Over the weekend, I took six children and a hot brunette to the Patuxent Research Refuge for the day.
Patuxent Research Refuge is a sprawling wildlife sanctuary established by President Franklin D. Roosevelt in 1936.
The large patch of wilderness on the 95 Corridor is a bucolic oasis — a quiet sanctuary from the hectic soul-sucking madness of D.C.
As I ushered my offspring and their friends down gravel paths, I had amicable conversions with North Face-wearing adventurers about ring-necked ducks and bald eagles.
That was before the 14-year-old stomped off in a huff over some perceived slight and set off the truck alarm...
Before the sandwich wrappers blew off in the wind and apples landed in the fish pond, before my five-year-old started screaming at an octave that only a-five-year old girl can achieve...
On our way out, the no-longer-friendly fellow with the binoculars and the Patagonia hat was looking severely askance.
He said with the authority of an English butler, “This is a bird sanctuary. Your mob and their antics scared off the first Dryocopus pileatus of the season.”
“Huh?” I responded.
“A Pileated Woodpecker,” he informed us.
“Look, friend,” I said as my eight-year-old ran by kicking a Sierra Mist can, “I grant you that I don't know a whole lot about Latin birds... but I'll tell you what. I'll make it up to you with two words.”
“No, it's not. I will give you the two words that will double your money over the next year.”
He made some sort of noise that started at the back of his trachea and escaped his nose with a blast of air. This man seemed doubtful, but I pressed on with the conviction of the righteous and just.
“Buy silver,” I said in my best James Earl Jones voice, which gave it the needed gravitas.
“Silver?” asked the bird man. “Silver is at the top of its range.”
He pulled a folded chart from his vest pocket and smoothed it on a fence post.
“No, sir,” I replied with a flourish, removing a black crayon from behind my ear and drawing a trend line on his chart...
“That is called a breakout with a MACD crossover. Besides, it's already down from its highs at $47 an ounce. Inflation will drive it back up.”
He nodded approvingly as my offspring threw rocks at a placid blue heron wading in the cattails.
“Silver was up 4.3% yesterday alone. In Europe's spot market, it's jumped more than 12% since last week. It has surged 34% since the start of the year,” I explained.
“Bountiful Ben and his printing press are pushing it higher... The mighty Ron Paul waved a Silver Eagle at Bernanke today and scolded him for debasing and destroying the dollar.”
According to Forbes:
Ron Paul first asked Bernanke if he did his own grocery shopping, to which the Fed Chairman responded with a “yes.”
Paul immediately cut him off and said “no one believes the 2% inflation rate,” claiming it was actually closer to 9%.
“Someone is stealing wealth,” said Ron Paul...
He then pulled out a silver eagle, a silver coin that has nominal face value of one dollar that is legal tender. Ron Paul told Bernanke that in 2006, as he took the top spot at the Federal Reserve, an ounce of silver bought about 4 gallons of gas. Today, said Paul, it buys about 11.
“You are correct, my good man. One can't make that stuff up,” he said as he folded his collapsible walking stick into his backpack.
“How should I play it?”
“Well first of all, you should own physical silver like Ron Paul does. Secondly, you should invest in silver miners. One company I like is Pan American Silver (PAAS). The company just started turning a profit again in the fourth quarter due to higher metal prices...”
Pan American owns mines in Mexico, Peru, Bolivia, and Argentina, and will produce about 22 million ounces of silver this year at a cost of about $13 an ounce.
PAAS made 89 cents a share in Q4 — up from a loss of 12 cents a share last year. Revenue rose $212.4 million. The company has a P/E of 7.8, a PEG of 0.81, and 491 million in cash compared to 31 million of debt.
That's good for a miner.
But forget about the past. The company has two key catalysts that will drive earnings in the future...
The first is a new strip mining law in Argentina that will clear the way for Pan American to open its Navidad silver mine.
Navidad is expected to yield 19.8 million ounces of the metal a year during the first five years of operation, according to a December 2010 study.
The second catalyst for share price appreciation is a smelter restart in Peru. The smelter was closed after the 2009 commodity bear market...
Restarting the smelter will boost Pan American's margins, as they are now having to pay up for outside processors.
“I concur with your assessment,” the bird man said after hearing me out.
“I will buy silver immediately.”
Pulling his cellphone from his pocket, he added: “But sir — please stop that child from digging up the beaver lodge.”
Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Crisis & Opportunity and Managing Director of Wealth Daily. He is also a contributor for Energy & Capital. For more on Christian, see his editor's page.