Jag har nu bytt ChatGPT mot Gemini 3 och sagt till Gemini att givet att silverpriset på så kort tid som 7-10 dagar skulle gå upp i 100 dollar/oz, vilka av de intressantaste aktierna jag valt ut att screena skulle gå bäst då? Med hänsyn till att 1 januari 2026 införs exportförbud för silver i Kina, samtidigt som uranbrytningsförbudet som infördes 2018, och röstades bort 5 november 2025 i riksdagen, börjar gälla.
I ett sådant scenario rör sig gruvbolagen inte linjärt, utan de värderas om baserat på operativ hävstång (vinstökning per uns) och geologisk hävstång (värdet på uns i marken). Här är en uppskattning av hur dina innehav antagligen skulle prestera procentuellt under denna 10-dagarsperiod:
Dessa bolag har högst hävstång eftersom de antingen är marginalproducenter (höga kostnader som nu blir extremt lönsamma) eller har massiva resurser som marknaden plötsligt börjar räkna hem.
Americas Gold & Silver (USAS):~300–400 %. Detta är den ultimata hävstångsaktien. Vid silverpriser under $30 kämpar de med marginalerna, men vid $100 silver exploderar kassaflödet mest av alla bolag på listan.
Hycroft Mining (HYMC):~250–350 %. Eric Sprott har pekat på att Hycroft är en "köpoption som aldrig löper ut". Med 1,5 miljarder uns i marken skulle en uppgång till $100 tvinga fram en våldsam omvärdering av varje enskilt uns i reserven.
Highlander Silver (HSLV):~200–300 %. Eftersom HSLV handlas till extrema $0,1\text{x}$–$0,2\text{x}$ NAV, skulle institutionellt kapital som vill ha "billiga uns" flöda hit först. Augusta-gruppens rykte fungerar som en katalysator för att stänga värderingsgapet snabbt.
Kvalitetsjuniorer som ofta leder sektorn när spekulativt kapital ("greed buyers") kliver in.
AbraSilver (ABRA):~150–200 %. Deras Diablillos-projekt har en enorm resurs ($350$ miljoner uns AgEq) som får en multiplikatoreffekt tack vare Argentinas nya RIGI-skattelättnader.
Vizsla Silver (VZLA):~120–170 %. Rick Rules favorit. Vizsla har hög likviditet och ses som "best-in-class", vilket gör att de ofta toppar listorna när indexfonder (SIL/SILJ) köper.1
New Pacific Metals (NUAG):~100–150 %. Sitter på enorm skala i Bolivia. Skalan kompenserar för jurisdiktionsrisken i en mania-fas.3
Outcrop Silver (OCG):~130–180 %. "High-grade" får alltid rubriker i en bubbla. OCG rör sig ofta extremt snabbt på grund av sina extrema silverhalter.
Dessa bolag har redan re-ratats en del och har lägre risk, vilket gör att de stiger mindre procentuellt än juniorerna men ger stabilitet.
Aya Gold & Silver (AYA):~50–70 %. Aya är en fantastisk maskin, men med ett P/S-tal på $15\text{x}$ är mycket redan inprisat. De kommer att generera enorma kassaflöden vid $100$ silver, men aktien har inte samma "slingshot"-potential som Highlander.
Pan American Silver (PAAS):~40–60 %. Som sektorns jätte rör de sig tyngre, men säkrare.
Dolly Varden Silver (DV):~80–120 %. Sammanslagningen med Contango ger dem kassaflöde vilket minskar risken för utspädning under uppgången.
4. Specialfallet: District Metals (DMX)
District Metals (DMX):~100–200 %?. Det är viktigt att komma ihåg att DMX rör sig på uran-nyheter. Den 1 januari 2026 upphör moratoriet för uranbrytning i Sverige. Om det beskedet landar samtidigt som en silvermania, kan DMX rusa oberoende av silverpriset på grund av Viken-projektets status som världens näst största urandepå.
Silverproducenten Aurcana som jag ägde för några år sedan är kursmässigt utbombad, men av goda skäl. Bolaget blöder, och trots en silverproduktion på ca 3,7 MOz Silverekvivalenter för 2014 gick man med en väsentlig förlust. Detta på grund av att kostnaden per Oz silver var ca 16,45 usd vilket är runt spot-priset för silver.
Enligt MDA för Q3 2014 så räcker pengarna på banken + övriga tillgångar till att finansiera bolaget till och med september 2015. Sen måste bolaget få in nya pengar eller vända till positivt kassaflöde från silverproduktionen.
Jag fortsätter hålla koll på Aurcana vid sidan av silverpriset.
Aurcana skulle kunna gå en KK till mötes eller om någonting ändras till bolagets fördel så skulle bolaget snabbt kunna flerdubblas.
At last month’s Vancouver Resource Investment Conference (VRIC), Jordan Roy-Byrne6, publisher of The Daily Gold, gave a presentation titled Best Gold & Silver Stocks for 2014.
"The Aurcana Board of Directors, after careful consideration and review of the development and mining options for the Shafter Project under current economic conditions and low silver prices, has elected to put the Shafter Project on "care and maintenance" "Aurcana is planning to initiate an exploration program designed to test targets within Shafter's known mineralized areas in further detail, to help determine whether additional higher grade mineralization can be delineated. Aurcana geologists have identified areas of interest to justify such a program." Lenic Rodriguez, Aurcana's President and CEO, states "Aurcana's management and its board of directors are very disappointed that in spite of many of our employees' best efforts, the prevailing economic conditions, in particular low silver prices, have caused the Company to suffer significant losses from the Shafter Project's operations, resulting in an unsustainable drain on the Company's treasury. We wish to thank all our employees and stakeholders for their efforts and support." As a result of the decision to place the Shafter Project on care and maintenance, the Company has determined that it will not immediately proceed with the planned updated resource estimate on the Shafter Project which was referenced in the Company's news release dated December 12, 2013.
Efter större nedgång redan skett är Aurcana ner ca 26% idag. och har idag varit nere på nytt årslägsta och flera års lägsta på 0,73 usd. Vad har hänt i Aurcana?
Silverpriset har sjunkit
Grades har sjunkit i La Negra i Mexico
Shafter ha krånglat
Minskade resurser/reserver i Shafter
Allt som allt har Aurcana brakat ihop. Jag är inte säker på att det är köpläge heller. Jag avvaktar med att gå in i PM-bolagen just nu, jag behåller bara den ytterst lilla post jag redan har sen gammalt i Endeavour Mining. Men om man tror på Guld och/eller Silver just nu så finns det nog mycket bättre bolag än Aurcana att investera i, Aurcana har verkligen svikit sina ägare och investerare. Man höll tyst ett bra tag i början innan man började meddela att det var problem vid Shafter, problem som sedan dess bara växt till att nu innebära att det finns mindre silver i Shafter-gruvan än man tidigare trott. Att det samtidigt gått dåligt med grades i La Negra i Mexico gör att Aurcanas finanser blivit riktigt dåliga till det fallande silverpriset...
Det är tråkigt det som hänt. Lärdomen är väl att det kan ändras, det kan gå fort, att något överraskar positivt eller negativt när det gäller guld och silver bolag som prospekterar och ska starta upp produktion eller har en produktion som har fungerat. För ibland hittar man guld/silver där man inte tror, så hittar man inte/mindre där man tror det finns. Det kan vara massor av problem med att gå igång en produktion av en resurs, det är mycket geologi i detta och olika blandningar av metaller och mineral och bergrunder och kan vara komplicerat att kommersiellt utvinna guldet/silvret. Sen att man fått igång en produktion betyder inte ens det att det kommer att flyta på bra, utan det kan uppstå problem helt plötsligt som att cash cost ökar mycket och/eller "grades" sjunker.
Som ni läsare av bloggen märkt så har guld och silverbolagen fått minskad exponering här i bloggen, det som finns kvar sedan gammalt är oljebolag, med Lundin Petroleum som aktuellt innehav och Africa oil och Tethys oil som är på bevakningslistan för närvarande. Men förutom detta har jag börjat skriva om andra bolag som banker (swedbank, Deutsche bank, citigroup) och verkstadsbolag (Sandvik, Atlas Copco) med mera. Men intresset för teknik och innovation finns kvar som "Cassandra oil" som bevakas som både är en producent av olja men genom revolutionerande teknik.
Silver Standard Resources Inc. (TSX:SSO,NASDAQ:SSRI) reported its
consolidated financial results for the second quarter of 2013,
commenting that it incurred a net loss of $235.9 million, or $2.92 per
share, down substantially from net income of $35 million, or $0.43 per
share, in the year-ago quarter. However, the company is on track to
reach full-year production guidance at its Pirquitas mine and made
progress at its Pitarrilla project.
Other highlights include:
Lowered 2013 cash cost guidance: Reduced 2013 cash cost guidance by
18% to between $14.00 and $15.00 per payable ounce of silver sold and
reported second quarter cash costs at Pirquitas of $13.03 per payable
ounce of silver sold.
Delivered to plan at Pirquitas: Produced 1.9 million ounces of
silver, on track to achieve improved full year production guidance of
8.3 to 8.5 million ounces of silver. Produced a record 5.6 million
pounds of zinc, the highest quarterly zinc production since mine
start-up.
Sold consistently into long-term sales contracts: Sold 2.2 million ounces of silver, generating revenue of $32.7 million.
Advanced cost restructuring program: Cost reduction program at
Pirquitas advanced with headcount reductions of 7% to date with further
reductions planned. Structured programs focusing on third party contract
services and operational controls at the plant and mine have been
initiated to drive efficiency and positively reposition the mine on the
industry cost curve.
Recognized impairment: Recognized non-cash, pre-tax impairment
charge and write-downs of $221.7 million related to Pirquitas,
exploration projects and assets held for sale.
Progressed Pitarrilla with pre-construction activities: Submitted a
final Environmental Impact Statement and tendered the EPCM contract.
Advanced surface access rights processes and commenced formal partner
and financing plan.
Maintained strong liquidity position: Cash balance of $435.8 million as at June 30, 2013.
John Smith, president and CEO of Silver Standard, commented:
We are focused on taking the right steps given the
current market conditions, whilst preserving long-term value. This
quarter, Pirquitas continued delivering to our production plan and costs
are being reduced, which can be seen in our revised guidance. Although
Silver Standard has a substantial cash balance, we have advanced a cost
restructuring program throughout the organization aimed at real cost
savings and improved operating performance. Looking ahead, Pitarrilla is
a key driver of our long-term growth and continues to advance due to
our solid technical capability and liquidity.
This week, silver was unable to sustain last week’s gains, sinking below $20 and only passing that mark on two brief occasions.
Silver started out below $19.80 per ounce on Monday, but quickly rose to $20.12. However, concerns prior
to a two-day Federal Reserve meeting set to begin the next day soon
drove it back down and the metal closed the day at $19.92.
Tuesday, silver continued to fall, dropping as far as $19.57 early in
the morning. Though it was able to rise to $19.97 later in the day, by
Wednesday it had fallen even lower, to $19.49, on the release of US
second-quarter GDP and June private payroll numbers, according to
Scotiabank’s Gold & Silver Marketwatch.
Later that day, the white metal made its second rise above $20, hitting
$20.04 as market participants took in the news that the Fed will
continue quantitative easing.
Silver closed Thursday at $19.63 after hitting a high of $19.90 earlier in the day.
If Barclays is to be believed, investors may still have more
up-and-down movement to weather. The investment bank said Monday that
the white metal may decline another 12 percent to hit its lowest price
in three years. It believes silver may be set to form a “a triangular
pattern called a bearish pennant,” according to Bloomberg.
Dhiren Sarin, the firm’s chief technical strategist for Asia Pacific,
noted, “[w]e are moderately bearish at the moment though we are
watching these levels.”
Gold-silver ratio to rise
The gold-silver
ratio — the amount of silver ounces needed to buy an ounce of gold —
rose to a three-year high of 66.6 on July 19 and is set to reach 70 by
the end of the year as a result of excess silver supply, Bloomberg reported.
Explaining the situation, Dominic Schnider, head of commodities
research at UBS’ Singapore-based wealth management unit, told the
publication, “[t]he silver market is in fabrication surplus, and the
only thing that’s keeping it alive is investment demand and there is no
meaningful increase in ETFs. In an environment where gold falls, silver
simply just does more, it’s more volatile.”
Most silver market players have long since resigned
themselves to the fact that the white metal’s average price for the year
will likely be significantly lower than was initially expected — back
in April, HSBC (NYSE:HSBC) cut its 2013 silver outlook to $26 per ounce from $33, while earlier this month Canaccord Genuity reduced its 12-month forecast to $23 per ounce from $32.50.
However, if recent reports from China and Japan are to be believed,
silver may be poised to benefit from an unexpected source of demand: the
solar power industry.
China and Japan step up
Though silver is perhaps best known as an investment tool, it is not
without other sources of demand, one of which is the solar industry.
In an article published
last week by Casey Research, Jeff Clark, senior precious metals analyst
at the firm, notes that while photovoltaic technology, the backbone of
the solar industry, did not begin registering on silver demand charts
until the turn of the millennium, the amount of silver consumed by solar
panel makers has risen approximately 50 percent per year since that
time.
Currently, it accounts for 5.6 percent of all industrial silver use,
but, as mentioned, two factors mean that amount may be set to increase.
The first is the fact that on July 4, China’s State Council said it
will stand behind a plan, originally put forward by the nation’s State
Grid, to raise China’s solar generating capacity to 35 gigawatts (GW) by
2015. That is 67 percent higher than the previous target of 21
gigawatts (GW) and will mean a yearly addition of 10 GW from 2013 to
2015, according to Clark.
Second, Japan, China’s western neighbor, will increase its solar
generation capacity by about 5.3 GW this year, David Franklin and David
Baker state in a Sprott’s Thoughts report.
Also this year, the country’s domestic solar power market is expected
to reach $19.8 billion, meaning that it will pass Germany as the world’s
largest solar market.
Potential market impact
The key question, of course, is exactly how much impact these factors will have on the silver market as a whole.
Franklin and Baker give a clear outline of their likely effects,
stating that as per information from the Silver Institute, making 1
megawatt of electricity requires up to 2.8 million ounces of the white
metal. If China and Japan end up increasing their solar generation
capacity by as much as they currently plan — a combined total of about
27 GW — together they will require around 91 million ounces of silver.
That’s up to 11 percent of global mine supply by 2012 numbers, a fairly
sizeable amount.
Looking longer term, they point out that silver used in solar panels
cannot be recycled; once it is used, it is gone forever. That means
solar generation has the potential to put ever-increasing pressure on
the silver market, particularly if other countries follow China and
Japan’s lead in upping their solar generation capacity. What’s an investor to do?
Franklin, Baker and Clark all appear to agree that the silver market
could benefit significantly if all goes as expected in China and Japan.
However, those who are not yet convinced should consider watching future
silver price forecasts to see whether they take the two countries’
plans into account; Franklin and Baker state that so far no 2013 silver
price forecasts have incorporated these announcements.
Investors who are ready to leap into the market might take a leaf out
of Clark’s book — he finishes his article by emphatically advising
investors to “buy silver now.”
"I put more faith in the gold side mostly because so much
silver is produced as a byproduct. Only about 25 percent of silver
actually comes from silver mines. Having silver mines shut down doesn’t
really have that big of an overall impact because so much of silver
still gets produced as a byproduct no matter what the price of silver
is. So we tend to look at gold from that perspective more than silver."
"And when I see mines shutting down because they can’t work at $1,250
gold, or $1,300 gold, more expansion projects being cancelled or
deferred, that tells me that we have hit a bottom. The supply side is
just not there. And once you see tightening on the supply side that puts
price pressure on the commodity. There are all sorts of other factors,
but having that price pressure sure helps. I do think it indicates we
are at a bottom."
Silver Investing News (SIN) recently had the chance to speak with
Kevin McArthur, president, CEO and director of Tahoe Resources (TSX:THO5,NYSE:TAHO), about his company’s
flagship Escobal project, located in Southeastern Guatemala.
In the interview below, McArthur discusses when the company plans to reach
production, the benefits of operating in Guatemala and where he thinks silver
prices are headed. He also discusses Tahoe’s new corporate social responsibility
(CSR) initiative.
SIN: Can you start by giving our readers a brief overview of the Escobal
project? Why should investors be excited about it?
Kevin McArthur (KM):The company is building the Escobal
project to world standards; our goal is to build a world-class mine that we will
operate responsibly. It will produce 20 million ounces of silver per year. The
attributes of this deposit are such that we believe we will be leading the
industry in free cash flow per share, earnings per share — eventually, our goal
is to lead the industry in dividend yield also. We think we can demonstrate
organic growth and also deliver community sustainability. In doing so, we’ll be
able to deliver long-term shareholder value, which is basically what this
business is all about.
Specifically, the deposit is set apart from silver deposits around the world
for four main reasons. Number one, it’s very high grade. It’s got silver, lead7, zinc8 and gold9, but the silver itself amounts to over 350 million ounces
in the measured and indicated category at over 400 grams per ton. It’s also got
very wide veins, so we can put very large equipment into the underground
operations and drive the unit cost down. Because of grade and width, we believe
that our cash cost will be the lowest, or at least in the lower decile or
quartile of cash costs for silver mines. Second, it’s got geologic
prospectivity, which I touched on earlier — it continues to grow, so we believe
we’ll continue to add value over time. Third, it’s in an area where there’s
excellent infrastructure. That is very important in this business. We’re not
4,000 meters up in the Andes and we’re not way up in Northern Canada in Nunavut
— we’re in Guatemala. There’s paved road access, we’re an hour and a half from
the capital city of Guatemala, there’s water, there’s power and there’s a nearby
community, so we don’t have to establish a camp to live in. As I mentioned, the
elevation is moderate. We’ve got a management team there on the ground. Most
importantly, the mine is almost complete. We’re just starting our commissioning
activities now and we expect to be in production — at least early production —
in the fourth quarter of this year, with revenues exceeding costs by next year.
We’ll have that, we hope, on a sustainable basis. This will be a fabulous
mine.
SIN: It sounds like you’re moving quickly toward commercial production.
What are the things that need to happen before you get there?
KM:A lot of those things have been done. We’ve derisked the
project to a great extent and we understand the deposit. The biggest hurdles we
had were getting our permits on a timely basis, but we’ve received all of our
permits and established all of our derisking milestones according to the
schedule that we posted in 2010. So we’ve been hitting our timelines nicely.
The construction of the mill and underground development of course is usually
a horse race. We had a real advantage in that we were permitted for underground
development back in February 2011, so we were able to drive 5×6-meter declines
into the mining areas at a very early stage. Infrastructure and mill
construction has gone on since 2011. We’re currently ready with the mine, and
we’re very close to mill completion — as I said, we have now started the mill
commissioning activities.
Our next challenge will be those commissioning activities, getting the mill
up and running in time to hit our goal of full-scale production early next year.
We’ve done the derisking along the way and basically completed all of the
technical work, so we feel pretty good about it.
10
Fine ore bins.
SIN: The Guatemalan government recently announced a two-year moratorium on
granting new mining and exploration licenses. My understanding is that Escobal
will be unaffected, but your press
release11 on the topic says you’ll be
pulling back on some “regional work.” Can you talk about that situation a
bit?
KM: First of all, it’s only a proposal for a two-year moratorium. The
president proposed that Congress approve it. The reason is so that the Energy
and Mines Ministry can devote its time to working with Congress on a revision to
the mining law. This is a revision that’s been contemplated for some time.
They’re considering approving the royalty that we’re already committed to paying
through our agreement with the president — our royalty on the minerals we
produce is 4 percent plus an additional one percent to outlying communities. The
revision is also aimed at encouraging community participation in the approval of
mining projects and for assurances on the closure of mines. So there are a
variety of things that are being looked at under the new mining law.
The two-year moratorium hasn’t been approved yet, but we think that it will
be. Essentially, the Energy and Mines Ministry is not processing new
applications at this point. But as you stated, we are not affected by it because
we have licenses in and around our property where we can do exploration that we
would anticipate will grow the resource over time and will add to mine life. But
we have a 2,000-square-kilometer area where we have regional concessions, some
of which haven’t been approved yet, that we’re not going to able to do work on
until we have approval. So we’ll have to halt our plan to commence regional work
until the situation gets resolved.
SIN: Leaving aside the moratorium, what would you say are the
advantages/disadvantages of working in Guatemala?
KM:There are some great advantages. First of all, you’ve got
to go where the precious metals are, and Guatemala has very good geology and a
very good business environment for mines. I think Guatemala is a little bit
misunderstood in terms of the business environment, but it’s a very positive
place to do business. As I said, we received our permits and have received
positive support from the government in permitting the mine and also great
support from the business community in establishing this brand new company in a
very short period of time. So there are very solid advantages to Guatemala on
the business end.
It’s also a fully-functioing democracy. There were 30 years of civil war that
ended in the ‘90s, and since then there’s been a good democratic government in
place with peaceful transfer of power to a new president and congress every four
years. The democracy in Guatemala works very well. As I said, I believe because
of the noise that comes out of Guatemala it’s misunderstood, but we have found
it to be a very good place to operate.
12
Crusher.
SIN: Ira [vice president investor relations at Tahoe] mentioned that your
focus is on long-term share price appreciation, and it looks like things are
going well so far. With many companies struggling, how do you account for your
success? Is there a particular strategy you’re living by in these
markets?
KM:We look to be a high-grade silver miner with underground
mines and intend to continue growing the company with that kind of profile. A
lot of us on the team worked for Glamis Gold — I was the CEO — where we
delivered shareholder value by looking for assets that were unusual in terms of
all of the attributes I’ve described Escobal as having. We were always looking
for a 15-percent hurdle rate on any business propositions we made, including
acquisitions and mine expansions, and we didn’t use our stock to buy assets
unless we got an adequate rate of return. During Glamis’ years from 1999 to
2006, we built five mines, and our share price moved dramatically during that
time period because we made smart decisions and always demanded a rate of return
that was higher than what other companies would demand.
We have internal models for hurdle rates and the way we operate, making sure
that we always balance all stakeholder issues. And when I say stakeholder, I
mean shareholders, employees and communities. We feel that if we find the right
balance between what shareholders need, what our employees wish and what
communities require, we will be a successful operator. Finding that right
balance, we feel, is key to a successful mining company.
SIN: Recently there has been some speculation that silver prices have
hit bottom13 and are set
to head upward. What is your opinion?
KM: Well, I’m a little bit biased here, but I came out of retirement
to run this company and I felt that silver was a good metal to be associated
with. There’s always supply-demand issues regarding precious metals, and the one
advantage that silver has over gold is that there’s a fair amount of industrial
demand that doesn’t go away. Also, the silver that goes into making products
does not get recycled because it just doesn’t pay to pull the silver components
out of a cell phone, for instance. Quite the opposite is true for gold. Almost
all gold that has been mined historically still sits on the surface today in
various forms. So I think the supply-demand dynamic for silver is very good, and
because of that I think we’ll see silver prices doing well.
The thing about silver prices dropping is that it’s a curse and a blessing.
The blessing comes in a funny way in that the all-in cost of sustaining mine
production is higher than today’s silver price when you look at averages in this
industry. Therefore, the supply-demand curve will start to be impacted over a
period of time because marginal mines and mines that are not making money will
have to close if the silver price stays where it is today or goes lower. So
there’s a natural buffering capacity in the industry that will happen.
The reason I would speculate that silver prices will go up is for currency
reasons. Gold and silver are competitors in the currency business, and compared
to western currencies, gold and silver should hold up quite well and do very
well considering that western currencies are being printed at a runaway pace. I
don’t necessarily look at silver prices going up. The way I look at the world is
that the paper money that is going to be used to purchase this silver and gold
is going to be falling dramatically in value; therefore, you have to use more
dollars to buy an ounce of silver, so the silver price goes up on a relative
basis . If you follow that to its logical conclusion, you can see a much higher
silver price in the future.
14
Ball mill.
SIN: Is there anything else you’d like to add?
KM: We have just recently started a big initiative in the company, and
it relates to getting our final permit in April of this year. The initiative is
on CSR. Not only do we want to become the new leader in the silver space, but we
want to operate responsibly with that balance that I spoke about between all.
stakeholders We’ve started a new division in the company so we have equal weight
between operations, finance, exploration and now CSR. We’ve hired BSR to help
guide our plans both corporately and in country. We just recently put out a
press release that describes some of the things that we’re doing in our CSR
programs. I want to highlight that as something we strongly believe in. We will
have more news on the initiative going forward. SIN: Thank you very much for speaking with me today.
Last week, Silver Investing News took a look at commentary
from John Whitefoot, author and editor at Daily Gains Letter, and
Sprott’s Thoughts’ David Franklin and David Baker, identifying two reasons
that silver prices could be set to rise. Now, as silver prices slowly
creep up the charts, market participants are wondering whether the white
metal is rebounding after hitting bottom or simply enjoying a
short-term boost.
Here’s a look at a number of factors, identified by Market Oracle analyst Jason Hamlin and Tony Davis of Atlanta Gold & Coin Buyers, that suggest silver prices have truly bottomed out:
Mining stocks are doing better than metals: Hamlin
notes in his article that in the last week or so, “quality mining
stocks” have started to perform better than the metals they represent.
Put more simply, many silver miners have risen upwards of 8 percent
while silver is up just 4.5 percent. Up until now, the white metal has
been faring better than such stocks.
Support may exist at $18.50: Another point covered
by Hamlin is that on “four separate occasions from 2008 to 2010,” silver
has encountered strong resistance at the $18 to $19 level. That is
significant, he notes, because “[t]he stronger the initial resistance,
the stronger the future support.” He believes that, as it has done in
the past, the white metal will bounce off this level.
JPMorgan Chase (NYSE:JPM) is collecting silver: For
his part, Davis points to the fact that JPMorgan “is taking physical
delivery of silver bullion in upwards of 90%” of contracts being
settled, a drastic increase from the usual 3 percent. While the bank
could just be anticipating increased demand for physical delivery
requests, it may also be gearing up for a rise in silver prices, Davis
states.
Cost of production
While Hamlin and Davis mainly identify different things they believe
point to a bottom in the silver market, the one thing they agree on is
that for many miners, silver is now at or below its cost of production.
As Hamlin points out, that situation is unsustainable — after all, he
asks, “[h]ow many items can you buy in the marketplace at or below the
cost to produce it?” The answer, of course, is not very many, a point
that David Morgan made to SIN
not long ago. As a result, both writers believe it won’t be long before
companies start closing unprofitable mines, thereby decreasing supply
and driving prices up.
A nod to the naysayers
Of course, not everyone believes that the bottom for silver prices is here. In a SilverSeek article
published yesterday, Przemyslaw Radomski states that while silver moved
higher last week, its “downtrend will remain in place … unless [it] can
increase and hold a breakout above the $20.70 price level,” a
“short-term resistance level” he says is based on intra-day highs.
As yet, the white metal has not done so, and as a result, Radomski
believes that last week’s upward movement was merely a “contra-trend
bounce” and the final bottom for silver is still to come.
With opinions ranged across the board it is difficult to say where
the silver price will go next. Let us know what you think will happen in
the survey below.
It’s no secret that silver has fared poorly this year. But
exactly how bad is bad? Since June drew to a close, news agencies have
been quick to report the extent of the damage: the white metal has
fallen 35 percent in the first six months of 2013 and is set to record
its worst performance in three decades.
Disheartening though that number may be, some market participants
believe that a turnaround is coming. Here’s a look at why John
Whitefoot, author and editor at Daily Gains Letter, and Sprott’s
Thoughts’ David Franklin and David Baker believe that silver is gearing
up for gains. Economic uncertainty could buoy prices
In a recent commentary,
Whitefoot notes that although this year was supposed to be “the year
that silver regained its luster,” climbing either as a hedge against
inflation and a devalued dollar or on the back of industrial demand,
“strangely” that has not happened.
However, Whitefoot believes that all is by no means lost, stating
that for contrarian investors — those who attempt to profit by investing
in ways that go against conventional wisdom — “silver has never lost
its shine — its role as a safe haven hasn’t really changed.” Elaborating
on that idea, he explains that the US economy is still not particularly
strong. For instance, the country’s unemployment rate sits at about 7.5
percent, first-quarter GDP growth was “well below” expectations and
wages are not improving. Outside the US, Portugal is facing problems and
the Chinese economy is not doing overly well.
These factors, according to Whitefoot, indicate that “all of the
ingredients for a rally are still set” — and based on the fact that the
US Mint has sold 43.9 percent more Silver Eagles in the first half of 2013 compared to the same period last year, he believes average American investors can see that.
He concludes his piece with the statement that “as long as the global
economy remains uncertain and central banks continue to print more and
more money, silver will continue to be in demand as a store of value.”
Commercial traders going long on silver
Taking a different approach, in a Sprott’s Thoughts note published
yesterday, Franklin and Baker point out that hope for silver prices can
be drawn from the fact that collectively, commercial traders — in other
words, large banks — have reduced their short positions from 259
million ounces in February 2013 to just 20 million ounces as of the
Commitment of Traders (COT) report released June 25. That reduction
“represents the cumulative purchase of approximately 240 million ounces
of ‘long’ silver contracts.”
That is significant, say the writers, because commercial traders have
“traditionally held significantly large ‘short’ positions,” meaning
that they are “either hedging an existing silver position or betting
that silver will depreciate.” A shift away from short positions toward
long positions could mean that such traders are now preparing for a
“bullish silver reversal.” Franklin and Baker believe that this idea is
further supported by the fact that commercial traders have also reduced
their net short gold positions.
Like Whitefoot, Franklin and Baker end their writeup by suggesting
that these changes in positioning may indicate that silver prices are
set to hit bottom and turn around.
The upshot
Though silver has been the underdog so far this year, there are at
least two reasons that may be about to change. Those interested in the
white metal should consider keeping an eye on future COT reports as well
as economic conditions.
The silver market is still very much influenced by speculation as
to when the US Federal Open Market Committee (FOMC) will pull the plug
on the current round of quantitative easing (QE), as is evidenced by
this week’s price action.
Early in the week, silver tracked gold
higher on short covering and safe-haven demand sparked by political
upheaval in Egypt, closing back up four pennies over $19 an ounce
Monday. That moderate upswing continued Tuesday as inflation news out of
China lent further support to gold and silver despite a stronger US
dollar, pushing silver up to $19.12 an ounce.
This week’s rally really picked up momentum mid-week after the release of minutes from Wednesday’s US FOMC meeting, Bloomberg reported.
Precious metals bulls gained strength from FOMC members stating that
they want to wait for more positive economic signals before axing bond
buying. A slight loss in the US dollar, in addition to higher oil prices, was also bullish for silver, which closed Wednesday at $19.37 an ounce.
Silver’s much-awaited rally continued for a fourth straight session
Thursday, the metal’s longest rally since March 8, according to
Bloomberg. The precious metals markets were bolstered by Federal Reserve
Chairman Ben Bernanke’s call for a “[h]ighly accommodative monetary
policy for the foreseeable future” from the US central bank in order to
spur economic growth. Silver hit a six-week high for a Thursday close of
$19.965 an ounce.
Company news
Coeur Mining (TSX:CDM,NYSE:CDE) released
results from the preliminary economic assessment completed on its La
Preciosa silver-gold project in Durango, Mexico. The mine is expected to
produce an estimated 134.5 million ounces of silver over a mine life of
17 years, making La Preciosa potentially one of the top 10 primary
silver mines in the world. The mine is expected to generate a 17-percent
after-tax internal rate of return based on $25 per silver ounce and
$1,500 per gold ounce.
First Majestic Silver (TSX:FR,NYSE:AG) announced
that total Q2 production at its five Mexican silver mines increased 55
percent over the same period last year for a record 34,268,117
equivalent ounces of silver. The producer also has said it will cut 10
percent of its workforce this year, reported Reuters, due to slumping silver prices. The company has already canceled drilling contacts and suspended silver sales.
Great Panther Silver (TSX:GPR,NYSEMKT:GPL) reported
Q2 production from its Guanajuato and Topia mines in Mexico. Metal
production rose 22 percent over the same period last year, to 680,212
silver equivalent ounces. The company attributes the increase to
improved grades and operational efficiency. Great Panther’s management
is confident the company remains on track to meet its fiscal 2013
production guidance of 2.4 to 2.5 million silver equivalent ounces.
Q2 production figures for Fortuna Silver Mines‘ (TSX:FVI,NYSE:FSM) San
Jose mine in Mexico and the Caylloma mine in Peru show a total of
1,074,007 ounces of silver and 5,183 ounces of gold. So far this year,
production at the two mines has totaled 2,066,225 ounces of silver and
9,675 ounces of gold. The silver producer is on target to meet its 2013
production guidance of 5.9 million ounces of silver equivalent.
Endeavour Silver (TSX:EDR,NYSE:EXK) announced
record-breaking second-quarter silver and gold production. Compared to
the same quarter last year, second-quarter silver production for 2013
rose 48 percent, to 1,535,873 ounces, while gold was up 159 percent, to
19,914 ounces. Revenues for the quarter were also up 57 percent, to
US$63.5 million. The company attributes its stellar production numbers
to successful operations at the Bolanitos mine, whose output peaked at
3,000 metric tons per day.
Junior company news
Entourage Metals (TSXV:EMT) commenced
exploration work at its La Liga silver project in the Yukon Territory,
Canada. The program is focused on high-grade silver plus lead-zinc
mineralization at the Red Devil and Galactose zones and will involve
detailed geologic mapping, prospecting and mechanical trenching.
Apogee Silver (TSXV:APE) reported
that a development and sampling program at its Pulacayo project in
Bolivia has exposed a vein with an average grade of 868 g/t silver over a
97-meter strike length and average width of 0.61 meters. The company is
seeking financial partners in the construction of a Phase I mine and
mill complex at Pulacayo; it is designed to produce 2.5 million silver
equivalent ounces per year.
Like most commodities, silver has had a tough time these past few months, having fallen
from close to $30 in mid-April to its current price of $19.32. However,
good news for the white metal has recently arisen in the form of Indian
silver import figures.
In a note
published last Friday, Eric Sprott and David Franklin state that after
importing just 1,900 metric tons (MT) of silver in 2012, India has
brought in 2,400 MT of the precious metal in just the first five months
of this year. That is significant given the fact that India’s record for
silver imports, recorded in 2008, is 5,048 MT, as per SilverSeek.com.
Why the surge in imports?
In terms of precious metals, India’s claim to fame has long been its status as the world’s biggest gold
consumer. It’s gained that title largely because people in the country
have limited access to banks, and, according to Sprott and Franklin,
“owning precious metals is synonymous with savings and security.”
However, at present, taxes and import restrictions are making it
difficult for buyers to get their hands on the yellow metal. Seeking
Alpha contributor Dante Caruso elaborates on those measures in a recent article,
commenting that in May, the Indian government raised the gold import
duty to 8 percent from 6 percent as part of its “drastic measures to
redirect [gold] investment back into the economy.” Further, lending
against gold, including gold jewelry and gold ETFs, has been restricted,
while Reliance Capital and the All India Gems & Jewellery Trade
Federation are attempting to curb sales of gold and gold-related
products.
As a result “it would appear that the Indian gold trade has moved
offshore” to get away from those factors, while ”the majority of Indian
investors” — excluding larger investors — are gravitating toward silver,
Sprott and Franklin state.
The implications
Unsurprisingly, these circumstances have investors wondering whether
this year will see India break its 2008 record for silver imports.
More importantly, many are considering how the market will be
affected if India breaks, or even approaches, that record. Shedding some
light on that topic, Caruso states in his article that due to both
silver’s cheapness relative to gold and the fact that Indians spend so
much more money on gold than on silver — respectively $7.2 billion and
$665 million in May — “[v]ery little redirection of gold investment into
silver is required to have a major impact.”
Put more bluntly, that means that if even a small number of gold
investors decide to buy silver instead, the silver market could easily
be overwhelmed, with prices rising “very quickly” as supply diminishes.
With that in mind, it looks as though, like Sprott and Franklin state, silver will be the true winner in India’s “war on gold.”
Silver mining in Mexico is on the rise, and many hopefuls are
flocking to the country to try their luck. Here’s a look at five such
companies.
Canada’s Aurcana (TSXV:AUN) owns 99.9 percent of the La Negra silver-copper-lead-zinc
mine, which is located in Queretaro State, Mexico. As of 2009, La Negra
was milling 1,000 metric tons (MT) per day, a number that jumped to 2,500 MT per day
in 2012. This year, Aurcana expects to reach 3,000 MT per day. While
exploration is ongoing at La Negra, a report from August 2012 identified
115 million ounces of measured and indicated silver underground. This
news changed the mine’s life to at least 30 years.
Avino Silver & Gold Mines (TSXV:ASM), also based in Canada, has 99.28-percent ownership of the Avino mine in
the heart of the Sierra Madre Gold-Silver Belt. The mine was discovered
in the 1500s and has been in operation, on and off, ever since. The
mine has been owned by Avino since 1974, though production shut down in
2001 as a result of low silver prices and the closure of a key smelter.
Avino has since reopened the mine. The San Gonzalo zone achieved
full-time production in October 2012, while the company is exploring new
zones in the area that were discovered in 2011.
Formerly a subsidiary of NSGold (TSXV:NSX), NSX Silver (TSXV:NSY) is currently actively mining
the Dios Padre mine, located in the Eastern Sierra Madre mountain range
about midway between Hermosillo and Chihuahua in East-Central Sonora.
NSX believes that the Dios Padre property’s exploration potential is
excellent, particularly in the breccia body. The property has been mined
since the 17th century and hosts high-grade silver mineralization.
Pilot tests have already demonstrated that the property responds well to
conventional milling and flotation, yielding a concentrate with
87-percent recovery of silver.
Gold and silver producer Silvermex Resources (TSX:SLX)‘s primary asset
is La Guitarra, a property located in the Temascaltepec mining district
of Central Mexico. The property, along with the company, was absorbed
by First Majestic Silver (TSX:FR,NYSE:AG)
in July 2012. The mine covers 98,135 acres and has been mined since the
15th century. Recently, the company completed an expansion program,
increasing its silver production capacity by 40 percent, to 500 MT per
day. Further planning is currently underway to increase production to as
much as 1,000 MT per day. The mine consists of two underground
operation centers and a flotation mill.
Vancouver-basedKootenay Silver (TSXV:KTN) is currently exploring
its Promontorio mine in Sonora, Mexico; the company recently discovered
that the mine contains 92 million silver equivalent (AuEq) ounces. The
mine is made up of approximately 197,684 acres and contains an estimated
44.5 million MT grading an average of 64.32 g/t AuEq. Exploration of
the area indicates that as many as 92 million ounces of AuEq could be
available, with an additional 24 million ounces categorized as
“inferred.” The company is approaching a milestone of 1 million ounces
of AuEq mined.
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.
As silver mining becomes more widespread and successful in
Mexico, many companies are in the process of exploring promising
properties.
Southern Silver Exploration Corp.(TSXV:SSV)
Based in Vancouver, Canada, this junior exploration company is currently
working on multiple projects throughout North America, including two in
Mexico. Southern Silver’s flagship exploration property is the Cerro
Las Minitas silver-lead-zinc
property located in Durango State, Mexico. It covers over 57.9 square
miles, much of which is in Northern Mexico’s Faja de Plata, or Belt of
Silver. According to the company’s website, this area has historic
production and resources of over 3 billion ounces of silver.
Southern Silver is also in the process of exploring its Minas de Ameca project in Jalisco State. This property contains silver, gold and copper deposits within its 50.6-square-mile area.
Arian Silver Corporation (TSXV:AGQ)
The silver exploration, development and production company focuses
primarily on the silver belt in Mexico, specifically Zacatecas State.
Its mission is to explore properties with prior exploration and
production history in order to best reduce risks and capital costs.
Currently, Arian Silver’s main exploration project is its
100-percent-owned Calicanto Group, which encompasses 7 adjacent
properties in Zacatecas. It does not have a current reserve estimate,
but during previous production in 1955, a small section of the mines had
monthly production of 1,500 to 3,400 dry tons, with an average of 110
grams per ton of silver. The property has since been expanded through
exploration.
Aura Silver Resources (TSXV:AUU)
Aura Silver’s concentration is silver and gold in North America. Its
major Taviche Project is located in Oaxaca, Mexico, within the San Jose
Mining District.
This exploration project is made up of the Taviche East and Alma
Delia concessions, according to the company’s website. Within these,
research on the Higo Blanco prospect has determined an inferred silver
resource of 865,000 metric tons at a grade of 119 grams per ton,
amounting to 3.3 million ounces of contained silver.
Kootenay Silver (TSXV:KTN)
The Vancouver-based exploration and mining company is focused heavily on
the exploration of its 100-percent-owned flagship Promontorio Silver
Project located in Sonora, Mexico. Kootenay Silver’s most recent
resource estimate found this property holds an estimated 92,035,000
ounces of silver equivalent, plus an additional 24,326,000 ounces
inferred. Promontorio is also estimated to contain sizeable gold
deposits.
Currently, the Promontorio property is such a priority that Kootenay is not in the process of exploring any other areas.
NSX Silver (TSXV:NSY)
Also headquartered in Canada, NSX Silver is a mineral exploration
company focused on the exploration and development of silver in Mexico.
Its primary asset is the Dios Padre project located in the Eastern
Sierra Madre Mountain range between Hermosillo and Chihuahua.
The Dios Padre’s past production reached 16 million ounces of silver,
according to the company website, and its current exploration potential
is considered to be excellent. NSX Silver has plans to produce a
resource estimation for the project in the near future.
"In recent weeks, a YouTube user known as Drutter has been making the news with his videos,
many of which track the growing divergence between the market price of
silver and physical demand for Silver Eagles from the US Mint. " "SIN: To start off with, could you give our readers a brief explanation of what Drutter’s divergence is? David Morgan:It looks to me like
the main point is that you have good buying, particularly in the coin
realm, Silver Eagles, and yet you see this divergence between an
increase in Silver Eagle purchases and a decrease in the price of
silver, and you have long consolidation periods. Mike Maloney made the
point that the bull market’s intact, there’s massive buying in Silver
Eagles and the price has been decimated recently, particularly the last
couple of years and in particular the last few months. Therefore, based on this Drutter’s divergence, it seems to me Mike
Maloney was implying we’re getting ready for another upsurge. That’s how
I see it — it’s basically a divergence between physical buying,
particularly looking at coins, and the price."
"Let me explain. I went around the world saying that no one knew how
high was high when silver was still trading near the $5 level and the
breakout point was $5.55 the ounce. It finally broke out at $5.55 the
ounce — I forecast that would happen in September 2003, and it did. The price shot to $8.40, then it came back and briefly touched the
$5.55 level and then it moved up. The next big move up was up into the
twelves or so; then it came back down and touched $8.40. Then it moved
all the way up to $21 before coming back down to touch into the nines.
Then it moved all the way up to the $48 level. I mentioned in the members video that we might see it touch back down
to the breakout point, which was at QE2 at $19 an ounce, roughly. I
said, “believe it or not, if this silver market holds true to form, I
wouldn’t rule out that we’ll retrace all the way back to this $19
level,” and that’s pretty much where we’re at right now.”"
" Silver guru David Morgan told Silver
Investing News that while he believes silver prices will stay down in
the short term, the fact that there is “only so much silver available
under $20 an ounce” means that prices will eventually be pressured
upward."
