By Melissa Pistilli—Exclusive to Silver Investing News
Last Friday, silver prices in New York followed gold lower to close at $17.79 an ounce. This week, analysts have advised silver investors to be prepared for a week of strong volatility as the markets decide whether to take direction from concerns over euro zone debt or worries over a slowing global economy. On Monday, the price of silver extended its losses to close at $17.61 an ounce on the COMEX.
Tuesday, silver futures dipped as low as $17.50 before rebounding on bargain-buying in the late morning to close at $17.70 an ounce.
The Dreaded Summer Doldrums Dole Out Opportunity
Long-time silver investors are well aware that this isn’t the best time of year for precious metals as gold and silver prices trade sideways to lower, hitting bottoms by mid-August. Blame it on the lure of surf, sun, and sangria or the absence of traditional holidays in India, either way the summer months are often devoid of investor interest in precious metals.
Looking at silver’s seasonal charts over, last month analyst Adam Hamilton of Zeal Intelligence, forecast silver “trading in the mid-$17s by late August.” It’s nearing the end of July and the white metal is already grazing that range this week.
Silver’s plummeting prices over the past few weeks have no doubt given many silver investors cause for concern, particularly those with stakes in silver producers who have seen their share prices drop along with the metal’s futures price.
Despite the depressing name, the summer doldrums do offer a ray of sunshine to those investors willing to pull their head out of the sand. As most silver (and gold) buffs will tell you, August is the perfect time of year to bargain shop for physical holdings and for mining stocks especially, as precious metals stocks during this time period “typically fall to their lowest relative levels of any given year,” as Hamilton points out. Once the fall begins precious metals prices begin to recover from their lows as the buying season resumes in many regions of the world.
Most analysts still hold an optimistic outlook for silver prices over the next few years. VM Group’s latest metals review sees silver prices holding steady throughout the third quarter with the potential to advance in the fourth quarter of 2010. The consultancy firm is bullish over the medium to longer-term, especially if industrial demand for silver picks up as expected, and views $20 an ounce silver as a strong possibility in the first half of 2011.
Great Panther Silver (TSX:GPR) has reported additional assays from its 7,200 metre surface drill program on the Topia mine veins, including a return of 3.15 metres averaging 1,681g/t silver, 0.88g/t gold, 2.40% lead, and 5.32% zinc. Once drilling is completed in August, the company will begin mineral resource calculations. Increasing its resource base is an important part of Great Panther’s plans to increase production by 20 percent per annum from 2010 to 2012.
Avino Silver & Gold Mines (TSXV:ASM) announced results of further underground development at its San Gonzalo project in Durango, Mexico. Two declines, at elevations of 2306m (level 1) and 2260m (level 2), both intersected the San Gonzalo vein, with level 2 intersected an additional splay vein. Channel samples were collected across the San Gonzalo vein, narrow in this location, along a strike length of 16.88m, averaging 0.73 m wide, 0.562 Gold, 108 Silver, 992 Lead, 2653 Zinc, 487 Copper (all values ppm).
Fortuna Silver Mines (TSX:FVI) provided an update on the ongoing construction at its San Jose silver-gold project in Oaxaca, Mexico. Operations are still on target to commence production in Q3 of 2011at the 1,500 tpd mine, which is expected to produce 5 million silver equivalent ounces per annum at a cash cost of US$6.20 per ounce.