Investing in silver has always been a little complex. While it generally moves in cycles like the price of gold does, it is not always in sync with the yellow metal. Furthermore, silver and consequently silver stocks tend to be more volatile than gold, which can make it a higher risk investment, but it can also result in some significant rallies like we saw in September.
All year long, with global tensions rising, interest rates on the decline and the U.S. dollar softening, both gold and silver have seen sustained rallies. Year-to-date, the price of gold is up a little over 50%, whereas silver has gained roughly 70%.
And in September, while gold prices continued their steady climb, increasing by about 12%, silver once again outpaced the yellow metal, gaining roughly 17%.
There are plenty of reasons to be bullish on silver prices over the long term. While both gold and silver have strong demand as safe-haven assets and for use in jewellery, unlike gold, nearly 60% of silver’s demand now comes from industrial applications.
Furthermore, many of the products that rely on silver – such as solar panels, electric vehicles, medical equipment, and electronics – are seeing rapid growth in demand. Therefore, as the world continues to electrify and transition to cleaner technology, the demand for silver should only keep rising.
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How did the top TSX silver stocks perform?
Typically, when silver prices rally, especially at a rapid pace, Canadian silver stocks tend to outperform the metal, since their operations are leveraged to its price, and for these three top silver stocks, September was no different.
A China play
One of the top performers in September, up over 32% and nearly double the price of silver, was Silvercorp Metals (TSX: SVM), a China-focused silver miner that also produces lead and zinc.
Silvercorp is only a $1.9 billion miner, but its ultra-low operating costs give it much more reliability and allow it to stay profitable even when silver prices are weak.
Furthermore, in addition to its ongoing operations, Silvercorp is diversifying its business, particularly outside of Asia, with its recent investments in Ecuador.
Year-to-date, Silvercorp is up by more than 110%, showing the upside potential of silver stocks when the industry is booming.
A pure play
Another top gainer in September was First Majestic Silver (TSX: AG), a pure-play silver producer with a market cap of $8.6 billion.
It’s no surprise that First Majestic saw a significant rally in September. It’s one of the highest volatility silver stocks, which means it has plenty of upside potential when the precious metal is rallying.
In fact, not only did First Majestic’s price gain more than double the value of silver in September, up by roughly 36%, but for the full year, the stock has gained more than 130%, significantly higher than the 68% increase in the price of the metal.
A high-growth play
Lastly, Endeavour Silver (TSX: EDR) is a $3.3 billion company with significant growth potential in the coming years. Its newest project, the Terronera mine, which just began commercial production this month, is expected to provide significant growth for Endeavour.
Not only is the miner’s output expected to double with the addition of Terronera, but Endeavour’s overall costs to produce each ounce of silver are also expected to fall.
So, it’s no surprise that Endeavour gained roughly 27% in September and is up more than 120% year-to-date.
