Silver Slips Below $20 on Stronger US Dollar and Jobs Data

Silver began the week promisingly, reaching $20.30 per ounce on Monday morning, but since then has been dragged down by the combination of a stronger US dollar and positive jobs data, also from the US. The white metal’s decline began on Tuesday. After closing Monday at $20.18 per ounce, just under last week’s high of $20.24, silver started dropping early Tuesday morning, soon reaching $19.69, its low for the day.

Capital Trading Group states in a report that the drop looks to have come from “a rising Dollar and noted weakness in gold prices.” The firm also notes that “a negative view from a well-known fund manager” may have “contributed to the slide in silver prices.”

While silver managed to end Tuesday at $19.88, it took another fairly steep fall on Wednesday, sinking to $19.39 at its lowest point. Reuters explains that the decline was the result of a boost in the dollar caused by the news that US private employers added 238,000 jobs in December, higher than was expected and “the strongest increase in 13 months.” Capital Trading Group states in another report that more of the same may lie ahead for silver as it seems the metal “is currently in a position to weaken in the face of positive US data flows … and that could also foster talk of sooner-rather-than-later additional US tapering action.”

Today, silver has been fairly steady, trading between $19.44 and $19.63. It closed the day at $19.58 per ounce.

COMEX silver stockpiles hit 16-year high

In other silver-related news, Bloomberg reported this morning that silver stockpiles on the COMEX in New York rose to 176.28 million ounces today, a 16-year high. Inventories have been on the rise for seven sessions in a row, and in 2013 supplies rose for a third year in a row, “the longest span of annual gains in a decade,” the news outlet said.

Explaining the development, Bart Melek, head of commodity strategy at TD Securities in Toronto, told Bloomberg, “[t]his could well be an indication that demand has slowed down to an extent,” also noting that it could point to declining investor interest in silver exchange-traded products.

Company news

Endeavour Silver said today that it set a new quarterly silver and gold production record during the fourth quarter of 2013. The company put out 1,931,717 ounces of silver during that time, up 56 percent from the same period in 2012, while its gold production came in at 17,686 ounces, a 37-percent increase from the year-ago quarter.

2013 was Endeavour’s ninth consecutive year of production growth; it produced 6,813,069 ounces of silver and 75,578 ounces of gold for the full year.

Junior company news

On Tuesday, Trevali Mining (TSX:TV,OTCQX:TREVF) announced that mineral processing plant commissioning at its Peru-based Santander zinc-lead-silver mine “continues to progress well,” as does the production of zinc and lead-silver concentrate.

The company also said that during December, mill throughput at Santander continued at full nameplate capacity of 2,000 tonnes per day. Average head grades came in at 3.6-percent zinc, 1.5-percent lead and 1.4 ounces per tonne silver “from a blend of underground feed, stockpiled surface material and higher-grade re-mined former tailings.” Trevali’s plan is to transition to full underground production feed this quarter.

The next day, IMPACT Silver (TSXV:IPTprovided second-phase drill results from its Mexico-based San Juan project, commenting that it encountered further high grades for silver in the Noche Buena vein. For instance, hole Z13 60 contains 1,587 grams per tonne silver over 1.72 meters true width.

Maya Gold & Silver (TSXV:MYA) earlier today revealed positive assay results from the final eight drill holes at its Zgounder silver mine, located in Morocco. Highlights include hole ZP13_2000N_07, which returned 631 grams per tonne silver over 7.2 meters, and hole ZP13_2035E_001bis, which intersected 379.5 grams per tonne silver over 6 meters, including 526.7 grams per tonne silver over 3.6 meters.

 

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

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