Silver Cools Off Some Today

Silver prices actually rose again late last Friday, finishing at  0.72% to USD 39.02 per ounce. However, silver cooled back down some today, as the first level of short-term resistance on the upside is at 39.41, followed by 39.88. The pair is expected to find support at 38.28, with the subsequent support level at 37.62.

The white metal is showing convergence with its 20 Hr and its 50 Hr moving averages. Not to worry, silver prices always fluctuate wildly and are still predicted to reach amazing levels by March of 2012.

The overall price of silver has risen by right around 100% the last year, which is unheard of. The outlook for the future of the white metal looks very promising.

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Gold is Good but Silver is Better

Most people are still committed to gold, and rightfully so, as the price of gold continues to skyrocket and shatter price records. That being said, there are still a few factors that make silver just as good if not better than gold.

What is the main factor to base this statement on? Supply constraints. The amount of gold already mined is about 100 times greater than silver; yet for each dollar invested in gold, another dollar is currently being invested in silver. You can’t keep buying it at 1-to-1 and have the price stay the same when the supplies are so different.

Being the fact that silver is being produced at a level that has never been seen, as well as being used faster than it can be mined, this screams to the point that silver is only going to go up in price and should be invested in as soon as possible.

Furthermore, the price of gold is trading about 45 times the price of silver. Historically, the ratio has been about 16 times and the two metals should eventually move back in line with that ratio.

So investing in silver, in just about any form is a good idea. Physical silver and silver coins are always the best option, but futures contracts can be worked to, if you know what you are doing. There are a number of places to invest in silver, with one of the best being APMEX Gold and Silver. Do some research and get yourself invested in some silver now.

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Sprott Plans to Buy Another $32 Million Worth of Silver

Sprott is planning to buy another $32 million worth of silver. So what does this mean for future silver prices? Lets take a look at how silver has been performing in relation to gold. Usually Silver prices spike one way or another when gold prices do. However, this has not been the case lately, as gold is setting new price records while silver has remained steady between the $39-$42 range.

Does this change in behavior mean a rerating is taking place? Probably not yet. Silver investors are naturally nervous, particularly following the sharp fall in their favored precious metal at the beginning of May. A fall that was so severe that it may have seen some new investors in the metal withdraw from silver forever. This was an unwise move, as too many investors are jumping at a moments notice if silver spikes too fast up or down or. It is taking time to get over this setback, but in recent days seems to be recovering.

There is one move apparently under way that could drive silver very rapidly to big new highs. Pre-eminent silver bull, Eric Sprott, has told King World News that he will be selling a further 2 million shares in the Sprott Physical Silver Trust, which will make available another $32 million that will be used to buy physical silver to that value. Sourcing the 800,000 ounces or so of physical metal may put a squeeze on the market if some silver analysts are correct, and this could cause the silver price to accelerate- and along with gold’s spectacular surge could drive silver back to the $50 level and higher very quickly.

If this is the case (which it seems to be), the true silver bulls would just see this as a great buying opportunity in what they view as a long term upwards bull market in precious metals within which category they see silver as the potential star performer. What does this mean for you? Well all along we have been telling you to get invested in silver. There are a number of ways you can do that, with the most popular being Silver Bars and Coins.

Silver looks like it may be on the verge of another price spike. The news from Sprott only magnifies the fact that silver is the very best precious metal to be invested in for the long run.

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Will Increased Production Hurt Silver Prices?

Mining companies are mining for silver at the highest rate in history. With the economy continuing to slide, will the price of oil and the fact that silver is being so heavily mined affect its price?

Finding the true value of a commodity is difficult. On the demand side, numerous entities may purchase a commodity to produce final goods. All of these entities have a different break-even price at which a commodity is too expensive, and each requires a quantity that varies from firm to firm. Silver has another complexity: its recyclability.

On the supply side, silver is almost solely produced by miners. Silver can also be “produced” by recycling firms, which turn unwanted silver jewelry, medallions, and trinkets from the general population into a pure commodity product. Recycling silver is essentially “borrowing” from past silver production.

But one element isn’t discussed all that much. Silver has a hedge of sorts that exists between the producer and the user. Silver mining is expensive, primarily due to the rising cost of oil, which fuels most mining machinery and refining equipment. Silver miners essentially turn energy—human and petroleum—into a finished product: silver.

When the cost of oil drops, mining becomes more lucrative and more silver is mined. This helps to keep oil at a reasonable equilibrium price. Additionally, the OPEC cartel enjoys ever rising oil prices, and it is keen on keeping price for oil as high as possible. Most inexpensive oil was brought to the surface 50 years ago anyway, so now we’re using the most expensive oil to find and refine.

Silver production is at an all-time high. Despite this fact, the price of silver shouldn’t be affected, and if anything it should continue to go up due to the fact that silver is being used at a faster rate than it can be mined.

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Silvercorp Mining Purchases Majority Equity in Two China Mining Companies

Silvercorp just announced that its 77.5% owned subsidiary, Henan Found Mining Co. (“Henan Found”), signed a share purchase agreement to acquire a 90% equity interest in Zhongxing Mining Co. Ltd. (“Zhongxing”) and Chuanxin Mining Co. Ltd. (“Chuanxin”), two local private mining companies, with common owners, in Luoyang City, Henan Province.

We have already written about China starting to get involved more passionately with the financial sector of the world. They have also made the jump to being more involved in precious metals. It seems even big mining companies are heading to China to dig around some.

Henan Found’s total cash payment for the acquisition of both companies is approximately US $10.4 million, including US$4.3 million for the equity interest and US $6.1 million cash payment for outstanding debt. Henan Found has made 80% of the required total payment and has taken over control.

Zhongxing’s main assets include the high grade XBG silver-gold-lead-zinc (“Ag-Au-Pb-Zn”) mine with a mining permit covering 26.36 square kilometers (km2) expiring November 2022 and the adjacent NTM gold exploration permit covering 2.54 km2. Chuanxin’s main assets include a 350 tonne-per-day (“t/d”) floatation mill and an associated tailings management facility built in 2009 within the mining permit area, and an environmental permit to construct a 1,000 t/d floatation mill.

With the economy the way it is you can expect to hear more and more news regarding mining companies digging around in other countries for precious metals, especially silver. The purchase price the Henan paid was actually relatively low, and while they will make their money back with ease, it looks like they are shooting for a huge score and looking to find something unexpected in the next few years.

Silver continues to be the most popular precious metal and will continue to be because of the high demand that investors and industries have for it.

Cautionary Statements

The majority of this article was taken from a Press Release.

Blog Silver has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this Press Release.

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New Silver Mineralization Found in Upper Levels of the Santa Juana Mine by ECU Silver

ECU Silver Mining Inc. (TSX: ECU.TO) is pleased to announce that through its ongoing underground development, it has uncovered the upward continuity of several mineralized veins known as the “A” veins package.   These veins were mined individually on level 17 and are currently being mined on the lower levels 18 and 19.   In the upper levels, from level 14 to 17, the veins were mined intermittently.   The total height of the active mining area where these veins are located, between levels 12 and 19, is 260 meters (853 feet).   The upward continuity of the “A” veins package, from level 12 to surface is 300 meters (984 feet).

In the block formed by the “A” veins package, there is a 100 meter (328 feet) long section where the veins are closer to one another and bulk mining can be considered.   In the mining levels between levels 12 and 19, the section of veins has an average width of 35 meters (115 feet) representing a total volume of more than 3,000,000 tonnes of mineralized material within the 260 meters (853 feet).

The information on the upward extension of the “A” veins package was recently discovered when the system was encountered while driving a new ramp starting on level 12.   A cross-cut was driven from that ramp to test the “A” veins package and the average following assay results were obtained: 1.18 g/t gold, 307 g/t silver, 0.33% lead, 0.36% zinc and 0.31% copper over a total drift length of 24 meters (79 feet).

Michel Roy, CEO and Chairman of ECU stated, “The upward continuation of the “A” veins package, with interesting precious metals grades, is encouraging as it constitutes a readily accessible source of feed for our flotation mill and any future expansion of our milling capacity.”

The Company is also continuing the deep drill hole below the Santa Juana mine and has now entered the target zone below the massive sulphide originally intercepted in drill hole SJ-18-21.   The drill has intersected 200 meters (656 feet) below the planned projection of the massive sulphide zone encountered above.   Mineralization was cut over a core length of more than 20 meters (66 feet).   Visually, it is a mixture of calcite, quartz and sulfides.   This appears to be a repetition of the variation in the mineralization of the A4 vein intercepts, 1,200 meters (3,937 feet) above, which is to be the upward continuity of this deep zone.   In the upper mined levels of the A4 vein, the mineralization vary from massive sulfides, containing high levels of lead and zinc with variable precious metals, to a mixture of calcite and sulfides with much lower lead and zinc but better average grades of precious metals and copper.   Assays are pending.

Michel Roy, CEO and Chairman of ECU stated, “There is a strong similarity of the mineralization in this first daughter hole compared to the mineralized material mined 1,200 meters (3,937 feet) above.   More daughter holes are planned as soon as this one is completed.”

On June 24th, the Company announced that it had entered into an agreement to merge with Golden Minerals Company (“Golden Minerals”) to create an exciting new junior precious metals mining company.   The details of the proposed merger have been documented in detail and have been sent out to the respective shareholders of each company.   Securityholder votes will be registered at a special meeting of shareholders for both companies to occur on August 30, 2011.

Cautionary Statements

Readers are cautioned that until a prefeasibility study is completed, there are no assurances these latest mineralized zones will be economically viable.

Blog Silver has not reviewed and does not accept responsibility for the adequacy or accuracy of the content of this Press Release.

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MAG Silver Reports Net Losses for Second Quarter of 2011

Silver giant MAG silver has reported some net losses for the second quarter of 2011. The first six months of 2011 operating ended on June 30th, 2011. The company reported losses that amounted to  $1,387,846.

This may seem pretty rough, but by comparison, in 2010 at this same point of the year, MAG silver reported losses of $3,554,861. Since then of course silver has been on a tear, resulting in a much better net loss number for the company to report.

Another factor that is helping MAG silver’s numbers to come up some – yet they are still in the red, was the result of an arbitration award of $1,799,775 received from Fresnillo that was recognized as income for the current quarter.

MAG Silver currently holds $34,897,811 in working capital and $33,571,781 in cash on hand. As you can see by those numbers, things are actually quite good for them.

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Silver ETF Holdings Decline

Silver prices don’t seem to be keeping pace with gold prices as of late. Silver ETF holdings are a bit down. This is somewhat surprising, as usually gold and other precious metals can act as a good indicator or what silver will do. However, with the current state of the economy, silver looks like it is going to do what it wants.

Holdings of the iShares Silver Trust (SLV) declined by 86.36 tonnes on the week but have gained 236.41 tonnes since July 1st when silver prices began rallying.

As we said above, silver has not kept pace with gold, probably because of the fact that industrial demand for silver has gone down a little due to the severe economic downturn.  Silver closed Wednesday at $39.39, up $1.58.  Silver began the year at $30.67 and is now up by $8.72 on the year returning investors a gain of 28.4%.

The SLV peaked in late April at the $50 level before prices corrected to the low 30's.  The SLV has had an average annualized total return of 25% over the past three years.

The iShares Silver Trust currently holds 314.2 million ounces of silver valued at $12 billion. Silver ETFs are still an excellent investment, as silver will be a very sought after precious metal for the foreseeable future.

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