[Ed note: Your editor is taking a long weekend. So I’ve handed the reins over to Diggers & Drillers editor, Dr. Alex Cowie. Below the ‘Stock Doc’ explains why he thinks there’s still time to buy into the latest silver rally...]
Obviously, buying physical silver bullion is a prudent thing to do if you think silver will be more expensive a year from now.
But in my role as editor of Diggers & Drillers, I’ve found a silver stock that could leverage you an even bigger return… obviously by taking on a bigger risk.
And you might be surprised to hear it’s an Aussie company that’s mining gold… twelve and a half thousand kilometres away in the San Juan Province of Argentina.
That’s right: gold.
You’re probably wondering what a gold mining company has to do with making money from silver this year.
The secret is in the way silver is mined.
You may not know this but eighty per cent of the world’s silver comes from mines that produce the precious metal as a by-product of mining something else. In most cases silver is found in deposits such as gold, copper, zinc and other base metals.
So one good way to profit from rising silver prices is to take a punt on a mining stock with a high proportion of silver in their deposit of some other commodity.
And that’s exactly what I did with the silver stock I tipped in the December issue of Diggers and Drillers.
The best thing about this stock it that it has already begun pouring silver ingots… just sixteen months after the mine was set up!
I advised my readers to tuck this stock away in their portfolios to give them the opportunity to invest in the volatile, but potentially booming silver market. The reason I’m telling you about this now is that in my opinion it’s still not too late to buy in to this cracking little silver play.
In May 2010, this firm’s mineral reserve report revealed an estimated 19% more gold and 67% more silver than assumed in their 2008 study.
And after several months of due diligence I’m convinced this is the best silver stock on the Australian market right now.
Look, I know you might think silver has already had an incredible twelve months – as you can see on the chart below, the price has doubled:
But I believe you’ll see it break to more multiple highs through the rest of this year.
If you agree with me, you should really think about owning physical silver.
And if you want to go a step further and take a punt on a stock I believe will be swept up in the next silver up-leg… then you should seriously take a look at the stock I tipped in December, and am still tipping now.
The stock I’m talking about is marketed as a gold company but the silver in its deposit is approaching 50% of the deposit’s total value.
This is something most investors still don’t realise.
But the reason I’m tipping it now is that I’m convinced it won’t be long before the rest of the market catches on.
And when that happens, you can imagine what will happen to the stock price.
Don’t forget, this firm is already in production. It stands to benefit from growing silver and gold prices right now.
The silver price has already started a rapid recovery. In recent weeks it jumped 11% in a week from $26 to $29.
And by March 7th, it had jumped to a 31 year high of $36. But in my view that won’t be the end of it.
That’s right, I believe silver prices will continue to rise sharply in 2011 – and take my stock tip right up there with them.
However, I should point out that while I believe this stock has the potential to earn you a lot of money – investing in silver is a risky business.
As with any stock, you should only put down what you can afford to lose.
The silver price is volatile and there’s always the chance prices will drop. Now I don’t believe that will happen, but as an investor you have to keep that possibility in mind.
If you understand – and are happy – taking on that risk, I can think of no better way to capitalise on a rising silver price in 2011. In fact, chances are you could get a better return from owning this silver stock than from owning silver bullion!
But when the market cottons onto the silver phenomenon, they’re going to exhaust all the well-known, well-covered investment options pretty quickly.
When that happens, investors will look for the best value and, more importantly, best leverage from booming silver prices.
In short, they’re going to come looking for companies just like the one I’ve researched and tipped in Diggers & Drillers.
Dr Alex Cowie
Diggers and Drillers
[Kris says: You can find out the name and ticker symbol for Dr. Alex Cowie’s silver stock pick simply by clicking here and taking a 30-day risk free trial of the Diggers & Drillers service. If you want to get in on what he believes is one of the biggest commodity investment booms of the year – don't waste any time, click here to find out more...]
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Written by Dr. Alex Cowie
Dr Alex Cowie is Money Morning‘s Chief Resources Analyst. (To have his newest investment ideas delivered straight to your inbox you can subscribe to Money Morning for free here).
He is also the editor and chief analyst for Diggers and Drillers — Australia’s premier resource stock advisory service.
If you’re already a subscriber to these publications, or want to follow his financial world view more closely, then we recommend you join Alex on Google+. It’s where he shares investment insight, commentary and ideas that he can’t always fit into his regular Money Morning essays.