Silver Takes a Fall; "Rallies Should Fade," Says Standard Bank

After remaining fairly flat last week, this week silver finally picked a direction in which to move. Unfortunately for fans of the white metal, that direction was down. 

Silver hit $20.38 per ounce, its high for the week thus far, on Monday morning. However, in early trading on Tuesday the precious metal took a steep fall, sinking all the way to $19.79; it was not able to rise much higher than that for the remainder of the day.

Capital Trading Group notes in a recent report that at times that day silver was pressured by “fresh fears of US tapering” at next week’s Federal Open Market Committee meeting; in other instances, “weakness in gold and/or strength in the Dollar” brought it down. ”In any regard,” the report states, “it does seem as if silver is back under the influence of weak price action in gold.” That, the firm believes, could mean that silver will sink back down to the lows it hit earlier this month.

Wednesday brought further declines for the white metal. Early on, it sank to $19.75, then fell even further, to $19.66, late in the day. Commenting direly on the situation, Standard Bank said in its commentary for the day that the metal “continues to run into resistance on approach of $20.40.” Further, analysts at the firm believe “silver’s fundamentals are weak and that rallies should fade.”

That’s not particularly reassuring news given that today silver posted a slight rally, rising to $20.21 midway through the morning. It’s now down at $19.99, and if Standard Bank is to be believed, it could continue to move downward as the week draws to a close.

Company news

Starting off the week on a positive note, Pan American Silver (TSX:PAA,NASDAQ:PAAS) on Monday announced that it achieved record silver production of 26 million ounces in 2013, up 4 percent from the previous year. Its gold production also hit a record high, coming in at 149,800 ounces — that’s a 33-percent increase from 2012.

Next year, Pan American expects to produce between 25.75 and 26.75 million ounces of silver, along with 155,000 to 165,000 ounces of gold.

Also providing 2013 results on Monday was US Silver & Gold (TSX:USA,OTCQX:USGIF), which said that its Galena Mine Complex recorded production of 2.12 million silver ounces last year. That is 6 percent lower than the 2012 amount; the company’s press release notes that the decline was caused by “an order from the Mine Safety and Health Administration requiring the Company to shut down Shaft #3 for 10 days.”

The next day, Avino Silver and Gold Mines (TSXV:ASM,NYSEMKT:ASM) reported production results from its Mexico-based Avino property for both Q4 2013 and 2013 as a whole. Most notably, the company’s 2013 silver equivalent production came to 895,240 ounces, a whopping 253 percent higher than the previous year.

Junior company news

On Wednesday, junior exploration and development company Corvus Gold (TSX:KOR,OTCQX:CORVF) reported results from the last 10 core holes drilled during the 2013 campaign completed at its Nevada-based North Bullfrog project. Highlights from the Yellowjacket vein system include hole NB-13-372 with 28 meters at 2.9 grams per tonne (g/t) gold and 7 g/t silver, including 3.7 meters at 3.9 g/t gold and 33 g/t silver.

Corvus’ 2014 drill program will be starting at the end of January; its focus will be on Yellowjacket’s “immediate growth potential to the north, south and at depth,” a company press release quotes CEO Jeff Pontius as saying.

The same day, Pilot Gold (TSX:PLG) announced an initial independent resource estimate for its Kucukdag gold-silver-copper deposit, located in Turkey. The company’s press release quotes Matt Lennox-King, Pilot’s president and CEO, as saying that over the last 15 months, Kucukdag, which is divided into a lower gold zone and overlying silver zone, “has grown from a primarily gold system to a deposit hosting a sizeable silver resource that — on its own — is estimated to be Turkey’s third largest silver deposit.”

The silver zone’s indicated mineral resource totals 11.44 million tonnes at an average grade of 46.7 g/t silver containing 17,182,000 ounces of silver, while its inferred mineral resource comes in at 9.08 million tonnes at an average grade of 52.7 g/t silver containing 15,367,000 ounces of silver.


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

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Silver Aimless as 2013 Production Results Roll In