Why Silver and Gold Miners Are Dropping Today

What happened

Shares of Endeavour Silver (NYSE:EXK), New Gold (NYSEMKT:NGD), and Fortuna Silver Mines (NYSE:FSM) all dropped more than 10% this morning. All three remain down around 9% as of 1:45 p.m. EDT. Shares of PolyMet Mining (NYSEMKT:PLM) are down even more, sitting more than 12% below yesterday’s closing price. 

So what

It’s been a rough week for investors in precious metals. Prices of gold and silver are down 5% and 15%, respectively, in the past five days, as measured by the ETFs used to track them. 

worker pouring molten silver out of a ladle

Guanacevi Mine, Mexico. Image source: Endeavour Silver Corp.

Endeavour Silver, Fortuna Silver Mines, and even New Gold, have large amounts of silver reserve assets. Silver has slightly outperformed gold as a commodity year to date, but the recent drop has been more significant for owners of silver assets. 

SLV Chart

SLV data by YCharts

The outsized drop in PolyMet shares may reflect the state of its operations. The company is still preparing to begin its NorthMet project in Minnesota, which is known to contain gold, silver, copper, nickel, and other metals. A drop in price for the commodities make the project less appealing to investors. PolyMet is also working through permitting challenges before beginning production. 

Now what

Precious-metal miner stocks are bound to react to price movements in the commodities they mine. This comes with the territory and today’s moves don’t reflect any company-specific news. 

While the five-day drop in Endeavour Silver, New Gold, and Fortuna Silver Mines are all about 20%, the year-to-date price moves of the shares tell a different story. The metals have filled a defensive need among investors this year, and the commodities are up on this “safe-haven” trade. Shares in these miners are up between 40% and 90% in that time, even with the recent drop. 

Though PolyMet has ongoing company-specific issues as it prepares to begin its Minnesota operation, today’s moves in Endeavour Silver, New Gold, and Fortuna Silver Mines are just following the moves in the commodity prices. 

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