The Gold Report: A recent Raymond James research report refers to silver as the “devil’s metal.” What is the story there?
Chris Thompson: Silver is much more volatile than gold. Typically when we see a weak day for the gold price, silver has a terrible day. Likewise, if we see a strong day for gold, typically silver delivers exceptional performance. Because it’s so volatile, we term it the devil’s metal.
TGR: If the selloff in precious metal equities is over and this is the bottom, how long do you expect the flat-lining to persist?
CT: At Raymond James, in the near term we see gold trading rangebound between $1,200 per ounce ($1,200/oz) and $1,300/oz and silver trading rangebound between $16.50/oz and $18.50/oz. We are not seeing fundamentals that would prompt a price outside of those respective ranges. We expect current price strength to continue to the end of Q1/15, followed by some weakness into the summer and then more strength toward the end of the year.
TGR: In a recent research report you warned investors about 2015 possibly being the “Year of the Dodo” for certain precious metal producers. Please explain.
CT: Over the last three years or so, the silver price has dropped to a level that calls into question the economics of a lot of the primary silver-producing companies that I follow. It’s now about survival. We all know that the dodo could not fly. What I’m looking for—regardless of metal prices—are companies that can continue to deliver real growth and shareholder upside; companies that can “fly,” not just survive. That is why we cautioned investors toward the end of last year that the majority of the silver names are in survival mode at these metal prices. We want to direct investors toward those few stories we cover where we see significant upside …read more