Precious Metals


Investors are waiting for Friday’s US jobs report. If it is negative, rate hike concerns may be alleviated.

The silver price took a fall last week after the US Federal Reserve elected not to raise interest rates, and has continued to fall since then. 
While the white metal began the week at about $15.50 per ounce, as of Thursday at 3:00 p.m. EST it was changing hands at just $14.98. Prior to the Fed’s announcement it was sitting just below $16.
Silver’s price movement often mirrors that of gold, and the past couple of weeks have been no exception — gold has seen similar declines during the period.
The news might seem strange given that low interest rates are typically positive for precious metals. Analysts have explained the unusual behavior by pointing out that many investors now believe the Fed may hike rates at its next meeting, scheduled for December 15 to 16.
And they have reason to. According to The Wall Street Journal, Fed Chair Janet Yellen reiterated Wednesday that a December rate increase is possible if economic growth remains on track.
One hint about economic growth will come Friday, when US employment data is released. According to the news outlet, many believe those numbers will give a clear picture of how the US economy is performing, and thus may offer guidance on a potential rate hike.

Glencore and Silver Wheaton

The big news in the silver space this week was Silver Wheaton’s (TSX:SLW,NYSE:SLW) announcement that its subsidiary, Anani Investments, will pay a Glencore (LSE:GLEN) subsidiary $900 million for a silver stream on the Peru-based Antamina mine. Beyond that, Silver Wheaton will make ongoing payments of 20 percent of spot price per silver ounce delivered.
In all, Silver Wheaton will receive 33.75 percent of Antamina’s silver output until 140 million ounces of silver have been delivered to it; the company will then receive 22.5 percent of the silver the mine produces at a 100 percent payable rate until the end of its life.
Interestingly, Antamina is a copper mine, not a silver mine. In fact, it’s the eighth-largest copper mine in the world. It’s owned by subsidiaries of Teck Resources (TSX:TCK.B,NYSE:TCK), BHP Billiton (ASX:BHP,NYSE:BHP,LSE:BLT) and Mitsubishi (TSE:8058), as well as the Glencore subsidiary.

Q3 results

This week also brought the release of Q3 results from various silver miners. Below are some highlights.
Coeur Mining (NYSE:CDE) released its Q3 results on Monday, commenting that it produced 3.8 million ounces of silver and 85,769 ounces of gold during the period; that equates to silver equivalent output of 9 million ounces.
On the financial side, the company incurred an adjusted net loss of $14.2 million, or $0.16 per share. Meanwhile, revenue came in at $162.6 million.
The same day, Endeavour Silver (TSX:EDR,NYSE:EXK) released its financial results for Q3, stating that it saw a net loss of $14.1 million, or $0.14 per share. That’s compared to a net profit of $11.4 million, or $0.11 per share, in the year-ago quarter.
During the period, the company produced 1,820,282 ounces of silver and 15,319 ounces of gold. Compared to Q3 2014, those are increases of 11 and 9 percent, respectively.

Wednesday, Hecla Mining (NYSE:HL) released its Q3 results, reporting a net loss applicable to common shareholders of $10 million, or $0.03 per share. After adjustments, that equates to a net loss applicable to common shareholders of $20.5 million, or $0.05 per share
The company’s total silver production came in at 2.6 million ounces, while its gold output was 43,635 ounces.
Also on Wednesday, Great Panther Silver (TSX:GPR,NYSEMKT:GPL) released its financial results for Q3. Compared to Q3 2014, its silver output increased by 4 percent, to 586,918 ounces, while its gold production rose by 45 percent, to 6,079 ounces. In all, the company’s metal production increased by 21 percent to hit 1,080,296 silver equivalent ounces.
The company recorded a net loss of $3.3 million compared to a net loss of $1 million in the year-ago period.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. 


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