Getting ready for a Klondike Silver rush…
Some would say silver is sizzling right now, up ~20% in the last 3 months. But actually silver has a long way to go to catch up with gold. While the real significance of the gold silver ratio has been the subject of intense debate, there is a historic relationship between the price of gold and that of silver for centuries. In general terms, as the price of gold moves up or down, silver prices often follow. This ratio is often used by investors to determine if either of the metals is undervalued when compared to the other.
The Gold Silver ratio
The average gold silver price ratio during the 20th century has been 47:1. That is gold was worth 47x what silver was worth. Over the past 20 years, the ratio has averaged about 60:1. The current ratio of 84:1 is very high historically and ~40% above the past 20-year average, or 79% above the 20th century average. If we go much further back to Roman times the gold silver ratio was set at 12:1, noting that the earth’s crust ratio has 17.5x more silver than gold, so one would expect the gold to silver ratio to be 17.5:1. All of this means, based on history and availability, silver should be due to appreciate significantly relative to gold.
We can see from the chart below the recent silver price spike from US$15/oz to the current ~US$18/oz, for a 20% rise in the past 3 months. Is this the start of the next silver bull run?
Silver prices – 20 year chart
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Klondike Silver Corp. (TSXV: KS) 100% own their royalty free 100 km2 silver, lead, and zinc land package located in the Slocan Mining Camp in Southeast British Columbia. Klondike Silver is the dominant landholder within the Slocan Mining District that has produced more than 24 million ounces of silver since the first discoveries in the late 1800s. Klondike Silver also owns their own nearby mill – The Sandon Mill.
Klondike Silver’s 100 km2 land package (grey shaded areas) within the historic Slocan Mining District
The Silvana Mile Mine (along the Main Lode) and recent drill results
Klondike Silver continues to drill their Silvana Mile Mine, along the Main Lode. This Main Lode structure is the most prolific mineralized structure in the Slocan Mining Camp. In total there are 13 historical mines that are situated along this 9 km “Main Lode” structure that has produced 886,000 kg of silver, 117 million kg of lead and 95 million kg of zinc. The Company has received several assay results from its recent drilling. All intersected mineralization along the Main lode. The best recent intersection result was:
- K-1137 – 0.39 meter intersection length assayed 10.9 g/t silver, 0.2% lead, and 0.01% zinc.
Tom Kennedy CEO, and Director of Klondike Silver stated: “All drill holes to date intersect the Main Lode. The drill hole assays demonstrate that we are intersecting stronger mineralization within the Main Lode and parallel structures. Klondike is on the right track. Our goal is to discover rich Silver Lead Zinc mineralization known to occur along the 9 km Main Lode.”
The Sandon Mill
Klondike Silver’s key advantage is the Sandon Mill. This is a nominal 100 ton (90.7 metric tonnes) facility. The Mill is a standard crushing, grinding flotation system that produces zinc and lead concentrate. The mill is now hooked into the BC hydropower grid after initially running on diesel.
Gold has been used almost entirely as a store of wealth and in jewelry, whereas silver is used for investment and industrial demand. With so many investors looking for safe-haven investments nowadays and silver trading cheaply relative to gold, investors are now starting to look at silver again.
Klondike Silver offers investors exploration upside from a large land package in a safe jurisdiction, for a low valuation. Time will tell how much silver they can find, but judging by the Slocan District’s history they have a pretty good chance to find high-grade silver.
Matthew Bohlsen is a Senior Editor for InvestorIntel.com. With a Graduate Diploma in Applied Finance and Investment, and a Graduate Diploma in Financial Planning. He ... <Read more about Matthew Bohlsen>