RBC Capital Markets last week maintained its outlook of global silver demand outpacing new mine supply this year. RBC analysts forecast average silver price at $15 per ounce for 2010 and beyond, compared to $14.65 per ounce during 2009. Some analysts estimate silver prices to average as high as $20 per ounce during 2010.Over the past month, silver prices have increased by around 16% on speculation of escalating sovereign-debt concerns boosting demand for the metal as an alternative to currencies. In addition, continuing record-low U.S. interest rates and government spending weighed heavily on the dollar, prompting purchases of precious metals. Over the past year, stocks of silver producers have been performing well on the back of investment inflows into silver and other precious metals. Total one-year returns from Hecla Mining ( HL), Endeavour Silver ( EXK) and Alexco Resource ( AXU) stand at 344%, 187%, and 154%, respectively. Total silver supply is expected to increase only fractionally year on year during 2010, with the increase in mine production likely to be offset by lower scrap and government sales. On the other hand, higher demand from industrial and investment segments is forecast to more than offset a continuing decline in photographic demand. The industrial segment accounts for around half of the world's total silver demand. In addition to the supply-demand deficit, a weak dollar will likely boost prices for precious metals. Based on the current outlook, we expect Silver Wheaton ( SLW) and Pan American Silver ( PAAS) to outperform their mining peers during 2010.
The company currently has stakes in three of the world's five largest silver deposits and is a top growth story among the North American silver producers, "a considerable achievement for a company started just over five years ago," according to Barnes. He said "Navidad has the potential to increase our long-term silver production by approximately 2 million ounces per annum." Silver Wheaton pays no income taxes, as all of its silver trading activities are executed by its wholly owned subsidiary based out of the Cayman Islands. According to analysts polled by Bloomberg, the company is set to report earnings of 73 cents per share for 2010 and 90 cents per share for 2011, up from 38 cents in 2009. The stock has 11 buy, two hold and no sell ratings, according to TheStreet's Analyst ratings guide.