The history of silver mining in Mexico stretches back almost 500 years, when the great silver-gold vein system of the Veta Madre at Guanajuato was discovered in 1550.
The history of silver mining in Mexico stretches back almost 500 years, when the great silver-gold vein system of the Veta Madre at Guanajuato was discovered in 1550. That area is now known as the Silver Belt, and it stretches from Guanajuato and Zacatecas in the Mesa Central, Chihuahua in the Mesa del Norte and San Luis Potosi to the East. Today, this is the home to silver mining companies from around the world.
"Geologically, there is no better place on earth for silver," said geologist Peter Megaw to The Northern Miner.
Megaw, president of International Development and Exploration and confounder of MAG Silver (MAG-T, MVG-X), has worked in Mexico for nearly 40 years. Last year Mexico produced over 162 million ounces of silver, making it the global leader in silver production.
Though Mexico has long since been a major player on the silver mining scene, the country was not receptive to foreign investors for a large part of the twentieth century. From 1961 to 1991, the Mexican mining law stipulated that mineral assets must be at least 50 percent owned by Mexican companies. In the 1990s, when the law changed to allow 100 percent foreign investment, international companies quickly flocked to reinvest in the country's silver mines, resulting in many new silver sources being uncovered.
Companies to watch in 2013
Fresnillo PLC (FRES:LN) is a United Kingdom-based company which made its debut on the London Stock Exchange in 2008. The group maintains the largest land area of concessions for precious metals exploration and mining in Mexico. In 2012, Fresnillo produced 36.9 million ounces of silver, and the first quarter of 2013 has produced 10.1 million ounces already, putting it up 2.6 percent over the first quarter of 2012.
First Majestic Silver Corporation (TSX:FR, NYSE:AG) currently owns and operates mines in Mexico, with its headquarters in British Columbia, Canada. The corporation anticipates the production of over 11 million ounces of silver in 2013 through their five mines, La Parrilla Silver Mine, the San Martin Silver Mine, the La Encantada Silver Mine, the Del Toro Silver Mine and the La Guitarra Silver Mine.
Endeavour Silver Corporation (NYSE: EXK, TSX: EDR) has seen eight consecutive years of growth since its startup in 2004. The company is mid-tier, focusing on expansion programs at its three operating mines in Mexico, the Guanaceví Mines operation in Durango State and the Bolañitos (formerly called Guanajuato Mines) and El Cubo mines operations in Guanajuato State. A total silver production of more than 5 million ounces is expected in 2013 after a 2012 yield of 4.5 million ounces.
What to keep in mind when investing in silver
Silver, in general, is considered a safe investment. Its worth is not generally going to be greatly affected by political turmoil or economic crisis. However, it should be noted that silver serves as a currency as well as an industrial metal. This gives it behavior similar to that of a currency and may act as an inflation hedge during falling dollar prices.