2007 was a good year for precious metals and related investments. Gold recorded a powerful advance, closing up 31%, just off an earlier high of $845, some 13% higher than my forecast. Silver reached $16.20 at one point, coming within 5% of my forecast. I had expected silver to outperform gold, but the reverse happened.
This was the year the mortgage-backed securities market melted down, and gold was viewed as a safe haven against the decline of the U.S. dollar. But silver was seen as an industrial metal, and with economic weakness ahead, the prospect of lower industrial demand prevented silver from keeping up with the yellow metal.
My old standby Silver Standard closed at 36.53, after having traded as high as 48. This was a 19% gain for the year, which is good for any stock, but that was just a warmup for this company. Next year they are expected to bring the Pirquitas project into production, and I expect the shares will be re-rated as a producer instead of an explorer.
The rest of my recommendations from September: CEF +9.8%, ESPZF -(32.1%), FDPIX +4.3%, GGCRF +11.1%, MVG +6.9%, SLVXF +4.4%, SLW +18.3%, SVMFF +38.7%
A couple of notes for those who are keeping score at home: SVMFF split 3-for-1, and FDPIX declared a dividend of 2.94. ESPZF is the only one lower, because the market was disappointed with some pretty good drilling results. The grades were fairly low (1-2grams/ton) but the length of the intercepts were very good (70-80 meters.) You can't find bonanza grades like San Luis every time you stick a drill in the ground. But ESPZF is well financed, has good management, and a JV partnership with Silver Standard, which will fund the San Luis construction. So I think ESPZF has a bright future, and is very attractive at this level.
Next year? I see $1,000 gold and $20 silver. In any event, don't sell Silver Standard unless you are averse to making money. Once it brings Pirquitas into production, it will be printing money no matter what the price of silver does.
At this point I will add one more recommendation: Anatolia Minerals (ALIAF) has already defined 6+ million ounces of gold, and raised the funds needed to construct the mine. What could go wrong? Well, like the name suggests, it's in Turkey, and is subject to all of the geopolitical risks you could imagine. But if the Middle East doesn't blow up, and Turkey doesn't invade Iraq, and environmentalists don't shut down operations, Anatolia should do very well.
That's all for now.
