Silver mining stocks on a roller-coaster ride

By Staff Writer / September 09, 2020 / Article Link

The silver stocks of Canadian mining companies have had a roller-coaster ride of a year, getting sucked into March’s stock panic before skyrocketing out in a massive upleg. While much-higher silver prices have radically improved silver-stock fundamentals, Q2’s national lockdowns to curb the spread of COVID-19 wreaked havoc on this sector. The junior miners’ latest quarterly results recently released revealed unprecedented challenges.

The silver-stock domain is smaller than the gold one as there aren’t many silver mining companies in Canada or the world. For the majority of major and mid-tier gold producers, only a small portion of their revenues comes from silver. At the same time, silver pricing has increased more than gold in 2030 making silver stocks more desirable than gold stocks for investors.

With silver futures for September trading around $27.025 an ounce, this is a 49% year-to-date gain, which surpasses that of gold’s 26.9%. Early this August, silver trended past $28 per ounce — a level not seen since 2013. Market uncertainty resulting from the COVID-19 pandemic and the long-standing U.S-China tensions have renewed interest in silver as an investment vehicle. Coupled with low interest rates, continued liquidity boosts by central banks and recovery in industrial demand – this has given silver a considerable boost.

As a result, silver stocks have also enjoyed some attractive gains with Canadian mining companies
among the best silver stocks to watch.  One promising junior miner is Avino Silver & Gold Mines Ltd. (ASM Stock Price). Avino is a mining company that acquires and explores mineral properties all over Canada. The company owns about 42 mineral claims and four leased mineral claims as well. On August 11th, Avino reported its second-quarter financial results.

These results stated that mine operating income was $0.8 million, which was up 166% from the year previous. The CEO and President of Avino, David Wolfin said, “Similar to many other mining companies, Avino’s financial performance for the second quarter was impacted by the temporary mine shutdown due to Covid-19, which in turn resulted in decreased production.” The ASM stock price is up 82% from $0.64 a share in January to $1.165 a share this week.

Among the top picks for the best silver stocks are also Canadian mining companies Pan American Silver, Silvercorp Metals and Endeavour Silver Group. The Zacks Consensus Estimate for both junior miners is positive, indicating year-over-year growth.