Physical gold is in record territory and has got expensive for the average worker like Garimpeiro to keep adding ounces to the sewing box.
So he has turned to poor man’s gold – silver.
It has been on the march too but at its mid-week price of $US27.18/oz ($41.40/oz), accumulating ounces of the physical stuff is certainly more doable than accumulating gold ounces at the mid-week price of $3,500/oz.
Garimpeiro reckons the same goes for the silver stocks on the ASX. Like the gold stocks, they have been edging higher, following the lead of gold. But unlike the gold stocks, the gains for the silver stocks have been more circumspect.
It means greater leverage to rising prices for the silver stocks than is the case with the golds.
Silver started the year at $US24/oz and is now $US27.18/oz for a gold-silver ratio of 84x. Silver bugs with a sense of history will tell you the ratio should be around 60x for a silver price of $US38/oz.
But that is not about to happen. And even if silver were to take off to $US38/oz it would still be well short of its all-time high of $US50/oz back in 1980 ($US180/oz inflation adjusted) when the Hunt brothers from Texas tried to corner the market.
Still, silver’s mid-week price had it standing 13% higher for the year-to-date, and up from its CY2023 average of $23/oz, and the CY2022 average $22/oz. That’s a good thing for the ASX gold stocks.
Morgan Stanley for one sees further silver upside ahead, to a degree anyway.
“We think the global solar industry may struggle to deliver the record growth seen in 2023 – but more silver-heavy solar cells are gaining share, raising intensity of use,’’ the investment bank said.
It also tipped that industrial, jewellery and silverware demand should recover while ETF holdings are showing the first signs of an uptick.
Against that backdrop, Garimpeiro went looking during the week for ASX silver stocks to keep an eye on. It didn’t take long as there are precious few silver plays on the ASX.
Silver Mines (ASX:SVL): The best known pure silver play in the market thanks to its 396Moz silver equivalent resource at its Bowdens project near Mudgee in central NSW.
It has been a long haul through the State and Federal approvals process but there is finally light at the end of the tunnel.
The share price has been marching higher in line with the silver price, with its 18.5c mid-week price giving it a market cap $272 million.
Watch out for a resource update and the release of an optimised feasibility study in to a development at Bowdens. Garimpeiro reckons exploration upside is not fully appreciated and that once it gets going, the project will around for a long time as a major silver producer and other metals.
Mitre Mining Corp (ASX:MMC): Trading mid-week at 51c for a (fully diluted) market cap of $60 million. Not widely known as a silver stock which is no surprise given it only recently picked up its Cerro Bayo silver-gold project in the Aysen region of southern Chile.
The project was a former producer of 45Moz of silver and 650,000oz of gold over 15 years until it was put on care and maintenance in October 2022. The resource was doubled in March on an indicated and inferred basis to 50.2Moz at 311g/t AgEq which is interesting in itself for a company with Mitre’s market cap.
Exploration continues to excite and the pathway to production is made all that much easier because of the $150m sunk in to the project by previous owners.
The Perth market is getting behind this one, backing home the idea that the Steve Parsons/Ray Shorrocks team of Bellevue (ASX:BGL) and FireFly (ASX:FFM) fame can oversee a repeat performance at Mitre.
Investigator (ASX:IVR): Trading at 5c mid-week for a market cap of $72m. The stock is up nicely from its starting price for the year of 3.6c. It is well known for its ownership of the Paris silver project near Kimba in South Australia, ranked as Australia’s highest grade (primary) silver deposit.
It is working on completing a definitive study. Earlier study work suggested robust economics for a project based on a silver price some 20% less than where it is now.
Interest is also building in a stepped up exploration program to find another Paris in the broader region.
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