Key points
- Gold prices rose to all-time highs at 2,420 on April 12, causing silver prices to rally.
- Silver tends to be more volatile than gold and is nowhere near its all-time high.
- Pan American Silver and Fortuna Silver Mines are two companies to watch as silver prices rise.
- 5 stocks we like better than Pan American Silver
Gold has hit all-time highs, reaching an all-time high of $2,430 an ounce on April 12, 2024. The latest surge stems from tensions in the Middle East (as warnings of an imminent attack on Israel by Iran make news), the growing US debt and recent economic reports showing rising inflation. This surge has sent shares of gold ETFs and gold miners soaring on fear of missing out (FOMO).
If you missed the gold rush, take a step back and take a look at some silver stocks, gold’s distant cousin. Silver is still nowhere near its all-time highs and is starting to move towards basic materials sector stocks.
Panamerican Silver Co.
Panamerican Silver Co. NYSE: PAAS it is one of the first stocks that come to mind when trying to invest in silver. The company explores, develops and operates silver mines in the Americas, Peru, Argentina, Canada and Bolivia. Pan American supplies raw silver to a diverse group of industries.
The company mined 4.8 million ounces of silver in the fourth quarter of 2023 and a total of 20.4 million ounces in 2023. Revenues reached a record $669.6 million in the fourth quarter of 2023 , with full-year 2023 revenues reaching $2.3 billion. The company still lost $67.8 million or 19 cents per share in the fourth quarter and 32 cents per share or $104.9 million in 2023.
Increases in silver costs have led to shortages
Silver segment costs were $19.31 and $13.07 per ounce in the fourth quarter of 2023. Silver segment all-in sustaining costs (AISC) were $26.55 and $18.17 per ounce, respectively, in fourth quarter and full-year 2023. These higher costs were attributed to increased underground resource mine development at Huaron and a production deficit caused by ventilation at La Colorada . Some of the costs were offset by lower-than-expected costs at Cerro Moro resulting from increased productivity, rising gold prices and cost-cutting initiatives.
Even gold mining
Although the company name says silver, the company also mines gold. Pan American finalized its purchase of Yamana Gold Inc. in the fourth quarter, where it mined 267.8 ounces of gold. For the full year 2023, Pan American mined a total of 882.9 thousand ounces of gold.
Weekly descending triangle
The weekly candlestick chart for PAAS illustrates a descending triangle pattern. The descending (declining) trendline emerged at $29.01 on April 18, 2022. The stock collapsed to a low of $12.93, which became the flat-bottomed lower trendline. PAAS continued to fall, making lower highs but holding the flat-bottomed lower horizontal trendline at $12.93. Shares appeared to break out when they dropped to $12.10 in February 2024, but jumped back and through descending trendline resistance at $15.19 on March 25, 2024, to hit a high of $20.60. The daily relative strength index (RSI) has risen towards the 70 band. Pullback support levels are at $17.06, $15.73, $14.19, and $12.93.
Analyst Ratings and Price Targets of Pan American Silver Co I’m on MarketBeat.
Fortuna Silver Mines
Based in Canada Fortuna Silver Mines Inc. NYSE: FSM owns and operates silver and precious metals mines in Latin America and West Africa, particularly in Argentina, Peru, Mexico, Ivory Coast and Burkina Faso. Some of these areas are subject to geopolitical risk, which actually tends to have a bullish effect due to perceived supply shortages, much like oil prices during a geopolitical threat.
Demand driven by industries
The clean and renewable energy movement is also a driving force for rising silver prices. Electric vehicles (EVs), solar panels and batteries are just three of the components that use silver. Electric vehicles contain 25 to 50 grams of silver due to its excellent thermal and electrical conductivity. Hybrid cars use 18 grams to 34 grams of silver per light vehicle. Silver is also used in medicine, jewelry, water purification, flat screen TVs, electronics and photography.
Silver extraction but bleeding red
Fortuna reported an EPS loss of 30 cents in the fourth quarter of 2023 for a net loss of $92.3 million, which includes a non-cash impairment charge of $90.6 million. Full-year 2023 losses were $50.8 million. The company repaid $41 million of its corporate credit line. Silver production was 1.34 ounces in the fourth quarter of 2023 and 5.88 million ounces for full-year 2023. Fortuna has initiated a 45,000 meter drilling program in Senegal at the recently acquired Diamba South project. The Preliminary Economic Assessment (PEA) will be produced by the end of the year.
Fortuna also mines gold
Fortuna mined 136,143 ounces of gold in the fourth quarter of 2023 and achieved record production of 452,389 ounces in full-year 2023. Consolidated liquidity per gold equivalent ounce was $840 in the fourth quarter of 2023 and $874 for the whole year. Consolidated AISC per gold equivalent ounce was $1,509 in the fourth quarter and $1,508 for full-year 2023.
Fortuna CEO Jorge Ganoza said: “For 2024, our capital allocation priorities continue to be focused on providing maximum balance sheet flexibility through further debt reduction and financing aggressive organic growth programs with approximately 200,000 meters of exploration drilling planned across the portfolio. The Dicamba Sud project in Senegal and the Séguéla mine in Côte d’Ivoire are priorities for our exploration programs during the year.”
Weekly symmetrical triangle
The weekly candlestick chart for FSM illustrates a symmetrical triangle pattern. A symmetrical triangle pattern includes a descending (descending) upper trend line, which started at $4.68 on March 14, 2022, and a ascending (ascending) lower trend line, which started at $2.05 on October 3, 2022. The trend lines meet at the apex point where the stock will eventually break above the top or drop below the lower trend line. The weekly RSI has peaked, stopping just below the 70 band. Pullback support levels are at $4.20, $3.74, $3.22, and $2.63.
Fortuna Silver Mines Analyst Ratings and Price Targets I’m on MarketBeat.
Before you consider Pan American Silver, you’ll want to hear this.
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