Are there fundamental reasons to buy Silver?

After GME dominated the headlines until very recently, investors are wondering if there are fundamental reasons to buy Silver, or are traders simply hoping for another meme-fuelled pump? While Silver doesn’t often get the spotlight Gold does, it does attract investor interest for being useful as bullion but also for numerous industrial purposes.

The Gold/Silver ratio has been declining recently to under 70 where it’s at today:

This is a big change from recently, when it touched 124 in the summer. The run-up in precious metals wasn’t experienced by Silver to the extent it was by Gold. Perhaps there are fundamental reasons to be bullish on Silver? Technical analysis shows resistance being met at the $30 level:

Fundamentally, there is argument in favour of a long position in Silver. Eric Ross from Cascend Securities says Silver has been trading below its reference to gold. The buying activities from retail investors have helped its price rise lately, but economic fundamentals will drive silver higher to close to its fair value.

Tyler Wall, president and chief executive officer of SD Bullion, discusses the outlook for silver, which surged at the week’s open as the Reddit-inspired frenzy that roiled stock markets last week spills over into commodities. He also mentions the substantial drop in the Gold/Silver ratio and believes there is plenty of room to run.

Randy Smallwood, president and CEO of Wheaton Precious Metals, says the fundamentals for Silver are so good that there is a strong likelihood some of the new investors will stay long with the investment in Silver.

Conclusion

With fundamental reasons to buy silver being strong, a great way to expose yourself to this is to buy mining stocks with the potential to host high quality silver deposits. We remain bullish on Etruscus Resources (CSE:ETR), in particular with their recent grab samples showing an unbelievably high 7,013 g/t silver, 12.7 g/t gold, 3.9% zinc, 2.4% lead, and 0.2% copper. They are also neighbors to mines who’s stocks have been flying of late, and increased over 227% on average in 2020, with some comps increasing north of 1100%. This is a very cheap stock, located in BC’s Golden Triangle, and with the results of their work being very positive, we remain bullish and believe this should be worth over $1.02.

Another stock we are bullish on is Tocvan Ventures (CSE:TOC). Tocvan recently completed phase 1 of their drill program, and are progressing their flagship Pilar property. The property is located in the Sierra Madre Occidental and is adjacent to a geologically similar mine that fast-tracked into production last year. This stock is worth north of $1.53, and is trading a shade under $0.50. It is still cheap, and a very promising asset.