Ukraine Tension Takes a Back Seat as Silver Hits Lowest Price Since February

This time last week, silver market watchers were wondering whether the white metal would close Friday on a high note. While silver ultimately managed to end that day at $20 per ounce, about midway between its high and low points for the week, this past week has been another story entirely.

Silver saw a fair amount of movement on Monday morning, dropping almost immediately from $20.04 to $19.72. iNVEZZ.com notes that the precious metal’s sharp decline was likely the result of its inability to retain gains brought on by an emergency Ukraine-related United Nations Security Council meeting. However, silver soon rose back up to $20.03, suggesting that the meeting ultimately had a positive effect on its price.

Tuesday brought another drop for silver. Again, the white metal sunk down to about $19.75 early in the day; this time, however, there was no recovery. Rather, silver kept sinking, reaching $19.24, its low for the week thus far, not far into the day — that’s the metal’s lowest price since February 4, according to Reuters. News Ledge explains the decline as a delayed reaction to Monday’s “solid U.S. retail sales,” which jumped 1.1 percent in March, “besting forecasts calling for a 0.8% increase.”

The next day, Ukraine tension, which took a back seat on Tuesday, resurfaced, buoying silver as high as $19.66, as per Reuters. Though iNVEZZ.com states that the white metal gave up some of that gain in today’s Asian session, dropping as low as $19.47 as investors reacted to a speech from US Federal Reserve Chair Janet Yellen, it was able to close the day at $19.65 per ounce.

What’s next? 

While Michael McGlone, director of research at ETF Securities, does not provide a silver price outlook in his recent interview with Kitco News, he does note that continued downward movement could “be a bad indication for gold.”

That, he said, is because “all precious metals have positive correlations to each other, they are not very high – but the highest is silver and gold.” Continuing, he explained that “[i]t is very rare for one to zig and the other to zag” — however, that’s exactly what’s happening now. Specifically, gold prices have risen 9 percent this year while silver has largely been stuck around the $20 mark.

He believes that means there’s double the reason for investors to hope that silver prices manage to turn around in the not-too-distant future.

Company news

Fortuna Silver Mines (TSX:FVI,NYSE:FSM) kicked off the week by announcing first-quarter production results from its Mexico-based San Jose mine and Peru-based Caylloma mine. Highlights include silver production of 1,536,859 ounces and gold production of 8,150 ounces; respectively, those are increases of 55 and 81 percent compared to the year-ago quarter.

Also announcing Q1 production results was Trevali Mining (TSX:TV,OTCQX:TREVF), which said on Monday that its Santander mine, located in Peru, put out about 268,600 payable ounces of silver, 14.6 million payable pounds of zinc and 5.4 million payable pounds of lead during that period.

The next day, SilverCrest Mines (TSX:SVL,NYSEMKT:SVLC) provided its first quarter production results as well, commenting that it put out 201,101 ounces of silver and 7,545 ounces of gold. The company plans to release its first-quarter financial results on May 15, 2014.

The same day, Hochschild Mining (LSE:HOC) noted that in Q1 it produced 5.9 million attributable silver equivalent ounces, also stating that it is on track to meet its 2014 production target of 21 million attributable silver equivalent ounces.

Ignacio Bustamante, the company’s CEO, commented, “[w]e are also continuing to move forward with our cashflow optimisation programme which has already delivered more than $145 million of savings and are currently targeting further initiatives in all areas of the Company including operations, administration and exploration.”

Wednesday, Santacruz Silver Mining (TSXV:SCZ) revealed that its Mexico-based Rosario mine produced 159,729 silver equivalent ounces during the first quarter of the year. That’s a 260-percent rise from the previous quarter and “demonstrates the Company is on schedule to meet its production target of between 850,000 to 1,100,000 silver equivalent ounces by the year-end 2014.”

Junior company news

Silver Mountain Mines (TSXV:SMM) announced on Wednesday a non-brokered private placement of up to 12,000,000 flow-through units priced at $0.06 each; the company hopes to raise as much as $720,000.

It also outlined a proposed summer 2014 drill program for the Ptarmigan Basin and Dunwalk areas, noting that it expects to complete 10,000 meters of drilling at an average depth of 350 meters per hole. The company also intends to complete “further ground gravity survey and additional sampling on other known mineralized areas previously identified from other drill programs.”

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

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Will Silver’s Topsy-Turvy Week End on a High Note?