SILVER STOCKS NEWS – Silver stocks fell Wednesday, with the Global X Silver Miners ETF (SIL) dropping 0.9% to $26.90 per share. Weakness in silver stocks and the SIL was fueled by a sell-off in the silver price, which fell $0.54, or 1.4%, to $38.47 per ounce. The decline in silver stocks and the white metal came amid broad-based selling in precious metals, following reports that U.S. President Barack Obama and congressional Republicans were close to a resolution on the nation’s debt ceiling.
Despite today’s drop in silver stocks, the sector has rebounded considerably in recent weeks alongside the silver price. Since reaching a five-month low of $22.07 on June 16, the SIL has surged 21.9%. Over the same time period, the white metal has risen by 8.2%, from $35.57 per ounce.
Although silver stocks have continued to underperform the silver price year-to-date – the SIL is down 0.8% versus a 24.3% gain for the metal – their recent strength is a welcome change for investors seeking leverage to the price of silver.
Looking ahead, many strategists remain bullish on the price of silver and silver stocks. TD Securities Commodities team released a report discussing its positive outlook, noting that “there are sentiment and fundamental related reasons to be bullish on the white metal.” The firm cited rising investor and industrial demand in the second half of 2011, which will help the silver price to average $40 per ounce “with intraday highs considerably north of that level.”
“With the perception of silver scarcity likely returning,” TD Securities wrote,” we will again get the environment needed to make silver a star performer” in the second half of the year.
The firm went on to highlight several macroeconomic factors likely to serve as positive catalysts for the silver price and silver stocks. These factors included the ongoing European sovereign debt crisis, higher short term inflation expectations in China, and the Federal Reserve’s “likely intensions to keep interest rates lower for longer.”
In morning trading on Wednesday, notable silver stocks moving lower alongside the SIL included Hecla Mining (HL), Pan American Silver (PAAS), and Silver Standard Resources (SSRI). Shares of HL, PAAS, and SSRI slid 2.3%, 0.7%, and 1.1%, respectively.
Fortuna Silver’s Production Rises in Q2
- Fortuna Silver Mines reported that it is prioritizing its silver and gold production and is on track to deliver 2.4 million ounces of silver and 7,368 gold ounces, plus significant base metal production, in 2011.
- The third quarter of 2011 will be a milestone quarter for the Company with the planned start-up of commercial operations at its San Jose Silver and Gold mine in Mexico.
- Silver production at Caylloma for the first two quarters was 912,102 ounces with mill feed being sourced from the Animas, Bateas and Soledad veins. Last month, the Company received the approval of the environmental impact study for the construction of a new tailings dam.
