Summary of "Silver Miners! The Prices Are About To Go Crazy. I Name My Top Silver Miner Picks For Huge Gains."
Silver Miners! The Prices Are About To Go Crazy
I Name My Top Silver Miner Picks For Huge Gains
Presenter
Clive Thompson – Investor with 50+ years experience, focused on silver and gold mining stocks.
Market & Macroeconomic Context
- The silver mining sector is very small but poised for significant price appreciation.
- Silver prices are rising faster than gold and the general stock market.
- Silver mine production has declined from 900 million ounces in 2016 to an estimated 835 million ounces in 2024 (a 65 million ounce drop).
- Demand has increased from 993 million ounces a decade ago to approximately 1.15 billion ounces currently, creating a supply-demand deficit since 2021-2022.
- About 200 million ounces of silver are purchased yearly as investment coins/bars (roughly 1 oz per 45 people).
- The U.S. Department of the Interior (DOI) has added silver to the draft list of critical minerals for the first time, indicating strategic importance for electronics and defense.
- Potential supply disruptions from Mexico (the largest supplier to the U.S.) are estimated at a 4% probability.
- If silver is officially designated a strategic mineral (consultation ends September 25, 2024), the U.S. may begin stockpiling, which would support higher prices.
- Commodities are currently cheap relative to equities; the mining sector is only about 1% of global equities (down from 10% historically).
Asset Types & Instruments Mentioned
- Silver and gold mining companies (many are dual producers).
- Global X Silver Miners ETF used as a universe for stock selection.
- Some companies have copper mining exposure.
- Silver coins and bars as investment assets.
Investing Strategy & Portfolio Construction
Focus on silver miners who:
- Are already producing and selling silver (and gold).
- Have production costs (All-In Sustaining Cost or AISC) below current and forecast silver/gold prices.
- Show expected production growth year-over-year.
- Are trading at low price-to-earnings (P/E) ratios (used as a rough valuation tool).
Additional considerations:
- Willingness to accept compromises; few companies meet all ideal criteria.
- Emphasis on risk management: higher upside companies often carry higher downside risk due to political/geopolitical risks or thin profit margins.
- Recommended to buy shares on the company’s primary listing market and use limit orders to avoid price slippage.
- Volume and bid-ask spread should be checked before buying.
Methodology / Valuation Framework
-
Company Selection: Start with Global X Silver Miners ETF holdings (~38 companies ranging from $50 million to $4.4 billion market cap).
-
Data Gathering:
- Mine production last year and forecast for next 3 years (2025-2027).
- All-in Sustaining Costs (AISC) per ounce for gold and silver.
- Other costs: prospecting, marketing, overheads, taxes.
- Reserves and resources data.
-
Price Assumptions:
- Base case for 2027: Gold at $5,000/oz, Silver at $50/oz.
- Inflation on AISC assumed at 10% per year.
-
Profit Estimation:
- Calculate gross profit = (price per ounce - AISC) × ounces produced.
- Deduct other costs to get net profit.
-
Earnings per Share (EPS):
- Divide net profit by shares outstanding.
-
Price Target:
- Apply conservative P/E multiple of 10× to EPS to estimate 2027 share price.
-
Scenario Analysis:
- Higher price scenarios:
- Silver $70 / Gold $7,000 → potential 7-10× returns.
- P/E multiple increased to 25× → potential 26× returns.
- Extreme: Silver $100 / Gold $10,000 → 10×+ returns for some companies.
- Ultra-extreme: Silver $200 / Gold $20,000 with 25× P/E → possibility of 100× returns (speculative).
- Higher price scenarios:
-
Risk Considerations:
- Higher return potential correlates with higher risk.
- Many smaller companies are still explorers/prospectors with high failure risk.
Specific Company Highlights
1. McEwen Mining Inc. (Ticker: MUX, Canada/USA)
- Market cap: Large among silver miners (exact figure not stated).
- Operations in Nevada (USA), Ontario (Canada), Santa Cruz (Argentina).
- Holds 46% stake in Los Azules copper project (Argentina).
- CEO: Rob McEwen, founder of Goldcorp, with a strong track record (grew Goldcorp from $50M to $8B market cap).
- Current trailing P/E is high at 89× but expected to fall rapidly due to projected net income growth from $15M (2025) to $150M (2026).
- Production forecast: Gold equivalent ounces to increase from 75,000 oz to 175,000 oz in 5 years (excluding copper).
- Share price valuation range by company: CAD $18 - $58 (current ~CAD $15).
- Author’s model: CAD $34.74 at current prices; CAD $75 at $50 silver / $5,000 gold scenario.
- Potential catalyst: Government approval of Los Azules copper project (feasibility study expected soon; Argentina recently removed copper export duties).
2. Andean Precious Metals Corp. (Ticker: ANDE, Canada)
- Market cap: ~CAD 700 million.
- Revenues: CAD 254 million.
- P/E ratio: 7.19× (very cheap).
- Operations: 54,000 oz gold in California; 4.5 million oz silver in Bolivia.
- Strong cash position and record Q1 growth.
- Major investor: Eric Sprott (Canadian billionaire known for precious metals investments).
- Growth opportunities highlighted but specifics not detailed in video.
Disclaimers & Disclosures
This is not financial advice. The presenter is not a financial advisor and does not know your personal situation or risk tolerance.
Stocks mentioned are examples for research purposes, not recommendations.
The presenter has small personal exposure (<1%) in highlighted companies but is not actively trading them.
Viewers are encouraged to do their own research or consult financial advisors.
Affiliate links mentioned for Gold Bullion Partners (UK/Europe) and ITM Trading (USA) for gold/silver bullion purchases.
Summary of Key Numbers & Timelines
- Silver production decline: 900M oz (2016) → 835M oz (2024 forecast).
- Silver demand rise: ~993M oz (2010) → ~1.15B oz (2024).
- DOI consultation on silver as critical mineral ends September 25, 2024.
- Price assumptions for valuation:
- Base: Gold $5,000/oz, Silver $50/oz by 2027.
- Upside scenarios: Gold $7,000-$20,000; Silver $70-$200.
- Inflation on costs: 10% per year.
- P/E multiples used: conservative 10×, typical 25× for growth companies.
- Potential returns: 4× to 26× under base and moderate upside scenarios; speculative 100×+ for very risky explorers.
Final Notes
The silver mining sector is small but with a growing supply-demand imbalance and strategic importance, potentially driving prices and miner profits sharply higher. Valuation models suggest substantial upside in selected silver/gold miners, especially those with production growth and low cost structures.
Risk remains high, especially for smaller or non-producing companies. Investors should focus on companies with production, profitability, and growth prospects, and use valuation multiples conservatively.
McEwen Mining and Andean Precious Metals are highlighted as favorite picks based on fundamentals and insider/major investor support.
Presenter: Clive Thompson
Category
Finance
Share this summary
Is the summary off?
If you think the summary is inaccurate, you can reprocess it with the latest model.