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by Daniel Reid

US Mint Boosts Silver Coin Price by 42%.  Could This Be A ‘Buy’ Signal For Silver Stocks? 

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There’s something strange happening with Silver...  


This past week the US Mint decided to up the price of its Silver coins. 


And while this doesn’t correlate directly to the spot price of silver, it does tell us something.  Demand for physical silver is going up.  And higher demand is always a good sign for Silver in the long run.  Not to mention, good for you if you’re looking to invest in silver stocks now.  


We’ve done quite well with Silver stocks in the past, so this move by the US mint prompted us to hit the charts and spreadsheets to find you one of the better opportunities in Silver mining stocks right now.   


We’ll get to the stock in a moment… But first, let’s take a quick look at why Silver stocks could be an even better opportunity than gold stocks.


SILVER OUTSHINES GOLD IN BULL MARKETS


Since the late 1960s there have been six bull markets for gold and silver and silver has outperformed gold in five of these.


The current silver bull market started in January 2016, when the silver price hit a market bottom from the record-high reached in April 2011 - see figure below. 


LBMA Silver Prices

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From the January 2016 low, silver rallied almost 85% through September 2020. By comparison, gold rallied almost 76% during the same period.


Now, even in bull markets, pullbacks happen. 


Therefore, there will be occasional pullbacks as silver prices run-up. These will be opportunities for investors to buy silver or consolidate existing positions.


HOW FAR CAN THE SILVER BULL RUN?


No one knows exactly how long or how high this current silver bull will run.

However, market watchers expect the following factors to support the bullish price trend in the medium term:


  • Gold/Silver Coupling: Unsurprisingly, gold is also on a bull run. And unrelenting fiscal and monetary stimuli by sovereigns to stimulate economic recoveries will continue to support this run. By extension, silver will benefit from this sentiment.
  • World Economic Recovery: According to the International Monetary Fund (IMF), the sluggish recovery of the world economy from the Coronavirus pandemic will accelerate in 2021 and beyond. This should benefit silver as demand for industrial goods in the largest consumers USA, India and China ramps up.
  • Latin American Supply Woes: On the supply side, Mexico and Peru, which are the top two largest producers of mined silver in the world, are still grappling with COVID-19 lockdown measures. So, shuttered supply from mine closures in Latin America may take longer than expected to return to the market.


HOW TO LEVERAGE THE SILVER BULL RUN


Like gold, you can invest in silver by buying physical silver (bullion coins) or exchange-traded funds (ETFs). 


However, buying a silver miner gives you better risk/reward than either physical silver or an ETF. 


That’s because, generally, miners are leveraged plays on metal prices: when metal prices rally, mining stocks often rally higher to the upside. The opposite is also true: miners tend to accentuate the downward movements of metal prices.


If you desire high risk/reward opportunities even amongst silver miners, then consider smaller cap miners, like Vancouver-based junior miner Silver Dollar Resources Inc. (OTCQB: SLVDF).


SILVER DOLLAR RESOURCES:CREATING VALUE THROUGH M&A (Mergers & Acquisitions)


Silver Dollar Resources is a junior miner active in Mexico, which is the biggest silver producer in the world, and in Ontario, which is Canada’s biggest gold-producing Province.


Founded in 2018, the company IPO-ed in May 2020 to raise funds for their Pakwash Lake and the Longlegged Lake projects in the highly-productive Red Lake mining district of Ontario.


The key factors that make Silver Dollar Resources a compelling investment are: High growth prospects, solid management team, and a likely M&A (ie Mergers & Acquisitions) target.



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EmGold:   Current Chart on OTCMKTS: SLVDF​​​​​​​.   On Canadian Exchange SLV

HIGH GROWTH PROSPECTS


Following their recent IPO, the company is actively seeking acquisition targets in highly productive mining regions worldwide.


Since their balance sheet is currently very light, they have ample room to grow by acquiring plenty of assets.


In addition to acquisitions, the company is also considering an organic growth strategy of spinning off its Red Lake properties into a pure-play gold miner.


On the company’s growth strategy, Mike Romanik, President and CEO of Silver Dollar Resources, recently said, “We are actively pursuing additional advanced-stage silver projects for acquisition and as the Company matures there may come a time when a spin out of our Red Lake gold projects is an appropriate step to maximize shareholder value.”


Eric Sprott, the billionaire precious metals enthusiast with stakes in many junior miners, recently increased his stake in the company to 19.9%, a move that validates the growth potential of the company.


SOLID MANAGEMENT TEAM


The company has assembled a highly experienced management team with deep industry knowledge.


POTENTIAL ACQUISITION TARGET


The Company is in the process of finalizing its initial exploration program for its La Joya Property in the State of Durango in the Mexican silver belt.


Under the terms of the August 2020 deal to acquire the property from First Majestic Silver Corp., which is one of the biggest silver producers in Mexico, First Majestic could own up to 21.4% of  Silver Dollar Resources. 


First Majestic has indicated the possibility of acquiring more shares of Silver Dollar Resources in the future, and this makes Silver Dollar Resources a potential acquisition target.


RECAP:


When many investors consider getting into precious metals, they often overlook silver in favor of gold because of the latter’s position as the ultimate safe haven asset.


However, silver often outperforms gold in bull markets and both metals are currently in bull markets.


While you can invest in physical silver or a silver ETF to profit from the bull market, a junior silver miner like Canada-based Silver Dollar Resources Inc. (OTCQB: SLVDF) could give you a better risk/reward.


It’s active in Mexico and Canada, two of the world's most prolific silver mining regions.  


Following an IPO earlier this year, the company is now aggressively pursuing growth organically and through acquisitions.


Silver Dollar Resources has attracted considerable equity investments from a major silver miner and a billionaire precious metals enthusiast. The investments validate the company’s management and growth strategy.


Furthermore, these credible investments, coupled with the company’s small-cap size and aggressive growth plans, could make it an acquisition target in the future.




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Mark M.
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Please read our full disclaimer and compensation disclosure​​​​​​​ by clicking here​​​​​​​.  Statements regarding the Company which are not historical facts are "forward-looking statements" that involve risks and uncertainties. Such information can generally be identified by the use of forwarding-looking wording such as "may", "expect", "estimate", "anticipate", "intend", "believe" and "continue" or the negative thereof or similar variations. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements due to factors such as: (i) fluctuation of mineral prices; (ii) a change in market conditions; and (iii) the fact that future operational results may not be accurately predicted based on this limited information to date. Except as required by law, the Company does not intend to update any changes to such statements. Caddy Stocks believes the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included herein should not be unduly relied upon. This article shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.