Silver has for years lagged behind the U.S. dollar, gold, oil, and many other commodities as an investment vehicle. However, the price of silver has rapidly climbed from under $5.00 per ounce in 2002 to its recent price of $16.30 per ounce. In turn, many companies are aiming to capitalize on the growing market for silver. One such company is Minco Silver Corp., a Canadian Mining company that trades on the Toronto Senior Board under the ticker symbol MSV.TO. Minco Silver is positioning itself to become the number one silver producer in China.
It is no coincidence that the price of silver continued to climb as the U.S. Federal Reserve went on its recent rate cutting frenzy, though we may have witnessed the last rate cut by the Fed for quite some time. As the U.S. dollar plunged as a result of those slashed interest rates, many investors rushed into commodities such as silver and gold, driving their prices up to record levels. We believe, though, that the U.S. dollar will recover and momentum in the price of silver will stall. We project the price of silver will hover in the range of $10.00 to $16.00 for the next couple of years and that, beginning in 2010, Minco Silver will reap the benefi ts of this recent rise in the silver market as MSV is projected to be profi table at any price above $2.40 per ounce.
We are initiating coverage with a “Buy” rating and a 12-month price target of Can$4.50 Assuming a price to earnings ratio of 10x our 24-month price target is Can$6.50 per share.
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