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The latest news, commentaries and opinions relating to the global silver market over the past week.
By Adam Currie — Exclusive to Silver Investing News
Silver markets showed relative stability over the week, still buoyed by news of the Greek bailout. While the dangerous symptoms of the debt crisis in Europe have retreated, the crisis itself seems to have been temporarily contained.
The metal traded within the $33 to $34 per ounce range for the majority of the period, closing higher on the COMEX at $35.56, up 3.80 percent.
This rally has led to some rather bullish forecasts within the market, with both analysts and speculators forecasting that the metal is long overdue for a notable price surge.
A market on the rise
In a recent interview, Gavin Thomas, Managing Director and CEO of Kingsgate Consolidated Ltd. (ASX:KCN), voiced his bullish silver sentiment, stating “Silver is a fantastic opportunity…I see there’s a lot of upward price [for the metal], because of the lack of supply.” He added that silver could rise to $50 per ounce over the next 24 months.
Thomas noted that the supply of silver is under increasing pressure as lead and zinc mining, of which silver is a by-product, become less prolific.
Greg McCoach, President of AmeriGold and publisher of the Mining Speculator newsletter, also believes that a tight supply is a good indicator for silver, commenting “There’s a lot of explosive upside in silver and when you understand how tight the silver market is right now, and all the game-playing that’s been going on and the monster short position that exists, there’s not enough physical metal in the world to cover this.”
McCoach explained that there is “a total disconnect in [the silver] market that, at some point, when it is allowed to become a free market,” will “run like crazy.” He sees that time coming very soon.
China’s weak silver demand
Looking towards emerging markets as a yardstick, Walter de Wet, strategist in London for South African bullion and investment bank Standard Bank, warned that while industrial silver demand from these markets was strong in 2011, China’s new demand for silver “is not very strong at the moment.”
Standard Bank argued that Chinese warehouses currently hold enough silver to meet the country’s industrial demand for 15 months, having risen sharply from the surplus of twelve months’ worth in 2011.
Not all about China
While analyst attention seems primarily focused on China, another of the world’s developing powerhouses might very well be dictating the direction in which prices move over the medium to long-term.
India’s silver imports may top 5,000 metric tons in 2012 due to strong investment demand, according to Prithviraj Kothari, president of the Bombay Bullion Association.
At a conference this week, Kothari stated that last year India imported approximately 4,800 tons of silver, with silver demand expected to rise on firm industrial and investment demand in 2012.
According to a recent media research report, bullish market observers are of the opinion that silver demand will grow in the years ahead, resulting in continuing price rises. The report added that demand from the medical and industrial sectors is growing steadily, while silver production as a by-product will decline significantly moving forward.
The research underlined that, with the exception of 2008, silver’s technical chart shows that it will continue to progress in a long-term bull market. “Technical analysts see important resistance at the $35 per ounce mark. Should the white metal break through this level it would open the way for a trending move higher. The silver price could regain its high of $50 per ounce and even hit new record highs at around $65 to $70 per ounce before enduring another meaningful correction.”
Company news
With the market exuding such bullish sentiment, it is little surprise that investors are seeking out silver production and exploration companies in order to take advantage of any future price run.
Pan American Silver Corp. (TSX:PAA) has announced the results of its 2011 exploration activities. Last year, Pan American spent $25.1 million in direct exploration at its seven operating mines and selected projects.
According to a press release, the company discovered 29.3 million ounces of new reserves, which more than replaced the 24.7 million contained ounces of silver mined last year. The most notable exploration success was at the La Colorada mine, where exploration drilling added 10.6 million new ounces of silver.
Junior company news
La Quinta Resources Corp. (TSXV:LAQ) announced that it will initiate its 2012 diamond drilling campaign at its Easter Project in Nevada on March 1, following the completion of access road rehabilitation to the property and scheduling of its drill contractor. Over the past few months the company refined the design of its drilling program to focus primarily on the West Vein at Easter in order to assess the initial potential for resource expansion.
“The West Vein target will be the initial focus of this drilling campaign,” said CEO Glen Watson. “The results of surface sampling at the West Vein target from our 2011 fieldwork are significant enough to cause us to re-evaluate our priorities for drill targeting to prove-up what we believe to be a discovery of interest.”
Mirasol Resources Ltd. (TSXV:MRZ) announced results from expansion drilling at its La Negra and La Morocha silver deposits at the Joaquin Silver Project in Argentina. According to a release, regional exploration has identified “several other targets” where exploration and drilling returned “significant” silver and/or gold intercepts.
Highlights of the program included two drill holes located east of the La Negra resource pit, where high-grade silver intercepts were included within long mineralized intercepts at relatively shallow depths.
Securities Disclosure: I, Adam Currie, hold no direct investment interest in any company mentioned in this article.
