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Silver Metal Price Rallies and Silver Equities Prices Fall - Dichotomy Opens Up Opportunities

By: Dr. Ryan Long

The end-of-year rally in the price of silver means silver prices are up 13% year-on-year, up 63% on a five-year chart, and up an impressive 337% since 2000. This impressive short, medium, and long-term performance is expected by many analysts and market commentators to continue into positive territory.

CPM Group’s Jeffrey Christian has recently produced a very interesting couple of videos explaining why precious metals can continue to rise even as inflation rates decrease. You can watch the videos below, but in summary, Mr Christian points out that the traditional and oversimplified view that higher inflation means higher gold and silver prices, and visa-versa, is only right about 9% of the time (Video 1).

Video 1: Gold and Silver Soar As Inflation Falls Flat: This Is Why

Source: CPM Group

Lower inflation rates at present have signalled to financial markets that interest may have now peaked and could lead to a softening of the dollar, which Mr Christian expects will continue to drive investors to precious metals, increasing gold and silver prices to reach record and near-record, levels into 2024 and 2025 (Video 2).

Video 2: A Realistically Bright Future For Gold And Silver

Source: CPM Group

We have already seen a remarkable dichotomy this year with silver and gold prices rising, but silver and gold equities falling, which leaves gold-silver miners and explorers looking for remarkably good value. If precious metal prices continue to rise, even more value can be gained by getting exposure to precious metal equities.

Mining Guru, Rick Rule, has also highlighted the investment case for silver and silver equities in a recent interview that can also be seen below (Video 3). Mr. Rule points out that he expects a huge uplift in the silver miners, simply from silver stocks being “less hated by the market” i.e., he believes that investors have been experiencing overly negative emotion towards the silver space and are, as a result, failing to consider the significance of the recent rise in metal prices and fall in silver equities.

Given the lack of pure-play silver equities with which investors can gain exposure, Mr. Rule likens the rush of investors he expects to be trying to invest in the limited pool of silver equities to like trying to siphon the Hoover Dam through a garden hose.

Video 3: Rick Rule's Top 10 Silver Stocks & Silver Masterclass

Source: Resource Talks

New Pacific Metals’ is a company that offer investors attractive exposure to all phases of the silver development cycle as it moves it projects up the value chain.

New Pacific Metals

New Pacific Metals (TSX: NUAG | NYSE-A: NEWP) is a well-funded (C$35 million in cash) exploration and development company with three silver projects, located in Bolivia. The most advanced project is the Silver Sand Project, which has a resource base of 214.8 million-ounces of silver at an average grade of 113.8g/t silver.

A preliminary economic assessment, highlighted the significant economic returns that could be generated from an operation that produces around 12 million ounces of silver per year for 14-years, returning a post-tax net present value of US$726 million at a 5% discount rate and a silver price of US$22.5/oz, in line with the current silver price. The Company is now preparing a pre-feasibility study for the Silver Sand Project.

New Pacific also plans to complete a preliminary economic assessment of the Carangas Silver Project by H1 2024. Carangas has a resource base of 669.6 million ounces of silver equivalent, at an average grade of 80 g/t and also contains numerous district-scale exploration targets, focused on induced polarisation anomalies, that could further expand the scale of the project with additional exploration.

New Pacific’s Silverstrike Project, is the earliest stage of its three projects. The company has completed an initial 6,000-meter drill programme that defined broad intersections of gold-silver mineralization in the first two holes; further results will be announced in due course.

With a portfolio of silver exploration and development stage projects, all poised to be advanced up the value curve, New Pacific stands out as a promising investment opportunity for those seeking exposure to the silver market. Industry experts have highlighted the discrepancy between rising metal prices and falling equities, suggesting a lack of investor attention to the silver space, culminating in an undervaluation of these stocks. As the market dynamics continue to shift, these opportunities in the silver equity space may offer substantial growth potential for astute investors looking to capitalize on the evolving precious metals landscape.

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