The global search for silver

Since 1998 US production is down 38%, while sliding to eighth in the global ranks. But like Mexico, this boost in US activity isn’t all that surprising considering its history. The higher silver prices have prompted the mining companies to revisit some of the historic silver districts. And some of these miners are finding it economically feasible to restart historic mines, while others searching in and around previously-known deposits are making some big new discoveries. This work has led to a bolstered development pipeline and likely a reversal in the US’s production downtrend.

The final country host to more silver projects than Peru is Canada (24% of silver companies), which is curious considering it currently only has one primary silver mine in operation. With the miners focusing on exploration at both historic districts and grassroots discoveries, Canada and its very friendly mining laws could make it a silver dark horse. It should be very interesting watching a potential trend unfold in the Great White North.

Lower than Peru on the project-activity front are fellow South American countries Argentina (8%), Chile (7%), and Bolivia (4%). These three countries combine to produce about 100m ounces of silver per year. And while a lot of this silver is produced as a byproduct of large base-metals mines, there are indeed some exciting primary silver mines and exploration projects that attract interest to these regions.

Overall this geographical spread is quite fascinating. And it was interesting to see how this spread was rendered across the elite stocks that made the cut for our latest report. Zeal’s favorite dozen silver stocks range from small junior explorers to large global producers, and their exciting exploration projects, development projects, and mining operations are indeed spread across the globe in similar fashion to the breakdown mentioned above.

Of our favorites 67% own a project(s) in Mexico, 33% in Peru, 25% in the US, 25% in Argentina, 17% in Canada, along with a handful of singleton projects in various other countries. But these stocks weren’t chosen based solely on geography, they survived the arduous scrub based on their all-around fundamentals. And we believe these dozen hold the highest potential to thrive in silver’s ongoing secular bull.

The bottom line is even though silver is mined all over the world, there are only a select-few countries where primary silver explorers can increase their probabilities for success. And as we found in our latest research endeavor, Mexico is by far the most-popular destination. This country has a strong silver-mining history, favorable mining laws, and is supported by excellent primary-silver geology.

Mexico has mined a lot of silver in its history, and has seen impressive production growth over the course of this bull (29% since 2002, outpacing silver’s global growth of 18% over this same span). But as the mining companies are finding, there is a lot more silver still to be discovered and produced. And as we found in our own research, many of the best silver companies are scoring big in Mexico.

Scott Wright can be reached at scottq@zealllc.com.

Zeal publishes an acclaimed monthly newsletter, Zeal Intelligence, that details exactly what we are doing in terms of actual stock and options trading based on all the lessons we have learned in our market research as well as provides in-depth market analysis and commentary. Please consider joining us each month at www.zealllc.com/subscribe.htm.

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