Weekly Investment Report: TRADE ALERT, SECOND TRADE IN 2 YEARS, SELL MFN, BUY SVM - - Our Model Portfolio Sells Minefinders (MFN) and is up 66%, Buys Silvercorp Metals (SVM)

Saturday, September 3, 2011

TRADE ALERT, SECOND TRADE IN 2 YEARS, SELL MFN, BUY SVM - - Our Model Portfolio Sells Minefinders (MFN) and is up 66%, Buys Silvercorp Metals (SVM)

Our favorite stock right now to buy, undervalued silver producer Silvercorp Metals:

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Results of First Trade of Model Portfolio:

Sept 02, 2011 Sale: 2,800 shares of Minefinders (MFN) X 17.46 = $48,888
Oct. 16, 2009 Buy: 2,800 shares of Minefinders (MFN) X $10.39 = $29,092

PROFIT ON TRADE........................................................$19,796

Starting Balance, Oct. 16, 2009...................$30,000
Profit on First Trade, Minefinders.................19,796

New Balance.........................................$49,796

SECOND TRADE - SVM - Silvercorp Metals

Sept 02, 2011 Buy: 6,600 shares of SVM at $7.53 a share = $49,698

So far on this blog we have praised Minefinders - MFN (which gave us a good reward) and panned Silver Falcon Mining Company - SFMI. We made a 66% profit on Minefinders while we watched SFMI go into the hole. There is just no way SFMI will make money with its onerous lease of a million dollars a year. Thats reflected in the depressed stock price.

As bad as SFMI is, SVM (Silvercorp Metals) is a super buy now. Short sellers are claiming the books are cooked and there is a 1.3 billion dollar financial fraud. This spooked investors but for those in the know, these short sellers have given us a gift of a low entry price. Silvercorp Metals biggest balance sheet item is cash and that is easy to confirm in an audit. Here is a mining stock that pays a dividend, has positive cash flow and earnings and has one of the best executive teams in the business. SVM IS A SCREAMING BUY NOW BECAUSE OF SOME SHORT SELLERS WHO ARE LIEING ABOUT THE COMPANY'S POSITION. WHAT A GREAT OPPORTUNITY. WE ARE PREDICTING THIS STOCK WILL DOUBLE BY THE END OF THE YEAR. THIS IS ONLY OUR SECOND BUY IN TWO YEARS AFTER BOOKING A 66% PROFIT ON OUR FIRST TRADE OF MFN. WE LOVE SVM AND THEY ARE NOT A FRAUD OR AN SFMI. WHEN THIS STOCK MOVES UP, LOOK FOR A BIG MOVE AND SOON.

HOW DOES SILVERCORP MINE SILVER AT A NEGATIVE CASH COST?
Silvercorp’s Ying mine is one of the richest silver-lead-zinc mines in the world. In addition to silver, the mine produces a large quantity of lead and zinc as by-products (53 million pounds of lead and 13 million pounds of zinc in FY2009). In fact, just under half of the company’s revenues is made up from the sale of these by-products. Due to the low cost jurisdiction in which Silvercorp operates, the money made from the sale of its lead and zinc by-products not only covers the entire cost of mining each tonne of ore but also produces a small profit. When this profit is applied to the cost of mining silver, we arrive at a negative cash cost. Essentially, Silvercorp is paid to mine out its silver.

Bullet points or why Silvercorp Metals is even better than Minefinders now:

- $230.5 million in cash (US Dollars)

- no long-term debt

- lowest production costs among its global industry peers

- pays a dividend

- is profitable

- good management

- unique buying opportunity now because of a short seller claiming SVM has committed financial fraud. This is a bogus claim to drive down the price of the stock, so the shorts can cover their position at a profit.

- Management is scheduled at two upcoming mining shows this month (Sept 2011). Look for a lot of interest in SVM now that its in the news. More people are going to jump aboard when they find out this is the real deal. Its amazing, gold stocks in general have lagged the physical metal, and then this phony fraud story. Great entry point here. Gold traditionally does well in the fall and look to the stocks to catch up to the metal. This spells a double for SVM.

- Unlike gold, silver is actually consumed. One of the biggest customers for SVM silver and other minerals mined in China is the Chinese makers of batteries and other products. SVM is already in the country.

- With the huge short position and upcoming gold shows, look for explosive moves upwards in SVM in the next two weeks. We are very impressed with managements response to this attack by autonomous parties. The gold-shows could not come at a better time to get the truth out. SVM is a beautiful story and its all real!

- The CFO (she is a CPA and CA) just made an $80,000 stock purchase at these low prices. So did one of the directors, one who has a geology background.

I believe Silvercorp Metals has one of the best CEO's in the business, Canadian Rui Feng is a geologist and a superb miner. In the recent criminal short squeeze attempt, Doctor Feng and his team were impressive in responding to the false charges.

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Eric Sprott interview

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Silvercorp is participating in the following conferences during fall 2011:

-- September 11-13 - Rodman & Renshaw, Global Investment Conference, New York
-- September 18-21 - Denver Gold Forum
-- October 20-21 - The Silver Summit, Spokane, Washington
-- October 26-29 - New Orleans Investment Conference
-- November 4-5 - Internationale Edelmetall & Rohstoffmesse, Munich,
Germany
-- November 27-28 - San Francisco Hard Assets Conference

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