Barry FitzGerald: Silver stocks offer supreme value in precious metals bull run

Australian-listed silver stocks have come off sharply since October last year, giving them supreme leverage to the precious metals bull run.

Barry FitzGerald likes the value in the ASX's silver cohort. Pic: Supplied/Stockhead

“Garimpeiro” columnist Barry FitzGerald has covered the resources industry for 35 years. Now he’s sharing the benefits of his experience with Stockhead readers.

ASX silver stocks are stirring after suffering a bleak end to 2024. All of the leading names have been popping higher thanks to rising prices for the metal.

Silver’s move to $US32.25/oz mid-week is not the record breaking stuff of its more glamorous precious metals accomplice gold.

But at least the move higher is undoing the share price hit the ASX silver stocks took in the closing months of 2024, when silver fell from the 12-year highs in October of $US35/oz to below $US30/oz.

That price retreat triggered a broad sell-off in ASX silver stocks, with share price falls of 25-50% common before buying support for the sector took hold during the week.

While the gold price also took a hit in late October on interest rate concerns, it bounced back quicker and has since marched to record levels, taking ASX gold stocks along for the ride.

The silver price is well short of its all-time high of $US50/oz back in 1980 ($US180/oz inflation adjusted) when the Hunt brothers from Texas tried to corner the market. But it doesn’t need to be at record levels to fire up interest in ASX silver stocks.

As mentioned earlier, the silver stocks are still sporting 25-50% losses on their October 2024 levels when silver was near on $US35/oz. And here we are, with the metal giving every in indication it will retake $US35/oz soon.

The wildcat

There is a bit of wildcat emerging in silver too. Mexico is the world’s biggest producer and supplies about 80% of US demand. Donald Trump has put a one month stay on his plan to subject Mexico imports to a 25% tariff.

Negotiations are underway and the assumption is that 25% tariff will become a less onerous 10% tariff. Still, a US silver premium ahead of the Mexico tariff taking effect is on the cards.

And like gold, silver’s safe haven monetary qualities are becoming more appealing as the tit-for-tat trade war between the US and its foes and allies alike escalates.

All that has got Garimpeiro thinking that it could be time for a return to the ASX silver sector. Others are thinking the same given the sharp share price increases – from battered levels – seen in the silver stocks this week.

Assuming silver retakes $US35/oz soon, there is every reason to suspect the silver stocks will retake their October 2024 levels, remembering they are currently 25-50% below those levels.

There is word of caution. Because of silver’s greater use in industrial applications compared with gold, its upwards momentum could be derailed by a slowdown in economic growth caused by tariff increases under the Trump administration.

Having said that, silver’s growing use in solar panels and electric vehicles means that for the fifth consecutive year, a supply deficit in the silver market is expected (150 million ounces  according to an assessment by the Silver Institute/Metals Focus).

Stocks to watch

Silver stocks on Garimpeiro’s radar, all of which were substantially higher when silver was $US35 an ounce in October, include Investigator Resources (ASX:IVR), Silver Mines (ASX:SVL), Mithril Silver and Gold (ASX:MTH) ,  Andean Silver (ASX:ASL) and Sun Silver (ASX:SS1).

Their December quarterlies are still nice and fresh so there is no need for Garimpeiro to give a run down on them today.

There is a special mention though for Maronan Metals (ASX:MMA). It is down on its October levels, but the share price damage was limited in comparison with the rest of the pack.

No surprise in that as its namesake silver-lead project near Cloncurry is a fast maturing, large-scale development opportunity. Newsflow will be strong in coming months and will include more drilling results, a resource upgrade and a scoping study.

The company itself says it is becoming a prime merger and acquisition target. It traded mid-week at 23c a share.

The views, information, or opinions expressed in  this article are solely those of the columnist and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.

At Stockhead, we tell it like it is. While Maronan Metals, Mithril Silver and Gold and Sun Silver are Stockhead advertisers, they did not sponsor this article.

Originally published as Barry FitzGerald: Silver stocks offer supreme value in precious metals bull run