While many investment banks have raised their gold price forecasts in recent months, few have turned as bullish on silver. However, HSBC raised its silver price targets in light of a “slight upward bias” it now sees for gold’s sister precious metal.
HSBC increased its 2012 silver estimate to $34.00 from $32.00 per ounce, and its 2013 target to $32.00 from $30.00 per ounce. The firm also introduced a 2014 silver estimate of $28.00 and reiterated its five-year forecast of $25.00 per ounce.
On Friday, the spot price of silver was higher by $0.58, or 1.8%, at $33.32 per ounce. Silver stocks, however, turned lower alongside other precious metals equities. Two notable decliners were Pan American Silver (PAAS) and Silver Wheaton (SLW), which lost 3.9% and 2.4%, respectively.
HSBC attributed support for the silver price to strong investment demand from exchange-traded funds and coins, along with steady industrial demand. However, it also noted that due in large part to rising demand, mine supply has climbed at a rapid pace and scrap supplies have risen as well. The silver market is expected to contain a supply surplus of 138 million ounces in 2012, according to the firm.
Due in part to the silver supply surplus HSBC noted that it is “not unreservedly bullish” on silver prices, however. “Rather, we believe that current price levels largely reflect underlying physical supply/demand balances and investor sentiment, but with a slight upside bias.”
Fortuna Silver Reports “Best Quarter Yet”
The Company noted that it expects to report sustained low cost quarterly silver production growth over the upcoming 18 months as it expands its San Jose mine in Mexico from 1,000 tonnes per day (tpd) to the design capacity of 1,500tpd. Fortuna also reported that it continues to seek organic growth opportunities beyond existing reserves and resources; to that end, the Company presently has eight drill rigs turning on its 70,000 hectare properties in Peru and Mexico. Full Fortuna Silver Press Release
- Operating income of $14.89 million, compared to $1.03 million in Q3 2010
- Cash position (including short term investments) and working capital as at September 30, 2011 were $62.73 million and $70.22 million respectively
- Silver production of 660,749 ounces up from 474,489 ounces in 2010; silver accounted for 70% of revenue
- Cash cost per silver ounce, net of by product credits, of $1.45
