|
|
Where are the silver bulls?
Across the broad landscape of globally listed mining companies, silver bullion miners, developers and explorers are less wanted than anything else. Looking at 43 names listed in the category, the average stock price loss from highs, measured on a weighed basis, is currently around 83%, leaving especially the smaller stocks fully vulnerable to facing the prospect of shorter term bankruptcy. Silver bullion itself is 56% off its highs, seen in March this year. Amid the apparent dire state of affairs for both silver bullion prices, and stocks operating in the silver space, bullish comments and forecasts remain the order of the day. This week, ScotiaMocatta insisted that in spite of poor demand outlook in the short term, the long-term outlook for precious metals remains bullish, and that "silver is well placed to outshine gold". Pan American Silver president and CEO Geoff Burns noted last week that despite the global financial crisis, "the physical investment market remains very strong as common investors are accumulating physical silver and gold during turbulent times. I personally believe they will be handsomely rewarded for their foresight," he told analysts and investors during a conference call to discuss quarterly financial results. In his opening address to the successful London Silver Summit on 5 November specialist precious metals and natural resources fund manager Ned Naylor-Leyland said the "death of fiat money will happen". He argued that a new series of Bretton Woods discussions getting under way at the end of this month will at least focus people's minds on the idea of a precious metals backing for world currencies. During a conference call on 4 November Hecla Mining president and CEO Phil Baker insisted that long-term fundamentals for silver have never been better: "While there is a great deal of short-term uncertainty about the prices of the metals we produce, I believe in the long-term the fundamentals have never been better . . . Silver like gold should eventually perform well as a result of the impact of all the liquidity injection into the economy by the Fed and Treasury in what we believe will be the ultimate impact on the US dollar". While conceding that current silver prices are probably "the exact opposite of what most would have predicted in these economic times," Silver Wheaton president and CEO Peter Barnes declared on 3 November that "we're more bullish than ever on the price of silver as a result of what's happening on the global markets today". In a conference call to discuss the company's financial results, Barnes said that "while nobody knows how long it will take to get through this crisis mid to long-term prospects for the silver market continue to look very promising". Investors are nowhere near buying the story, but the bulls are apparently nowhere near holding off. Dennis Wheeler, president and CEO of Coeur d'Alene, declared earlier this month that while the global credit crisis wreaks havoc with the mining industry, "overall, we continue to see a positive supply/demand fundamental picture, particularly on the supply side". During a recent conference call to discuss financial results, Wheeler noted that 75% of silver production is a by-product of base metal mines. The suggestions are that recent dramatic drops in prices - as in the case of silver bullion - for copper (down 59% from highs), lead (down 64%) and zinc (down 60%) delay certain projects from streaming, and curtailment or even closure of certain existing operations. While price falls remain essentially an external factor, given that miners are price takers in most senses, the real danger for silver may be its ignominy, like some other commodities such as cobalt, as mainly a byproduct. Of the world's top 15 silver miners by physical volume, just three, Fresnillo, Pan American Silver, and Volcan, rank as primary silver bullion diggers. Separately, investor demand for listed silver stocks may have been partly cannibalised by specialised exchange traded funds which hold silver bullion, currently worth USD 2.5bn, on behalf of investors. These ETFs started appearing during 2006, a time when listed silver stocks traded at a premium to their gold peers.
Disclaimer MINEWEB is an interactive publication, with rolling deadlines through each day, commencing in the Sydney morning, and concluding, 24 hours later, in the Vancouver evening. If you believe your side of an issue deserves inclusion, but has failed to meet one of our deadlines, you are invited to notify the Editor in Chief in Johannesburg, and we will include you in our editing and expanding on our stories. Email him at alechogg@gmail.com |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
 |
 |
Few listed resources subsectors are more reviled than that mining, developing and exploring for silver bullion.