Email from Brad:
Hi Ty
I did the following interview today so include it to bring you up to date on my thoughts for the gold and silver markets.
Regards Brad
What were your thoughts on 2014 at the end of last year? Were your expectations correct? Here at Endeavour Silver, we predicted a modest bounce in gold and silver prices followed by a decline to retest the $19 and $1200 lows then a slow crawl forward to $22-24 silver and $1400 gold by year-end. Instead we got two big bounces followed by a crash to new lows so not on target!
What has been the most challenging aspect of this market? As a producer, our biggest challenge has been to continually trim our operating costs to maintain profitability. We succeeded in doing that in 2013 but we are back doing it again this year.
What was the most important milestone for your company this year? How did it affect share price? (why?) We added US$14.5 million to the balance sheet primarily from operations in the first half of 2014 in order to significantly strengthen our financial position – given the low metal prices, I would say that was our best achievement this year. As a result of that plus our sector leading leverage to the precious metal prices, our share price more than doubled from January to August.
2015 outlook:
What do you expect for 2015? More of the same? Better market? Worse market? As an eternal optimist, I regret to say I have a very muted outlook for the precious metals in 2015. We should see a nice rebound over the next four weeks (starting mid-November 2014) but then a decline to test new lows over the next four months. Since the gold and silver mining sectors are not sustainable below $15 silver and $1100 gold, that should mark the bottom and I see a slow climb back to $18 silver and $1350 gold by year-end.
What do you tell investors who are concerned about the state of the market? We aim to run our business to remain profitable at any metal price and that is a challenge we are meeting even at these low prices. However, there is currently a big disconnect between the paper and physical markets for gold and silver. Gold supply has been falling for three years and yet the gold price has crashed, primarily because of no inflation prompting short sellers in the futures market forcing the gold ETF’s to liquidate their physical holdings at lower and lower prices. And yet physical demand in the far-east as measured by gold imports into China and silver imports into India has never been higher! This current run in the US$ defies gravity and represents a short term rush to the safety and liquidity of the US$ in the absence of any other bona fide investment opportunities for global cash waiting for signs of economic recovery world-wide. Something always comes out of left field to pop the bubble so gold and silver investors only need to be a bit more patient. Once the US$ starts to unravel, things could evolve fairly quickly in the precious metals.
Do you have any catalysts on the horizon that investors should be excited about? Absolutely! In addition to new finds at all three of our mines in Mexico this year, Endeavour Silver has an exciting new discovery emerging on our San Sebastian property in Jalisco state. We have already received our mine development permit and hope to announce an updated resource, mine plan and economic study in 2015 followed potentially by a production decision.
AI
