Silver Forecast 2017: Companies Optimistic

After three years of decline, silver prices have been on the rebound in 2016. A weak US dollar, Brexit results and uncertainty over the incoming US president’s agenda have all impacted precious metals prices this year.

The Investing News Network reached out to a number of companies in the silver sector to get their thoughts on 2016 and on the silver forecast for 2017. Impact Silver (TSXV:IPT) Investor Relations Manager Jerry Huang, and Avino Silver & Gold (TSXV:ASM) Corporate Communications Manager Charles Daley were able to provide some insight.

Silver in 2016

Last year was tough for the white metal, but from the start of 2016 silver prices started to surge. The gold-silver ratio was at its highest in the first two months of the year since February 2008.

At the end of last year, Impact Silver’s Huang expected to see “some light at the end of the tunnel for mining.” He highlighted the fact that in the final months of 2015 investors, who had averaged down saw huge percentage gains in the first few months of 2016.

“Finally the high risks many investors had taken on the last four years had started to pay off in spades, and we praise their conviction in the tangible value of many undervalued mining companies,” he added.

The unexpected outcomes of Brexit and the US presidential election left the world uncertain about what might happen in the future. This political and economic environment turned investors to precious metals as a safe haven.

Silver prices jumped to over $20 an ounce for the first time in roughly two years after the United Kingdom voted to leave the European Union, and the white metal even outshone gold in the post-Brexit precious metals rally.

But after the US presidential election, silver lost roughly 10 percent by November 25.

Avino Silver & Gold’s Daley agreed that in 2016, silver prices were affected by the uncertainty in the markets created by the lead up to the Brexit vote and then the US election, which saw precious metals appreciate significantly.

“However, following the US election, the prices for precious metals declined significantly, which came as a big surprise to many in the industry,” Daley said.

Silver forecast: The year ahead

What will happen in 2017 still remains to be determined, but proposed plans by incoming US President Donald Trump could boost the metals market.

“With Trump in office we already saw strong demand for base metals and infrastructure materials. We can foreseeably expect more fluctuation and “Black Swan” events, like Brexit and the election in 2016, that tend to be great for precious metals,” Huang said.

“It’s difficult to know what type of policies are actually going to be pursued by ‘the Donald.’ That being said, Mr. Trump’s policies, along with the Federal Reserve interest rate hike, could be bad for gold and silver,” Daley said.

Trump has also promised massive taxpayer-subsidized infrastructure projects, along with lower taxes for corporations and the wealthy.

“It’s hard to imagine how he plans to pay for all of this with a significantly decreased tax base, meaning it’s definitely within the realm of possibility that there will be more financial turmoil ahead which has historically been good for gold and silver,” he said.

Everything will unfold in January, once Trump takes office. “It will be interesting to watch safely from Canada the chaos that could follow south of the border after the inauguration,” Daley added. “It will also be interesting to see if anything comes about as a result of the recent revelations around the fixing of the silver price, which has been quite prevalent in the news lately.”

His silver forecast for 2017 is for prices to be rangebound between US$14 and US$20.

Silver forecast: Companies to watch

Huang suggested to watch out for First Majestic Silver (TSX:FR), which is up over 110 percent year-to-date, and First Mining Finance (TSXV:FF), which has gained 147 percent year-to-date. He also said that it is hard to go wrong with Pan American Silver (TSX:PAA), which is up over 118 percent year-to-date.

“You have to give credit to the Silver Wheaton (TSX:SLW,NYSE:SLW) team, [whose share price] gained 36.63 percent year-to-date, and the creativeness of streaming royalties. The smaller start up Sandstorm Gp;d (TSXV:SSL), that jumped to over 98 percent gains year-to-date, has also done well for investors this year,” he added.

Daley suggested investors to follow Coral Gold Resources (TSXV:CLH), which is up 358.33 percent year-to-date and is in the final stages of closing a deal with Barrick Gold (TSX:ABX,NYSE:ABX) for the sale of the Robertson property in Nevada’s Crescent Valley.

Silver forecast: Investor takeaway

Huang explained that investors interested in the junior mining should make educated investment choices, and that if they do “the odds of success in this sector are very good.”

“I think it’s useful for investors to understand themselves. Why they are investing and what’s their time horizon and risk tolerance for this money. Do your due diligence and invest in companies where management are in the trenches with you and of course, be patient and set a realistic timeframe for your investment,” he added.

“Don’t try to time the markets. Find projects and management that you like and stay the course,” Daley said.

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

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.