Surging silver miners pushing valuation limits, CIBC says


Silver miners have soared YTD, far outgaining the metal's modest ~10% rise so far and even rising more than gold miners, and CIBC analysts say the shares appear to be "pushing valuation limits."

While some of the strength in silver equities may have come from expectations that silver will outperform gold after underperforming YTD, the firm is not convinced this actually will happen as it sees potentially disappointing industrial demand for silver; investment demand would need to rise significantly to keep the market from moving into a material surplus in 2014 and after.

Among individual silver mining stocks, the firm downgrades Fortuna Silver Mines (FSM) to Sector Perform from Sector Outperform but raises Pan Am Silver (PAAS) to Sector Perform from Sector Underperform, noting PAAS' strong organic growth potential and its progress in cutting costs and boosting cash flow.

ETFs: SLV, AGQ, SIL, SIVR, USLV, ZSL, DSLV, SLVP, DBS, SLVO, SILJ, USV

Comments (7)
  • apberusdisvet
    , contributor
    Comments (3104) | Send Message
     
    What' s not to like about the world's most strategically important industrial metal, that's also recognized as real money by a majority of the world's population, and is currently in short supply. Additionally, those who follow the PM sector understand that while JPM has been suppressing the price of silver through illegal naked shorts, this bank has also managed to acquire close to a half year's global production in its proprietary account.
    18 Mar 2014, 06:19 PM Reply Like
  • Mark0f0
    , contributor
    Comments (3061) | Send Message
     
    Many of those silver miners are still trading at a fraction of the replacement cost of their assets. Usually when you can buy something for less than the cost of building it, that's a good deal. Yes, earnings aren't really that good for the silver miners, but there's a turnaround underway in the price of precious metals.
    18 Mar 2014, 08:04 PM Reply Like
  • lance anderson
    , contributor
    Comments (2) | Send Message
     
    If JPM, see's the price of "Silver" reaching +- $25.00 in the near future, I am assuming they will be inclined to "dump" their inventiry, which in all likelehood, has been accummulated over the past 6 months+- for approx. $20.00, thus again "Flooding" the market with excess silver.
    18 Mar 2014, 10:24 PM Reply Like
  • User 446032
    , contributor
    Comments (2) | Send Message
     
    All this Hoorah about the "Surging Price" of Silver, is inaccurate. Silver is barely moving out of the hole it was dropped about a year ago. All the Big Sellers have dropped Silver and Silver stocks in well. They are just now beginning to seeing the Light of Day. Hopefully soon it really will surge. Anyone that knows how to read chart can pick any metal stock and confirm this for themselves.
    19 Mar 2014, 03:39 AM Reply Like
  • Ruben12345
    , contributor
    Comments (899) | Send Message
     
    Investors want returns between now and 3 months.. then PM is not for you.
    19 Mar 2014, 04:27 AM Reply Like
  • ajklein00
    , contributor
    Comments (4) | Send Message
     
    Looks like CIBC is short silver. "Pushing evaluation limits" is a ridiculous claim. With geopolitical tensions increasing, and the Fed showing no signs of a stop in money printing, silver should do well this year.
    19 Mar 2014, 09:02 AM Reply Like
  • donjean2
    , contributor
    Comments (29) | Send Message
     
    The Bible talks about wars and rumors of wars and that is happening worldwide. Bible also talks about earthquakes and the severity and timing is akin to a mother giving birth. Bought some property in a different state just in case the earthquake shakes up Northern Caiifornia. So far, everything stated in the Bible has come true so listening and reading the Bible is at least being exposed to truth.
    19 Mar 2014, 01:22 PM Reply Like
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