Will Silver and Silver Wheaton Continue to Recover?

Silver Wheaton Corp. (SLW) is slowly recovering: Shares of Silver Wheaton jumped by 17.6% during the month. In comparison, the price of silver rose by 1.6% during July, and iShares Silver Trust (SLV) rose by only 1.85%. Will Silver Wheaton continue to rally in coming months? Let’s examine the latest developments related to Silver Wheaton.

Pascua-Lama Agreement

The recent silver streaming agreement between Silver Wheaton and Barrick Gold Corporation (ABX) has reached an impediment; Silver Wheaton extended the completion date to the end of 2016 due to the slow progress of the Pascua-Lama project. This delay led Silver Wheaton to revise down its silver production in 2017. This delay, however, won’t adversely affect the company’s silver production in 2013. Considering the latest developments in the silver market, perhaps this delay will benefit Silver Wheaton as it will receive back some of its $625 million cash upfront payment; this will enable the company to invest in other projects.

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Is silver making a comeback?

Silver wasn’t the only precious metal that rallied during July: The price of gold also rose by nearly 8%. Furthermore, SPDR Gold Trust (GLD) bounced back by 9.7%. This rally might be partly related to the latest news from the U.S includes the heavy coverage of the FOMC next move regarding its asset purchase program; this news coverage has kept the volatility of gold and silver high. This week, the FOMC will convene again and perhaps shed some light on its future changes to its monetary policy. In the last FOMC meeting, Bernanke hinted the Fed may start tapering QE3 at the end of the year, providing the U.S economy will keep improving. Since then, however, he slightly changed his tone towards refraining from tapering anytime soon. If the Fed will start tapering QE3, this could lower the growth rate in the U.S money base, which may indirectly reduce the demand for gold and silver as safe haven investments. Once the Fed will start tapering its asset purchase program, silver and gold prices are likely to resume their downward trend.

But not all is bad for silver; in India the demand for precious metals remains robust: India’s silver imports rose in the past several months compared to last year.

For further reading see” Gold and Silver Outlook for July 29- August 2”


Disclaimer: The author holds no positions in stocks mentioned and does not plan to initiate positions within 120 hours of the posting of this article. This article is to be used for educational, research and informational purposes only and does not constitute investment advice. There are no guarantees, expressed or implied, of future positive returns in regards to the subject matter contained herein. Understand the risks inherent in investing before making the decision to invest or consult an investment professional for more information. Reasonable due diligence has been performed in regards to the information in this article. However, the author expressly disclaims any liability for accidental omissions of information or errors in fact.