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Shares of silver-focused precious metals miner Coeur Mining, Inc. (NYSE: CDE) fell roughly 14% in November. That continues a downtrend that started in August, after the stock reached a year-to-date gain of more than 500%. Despite the ongoing pullback, Coeur was still up around 290% year-to-date through November.
Image source: Coeur Mining.
What happened last month and since August is basically the same story, silver prices have been trending lower. That's dragged the price of Coeur Mining along with it, but there's more to the story here.
Coeur released decent third quarter earnings in late October, reporting net income of $0.42 a share, up from a loss of $0.11 a share in the year ago period. Adjusted net income, which takes out one-time items, was also solid at $0.23 a share, up from a loss of $0.14 last year.
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That's great news, however a key part of the equation at Coeur is the price of silver versus the cost to pull it from the ground. In the third quarter the miner's all in sustaining costs per silver equivalent ounce, which puts silver and gold on an equal footing, were around $17 an ounce. That's a very high number relative to the price of silver today.
To put some numbers on that, silver peaked in August at around $20 an ounce and declined to around $16.50 an ounce by the end of November. Simplistically speaking, Coeur went from making $3 per ounce of silver to losing money. So you can see why the drop in silver prices has had such a big impact on Coeur's stock price.
But there was an interesting wrinkle in November, the U.S. presidential election on November 8th. Coeur's shares rose a little after its late October earnings release, along with the price of silver. They then fell a bit from November 1st to November 8th, along with the price of silver. Each of those moves were in the 2% range.
Then Coeur's stock dropped 12.5% between the 8th and 30th of the month... along with the price of silver, which fell 10% over the same span. Silver prices are, clearly, having a huge impact on Coeur's stock price. But the steep drop in silver after the election brings in an outside, political element that's hard to predict. Investors are clearly working off of speculation about what the president elect will do when he takes office in January.
As far as silver miners go, Coeur's costs are toward the high end. That makes the price of silver extremely important. More conservative investors would be better off focusing on miners with lower costs and, thus, more financial breathing room. That's particularly true today since, at this point, speculation about hard-to-predict political outcomes appears to be a driving force in the already volatile precious metals markets.
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