Insights

Why is the Silver Mines (ASX:SVL) share price climbing 7% on Thursday?

What could be driving the silver pure-play’s upside today? We look at some possible factors
The post Why is the Silver Mines (ASX:SVL) share price climbing 7% on Thursday? appeared first on The Motley Fool Australia. –

The Silver Mines Limited (ASX: SVL) share price is gaining ground this afternoon, currently up 7.3% at 22 cents.

There’s no price-sensitive information out of the precious metals company’s camp today. Therefore, it’s worthwhile considering what forces may or may not be influencing its price action.

Why is the Silver Mines share price charging higher?

In the absence of any market-sensitive information today, we have to examine what’s happening in the underlying commodity markets.

Given the company is basically a silver pure-play, it’s wise to see what’s been happening with gold’s grey cousin lately.

After a strong rally in calendar year 2020, silver pricing has been volatile lately and largely traded sideways until June. After that, it started marching down the steps to hit a new low of US$21.513/t.oz on 29 September.

From then silver pricing has made a sharp recovery and is charging back northwards with authority.

In the two-or-so weeks since the move in silver began, it has climbed 13.5% to now trade at US$24.41/t.oz. It’s showing no signs of slowing down either, with another 0.6% gain so far today.

As long-lasting inflation poses a threat to the global economy, investors tend to flock to asset classes that offer safety and act as a hedge against inflation.

In this “flight to quality” as it is known, investors tend to gain exposure to commodity classes such as precious metals. These have proven to be reasonable and effective protection against currency debasement and asset price inflation over time when included in one’s portfolio.

What else could be at play?

Silver Mines is an ASX resources share that produces a commodity – in this case silver – and therefore, it is considered a price taker on the metal.

That means it must accept the going prices in the markets it sells into, which are often dictated by the unseen hands of supply and demand (among others).

As such, its share price can and does fluctuate with volatility in the broader commodity markets. So, when silver pricing begins to break out or crash, we can expect similar activity in the Silver Lake share price.

The correlation/causation effect is more apparent when examining the price history of both assets. We can see they move largely in unison, with the precious metal leading the Silver Mines share price.

And also given silver has hit new highs each day of this week, including today, it stands to reason this correlation effect has spilled over into Silver Mines’ hemisphere.

Silver Mines share price snapshot

The Silver Mines share price has struggled this year to date, despite strengths in its underlying markets. It has posted a loss of 6.5% since January 1 and is trading flat to its share price 1-year ago.

These results have each lagged the S&P/ASX 200 index (ASXL: XJO)’s return of around 19% in the same time.

The post Why is the Silver Mines (ASX:SVL) share price climbing 7% on Thursday? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Silver Mines right now?

Before you consider Silver Mines, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Silver Mines wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Perpetual (ASX:PPT) share price jumps 8% on positive quarterly update

ASX 200 energy shares take a breather, broker sees “lot of upside risk” for oil

Enero (ASX:EGG) share price leaps 22% to 52-week high. Here’s why

These 3 ASX 200 shares are topping the volume charts on Thursday

NAB (ASX:NAB) share price nudges 2-year, post-COVID high

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!