Shares in Silver Mining Companies Fall with Commodity Prices

The decrease in commodity prices Friday had a significant impact on silver mining company shares, as they mirrored the overall decline.

On the Comex division of the Nymex, silver dropped 87 cents to $17.83 an ounce in afternoon trading on Friday. The Dow Jones-AIG Silver Index was also down by 2.7 percent.

Some of the declines included Pan American Silver Corp. (nasdaq:PAAS) which fell $2.11, or 5.2 percent, to $38.42; Hecla Mining Co. (nyse:HL) fell 63 cents, or 4.9 percent, to $12.37; and Silver Wheaton Corp. (nyse:SLW) fell 74 cents, or 4.3 percent, to $16.49; Coeur d'Alene Mines Corp. 14 cents, or 3.7 percent, to $3.63 and Silver Standard Resources Inc. (nasdaq:SSRI) fell $1.31, or 4.3 percent, to $29.22.

Canaccord Adams analyst Steven Butler said that while the silver sell off followed the gold, the demand for silver keeps it different than gold as solely an inflation hedge.

Silver began the year on the spot market at $14.80 an ounce.

Silver Producers' Shares Plunge as U.S. Dollar Strengthens

The U.S. dollar continues to wreak havoc in the overall commodities market, as prices plunge in response to the greenback's recent strength.

Silver was no different, as it dropped to $16.63 an ounce on late morning Tuesday, down from Monday's close of $18.11. Shares of silver producers fell along with the silver prices.

Some silver producers falling were Coeur d'Alene Mines Corp. (NYSE: CDE), which fell by 28 cents, or 6.9 percent, to $3.76; Pan American Silver Corp. (Nasdaq:PAAS) dropped $1.97, or 5.1 percent, to $36.41; and Silver Wheaton Corp. (NYSE:SLW) fell 55 cents, or 3.5 percent, to $14.98.

The Dow Jones-AIG Silver Index dropped 4.2 percent.

Along with the stronger U.S. dollar, another factor is the slowing U.S. economy, which some believe will decrease the chances that inflation will rear its ugly head, making precious metals less valuable in the eyes of investors, who typically go there in inflationary times.

The manufacturing index of the Institute of Supply Management said it came in at 48.6 in March, The thinking is if it's below 50 there is a contraction going on in the economy, rather than expansion.

As usual, this is today's activity and response. When the dollar weakens again we could see all this change very quickly.