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Why gold and silver miners diverged in Q2

Kitco News

Gold miners shrugged off COVID-19 disruptions with many maintaining production levels in Q2, while silver miners have seen production levels drop, said Mining Audiences Manager Michael McCrae during Kitco Podcast.

McCrae was joined by special correspondent Paul Harris and Kip Keen for a discussion of the past week's news. Keen is a Canadian reporter with S&P Global Market Intelligence covering mining and metals.

Gold miners' operations are dispersed worldwide allowing for some hedging of risk, however most silver miners are located in Latin America, which has seen some of the greatest disruptions from the pandemic.

In recent Q2 announcements, Kinross Gold increased gold production. So did B2Gold while Kirkland Lake Gold mostly maintained.

However, Pan American Silver's production was halved in Q2. SSR Mining tumbled going from 1.7 million to 366,000 silver ounces.

Precious metals continue to power higher. During the week gold hit a record high of $2,078 an ounce, using October Comex futures. High metal prices are attracting more sector investment.

Paul Harris said the number of bought deals are increasing, noting that these types of deals are at a three-year high. In 2020 he tabulated 24 deals totaling $470 million. Average deal size is $19.5 million.

"It's a good sign that investor interest is coming back to the sector, but it is quite a ways to go from hitting the highs that were seen in 2012."

Keen concurred, noting that money coming into the sector is finding it harder to place.

"I've heard from a number of junior CEOs who can't sell enough paper or they don't want to, because it would be too much money for the programs they have planned," said Keen.

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