Silver Struggles to Stay Above $24 Despite Thriving Physical Demand

Silver’s struggle to stay above the $24 level continued this week as the white metal moved between $23.52 and $24.23 per ounce, breaking $24 only for brief stretches at a time.

The white metal had a strong start to the week, hitting $24.23 early on Monday in New York. However, by the end of the day, silver had slunk down to $23.74; it did not rise above the $24 mark again until Wednesday.

Tuesday morning saw silver fall to its lowest point of the week, hitting $23.52. The precious metal was able to recoup its losses later in the day, closing at $23.93.

Late Wednesday, silver once again passed $24, rising as high as $24.14. But once again, it was unable to sustain those gains; as gold fell Thursday on the back of better-than-expected US jobs data, the white metal also fell, Bloomberg reported.

Speaking yesterday to ETF Daily News, Tom Cloud of National Numismatics said that there is a “50-50 chance of silver going back below $23 one last time, in the next week or two.” From there, he believes “the shorts will be taken out and we’ll see silver head back up above $25 fairly quickly.”

Silver closed at $23.68 Thursday in New York.

Coin and bar demand strong

Demand for physical gold has surged since the yellow metal’s abrupt mid-April price drop, and physical silver demand has risen along with it. In fact, MarketWatch notes in a recent article that the US Mint has sold over 19 million 1-ounce American Eagle silver bullion coins so far this year, nearly 5 million more than were sold in the same period last year.

The articles quotes Anthem Blanchard of Anthem Vault as saying that this increased buying has made physical silver harder to obtain than physical gold because “there is less above ground supply of physical silver than there is of gold.”

As a result, the US Mint has opted to allocate the initial release of the 2013 America the Beautiful 5-ounce silver bullion coin; according to BullionVault, that means only a limited number of the coins will be available for purchase when they go up for sale on May 16.

The mint will continue the allocation process until it is able to increase its inventory, Reuters reported.

Company news

Fortuna Silver Mines (NYSE:FSM,TSX:FVI) announced its results for the first quarter of 2013, noting that it produced 992,218 ounces of silver and 4,492 ounces of gold. Its revenue for the quarter came in at $40.7 million, while its net income was $6.7 million, down from $11.1 million a year ago. Jorge A. Ganoza, the company’s president and CEO, commented that the company is in “a solid position to carry out [its] strategic objectives in this lower price environment.”

Great Panther Silver (AMEX:GPL,TSX:GPR) also reported its results for 2013′s first quarter, commenting that its revenue clocked in at $12.6 million, a million dollars less than the year-ago quarter; its net income declined 68 percent during that time period. The company produced 369,624 ounces of silver, 3 percent more than it did a year ago.

Both companies cited lower realized silver prices as being partially responsible for their year-on-year declines.

The market is waiting with anticipation for the May 10 release of precious metals streamer Silver Wheaton’s (NYSE:SLW,TSX:SLW) first-quarter results. The expectation, according to Forbes, is that weak silver prices and the suspension of Barrick Gold’s (NYSE:ABX,TSX:ABX) Pascua Lama mine will negatively impact the company’s earnings — the question is how much.

Junior company news

Paramount Gold and Silver (AMEX:PZG,TSX:PZG) intercepted “exceptional” silver and gold grades in three zones at its Nevada-based Sleeper gold project, assaying up to 226 g/t silver and 10.1 g/t gold within a mineralized interval grading 3.14 g/t silver and 0.94 g/t gold.

Christopher Crupi, Paramount’s CEO, commented, “[o]ur metallurgical and resource drilling continues to confirm the gold and silver grade distribution defined in our resource estimation. These results improve our understanding of the various styles of mineralization within and around the original Sleeper deposit.”

Primero Mining (NYSE:PPP,TSX:P) announced that Australia’s federal court has approved its acquisition of Cerro Resources (ASX:CJO,TSXV:CJO), a company focused on developing its 69-percent owned Cerro del Gallo gold-silver project, located in Guanajuato, Mexico. Goldcorp (NYSE:GG,TSX:G) owns the other 31 percent of the project.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Related reading: 

Physical Gold Rush Follows April Price Declines

2013 Silver Eagles Already Sold Out

How to Avoid and Identify Fake Silver Products