Silver price dip presents investors with a ‘buying opportunity’
If the way silver prices are moving is any indication, it might be time to start polishing grandma’s vintage silverware that has been sitting at the back of pantry.
Spot silver is currently trading at $US27.83 ($38.52) an ounce and the gold/silver ratio, which is how many ounces of silver you need to buy an ounce of gold, is currently hovering just below 72:1.
And while this is down from the high of about $US29 an ounce earlier this month, the ratio is still decidedly in silver’s favour when compared to the ratio of nearly 94:1 in late July.
And the money is still coming into silver with Commerzbank reporting that while gold is seeing less exchange traded fund (ETF) demand, silver ETFs are registering robust inflows in recent days.
“ETF investors apparently viewed the significantly lower silver price in the interim as a buying opportunity,” Commerzbank analyst Carsten Fritsch said.
Hardly surprising as the ratio typically ranges 15:1 to 30:1 and even when gold goes on one of its bull runs, the silver price will eventually catch up.
The rising silver price is certainly welcome for Golden Deeps (ASX:GED), which has now taken ownership of the previously producing Khusib Springs copper-silver mine Namibia.
Khusib Springs was discovered in the 1990s and went into production in 1995. About 300,000 tonnes of ore was mined at a grade of 10 per cent copper, 584 grams per tonne (g/t) silver and 1.8 per cent lead.
A compilation of previous drill data and mining plans at Khusib Springs shows that remnant copper ore exists on the margins of mined stopes.
Golden Deeps noted that there was potential for extensions to the defined ore zones along strike and down plunge.
Golden Deeps is not the only silver play with the potential to quickly resume production.
This is aimed at uncovering more gold and silver at the project, which would help drive the company’s decision to proceed with the acquisition.
Finding enough of the two precious metals would also allow the company to bring the 1,500-tonne-per-day Cerro Bayo processing plant that is currently on care and maintenance back into production.
Highlighting this potential, the project has been through several production phases over the years, with the nine historical mines having produced 650,000 ounces of gold and 45 million ounces of silver to date.
The company noted the intersection of high-grade gold and silver, elevated lead, zinc, copper and arsenic, along with evidence of several phases of mineralisation, indicated that a fertile system was present.
Meanwhile, ASX newcomer Manuka Resources (ASX:MKR) is hoping for some sweet rewards from its 9,000m drilling campaign at the historic Wonawinta silver project, which is expected to begin in late August.
This will allow for detailed resource modelling and mine planning, with the company hoping to resume silver production in mid-2021.
Investigator Resources (ASX:IVR) is also preparing to kick off infill drilling at its Paris project in South Australia.
The 15,000m program is aimed at improving resource confidence and upgrading inferred resources to the higher certainty indicated category, which has sufficient information on geology and grade continuity to support mine planning.
Paris currently has a shallow resource of 9.3 million tonnes grading 139g/t silver and 0.6 per cent lead, making it suitable for bulk open pit mining.
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