Silver prices are plunging
After dipping 3.9% on August 26, silver rallied on August 27. Silver currently has a year-over-year loss of 5.75% as of September 3. In comparison, gold has had a relatively up month in August and gained 3%. The three-month price chart for silver below shows that prices have fallen substantially, and that they have broken the likely support level they had at ~$14.5.
China’s Metals Consumption Index takes a dip
Was it just the Chinese markets that affected silver or the global uncertainty? The Goldman Sachs China’s MCI (Metals Consumption Index) fell to its lowest level since July in annualized terms. Regardless of the slight upward approach in consumption, it was not enough to offset a continued expansion in the industrial metals supply, which resulted in industrial metals prices falling further. Silver’s outlook remains bearish, as the biggest consumer market is resilient in industrial demands. Another important factor is higher supply than demand for the metal.
How are ETFs and miners affected?
Silver ETFs like the iShares Silver Trust (SLV) and leveraged silver ETF ProShares Ultra Silver (AGQ) have both lost on a year-over-year basis. However, SLV and AGQ have gained 0.72% and 0.48% on a 30-day trailing basis.
Pan America Silver Mining (PAAS) is one of the mining companies that is affected by the current rout in precious metals prices. A slash in dividends is in the cards, and the company will use resulting resources to extend mine lives. Pan America is trading at $6.8 as of September 4 on the New York Stock Exchange.
Other silver mining companies have also taken a plunge owing to the drastically falling prices. The mining companies that faced the downturn and were suffering on the operational front include Hecla Mining (HL), First Majestic Silver (AG), and Silver Wheaton (SLW). These stocks together make up about 23% of the VanEck Vectors Gold Miners ETF (GDX).