Thursday October 9, 2014, 4:15pm PDT
By Charlotte McLeod+ - Exclusive to Silver Investing News
It’s no secret that silver is having a bad time.
Though prices for the white metal generally pick up in September, when investors return to the market after vacation, that simply hasn’t held true this year. Instead, silver has trended downward, with its slide culminating in a fall below $17 per ounce just over a week ago.
That’s pretty poor news, especially when silver’s overall 2014 price performance is taken into account — the metal has dropped 19 percent in the last quarter alone, and is down 22 percent for the year as a whole. However, that’s not to say silver is a lost cause; in fact, the current situation has a couple of pluses.
One is that — at least according to some market watchers — the bottom must be near. Well-known silver guru David Morgan is of that opinion, and just yesterday in an interview with The Gold Report quoted Jim Dines as saying, “the cure for low prices is low prices.” In other words, lower prices will eventually spur buying and that will push silver’s price up.
Encouragingly, others share Morgan’s optimism. For instance, Michael Lombardi of Profit Confidential pointed out earlier this week that silver’s positive demand outlook in the face of waning supply suggests that “[p]essimism towards the ‘poor man’s gold‘ has gone too far.” As a result, he sees the white metal “provid[ing] investors with a better return than gold bullion over the next 24 months.”
Of course, it can be tough to retain such optimism in the face of a silver price that just can’t seem to stop falling. More pessimistic investors, however, would do well to remember that a poor silver price means the metal can be picked up cheaply. That opportunity was discussed on Silver Investing News last month, and many market watchers are still lauding the benefits of buying — Morgan also said in the interview mentioned above, “[t]here are plenty of people, including money managers, who understand that this is a great price.”
The overall message from those in the know thus seems to be that the silver price can’t stay low forever, and even if it does stay down for a protracted period of time, there are plenty of ways savvy investors can benefit. For now, silver remains above $17 having closed Thursday at $17.37.
Now that September is over, Q3 results have begun to hit the market. So far this week has brought reports from a number of companies, including big players Silver Standard Resources (TSX:SSO,NASDAQ:SSRI), Fortuna Silver Mines (TSX:FVI,NYSE:FSM) and Endeavour Silver (TSX:EDR,NYSE:EXK).
Silver Standard announced Tuesday that during the third quarter it surpassed its gold production schedule at its Nevada-based Marigold mine, putting out 40,442 ounces of gold — that’s 83 percent higher than the previous quarter and 23 percent higher than the company’s Q3 guidance. Meanwhile, the company’s Pirquitas mine in Argentina produced a record 2.6 million ounces of silver, up 25 percent from the previous quarter, and 7 million pounds of zinc.
President and CEO John Smith commented, “[b]oth Pirquitas and Marigold have delivered to plan through the rigorous application of operational excellence. These operational results underscore how important good people working to plan and executing on strong processes are to our business.”
Thursday saw Fortuna Silver Mines release Q3 production results for its two underground Latin American mines. The company said they put out 1.8 million ounces of silver and 9,751 ounces of gold — those are hefty increases of 63 and 116 percent from the year-ago quarter. Fortuna also produced 4,213,192 pounds of lead and 7,148,465 pounds of zinc, though those figures are both down 11 percent from Q3 2013.
Not faring so well was Endeavour Silver, which said the same day that its Q3 silver output sank 12 percent from the year-ago quarter, hitting 1,634,294 ounces, while its gold production fell 38 percent, to 14,118 ounces.
Nevertheless, CEO Bradford Cooke put on a good face, commenting, “[s]ilver and gold production was steady quarter on quarter, and remains on target to meet our consolidated guidance for the year. Production is expected to improve in the fourth quarter as our annual capital programs near completion.”
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.