MAG Silver Makes Sense In Ongoing Precious Metals Bull Market

Photo: MAG Silver Makes Sense In Ongoing Precious Metals Bull Market

After four years of testing its lows, it would appear that the bull market in silver and gold that began around the year 2000 is intact. The calls for the demise of silver's bull run and a retrenchment to single digits in its US Dollar price never materialized, and as Rick Rule has pointed out many times, precious metals investors would be wise to look at prices over a multi year time frame.

With the bottom for silver likely in, it is probably a good idea for investors who want exposure to silver to have a look at quality mining operations that offer leverage to the ongoing bull market. One company that fits the bill is MAG Silver Corp, and in addition to giving investors ready access to existing silver resources, MAG is in a position to deliver explosive upside potential.

One of the big reasons why MAG is so interesting has to do with its management. Dr. Peter Megaw is responsible for the discovery of many high grade silver deposits, the Juanicipio deposit in MAG's portfolio being a notable example. The whole region that MAG operates in has a great potential for finding more deposits, and Dr. Megaw is excited to develop the MAG's properties.

Unique Geology

It isn't hard to see that Dr. Megaw is happy to be working in one of the world's richest known silver regions. From the time the Spanish colonized Mexico, the Alamos region where MAG holds property has produced more than 200 million ounces of silver, but Dr. Megaw thinks there might be a lot more there to discover.

Unlike gold, silver is consumed by a number of industrial applications, so making sure there is a steady supply of it is vital for the future. While the advent of digital photography removed one of the largest demand drivers from the silver market, the solar industry has taken up a lot of that slack. Now that China is moving full force into sustainable electrical generation, the need for new sliver deposits is probably going to rise.

Unlike many mining operations that produce silver as a by-product, MAG's operations center around silver production, so if and when prices rise, their operations can ramp up to fill demand.

Established Ties

While MAG isn't producing any metal yet, they occupy a rare position among metals explorers. They have a relatively small share float, lots of cash, and zero debt. They also formed a JV with Frenillo, who is going to develop and operate the Juanicipio project. To say that Fresnillo is an experienced mine developer would be a massive understatement, and in fact, they are already operating plant and infrastructure in the area.

With a stable silver price MAG looks like it is in a great position going forward. In the event that silver rises to the levels that some people have predicted, MAG's value could rise significantly. With a large portfolio of silver rich properties under its control, MAG is well positioned to offer investors exposure to silver, and unlike many explorers, they don't rely on dilution after dilution to continue to operate.

If you are interested in learning more about MAG, or the precious metals market in general, the upcoming Silver and Gold Summit will be a great time. Dr. Peter Megaw will be presenting on behalf of MAG, and legends like Doug Casey, Rick Rule and Marin Katusa will be giving their views on investing as well. The two day event starts on November 20th, and you still have time to book a room at the Hilton Union Square in downtown San Francisco!