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Silver prices rallied after the Federal Reserve announced a surprisingly aggressive new program.
The silver market was volatile ahead of the FOMC meeting. Intraday silver prices made significant moves with the white metal bouncing above $34 and $32. Silver’s fluctuations were widely attributed to a battle between the confident and the second guessers. While some were willing to bet that QE3 was in the cards, others seized the opportunity to cash in on the profits. Still, silver managed to maintain a close over $33 each day.
Wednesday ended with silver down $0.17 at $33.31. For much of Thursday, the metal remained under pressure as selling continued. Then came the announcement of a surprisingly aggressive move from the Fed.
The Fed announced that under a new, open-ended program it will spend $40 billion per month buying mortgage-backed securities. Given the other programs currently in place — such as Operation Twist, which has been extended until the end of 2012 — the Fed will be spending about $85 billion per month on “longer-term securities” through to the end of the year.
Furthermore, the Fed announced, “[i]f the outlook of the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate.”
The close
Another question of skepticism debated ahead of the announcement was whether QE3 would already be priced in. Thursday’s price action speaks for itself: the US floor session ended with December silver on the COMEX up $1.29 at $34.60. The New York spot price ended the day up $1.37 at $34.68.
The accommodative action also gave a boost to silver miners, whose stock prices did not perform overly well this week. Ahead of the announcement on Thursday there was a significant amount of red, but afterwards the bleeding largely stopped and most companies were in the green.
Company news
Apogee Silver (TSXV:APE) reported 86 percent silver recovery from a bulk sample taken from its Pulacayo development project in Bolivia.
“These bulk test results indicate a total silver recovery of 86.08% in lead and zinc concentrates and produced marketable lead and zinc concentrates with high silver grades,” states the company’s press release.
Trevali Mining (TSX:TV,LMA:TV,OTCQX:TREVF,FWB:4TI) announced that construction at its Santander zinc–lead-silver mine in Peru is progressing, and commissioning is expected in the fourth quarter.
Based on current development schedules, Trevali anticipates that approximately 95,000 tonnes of mineralized material grading 5.61 percent zinc, 0.65 percent lead and 1.65 oz/t silver will be stockpiled and available for mill commissioning.
There will be a delay in Cream Minerals‘ (TSXV:CMA,OTCBB:CRMXF,FWB:DFL) filing of the NI 43-101 technical report for the updated mineral resource estimate for its Nuevo Milenio silver-gold project in Mexico.
The report was supposed to be filed by September 13, 2012, but Dr. Derek McBride, who is preparing the report, has advised the company that he will not be able to deliver it by the deadline.
Orko Silver (TSXV:OK) commenced a field exploration program at its La Preciosa silver-gold project in Mexico.
Rainbow Resources (TSXV:RBW,OTCQX:RIINF) is now trading on the highest over-the-counter marketplace: the OTCQX.
Securities Disclosure: I, Michelle Smith, do not hold equity interests in any company mentioned in this article.