Silver Could Be On The Cusp Of Major Rally - Mining CEO
(Kitco News)- Lackluster silver prices are not deterring one Canadian silver explorer fromimplementing its exploration plans because the market could be on the cusp of asignificant market rally, according to the company’s top executive.
In an interview with Kitco News, Greg Johnson, chief executive officer ofMetallic Minerals, (TSX.V: MMG) said that the company is moving forward with a plan toinvest about $2 million in its 2018 exploration program at its Keno SilverProject, located in Canada’s Yukon Territory.
He explained that he is bullish on silver because of its strong industrialdemand. He added that it wouldn’t take much new investor demand before themarket is outperforming gold.
“I think gold and silver are poised to enter a new uptrend,” he said.“Silver, in particular, looks good as industrial consumption remains in along-term uptrend. All the market needs is renewed investor interest and Ithink it’s only a matter of time before that comes.”
Johnson’s comments come as the gold/silver ratio continues to trade nearmulti-year highs around 80 points. The ratio shows that it now takes about 80ounces of silver to equal one ounce of gold. The ratio’s recent historicalaverage is around 60, with a long-term average around 45 points.
March silver futures last traded at $16.595 an ounce, down 0.13% on the day. At the same time April gold futures last traded at $1,330.70 an ounce, down 0.11% on the day.
Johnson noted that while the gold/silver ratio could continue to fallfurther if there is a sharp sell-off in equity markets, investors can’t ignorethe major imbalance in the marketplace.
“We are much closer to a bottom in silver than a top, and I think peoplewill start to see the value in the metal and the mining sector,” he said. “Itis going to change tomorrow? Probably not, but at some point, we are going tosee sentiment change.”
As to what could be the catalyst that ignites the new rally in silver,Johnson said it could be further uncertainty in financial markets. With equitymarkets struggling to hold onto gains and bond yields pushing higher, Johnsonsaid that gold and silver will look attractive as investors search forunderpriced, defensive assets.
“One of the catalysts that I am looking at is the bond market. Yields arepumping up against some major long-term trendlines. We have seen rising bondyield market in 30-year and nobody knows how this is going to impactinvestors,” he said. “If you have money coming out of bonds and intoalternative assets like gold and silver, that could be huge for prices.”
U.S. 10-year bond yields are currently trading at 2.91%, near their highest levelin four years. Many bond analysts say that it is only a matter of time beforeyields push above 3%, with some seeing rates at 3.50% by the end of the year.
The Keno region in the Yukon is Canada’s most significant silver districtwith a long history of high-grade silver production. Between 1919 and 1989, thedistrict produced more than 200 million ounces of silver.
“Our property includes eight historic mines that haven’t seen any modernexploration in almost 30 years,” the CEO said. “We think this brownfieldexploration project has lots of potential.”
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.