Precious Metals

Silver is maintaining its post-employment report gains and has moved higher.

Silver received a boost last Friday, gaining $0.45 for the day and closing at $27.35, following the release of a disappointing US employment report. Although the metal started the week by losing a nickel, it more than recovered on Tuesday, when silver prices jumped $0.68 for the day, finishing two cents shy of the $28 mark.

Tuesday’s gains were the largest since January, according to Bloomberg. The move was largely attributed to short covering, bargain hunting and expectations that major central banks will continue to employ policies considered bullish for precious metals.

Wednesday’s release of Federal Open Market Committee meeting minutes doused these expectations. The document reveals that debate continues within the Fed regarding how long current monetary policies should continue. Discussions about the potential risks associated with these measures are also ongoing.

Also in the US, on Wednesday, both the Dow (INDEXDJX:.DJI) and S&P 500 (INDEXSP:.INX) hit record highs, putting further pressure on silver. Added to the mix was the gold market’s negative response to reports that Cyprus plans to sell 400 million euros worth of its gold reserves. Silver followed the yellow metal’s decline and finished the day with $0.33 in losses, ending at $27.65. Thursday, the Cypriot central bank denied the claims that it plans to sell its gold, asserting that the matter has not even been discussed.

Silver has managed to keep above $27 all week and even briefly breached the $28 mark during trading. But the futures market is still extremely heavy on the short side.

Last week’s Commitment of Traders report shows that there were further aggressive additions by speculative shorts. Short positions, which are at a five-year high, saw the addition of 635 metric tons. However, since Tuesday is the cut-off day for the reporting period, the market’s response to March US employment data will be reflected in this week’s report.

With the exception of Friday, when that report was released, silver was in the sub-$27 range last week. In response to the lower price level, Heraeus, a global precious metals and technology firm, said it has noticed increased demand and equally strong interest in Silver Eagles.

Although some banks have lowered their forecasts for silver for 2013, physical demand, as well as the economic environment, indicate climbing prices, the firm’s market report states.

Like other firms, Deutshe Bank (NYSE:DB) has cut its silver forecasts. For 2013, the firm lowered its average price projection to $31 while reducing its 2014 projection to $34. These are reductions of 16.5 percent and 10.1 percent, respectively, according to MarketWatch. That indicates that the firm expects a significantly weaker performance from silver, but like Heraeus, still expects notable moves above current prices.

The close

Thursday May silver on the COMEX ended the US session up $0.02 at $27.68. Gains on the New York spot market were half that amount. Up by a penny, the metal’s closing price was $27.66.

Company news

Endeavour Silver (NYSE:EXK,TSX:EDR) announced record production from its mines in Mexico during the first quarter of 2013. Silver production was up 39 percent, at over 1.4 million ounces. Gold production rose 138 percent, to 15,032 ounces.

Though realized prices for silver and gold fell during the quarter, the company still reported that revenues jumped 42 percent, to nearly $70 million. Endeavour also said that the company has signed two new concentrate sales contracts.

With the release of further delineation drill results, SilverCrest Mines (AMEX:SVLC,TSXV:SVL) continues to expand its Santa Elena deposit in Sonora, Mexico. The results are part of a resource expansion and reclassification that will be included in a prefeasibility study.

President J. Scott Drever said the company has “drilled the known portion of the deposit at 35 to 40 metre centres [and] the Main Mineralized Zone has been extended by approximately 300 metres beyond [the] current resource boundary.” SilverCrest also identified two new subparallel zones. Drever noted that the company expects the results to demonstrate an extended mine life.

The company reported that core hole SE-13-126 intercepted further bonanza grades (greater than 34 g/t gold or greater 1,000 g/t silver), with 0.6 meters grading 5.2 g/t gold and 1,840 g/t silver. These high grades are included in a broader interval of 21.6 meters grading 1.46 g/t gold and 169 g/t silver.

Canadian Silver Hunter (TSXV:AGH) announced the expansion of its exploration area at the South Lorrain silver-cobalt project in Ontario.

The company said recent diamond drilling returned significant silver values between 111 and 122.3 meters downhole, including 1,517 g/t over 0.3 meters, 479 g/t over 0.4 meters and 91 g/t over 0.3 meters. This zone appears to be related to a new silver-bearing structure. The recent power-stripping and channel-sampling program returned silver values ranging from 0.4 g/t to 190 g/t, with only seven of the 77 samples taken assaying below 1 g/t silver. The company has also now launched its website.

Orko Silver (TSXV:OK) shareholders overwhelmingly voted in favor of the arrangement whereby the company will be acquired by Coeur d’Alene Mines (TSX:CDM,NYSE:CDE). Orko plans to apply for a final order of the Supreme Court of British Columbia on April 12 and estimates that the arrangement could be effective as soon as April 16.


Securities Disclosure: I, Michelle Smith, do not hold equity interest in any of the companies mentioned in this article.

Related reading: 

2013 Silver Eagles Already Sold Out


S&P 5003911.74+116.01


Heating Oil4.18-0.06
Natural Gas6.10-0.12