Silver Report 2018 Everything you need to know about silver! - Swiss Resource Capital
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Silver Report 2018 Everything you need to know about silver! www.resource-capital.ch | info@resource-capital.ch
Disclaimer
Dear reader, neither explicitly nor implicitly to be under- part foreign exchange risks. The deposit porti- by expressed recommendations or repro- out other company evaluations. Neither Swiss mits, changes of foreign exchange rates, fluc-
stood as guarantee of a particular price de- on of single shares of small and micro cap duced opinions in such a publication will result Resource Capital AG nor the respective au- tuations of commodity prices, delays by pro-
Please read the complete disclaimer in velopment of the mentioned financial instru- companies and low capitalized securities like in an investment advice contract or investment thors will guarantee that the expected profits ject developments and other factors.
the following pages carefully before you ments or as a trading invitation. Every derivatives and leveraged products should brokerage contract between Swiss Resource or mentioned share prices will be achieved.
start reading this Swiss Resource Capital investment in securities mentioned in publica- only be as high that, in case of a possible total Capital AG or the respective author and the Neither Swiss Resource Capital AG nor the re- Potential shareholders and prospective in-
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and trustworthy by Swiss Resource Capital sible that investments can lead to a capital In addition, Swiss Resource Capital AG wel- mineral reserve and mineral resource estima-
We point out the following: This applies especially to all second-line- AG and the respective authors at the time of reduction or to a total loss and - depending on comes and supports the journalistic principles tes, fluctuations of the gold price, risks and
stocks in the small and micro cap sector and preparation. Swiss Resource Capital AG and the investment – to further obligations for ex- of conduct and recommendations of the Ger- dangers in connection with mineral explorati-
Swiss Resource Capital AG and the au- especially to exploration and resource compa- all Swiss Resource Capital AG employed or ample additional payment liabilities. Any in- man press council for the economic and finan- on, development and mining, risks regarding
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following Companies which are described vely suitable for speculative and risk aware greatest possible diligence to guarantee that high risk. Due to political, economical or other ples and recommendations are respected by that are doing business with the company; the
in this publication: Endeavour Silver Corp., investors. But it applies to all other securities the used and underlying data as well as facts changes significant stock price losses can ari- employees, authors and editors. insufficient insurance coverage or the failure to
First Majestic Silver Corp., Kootenay Silver as well. Every exchange participant trades at are complete and accurate and the used esti- se and in the worst case a total loss of the in- receive insurance coverage to cover these ris-
Inc., Levon Resources Ltd., Metallic Mine- his own risk. The information in the publica- mates and made forecasts are realistic. There- vested capital and - depending on the invest- ks and dangers, the relationship with emplo-
rals Corp., Sierra Minerals Inc., Silvercorp tions of Swiss Resource Capital AG do not fore, liability is categorically precluded for pe- ment – to further obligations for example Forward-looking Information yees; relationships with and the demands from
Metals Inc., Silver One Resources Inc. replace an on individual needs geared profes- cuniary losses which could potentially result additional payment liabilities. Any liability the local communities and the indigenous po-
sional investment advice. In spite of careful from use of the information for one’s own in- claim for foreign share recommendations, de- Information and statements in all publica- pulation; political risks; the availability and ri-
research, neither the respective author nor vestment decision. rivatives and fund recommendations are in tions of Swiss Resource Capital AG especially sing costs in connection with the mining cont-
Swiss Resource Capital AG has closed IR
Swiss Resource Capital AG will neither gua- principle ruled out by Swiss Resource Capital in (translated) press releases that are not histo- ributions and workforce; the speculative
consultant contracts with the following
rantee nor assume liability for actuality, correc- All information published in publications of AG and the respective authors. Between the rical facts are forward-looking information wit- nature of mineral exploration and development
companies which are mentioned in this pu-
tness, mistakes, accuracy, completeness, Swiss Resource Capital AG reflects the opinion readers as well as the subscribers and the au- hin the meaning of applicable securities laws. including risks of receiving and maintaining
blication: Endeavour Silver Corp., Sierra
adequacy or quality of the presented informa- of the respective author or third parties at the thors as well as Swiss Resource Capital AG no They contain risks and uncertainties but not the necessary licences and permits, the
Metals Inc.
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tments in securities for which information was Swiss Resource Capital AG nor the respective tion of a publication of Swiss Resource Capital concerned, the stock concerned or the res- reserves during mining; the global financial si-
Swiss Resource Capital AG receives
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companies mentioned in this publication:
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Endeavour Silver Corp., First Majestic Sil-
tive author neither explicitly nor implicitly. as the respective authors assures that only tions of Swiss Resource Capital AG are neit- ve”, “assume”, “goal”, “plan”, “objective”, “in- project parameter to include unexpected eco-
ver Corp., Kootenay Silver Inc., Levon Re-
sources which are deemed reliable and trust- her, direct or indirect an offer to buy or for the tent”, “estimate”, “can”, “should”, “may” and nomic factors and other factors, risks of in-
sources Ltd., Metallic Minerals Corp., Sier-
Any investment in securities involves risks. worthy by Swiss Resource Capital AG and the sale of the discussed security (securities), nor “will” or the negative forms of these expressi- creased capital and operating costs, environ-
ra Minerals Inc., Silvercorp Metals Inc.,
Political, economical or other changes can respective authors at the time of preparation an invitation for the purchase or sale of securi- ons or similar words suggesting future events mental, security and authority risks,
Silver One Resources Inc.. Therefore, all
lead to significant stock price losses and in the are used. Although the assessments and state- ties in general. An investment decision regar- or expectations, ideas, plans, objectives, in- expropriation, the tenure of the company to
mentioned companies are sponsors of this
worst case to a total loss of the invested capi- ments in all publications of Swiss Resource ding any security should not be based on any tentions or statements of future events or per- properties including their ownership, increase
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Tables of Contents Imprint
Commodity-TV
The whole world of commodities
in one App!
ad
Downlo App
ique
our un e!
Disclaimer 02
for fre Table of Contents | Imprint07
Preface09
Silver – considerable catch-up potential via growing
mechanization and investment demand!10
Interview with Dr. Torsten Dennin –
Gründer und CEO von Lynkeus Capital LLC16
Company profiles
Editor
Endeavour Silver Corp. 20 Swiss Resource Capital AG
Poststr. 1
First Majestic Silver Corp. 25 9100 Herisau, Schweiz
Tel : +41 71 354 8501
Kootenay Silver Inc. 30 Fax : +41 71 560 4271
info@resource-capital.ch
Levon Resources Ltd. 35 www.resource-capital.ch
Metallic Minerals Corp. 40 Editorial staff
Jochen Staiger
Sierra Minerals Inc. 45 Tim Rödel
Watch Management & Expert Interviews, Site-Visit-Videos,
Silvercorp Metals Inc. 50 Layout/Design
News Shows and receive top and up to date
Frauke Deutsch
Mining Information on your mobile device worldwide! Silver One Resources Inc. 54
All rights reserved. Reprinting material
by copying in electronic form is not
Amazing features: permitted.
• Company Facts
• Global Mining News Editorial Deadline 09/30/2017
• Push Notofications cover photo: © Eliora Henzler / flickr.com
• Commodity-TV, Rohstoff-TV and Dukascopy-TV eliorahenzler@gmail.com
page 19 © Endeavour Silver Corp.
powered by:
• Live Charts All images and graphics are, unless otherwise
stated, by the companies.
• JRB-Rohstoffblog Back 1,2,3: © Endeavour Silver Corp.
Back 4: shutterstock/Aleksandar Mijatovic
Date of Charts: 11/03/2017
6 7
Swiss Resource Capital AG | Poststrasse 1 | 9100 Herisau | Schweiz | www.resource-capital.ch www.resource-capital.ch | info@resource-capital.ch
Preface
Dear reader,
on the following pages we present to you on the silver price and are well suited as Jochen Staiger is founder and CEO of
with great pleasure our special report on an investment. In this silver report some Swiss Resource Capital AG, located in
the topic “Silver”, which follows our suc- interesting companies are presented Herisau, Switzerland. As chief-editor
cessful Lithium and Uranium Reports. which are suited for speculation on rising and founder of the first two resource
Swiss Resource Capital AG has made it silver prices. Via the general overview we IPTV-channels Commodity-TV and its
its business to topically and comprehen- also want to provide you with the neces- German counterpart Rohstoff-TV, he
sively inform commodity investors, inte- sary basic knowledge so that you can reports about companies, experts,
rested parties and the individual who make your own decisions. fund managers and various themes
wants to become an investor in various around the international mining
commodities and mining companies. With our special reports we would like business and the correspondent
On our website www.resource-capital.ch to give you the necessary insights and metals.
you will find 20 companies and informati- inform you comprehensively. In additi-
on as well as articles related to commo- on, our two Commodity IP-TV
dities. We see silver as an industrial me- channels www.Commodity-TV.net &
tal on one side and as indispensable for www.Rohstoff-TV.net are always avai-
the solar industry as well as a high-tech lable to you free of charge. For the go
metal on the other side. Silver reached a we recommend our new Commodi-
supply deficit in 2016 and will continue to ty-TV App for iPhone and Android
do so which allows for space and oppor- which also provides real-time charts,
d R o h s t o f f - T V get tunities for future price development. Sil- share prices and the latest videos.
an
Commodity-TV
ver is becoming more and more import-
n e s s it d e s e r v es! ant for antibacterial applications, allergy My team and I hope you will enjoy rea-
aware
sufferers, textiles, cosmetics, high-tech ding the special report on silver and hope
c o m p a n y t h e industry, energy transmission, solar in- that we can provide you with new infor-
your dustry and for electric vehicles as well.
The demand is rising whereby the supply
mation, impressions and ideas. Only the
one who gets broadly informed and ta-
cannot keep up due to the fact that silver kes matters relating to investments in his
is in large part a by-product of the base own hand will be amongst the winners
metal production. One should also keep and preserve his wealth during these dif-
in mind the value of silver as a store of ficult times. Silver like gold withstood Tim Roedel is chief-editorial- and
purchasing power and pecuniary substi- over millennia and will continue to with- -communications-manager at SRC
tute as well as a hedge against extremely stand in the future. AG. He has been active in the
bad times. If the global financial systems commodity sector since 2007 and
can’t withstand the money printing or- held several editor- and chief-editor-
gies of the central banks and financial Yours Jochen Staiger positions, e.g. at the publications
collapse occurs, then the owner of silver Rohstoff-Spiegel, Rohstoff-Woche,
ounces has a clear advantage to provide Rohstoffraketen, Wahrer Wohlstand
himself and his family with the most and First Mover. He owns an
necessary food. We don’t want to con- enormous commodity expertise and a
jecture the worst case but physical silver wide-spread network within the whole
and also gold as well as my wine cellar resource sector.
ease off my fear of the potential coming
distortions. It is more important to have a
positive view of the future and that nice
returns can be achieved with silver com-
panies. Once silver turns north the silver
producers have a tremendous leverage
9
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Silver – considerable catch-up potential via growing
mechanization and investment demand!
What is better than gold? – Correct: Sil- the reason for the historic price ratio bet- have already made gold a kind of substi- tivity of all elements and the highest
ver! At least if we look at some funda- ween gold and silver of 16:1. tute currency. That this is so shows thermal conductivity of all metals. These
mental data such as the ratio of gold gold’s rise by 700 % during the first characteristics make silver an in-
production to silver production together decade of the 21st century and the big dispensable metal for industrial applica-
with the ratio of the gold price to silver Gold = Silver times 16 – but not gold outflow from Europe to China that tions.
price or the grade of industrial use of for the price increased during recent years. If gold
both metals. Then, one quickly finds out would be made to a currency the same But silver is much more: Unlike gold, it is
that compared to gold, silver has a tre- A summary of these findings provides would be happening to silver and the used in numerous applications that are
mendous catch-up potential. the insight that something is not right. amount of gold and silver necessary to steadily increasing with technical pro-
The ratio of existing and annually pro- build such a gold and silver backed cur- gress. Besides its use as industrial me-
duced ounces of silver to gold is appro- rency system would be several times tal, silver is also a precious metal. Like
In regard to gold silver has a ximately 16:1. Concurrently the price dif- higher than the dwindling industrial de- gold, silver is in principle money and is
multiple catch-up potential ference of an ounce of gold to an ounce mand caused by possible crises. used for value preservation. It can also
of silver is 75:1. If this doesn’t sound be viewed as a hedge against a progres-
The reason that silver has additional right and should shift in favor of silver to- sing inflation.
catch-up potential with respect to gold is wards 16:1 one is really amazed about Silver has to detach itself from
on the one hand the historic gold/silver the aforementioned ratio of investments gold in the long-term!
ratio and on the other the ratio of pro- in physical silver to investments in physi- Supply Situation
duced ounces of gold/produced ounces cal gold which according to leading nati- As an interim conclusion it can be said
of silver. onal Mints is between 1 and 2.5. How is that the old price ratio of 16 ounces of
this possible that (almost) as much capi- silver to one ounce of gold could be a Mexico, Peru and China are the
The ratio between the gold price and the tal flows in to physical silver than in phy- suitable basis. Based on current facts leading producers
silver price was – as long as both metals sical gold? The ratio of physical silver to silver must return to its old strength and
were a currency in the USA and Europe physical gold is around 16:1 and the thereby also to the old price ratio of 1:16! In 2015 the global silver production rea-
(gold and silver backed currencies were price of an ounce of gold to an ounce of It can be noted that for the last 3, 5 and ched its previous peak with a total of 891
amongst others the US$, the Goldmark silver is 75:1. 10 years the price development of silver million mined ounces. In 2016, approxi-
or the Pound Sterling (Silver)) – always at and gold was parallel to 80%. This mately 886 million ounces (close to
16:1. At the moment the price difference doesn’t say anything about the volatility: 27,580 tons) were extracted from the
between gold and silver is approximately The paper silver determines The beta of silver to gold was between earth’s crust, minus 0.6% combined with
at 75:1! the price 1.2 and 1.4 during this time. This means 2015. With an annual production of 180
that at an increase in price of gold by million ounces (approximately 20% of
The number of ounces of silver to the This is prevented by the “paper exchan- 10% an increase in price of silver by 12- the total global production) Mexico ranks
number of ounces of gold in the earth’s ge” Comex. On Comex, contracts for all 14% is very likely. As can be seen, silver first among the silver producing nations
crust is approximately 16:1 (other sour- sorts of metals and other commodities is a riskier but also potentially a more followed by Peru and China. These three
ces mention 20:1, which is not such a are traded since ever. In theory there is promising investment. countries are accountable for about half
big difference). The same ratio is found the obligation for a physical delivery of the global silver production.
for the annual silver and gold producti- which is never called for. Thereby it is
Source: First Majestic Silver on, 16:1. That was always so and this is possible to trade more than a billion
ounces silver daily (2016 the global silver What is silver?
production amounted to “only” 886 milli-
on ounces silver per year), even if this Top characteristics make silver
incredible amount of silver is not owned an indispensable industrial
by anyone. With actions like this the sil- metal! In 2015 the global silver production reached
ver price can be artificially depressed. its previous peak.
Let us come to the element silver itself Source: The Silver Institute, GFMS,
and the actual market activities. Silver is Thomson Reuters
Gold and silver have already a chemical element with the element
become a substitute currency symbol Ag and the atomic number 47. It
ranks among the so-called transition
On the other side the by debt crisis and metals. Silver is a soft, ductile heavy
geopolitical distortion shaken markets metal with the highest electrical conduc-
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fall of the zinc/lead mines. From today’s Demand situation
view a declining silver production as well
as a decline of the overall silver supply is
expected as of 2019. The main reason is Silver in a dual role
the expected closure of several medium
to large size zinc/lead mines and as well Whereas gold is used as an investment
as the tremendous investment backlog to preserve value in form of jewelry (only
which has built up due to the weak silver 9% of the annual demand comes from
Only 30% of the annual production is mined price during recent years. Respective sil- industry), silver has a dual role. Approxi-
in pure silver mines ver projects were shelved and inadequa- mately 60% of the total silver demand
Source: The Silver Institute, DB, GS, Tiberius tely developed. As a consequence, these comes from the industry. The rest is in
projects will be brought to production demand by investors in form of bullion
with a big delay. and coins as well as the jewelry industry.
Silver is above all one thing: a Silver companies prioritize(d) Main areas of application: World Silver Supply
by-product! cost savings Electronic, Alloys, Photogra- high level to 1.03 billion ounces in 2016. Source: The Silver Institute, GFMS, Thomson
phy, Photovoltaic The main reason for this was a decrea- Reuters
Only 30% of the annual production is The development of the mine pipeline sing demand from the investment sector.
mined in pure silver mines respectively in came to a halt in the past years with The maximum values of the important The demand for coins and bullion decrea-
mines where silver is the primary resour- weak silver prices because the silver properties (highest electrical conductivity sed by 29% after it has increased by
ce. The predominant part (70%) origina- companies primarily had to deal with of all metals, high thermal conductivity 24% one year before.
tes from mines where silver is only a controlling their cost structure. The high and distinct optical reflecting capacity)
by-product thus mainly from zinc-lead silver prices between 2010 and 2012 led make silver indispensable in the areas of
mines and also from copper mines as to the commissioning of mines with all-in electrics, electronics and optic as well as Silver ETFs record cash inflow
well as gold mines. costs of over US$ 20 per ounce. These photography. About half of the total in- again
mines quickly became uneconomical af- dustrial demand of around 600 million
ter 2012. Instead of closing theses mines ounces comes from these areas. Other The worldwide ETF inventories climbed,
Weak base metal prices lead to the companies tried and are still trying to applications are in silver alloys (with cop- since the beginning of 2016 intermittent-
stagnant silver production and reduce costs. So, there is not much time per, zinc, tin, nickel, indium) which are ly by 13% to an all-time high of around
to a falling supply overall and a lot less money for extensive explo- used in the electro-technics and solde- 676 million ounces. The main reason is
ration and development programs. In the ring technique as solder alloys (so-called certainly the expansive politics of the World Silver Demand
This great dependency on base metals meantime, most of the companies have brazing), in contact materials (primarily in FED and other Central Banks that not Source: The Silver Institute, GFMS, Thomson
like lead, zinc and copper is a factor that reduced their costs to an acceptable and relays) and conductive materials (as ca- only pump unsecured billion-dollar as- Reuters
the weak base metal prices and related largely profitable level. pacitor coatings). Since 2011 the photo-
mine closures or at least the decrease of voltaic sector is a significant part of the
the respective base metal production ad- silver demand. Especially China wants to
versely affects the production of the Recycling and central bank expand its photovoltaic capacity to
by-product silver. That the price declined sales may not increase the around 110 gigawatts by 2020. This
in the past years – above all of copper supply would fix a lot more silver for at least 20
and lead too – is a reason that the silver years!
production increased only marginally. A further decline in supply is still expec-
From 2014 to 2015 the silver production ted for the silver recycling sector. Sales
increased by 2% only! The decline in sil- from the central banks are no issue since Physical demand reaches
ver recycling by 13% to 22.2 million oun- 2011 and may not contribute to a signifi- record high and is driven
ces was responsible for the slight decline cant rise of the silver supply in coming primarily by the investment
in total supply between 2014 and 2015. years. sector
A continuation of the stagnant silver pro-
duction during the coming years is pre- The physical silver demand reached a re-
dicted because the output of the new cord high of around 1.17 billion ounces
mines can barely compensate the short- (36,400 tons) in 2015 and fell from a very
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ver (primarily in form of the one-ounce
Philharmonic Coin) could catch up formi-
dably. While the big gold ETFs had a high
outflow the respective silver ETFs could
in part increase their assets. It seems
that silver investors had more confidence
Worldwide industrial demand in their investment than gold investors in
Source: The Silver Institute, GFMS, recent years although in the meantime
Thomson Reuters the silver price dropped more from its
highest level than the gold price.
Demand continues to increase
sets in the markets but are also respon- All in all, the global silver demand should
sible for the sliding of interest rates into continue to increase in the coming years. Source: The Silver Institute, GFMS, Thomson
negative territory. While it costs interests Besides the increasing ETF inflows and Reuters
in certain investment categories to invest additional physical demand, an in part
money, no penalty interest has to be paid drastic demand increase is expected
for physical silver. That special characte- from the jewelry industry in Asia as well stopped due to the low silver prices. Lea- Price control on the supply side
ristic of silver (and gold) as a hard-finan- from several industry sectors such as ding analysts expect a record supply de- and a rising dependency on
cial asset should continue so that the photovoltaic, touch screens and dis- ficit of more than 180 million ounces of new technologies will be the
physical demand from the investment plays. In addition, India is heading for silver in 2017! key to the next silver boom!
sector should continue to remain on a another record year of silver imports.
stable high level. The primary objective for all who want to
Financial analysts forecast a make money with silver - regardless if
silver price of up to US$ 30 per they are producers or investors – has to
Conclusion ounce in 2018 be the breakup of the current market po-
wer of the silver-paper-trade. If the silver
Worldwide physical demand The silver market is heading The median forecast of 30 financial producers and the leading commodity
for coins and bullion towards an ever-increasing analysts predicts a silver price of al- experts have their say, the physical silver
Source: The Silver Institute, GFMS, supply deficit! most US$20 between 2018 and 2020 market must and will dominate the pa-
Thomson Reuters which is not far from the current silver per-silver-market in the future. An increa-
Since several years a proper supply defi- price. Alone for 2018 the estimates sing demand from the investor sector as
cit is prevailing in the silver sector which range from bearish US$15 to bullish well as from emerging nations like China,
has reached its previous peak of more US$30. Should the expansionary mo- India and Brazil could contribute to that.
than 100 million ounces in 2015. Since netary policy of the global central A certain price control on the supply side
2000, there were only four years when banks continue and more money wi- would be more important. The formation
the global silver producers generated a thout significant counter value is pum- of a silver cartel could be an important
surplus. During the past years the de- ped into the dilapidated global financi- step toward a permanent silver price sta-
Most recently it is noticeable on the in- mand was 350 million ounces higher al system, the precious metals could bilization and following that toward a rea-
vestment side that the same amounts of than the production. The main reason for also be among the winners in the co- sonable price ratio of 1:16 to gold.
money are spent to buy silver than for the the drastic increase of the silver supply ming years. That the silver price has a Should this be successful we could be at
acquisition of gold. A simple example: deficit is the conservative development significant catch-up potential in com- the beginning of a boom decade for sil-
The US Mint sold for every dollar spent activity of many precious metals compa- parison with gold, which is the result of ver. Fact is: the more humanity becomes
on gold, a dollar of silver. The Australian nies in the past years. During the past the historic price development and the dependent on the new technologies the
Mint sold for every dollar spent on gold three years no bonanza discovery was physical occurrence in the earth’s more we become dependent on silver.
0.75 dollar of silver. At the Austrian Mint made and the exploration activities of crust, was plausibly explained. And that will benefit the price of silver.
the ratio was around 2.5:1, at which sil- most of the companies were completely
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Interview with Dr. Torsten Dennin –
Founder and CEO of Lynkeus Capital LLC
Dr. Dennin you are the founder and CEO The Lynkeus Commodity Strategy is in- After top performer status in 2016, silver reached a value of more than US$ 11 billi- Lynkeus Capital LLC
of Lynkeus Capital LLC, an investment vested in the commodity markets since and silver mines had major losses, espe- on in July 2017. On the other hand, silver
boutique, specialized in the topic com- March 2016 but exists on paper since cially in September 2017. What now? was trapped in its “dual role” as a preci- Founded at the beginning of 2016
modity markets. As the commodity June 2013. During that period of more ous metal necessary for the industry. Lynkeus Capital LLC has specialized
markets – measured against Bloomberg than 4 years an average growth of more Gold at almost US$ 1,300 and silver be- Around 60% of the silver demand is from in investments reaching across asset
Commodity Index – have lost 3.3% you than 32% per year was achieved (CAGR). low US$ 17 per ounce doesn’t sound inte- the industry followed by coins, bullion and classes in the topic area of
were able to achieve an increase of Such a result can’t be achieved with a resting for the investors and is no feast for jewelry. And during the past quarters the international commodity markets
value of 48.2% with the Lynkeus Com- “savings mentality” – that goes without the eyes of the managers of gold and sil- economic development was noticeably focusing on energy and metals. The
modity Strategy in 2017. What are you saying. The specifications for the risk ma- ver mines. During the past 12 months, the weaker as the long-term trend. focus is on the identification of
doing differently from the competition? nagement provide for a strict control of price of silver decreased by 13.3% and extraordinary investment
Which strategy or which investment the risk in proportion to the expected re- the shares of gold and silver mines – mea- opportunities in commodities and
Dr. Torsten Dennin is the founder and goal are you pursuing specifically? turn. This means that the known risk mea- sured against the Philadelphia Gold & Sil- In terms of price silver is roughly in ac- commodity producers (shares and
CEO of Lynkeus Capital LLC, an sures like Sharpe Ratio, Sortino Ratio and ver Index – were traded 11% lower than a cord with the development of the price bonds) as well as achieving of a
investment boutique specialized on The Lynkeus Commodity Strategy is the Calmar Ratio have a value >1. year ago. of its “big brother” gold. It seems that convincing, positive capital growth in
the topic area commodities, seated in product of my professional experience The bottom line of the past months is: it is Although the price of silver took several silver is always a bit more volatile than any market phase (“Absolute
Switzerland. Since 2003 Dr. Dennin is accumulated in the commodity markets possible to make money in the commodi- runs up to the US$ 20 mark, the metal gold, which in a figurative sense can be Return”). Lynkeus is a member of the
analyzing the international commodity during the past 15 years. Two features of ty markets! gave back all its gains. The positive news compared with a master walking his association for quality assurance of
markets with a focus on energy and the investment strategy stand out especi- is that the current price of gold and silver dog. While the master (gold) stays on the financial services (Verein zur
the global equity sectors oil & gas and ally: first the Absolute Return Approach is an invitation for additional purchases. sidewalk the dog (silver) pulls in all direc- Qualitätssicherung von
metals & mining. which allows long as well as short posi- What were the big value drivers in the The fundamental picture for precious me- tions. Why is silver far more volatile than Finanzdienstleistungen, VQF), a
Until the middle of 2017 Dr. Dennin tions and second the Cross Asset Class commodity market during the past 12 tals remains unchanged and is still attrac- gold? self-regulatory organization and
managed the division Strategy and Approach. This allows displaying an in- months? tive. The reason is the general condition of industry organization for portfolio
Research of Tiberius Asset Manage- vestment thesis in the commodity sector the global economic and financial system, The physical silver market is considerably managers domiciled in Zug,
ment AG. Previously Dr. Dennin about the commodity as well as the Quite clear: 2017 is a year for commodi- the historic low interest rates and the smaller and thereby more susceptible to Switzerland, recognized by FINMA
worked as Co-Head Natural stocks or bonds of commodity producers. ties and mines! After a sluggish recovery comparatively high valuation of the stock fluctuations. In a figurative sense, we (Swiss Financial Market Supervisory
Resources for VCH Vermögensver- Depending on what pays off more for the from the lows in January 2016 (+16%) the and bond markets. An upward movement compare the DAX with the SDAX. It can Authority).
waltung (asset management) investors. commodity markets are stagnant at the of the inflation rate could inspire the gold be noted that for the last 3, 5 and 10 years
(2010-2013) and from 2003 to 2010 For example: in a positive market environ- moment. During 2017 the prices of indus- and silver stocks. the price development of silver and gold
as Portfolio Manager for Deutsche ment for gold and silver the shares of gold trial metals, like aluminum, copper and Looking back on the past 5 years gold was parallel to 80%. This doesn’t mention
Bank AG in Frankfurt am Main. During and silver mines often show a clearly more zinc increased (+16.6% on average) and and silver mines as well as the commodity anything about the volatility: The beta of
this time, he was responsible for the positive investment result because in- of the precious metals increased by 9.2% sector in general have just begun to catch silver to gold was between 1.2 and 1.4
investment decisions of several creasing prices are often reflected as a in average. Despite around US$50 for a up in comparison with the stock market. during this time. This means that at an in-
commodity funds. “multiplier” in the earnings and value of barrel of WTI crude oil the energy sector is crease in price of gold by 10% an increa-
Dr. Dennin studied economics at the the company. So, for example, in the port- in the red (-10.7%). And agricultural goods se in price of silver by 12-14% is very li-
University in Cologne, Germany and at folio many stocks and debentures of gold (-9.3%), unpopular with investors, did not There is a supply deficit for silver since kely. As can be seen, silver is a riskier but
Pennsylvania State University, USA. and silver mines are found in addition to bring joy. several years. Meaning, less silver is pro- also a potentially more promising invest-
He wrote his doctorate on the topic direct investments in gold and silver. For That is especially annoying for the inves- duced per year than demanded. How do ment.
Commodity Markets at the the selection the strategy relies on a strin- tor because of the loose Central Bank po- you explain the negative price develop-
Schumpeter School of Business and gent quantitative investment process and licy and a still low interest level, even an ment until the beginning of 2017?
Economics. He is a full member of the the qualitative fundamental market analy- anemic economic growth and the absen- What is important for you in your assess-
Berlin Institute of Finance, sis for the suitable commodities. ce of the collapse of the Euro Zone is suf- On the one hand, it can be explained by ment of a silver or precious metal com-
Investigation and Digitalization. Dr. ficient to drive the stock markets to ever the existing inventory and a weak invest- pany?
Dennin is the author of the books increasing record heights. The Dow Jones ment demand. A slightly declining mine
“Besicherte Rohstoffterminkontrakte Granted: an impressive investment re- Industrial Average at 22,000 points and production also faced a declining invest- The location, quality, and the potential of
im Asset Management”, “Lukrative sult against the background of a weak the S&P 500 index at 2,500 points have ment demand since 2013/2014. In Febru- an asset as well as the competence and
Rohstoffmärkte – Ein Blick hinter die development of the commodity market. spoiled the investors. But the warnings ary 2016, the known silver ETF inventory reliability of the management are the deci-
Kulissen” and “Afrika – Kontinent der But, what are the risks? are becoming louder and the air thinner. declined to below 600 million ounces for sive factors for our qualitative fundamen-
Chancen” as well as numerous the first time since 2012. Since then the tal analysis. That applies for precious me-
publications in journals. ETF inventory was constantly rebuild and tals as well as for the mining and energy
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