While the gold price continues to consolidate its recent outsized gains from an all-time isolated high at $3500 on April 22, silver remains on sale. Fears of a recession has seen the Gold/Silver ratio (GSR) surge to triple digits, as silver is being viewed more as an industrial metal than a traditional precious metal.
Nevertheless, silver may still benefit from any future rise in the price of gold, which tends to perform well in times of uncertainty, especially during stagflation.
The only other time this closely followed barometer reached triple digits was during the Covid-19 panic in March 2020, when the GSR spiked to an unprecedented 124 and has been over 100 to 1 less than 2% of the time.
The move proved to be an incredible buying opportunity in both silver and the beaten down junior space, which saw the GDXJ rise nearly 350% in just 5-months from a spike low at $18.
Silver tends to outperform gold in the later stages of bull markets. A reversion to the 27-year mean ratio of 60 as a result of a rally in silver implies a price move to the all-time high at $50/oz as the gold price consolidates.
We are also in year number five of fewer silver ounces being mined than consumed. Above-ground inventories and recycling have picked up the slack, but how long before a major shortage?
Supply takes years to unleash as most silver production is a by-product of gold, lead, zinc, or copper mining.
As the gold price continues to remain well-bid, despite showing signs of being overcrowded, the lagging silver price is incentivizing consolidation among mining players in the silver space.
The miners of silver, of which there are a select few, have recently begun to concentrate on growth, cutting costs, and delivering better returns to increasingly demanding investors ahead of an anticipated silver breakout above multi-year resistance at $35/oz.
On the heels of Pan American Silver's (PAAS) blow-out Q1 results last week, the #4 global silver miner announced Monday it has agreed to pay $2.1 billion to acquire mid-tier silver producer MAG Silver (MAG), giving the company a major stake in Mexico's lucrative Juanicipio silver mine.
Mexico City-based miner Fresnillo (LSE: FRES) controls Juanicipio with a 56% stake and operates the mine, which is located inside of Mexico’s Fresnillo silver trend.
Looking ahead, the mine is on track to produce about 16.7M of silver in 2025. Juanicipio produced 4.5M oz. of silver in the first quarter, as well as 10,200 oz. of gold, 10,600 tons of lead and 16,900 tons of zinc.
Juanicipio's exceptional ore grades and low production costs make it one of the best primary silver assets in the Americas. The mine had all-in sustainable costs (AISC) of $10.64 per oz. AgEq, which will give Pan American’s production numbers and bottom line a serious boost.
For Pan American, this deal is a shortcut to growth while also securing long-term exploration potential during a precious metals bull market. The deal, which calls for PAAS to pay $500M in cash and 0.755 share for each share of MAG, is expected to close in H2 2025. Pan American expects to issue about 60M shares to MAG shareholders at closing.
Then on Tuesday, early-stage junior silver explorers Silver47 Exploration Corp. (AGA.V) and Summa Silver Corp. (SSVR.V) agreed to combine their respective companies by way of a court-approved plan of arrangement. The combined company is expected to continue under the name "Silver47 Exploration Corp."
These recent proposed deals are just the latest in a string of silver-related mining mergers and strategic property acquisitions, building on M&A activity and property consolidation in the tiny silver space since September.
The silver miner M&A frenzy kicked off with First Majestic Silver’s (AG) $970M purchase of fellow Canadian explorer and developer Gatos Silver, Coeur Mining’s (CDE) $1.7B acquisition of Canadian precious metals producer Silvercrest and Endeavour Silver’s (EXK) $145M deal for Peruvian miner Minera Kolpa, which closed earlier this month.
Along with increasing M&A in the silver space, cashed-up silver juniors Vizsla Silver (VZLA) and Dolly Varden Silver (DVS) have announced several strategic property acquisitions as well.
Following a March 2024 agreement to acquire the past-producing La Garra-Metates district, followed by an agreement to acquire the San Enrique prospect in April 2024, Vizsla continued to expand its land position in western Mexico along the highly prospective Sinaloa Silver Belt with the acquisition of the producing Santa Fe Mine in western Mexico, south of its Panuco silver-gold property, from a local investor on Thursday.
Santa Fe’s production concessions “will provide an opportunity to increase Vizsla’s annual production profile beyond Panuco’s recent preliminary economic assessment if the option is exercised,” BMO Capital Markets mining analyst Kevin O’Halloran said in a note.
Meanwhile, Dolly Varden Silver announced its third strategic acquisition this month. Following two property acquisitions last week, which included the acquisition of Hecla’s Kinskuch property and a deal to acquire Strikepoint’s interest in the brownfields Porter Project, DVS announced another deal yesterday.
Also on Thursday, the company reported that it has entered into a definitive agreement to acquire MTB Metals’ (MTB.V) interests in four properties totaling over 20,000 hectares in the Golden Triangle, B.C., where Dolly Varden is positioning itself to become the dominant advanced explorer in this highly prolific Canadian region.
At Junior Miner Junky (JMJ), my subscribers and I have accumulated shares in both VZLA and DVS inside a basket of 20 gold, silver, and copper related juniors, ahead of the recent major breakout in the mining sector.
Although several have risen 2x-5x over the past 12-months, others have yet to catch up to the outperformers as sector rotation from high-flying miners and royalty/streamers has been taking place since an early-April high in GDX.
After rising a blistering 55% thus far in 2025, the global miner ETF has been consolidating recent gains along with the gold price since the first week of April, while the junior sector has been catching up with the miners.
The weekly Canadian TSX-Venture chart (CDNX), where 50% of its holdings are small-cap junior resource stocks, is breaking out of an uber-bullish 3-year accumulative inverse head & shoulders basing pattern as huge miner gains are being rotated into quality under-owned juniors.
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Full disclosure: I have purchased shares of PAAS, VZLA, and DVS in the open market and cover all three stocks in the JMJ weekly newsletter.
