Keep An Eye On Fortuna Silver Mines

The Dow roared after Fed Powell announced the central bank's new policy strategy…to keep interest rates lower for longer. Specifically the central bank is going to allow inflation to run above the Fed’s 2% inflation goal. The DOW is positive for 2020. But this post is about equity markets, it’s about silver and in particular Fortuna.

It appears metals traders have digested Fed Powell’s speech as gold and silver shot up yesterday into today. The shift in Fed policy will mostly likely reignite “the inflation trade,” which has historically been bullish for commodities.

Gold had one of its worst one-day declines in 7 years. Silver also took a nosedive, fallen the most in any single day since mid-March. But the drop in silver is far from over, just getting started and the dip in price was a buying opportunity.

Keith Neumeyer, CEO of First Majestic Silver, a pure silver mining company and a veteran with 35 years of experience in the mining sector thinks silver can hit $100 in the future based on silver increasing from $5 dollars in 2002 to $50 dollars in 2011.

Fortuna Silver Mines Inc. engages in the exploration, extraction, and processing of precious and base metal deposits in Latin America. The company explores for silver, gold, lead, and zinc deposits.

During their last earnings report, Fortuna said COVID-19 hurt the operations when with a 54-day government mandated suspension of operations at the San Jose mine. This resulted in a $20.4M decrease in sales as silver and gold sales volume fell 56% and 53% respectively. During the quarter, silver and gold production totaled to 1.27M oz. 7.1K oz. respectively, while all-in sustaining costs were $11.18/silver equiv. oz. at the San Jose mine and $15.81/silver equiv. oz. at the Caylloma mine.

What’s important to note is Fortuna’s all-in sustaining cost for silver. Silver is now trader above $25 an ounce. Bank of American sees silver prices going to $35 next year, while Goldman Sachs see $30 next year.

Although Fortuna is one of the largest silver miners in terms of revenue, it get little love by the financial outlets. Thus, price has not move up like the other silver miners and so I'm keeping my eyes on this company in the medium to longer term on Fortuna. If price can close above the weekly supply at $7.75, I might start to buy some shares and hold for the next 10 years.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

Posted Using LeoFinance