In an interview with The Gold
Report, the Canadian gold and silver analyst Mike Kachanovsky,
a.k.a. "Mexico Mike", stated that the precious metals bull market
still has plenty of life left in it yet. Kachanovsky
expects the world's current economic problems to persist, and that central
banks will continue to monetise debt – which
will eventually have inflationary consequences. This will benefit mining
stocks and, according to Kachanovsky, especially
benefit Mexican silver producers.
Despite the drug war in Mexico, Kachanovsky feels confident about the quality
and the good prospects of the country's silver producers. He visits Mexico regularly, and
notes that production is only slightly affected by the war between the
Mexican government and the country's main drug cartels. There are many good
reasons to invest in Mexican silver producers, as most companies are highly
profitable and have strong balance sheets. In his view, Mexican mines
generally have greater potential for growth in comparison with mines in many
other producing countries.
But besides considering the
excellent fundamental data, investors also have to keep an eye on the
political situation in Mexico, with increasing numbers believing the country
is spinning out of control. The drug war between the government and the
country's main cartels is escalating and claiming more and more casualties.
While mine production has not been hindered thus far by the conflict, senior
mining employees are in danger of being kidnapped in exchange for ransom.
Thus, the managerial staff travel with armed
bodyguards. But putting to one side the cartel wars,
and Mexico offers one of the best opportunities for investing in junior gold
and silver producers.
Kachanovsky is particularly optimistic about the silver price. He is convinced that the silver
price will break the $50 mark to the upside upon conclusion of its current
correction phase, and thinks that the economic problems triggered by the
financial crisis will continue to hold a strong grip on the world for years
to come. Kachanovsky advises that buying gold and silver is a must for anyone interested in
preservation of capital in the years ahead.
Investors who prefer taking
risks might diversify their capital into junior explorers or – more
conservatively – established gold and silver producers. Inflationary
monetary policies from central banks will support gold and silver prices.
Rising prices at the metals markets will in turn benefit mining stocks.