Silver is utterly timeless as a lasting store of value. But when it comes to investing in the volatile precious metal, timing matters. With that in mind, each year I scour the mining industry for the most exciting and timely investment opportunities of the year in gold and silver. For the first time this year, I am presenting my top 10 silver picks separately from my top 10 gold picks for 2012. Before continuing on, I encourage readers to review Part 1 for the first half of this first-annual silver countdown (don't forget to return here, of course!). With any further delay, here are my top five silver stocks for 2012:

5. Aurcana (OTC: AUNFF)
Aurcana enters 2012 with a remarkable production surge in the works. The company anticipates first production from the Shafter mine in Southwest Texas in May of this year, with 3.8 million ounces of low-cost silver output slated for the mine's first 12 months of commercial output. Given the simultaneous 33% expansion of the mill at Aurcana's producing La Negra mine in Mexico -- targeted for completion in March 2012 -- I see strong potential for Aurcana to approach 6 million ounces of silver-equivalent production during 2013. From a current production profile of about 1.7 million SEOs per year, a 250% surge within a two-year span represents one of the industry's most exciting near-term growth trajectories.

According to the current mine plan, Shafter is a short-lived operation that would only support peak output for the first two years before dwindling down to 2 million ounces by the fifth year of operation. However, the Shafter deposit remains open along strike to potential expansion in two directions from the adjoined historical and modern orebodies. In its former incarnation as the Presidio mine, Shafter produced some 35 million ounces of silver between 1883 and 1942. I have learned to never underestimate the potential for modern exploration to yield meaningful expansion of historically significant orebodies.

I consider the La Negra asset prospective for further expansion as well; 83% of third-quarter production came from new discoveries or resources not included within the existing resource estimate. Recent drill results look encouraging, and an updated resource estimate expected during the current quarter offers investors another potential catalyst for share-price advancement during 2012.

4. Endeavour Silver (NYS: EXK)
Fools who endeavored to participate in this tremendous growth story following my August 2010 interview with CEO Bradford Cooke have seen Endeavour's share price promptly quadruple to reach a 2011 peak of $13.10. My recent tour of Endeavour's expanding Guanajuato mine complex confirmed for me just how well-deserved that glistening performance has been. And now that a substantial retracement in the sector has driven Endeavour back into the $10 range, I see a timely opportunity for investors to embark on Endeavour's continuing journey of well-executed growth.

With a major expansion of its plant capacity in Guanajuato (to 1,600 tpd) completed during 2011, Endeavour is beautifully positioned to capitalize on steady output expansion from the growing array of near-surface vein structures surrounding the plant. Recent confirmation of high-grade silver and gold mineralization within the vein structures of La Joya and Belen have the company touting "a substantial increase in reserves and resources at Guanajuato" for early 2012, and offer a near-term roadmap for matching production to the expanded plant capacity.

I consider Endeavour's San Sebastian, Parral, and La Brisa exploration projects very promising elements of the company's project pipeline, but I urge Fools to pay particular attention to the recently acquired target for bulk-mineable silver and gold in Chile called Lomas Bayas. With a 10,000-meter drill program already under way, I expect successful assays from that project to provide additional stock catalysts during 2012. I consider Endeavour's management the best in the business, and I recommend the stock as a long-term silver holding without reservation.

3. Silver Wheaton (NYS: SLW)
Parallel to my selection of major producer Goldcorp among my top 10 gold stocks for 2012, Silver Wheaton might appear a relatively conservative pick as compared to the stable of smaller-cap growth stories that fill out the rest of the list. But don't let Silver Wheaton's hefty market capitalization fool you; this is a stock from which I continue to expect multi-bagger gains as this long-term bull market for silver matures. What's more -- with an enterprise value that equates to just $5.63 per total-resource ounce of silver (or $10.77 per ounce of proven and probable silver reserves) the stock remains dirt cheap! It's not quite as cheap as it was when I treated readers to a truly uncommon opportunity just over 3 years ago, but just watch how this stock responds as the market comes to terms with the likelihood of silver penetrating the all-time high near $50 per ounce and blasting into fresh record territory. Keep in mind, Fools, that Silver Wheaton is targeting about a 70% production surge by 2015, to reach a monumental 43 million ounces of silver per year!

Silver Wheaton has been a bit quiet lately with respect to adding new silver stream agreements to the pipeline, and personally I suspect the hiatus is likely linked to an adjustment of its signature rate structure (paying roughly $4 per ounce delivered into a stream agreement) to account for a much-transformed silver price environment. But I do note with interest the company's recent appointment of mining analyst Haytham Hodaly -- as senior vice president for corporate development -- to aid in the negotiation of new silver streams. I do not expect the pause to last through 2012, and view the prospects for one or two major new stream announcements as likely stock catalysts for 2012. And as Silver Wheaton's newly established dividend policy of distributing 20% of cash from operations collides with a rising silver price, I expect Silver Wheaton to remain a major focal point of global silver investment demand.

2. Fortuna Silver Mines (NYS: FSM)
After visiting the brand new San Jose silver and gold mine that forms the strategic nucleus of Fortuna's growing fortune, I am convinced 2012 will prove a very profitable year for this miner and its shareholders. Of all the silver producers I surveyed for consideration within this list, Fortuna offers one of the clearest roadmaps to steady, incremental output expansion over the next several years as San Jose's mine output progresses from 2.6 million SEOs in 2012 to nearly 5.2 million SEOs by 2017, according to the current mine plan. Combined with polymetallic output (rich in lead and zinc) from Fortuna's Caylloma mine in Peru, Fortuna expects consolidated production to approach 7.4 million silver-equivalent ounces (with more than 80% derived from silver and gold) by 2014. That would represent about a 76% production surge in three years from Fortuna's output in 2011.

Moreover, after discussing the exploration upside potential at San Jose at length with the mine's geological team, I perceive strong potential for extension of the mine life at San Jose as substantial inferred resources are converted to reserves. Indeed, I would not overlook the district-scale opportunities that may reside in exploration targets within Fortuna's massive 58,000-hectare concession package. I have much more to share from my recent mine tour, so please stay tuned to my ongoing coverage for further insight into San Jose as a springboard for Fortuna's exciting growth spurt.

1. Scorpio Mining (OTC: SMNPF)
When your investment outlook for an entire sector is as bullish as mine is for silver, reducing a long list of quality operators down to a top-10 list presents a daunting task. I must concede to no shortage of agony in omitting some first-rate vehicles like the wrongfully assailed Silvercorp, perpetually undervalued Pan American Silver, or even the clerically challenged Coeur d'Alene Mines. And considering the strength of the investment rationales for each of the preceding nine picks, I trust it's clear that the selection of my No. 1 silver stock involved some considerable deliberation.

Scorpio Mining leapt out of relative obscurity and straight into the spotlight of emerging junior silver producers following its strategic acquisition of Platte River Gold in 2010. Unfortunately for me, I was slow to adapt, so I missed out on a prompt double in Scorpio's stock during 2011. I don't intend to make that mistake again, and thankfully a bargain valuation continues to signal a green light for this Fool to continue acquiring shares during 2012. A key aspect of my strategic preference for miners over bullion boils down to the opportunity to gain exposure to silver at a substantial discount to market value (even after accounting for development costs, production costs, and the myriad challenges and risks associated with mining activity). With the market valuing Scorpio's 55 million ounces (measured and indicated silver resource) at just $6.93 apiece, I like my chances of turning a profit on those ounces as they emerge from the ground over time.

Widening the moat even more, Scorpio's ample base-metal assets in copper, lead, and zinc yield a global silver-equivalent resource of 137 million ounces (presently valued at just $2.78 per ounce!). While some may shy away from production profiles where the primary target (silver) accounts for just 57% of revenue, I welcome the diversification that benefits as much from growing emerging-market industrial demand as it does from surging silver investment demand.

Following a 64% increase in year-over-year silver production from the flagship Nuestra Senora mine during the first nine months of 2011, I would not be surprised to see that growth trend pause for a bit this year. The core of my investment rationale lies, rather, with the prospect of two major decisions looming to expand Scorpio's processing capacity in the region by some 300%.

Scorpio's land holdings in the Cosala district span 29,000 hectares. In addition to the Nuestra Senora mine and mill, the company holds two advanced development projects (San Rafael and El Cajon) and a silver/copper mine (La Verde) acquired in the Platte River acquisition that was under a lease until early 2011. During 2010, La Verde yielded decent quantities of silver and copper. Scorpio is conducting feasibility analysis of a proposed 4,000-ton-per-day plant to process ore from assets in the northern portion of its concessions, with release of that study targeted for the third quarter of 2012.

Definition and exploration drilling continues at a steady clip, with an updated resource estimate at Nuestra Senora expected during the second quarter. Because the company has warned of observed discrepancies between the existing resource model and recent assays from development and drilling, Fools may wish to hold back on building a full position in Scorpio Mining until that updated resource estimate is in hand. Any negative reaction to ounces that might be lost at Nuestra Senora could yield a more compelling entry point from which to catch the potential catalyst of a positive plant construction decision to process ore from the more northerly resource areas.

There you have it, Fools! Following a marathon of research and deliberation, I offer the above stocks as my top 10 silver stocks for 2012. Please be sure to find Part 1 of this countdown here to review my other five selections. To follow all my ongoing coverage of the precious-metal miners, please bookmark my article list, or follow me on Twitter. Naturally, I have issued bullish calls for each of the CAPS-ratable stocks on this list within my Motley Fool CAPS portfolio, and I invite each of you out there to consider following suit.

Looking for more ideas? Download The Motley Fool's special free report " The Tiny Gold Stock Digging Up Massive Profits ." Our analysts have uncovered a little-known gold miner that we believe is poised for greatness; find out which company it is and why we strongly believe in its future -- for free!

At the time this article was published Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Aurcana, Coeur d'Alene Mines, Endeavour Silver, Fortuna Silver Mines, Goldcorp, Pan American Silver, Silvercorp, Silver Wheaton. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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