With Gold At All Time High, Regency Silver Poised To Benefit

Gold prices are having a nice run in recent weeks and it is only a matter of time before silver catches up. Driven by demand in China and investors' quest for places to hide out during geopolitical unrest, gold recently hit a record high. Gold prices are up nearly 19% year-over-year and close to double the price five years ago. 

It's not just gold that’s seeing outsized interest from investors. Silver recently hit a two-year high with more increases expected to come. After all, silver tends to follow gold's upward and downward trends. Silver investors are drawn to the precious metal because it offers diversification beyond stocks and bonds, it tends to increase in price during periods of high interest rates and just like gold, silver is seen as a store of value. If the U.S. dollar ever devalues, silver could be used as a form of currency. There's also a scarcity of it, which means the price has room to appreciate. 

Much of the silver mined has been used and isn't recoverable. The global deficit of silver reached an all-time high in 2022 at 237.7 million ounces as the demand for silver rose 18%. And let's not forget copper. Prices are rising there too as manufacturing recovers and demand picks up. Some estimates predict copper prices will rise by 75% this year alone. 

There is a huge divergence between the price of gold and precious metal stocks, including miners. If the share prices catch up with the surge in gold, it could present an opportunity for bargain-hunting investors. 

Regency Silver Stands To Benefit 

All of this bodes well for Regency Silver Corp. RSMXF, a Canadian mining company with operations in Sonora, Mexico. The miner's flagship project is the high-grade Dios Padre project. Sonora has a 400-year history of mining and is surrounded by other big mining operations including the Pan American Silver PAAS Dolores mine and the Agnico Eagle AEM Pinos Altos mine. 

Regency Silver recently discovered sizable grades of gold, copper and silver at Dios Padre, which it says is one of the richest discoveries in recent Mexican history. Regency's first drill hole produced 6.84 g/t gold, 0.88% copper and 21.82 g/t silver, starting at a 420-meter depth down-hole. Hole REG-23-21 resulted in 54.65 meters of 5.34 g/t gold while REG-23-14 hole extracted  35.9 meters of 5.51 g/t  gold. To underscore the magnitude of the discovery, 55 meters is the size of a 17-story building.

The company has also identified vast amounts of gold, copper and silver, based on 11,481 meters of drilling in 74 holes. The NI 43-101 resource estimate reveals an inferred resource of 11.375 million ounces of silver at a high grade, highlighting the site’s substantial potential.

More Exploration Claims

In addition to Dios Padre, Regency has over 10,000 hectares of exploration claims in the highly prospective San Dimas silver district in Durango, Mexico, which are known for their abundant artisanal workings and tunnels. In the past, samples obtained from the area have shown impressive assay values, with up to 17 grams of gold per ton and 7,753 grams of silver per ton. Recent sampling performed by Regency Silver confirmed the presence of valuable minerals, with assay values of 8.95 grams of gold per ton and 304 grams of silver per ton, as well as 0.49 grams of gold per ton and 1,084 grams of silver per ton.

The location of these claims is particularly advantageous, as they are a mere 13 kilometers away from the renowned San Dimas mine. Over the years, the San Dimas district has been a significant source of precious metals. 

Regulations May Be Shifting 

Beyond the discovery of gold, silver and copper, Regency Silver could benefit from a potential shift in regulations in Mexico. For some time, Mexican-based metal stocks have taken a hit because of a mining law passed in April 2022 that makes it more cumbersome to drill in the country. The law includes requirements for pre-consultations, impact studies and bonding that could be difficult for smaller explorers to meet. 

Regency Silver said the law could be deemed unconstitutional by the Mexican Supreme Court ahead of the country's elections in early June. If it is eliminated, it could remove the discount Mexican-based metal stocks have been experiencing, as it will be easier to drill in the country. Further, with the Mexican economy running at a deficit, the government could be more open to foreign investments.  

Regency Silver also has a deep management bench backing up its exploring endeavors. The company's co-founder, executive chairman and director Bruce Bragagnolo, has a long and successful track record in the mining industry as the founder of Timmins Gold Corp., which rose to become a 100,000+ ounce-of-gold-a-year producer and the CEO of Silvermex Resources Inc. He has also led three exits in the mining industry since 2005. 

Gold, silver and copper are shining in recent months as investors look to diversify beyond stocks and bonds. Mining stocks have been lagging behind, but that may not last. Regency Silver is making big discoveries at the same time that regulations in Mexico may return to more favorable conditions. That could present an opportunity for investors who want a piece of gold, silver or copper.

Featured photo by Jingming Pan on Unsplash

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