Silver lining for miners and investors as interest grows amid surging gold price

With the price of gold continuing to rise, attention is beginning to turn to another precious metal which may be more financially palatable for the masses — silver.

The silver price has risen 18 per cent in the last six months and is now worth just over $40 per ounce.

Australia has the largest share of the world’s economic silver resources, mostly in Queensland, the Northern Territory and South Australia, however mines right across the nation have silver as part of their overall commodity mix.

Association of Mining and Exploration Companies chief executive Warren Pearce said the timing may be perfect for mining companies to ride the wave of interest stemming from the surging gold price.

“If you look at the price, it started to spike probably for the best it’s been in three years. So certainly it’s getting a lot more attention than it has,” he said.

“You’re going to see some people start to turn their minds to how they might be able to take advantage of that.”

Multiple uses

While jewellery and cutlery are popular uses for silver, the metal now plays a role in everything from mirrors to electronics, solar panels and medicine.

Mr Pearce said given silver was a “useful” metal, its future value would depend on how it was used in technology.

“A whole host of traditional industries will start to have new lives, falling into different markets,” he said.

“Particular products will suddenly find a new life — silver might well be one of those.

“But how much silver we’re going to need and what that actually means for the existing established industry is a bit bit unknown at this point.

“Depends which way the technology develops, and what exactly are going to be the the optimum parameters for the types of percentages of product that goes into battery storage, particularly renewable technologies.”

International interest

Silver’s potential is even getting traditional gold bulls excited.

At a webinar hosted by Arlington Group Asset Management last week, Canadian billionaire and investor Eric Sprott said the ability for the average investor to buy silver was enticing.

He said there were suggestions that Chinese media had been running TV advertisements in recent weeks, encouraging citizens to invest in silver rather than gold.

“Now that could be a rather dramatic thing when you think about the 1.4 billion people all buying silver, of which there’s already a shortage,” he said.

Macroeconomic analyst Luke Gromen agreed there was potential upside for silver.

“I’m bullish on silver, I think it will be a monetary metal for the masses,” he said.

“I think gold will play a primary role, simply because silver isn’t on the central banks’ balance sheet.”

But he said while silver was a “working metal”, gold’s comparative uselessness meant it would always be more valuable.

“I think gold will serve a role of deflating debt on central bank sheets, re-capping them, I think silver will benefit immensely,” he said.

New life for old projects

In Western Australia’s historic Goldfields mining region, Morrie Goodz said the time was right for silver.

The resource industry stalwart was once head of a company hoping to bring a “silver Superpit” to Kalgoorlie.

He said the current increasing price and interest in the precious metal was encouraging for current miners and may bring fresh interest to old proposals.

“Inevitably, I think the silver price had to return to a more realistic level. And so it is good to see that the price has recovered in recent times,” he said.

“Now is a good time to really be looking at those assets and saying: ‘Should we be reassessing them?’

“We should be giving the green light to those projects we have assessed and they’ve just been on care maintenance.

“I think there is huge opportunity to be lifting our role in the production of these [polymetallic] metals.”