Precious Metals

Silver prices declined for much of the week, but today’s uptick has some experts thinking that improvement is on the way.

It was another rough week for silver, but some experts believe that better times lie not too far ahead. 

The white metal began the week at $23.67, not far off from last week’s low of $23.52, and continued to trade between $23.54 and $
23.71 until early Tuesday morning. That’s when pricing for the metal took a turn for the worse, falling to $23.25.

While silver did not fall further that day, closing at $23.31, Wednesday was a different story. Despite some upticks, silver closed Wednesday at $22.73, tracking gold downward following a rally in the US dollar, the Financial Post reported.

Unfortunately, the worst was not yet over. That came early Thursday morning, when silver hit $22.18, its low for the week so far. Now, however, silver is faring better: during the afternoon it rose to $22.77 on the back of a weaker US dollar and lower-than-expected economic data, posting a close of $22.69 in New York.

There’s debate about what the metal’s activity today means for investors, Kitco’s Debbie Carlson said in an article published after silver’s rally. Although some believe it is a “positive short-term signal for those who want to see higher prices,” others are of the opinion that “this week’s break below $23 is an omen for further weakness longer term.”

On the positive side is Jim Comiskey, a senior account executive for Archer Financial Services, who told Kitco he is “cautiously optimistic” about the rebound. Taking the opposite view, Ralph Preston, principal at Heritage West Financial, noted that today’s rise is not good enough: “[p]rices will need to close back over $25 in order to reinvigorate the bulls; until then, the bear will dominate this market,” he said.

If National Numismatics’ Tom Cloud is correct, that may happen soon. He told ETF Daily News last week that there was a “50-50 chance of silver going back below $23 one last time, in the next week or two,” following which “the shorts will be taken out and we’ll see silver head back up above $25 fairly quickly.”

For now, the main factors silver has to contend with are strength in equities and the US dollar, along with bearish-looking technical charts, Carlson said.

Company news

Last week, the market was waiting with anticipation for Silver Wheaton’s (NYSE:SLW,TSX:SLW) first-quarter results, with many believing that the company’s earnings would be negatively affected by weak silver prices and the suspension of Barrick Gold’s (NYSE:ABX,TSX:ABX) Pascua Lama mine. When the results came in on May 10, those predictions did not miss the mark: the precious metals streamer’s net earnings amounted to $133.4 million, a 9-percent decrease from the year-ago quarter, and, according to the Financial Post, “slightly below expectations.”

Further, while the company produced 8 million silver equivalent ounces during the quarter, a 20-percent increase compared to Q1 2012, it was only able to sell 6.9 million ounces of the white metal.

Nevertheless, Randy Smallwood, president and CEO of the company, offered reassuring words, commenting, “[w]hile the past few weeks have been characterized by volatility in the commodity markets, we continue to provide shareholders with the stability of low, predictable costs.” He also said that the company has amended its dividend policy to dampen any further volatility that may occur.

First Majestic Silver (NYSE:AG,TSX:FR), which also released its first-quarter results, fared a little better, producing nearly 2.5 million silver equivalent ounces, a 33-percent increase compared to the first quarter of last year, and generating net earnings of $26.5 million after taxes, up 1 percent from a year ago. Keith Neumeyer, the company’s president and CEO, stated that First Majestic’s four major expansion projects are still on track and “will set the stage for major growth in the coming years.”

Even so, the company has made substantial budget cuts — including a 49-percent reduction in exploration spending — that total a 16-percent decrease in capital expenditures.

Junior company news

NSX Silver (TSXV:NSY) provided the initial results from an ongoing mapping and sampling program at the Santa Rosalita and La Prieta zones of the Piedras del Norte and Oso Blanco 1 mining concessions, both of which are located near the company’s Dios Padre project. Anomalous assays along the La Prieta zone show as much as 352 grams per metric ton (MT) silver and 9.4 grams per MT gold.

El Tigre Silver (TSXV:ELS,OTCQX:EGRTF) announced further assay results from the 2013 drilling program conducted at concessions that are part of the company’s 431-kilometer ownership in Sonora, Mexico. The company drilled 38 holes and 4,862 meters in total and has identified the highest silver assay reported as 0.45 meters of 8,660 grams per MT silver in hole ET13-76.


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

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