Silver Price Pressured by Trifecta of Greece, China and Fed

By 4:00 p.m. EST on Thursday, the silver price was at $14.99 per ounce, up just slightly from the week's low of $14.94.

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Though hopes were high that concerns regarding Greece and China would boost the silver price this week, the white metal has taken a decided turn for the worse. 

It was sitting at $15.49 per ounce at 9:00 a.m. EST on Monday, and since then has moved downward save for a few bumps. By 4:00 p.m. EST on Thursday, the white metal was at $14.99, up just slightly from the week’s low of $14.94.

The problem seems to be that rather than intensifying, the anxiety about Greece and China that hit the market last week has dissipated. In terms of the former, Eurozone officials struck a third bailout deal with Greece on Monday, and it was approved Thursday — funding will now be reopened to Greece, according to Reuters.

Looking at China, tension was high last week when the Asian nation’s stock market took a big hit. While there was some anxiety that problems there would persist, David Jollie, an analyst at Mitsui Precious Metals, told Reuters earlier this week that investors are still uncertain “over which direction Chinese equities might move in next.”

Investors tend to flock to precious metals during times of anxiety, so reduced tension in Greece and China has left such metals with little upward momentum.

That lack of upward momentum would have been bad enough, but it has been compounded by comments from US Federal Reserve Chair Janet Yellen released Thursday. She reiterated that US interest rates will likely increase in 2015, as per Bloomberg. Higher rates reduce the appeal of precious metals as they neither pay interest nor provide returns, so her message pressured silver — along with gold, platinum and palladium.

While this week looks set to end on a down note for the silver price and for precious metals in general, it seems possible that a change in direction in Greece or China could alter the situation.

Company news

Primero Mining (TSX:P,NYSE:PPP) was in the news this week when word surfaced that its subsidiary is having issues with its import and export licenses. They were suspended in May, and as a result the subsidiary has been delayed in selling about 880,000 ounces of silver — that represents “approximately $6.5 million in delayed revenue.”

Due to that delay, Primero’s subsidiary has not been able to deliver silver under its purchase agreement with Silver Wheaton (TSX:SLW,NYSE:SLW). In total, the subsidiary failed to deliver around 630,000 ounces of the metal to the company during Q2, and it “did not get the benefit of spot sales on approximately 250,000 ounces.”

At this point, Primero hasn’t been given a clear date for when the licenses will be put back in place. It will face consequences if it does not happen by August 5, 2015, which is when its silver purchase agreement with Silver Wheaton resets — put simply, Primero “may not realize spot silver sales in the third quarter of 2015 but could then expect to reach the annual threshold earlier in 2016.”

On a brighter note, both Great Panther Silver (TSX:GPR,NYSEMKT:GPL) and Hecla Mining (NYSE:HL) released Q2 production results this week. The former achieved record output of 648,810 ounces from its two Mexico-based mines, while the latter put out 2.48 million ounces of the white metal, down 2 percent from the year-ago period.

Great Panther also reported record gold production of 5,322 gold ounces, while Hecla produced 44,692 ounces of the yellow metal.

Finally, Kootenay Silver (TSXV:KTN) was up 6.56 percent, at $0.325, as of 4:00 p.m. EST on Thursday following the announcement that it’s initiated a maiden NI 43-101 resource estimate for its Mexico-based La Negra silver discovery. The resource estimate will include a metallurgical study.

The company also announced a $1.5-million, non-brokered private placement. It will consist of 5 million units priced at $0.30 each.

 

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

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