Silver is catching up fast
In the first crash sales of the Corona crisis gold held up well and the price of silver fell. The gold-silver price ratio rose to over 120. It's never been this high before. At the end of 2019, it was still at around 90 and thus far from the previous all-time high of a good 100 from the early 1990s. The long-term average - since the 1970s - is around 60.
The reason for the recent weaker development of the silver price was the fear of market participants that the pausing industrial activities will also push down silver demand. This is likely to happen. But the extent of this should not be too strong. After all, silver is needed industrially in more and more applications - by now already more than 40,000.
But recently the silver price has again moved up more strongly than the gold price. The ratio has again drifted towards 110. One reason for this is that fears of a slump in industrial demand for silver have diminished due to the global government economic stimulus packages. On the other hand, silver supply is also likely to be negatively affected by the corona crisis. This is because much of the silver does not come from pure silver mines, but as a by-product of mining projects for industrial metals. In some countries, such as Chile, Argentina, South Africa and even Canada, there have already been restrictions on mining. It can therefore be assumed that the silver price will be well supported by the supply-demand ratio as the year progresses.
If the silver price continues to rise, albeit slowly, then there will be more confidence for silver company stocks. These weeks could therefore offer a good entry opportunity. Two silver companies that look good from today's point of view and that should look comparatively good when silver prices rise again are MAG Silver and Endeavour Silver.
MAG Silver owns the Juanicipio Project in Mexico with its Mexican partner Fresnillo, one of the largest silver producers in the world: https://www.commodity-tv.com/play/mag-silver-investor-presentation-at-pdac-2020/. The silver mine is practically established there, and production is expected to start up economically soon.
Endeavour Silver already produces silver - also in Mexico. Three mines ensure silver production: https://www.commodity-tv.com/play/endeavour-silver-preparations-for-corona-and-update-on-terronera-development/. Further projects in Mexico and Chile are being explored.
The latest company information and press releases from MAG Silver (https://www.resource-capital.ch/en/companies/mag-silver-corp/) and Endeavour Silver (https://www.resource-capital.ch/en/companies/endeavour-silver-corp/).
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