I am posting this short entry tonight to follow up on my posts about silver back on April 1st and 17th. I continue to survey the market looking for conviction on a silver trade. That conviction has manifested in the Coeur Mining trade I detailed, but so far nothing else. The CDE spread was performing well heading into the earnings call. On the call the CFO identified an approximately $10 million hit to free cash flow coming out of the company’s Mexico properties due to the covid-19 related shut-down. I personally listened to the call and was encouraged, but the market did not receive the call so well and the stock price is not back to a very similar level, around $3.60, to where it was when I put on the spread. With that in mind, it is my policy to double down on an unexpired investment thesis if the market presents an opportunity, so I am considering it. I am considering it with a strong lean away; I would like to find a different approach to any upside in silver, if I can get conviction, before revisiting my current trade.
But the reason I am writing tonight is because, during the month of April (and in fact it looks like just a day or two ago) the Silver Institute and Metals Focus have published their annual World Silver Survey, which can be found here: https://www.silverinstitute.org/all-world-silver-surveys/ . Anyone interested enough to be reading this post should be interested enough to read the report, but the take-aways for me were:
- Excess inventories,
- Covid-19 related disruptions across the supply and demand spectrum making projections difficult, and I would characterize Metals Focus’ estimates both on the impact to extraction and to industrial demand as far too conservatively low in magnitude,
- Average 2020 price projected to be a meager $15.70, peak price target of $19,
Overall, I did not find the report particularly bullish for silver in the next 12 months. Time will tell. I would love to hear your key take-away from the World Silver Survey. Leave your comments below!