After taking a nosedive to $11 range in March 2020 amid COVID-19 pandemic, silver has scored the biggest monthly gain in 9 years as U.S.-China tensions boosted gold prices.
What we are seeing that gold is approaching closer to its all-time highs in US dollars but silver has been consolidating and basically trading sideways since 2011. If silver breaks its 2016 high in the $20 range, it will be very bullish for silver and silver mining stocks.
“COVID-19 and the economic fallout that followed has clearly impacted industry/technology and jewelry demand, with 75% of the global silver demand… dependent on the consumer who has been either temporarily or permanently wounded by the downturn,” said Steven Dunn, head of exchange-traded funds at Aberdeen Standard Investments.
“Unlike gold, silver may get a boost as major economies ease coronavirus-linked restrictions which will only fuel hopes of an economic recovery,” he added.
We are already observing huge gains in the silver mining stocks, people who were lucky to pick undervalued gold and silver mining companies have already seen more than 100% gain. However, when you look at the bigger picture, the stock prices of most silver mining companies are still near the late 2019 range and still undervalued.
If you search the net for silver mining companies, you will find many articles talking about large-cap silver mining stocks but the purpose of this article is to highlight microcap silver mining companies with multi-bagger returns potential. Before going into the details I’ll discuss the reasons to invest in silver and silver mining companies but if you are already aware of the reasons, you can skip to the Top Junior Silver Mining Companies section.
Why Should You Invest in Silver and Silver Mining Companies?
Silver Outperforms Gold In Bull Markets
Silver is a very small market—so small, in fact, that a little money moving into or out of the industry can impact the price to a much greater degree than other assets (including gold). This greater volatility means that in bear markets, silver falls more than gold. But in bull markets, silver will soar much further and faster than gold.
Let’s see how much more silver gained than gold in the two biggest precious metals bull markets in the modern era:
Gain from 1970 low to 1980 high
Gain from 2008 low to 2011 high
You might say silver is gold on steroids!
We can expect this outperformance to repeat in the next bull market, too, because the silver industry remains tiny.
Peter Schiff states, “Silver has hit an all-time high of $49 per ounce twice – in January 1980 and then again in April 2011. If you adjust that $49 high for inflation, you’re looking at a price of around $150 per ounce. In other words, silver has a long way to run-up. As one analyst put it, “With the long-term downside potential of silver very low versus its current valuation, the risk/reward is one of the best investments on the planet.”
Growth in Industrial Usage
Believe it or not, we don’t go one day without using a product that contains silver.
Silver is used in nearly every major industry, from electronics and medical applications to batteries and solar panels. Silver is everywhere, whether you see it or not. As Mike says in his book, “Of all the elements, silver is the indispensable metal. It is the most electrically conductive, thermally conductive, and reflective. Modern life, as we know it, would not exist without silver.” Due to these rare characteristics, the number of industrial applications for silver has skyrocketed. In fact, the industry now gobbles up more than half of all silver demand.
Silver is used in a wide number of industries and products, and many of those uses are growing. Here are a few examples:
• A cell phone contains about one-third of a gram of silver, and cell phone use continues to climb relentlessly worldwide. Gartner, a leading information technology research and advisory company, estimates a total of 5.75 billion cell phones will be purchased between 2017 and 2019. That means 1.916 billion grams of silver, or 57.49 million ounces, will be needed for this use alone!
• The self-heating windshield in your new Volkswagen will have an ultra-thin invisible layer of silver instead of those tiny wires. They’ll even have filaments at the bottom of the windshield to heat the wipers so they don’t freeze to the glass.
• The Silver Institute estimates that silver use in photovoltaic cells (the main constituents of solar panels) will be a whopping 75% greater in 2018 than it was just 3 years earlier.
• Another common industrial use for silver is as a catalyst for the production of ethylene oxide (an important precursor in the production of plastics and chemicals). The Silver Institute projects that due to growth in this industry, 32% more silver will be needed by 2018 than what was used in 2015.
There are a lot more examples like this, but the bottom line is that due to its unique characteristics, industrial uses for silver continue to expand, which means we can reasonably expect this source of demand to remain robust. But that’s not the whole story… unlike gold, most industrial silver is consumed or destroyed during the fabrication process. It’s just not economic to recover every tiny flake of silver from millions of discarded products. As a result, silver is gone for good and limits the amount of supply that can return to the market through recycling.
So not only will the ongoing growth in industrial uses keep silver demand strong, millions of ounces cannot be reused.
Increase in Global Demand
The global demand for silver is increasing. Virtually all major government mints have seen record levels of sales, with most already operating at peak production. Surging demand is nowhere more evident than China and India which have long histories of cultural affinity toward precious metals. And with their populations growing their tremendous appetite will continue.
The growth of silver jewelry in India has stored to more than 600% since 2006. China was consuming around 40 million ounces of silver in 2000, now the usage has increased to more than 200 million ounces
Physical Metals Supply Deficit
When palladium was skyrocketing in early 2020, two very authentic sources SDBullion and Sprott Money indicated that gold, platinum and, silver also are very likely to experience the same kind of parabolic moves as platinum and rhodium. The fundamental reason behind the much-anticipated rise in the prices remains the same which mainly is a shortage of physical metals supply.
As mentioned in “The Magic Palladium Bullet” by Craig Hemke at Sprott Money, the actual amount of vaulted physical precious metals is way less compared to the tradable ones in the form of COMEX contracts. There are 3.72 ounces of tradable silver exposure for every one physical ounce in the vaults. For gold, the ratio of digital to physical leverage is 5.85 times whereas for palladium it is 67.3 times.
Higher Leverage: Current Gold to Silver Ratio
Gold to silver ratio (GSR) simply tells how many silver ounces can be bought with an ounce of gold. To find the ratio, divide the current gold price by the price of silver. Over the past fifty years, the GSR has moved between 20 and 100, averaging about 60 which means that the silver mining companies have nearly two to one leverage over the gold miners.
GSR is currently 1:95 after reaching an all-time high of 1:126.4 in March 2020. The highest monthly GSR of 1:99.47 was previously set in January 1991 amid an eight-month U.S. recession.
The GSR helps precious metals investors to identify if gold is undervalued (or overvalued) compared to silver? At the current ratio of 95:1, a trader could sell an ounce of gold for 88 ounces of silver, compared to the historical average of 60 silver ounces to one gold ounce. All it means that silver right now is extremely undervalued compared to gold which a lot of people have not recognized yet. The silver mining companies have not yet received the attention for the potential value, the leverage that they currently have in terms of gold price.
The historically all-time high GSR is a warning to investors and it could correct at any time, either meaning a move up in silver prices or a move down in gold prices. Since gold has been holding up very well despite the COVID-19 pandemic, trade deal with China, and a continued strong dollar, we believe the gold price is not going to fall drastically and silver will need to catch up. History repeats itself, it did that last time in 2011, and there is no reason why it wouldn’t again.
According to Citi gold will be topping $2,000 in the next 12 to 24 months, so a GSR in the 50s means silver could easily reach $40 soon.
Top Junior Silver Mining Companies
Since the mining sector is beaten down to its lowest valuations in late 2015 from 2011 highs, investors have been crazy for gold mining companies. The silver mining sector, particularly junior silver mining companies did not get much of investors’ attention and provide an excellent opportunity for potentially high returns in the near future.
The silver mining like other mining sectors is divided into two major groups: silver producers and junior silver mining companies (or silver exploration companies). If you are interested in the silver mining sector, you can check our silver mining companies page which we are updating regularly as we discover companies with great upside potential.
There are not many silver producers compared to gold producers because what’s happened over the last ten years is that the silver producers keep buying gold mining companies and so they’re no longer pure silver miners. For instance, Hekla Mining used to be a silver mine and now it’s a gold miner you know that’s what’s happening. Coeur Mining is another one they used to be silver now they’re primarily gold. Pan American Silver Corp. recently bought a gold miner so we’re seeing more and more pure silver mining companies no longer exist, there are very few. So, when silver takes off and silver runs to $50, $75, $100 the companies that are still pure silver miners are going to explode because there are very few of them left.
Junior silver mining companies are generally very volatile in both uptrend and the downtrend. If you look at the weekly price charts of silver mining companies below you will notice that large-cap silver producers e.g. Silvercorp Metals have seen a lower decline in the share price since 2016 and have surpassed their 2016-2017 highs during this bull market. What it means that investors will most likely take profits and shift the money to junior silver mining companies which are still trading closer to their lowest valuations.
So, I am gradually building long-term positions in the junior silver mining stocks that are undervalued.
Silvercorp Metals Inc (TSE:SVM)
Silvercorp Metals Inc (TSE:SVM) is a Canadian Silver mining company. It’s a mid-tier producer mainly focused on the exploration and development of mineral properties in China. It is producing silver, lead, and zinc metals in concentrates from mines in China.
Silvercorp Metals Inc has about 225 million ounces of silver reserves & resources. The company currently produces almost 6 million ounce of silver per year with the all-in sustaining costs of US$7 per ounce.
Silvercorp Metals Inc has US$92 million cash and US$4.52 million debt. The company has 173.8 million shares outstanding and has a market capitalization of $1.05 billion.
Impact Silver Corp (CVE:IPT)
Impact Silver Corp (CVE:IPT) is a Canadian Silver mining company. It’s a junior small producer mainly focused on the exploration and development of mineral properties in Mexico. The company has multiple properties including Zacualpan District (Mexico City, Mexico) and Zacatecas District (Zacatecas, Mexico).
Impact Silver Corp has about 20 million ounces of silver reserves & resources. The company currently produces almost 0.8 million ounce of silver per year with the all-in sustaining costs of US$17 per ounce.
Impact Silver Corp has US$3.72 million cash and no debt. The company has about 117 million shares outstanding and has a market capitalization of $80.72 million.
Santacruz Silver Mining Ltd (CVE:SCZ)
Santacruz Silver Mining Ltd (CVE:SCZ) is a Canadian Silver mining company. It’s a junior small producer mainly focused on the exploration and development of mineral properties in Mexico. The company has multiple properties including Gavilanes (San Dimas, Mexico) and San Felipe (Hermosillo, Mexico).
Santacruz Silver Mining Ltd (CVE:SCZ) has about 50 million ounces of silver reserves & resources. The company currently produces almost 0.5 million ounces of silver per year with the all-in sustaining costs of US$18 per ounce.
Santacruz Silver Mining Ltd has US$1.5 million in cash and US$4 million debt. The company has 210.79 million shares outstanding and has a market capitalization of $32.67 million.
Bayhorse Silver Inc (CVE:BHS)
Bayhorse Silver Inc (CVE:BHS) is a Canadian junior silver mining company mainly focused on exploration and resource expansion of Silver in USA and Canada. The company has multiple properties including Bayhorse (Oregon, USA), Brandywine (British Columbia, Canada), Lyell (Reefton, New Zealand), Paparoa (Reefton, New Zealand), and Flagstaff (Washington, USA).
Bayhorse Silver Inc has been mining silver at their 100% controlled Bayhorse Silver Mine, OR, USA, from an inferred NI-43-101 resource of 292,300 short tons at an average grade of 21.65 troy ounces per ton silver (Ag) for total contained silver of 6,328,400 ounces. The mineralized material contains significant amounts of copper (Cu) and zinc (Zn).
Bayhorse Silver Inc has 125.42 million shares outstanding and has a market capitalization of US$11.92 million.
Silver Elephant Mining Corp
Silver Elephant Mining Corp. (TSE:ELEF) is a Canadian Silver mining company is advancing its 100% controlled Pulacayo silver mining project in Bolivia. (rated 2nd largest silver mine in the world based on historical production)
Silver Elephant’s Pulacayo silver project features diamond drill intercept of 1,030 g/t Ag over 25 meters, a starter resource of 31 million oz indicated at 455g/t, and 27 million oz inferred*. Only 30% of the known mineralization is drilled. Pulacayo is near New Pacific’s major silver discovery in Potosi.
Silver Elephant Mining Corp. has 138.27 million shares outstanding and has a market capitalization of $40.79 million.
- 60 million ounces of silver reserves & resources.
- Mr. Eric Sprott owns 7% of Silver Elephant, Company insiders own a further 10% of Silver Elephant.
- Silver Elephant Mining’s first Pulacayo Step-Out Drill hole intercepted 10 meter mineralization grading 147 g/t silver, 9.8% Zinc, and 2.0% lead (539 g/t AgEq) within 35.5 meter mineralization grading 230 g/t AgEq, starting 31.5 meters downhole
Brixton Metals Corp (CVE:BBB)
Brixton Metals Corp (CVE:BBB) is a Canadian Silver mining company. It’s a junior early-stage explorer mainly focused on the exploration and development of mineral properties in Canada. The company has multiple properties including Landis (Ontario, Canada) and Thorn (British Columbia, Canada).
Brixton Metals Corp has about 18 million ounces of silver reserves & resources.
Brixton Metals Corp has US$2.1 million cash and no debt. The company has 144.6 million shares outstanding and has a market capitalization of S$26 million.
Silver Bull Resources Inc (TSE:SVB)
Silver Bull Resources Inc (TSE:SVB, OTCMKTS:SVBL) is a Canadian Silver mining company. It’s a junior late-stage development company Silver Bull Resources is engaged in exploring and developing its 100% owned “Sierra Mojada” located in Coahuila, Mexico. The project is part of a large land package consisting of 20 mining concessions totaling 6,496 hectares (16,052 acres), located in a historical high-grade silver, lead, zinc mining district discovered in 1879. The project has a NI43-101 compliant measured and indicated Global resource of 70.4 million tonnes grading at 3.4% zinc and 38.6 g/t silver for 5.354 billion pounds of zinc and 87.4 million ounces of silver.
Within the Global Resource, discreet high-grade zones of the silver and zinc mineralization occur and include:
- A high grade measured and indicated “Zinc Zone” of 13.5 million tonnes at an average grade of 11.2% Zinc at a 6% cutoff for 3.336 billion pounds of zinc.
- A high grade measured and indicated “Silver Zone” of 15.2 million tonnes at an average grade of 114.9 g/t at a 50g/t cutoff for 56.3 million ounces of silver.
Silver Bull Resources Inc has US$1.51 million cash and no debt. The company has 236.33 million shares outstanding and has a market capitalization of $24.6 million.
Canada Silver Cobalt Works Inc.
Canada Silver Cobalt has 100% ownership of the Castle mine and the 78 sq. km Castle Property with strong exploration upside in the prolific past-producing Gowganda high-grade Silver Camp of Northern Ontario. With underground access at Castle, a pilot plant to produce cobalt-rich gravity concentrates on site, and a proprietary hydrometallurgical process known as Re-2OX for the creation of technical grade cobalt sulphate as well as nickel-manganese-cobalt (NMC) formulations, Canada Cobalt is strategically positioned to become a vertically integrated North American leader in cobalt extraction and recovery while it also exploits a powerful new silver-gold market cycle.
Canada Silver Cobalt Works Inc. drill assays from the second wedge hole at the Robinson Zone at Castle East, a new grassroots high-grade discovery adjacent to three past producers, have returned 70,380 g/t silver (2,053 oz/ton) over 0.30 meters within a broader zone of 1.4 meters grading 20,136 g/t (587 oz/ton) and 4 meters (core length) of 7,259 g/t (212 oz/ton).
AbraPlata Resource Corp (TSXV:ABRA)
AbraPlata Resource Corp. (TSXV:ABRA; OTCPK: ABBRF) is focused on exploring and advancing its flagship Diablillos silver-gold property, located in mining-friendly Salta province, Argentina. Diablillos has an Indicated Mineral Resource containing 80.9M oz silver and 732k oz gold. AbraPlata also owns the highly prospective Cerro Amarillo property with its cluster of five mineralized Cu-(Mo-Au) porphyry intrusions located in a mining camp hosting the behemoth El Teniente, Los Bronces, and Los Pelambres porphyry Cu-Mo deposits. As well, AbraPlata is exploring Aguas Perdidas, its wholly-owned Patagonia-style epithermal Au-Ag property. AbraPlata is based in Vancouver, Canada, and is listed on the TSX-V under the symbol “ABRA”.
AbraPlata Resource Corp commenced a 3000 meters drill program on the Oculto deposit in late November 2019 which is designed to improve the understanding of the structural controls on high-grade silver-gold mineralization and evaluate the potential for additional high-grade gold mineralization beneath the current mineral resource. The current drill program is expected to consist of approximately seven or eight diamond holes out of which AbraPlata has announced significant high-grade assay results from the first three diamond drill holes.
Drill Program Highlights
- 14 Meters of 6.40 g/t Gold & 197 g/t Silver and Identified High-Grade Copper Zone with Intercept of 15 Metres of 5.1% Copper, 2.35 g/t Gold & 658 g/t Silver including 4 meters grading 10.28% copper, 6.44 g/t gold and 1,476 g/t silver as per the news release on Feb 19, 2020.
- 15.0-meter intercept grading 10.42 g/t gold and 285.7 g/t silver (1,066 g/t silver-equivalent) from 242.0 meters, including 7.0 meters grading 20.64 g/t and 202.1 g/t silver (1,750 g/t silver-equivalent) from 250 meters at Diablillos. View full news release here.
Vizsla Resources Corp.
Recent surface sampling of the new Honduras vein has returned high grades above minor historical workings over a 250-meter strike length. The vein trends northerly beneath younger cover rocks concealing its true length. The results make this an attractive target for the current 14,500 meter drilling program in progress. The company’s aggressive exploration program has defined a new discovery, the Paloma Vein, at the Panuco precious metals district in Sinaloa, Mexico. Mapping and sampling have revealed outcropping mineralization over the 500 meter long vein.
- 664 g/t silver equivalent (508.0 g/t silver and 1.95 g/t gold) over 2.0 metres at Honduras 5 – Honduras Vein including;
- 1,051 g/t silver equivalent (801.0 g/t silver and 3.12 g/t gold) over 1.0 metres
- 1,051 g/t silver equivalent (801.0 g/t silver and 3.12 g/t gold) over 1.0 metres
- 436 g/t silver equivalent (287.7 g/t silver and 1.86 g/t gold) over 6.4 meters at Honduras 3 – Honduras Vein including;
- 886g/t silver equivalent (580.5 g/t silver and 3.82 g/t gold) over 2.6 meters including;
- 1,264 g/t silver equivalent (784.0 g/t silver and 6.00 g/t gold) over 1.2 metres
- 557 g/t silver equivalent (311.7 g/t silver and 3.07 g/t gold) over 3.4 meters including;
- 948 g/t silver equivalent (514.5 g/t silver and 5.43 g/t gold) over 1.8 metres
Kootenay Silver Inc (CVE:KTN)
Kootenay Silver Inc. is an exploration company actively engaged in the discovery and development of mineral projects in the Sierra Madre Region of Mexico and in British Columbia, Canada. Supported by one of the largest portfolios of silver assets in Mexico, Kootenay continues to provide its shareholders with significant leverage to silver prices. The Company remains focused on the expansion of its current silver resources, new discoveries, and the advancement of two of its existing silver resources located in the states of Sonora and Chihuahua, Mexico.
Kootenay Intercepted 650 gpt silver Over 7.45 meters within 159 gpt silver Over 39.9 meters at Columba Silver Project, Mexico – drill highlights included overall strike length of F Vein increased to 700 meters
Kootenay recently did non-brokered financing of CAD$2 million by issuing 7,692,308 units to Sprott Asset Management consisting at a price of CAD$0.26 per unit.