Shares of precious metals miner Endeavour Silver (NYSE: EXK) fell nearly 12% at one point in the first half of the trading day on Monday. Close behind was Great Panther Mining (NYSEMKT: GPL), which was off by nearly 11% at its worst. Fortuna Silver Mines (NYSE: FSM) and Coeur Mining (NYSE: CDE) weren't too far off that mark, with each losing just shy of 10% at the depths of the morning drop. All four miners managed to claw back some of those declines by lunchtime, but they were each still down between 6% and 8%.
There's no particular shock here since all of these miners are dependent on the price of the commodity metals they produce for their top and bottom lines. Although silver and gold have been rallying overall in recent months, they have sold off with the broader market today. That in turn has dragged the shares of Endeavour Silver, Great Panther, Coeur Mining, and Fortuna along for the ride. But there is a dichotomy here worth examining.
Over the past few months, silver has been notably outperforming gold. At one point during the year, silver was up around 60% or so, compared with an advance of about 35% for gold. Both have cooled off somewhat, but silver, which is often the more volatile of the two metals, has dropped more precipitously. At this point, gold is up about 25% for the year while silver has slipped from its 60% rally down to a 35% gain. It is still doing better than gold overall, but clearly it has lost ground at a faster pace. That was again on display today, with silver's loss at one point around four times that of gold's decline.
Which brings up this particular quartet. As Endeavour Silver and Fortuna Silver Mines both make clear in their names, silver is a major piece of their businesses. Great Panther Mining, meanwhile, used to be called Great Panther Silver. And Coeur Mining has a long history in the silver space. In recent years, gold has become increasingly more important for many miners, some of the names here included. But silver is still a notable product for each of these companies.
A look at Great Panther mining is instructive. It changed its name from Great Panther Silver in 2019 in an attempt to highlight the shift from silver mining to gold mining. In 2018, silver accounted for roughly 46% of production, with gold at 41%, and other metals the remaining. In 2019 that shifted to 83% gold, 12% silver, and 5% other metals. That's a big change, but silver remains a material product. In fact, the outsize price increases for the metal relative to gold this year have made it a bit more important in the mix at roughly 15% of revenue in the first half of 2020. With silver falling sharply today, the company's historical focus on silver, and the increasing prominence of the metal in 2020, it is completely understandable that the stock would drop more than a purer gold play.
Without getting too deep into the woods, the story is consistent across all four of these miners. Coeur Mining's gold/silver revenue split in the first half of 2020 was fairly similar to that of Great Panther, with the first quarter's breakdown coming in at 74% gold/26% silver. And the second-quarter split, following COVID-19 related business disruptions, was 83% gold/17% silver.
Endeavour Silver's gold/silver breakdown is even more heavily skewed to silver, with a roughly 50%/50% split between the two precious metals over the first half of 2020. Fortuna's mix, meanwhile, was roughly two thirds silver/one third gold across that six-month span. While silver's importance varies within this group, in the bigger picture they all generate notable revenue from the metal, and so their price drops today make sense.
Gold and silver are volatile commodities that have been on an impressive run since the bear market's bottom in mid-March. Silver's far more rapid advance appears to have turned into a more rapid decline, with silver-heavy miners feeling the pain as investor sentiment has shifted. That is not particularly surprising and is the other side of the coin when you look at the incredible advances that Fortuna Silver Mines, Coeur Mining, Endeavour Silver, and Great Panther Mining have made since the market's nadir. These names are up between 180% and 240% since mid-March even after recent pullbacks (including today's sizable drops).
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