Silver is a precious metal. While Gold is used as a safe haven investment, Silver derives its value from the demand for it in the industrial sector. The demand for the commodity comes from the use of silver for its electrical and thermal conduction properties. In addition to its industrial use, silver is also used to make jewellery and investors purchase silver just as they do gold for its safe haven characteristics. Thus, there are quite a few popular silver stocks on the ASX just as ASX is home to some of the best gold stocks.
Due to silver’s conduction property, it is extensively used in solar panels and rechargeable batteries. Each solar panel contains about two thirds of an ounce of the precious metal. Silver is also used to hedge against inflation and being a safe haven, investors are seen buying silver when there is a “risk-off” consensus brewing in equity markets.
Silver prices rebounded very quickly from the pandemic and surged to 5-year highs by August 2020. Since the past week, silver prices have started surging again on the back of retail investors from reddit groups pumping up the prices by buying the commodity. With further US stimulus on the cards, Silver prices may surge further in the future. There are quite a few ASX silver stocks to keep an eye in addition to the stocks to look out for in the pandemic.
Silver Mines is a Sydney based small cap explorer and developer of silver polymetallic assets. They have a market capitalisation of $255 million on the back of today’s 49% surge in share price. The firm operates through the mining and exploration of its Bowdens Silver and Barabolar Project.
Recently, the firm extended the Northwest High-Grade Zone that is located at the Bowdens project following ongoing drilling results. The program yielded up to 26.1m at 252 grams per tonne grade silver, and extended mineralisation in the area by 300m down and 200m in length.
The Perth headquartered Silver mining company is one of the largest silver stocks on the ASX with a market capitalisation of over $12 billion. They operate at Cannington mine located near Mt Isa in Queensland. The asset makes Cannington one of the largest silver mines in the world and the stock surged 3% today. Since SOuth32 is a very diversified mining company that operates across a wide range of commodities, the surge in share price was limited. The stock however, has surged over 28% in the past 3 months as the vaccine rollout has revitalised the commodity sector.
Adriatic Metals is a holding company that is headquartered in Cheltenham, United Kingdom. They engage in the exploration and development of polymetallic mining projects in Bosnia and Herzegovina. The stock surged over 19% this morning and it now demands a market capitalisation of $450 million. They focus on 3 main projects – Vares, Rupice, and Veovaca. Earlier last week, the firm announced the securing a 30 year mining permit from the Bisnian Ministry for the exploration of silver in the veovaca mining region. The stock price has been soaring since then – taking the total gains to 30% since the announcement.
While silver has a lot of inflationary properties and is a safe-haven, extreme caution should be advised when trading silver stocks at this moment in time given the catalyst for the surge in silver and silver stocks has been retail investors from the same reddit group that have caused quite a stir in the US stock markets.
Growth stocks are potentially one of the hardest to pick as there are a lot of factors that need to be considered – from industry tailwinds to financial health of the individual stocks, and a lot of little things in between them. Shares in Value research team have picked their top 3 ASX stocks to buy in 2021. Click here to download the report for free.