Silver Gets a Pick-Me-Up from Sinking US Dollar

After falling below $19 last week on the back of continued concern about US Federal Reserve Chairman Ben Bernanke’s talk of “tapering” quantitative easing, silver has since made a slight recovery, rising as high as $19.87 per ounce this week.

Silver hit $19.87 early Monday morning, and after sinking to $19.48 not long after, evened out at around $19.60, continuing at that level until Tuesday morning. From there, it sank to $19.34, its low for the week, before climbing up to $19.81 late Wednesday.

Responsibility for the white metal’s upward movement this week has been placed on the US dollar, which has sent silver prices up as it moves lower, according to Reuters.

Silver bulls will be happy to hear that Rick Mills of expects these gains to continue. In a note released this week, he said he believes that along with cobalt and uranium, silver holds opportunities for investors.

Pointing out that sales of silver bullion are “constantly breaking records,” he posed the question, “when was the last time you heard of a bull market ending, in any commodity, let alone a money metal like silver, with a period of sustained, record physical demand two years after peak prices?” He thinks that the precious metals bull market is not yet over and, as a result, the white metal will soar “much sooner than later.”

Silver took a slight downward turn today, sinking as low as $19.41 before closing at $19.52 in London.

Dundee survey

A Dundee Capital Markets silver sector survey released Wednesday states that Silver Wheaton (TSX:SLW,NYSE:SLW) and Tahoe Resources (TSX:THO,NYSE:TAHO) are “best positioned going into the lower silver price environment” in that Silver Wheaton will not need to change its business model — even if prices fall to $15 per ounce — and that Tahoe’s Escobal project is the lowest-cost mine that the firm covers.

However, Silver Standard Resources (TSX:SSO,NASDAQ:SSRI), Pan American Silver (TSX:PAA,NASDAQ:PAAS), Coeur Mining (TSX:CDM,NYSE:CDE) and Endeavour Silver (TSX:EDR,NYSE:EXK) will need to more significantly alter their business plans if they are to flourish, according to Dundee. The survey offers some indication of what changes these companies may make, suggesting that, for instance, Silver Standard may put Pirquitas, its sole operating mine, on care and maintenance.

Company news

Following Barrick Gold’s (TSX:ABX,NYSE:ABX) announcement late Friday that it will have to delay its Pascua Lama gold-silver project until mid-2016 — a move that could result in a writedown of up to $5.5 billion — Silver Wheaton came forward to say it will extend the outside completion date of its silver streaming agreement on Pascua Lama to December 31, 2016. That is a year later than originally planned.

Randy Smallwood, CEO of Silver Wheaton, commented, “[a]s long as Barrick is still advancing construction of Pascua-Lama at the end of 2015, Silver Wheaton does not intend to cancel the silver stream. We are in regular contact with Barrick, and are confident that all the right measures are being taken to achieve production at this mine. Pascua-Lama is a world class gold and silver deposit and will be a world class mine once it begins production.”

Silver Wheaton has revised down its 2017 production forecast to 49 million silver equivalent ounces from 53 million as a result of the delay.

First Majestic Silver (TSX:FR,NYSE:AG) received C$14.85 million as a partial payment from the judgment of US$93.84 million granted to it against Hector Davila Santos and Minerales y Minas Mexicana by the Supreme Court of British Columbia. The final outcome of the case will depend on the result of the defendants’ appeal of the court’s decision.

Junior company news

Northern Vertex Mining (TSXV:NEE) provided an update on its phased project development plans for reactivating its Arizona-based Moss Mines gold-silver project. According to the company’s press release, highlights include:

  • Amended Technical Report and Preliminary Economic Assessment (“PEA”) reconfirmed key metrics and recommendations, including continuation of Pilot Plant – Phase I construction and economics of Operations – Phase II
  • Engineering, Procurement and Construction Management contract awarded
  • Construction of pilot plant ponds and process facilities – Phase I underway
  • 700 foot x 300 foot leach pad complete

Argentex Mining (TSXV:ATX,OTCQB:AGXMF) closed a strategic financing worth just under C$5 million with Austral Gold (ASX:AGD). Austral now owns 11.7 percent of Argentex’s outstanding shares and is its second-largest shareholder; the funds will allow Argentex to continue developing its Argentina-based Pingüino silver-gold project.

Michael Brown, president and CEO of Argentex, commented, “[w]e are extremely pleased with this strategic investment by Austral Gold, especially in light of the difficult financial market conditions for resource companies. We have been successful in raising the capital needed to continue development of our projects located in Patagonia and initiating a strategic relationship with an experienced partner with project development and operations experience.”


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

Related reading: 

Silver Sheds Another Dollar, Slips Below $19

Silver Wheaton’s Smallwood Optimistic About Q1 Results

More Pain for Barrick in Chile