Chris Ritchie – Gold:Silver Ratio At Extremes, Economics Of Silver Assets, Where Will New Silver Supply Come From and A Production Update From Las Chispas
Chris Ritchie, President of SilverCrest Metals (TSX:SIL – NYSE:SILV) joins me to discuss the macro environment for silver companies and provide an operations update from the Las Chispas Mine.
Starting with macro silver comments we look at the gold to silver ratio which is at a historic extreme of 95:1. This ties into a discussion on margins that have now been compressed with inflation impacting costs and the silver price below $20. When looking at the supply side of the silver market I ask Chris where new supply will come from. This focuses on the balance between M&A and development companies both of which have been slow moving.
On the SilverCrest front, Chris provides an operational update. We discuss the wrap up to commercial production as well as the possibility the Company will hold silver rather than immediately sell the silver and hold cash. This would be a unique move by a silver producer.
If you have any follow up questions for Chris please email me at Fleck@kereport.com.
Click here to visit the SilverCrest Metals website to learn more about the Company.
We are in the final minutes of silver’s eleventh hour with respect to its quarterly chart. Important long term moving averages are in bullish alignment and pointing up but silver must get going even if modestly.
It made sense to welcome more downside until recently but only real bears (not bearish bulls) should hope for lower lows now.
https://stockcharts.com/h-sc/ui?s=%24SILVER&p=Q&yr=45&mn=0&dy=0&id=p75008722111&a=1246870526&r=1662672610772&cmd=print
I felt Chris made some fantastic points about the silver markets, supply/demand forces versus current pricing, the Gold:Silver ratio at extremes, the 2 types of conversations one can have around silver mining stocks – the higher margin companies that may pop more on metals price increase, and the low margin producers that can survive longer periods of weakness, and a whole lot more… Great conversation guys!
When silver hit its 240 month /20 year moving average in 2018 it was the first time it had done so since 2003. It also hit it in 2019, 2020 and last week. If that low holds, silver will probably not touch that MA again for many years. For comparison, gold would have to fall 33% from today’s close to reach its own 20 year MA while the S&P 500 would have to fall by more than 50%.
In August, the 60 month/5 year moving average crossed above the 120 month/10 year moving average for the first time in 17 years.
https://stockcharts.com/h-sc/ui?s=%24SILVER&p=M&yr=25&mn=0&dy=0&id=t3028090084c&a=1116162433&r=1662671145306&cmd=print