Along with gold, silver has risen as one of the best-performing metals in 2016. In fact, silver has outperformed gold year-to-date. Silver is usually a levered play on gold prices. With silver outshining gold in 2016, precious metal miners with substantial exposure to silver have also performed quite well. Silver miners’ operating and financial leverage was the main reason for the sensitivity in share prices as underlying metal prices changed.
Silver miner space
While silver prices are up 36% year-to-date as of September 1, 2016, depending on their leverages, silver companies have returned way more. Of these companies, Coeur Mining (CDE) has outperformed its peers. Coeur rose 428% YTD while First Majestic Silver (AG) rose 245%. Hecla Mining (HL), Pan American Silver (PAAS), and Tahoe Resources (TAHO) rose 202%, 167%, and 52%, respectively.
Coeur and First Majestic are highly leveraged operationally compared to their closest peers. They’re also relatively high-cost operators, leading to disproportionate gains.
In this series
2Q16 earnings season is over, and all major silver miners have reported their earnings for the quarter. So now it’s time to find out which miners fared better than others. In this series, we’ll look at various factors that are affecting gold miners such as Coeur Mining, Hecla, Tahoe Resources, Pan American Silver, and First Majestic Silver. These five companies form 37.2% of the Global X Silver Miners ETF (SIL).
We’ll discuss factors such as cost profile, cost reduction progression among miners, production growth factors, and debt standing. Finally, we’ll see how these factors have affected stock performance under the current metal price environment. We’ll see which stocks are more levered to changes in precious metal prices.
Let’s start by looking at silver miners’ geographical exposure in the next part of this series.