Silver has had a fairly good year after a particularly rough time in 2018 when the silver price dropped 9% and hit its lowest level in nearly three years.
Things have definitely been more positive for the precious metal this year, as economic uncertainty and political turbulence pushes investors toward safe-haven metals like gold and silver as a way to hedge risks and strengthen their portfolios. From the ongoing US-China trade war and rising tensions in the Middle East to Brexit, there are several reasons for investors to seek asylum.
Now hovering just over $17 per ounce, the white metal is up roughly 10% so far in 2019.
But will the silver price continue to increase into the new year? And are small-cap silver stocks a good investment?
Silver Price Predictions for 2020 and Beyond
The gold and silver price generally move in tandem and long-term trends, for both of the metals tend to mirror each other. However, gold often gets more press coverage and recommendations from analysts.
There are several catalysts that analysts expect will support gold prices next year, including heightened global uncertainty, modest global economic growth, recession concerns, and interest rate changes. And while these factors should typically reflect positively on the price of silver, according to Goldman Sachs, it may not rally as high as gold.
“Outside of investment demand, silver fundamentals remain challenged as industrial demand contracted and mine supply, while flat this year, is expected to grow strongly in 2020,” said a Goldman Sachs analyst. “While we expect investor interest in the precious space to be high in 2020 it will likely be less than during H2 2019 when recession fears spiked. In such an environment while gold investment can continue to grow silver often gets overlooked being the marginal precious metal.”
The silver price has been hovering around the $17 USD mark for the last month, and Goldman Sachs expects it to remain around $18 USD per ounce next year, as well. Meanwhile, Bank of Montreal analysts expect silver to be slightly higher in 2020, averaging around $18.60 per ounce.
Of course, there are others who see the silver price making a decent rebound in 2020.
Analysts at European precious metals firm Degussa see silver rallying to $23 an ounce next year, while Longforecast.com sees the price fluctuating between $16.68 to $19.75 throughout 2020.
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Silver Stocks to Watch in 2020
Whether the silver price remains at its current level or experiences an uptick in 2020 remains to be seen. However, there are still some silver stocks that have been performing well throughout 2019 and are expected to continue upwards.
If you have been looking to diversify your portfolio with some silver stocks, here are some companies to take into consideration.
One company that has had an outstanding year is Silvercorp Metals Inc. (TSX:SVM) (NYSEAMERICAN:SVM), a silver-producing Canadian mining company with multiple silver assets in China. In September, Silvercorp updated the resource estimate for its Gaocheng (GC) silver-zinc-lead mine, increasing proven and probable reserve tonnes by 7% and increasing the life of the mine by three years.
The GC Mine is expected to have an average annual production rate of 300,000 tonnes with average silver equivalent grades of 334 grams per tonne (g/t) for the first six years, then 271 g/t for the remainder of the mine life.
Then in November, Silvercorp announced that ongoing exploration drilling at GC has revealed major mineralized vein structures at the property.
The company’s share price has increased by an impressive 132.78% from $2.99 CAD to $6.96 CAD in 2019 and could continue upward if the company further expands the mineralized zone at the GC Mine.
Another small-cap silver stock that might be worth picking up is Aftermath Silver Ltd. (TSXV:AAG) (OTCQB:FLMZF), a relatively new mining company with two silver-gold properties, Cachinal and Challacollo, in mining-friendly Chile.
Aftermath just closed a $3.3 million private placement financing, which includes a $2.98 million investment from mining legend Eric Sprott. The company will be using the proceeds to pay for the acquisition of its Cachinal property and to fund the initial work program there.
The Cachinal property is a low-sulphidation epithermal deposit that hosts an 18.4 million silver ounce Indicated Mineral Resource and 3 million silver ounce Inferred Mineral Resource. Meanwhile, the company’s Challacollo project hosts a historic Mineral Resource of 30 million silver ounce Indicated (4.7 million tonnes at 200 g/t silver) and a 6.9 million silver ounce Inferred (1.6 million tonnes of 134 g/t).
Aftermath Silver’s share price has shot up significantly this year from $0.09 CAD to $0.41 CAD, which represents a whopping 355.56% increase.
In short, Aftermath Silver and Silvercorp Metals are two silver stocks that could add some glimmer to your portfolio regardless of where the silver price goes in 2020.
Are there any other small-cap silver stocks on your radar? Let us know in the comments!
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