How is that possible that a company like YYY, projecting millions of ounces of silver by 2009 can have a share price UN-related to the price of silver?
The essay that you are referring to was meant to assess MARKET'S PERCEPTION toward particular stocks with the emphasis on the long term correlations between price of silver and various silver stocks (including YYY). The coefficients that tell you about leverage or exposure are based on market prices, not on pure supply / demand factors. This means that we focused on reading what market tells us, instead of making our mind based on the fundamental factors of each particular company. Why exactly does the price of YYY seem to trade rather regardless of the price of silver? The only possible answer is - 'impossible to tell', as this is a collective decision of all market participants. Why did they not buy YYY as the price of silver increased? Well, they have had their own reasons, perhaps sometimes emotional (but since it's the long term, we're talking about it is not likely that it were emotional decisions all the time, as they would probably average each other out).
Company's share price is related to silver but it IS related to other factors as well. If these other factors are negative and important, than the net effect could be disappointing for people seeking exposure to the price of silver.
For example although price of silver increased dramatically, the price of crude oil also increased, meaning higher costs for most of the companies. YYY's projects could have been influenced by this factor to a greater extent than other companies and this might have caused this stock's underperformance up to date. Shares might get diluted, investors might get scared of particular political risk connected with operations in particular countries and so on and so forth. There are numerous factors to take into consideration before we estimate that company's profit (and the price share) will rise along with the price of particular metal (here: silver). Remember that some problems with some companies may be difficult to spot.
Please note that you are responsible for your investment decisions. Please read the disclaimer on the bottom of the page, if you haven't done so already.
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