Price action?, page-7

I agree with that Kman. There is nothing that I can see to base a solid long term investment decision on Silver Lake.

The relationship between a days trading price/volume and the following overnight gold price is interesting; I see it as traders (with some insight into the next 24hr move by large institutional gold traders) drawing in buyer interest and then dumping skimming off a cent or two along the way. I think this pattern will continue for the foreseeable future until there is confirmation of the gold price bottoming and stabilising.

I can't accept a view that gold has had its day. The only conclusion I can come to is a drive down to force a massive shake out in the gold producer industry. Those with good grades, good resources, proven reserves, no or little debt, and low cost of production will reap the benefit. Eventually the laws of supply and demand will drive gold price back up with a big upside for those miners that can survive.

Where will Silver Lake sit? I had thought it was well placed and 'undervalued' but now I'm not so sure. At its current low production and the low $AUD POG, hedging seems to be the only factor keeping it going. If POG has bottomed Silver Lake will probably survive regroup and maybe with a bit of luck get a sustainable profitable operation happening (albeit much smaller than the vision of a year or so ago) - a forward looking $30m NPAT would be a good starting point that figure should support a SP of 60c. Can't see it for a while though and certainly not this year.

So immediate challenge is it needs positive cash flow to keep exploration going let alone provide a return for investors. It cannot afford to keep drawing down on its limited cash or back at square one with a required CR, debt is inconceivable in the present climate . Further declines in POG will push it dangerously close, hedging only provides a degree of protection for the next four months.

It seems to me, considering risk, the best outcome for shareholders would be a large gold miner take over and hope for a reasonable premium on current price.

Previously I had the mind of tuck it away in the cupboard and wait it out. The wait, if it comes to fruition, may be too long. I'm now thinking the only way to get a return is to join the overnight trading game. For many that would probably mean locking in a big loss but maybe better than holding on indefinitely in hope; armed with knowledge in how SLR is traded there could be opportunity to recoup the loss 'a little at a time' in short 2-3 day trades.

Still contemplating though, for now hold.