Silver is technically a precious metal, but it is also used as an industrial metal, contributing to its price gains as investors bet on a global economic recovery in the second half of the year.
The metal’s price has increased by 51% in 2020 to US$27.12 per ounce from US$17.91 per ounce at the start of the year.
Silver is used in an increasing number of medical applications, as well as in electronic components for 5G telecommunications networks, which indicates the potential for silver to outperform gold.
Is there room for further price increases?
As technical indicators go, the ratio of gold price to silver prices, commonly referred to as the gold-silver ratio, is considered by precious metal traders to be one of the most reliable indicators for forward price movements in silver.
The gold-silver ratio indicates how many ounces of silver are required to buy one ounce of gold. In times where the ratio is relatively high, it acts as a leading indicator for a rise in silver’s value.
The gold-silver ratio has now risen from a low of 34.7:1 in April 2011, its lowest level since 1979, to its highest level in 87 years of 111.7:1 in April 2020, before reducing to 90.6:1 in July on the back of a 35% rise in the silver price over just three months.
Gold-Silver Ratio since 1990. Source: Mining and Metals Research Corporation Ltd.
Could we now be facing a sustained uptrend in the silver price?
Historical precedent appears to suggests so, only once in history was silver more undervalued compared to gold than it was in April 2020 and that was in 1933, when the US Government forced its citizens to sell their precious metal holdings.
Projects near historical silver mines
Walcott is acquiring two prospective silver‐zinc projects in Australia, being the Tyr Silver Project and the Century South Silver‐Zinc Project.
The Tyr Silver Project in northern New South Wales has two historical silver mines – Burra and Torny – coupled with high‐grade silver zinc‐lead‐tin mineralisation.
Tyr delivers upside potential with mineral occurrences apparent along a north‐ west trend.
Notably, the north‐west trend is part of a large‐scale mineralised system that includes the historical silver mines, which materially boosts exploration upside.
The Century South Silver‐Zinc Project is in Mt Isa Basin, north‐west Queensland and is 5 kilometres along strike from one of the world’s largest silver‐zinc mines.
Both projects are located near established mining infrastructure with accessibility to ports.