Silver Ticks Up, Later Falls on Fed Stimulus Announcement

After spending much of last week under $20, silver perked up on Friday, hitting $20.22 per ounce. However, true to Standard Bank’s recent prediction that any rallies in the metal’s price will fade, silver fell and has spent the entirety of this week under $20. 

Monday was a fairly quiet day for silver, which hit $19.96, its high for the week thus far, that morning. As the day wore on, the white metal moved lower, to $19.59, before closing at $19.70. Word from Reuters was that investors were jittery in the lead up to the Federal Reserve’s meeting.

The white metal’s performance was much the same on Tuesday, when it traded between $19.50 and $19.81. Walsh Trading’s Sean Lusk said in a note that day that silver’s weakness was largely the result of “recent longs in the market book[ing] profits before [Wednesday's] FOMC statement.”

Silver’s real trouble began on Wednesday, when the Fed announced that it will be reducing its monthly stimulus program by another $10 billion, bringing it down to $65 billion per month. While silver, like gold, initially ticked up on the news, hitting $19.79 late in the afternoon and closing at $19.76, that upward movement has not continued.

In fact, today silver has declined somewhat precipitously. Early this morning it fell as far as $19.08, later managing to close at just $19.14. In a report released today, Standard Bank states again that it expects rallies to fade “and foresee[s] further downside if support at $18.50 is broken.”

Company news

Earlier today, Hecla Mining (NYSE:HLprovided its preliminary results for the fourth quarter of 2013, as well as for the whole year, commenting that for the entire year it put out 8.9 million ounces of silver, a 39-percent increase from 2012

Its 2013 gold production came in at 119,989 ounces, up 116 percent from 2012.

Junior company news

On Monday, Eurasian Minerals (TSXV:EMX,NYSEMKT:EMXX) provided 2013 year-end exploration results from its Akarca gold-silver project, stating that results include an oxide drill intercept of 68 meters averaging 3.43 grams per tonne (g/t) gold and 34.71 g/t silver, with a high-grade sub-interval of 4 meters averaging 52.87 g/t gold and 530.43 g/t silver. Akarca is located in Turkey.

Today, Maya Gold & Silver (TSXV:MYAobtained a finance facility worth US$6 million by entering a facility agreement with a fund managed by Scipion Capital. Of that amount, $3.5 million will be available immediately.

The first tranche of the loan will be put towards recomissioning Maya’s Morocco-based Zgounder silver mine. The company’s aim is to reach its projected production of 85,000 ounces of silver per month as soon as possible.

Also today, Paramount Gold and Silver (NYSEMKT:PZGreleased further results from core drilling at its Mexico-based San Miguel project, commenting that the results “are expected to add ounces to the Don Ese resource and to improve the confidence level of the resources from inferred to measured and indicated.”

Christopher Crupi, Paramount’s CEO, said, “this drilling is reporting exceptional widths and grades which are well in excess of what the Don Ese resource model predicted. The greater widths are especially significant. Drill hole 13-040, with 24 meters of 10.6 g/T gold equivalent, was drilled across a block of inferred resources where the high grade zone was estimated to be only about 8 meters wide.”

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

Related reading: 

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

Gold Rises Following Fed Stimulus Cut