When exhaustively researching any sector of stocks, a lot can be learned about a given industry, its constituents, and its fundamentals. And indeed at Zeal we've learned a lot about the silver-stock sector in our latest round of research. This research is invaluable in both identifying industry trends and selecting the companies with the highest probability for success.

One thing in particular that I enjoy gleaning from this type of research is a better understanding of where in the world the next generation of mines, in this case silver mines, is going to come from. Where are the silver explorers, from small juniors to large producers, looking for this shiny-white metal?

Based on what we already know about this industry's fundamentals, we can gather a general idea of the concentration of efforts. Simply put, there are places in the world where favorable geology and geopolitical climates line up as the most attractive. And indeed this is where the mining companies tend to congregate and thus produce the highest volumes.

The most popular countries by volume are Peru and Mexico. And this two-headed monster dominates this industry, responsible for nearly one-third of global mined silver production. And thanks to the recent commissioning of several large mines, Peru has had the upper hand for nine years running now. In 2010 it again edged out Mexico, with production of 117m ounces (per the Peru Ministry of Energy and Mines).

Mining is the lifeblood of Peru's economy, and silver is one of its stalwart metals. It is estimated that Peru holds 30% of the world's silver reserves, and you'll find some of the biggest and best primary silver mines tapping these reserves from high in the Peruvian Andes. So with these massive reserves and Peru's generally friendly mining laws, this should be the logical place for mining companies to focus their efforts, right? Well as we found in our research, this isn't necessarily the case.

The impetus for this research is a quest to find the best of the best silver stocks. And in doing so it is important to have a base to work from in order to perform comparative analysis. The only way to do this is to scrub the entire universe of silver stocks, which in this case included around 100 stocks trading in the US and Canada.

In order for this scrub to be effective, it is important to gather as much information as possible on each of these companies. And included in this information is the location of each of their projects. With this geographical information on hand, we can gain valuable insights into where in the world these companies are not only mining, but looking for silver. And interestingly Peru was not even close to the top of the list as measured by total projects!

For a country that produces 17% of the global mined silver supply, with still a lot of the metal left in the ground, it was quite surprising to see only about 10% of silver companies owning projects within Peru's borders. This is indeed quite odd considering Peru's 34% production growth from 2002 (when it took over the silver title from Mexico) to 2009 (production was down in 2010).

Is this small presence reflective of perceived unfavorable conditions going forward, higher barriers to entry, or perhaps a preference for other more prospective regions of the world? It's hard to pin this anomaly on one specific scenario, but it's not hard to see that Peru is not a top exploration destination for the majority of the world's silver companies.

All we have to do is look to the other head of the monster to find out where in the world the miners are spinning their drills. Incredibly nearly 60% of all silver companies own a project in Mexico. This country is currently by far the hottest destination for silver exploration and development, and for a variety of reasons deservedly so.

Mexico has long been a silver powerhouse. Its natives had mined this metal for a very long time, and when the Spaniards set ground in the 16th century Mexico quickly became the world's silver Mecca. It is believed that about one-third of all silver mined in history has come from this country's rich mineral belts. And with its current volume at about 15% of global mined supply, the silver just keeps on coming.

Now even though Mexico is host to a single silver mine that is responsible for about one-third of this country's production (Zacatecas' massive Fresnillo mine), its past and present silver resources are not confined to a small region of silver-centric ore. The Faja de Plata (Spanish for "silver belt") in the prolific Sierra Madre Occidental is not the only place silver miners have found success. Mexico is littered with historic silver districts and is wide open for modern exploration. Explorers very much fancy its historical compass and favorable geology.

Speaking of geology, it is important to understand silver's mineralized nature when it comes to mining the ore in which it resides. Interestingly it is not only rare to find a pure silver deposit, it is quite uncommon to find a deposit where silver is the metal of primary economic value.

Because the mineralization that contains silver often has strong concentrations of copper, zinc/lead, or gold, this white metal is frequently just a byproduct. In fact, two-thirds of the world's mined silver is a byproduct of mines producing higher-revenue-generating metals.

One of the main reasons we don't see much silver-centric exploration activity in top-ten producer countries China, Chile, Poland, and Kazakhstan is silver's byproduct nature. The lion's share of these countries' silver production is via byproducts of large copper mines.

Mexico does have byproduct silver from some of its gold mines, but the majority is produced from primary silver mines. This country is blessed with several geological structures that contain numerous high-grade silver systems. And some of the world's purest silver mines can be found within Mexico's robust silver belts.

This geology supports Mexico's modern-day silver rush, and this country's fairly-accurate historical compass is guiding the way. The old mining-industry adage of "the best place to find [silver] is where it is already known to exist" is all too true in Mexico's case. And today's geologists know full well that many of Mexico's historic mining operations may have only scratched the surface of their silver deposits.

Interestingly the Mexican silver miners of yore were limited in their ability to fully exploit their discoveries. But back then it wasn't as big of a deal to get the last ounce since silver was so abundant in its surface showings. If things got too difficult, the miners simply moved on to the next vein outcropping that popped out to them.

These mostly smaller-scale operations followed the veins until they either disappeared or got to a depth that was unmanageable. And in many cases this wasn't very deep depending on where they were relative to the water table. The historic miners' limited technology really left a lot of silver behind since they couldn't operate beneath the water table, and in many cases inaccurately tracked the pinches and swells of the veins they were mining.

Today's mining companies are aggressively exploring these historic mine workings, and finding extensions and parallel systems that uncover a lot more silver than what was mined in past operations. With a little bit of fieldwork that includes mapping, surveying, sampling, etc., along with drilling that steps out from the surface and even cuts underground from subterranean platforms, fresh new discoveries have been abundant.

For the reasons mentioned above Mexico is the destination of choice for the majority of silver companies. And with all the activity spawned by silver's powerful secular bull, this country's development pipeline has seen tremendous growth. So much so that I would expect Mexico to reclaim top-dog status from Peru in the coming years.

Also attracting more attention than Peru is the United States, with nearly 30% of silver companies owning a project in this former silver dynamo. As recently as 1998 the US was the world's second-largest silver producer, behind only Mexico. But for a variety of reasons including the perceived depletion of some mammoth mines, higher operating costs, and a tighter regulatory environment, the US has seen a sharp decline in silver production.

Since 1998 US production is down 38%, while sliding to eighth in the global ranks. But like Mexico, this boost in US activity isn't all that surprising considering its history. The higher silver prices have prompted the mining companies to revisit some of the historic silver districts. And some of these miners are finding it economically feasible to restart historic mines, while others searching in and around previously-known deposits are making some big new discoveries. This work has led to a bolstered development pipeline and likely a reversal in the US's production downtrend.

The final country host to more silver projects than Peru is Canada (24% of silver companies), which is curious considering it currently only has one primary silver mine in operation. With the miners focusing on exploration at both historic districts and grassroots discoveries, Canada and its very friendly mining laws could make it a silver dark horse. It should be very interesting watching a potential trend unfold in the Great White North.

Lower than Peru on the project-activity front are fellow South American countries Argentina (8%), Chile (7%), and Bolivia (4%). These three countries combine to produce about 100m ounces of silver per year. And while a lot of this silver is produced as a byproduct of large base-metals mines, there are indeed some exciting primary silver mines and exploration projects that attract interest to these regions.

Overall this geographical spread is quite fascinating. And it was interesting to see how this spread was rendered across the elite stocks that made the cut for our latest report. Zeal's favorite dozen silver stocks range from small junior explorers to large global producers, and their exciting exploration projects, development projects, and mining operations are indeed spread across the globe in similar fashion to the breakdown mentioned above.

Of our favorites 67% own a project(s) in Mexico, 33% in Peru, 25% in the US, 25% in Argentina, 17% in Canada, along with a handful of singleton projects in various other countries. But these stocks weren't chosen based solely on geography, they survived the arduous scrub based on their all-around fundamentals. And we believe these dozen hold the highest potential to thrive in silver's ongoing secular bull. Buy your report today for a newly-discounted price of only $85 ($65 for newsletter subscribers).

The stocks in this report are also the ones we'll pull from when we execute silver-stock trades in our acclaimed weekly and monthly newsletters. Since 2002, all 48 silver-stock trades we've realized in our flagship Zeal Intelligence monthly newsletter have averaged annualized realized gains of +54.1%. Subscribe today for high-potential real-world trade recommendations along with cutting-edge analysis that will increase your knowledge and wisdom in these increasingly-complex markets.

The bottom line is even though silver is mined all over the world, there are only a select-few countries where primary silver explorers can increase their probabilities for success. And as we found in our latest research endeavor, Mexico is by far the most-popular destination. This country has a strong silver-mining history, favorable mining laws, and is supported by excellent primary-silver geology.

Mexico has mined a lot of silver in its history, and has seen impressive production growth over the course of this bull (29% since 2002, outpacing silver's global growth of 18% over this same span). But as the mining companies are finding, there is a lot more silver still to be discovered and produced. And as we found in our own research, many of the best silver companies are scoring big in Mexico.