Proactive Investors - Silver crossed $28 per ounce this week and is seen reaching as high as $32 by the end of 2024 amid expectations that interest rates in the US could stay higher for longer.
In part due to safe-haven demand amid geopolitical tensions, the silver price, which is about 40% below its $48 per ounce peak in 2011, has jumped along with gold prices in recent days, with gold hitting an all-time high price of $2,365 per ounce on Tuesday.
“Silver started to move in earnest last autumn, rather like gold, just as financial markets started to wonder whether the US economy was running hotter than expected, with the result that inflation could run higher for longer than expected, a view which gained further currency last week with the strong American non-farm payrolls numbers,” AJ Bell investment director Russ Mould commented.
“Throw in rampant US government spending, and how inflation on the other side of the Atlantic seems to be reaccelerating, and investors and traders may be on the hunt for stores of value once more.”
Mould believes silver may catch the eye of contrarians even more than gold, which is at new all-time highs above $2,300 per ounce.
“The gold price currently trades at nearly 85 times that of silver, whereas the long-term average is a multiple nearer to 65 times,” he said. “That may be enough to persuade some investors and traders that silver is ‘cheap’ relative to gold.”
Analysts at UBS see more upside for silver ahead. They expect silver to reach $32 per ounce by the year-end, noting the metal has surpassed their June forecast of $26.
“We previously argued that the market is underestimating the upside in silver prices given the potential for industrial activity to recover in 2H, amid already buoyant industrial application demand, and prospects of rate cuts,” they wrote.
They believe investors are looking for beneficiary laggards of lower interest rates ahead.
“We see this reflected in the material performance gap between gold and silver. When manufacturing activity increases, the gold-silver ratio can easily reach 70x to 75x (currently at 84.6x). This would imply a silver price of $30 to $32 per ounce,” they wrote.
They concluded: “We recommend investors stay long silver and let momentum run its course. Alternatively, investors can still sell silver’s downside risks for a yield pickup over the next six months.”
News from the field:
- Kootenay Silver Inc (TSX-V:KTN) has kicked off a new drill program at the Columba silver project in Chihuahua, Mexico. The 5,000-meter drill program is following up on previous intercepts from the highly prospective D-Vein target, a silver-bearing quartz-calcite-barite vein structure which hosts the highest grades and widths seen at the project to date.
- Regency Silver Corp. (TSX-V:RSMX, OTCQB:RSMXF) has entered into an option agreement to acquire two contiguous claim groups near the San Dimas mine in Durango, Mexico. The company said it is estimated that the San Dimas claims contain a minimum of 70 million silver equivalent ounces in the measured or indicated categories.
- Santacruz Silver Mining Ltd (TSX-V:SCZ, OTC:SZSMF) reported that it produced 5.7 million ounces of silver equivalent during the first quarter from its Mexican and Bolivian assets. This included 1.7 million ounces of silver, 23,777 tons of zinc, 3,129 tons of lead and 290 tons of copper.
- Silver North Resources (TSX-V:SNAG, OTCQB:TARSF) said optionee Coeur Mining (NYSE:CDE) plans to carry out 2,000 metres of drilling at the Tim silver property during 2024. Exploration is set to commence in June with drilling targeting silver-lead-zinc carbonate replacement deposit mineralization.
- Silver X Mining Corp (TSX-V:AGX, OTC:WRPSF) has upped its non-brokered private placement size to meet demand, now raising up to $5 million at $0.18 per unit. The funds will support capital expenditures, exploration in Peru's Nueva Recuperada Silver District, and potential asset acquisitions.
- Zacatecas Silver Corp. (TSX-V:ZAC, OTC:ZCTSF) closed its previously announced private placement financing by issuing 25 million units at $0.10 each for total proceeds of $2.5 million. The company, whose key projects include the Zacatecas silver project in Zacatecas State, Mexico, said it intends to use the net proceeds from the offering to satisfy ongoing costs associated with its properties and for general working capital purposes.
- Arizona Gold & Silver Inc (TSX-V:AZS) announced that equipment has arrived on site for an upcoming reverse circulation drill program at the Philadelphia gold and silver property, located in Mohave County, Arizona. The program will target the Resaca claim, specifically areas with historical high-grade mine workings.
- Equity Metals Corporation (TSX-V:EQTY, OTCQB:EQMEF) has revealed high-grade silver drill results from the Camp Target (NYSE:TGT) at its Silver Queen gold-silver project in British Columbia. Assay results from the drill program returned multiple intercepts of strongly enriched precious and base metals, including 2.5 metres of 220 grams per tonne (g/t) silver equivalent and 2.6 meters of 223 g/t silver equivalent.
- Carlyle Commodities Corp (CSE:CCC, OTCQB:CCCFF) has reported promising metallurgical test results from its Newton gold and silver project. Using a flotation/leach approach, the overall silver extraction rate was 32.7%, while gold extraction was 80.3%.