Pan American Silver Corp.

Pan American Silver Corp. (PAAS) and silver prices have disconnected. In early January when silver prices were near $9.00 per ounce, and Pan American Silver was near $20 per share. Now in mid May, silver prices are at $13 per ounce and Pan American Silver is near $19 per share. Despite an over 40% increase in the price of silver, Pan American Silver is actually less per share now than it was back in early January. I listened to the conference call, and I did not find anything alarming or concerning. In fact, I was rather pleased with the conference call.

I can think of only only two reasons for the disconnect. One, the uncertainty surrounding the Peruvian elections. The runoff election will be held on 4 June 2006. So far, Garcia is favored to defeat Humala, which is a strong positive as far as the mining industry is concerned. The other reason is that some investors might have sold Pan American Silver to invest in iShares Silver Trust (SLV). As an aside, as I noted in my article Outlook For Silver, on 12 May 2006, the fund held appproximately 65 million ounces of silver. According to the website this evening, as of 16 May 2006, the fund holds approximately 69 million ounces of silver. Obviously, investors and speculators are still purchasing iShares Silver Trust.

Despite the recent correction, I remain bullish on silver prices and on Pan American Silver.

As a matter of disclosure, I remain long on Pan American Silver shares.