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Denver - At North America's largest annual goldmining conference, top silver companies, not bullion, grabbed the attention of participants yersterday as they made bullish forecasts based on higher prices for the metal and a low production cost.
However, mining executives warned that costs could be on the rise again soon as a lower interest rates and record energy prices increase the chances of inflation.
On the first day of the Denver Gold Forum, Coeur d'Alene Mines chief executive Dennis Wheeler began the company presentations by saying that silver and gold prices were heading into a "perfect storm" based on growing demand, shrinking supply, a falling US dollar and inflation worries.
Wheeler told analysts, fund managers and industry players at the gold show that he expected industry production would continue to lag behind silver demand. "My overall outlook is that demand increases 2 per cent a year compounded. And production grows at 1 per cent for a few years or so. It can't change."
When asked if he expected the price of silver to hit US$15 ($20.30) an ounce any time soon, Mr Wheeler t replied it was "a reasonable price range".
Geoffrey Burns, chief executive of Pan American Silver, agrees, saying he sees US$15 silver much sooner than he expects silver at US$10.
"I think the fundamentals remain sound. I think at the moment [silver] is riding with gold on the US dollar weakness. I don't see those circumstances changing in the short term," Burns told the forum.
Phillips Baker Jr, chief executive of Hecla Mining, said "we are going to see significant increase of the silver price for no other reason but just following the gold price".
Baker also said the company's cash cost of production for silver was just an average of US$1.98 an ounce during the second quarter of 2007 - sharply below yesterday's spot price of US$13.45 an ounce.
- Reuters
