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Silver Underperforms Gold in 2018: Can It Correct Its Course?

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Mar. 20 2018, Published 2:07 p.m. ET

Silver versus gold

Year-to-date (or YTD), silver has underperformed gold. As of March 16, 2018, the SPDR Gold Shares ETF (GLD), which tracks gold prices, had risen 0.8% YTD. During the same period, the iShares Silver Trust ETF (SLV), which tracks silver prices, had fallen 3.8%.

Because silver typically acts as a leveraged play on gold prices, silver prices usually follow gold prices but with greater intensity. This, however, hasn’t been the case so far in 2018.

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Silver miners’ performances

The individual stock performances of silver miners have varied widely YTD. However, their overall performance hasn’t been remarkable either.

First Majestic Silver (AG) had underperformed its peers (SIL), falling 11.9% YTD as of March 16, 2018. Due to the irregularities faced by the company’s mines in 2017, it downgraded its production, which negatively impacted the market sentiment for its stock.

Hecla Mining (HL), Tahoe Resources (TAHO), and Pan American Silver (PAAS) had fallen 8.7%, 0.0%, and 1.4%, respectively, as of March 16. Coeur Mining (CDE) is the only major silver miner to have risen. It had gained 8.7% as of March 16.

The huge divergences between silver prices and silver miners’ performances have likely been the result of company-specific factors and the leveraged natures of these companies. We’ll discuss these factors in detail later in this series.

Series overview

Recommendations and ratings given by analysts act as measures to gauge their market sentiments. They reflect the overall level of bullishness or bearishness on a particular company or industry.

In this series, we’ll discuss the recommendations and ratings for the above-mentioned silver miners. We’ll also discuss their stock performances and the reasons for their divergences. We’ll also look at analysts’ estimates for these companies’ revenues and EBITDA (earnings before interest, tax, depreciation, and amortization).

Let’s start by looking at ratings and expectations for Coeur Mining (CDE).

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