Precious Metals

Silver spot prices have rallied on expectations that quantitative easing will continue for longer than previously expected.

The silver market is still very much influenced by speculation as to when the US Federal Open Market Committee (FOMC) will pull the plug on the current round of quantitative easing (QE), as is evidenced by this week’s price action.

Early in the week, silver tracked gold higher on short covering and safe-haven demand sparked by political upheaval in Egypt, closing back up four pennies over $19 an ounce Monday. That moderate upswing continued Tuesday as inflation news out of China lent further support to gold and silver despite a stronger US dollar, pushing silver up to $19.12 an ounce.

This week’s rally really picked up momentum mid-week after the release of minutes from Wednesday’s US FOMC meeting, Bloomberg reported. Precious metals bulls gained strength from FOMC members stating that they want to wait for more positive economic signals before axing bond buying. A slight loss in the US dollar, in addition to higher oil prices, was also bullish for silver, which closed Wednesday at $19.37 an ounce.

Silver’s much-awaited rally continued for a fourth straight session Thursday, the metal’s longest rally since March 8, according to Bloomberg. The precious metals markets were bolstered by Federal Reserve Chairman Ben Bernanke’s call for a “[h]ighly accommodative monetary policy for the foreseeable future” from the US central bank in order to spur economic growth. Silver hit a six-week high for a Thursday close of $19.965 an ounce.

Company news

Coeur Mining (TSX:CDM,NYSE:CDE) released results from the preliminary economic assessment completed on its La Preciosa silver-gold project in Durango, Mexico. The mine is expected to produce an estimated 134.5 million ounces of silver over a mine life of 17 years, making La Preciosa potentially one of the top 10 primary silver mines in the world. The mine is expected to generate a 17-percent after-tax internal rate of return based on $25 per silver ounce and $1,500 per gold ounce.

First Majestic Silver (TSX:FR,NYSE:AG) announced that total Q2 production at its five Mexican silver mines increased 55 percent over the same period last year for a record 34,268,117 equivalent ounces of silver. The producer also has said it will cut 10 percent of its workforce this year, reported Reuters, due to slumping silver prices. The company has already canceled drilling contacts and suspended silver sales.

Great Panther Silver (TSX:GPR,NYSEMKT:GPL) reported Q2 production from its Guanajuato and Topia mines in Mexico. Metal production rose 22 percent over the same period last year, to 680,212 silver equivalent ounces. The company attributes the increase to improved grades and operational efficiency. Great Panther’s management is confident the company remains on track to meet its fiscal 2013 production guidance of 2.4 to 2.5 million silver equivalent ounces.

Q2 production figures for Fortuna Silver Mines‘ (TSX:FVI,NYSE:FSM) San Jose mine in Mexico and the Caylloma mine in Peru show a total of 1,074,007 ounces of silver and 5,183 ounces of gold. So far this year, production at the two mines has totaled 2,066,225 ounces of silver and 9,675 ounces of gold. The silver producer is on target to meet its 2013 production guidance of 5.9 million ounces of silver equivalent.

Endeavour Silver (TSX:EDR,NYSE:EXK) announced record-breaking second-quarter silver and gold production. Compared to the same quarter last year, second-quarter silver production for 2013 rose 48 percent, to 1,535,873 ounces, while gold was up 159 percent, to 19,914 ounces. Revenues for the quarter were also up 57 percent, to US$63.5 million. The company attributes its stellar production numbers to successful operations at the Bolanitos mine, whose output peaked at 3,000 metric tons per day.

Junior company news

Entourage Metals (TSXV:EMT) commenced exploration work at its La Liga silver project in the Yukon Territory, Canada. The program is focused on high-grade silver plus leadzinc mineralization at the Red Devil and Galactose zones and will involve detailed geologic mapping, prospecting and mechanical trenching.

Apogee Silver (TSXV:APE) reported that a development and sampling program at its Pulacayo project in Bolivia has exposed a vein with an average grade of 868 g/t silver over a 97-meter strike length and average width of 0.61 meters. The company is seeking financial partners in the construction of a Phase I mine and mill complex at Pulacayo; it is designed to produce 2.5 million silver equivalent ounces per year.


Securities Disclosure: I, Melissa Pistilli, hold indirect investment interest in Avino Silver & Gold Mines.

Related reading: 

Silver Gets a Pick-Me-Up from Sinking US Dollar

Fortune Smiles on Fortuna Silver Mines



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