Silver and Silver Stocks: Why Investors Should Consider This ‘Lesser’ Precious Metal

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Silver deserves more respect, especially for its industrial applications in the cleantech, greentech sector

Andrew O’Donnell | November 7, 2018 | SmallCapPower: Silver is often sidelined as the lesser precious metal. It is the runner-up; always the bridesmaid and never the bride. Despite silver’s rarity and lustrous, shiny characteristics, it is simply not gold. The intent of this article is to show you, in my opinion, why silver is just as valuable, and in some cases, even more valuable in regard to industrial use and practical application, particularly in health, Clean/Greentech and consumer technology.

Most of us look at silver as having value in fine items, jewelry or perhaps as physical currency when the financial apocalypse comes. Imagination, creativity and silver’s own malleability have led from ornate jewelry to microbial bandages, water filtration and electrical capabilities. Silver is born from the Earth, but it is out imagination that unlocks its incredible properties.

Silver was discovered around 5000 BC, and we have human-crafted silver objects dating back before 4000 BC. It was used as a sign of wealth, trade, currency and jewelry. Silver, like gold, is incredibly ductile: an ounce of silver can be drawn into a wire 8,000 feet long! It is light, can be flattened into sheets, made into mirrors and it is highly conductive to heat and electricity. The history of silver is long, ancient and too much for the scope of this article. We need to fast forward to the demand, the use and the future of this rare metal.

Mexico is the leading producer of silver, accounting for almost 19%, followed by Peru. The U.S., Canada, Russia and Australia also are main contenders, which is positive as these locations have strong reliability and regulation to protect both miners and the environment. Saucito Silver Mine in Mexico is the largest mine to date, producing around 22 million ounces in 2016. The basic demand for silver is roughly 54% for industrial use followed by 26.5% use in fine items, silverware and jewelry, and 19.5% in bars and coins. That industrial percent accounts for a great deal fascinating projects.

Silver is the best conductor of heat and electricity. In fact, it is the gold (silver) standard by which other conductors are measured. Copper is quite close in its conductive ability and certainly much cheaper, which is why it is generally favored in industrial use. However, if you want maximum efficiency, silver is it. This is why we must include silver into the group of metals that are required for Green technology and future energy.

One of the fastest-growing applications of silver paste is in the production of solar energy, as well as its reflective properties in solar panels and mirrors such as telescopes like Hubble and Galileo. Whether it be low level, energy efficient lighting, LED screens on computers, monitors or televisions or in the new flexible monitors, LED screens, mirrors, electrical components and of course lightweight batteries. Little button-shaped silver-oxide batteries are found in watches, cameras and in aerospace, while the silver zinc battery is a competitor or alternative to lithium for computers and electric vehicles. In fact, it is predicted that 20 million ounces of silver could be used in the LED market alone. In fact, some think growth in the flexible screen, LED market and semiconductors space will grow 275%.

Nanotechnology has always held a deep fascination for me and silver does not disappoint here, either. Many of the windows of skyscrapers or tall downtown buildings are coated in a transparent film of silver that reflects the light, keeping the building cooler and saving on energy usage for air conditioning. In fact, the tiles that protect spacecraft are silver coated! These films are also applied to food packaging, refrigerator, and personal hygiene products due to silver’s incredible antibacterial benefits. These antibacterial qualities have been known for hundreds, even thousands of years…certainly before the discovery of microbes. Silver containers fight bacterial buildup. Water filtration and purification systems are the larger usage now but still silver is found throughout hospitals and in safety gear to help stop the spread of bacteria. But we are not done. Nuclear energy also uses silver. The metal is used to control rods to capture neutrons and slow the rate of fission in nuclear reactors.

When we view the landscape of silver companies, there are a couple that standout ahead of the pack. Wheaton Precious Metals Corp. (TSX:WPM) is a leader in financial engineering in the silver space. It is not directly engaged in the exploration and development of silver mines. Rather than being known for exploration or even production, it is a streaming company. This means it invests in the production of other silver mining companies through long-term purchase agreements that enable it to lock in future silver production at advantageous prices. They’re good enough at this business to warrant a $9 billion market cap.

First Majestic Silver Corp. (TSX:FR) is an exploration and silver production company with a market cap of $900 million. The Company owns and operates six mines. Since making a 2011 high near $25 per share, the Company’s stock has tumbled as low as $2.66 per share and currently sits above $5. However, this makes it one of the less-expensive silver stocks available. Its 10-year track record of production growth and its virtually non-existent long-term debt make it an accumulation target for astute, value-oriented investors.

Hecla Mining Company (NYSE:HL) is ranked as one of the leading low-cost silver mining companies in the U.S. The Company has operating silver mines in Idaho and Alaska and is rapidly becoming a significant gold producer thanks to its highly-efficient mining operations in Quebec. It has promising exploration and development projects in five additional gold and silver mining projects in the U.S., Canada and Mexico.

Viscount Mining Corp. (TSXV:VML) is a dynamic opportunity currently confirming a prefeasibility study that was conducted in the 1990s. This Company has enormous potential and has caught the attention of a number of major silver producers. The properties are risk-mitigated and the upside is worth the risk.

In all, silver has amazing practical application limited only by current technology and the creativity of the human mind. Every day, researchers, engineers and scientists are finding new uses for this metal. It seems we have only just unlocked the potential for silver. Now we must make sure we have enough to meet demand.

With this in mind – stay tuned for our next write up—where we will profile a new company has the outstanding growth potential to feed the rapidly growing hunger for silver.

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Securities Disclosure: I, Andrew O’Donnell, hold no direct investment interest in any company mentioned in this article. I was paid by one of the companies for this article.

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