Frustration Rife After Yet Another Range-bound Week for Silver

Silver’s price action has been uninspiring thus far this year, particularly for the past few weeks, and market watchers are starting to get a little fed up. Indeed, in a biting — but accurate — evaluation of the situation, Gold Seek’s Chris Mullen recently said silver “continues to attract selling at the $20 level and buying near the $19 level meaning its boring range bound trading pattern continues.”

This week was no exception. Silver spent Monday bouncing between $19.52 and $19.72 per ounce, seemingly due to uncertainty about the Ukraine situation, which intensified that day due to US visa bans and sanctions on individuals and companies in Russia. While such geopolitical turmoil is usually good for precious metals prices, its benefits “tend to be fleeting and can be erased just as fast as they materialize,” James Steel, chief precious metals analyst at HSBC, told Reuters.

The next day Ukraine played a different role. While silver continued to sink, hitting $19.28 early in the morning on the back of “a rally in equities … ahead of the Fed’s two day meeting,” concerns about Ukraine stopped the precious metal from sinking even further, as per a News Ledge article.

However, even Ukraine couldn’t hold silver up forever. On Wednesday, the white metal continued to slink downward, ultimately closing at just $19.17 as investors speculated about the outcome of the Fed’s meeting; many believed it would confirm a further $10-billion cut to the Fed’s monthly bond-buying program even though US economic data continues to be mixed, iNVEZZ.com states.

As it turns out, that prediction was justified. For the fourth consecutive meeting, the central bank decided to reduce its purchasing by $10 billion, commenting that the economy “will expand at a moderate pace and labor market conditions will continue to improve gradually,” according to Reuters. Since the release of the verdict, silver’s decline has continued. It closed today at just $19.02 after dipping as low as $18.86 earlier in the day.

Company news

On Tuesday, Mexico- and Peru-focused Fortuna Silver Mines (TSX:FVI,NYSE:FSM) provided further step-out drill results from the Trinidad North discovery, which is contiguous to its San Jose mine. The results “continue to confirm the extension of the Trinidad North zone” and show that high-grade silver-gold mineralization is present over wide vein widths.

Highlights include hole SJOM-349A, which holds 929 grams per tonne (g/t) silver and 4.87 g/t gold (1,221 g/t silver equivalent) over an estimated true width of 4.5 meters, along with 1,808 g/t silver and 13.21 g/t gold (2,601 g/t silver equivalent) over an estimated true width of 4.1 meters.

The next day, US Silver & Gold (TSX:USA,OTCQX:USGIF) announced Q1 production results from its Idaho-based Galena mine complex, commenting that it put out 460,490 silver equivalent ounces, including 385,503 ounces of silver, during that time period. That’s a 33-percent fall compared to the year-ago quarter; however, the company said previously that Q1 would likely bring the year’s lowest production and highest costs.

Darren Blasutti, president and CEO of US Silver & Gold, commented, “[o]ur guidance for full year production and costs remains unchanged. Silver production in the second quarter will increase to over 500,000 ounces of silver and exceed 600,000 silver equivalent ounces at cash costs and all-in costs within our guidance range.”

Also on Wednesday, Mexico-focused Excellon Resources (TSX:EXN) released its financial results for the first quarter of 2014. Highlights include revenue of $10.5 million, up from $10.1 million in the year-ago quarter, and sales of 624,953 silver equivalent ounces. That’s quite a bit higher than the 476,281 silver equivalent ounces sold by the company in the first quarter of 2013.

Junior company news

Wednesday, Levon Resources (TSX:LVN) reported drill hole assays from the final 10 holes completed during Phase 4 drilling at the Aida claim at the company’s Mexico-based Cordero project. Highlights include hole C14-267, which returned 308 meters of 70.77 g/t silver equivalent, including 36 meters of 255.96 g/t silver equivalent.

The results confirm that mineralization “extends from surface and to depths of 700 to 1000+ m, revealing wide, higher grade mineralization within volcanic feeders beneath the Cordero Felsic Volcanic Dome Complex.” They also show that the dome is mushroom shaped and mineralized to the surface.

Earlier today, Paramount Gold and Silver (TSX:PZG,NYSEMKT:PZG) said it has discovered a new set of structures south of the Guazapares Megastructure on its San Miguel project. Further, preliminary drilling “has intersected sizeable widths of high-grade precious metals.”

The company describes the results from drill hole LU-85 as “outstanding,” noting that the hole brought back an interval of 15 meters grading 1.46 g/t gold and 646 g/t silver; that represents a 12.23 g/t gold equivalent at a 1 to 60 gold-to-silver ratio.

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

Related reading: 

Will Silver’s Topsy-Turvy Week End on a High Note?

Ukraine Tension Takes a Back Seat as Silver Hits Lowest Price Since February

Silver Fails to Impress on Anniversary of $50 Price Tag