Precious Metals

BMO Capital Markets doesn’t have high expectations for the silver price in 2015. However, the firm sees some companies, including emerging producers Bear Creek Mining, MAG Silver and Silver Standard, performing well.

Silver has performed well so far in 2015, and at close of day Wednesday was up just over 10 percent since the start of the year. 

However, despite the white metal’s good fortune, many aren’t convinced that it will be able retain the gains it’s made. Case in point: while Haywood Securities recently reaffirmed its prediction that silver will average $18 per ounce through to 2020, BMO Capital Markets has taken a much more conservative stance, stating in a note released this week that it sees silver averaging $15.50 in Q1, $14 in Q2, $15.50 in Q3 and $15 in Q4.

BMO doesn’t give a detailed explanation for its low price predictions, but in terms of gold notes that safe-haven support is down since the Greek elections took place, while the metal’s seasonal peak tends to arrive in mid-February. The firm “continues to expect more downside” for gold in the face of the Fed rate hike, though QE in the Eurozone could provide some buoyancy. It’s likely it sees similar factors applying to silver.

However, while BMO’s silver price outlook is fairly negative, it nevertheless sees good times ahead for some in the silver space. In its report the firm notes that it expects rises in the share prices of senior producers like Fresnillo (LSE:FRES), Pan American Silver (TSX:PAA,NASDAQ:PAAS), Silver Wheaton (TSX:SLW,NYSE:SLW) and Tahoe Resources (TSX:THO,NYSE:TAHO), as well as in those of a few emerging producers. Here’s a brief overview of a few of those smaller companies and what they’ve been up to lately:

  • Bear Creek Mining (TSXV:BCM— Bear Creek’s share price is currently sitting at $1.60, but BMO sees it heading up to $1.90 and has given the company an “outperform” (but speculative) rating. The company hasn’t put out news since releasing a corporate update regarding cost cutting in October 2015, but notes on its website that its Corani project is moving towards permitting and construction. A modified and optimized feasibility study is due out this quarter. 
  • MAG Silver (TSX:MAG,NYSEMKT:MVG) — As with Bear Creek, BMO has placed an “outperform” rating on MAG, but notes that it is speculative. At close of day Wednesday, the company’s share price was at $9.67 on the TSX, but the firm sees it moving up to $12. Most recently, MAG announced the appointment of a new director and released its Q3 2014 results, noting that it continues to work mainly on ramp advancement at its Juanicipio project.
  • Silver Standard Resources (TSX:SSO,NASDAQ:SSRI) — At the end of the day Wednesday, Silver Standard’s share price was at $7.81 on the TSX; BMO sees it increasing to $8 and has given it an “outperform” rating. The company was in the news in January first for putting out its 2014 production results and 2015 guidance, and later after it received a notice of assessment from the Canada Regulatory Agency. Silver Standard anticipates increased production in 2015, but exploration will be reduced.

It will certainly be interesting to see whether those companies rise to BMO’s expectations in the coming months. It will also be interesting to see whether the white metal is able to surpass the firm’s low price outlook.

 

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

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