Five Favorite Gold & Silver - Euro · PDF filethe reasons economies decline. ... Gold price in 1971 dollars $ ... year and has been dropping every month for over a year

Five Favorite

Peter SchiFF’S

Special ReportJULY 2010

Gold & Silver MininG StockS

88 Post Road West, 3Rd FlooR | WestPoRt, Ct 06880 | 800-727-7922 | WWW.euRoPaC.net

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Company Profile

Peter Schiff’s New Book: For those who would normally prefer to watch paint dry than delve into economic theory, Peter schiff's new illustrated book, How an Economy Grows and Why It Crashes, offers an enjoyable introduction to the subject.

With wit, humor, and over 150 original illustrations, Peter and andrew schiff offer a straightforward story of fish, nets, savings, lending, trade, job creation, and inflation.

the allegorical tale of a small, primitive, island nation discusses the roots of economic growth and the reasons economies decline.

Founded in 1997 and today headquartered in Westport, Connecticut, Euro Pacific Capital is a full service, broker/dealer, member FINRA/SIPC, that specializes in foreign markets and securities. Through its direct relationships with foreign trading desks, the firm’s clients may gain access to narrower spreads as compared to domestic market-makers of foreign securities, thereby helping to reduce overall transaction costs.

We are a small, boutique firm offering customized brokerage services to individuals, corporations, pensions, and institutions. We have offices in Los Angeles and Newport Beach, California; Scottsdale, Arizona; New York City, New York; Palm Beach, Florida; and Westport, Connecticut.

The firm develops investment strategies for its clients consistent with the macroeconomic philosophy of its founder and president, Peter Schiff. Peter believes that the dollar is in a long term decline due to excessive public and private debt, loose monetary policy, and overregulation. We believe that long term value can be found outside the U.S. in non-dollar securities and that investors should include some precious metals and natural resources in their overall portfolio allocation.

Combine our full array of services with our no nonsense investment advice, and we believe that all investors will find a home here for a portion of their portfolios. Euro Pacific Capital… Scanning the globe for you.


CLICK TO LEARN MORE ABOUT THE BOOK >>

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http://www.amazon.com/How-Economy-Grows-Why-Crashes/dp/047052670X/ref=bxgy_cc_b_img_b

Dear Investor,

In today’s economic environment, rank and file investors have shown a great resurgence of interest in precious metals.

We at Euro Pacific Capital believe that in addition to holding physical gold, exposure to precious metal mining stocks is an important element of a diversified metals portfolio. These stocks derive their value, in part, from the value of the metals that are mined. But they are also exposed to other factors that could drive, or hinder, growth. In this report you will find a list of my five favorite gold and silver mining companies that I believe are worth looking into. For investors with a higher risk tolerance, I have also included a more speculative, micro cap

mining company as an added bonus at the end of my Five Favorites report.

However, any foray into precious metal mining stocks should be underpinned by a strong understanding of the dynamics of gold itself. To do this, I feel it’s important to get beyond the day to day headlines and take as broad of a look as possible. We have invited Jeff Clark of the distinguished research firm, Casey Research, to offer some insight on the subject.

Thank you and I hope that you will enjoy my Five Favorite Gold and Silver Mining Stocks Special Report.

Sincerely,

Peter SchiffPresident and Chief Global StrategistEuro Pacific Capital, Inc.

JEff CLARK of Casey Research, an old friend of ours and a long-time gold advocate, has written the introduction to this Special Report.

Jeff is an Editor for Casey Research, and a featured writer for Casey’s Gold & Resource Report.

Jeff worked on his family’s gold claims in California and Arizona, as well as a mine in a place to remain nameless. We think his report is one of the best around. If you’re interested in learning more about it, CLICK HERE.

Jeff Clark and Casey Research are not affiliated with Euro Pacific Capital, Inc.

To buy gold and silver bullion at competitive prices and for fast, economical delivery to your home, please visit Euro Pacific Precious Metals at www.europacmetals.

http://www.caseyresearch.com/casey-services/caseys-gold-and-resource-report/?ppref=EPC014SR0210A

http://www.europacmetals.com/landing/euro-pacific-precious-metals-landing.html


SPECIAL REPORT: PeteR sChiFF’s 5 FavoRite gold and silveR mining stoCks | 1


Why Own Gold?If you think of gold as an investment, you’re missing its primary purpose as one of the best means of storing wealth over time.

AS ONE Of THE oldest and most consistently used forms of money, people have gravitated to gold as a way to preserve purchasing power. Although most people think “money” consists simply of pieces of paper with numbers on them, societies have used a great many things as money: beads, salt, cattle, and grain, just to name a few. But over time people have shown a preference for money that retains value year in and year out. To a surprising degree, the purchasing power of gold has remained constant, regardless of its price as measured in less stable forms of money. The secret of its strength lies in its relative rarity and almost universal desirability.

As the world enters a new era of uncertainty, in which debt-fueled economies create unprecedented amounts of paper currency, many investors are choosing to store their wealth in something more substantial. In this environment, many are not considering gold as an investment substitute for stocks and bonds

but as an alternative to holding cash.

Because gold is priced in U.S. dollars, it’s important to examine how it compares to those dollars. The above chart tracks the purchasing power of both the dollar and gold since the gold standard ended in 1971.

After adjusting for inflation, you can plainly see the erosion of the dollar, now able to purchase only 18¢ of what it did in 1971, versus an ounce of gold, which has not only stood up over time but increased in purchasing power.

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Gold and Dollar, CPI-Adjusted

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Copyright Casey Research 2010Sources: US Bureau of Labor Statistics & the London Bullion Market

INTROdUCTION By JEff CLARK



Come On In, The Water’s Fine!The recession is over, right? Officially, yes. But we’re not buying the notion that we’re out of the woods. In fact, we’re convinced another recession or even a depression is headed our way.

IN SPITE Of flowery speeches and insistent promises from various government leaders and economists, the fundamentals of the economy have not changed.

CONSIdER:

■ Unemployment remains stubbornly high, at 9.3% (as of May 2010), but it’s the fine print that’s downright scary. This official number excludes discouraged workers (those who’ve given up looking), and includes part-time and temporary workers. Many economists note that if these categories were properly accounted for, the underemployment rate would be north of 17%. Many forecasters expect the official rate to remain near 10% for the remainder of the year.

» If the economy were getting back to normal, unemployment would be falling.

■ 140 banks failed in 2009 – but 775 banks are now listed as “at-risk” by the FDIC. This translates into one of every eleven FDIC-insured banks and is the highest amount since 1993. Further, the FDIC is running a deficit for the first time since 1991. FDIC Chairman Sheila Bair actually stated, “I guess we should hope and pray that we don’t get hit with the dreaded double dip, or else the regulator itself may need a bailout.”

» If the economy were improving, the number of troubled banks would be decreasing.

■ In 2009, the U.S. federal government deficit came in at $1.4 trillion, nearly four times the previous record. The Congressional Budget Office predicts the annual deficit will continue at nearly $1 trillion or more for at least the next decade.

» A healthy economy does not operate from deficit spending.

■ According to the Federal Reserve Board, total revolving consumer credit fell at an annual rate of 12% in April (the latest data available). Revolving consumer credit fell by 9.6% last year and has been dropping every month for over a year.

» If the economy were healthy, consumer credit would be expanding. It’s doing the opposite.

INTROdUCTION CONT’d...



■ One in every 399 homes in the U.S. received a foreclosure notice in May alone. Meanwhile, a second wave of mortgage resets is now beginning in the Alt-A and Option ARM loans, which many economists believe are more toxic than subprime. Ergo, the possibility exists that many more write-downs, losses, and bailouts are to come.

» If the housing market were recovering, foreclosures would be declining. And what has the government done to prepare for the second wave of mortgage defaults?

■ Finally, and more to the point, another crisis – one that will be even worse than the current one – is looming, according to a report from a group of leading economists, financiers, and former federal regulators. The study says that “In 2008-09, we came remarkably close to another Great Depression. Next time we may not be so ‘lucky.’ The threat of the doomsday cycle remains strong and growing. What will happen when the next shock hits? We may be nearing the stage where the answer will be – just as it was in the Great Depression – a calamitous global collapse.”

» If the outlook were bright, we wouldn’t have dire warnings from such an extensive and non-partisan panel of experts – chaired by a Nobel Prize winner.

It is data like this that convinces us we’re not out of the woods yet. And that leads me to gold’s second purpose: to serve as a protector against economic upheaval.

It’s our belief that we haven’t experienced all the repercussions yet from the decades-long, borrow-and-binge spending spree. Therefore, we can expect more upheaval ahead. Without this fundamental understanding, I believe many investors will be caught off-guard.

In the mean time, a great many geopolitical

issues are bubbling to the surface which, by themselves or in combination, could create significant economic distress:

■ The sovereign debt crisis that began with Greece, Portugal, Spain, and others will likely surface in other heavily indebted economies, especially the U.S., Japan, and the U.K.

■ The gathering conflict between the Chinese and West over currency manipulation could result in dramatic reductions of Chinese purchases of U.S. Treasuries.

■ The escalation in Middle East tensions especially as it relates to Israel and a nuclear-armed Iran.

How will you help protect yourself if economic conditions deteriorate? Many investors are making the logical choice to go into cash. But what kind of cash? Dollar? Euro? Yen? Yuan? Currencies themselves are looking increasingly unreliable. Thus far in 2010 the euro has lost more than 20% of its value. The dollar is strong for now, but its value is dependant on many factors beyond the control of the U.S. government. For reasons that predate all these currencies, gold could be the cash of choice in times of crisis.




Caution: Inflation AheadWhile deflationary forces related to the global economic contraction continue to keep a lid on prices, inflation, the most insidious form of wealth destruction, is lurking beneath the surface. We’re convinced it’s headed our way for two big reasons:

1. MONEy PRINTING

Prior to the financial crisis in 2008, the U.S. monetary base (coins, paper money, and central bank reserves) was about $800 billion (minus dollars held abroad). In its initial response to the crisis, the government embarked in a printing binge that by December 2008 had expanded the base to $1.69 trillion. This means that for every dollar in America during that period, the U.S. government has created 1.1 more of them.

This was the largest expansion in history and a staggering dilution of the U.S. dollar.

Many may have assumed that in the ensuing 18 months, the government would have begun to reverse this expansion. However, since December 2008, the monetary base has grown an additional 21% to reach $2.05 trillion by the May 2010.

The ramifications of this continual carpet-bombing of currency are clear: when banks begin to lend again and the velocity of the money in circulation increases, the dollar bill in your wallet will lose significantly more value.

In other words, you can believe in deflation as much as you want today, as long as you believe in inflation as much as you can tomorrow.

2. dEBT

Taking on debt is like getting a tattoo: it doesn't go away, and it’s pretty painful to remove.

In the U.S., our current debt picture looks like this (as of June 2010):

■ National Debt = $13.1 trillion ■ Government Bailouts = $11 trillion ■ Unfunded Liabilities = $109.2 trillion

Where is the money to pay for all this going to come from? The government has only three choices to meet these liabilities:

1. Raise Taxes2. Cut Spending3. Print currency

You can debate the likelihood of the first two, but we believe #3 is the only politically viable option. [Some of you may believe economic growth could lift us from this debt burden; for the reasons outlined above, we obviously don’t think this has a remote chance of happening anytime soon.]




Please Don’t Crowd

The Emergency ExitLARGELy BECAUSE Of inappropriate government interventions, I am convinced that there will someday be a much broader move into gold and silver. And while precious metals have already appreciated over the last few years, their ascent has been relatively orderly. With gold at more than $1,200 per ounce, some investment analysts are currently talking about a bubble that is set for popping. But if concerns persist, I think that it’s far more probable that gold prices would continue upward.

If we added up all the gold ever mined on the planet, its total value would equal no more than $5 trillion at today’s prices. This figure is tiny by today’s measures: Let’s make the above chart very clear. In comparison to the $5 trillion in gold ever mined:

■ Since the financial crisis began, the U.S. government has thrown more than twice as many dollars at the U.S. economy.

■ Worldwide bailouts are more than four times larger (and this is a conservative figure; one estimate puts it at $24 trillion).

■ Total debt in the U.S. is more than 10 times larger.

And this isn’t even an apples-to-apples comparison. I had originally intended to include annual gold production as one of the comparisons in this chart. But that figure, just $88 billion, would have generated a bar so small that it couldn’t be seen without a magnifying glass. And if I had tried to make that bar discernible to the naked eye, then the “Worldwide Bailouts” bar would have had to hit the ceiling above your head. That’s how small the gold market is.




How High Is The Moon?

ALLOW ME TO ExPLAIN. Given its rapid rise in recent years, many investors have a hard time accepting $1,200 gold. However, the four-digit prices we’ve seen so far is with price levels stagnant and a relatively steady dollar. What happens to gold when each of these factors get turned upside down – rising prices and a falling dollar?

I took a fresh look at calculations that could be used to appraise gold’s possible upside potential. Not one of them, by itself, comes with compelling logic. But they all point in the same direction.

Gold’s Percentage rise in the last Bull Market: Like any other market, gold has a history of long term trends. In the 1970s gold

steadily rose, and in the 20 year period from 1980 to 2000, it drifted downward. The current “bull run” in gold began in 2001 after it hit a generational low of $255.95 per ounce. Since then, it has risen to the $1,200 per ounce level. This nearly five-fold increase has caused many to wonder if the current bull has run out of steam. But calling for a ceiling at $1,200 would be just as arbitrary as calling for a ceiling of $1,000 a couple of years ago.

To get a sense of what could happen in the full course of a bull market, it may be instructive to look back at what happened the last time gold made a continuing move on the upside. What if the current bull market were to follow a similar trajectory as the last one?

Many analysts see the $2,000 per ounce barrier as the upper limit of the potential price of gold. Based on my analysis of basic economic data, I disagree.




Before peaking in 1980, gold rose from $35 in 1970 to $850 in January, 1980, a factor of 24.28. Multiply the 2001 low by the same factor and you get a gold price of $6,214 per ounce. One does not need to make the case that gold will head that high to see the fallacy of limiting its potential to the current range. However, many of the same macroeconomic factors – money supply expansion, fiscal stimulus, etc. – that propelled gold in the 1970s are once again major concerns.

U.S. Gold Holdings to Money Supply: The M1 money supply consists of currency and checkable deposits. The U.S. government currently holds 286.9 million ounces of gold. If the government were to make each dollar in circulation redeemable by the amount of gold it possesses, we’d arrive at the following price for gold: $1.717 trillion ÷ 286.9 million oz. = $5,984.66/oz. Gold/Dow Ratio: When gold peaked at $850 back in 1980 the point value of the Dow Jones Industrial Average was approximately 800, putting gold and the Dow in an approximate 1 to 1 ratio. With the Dow currently north of 10,000, gold would have to rise eight times, to more than $10,000 per ounce, to restore the same relationship. However, if you believe that the Dow will fall before gold peaks, then that 1 to 1 ratio may exist at a lower level. If economic

uncertainty were to cause the Dow to drop by half to 5,000, then the ratio could be re-established with $5,000 gold – still a significant premium to the current price.

All the Money in the World vs. Gold reserves: If the public eventually comes to see the game being run by the central banks for what it is, namely an endless merry-go-round of printing press economics, then governments may be forced to back their currencies with gold (and perhaps other tangibles like silver). Assuming they had to go into the market and buy the gold needed to restore faith in their currencies, the numbers might look like this: total central bank reserves (including gold holdings) = $4.8 trillion, divided by 929.6 million ounces total gold reserves held by all official institutions that issue currency = $5,164/oz.

In summation, there really isn’t any surefire way to say how high gold could go. But it’s clear that there are many reasons to believe it could go much higher than it is today.

The market for gold has been around for a very long time, and is likely to be around for much longer. As such, it is best to look beyond weekly, and even monthly movements, and instead look to how it has performed in previous comparable circumstances, and where it could go based on the larger context of economic forces. n

Editor’s Note: A special thanks to Jeff Clark of Casey research’s Gold & resource report for this insightful introduction. click here to learn more about Casey Research.

Jeff Clark and Casey Research’s Gold & Resource Report are not affiliated with Euro Pacific Capital. Opinions expressed are those of the writer, and may or may not reflect those held by Euro Pacific, or its president, Peter Schiff. Past performance is not a guarantee of future results.









Investing In GoldIN AddITION TO buying bullion, many investors choose to purchase equity securities of gold mining companies. The advantage, and risk, of these companies are their volatility. Historically, in a rising gold market, the prices of gold mining shares tend to rise faster than the price of gold. Conversely, in a declining gold market, share prices tend to drop more than the price of gold.

For investors convinced that the future price of gold will rise, purchasing equity securities holds the potential of outperforming physical metal. Of course, if the price of gold declines, the opposite would be true. Either way, buying a gold ore mining company means investing in a business as opposed to bearing the cost of insurance and storage for physical bullion. It is an investment, rather than a cash alternative.

Below, we present five precious metal mining stocks (with a bonus sixth stock for more speculative investors) that Peter Schiff believes will do well if the price of metals continues to rise.

You will notice that two of the companies are focused on silver mining. To the extent that this report has made the case for investing in gold, we believe the same holds true for silver. Silver tends to trail gold, with additional volatility. Ask your investment consultant about an allocation of gold and silver miners that is appropriate to your unique financial situation and risk tolerance. n

RISKS: Although we are confident in our selection of the following companies, there are major risks inherent in investing in precious metal mining companies, such as volatility, currency risk, and political risk. Because the risks of investing in mining companies are similar, we have combined them at the end of this report. Before taking steps to invest in any of these companies, we urge you to carefully read the risks detailed herein.

International investing may not be suitable for all investors.

CLICK HERE to receive more information, and to see if it is suitable for your investment objectives and risk tolerance. Or call

1-800-727-7922 to speak to an investment consultant.

To buy gold and silver bullion at competitive prices and for fast, economical delivery to your home, please visit Euro Pacific Precious Metals at www.europacmetals.

PETER SCHIff’S 5 fAvORITE GOLd & SILvER MINING STOCKS

http://www.europac.net/contact_us_goldsilver





Why don’t we provide the company names?

Under FINRA Rule 2310, broker-dealers are required to make sure that every investment recommendation is suitable for each client’s unique investment objectives and risk tolerance. The company overviews provided here are meant to give an indication of the type of recommendations a Euro Pacific Investment Consultant may make, depending upon your unique investment goals, risk tolerance, and profile. If you have questions about the companies described in this report, or think they may be suitable for your portfolio, please call (800) 727-7922 and a Euro Pacific Investment Consultant will assist you, with no obligation to buy from us.



Company #1 COMPANy #1 is a large cap, dividend-paying gold producer with operations in canada and europe, and exploration and development activities in countries that include Mexico and the USA. We like this company for its diverse portfolio, solid foundation for growth, strong production history, and low political risks.

KEy POINTSCompany #1 has a diverse portfolio of operations, all located in mining-friendly regions. the company has operations in regions which have low political risk and significant long-term mining camp potential.

Company #1 expects to hold 20 to 21 million ounces of gold in reserves in 2010, and has a strong record of production. in 2009, the Company’s gold production increased more than 75% from 2008. For 2010, production is anticipated to double from its 2009 level. Meanwhile, the Company reduced its capital expenditure from $900 million in 2008 to $650 million in 2009, and plans to reduce it to around $450 million in 2010.

As one of the lowest-cost producers in the gold industry, Company #1 is one of the few mining companies that pay regular dividends. Company #1 has been paying consecutive annual dividends for more than a quarter century. This is made possible through its low-cost production, which is achieved through economies of scale afforded by the high tonnage mined at its Canadian source, mining by-product revenue, and by a stable, highly

skilled, and motivated workforce dedicated to cost-efficient mining operations.

The Company has a seasoned management team. The CEO and COO have been partners for 24 years and they have been recognized among their peers. The CFO is also an independently recognized leader in the industry.

CONCLUSIONWe think Company #1 is a good stock for a number of reasons: it pays dividends, its portfolio is diversified, its mines carry less political risk, its growth has been steady, and it is run by a widely recognized management team. n

Euro Pacific Capital specializes in international investments. International investing may not be suitable for all investors. To find out more about the above company, and to see if this investment may be suitable for you, CLICK HERE.

You can also call one of our investment consultants directly. They can give you share price information and help you to determine if these equities meet your particular investment objectives and risk tolerance. Call toll-free: 1-800-727-7922.

5 fAvORITES CONT’d...

Company #1 stock Chart, June 2009 – June 2010 (Bloomberg, June 2010)




Company #2 COMPANy #2 is a rapidly growing small cap gold mining firm with producing mines in Mexico. We like Company #2 for its solid balance sheet and its aggressive exploration.

KEy POINTSCompany #2 is virtually debt-free. In Q1:09, the Company significantly increased its cash position through a deal. That left the Company with $164.2 million in cash and short-term investments at the end of Q2:10 and expected strong cash flows from operations for the rest of the year. We believe this financial strength should allow the Company to fully fund its existing capital and exploration efforts and, more importantly, provide capital for development of additional projects.

The Company prides itself on responsible, rational expansion. It owns a large group of concessions, which includes a major mine and nine other prospective exploration targets. It is constantly outlining new resources and reserves, and exploring for new ore deposits throughout the area.

The Company’s production levels and growth have been impressive. the Company’s gold production in 2009 increased nearly 20% over its 2008 production. Annual production in 2010 is forecast to be steady or rising.

The Company’s recent acquisitions in Turkey diversify its portfolio. Production was formerly limited to Mexico. The recent Turkish acquisition diversifies the Company’s portfolio and expands its reach into another

country. Initial metallurgical tests on oxide ore resulted in average recoveries of roughly 90%. The Company can leverage its experience and technical expertise to help develop these new sites into successful projects.

CONCLUSIONWe believe that Company #2 is a strong candidate for growth in the long-term. We like its current cash position. Also, it is unhedged, which we see as a positive as we expect gold prices to rise in the coming years. n








Company #3 HEAdqUARTEREd IN canada, this mid cap company is rapidly becoming a leader in the African gold mining industry. The Company focuses on gold mining operations in two African countries. Both of them have upside potential from continuous improvement in operational efficiency, as well as from exploration to increase outputs in the next several years. While these two operations carry more geopolitical risk because the mine locations are in Africa, we believe the quality of the mines and their production potential may be worth the risk.

KEy POINTSMarket sentiment has turned bullish on gold. Company #3, as a well-established mid-tier primary gold producer, should do well as a result of the current positive investment environment for gold.

The Company could receive a boost as investors become more accepting of African gold producers. Historically, gold mines in Africa were disregarded due to the geopolitical risks on that continent; but, thanks to the current gold rush, we believe that is likely to change.

The Company has strong production and good potential for growth. In 2009, the Company produced close to one third more ounces of gold than in 2008. Total annual production in 2010 is expected to exceed 2009 production figures.

Company #3 has an excellent balance sheet with no long-term debt. It also has a cash position of around $150 million and generates solid cash flow from its two major mining operations.

CONCLUSIONWe like this company for its strong balance sheet and impressive growth. Despite its geopolitical situation, it has proven to be a profitable interest. It has no debt, a significant production growth profile, and a successful record of discovery. n








Company #4COMPANy #4 is a small cap precious metals producer headquartered in Canada, with projects located in China. It is well-positioned with sizeable cash holdings, no long-term debt, strong operations, and low production costs. The Company has generated positive cash flows on a quarterly basis, and it continues to acquire, explore, and develop mining properties in another region.

KEy POINTSCompany #4 has been particularly successful due to its high-grade flagship mining district. Approximately 90% of its production comes from this one district, which produced approximately 4.5 million ounces of silver in FY10.

While this mining district has a strong record to date, it is important to note that there is increased risk associated with concentrating production in one district. The risks include political upheaval, operational issues, technical problems, disruptions, and unexpected delays due to events outside management’s control.

The Company is well-financed and carries no long-term debt. With $79 million in cash and short-term investments, we believe the Company is well-positioned to seize expansion opportunities and create value for investors.

Demand for Chinese silver is growing rapidly. Since deregulation of the silver market in 2007, China’s fast-growing economy has driven increased silver demand. Although jewelry accounts for 25% of Chinese silver demand, the majority of silver is consumed in industrial applications such as electronics,

brazing alloys and solders, batteries, chemicals, and plating.

Company #4 has the China advantage. China has lately become the third largest silver-producing country, after Peru and Mexico. China has a low-cost, experienced, and efficient mining labor force. The cost of mining equipment is also low, and the construction of mills and roads takes only a fraction of the time it takes in North America.

CONCLUSIONWith its high-grade mines, lower cost of labor, and good cash flow, we believe Company #4 is an attractive way to take advantage of rising silver prices. The Company sees today’s market volatility as ripe with opportunities to grow its business, and we agree. n








Company #5COMPANy #5 is one of North America’s fastest growing micro cap silver mining companies. We are bullish on Company #5 for its quality core assets, primarily its mines located in Mexico, and a stellar management team.

KEy POINTSMexico is the world’s premier silver exploration and mining country. Mexico was historically and is presently the world’s number one silver producer – with an historic production record of over 10 billion ounces of silver and current annual production reaching almost 100 million ounces per year. Politically, Mexico is the most stable country in Latin America, with favorable tax structures and a strong government commitment to natural resource development. The Mexican mining community is well-trained, both at the professional and skilled laborer levels, and fully in tune with the latest mining technologies.

Company #5 produced an 11% increase in silver year-over-year in 2009. Its target production increase for 2010 is 19%. The Company has a large and growing resource base. If we conservatively ignore its gold by-product and only count the silver from its two operating mines, the Company currently has reserve and resource estimates that should give it many years of productive life.

The Company’s management team is made up of veterans with a proven track record in the mining industry. they are operationally savvy and strive to improve efficiency, quality, and safety on both of their silver producing mines.

CONCLUSIONWith its proven track record of production, experienced management team, strong growth history, and well-positioned resources, we believe that Company #5 is a precious metals stock investors should consider including in their portfolios. n








Bonus: Micro Cap Mining CompanyIN THE MINING business, high risk can definitely lead to high returns. Small mining firms, with operations that are concentrated on just a few sites, tend to be viewed as more speculative, and usually trade at discount to their larger peers. Though headquartered in Canada, our bonus firm is a small gold producer in Southeast Asia potentially ramping up gold production. The company recently raised capital to fund its expansion projects. It also announced recently that it has more than doubled its resource base with recent acquisitions and resource updates.

KEy POINTSThe company currently trades at lower multiples than comparable gold producing companies. Instead of focusing on marketing, the company has put its energy into gold production. Once investors become aware of the value in the company’s existing mines and the potential for their new development, we believe the stock price will move.

The countries where the mines are located are friendly to foreign ownership and capital. The Southeast Asian location provides a means to diversify gold portfolios that typically focus solely on North America and Africa. In addition, the company enjoys good relations with all local governments.

The company has enough capital to cover its current expenses and exploration needs and will not likely need to raise

capital in the near future. the company has been generating strong operating cash flow with the current gold price to bring its production goals into reality.

CONCLUSIONWe like this company because of its solid performance and overlooked potential by the general stock market. n

micro Cap Company stock Chart, June 2009 – June 2010 (Bloomberg, June 2010)



5 fAvORITES BONUS




General Risks of

Investing in Mining Companies1. OPERATING RISK: There is always a danger of encountering operational issues, technical problems, geological interruptions, other disruptions, and unexpected delays, due to events outside management’s control. Reserve and resource estimates have varying margins of error and should not be confused with proven reserves. Also, any significant discrepancy between estimates and reality could drastically impact a miner’s operations and the value of its shares. In addition, the market usually builds in expectation of future exploration success. In the event that results don’t meet with the market’s expectation, the miner’s shares could be negatively affected.

2. COMMOdITy RISK: these companies are exposed to volatile gold and silver prices, and for some of them, to the prices of their by-products. Even though we believe the current macroeconomic situation is bullish for precious metals, there is always substantial risk to the downside due to commodities’ expected volatility. Our long-term commodity price assumptions are based on currently available information. However, the timing and magnitude of commodity price fluctuations are always significant risks that, in most cases, strongly affect the value of mining and mineral exploration/development companies focused on a specific commodity.

3. CURRENCy RISK: Commodities are generally priced in U.S. dollars. If the currency of any of the aforementioned countries were to strengthen relative to the US dollar, the featured company’s’ cost structure would be negatively impacted by higher exchange costs, while revenues would stay flat in US dollars. In other words, the featured companies’ financial performances and our estimates may be greatly impacted by currency exchange rates.

4. MARKET RISK: Mining is a capital-intensive business that requires large amounts of cash and access to credit. Currently, both stock and commodity markets are very volatile, and credit markets are illiquid. Investors should recognize that the markets can stay irrational for a very long time, far beyond the expectations of both companies and investors.

5. COUNTRy RISK: There is never any guarantee that existing mining laws, regulations, rules, permits, and licenses will not be changed, updated, altered, or withdrawn in the future. Governments can always make changes to laws, regulations, and rules. Company #3 faces a relatively higher level of political risk in its African operations than is typical for North America. n

Euro Pacific Capital specializes in international investments. International investing may not be suitable for all investors. To

find out more about the above company, and to see if this investment may be suitable for you, CLICK HERE.

You can also call one of our investment consultants directly. They can give you share price information and help you to

determine if these equities meet your particular investment objectives and risk tolerance. Call toll-free: 1-800-727-7922.





Euro Pacific Capital, Inc. is a full-service broker-dealer, member FINRA/SIPC. This report has been issued in the United States for residents of the United States. It has been prepared solely for informational purposes, and it is not an offer to buy or sell any security or instrument or to participate in any trading strategy. All securities involve varying amounts of risk, and their values will fluctuate. Dividends can be increased or decreased. Investments increase or decrease in value and investors may lose money.

We currently believe that the U.S. dollar is in a long-term decline, but we could be wrong. In that case, investments in other currencies will lose value because of the depreciation of their local currencies or the appreciation of the dollar. However, the value of the shares in local currency terms may appreciate.

Data from various sources was used in the preparation of this report. The information is believed to be reliable, accurate, and appropriate, but it is not guaranteed. Consult a Euro Pacific investment consultant for the most current market-related information.

The research analysts who contributed to this report (including Peter Schiff and others not named) certify that: all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject investments, and no part of the research analyst’s compensation was, is, or will be directly related to the specific recommendations or views expressed by the research analyst in this report. n

Euro Pacific Capital specializes in international investments. International investing may not be suitable for all investors. To

find out more about the above company, and to see if this investment may be suitable for you, CLICK HERE.

You can also call one of our investment consultants directly. They can give you share price information and help you to

determine if these equities meet your particular investment objectives and risk tolerance. Call toll-free: 1-800-727-7922.

Disclosures



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Five Favorite Gold & Silver - Euro · PDF filethe reasons economies decline. ... Gold price in 1971 dollars $ ... year and has been dropping every month for over a year