quick valuation exercise for ayn, page-11

"I am holding AYN because I believe this company is on its way up not down , at the start of its life not the end."

Fair enough. Could you please explain why you think the company's poised for such massive success? I've included my valuation/figures and have highlighted the upsides (increase in mine life, etc) and yet I can't get a valuation that's so far off the current share price. perhaps you've got some information I don't? Please do let us know why you are so bullish going forward for AYN.

"But more import is the exposure to silver and only silver,"

Wrong. You're exposing yourself to AUD/USD. You're exposing yourself to exploration risk. You're exposing yourself to unneeded cash burn if exploration projects don't go as planned, or reserves turn out to be lower grade than expected. You're exposing yourself to all the downsides that come with owning a mining company (timeline risk, weather risk, etc). And there's absolutely nothing wrong with taking on all this risk, except that I think the SP is too high at the moment to warrant doing so.

"If silver doubles in price I would expect the sp to more than double , If the silver triples I would expect the sp to more thay tripple (consevatively)."

That's why I was talking about leveraged silver contracts. they do the same thing, without all the downsides of above.

"The key word is physical."

Unfortunately I've only just started my investment career, and I can't afford physical silver because the spreads simply are too high. If I had a spare $100k I may consider buying physical (I'm all for it), but with the money I have it's not viable - I'll lose too much money just transacting it (Buy 1kg and sell it the very next minute, you'll lose 6%). Not to mention storage, insurance, etc.

"If the pos takes off , you can expect kaos in the paper market and risk of default,
One day you have 100k on your screen , the next day ZERO."

If the entire paper market for silver defaults, then you will have plenty to worry about too, trust me. I'm aware that buying paper silver has its downsides in that you can demand your physical (as you have the right to) and they can refuse to deliver it - but they will settle your contract in cash instead (which is all I care about anyway).

People have been talking about a COMEX default for years. The risk if always there, just like there's the risk that the XJO could fall by 50% tomorrow and wipe out our investment in AYN.

"This sort of thing has aready happened on a small scale with this MF Global thing."

MF Global was very different. They were a dodgy private institution that used client funds to speculate on leveraged markets. That's very different to the open market for commodities.