Western Silver sitting on a mother lode
Cliff Droke
A little-known junior resource company is sitting on top of what could prove to be the world's largest silver mine. It's stock price has been rising at an impressive rate of change in the past year and can now even be classified as a momentum stock, yet hasn't been picked up by Wall Street's radar. Once the stock becomes known it will be in an excellent position to benefit from the publicity.

According Chief Nesbit, to a company spokesman for Western Silver Corp., the company has the potential to be the world's largest silver producer. Judging by the news coming from Western each month, the company is well on its way to fulfilling this forecast.

The news coming out of Western Silver in the past year has been good with new discoveries being made on a regular basis. Most recently, Western (WTZ:AMEX, WTC:TSX) announced the discovery of a new mineralized zone, El Chamisal, at its wholly-owned Penasquito silver, gold, zinc and lead property in central Mexico.

The company also announced that 17 new holes have now completed deposit delineation at its Chile Colorado zone. Western also has an interest in the world class San Nicolas zinc-copper project in Mexico with Teck Cominco and owns the Carmacks Copper Project in the Yukon.

Now let's turn our attention to the chart, which has been rising at a good rate of change since last June. The weekly chart shows good upside momentum, which is reflected in the rising of the 10/20/30-week moving averages. However, the real test of the internal strength of WTC will come when the $10.75 level, the previous all-time high, is tested. This level is extremely significant from a long-term chart standpoint and hasn't been touched since 1998.

The up-ramp visible in the weekly chart above is very constructive. Unlike the pervious major rally in 1997-98, the current rally underway is not as steep and more orderly. Also, the 10/20/30-week moving averages haven't pulled apart like they did in early 1998, six years ago to the month. Interestingly, there is an excellent chance we could get a test of the February 1998 high in the next couple of weeks. Will this "anniversary date" test be sufficient to make a new all-time high for WTC? Time will tell, but based on the drastic improvement (fundamentally and technically) in the physical silver market as well as the major corporate improvements in Western, there is every reason to believe a new high will be made in WTC this year.


February 16, 2004

Clif Droke is the editor of the Durban Deep/XAU Report, a daily forecast and analysis of DROOY, GLG, KGC, XAU, HUI, and GOX written especially for day traders. He is also the author of numerous books on finance and investing, including the top-selling "Moving Averages Simplified." Visit his web site for free samples of his analysis at www.clifdroke.com