver, this would add $400 million of free cash flow to the bottom line. Eric, you can see from this example how the silver stocks have tremendous upside leverage to the price of silver.
The fact that this story is gaining momentum is really about a much larger issue which is how to gain exposure to the price of silver in scale. This is not just about Carlos Slim, but more broadly about how the bullish outlook for precious metals is attracting serious money.
Remember, the Warren Buffett purchase of 130 million ounces nearly doubled the silver price over eight months. Given how tight the market is for physical silver presently, I can only imagine how high the silver price would rise today if someone with billions wanted 130 million ounces.
For what it is worth we are seeing a pause with some profit taking in both gold and silver, but I expect this will be short-lived and both metals should resume their march higher in a day or two.”
As Turk mentioned, there is a some profit taking that is happening with gold slightly lower, but up to now silver has remained stubbornly flat on the day near 30 year highs. We don’t know what will happen with the possible Carlos Slim takeover of Fresnillo, but Fresnillo traded up almost 3% yesterday while the HUI gold index was down over 1%. As the Financial Times reported today, Fresnillo is leading the FTSE 100, up another 5% so far.
Eric King
KWN - World’s Richest Man Entering Silver Gaining Momentum
From Neil Hume at the Financial Times, “Carlos Slim, the world’s richest man is looking to enter the silver market in a big way. And that big way, according to KingWorldNews, is a bid for Fresnillo, the Mexican based mining company that is poised to become the world’s biggest silver producer...All of which could be contributing to this morning’s spike which has carried Fresnillo to the top of the FTSE 100 leaderboard.”
January 4, 2011
KWN BLOG INTERVIEWS
