In short: "We own the biggest silver company is Hecla" — the only silver miner in the book, held as the equity complement to straight silver bullion.
Hecla is the largest silver producer in the United States, and it is the only silver miner Oxbow owns — "we own the biggest silver company is Hecla." Everything else on the silver side is the metal itself.
The reason to hold a miner as well as bullion is leverage: a silver miner's costs are largely fixed, so a rise in the silver price flows disproportionately into its profits. Oakley has already run this position once as a full round trip — bought near $9, sold above $30, repurchased around $14.50–15 — which is a good illustration that his stance here is a position, not a permanent conviction.
29:08And then in between we have a lot, we have all of the — not all of them but most of the big royalty companies. We have Royal Gold. We have Wheaton. Wheaton is in there. Franco-Nevada. And then we own the biggest silver company is Hecla that we own, a miner there.
In short: The round trip he uses as the whole lesson: "We owned Hecla at nine bucks last year and sold it over 30 and bought it back this year at 14 and a half or 15… and it's the number one silver producer."
Hecla is the largest silver producer in the United States. It is also the cleanest illustration of Oakley's sell-and-rebuy discipline: Oxbow owned it at $9, sold it above $30 when silver went parabolic, and bought it back this year at $14.50–$15.
He offers it almost apologetically — "I'm not making it up" — because the round trip sounds too neat. The point he draws from it is that taking a 200%+ gain, paying the tax, and waiting for the momentum crowd to leave is a repeatable process, not luck. He owns the same stock again today at less than half his exit price.
31:37— Mhm. — Unfortunately, what happened last year in many cases to us is that a lot of the and we on and we had massive moves in these gold miners. And silver miners. We owned Hecla at nine bucks last year and sold it over 30 and bought it back this year at 14 and a half or 15.
In short: "I am not a Hecla shareholder… their 20-year asset allocation track record is not good. The amount of reserve and resource that they add from the margin that they generate from selling an ounce of gold or an ounce of silver is negative — which is to say over 20 years they've destroyed as opposed to added capital." The offset he concedes: as a high-cost, high-volume American silver producer it is extremely leveraged to a silver spike, "and Americans tend to pay more, whether they should or not, for American silver."
Hecla is a large American silver producer, and Rick is not a shareholder. His objection is capital allocation measured over a full cycle: for every ounce sold, how much new reserve and resource did the profit buy back? For Hecla the answer over 20 years is negative — "over 20 years they've destroyed as opposed to added capital." A miner is a depleting business; if profits don't replace what was dug up, the company is slowly liquidating.
He concedes the one thing it does offer: as a high-cost, high-volume producer, its profits swing violently with the silver price, so it is powerful leverage if you're convinced silver spikes. Plus a quirk of the market — "Americans tend to pay more, whether they should or not, for American silver."
27:26Now, their 20-year asset allocation track record is not good. The amount of reserve and resource that they add from the margin that they generate from selling an ounce of gold or an ounce of silver is negative, which is to say over 20 years they've destroyed as opposed to added capital. So I'm not a Hecla shareholder. They are extremely leveraged to the silver price and if people listening believe that the silver price is going to spike up, Hecla is leveraged to it, both in the context of being a high-cost large volume silver producer but also being an
In short: A held silver position — "Hecla Mining on the silver side, which we own," reporting Tuesday after the close.
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