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The silver price took a hit this week on the back of a Greece-driven stock market rally. Companies active in the space include Teck Resources, which reportedly said it “could sell silver streams from its mines to increase liquidity.”
The silver price was above $16 per ounce last week on the back of chart-based buying, a weak US dollar and uncertainty about Greece.
However, this week has been another story. On Tuesday the white metal took a steep dive, dropping from Monday’s close of $16.20 right down to $15.74.
According to Reuters, the fall came on the back of a stock market rally driven by “hopes that Greece would reach a deal with its creditors to stave off default.” A sharp fall in the euro against the US dollar also played a role.
“Further losses seem likely now for gold, although that being said precious metals look a little bit oversold now while Greece could still default and exit the euro zone, an outcome that would undoubtedly boost the appeal of safe havens,” Fawad Razaqzada, technical analyst at Forex.com, told the news outlet.
Investors will have to wait and see if Greece can provide a boost for precious metals in the longer term. For now, the silver price has rallied somewhat, closing Tuesday at $15.88. Another Reuters article states that the uptick came on the back of a retreat in “both stocks and the dollar.”
Teck to sell silver streams?
The Financial Post reported Wednesday that Teck Resources (TSX:TCK.B,NYSE:TCK), Canada’s largest diversified resource company, has said it “could sell silver streams from its mines to increase liquidity.” According to the news outlet, Teck has been on the lookout for copper acquisitions, and selling silver streams is one way it could finance such purchases.
Analysts are already weighing in on Teck’s statement, with TD Securities’ Greg Barnes stating that the miner could potentially raise about $1 billion from streams. He predicts that Teck will sell around 75 percent of payable silver production from its Anatamina, Red Dog and Highland Valley mines. Meanwhile, Daniel Earle, another TD analyst, said that the “obvious buyer” for any such streams is Silver Wheaton (TSX:SLW,NYSE:SLW).
Whether Teck will be able to sell any silver streams remains to be seen, but it would be good to see the company get some positive news. Teck has encountered various obstacles in 2015, and currently its share price is down 12.34 percent year-to-date. Just this week, news hit that the company is facing sanctions at its Carmen de Andacollo copper mine in Chile.
In other silver news, Mandalay Resources (TSX:MND) said Wednesday that the union at its silver-gold Cerro Bayo mine in Peru has initiated a legal strike action. The company and the union are engaged in “ongoing bargaining efforts to reach a new collective agreement.”
Production at Cerro Bayo is currently suspended as access to the mine site is blocked. Mandalay is not yet sure of the extent to which the mine’s output will be affected.
The same day, Central GoldTrust (TSX:GTU.UN) announced that along with Silver Bullion Trust (TSX:SBT.UN) it has commenced a legal proceeding against Sprott Asset Management Gold Bid, Sprott Asset Management Silver Bid, Sprott Asset Management, Sprott Physical Gold Trust Sprott Physical Silver Trust — collectively known as Sprott — in the Ontario Superior Court of Justice.
Central GoldTrust and Silver Bullion Trust want the court to declare, among other things, that Sprott’s takeover bid for Central GoldTrust “is an illegal proxy solicitation” and “unlawfully deprives unitholders of [Central GoldTrust] of their statutory take-over bid withdrawal rights.”
It will be interesting to see what decision the court makes on the matter. Rick Rule, founder of Sprott Global Resource Investments, told the Investing News Network after Sprott launched its takeover that investor reactions to his company’s move had largely been positive.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Related reading:
Silver Price Above $16 on Weak US Dollar, Greece Uncertainty
Rick Rule on Sprott’s Intended Bid for Central GoldTrust and Silver Bullion Trust