Categories: Precious Metals
Topics: General Precious Metals

Silver Miners’ Q2’16 Fundamentals

The silver miners’ stocks have enjoyed an epic year, skyrocketing higher with silver’s new bull market.  At best since mid-January alone, some of these elite stocks had actually septupled!  Naturally such extreme gains beg the question of whether they can possibly be fundamentally justified.  The recently-released second-quarter financial and operational results of the top silver miners offer much insight on this.

Back in mid-December leading into the Fed’s first rate hike in 9.5 years, silver was pounded to a dismal 6.4-year secular low.  Sentiment was overwhelmingly bearish, the breeding ground of major bottomings.  Indeed silver soon started climbing with its primary driver gold heading into 2016.  As usual silver got off to a slow start, with traders skeptical until gold rallied far enough and long enough to entice them back.

In Q1’16 silver really lagged gold, with a weak 11.7% advance to gold’s 16.1%.  Once silver bulls get underway in earnest, silver tends to amplify gold’s upside by 2x to 3x.  And that already started happening in Q2’16, which saw silver surge 21.4% higher on a mere 7.4% gold rally!  This acceleration is what ignited silver stocks.  Was their buying fueled purely by greed, or did it have real fundamental underpinnings?

This crucial question for investors couldn’t be addressed until mid-August, when silver miners’ Q2’16 results were fully released. 

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