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Silver started the week declining, but is now about where it was last week. Will the metal see yet another week of losses or will it be able to gain?
Super-storm Sandy raged off the East Coast of the US and came inland early this week, resulting in massive devastation. While US equity markets were closed, silver trading continued; however, volumes clearly indicated that investors’ focus was elsewhere, and the metal started the week with losses, down $0.33 at $31.76. Silver has since recovered those early-week losses, but has yet to make any substantial gains.
US equity exchanges reopened on Wednesday and as more focus shifted back to the markets, silver participation, along with prices, recovered. The metal, which drafted support from positive action in base metals and crude, started the day higher. Some pressure crept into the market intraday, but silver then had strength in the gold market to play off. By the time New York spot markets closed, silver was able to post its first gain for the week, up $0.51 at $32.26.
That brought silver back into the neighborhood where it ended last week, which marked the sixth week of consecutive declines for COMEX silver.
A Commitment of Traders report revealed a further erosion of support for the week ending October 23. A hefty 543 metric tons were cut from net speculative length. That is the largest decline since June, a Standard Bank report states.
“[W]e could see further liquidation this week, although this might be limited should silver manage to ride on the coat tails of a possible stabilisation in gold,” the report adds.
On Thursday, silver started out in a positive direction again, outperforming gold and reaching its highest level since October 19. One of the anticipated data releases for the week, Chinese manufacturing, showed positive developments. China’s Purchasing Managers’ Index rose to 50.2 for October, which means it crossed the threshold into expansion territory. Silver seemed to receive a boost from that news, but the metal’s positive direction was not sustained. Strength in the dollar and in equities is credited with providing a passage for pressure on the metal.
The close
Following the close of the US day session Thursday, December silver on the COMEX was near the day’s low, down $0.04 at $32.27. The New York spot market closed with silver flat at $32.26.
There is support for silver around $31.52 and resistance at about $32.48, and the metal has been bouncing around in that range. The second data point on the radar for this week is the US jobs report, which is scheduled for release Friday. Some market participants have warned that it could prompt volatility.
If so, will it be enough to break silver out of its range? If silver does make a significant move, will it be one that forces the metal to post yet another week of losses, or will silver enjoy a week of gains? We’ll have to await the market for those answers.
Company news
Huldra Silver (TSXV:HDA) provided an update on its 200-metric-ton-per-day mill in Merritt, BC, where commissioning began on August 7. The company reported that testing is currently being conducted by processing a 5,000-metric-ton stockpile of mill feed from development work in 1988 at its Treasure Mountain mine. The mill is currently operating 24 hours a day, five days per week. In November, the company plans to transition to a seven-day schedule and to start shipping lead/silver concentrate to a smelter.
Huldra also amended its credit agreement with Waterton Global Value. Among the terms, the creditor agreed to provide funding for 80 percent of the value of concentrate delivered to the smelter on a spot basis for a 2 percent fee.
Avino Silver & Gold Mines (TSXV:ASM,AMEX:ASM) provided an update on the activities at its San Gonzalo project near Durango, Mexico, where underground development is ongoing.
Avino said the decline from level four to level five has advanced 170 meters to date, and a total of 200 meters remain until the level five elevation of 2,130 meters is reached. Meanwhile, the company has been mining along the San Gonzalo vein on the fourth level. Among other results, Avino announced samples of 14,768 g/t of silver over 0.4 meters.
Sunset Cove Mining (TSXV:SSM) announced the completion of surface channel sampling at its Carolay property in La Libertad, Peru.
Channel sampling was conducted in 10 tranches over an area approximately 32 meters wide by 42 meters long, while additional sampling was conducted in a small adit, the company said.
Highlights include several channels with potentially economic grades of silver with up to 259.2 grams per tonne (g/t) silver across 3.07 meters, including 0.4 meters of 1,308 g/t of silver and 135.1 g/t of silver across 1.42 meters in two separate trenches.
Securities Disclosure: I, Michelle Smith, do not hold equity interests in any of the companies mentioned in this article.
