Blue Horseshoe Called To Say He Loves Silver

Silver is the most coiled spring of all the metals I follow closely. I’m very bullish on gold because the Death Spiral of Debt is causing central bankers to increase their reserves of gold and the compounding cost of servicing the debt will keep causing a severe debt crisis. Gold is in second place as a reserve currency held by central banks because it is the soundest money with no government debt behind it and governments can’t print it. Silver has the same attributes, but these days it is being priced more like an industrial metal than a monetary metal.

I’m also extremely bullish on copper, the most critical metal, due to the growing demand and broken supply chain. Copper is the ultimate industrial metal as it is needed for everything electric. Silver also has a very compelling industrial metal story as it is also needed for electrical products, with the big growth engine being solar energy.

Silver has the best of both worlds, as a monetary and industrial metal. The most compellingly bullish argument is that there has been a deficit between physical supply and physical demand over the past few years. Looking at the supply chain, exploration to find important discoveries is down as are high-quality new mine development projects which will keep supply constrained for many years.

The reasons to be bullish on silver are very compelling, what I find challenging is to find a healthy list of silver explorers and developers. Which in itself is another reason to be a current and long-term bull on silver.

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Spotlight On A Sponsor

Vizsla Silver is my highest conviction silver development pick, which has the added bonus of having one of the best silver exploration stories in the silver exploration space.

What initially caught my attention was their remarkable preliminary economic assessment (PEA) statistics. Their Panuco project has a low capex of $224 million in a mining world that most metals mines these days start with around a billion-dollar price tag to build.

It also has a very high base case internal rate of return (IRR) of over 80% and if current silver and gold prices are used the IRR grows to over 100%. Due to the low capex and high IRR, the payback of the capex is around 9 months. These metrics put Vizla Silver’s Panuco project in the elite category for precious metals mines in development.

Throughout the history of mining silver worldwide, Mexico is the most important country in the world for mining silver and it will be far into the future. Silver mining in Mexico comes from epithermal veins, they are found in clusters and Vizsla Silver’s Panuco project has a very big cluster of epithermal veins that rivals some of the best in the country. It is somewhat shocking that they have really only drilled around 10% of the veins in their cluster.

In addition to having many epithermal veins in their cluster, another interesting thing about these systems is that some veins don’t come to the surface, they are called blind veins. The best vein Vizsla Silver has drilled into so far is their Copala vein which is a blind vein that was found while drilling for a different vein. They have a vast array of epithermal veins throughout their Panuco project, yet only drilled a minimal amount of the known veins and have shown that there are also important blind veins to be found in the cluster. All of these things considered, are why I think Panuco is the best silver exploration project in Mexico or anywhere in the world for that matter.

For investors interested in silver exploration and development projects, all roads lead to Mexico. In Mexico, Vizsla Silver has an elite silver development project with the added attribute of exceptional exploration potential as an added benefit.

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My efforts to find high-quality silver stocks has gotten harder of late because our top silver mining pick, SilverCrest Metals, is being taken over by Couer Mining. I’m not ready to switch my SilverCrest pick into a Couer pick because although Couer made a timely move to acquire SilverCrest, it was an action of necessity.

Couer Mining had a significant amount of debt, that they will use SilverCrest’s warchest of cash, silver and gold to partially pay down. They also needed SilverCrest’s Las Chispas mine to increase their production and decrease their costs of mining silver. I’m not a big fan of mining companies that have a lot of debt and a fairly high cost of production.

Which puts me in a quandary, Couer with SilverCrest makes Couer a better company, but they had issues that they needed to solve, which is why they are taking over SilverCrest. I will monitor how things go for the new Couer as they digest the SilverCrest take over.

I’m still left with the issue of being extremely bullish on silver, but struggling to find new picks to add to my roster.

Silver is such a coiled spring and is still a long way from its record high, while gold has made several record highs in 2024. Usually, in a gold bull market, silver would be performing in a similar fashion. As silver still has a lot of room to run just to reach its record high, that is also a sign that gold is only in its early days of a bull market, which is bullish for gold and silver.

Silver has several compelling reasons to be bullish on it, and it won’t surprise me that any day we could wake up and the silver coiled spring will have started a tremendous bull run.

All the best

Allan Barry Laboucan

Disclosure

Vizsla Silver is a sponsor of Rocks And Stocks News, content creation about them is for the benefit of the company. Sponsors also benefit readers and viewers of the reports as it makes content creation possible for no charge to the Rocks And Stocks News audience.

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