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Silver Prices set to rise higher

Silver Prices set to rise higher

Technically speaking, it looks as if silver prices are preparing for a move higher next week.

The STO for silver prices has hit the bottom of the chart and bounced off slightly, indicating a move to the upside is due in the short term.

On Friday silver prices went above their 50dma and this of course is a positive thing as over the last few trading session, silver prices have been stuck under the 50dma, now they have risen above it, we should be in for a small rally.

Gold prices rose up nearly $15 (2.22%) over the last two days, rising $5.50 (0.8%) on Friday. However silver prices were only up 20 cents over the same period, around 1.5% suggesting they should move slightly higher to catch up with the gains that gold made, provided gold prices maintain those gains when trading starts again this week.

All in all silver prices are looking good in the short term and of course in the long term the fundamentals are still all in place for silver prices to rise significantly over the coming months and years.

Silver Wheaton: Good Results

SLW Logo
Silver Wheaton is a new innovation in that it is a silver only company and does not own or operate any mines.

As we have stated before Silver Wheaton’s total revenue is derived from silver sales, which it acquires from gold and base metal mining companies as a by-product of their operations. This is the only company that we are aware of that operates in this manner. Its position is unique in the market place. By placing contracts with other miners for their silver at favourable rates and selling on to the general market they have created a terrific niche for themselves.
Having silver purchase contracts with five separate mines, the Company expects to sell approximately 15 million ounces of silver in 2007, growing to 23 million ounces by 2009.

Silver Wheaton is un-hedged and well positioned for further growth, which is something that is attractive to us as investors who want exposure to the price of silver in the coming Silver Bull Market.

In their latest news release the company have stated Net earnings of US$24.9 million (US$0.11 per share) from the sale of 3.3 million ounces of silver, an increase of 80% compared with US$13.8 million (US$0.07 per share) from the sale of 2.7 million ounces of silver in 2006. The operating cash flow has more than doubled from US$13.9 million to US$29.9 million.
The good news does not stop there as Silver Wheaton has also announced a couple of new deals, which will add to silver sales going forward. The first is an agreement to acquire 25% of the silver produced from Goldcorp’s Peñasquito project located in Mexico for the life of mine. This has cost them US$485 million in cash. In addition, an ongoing per ounce cash payment of the lesser of US$3.90 and the prevailing market price is due (subject to an inflationary adjustment), for silver delivered under the contract. So with the price of solver at say $15/oz then the company stands to make $9/oz on each ounce.

The second deal is similar to the one above whereby they have an agreement with Hellas Gold S.A., to acquire all of the silver produced from Hellas Gold’s Stratoni mining operations in Greece for the life of mine. This has cost Silver Wheaton US$57.5 million and an ongoing per ounce cash payment of the lesser of US$3.90 and the prevailing market price is due (subject to an inflationary adjustment), for silver delivered under the contract.

With more deals to come according to Peter Barnes, President and Chief Executive Officer of Silver Wheaton, the future is looking bright for the company.

Taking a look at the overall financial structure Silver Wheaton has a Market capitalisation $2.53 Billion, P/E Ratio 28.75, outstanding shares 221 million, share price US$11.43. Considering that the whole show is run by half a dozen staff this a unique business model.


Silver Wheaton Chart 28 April 2007

In conclusion we are pleased to own some of this stock and will continue to accumulate as and when our cash situation permits.

Silver Wheaton can be found on the NYSE and the TSX under the symbol SLW.

Endeavour Silver Corp: Production Up a Whopping 63%!

Endeavour Silver yesterday reported first quarter production for 2007 at 490,986 oz silver and 1020 oz gold from their Durango property in Mexico. This output represents a 63% increase over the same period last year when production hit 300,872 oz.

This is a significant event as it puts Endeavour's silver production 10% ahead of schedule in their quest to achieve a target of 2.6 million ozs of silver from the Guanacevi Mines. When we put this into the context of the current ‘skills labour and plant’ shortages scenario it is a terrific result to actually get ahead of the schedule. How many times do we hear grumbling? We can’t get the drills, men, machinery, permission, etc. Yes this is a very pleasing piece of news and well done to the team at Endeavour. Their success is evidenced by the fact that they have managed to assemble a team of 412 personnel who are presently engaged onsite at Guanacevi in an effort to complete the capital projects as soon as possible and that the new ball mill is now fully commissioned.

As we are in the good news mode we ought to mention Endeavours latest acquisition, which is the Bolanitos Mines project. This acquisition was made last week and is now being assessed for development and production with a forecast to be released later in the second quarter.

The stock closed last night in Toronto at $C5.67 and $5.07 on the AMEX and remains on our Buy List as we expect this silver producer to achieve its goal of becoming one the top primary silver producers in the world.

Endeavour Silver Corporation can be found on the following stock exchanges: (TSX: EDR) (AMEX: EXK) (DB Frankfurt: EJD)

Minco Silver Corporation: An opportunity in China?

Minco Logo


Minco Silver Corporation is focused on creating high-grade silver properties in China. The stock price has pulled back recently raising the question of “Is now the time to buy”?

Minco China Map

This company’s main asset is the Fuwan Silver Project in the province of Guangdong, China. On the 17th April 2007 the company announced a 15% increase in its resource estimate as follows:

“This estimate has increased the overall tonnage of the Fuwan deposit from 19.0 million tonnes to 23.0 million tonnes. This is an increase of approximately 15.3 million ounces of contained silver of which 4.5 million tonnes (29.2 million contained silver ounces) were upgraded from the inferred category to the indicated category at an average grade of 203g/t silver.”

Details of the updated resources have been taken directly from Minco’s news release on the Changkeng and Fuwan properties and are tabulated below:

Resource Estimate @ 50g/t Ag Cut-Off Grade.

Minco Silver Corporation Resources

*** The resources reported on the Changkeng permit represent 51% of the actual resources that reflect the proportion of ownership by Minco Silver Corporation that would be realized upon establishing the Changkeng JV. The total Changkeng permit inferred silver resources are 8,051,000 tonnes and 36,753,000 ounces of silver.

Geopolitically China may not be the most popular area in the world to invest but we should recognise that trade with China is increasing on a daily basis and this could be a case of “first up best dressed”


Dr Cai Minco CEO

A look at the management team reveals years of experience and high relevant qualifications. The President and CEO is Dr. Cai, who holds a Ph.D. in Mineral Economics from Queens University in Kingston, Ontario, Canada. Dr Cai is a Chinese national, which gives the company a tremendous advantage when it comes to paving the way for Minco’s mining activities. Having worked in foreign climes I have experienced close at hand the benefits that can be gained from having local ‘talent’ in your team. A construction team working away from home bares similarities to a hockey team on a road trip, if you get my drift. So the ability to understand the cultural differences and negotiate accordingly at a local level is of the utmost importance.

Also on the board of directors is a man that may be familiar to you and he is Robert Quartermain, a director of Silver Standard since 1985 and we know that Silver Standard have made terrific progress.

Robert Quartermain Minco


The financial structure of the company is as follows, the Market Capitalisation is $C88 million, shares outstanding 31 million and they are currently trading at around $2.84. This is not the largest silver miner in the pack but they do have a good prospect with their current property and the potential to add properties to their portfolio going forward.


The first thing we notice on this chart is that Minco has suffered from recent sell off from highs of around $C3.50 to a low of $C2.80. It did trade as high as $C4.50 when it first appeared on the TSX. As with a number of new ventures the excitement takes hold and the stock price heads north at a frantic pace. That initial froth has now been blown away and the price has dropped sufficiently for the team here to take a closer look.

Minco Chart 24 April 07

If you look closely you will see that the 50 DMA has crossed the 200DMA in an upward direction, sometimes referred to as the golden cross. Chartists view this move as being positive for the stock although it is not always 100% accurate. The RSI has bounced close to the ‘30’ level, the MACD is close to the floor and the Stockastics are on the floor. Well we can’t get much lower than that which indicates to us that there be a correction on the cards. There also appears to be support for the stock at $C2.80 which is another positive sign.


On balance we think that Minco Silver Corporation is worth a small investment and we will buy the stock today. The pull back presents us with an entry point that we will take advantage of. China does not worry us as we believe that more and more companies will target China in the future as a trading partner. We also believe that silver has a bright future and we are still looking for silver to hit $20.00 this year. We can be cavalier at times so don’t go too mad on this one stock or any other stock for that matter.


Minco Silver Corporation trades on the Toronto Stock Exchange under the symbol MSV.

Endeavour Silver Corporation: Up 30.58% in 6 weeks!

Endeavour Silver Chart
On the 5th March we were fortunate to pick up this silver mining stock for $3.97, which is now showing a very healthy paper profit as it closed on Friday at $5.21.

As the chart shows Endeavour has recovered really well form the general stock market wobble that hit most sectors of the market thus presenting us with a terrific buying opportunity. The price of silver is also on the move closing at $14.09 on Friday, up from $12.75 in early March.

For this year, Endeavour is predicting sales of C$36 million to C$39 million, based on 2.6 million ounces of estimated silver production from Guanacevi Mines in Durango, Mexico.

This is a pleasing start to the latest addition to our silver portfolio and we will be looking to accumulate more stock going forward.

Silver Standard Resources Outperforms Silver Prices

Having almost doubled since our purchase in July, we are obviously very pleased with the progress being made by Silver Standard Resources (Stock Symbol is SSRI on NASDAQ and SSO on the TSX).

SSRI Stock Chart

Silver Standard is a fairly large silver mining company, with a market cap now of about $2.25 billion and it controls the worlds largest published in-ground silver resources of any publicly traded silver company.

To some, Silver Standard's size may be viewed as a negative aspect of the company, as some investors may view SSRI as too large and so unable to offer enough leverage to silver prices. Well although it is true that many smaller silver stocks can rise more dramatically than SSRI, volatility works both ways and these small stocks that shoot up, can easy be shot right back down to where they started, or even lower.

SSRI offers quality silver mining projects, a strong management team and a stable stock price that is rising with silver prices and even outperforming them.

Silver compared to SSRI

With silver stocks it is key that they outperform silver prices and that is why we are investing our hard earned money in them. However what is more important is that they do rise with silver prices. This is imperative as you may own a junior silver company with all the potential in the world, but if its stock price is not moving up with silver prices, they are not worth owning. It is fine to own a few speculative explorers on the off chance that they go to the moon, but the majority of our capital invested in silver is in companies that will follow silver and outperform it all the way up. If you don't have some silver stocks that are moving with silver prices, then it is possible that you could watch silver prices go all the way up into the sky, and yet your stocks are not rising due to the fact that the market is not sure that they have any silver reserves/any commercially viable silver/any silver that can be mined in time to take advantage of the current bull market in silver.

Silver Standard

Silver stocks like SSRI are key to a good silver portfolio as you know that they are going to rise with silver prices and that they will perform better than them. By subscribing to the Silver Prices Newsletter you can keep updated on our latest ideas about silver stocks and silver prices, totally free of charge.

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Gold: Will it outperform Silver?

Silver China Coin

Gold and silver are in many ways very similar metals. They have both been used throughout history as money and to store wealth with silver long being considered “poor man's gold”. Gold prices and silver prices tend to move in very similar patterns and so those who are bullish on gold are usually bullish on silver and vice versa. Gold and silver are both precious metals, along with platinum, but there seems to be a closer relationship between gold and silver than there is between the other metals, although they all have similar uses, such as being used in jewellery.

However, with the ever rapidly advancing world of technology, we are beginning to see a separation in the metals. The main change is in the increase of silver usage. Of course silver and gold have long been used in jewellery, but silver has many industrial uses such as photography, dental alloys, bactericides, solder and brazing alloys, electrical contacts, batteries, mirrors, solar panels catalytic converters and much more. The fact is that silver is becoming both a monetary metal and an industrial metal, unlike gold, which is mainly a monetary metal, jewellery aside.

So, How will this additional demand affect silver prices?

Well as far as we can see this extra demand can only have a positive affect on silver prices. More silver being used in industry means less silver on the market, which leads to higher prices being paid for the remaining silver.

When speculating on the current precious metals Bull Market, it is important to look at the history of the metals, and how they have performed in previous bull markets. In the last precious metal Bull Market, both gold and silver performed extremely well and investors would have made handsome profits in either of the metals. Nevertheless, it is important to look at which metal performed the most attractively, in order to gage which metal is to make the most significant gains this time around.

Firstly we look at what gold prices did in the boom that peaked in early 1980. In the final part of the Bull Market, gold prices shot up an incredible $620, that is equivalent to 270%, in little over a year.

Gold making all time high

Gold's gains may have been amazingly dramatic, but they were unable to match the drama that was unfolding in the silver market. Silver outperformed gold by more than double, by a factor of just over 2.2 to be precise, with silver gaining over 600% in the same period that gold gained 270% in.

Will silver do the same this time around?

Silver making all time high

We think it is unlikely that silver will outperform gold to such an extent this time around. This is mainly due to the fact that silver had the backing of the International Metals Investment Company Ltd. I can almost hear you say, “Had the backing of what?” Well this was the company set up by the Hunt brothers and their partners with the single aim of cornering the silver market. They proceeded to try and buy all the silver that they could get their hands on, therefore pushing prices to extreme heights. It is of course possible that there is another Nelson Bunker Hunt out there, plotting with his partners on how to corner the silver market, but none that we are aware of.

However, we do not think that silver will outperform gold to such an extent; we do think it will outperform gold as silver prices are beginning to do so already.

From the start of this current precious metals bull up until 2004, gold was moving steadily higher, whilst silver was following it somewhat reluctantly. But just before we entered 2004, silver started to catch up with gold's gains and the two metals performed on a pretty much equal basis from 2004 to 2006, with silver being the more volatile of the two. However during 2006 we saw silver pull away from gold, steaming ahead more viciously than had been seen before. Since then silver has outperformed gold, as the chart below illustrates.

Silver compared to gold

On the contrary it is possible that silver will go back to under performing gold, as it did in the period before 2004 or that silver will return to moving in approximately the same way as gold does. It is also worth noting that gold also has uses besides being a monetary metal and being used in jewellery. Gold has its uses in the industrial world, although not to the extent that silver has. Gold is used in many electronic components because of gold’s outstanding ability to conduct both thermal and electrical energy. The medical industry also uses a share of the gold market, consuming around 2% of supply each year. This is a fairly small proportion and is considered to be a stable demand although industry in total represent about 11% of gold demand, approximately 400 tonnes each year (average from 2001-2005). Overall however, industry puts a larger demand on silver than it does on gold and that it one of the factors that may push silver higher than gold in this Bull Market.

One thing that is also very clear is that silver prices behave with much more volatility than gold due to the fact that the silver market is considerably thinner that the gold market. This thinness of volume means that when an influx of investment capital enters the silver market, it will send silver prices higher than gold, relatively speaking, because silver is a smaller market.

In conclusion, here at we think that silver will outperform gold, but not on the same level as it did in the last precious metals Bull Market. The driving factors will be additional demand from industry not from an attempted monopolization, although anything is possible. Therefore if you are bullish on precious metals, it might be a good idea to weight your portfolio towards silver, more so than gold. For ideas on which silver stocks to invest in, as well as commentary on the general silver market, subscribe to the Silver Prices Newsletter at completely free of charge.


Pan American Silver: Still going Strong and Steady

Pan American Silver Corp is going strong, up over 65% since we first signalled a BUY on this silver stock in July.

PAAS Stock Chart

Pan American Silver Corp, (Symbol PAAS on NASDAQ and listed as PAA on the TSX), was founded it 1994 and it still follows its aim that it set then, to be the best investment vehicle for investors looking for exposure to silver prices.

Well so far PAAS has been doing a great job of tracking and even outperforming silver prices, as the chart shows below.

PAAS compared to Silver

Silver stocks, such as the ones documented here at should outperform the silver prices. If a silver stock is not doing better than the silver metal, then there is no point in owning the stock. You would be better off buying bullion or ETF's as they track the silver price exactly, without the many risks of mining.

However it is good to see that PAAS is doing a lot better than the silver metal and the stock price should move a lot higher once silver prices get going, which we believe is eminent.

Pan American Silver has stated that it aims to produce 25 million ounces of silver every year by 2009 and it is well on the way with mines in Mexico, Bolivia, and two mines in Peru as well as projects in Mexico, Argentina and the USA.

PAAS Bolivian Project Map

The project in Bolivia is obviously a cause for concern, with the geopolitical risks of the country and threat of possibly extremely high taxation or even nationalization. But as Pan American Silver has many other project in many other countries, this is not too much of a problem to the stock at the moment although it could be in the future.

For the moment though, Pan American Silver is doing quite well for the Portfolio, especially for one of the larger silver mining companies, and it should continue to do so it the future. Keep updated on its progress and well as ideas on other silver stocks and silver prices by subscribing to the Silver Prices Newsletter completely free of charge.

SILVER: Are you ready?

The scene is set for silver to move a lot higher over the coming months so you need to be in position now.

The United States has kept its interest rates on hold for now with some commentators anticipating rate reductions further down the line. If the rate were to rise any further then the housing market would be in even more trouble than it is already. So given a choice between house repossessions caused by higher rates or allowing the dollar to devalue a little more, what’s it going to be? Since 1971 the dollar had lost 97% of its value so historically there hasn’t been that much interest in preserving its spending power. So our guess is that it will be allowed to drift lower but at a controlled rate that will suit the Feds. The upside, if there is one, is that American goods and services will be cheaper and therefore more competitive when compared with the current wave of cheap imports that land on America’s doorstep every day.

So once the dollar starts to sink (some say that the ‘82’ level is the technical support level that it most not break) then will see some serious money flowing in to the precious metals sector. Gold is the obvious choice however silver is a small market place so it won’t take much of a spill over in to silver for silver to really move.

The chart for silver encourages us, noting that each time it is sold off it does not fall as far as it did the time before. There is an upward channel forming giving us prior notice of the next move north. All we need now is an ignition. Someone or an event that will kick start this run and from there it will move quickly so we must hang on to a position in silver one way or another.


We are still expecting to see silver hit the $20.0 mark this year so we are on the lookout for under valued silver mining assets to supplement what we already have. Endeavour Silver Corporation being the latest additional investment to our stable.

23 March 2007


Endeavour Silver Corporation: Up 10.83% in 3 weeks

Endeavour Silver Corporation has made terrific progress in the last 3 weeks rising from $3.97 to close at $4.40 yesterday.

We expect this stock to rise above its recent high of $5.00 very soon and go on to demonstrate just what a high quality silver stock that it really is.

The tripling of its silver resources at Guanacevi Mines Project, Durango, Mexico, has no doubt played a big part in the stocks recovery. As noted on the chart it was the Chinese wobble that give us the opportunity to pounce and make our first investment. In our opinion it is still cheap so we will continue to accumulate as our cash flow allows.

The old adage of buy the dips certainly applied here. When the gloom comes down it is important not to let your chin drop as most of the others have done and hit the sell button. This selling drove the price down very nicely for us to make the best of a short-term correction. If you sold during this period then not to worry it is still cheap and buying back in now could better than trying to get back in 6 months, just our opinion of course, and we hold the stock so we are bias towards it.


The chart shows the commencement of the recovery and you can see that the volume has increased gently over the last 3 days. Now that the US interest rates have been kept on hold we could see gold going on a little run and silver is sure to join in the fun.

You can locate Endeavour on the TSX: EDR, AMEX: EXK, DBFrankfurt: EJD

08 March 2007