Canadian investment bankers Versant Partners forecast the price of silver to average $13.85/oz this year, $15.85/oz in 2010 and $11.75/oz on a long term basis.
Although correlations have contracted, silver remains more volatile than gold partially as a result of the small size of the silver market, lower inventory levels, and its dual role demand drivers, said Versant mining analyst Anthona Curic.
Therefore, silver tends to exaggerate gold's movements, trailing on the upside but outperforming and subsequently overcorrecting on the downside, she added.
Versant advises that gold prices will likely remain strong, subject to some volatility in the near term. Silver, which follows gold, is expected to likewise maintain support at a strong price level.
Curic believes that the current environment continues to provide an opportunity to invest in silver equities and we expect the price of silver to outperform the price of gold and for silver equities to outperform gold equities.
Having recently initiated coverage on silver, Versant selected companies it believes fit the following investment criteria:
• Quality projects with attractive resource and production growth potential;
• Limited geopolitical risk;
• Highly experienced senior management and technical team; and
• Lastly, given our outlook that silver prices will revert to normalized long-term prices we have selected equities that remain economically robust in a US$11.75/oz gold price environment.
Among the silver explorers and miners recommended by Versant are Bear Creek Mining (TSX-V: BCM), ECU Silver (TSX: ECU), First Majestic Silver (TSX: FR), Fortuna Silver (TSX-V: FVI), Orko Silver (TSX-V: OK), Silver Wheaton (TSX: SLW), and Silverstone Resources Corp. (TSX-V: SST).