- Money Morning Australia

Why You Should Buy This Stock Before Silver Hits $45

Written on 14 March 2011 by Dr. Alex Cowie

Why You Should Buy This Stock Before Silver Hits $45

[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:

1 Year Silver Price
Source: silverprice.org

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.

Best Regards,

Dr Alex Cowie sig

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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Letters will be edited for clarity, punctuation, spelling and length. Abusive or off-topic comments will not be posted. We will not post all comments.

If you would prefer to email the editor, you can do so by sending an email to moneymorning@moneymorning.com.au

13 Comments For This Post

  1. Peter Fraser Says:

    Quote from this post -

    “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.”

    Well said Alex.

  2. fbcat Says:

    I think perhaps this should have been put on the right hand side of the page in the spam section rather than the article section.

  3. Pete Says:

    I started buying physical silver 2 years ago at 16 an ounce I have more than doubled my initial investment and expect to double it again, I purchased silver based on my own extensive research, based on fundamental analysis, silver was and still is under priced, silver stocks are the next bubble, smart money time is now, mania next year, just as the tech stocks, housing market etc have had their day, this market will hit bubble mania but it’s not even close yet, FYI I am a biomedical engineer not a stock sock puppet, IMHO

  4. JB Says:

    Well done Pete!
    My silver is up about 7o% since when i started to buy in 2010.
    I dont know of many people who have made such a good return in such a short time.

  5. LeRoy Young Says:

    Everyone should own silver. If we all sold our houses during the bubble and bought gold and silver you would have a 5 X rate of return

  6. truine rational brain Says:

    Hi Peter Fraser
    Good example of silver bullish, no matter if you warn people of the risks, still will gamble and think they know everything.
    Herd irrational thinking is very powerful.
    When it goes pear shape they will look for someone to blame.

  7. Peter Fraser Says:

    TRB – alert to the risks, that’s all that can be done. Investors have to accept complete responsibility for their own losses. Even very good investors lose, that is a necessary part of risk taking.

    There is a reason why Buffet won’t touch airlines.

  8. JB Says:

    So how – in your esteemed view – is investing in silver a gamble?

    Also, why would you use the term “herd” when referring to silver?
    Investing in silver is virtually unheard of in the mainstream, so i really think the term “herd” is sorely misplaced.

    “When it goes pearshaped …” – well it certainly seems as though YOU seem to think you know everything!

    How is it that it you find the concept of holding physical metals as a store of wealth such a hard concept to comprehend??
    It is one of the only assets i can think of which has a timelous inherent value AND is payment in full – without relying on anybody’s “word” or “promises”.

    But i forget – you’re the d1ckwad who believes that “cash is king” …
    You do realise of course that cash is nothing more than paper promises and could become worthless virtually overnight?

  9. JB Says:

    apologies – i meant to say :

    It is one of the only assets i can think of which has a timeless inherent value AND is payment in full – without relying on anybody’s “word” or “promises”.

  10. truine rational brain Says:

    JB every boom must bust.
    Actually I know nothing except three really dumb things.
    Have no debt.
    Have strong cashflow.
    Buy real useful assets, when cheap with no debt example House to live in, that’s your own home not a ATM machine for speculation.
    Silver is not cheap.
    JB to you silver is cheap because you are 100% sure we are going into hyperinflation you know everything about the complex economy do you?
    What happens if hyperinflation does not happen?
    Peter Schiff was wrong in 2008 please check Mish Blog for evidence.

  11. MG Says:

    Silver is definately in the very early stages of a bubble… But there is still plenty of time… It hasnt gone manic yet… That will be once QE3 is announced and the subsequent USD crashes and hyperinflation takes over in the US and silver reverts back to its 16:1 gold price ratio at a much higher level than todays price in USD… Then again, if hyperinflation takes over in the US I cant see why youd want to sell gold or silver… If the Fed keeps printing, hyperinflation would be just around the corner…

  12. hey HORSHACK Says:

    “”"”"What happens if hyperinflation does not happen?”"”"”"

    chemtrail all of us usual………………………

  13. Armil @ silver bullion buy Says:

    Silver bullion bars are one of the best ways to invest in silver. These silver bars are also known as silver ingot bars, and in general they contain 99.99 percent silver. The sizes of bullion silver bars that you can find usually ranges in sizes from 1 ounce to 5000 ounces. For most investors, the most popular sizes are 10 ounces and 100 ounces.

    The bars that were first produced during the year 1970′s are difficult to find nowadays. They are 5 oz, 25 oz and 50 oz.

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