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Message: Carpe DM Stocks SFMI dtd 18 Dec 20122

Tuesday, December 18, 2012

$SFMI - The Price of Gold

Recently Goldman Sachs released a report that temporarily sent the price of gold sharply downward. This lead traders in the commodity to bark back in anger stating that this was typical BS that seems to plague the commodity prognostication market. On the one hand, the report was stating that investors should step away from gold leading the price to drop below $1700 for the first time in months. On the other hand they predicted gold would be mid $1800 in six months. The market balked at first and now has quickly recovered its losses. In the long run, unless Goldman has alchemists at the ready turning lead into gold, its a fairly finite commodity. Yes there are better extraction techniques which allow companies much higher yields, but overall the global amount of gold isn't going to get much bigger. What that means for $SFMI, Silver Falcon Mining is that despite the seemingly slow pace of progress (Rome wasn't built in a day either), the value of their potential continues to increase. Think about it this way. If Goldman is right, and aren't they always (sarcasm) then gold should be $100 plus higher in 6 months right about the time Silver Falcon should begin to find out how much they may really have in their mine. Every 1000 ounces will yield nearly an additional $100K of value, simply because it takes time to get out the ground. If Silver Falcon were mining that material right now, they couldn't get that kind of yield at a bank. Patience is a virtue in the mining business. This is a game measured in inches. There has been a lot of taxloss selling all around. There may also be a significant amount of shorting against the box happening. This has put a damper on $SFMI's stock price, but like the Goldman report's effect on the price of gold, it should be temporary. The new director of $SFMI didn't buy 5 million shares because he thought the certificate would look pretty on the wall. He bought these shares because he is savvy and believes that his money will do better in this investment long term than other places. For the skeptics who believe that this type of purchase was for show, it wasn't. The Company didn't make any grand fanfare behind the purchase and quite frankly, Mr. Parliament owns a very significant position already. He purchased the shares because he's seen the company progress and believes it will yield golden results.
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