Silver Miners Rally Even as the Metal Sheds 19%

Silver Miners Rally Even as the Metal Sheds 19%

Silver mining equities are finding support from strong production fundamentals even as spot silver endures its sharpest monthly pullback in years.

What to know

• Silver has dropped 19.5% over the past month to $69.66/oz, yet select mining stocks like Avino Silver & Gold are gaining ground on robust output figures.
• The gold-silver ratio has compressed to 65.7, still historically favourable for silver miners despite the recent sell-off.
• The broader precious metals complex is under pressure, with gold down 12.1% month-on-month and platinum off 5.7% on the week.

What happened

Silver has taken a beating. The spot price has fallen from above $86 to $69.66/oz over the past month - a 19.5% drawdown that ranks among the sharpest corrections since silver’s post-pandemic rally. Gold has suffered too, sliding 12.1% from its recent highs near $5,400 to $4,574.90. The entire precious metals complex is bleeding, with platinum and palladium down 5.7% and 8.8% respectively on the week.

Against that backdrop, something unusual is happening in the mining equity space. Avino Silver & Gold, a mid-tier producer with operations in Mexico and British Columbia, has been gaining momentum. The company’s stock has pushed higher on the back of strong production updates, defying the gravitational pull of falling metal prices. Company-level fundamentals are overriding macro headwinds - at least for now.

Who’s involved

Avino operates the Avino mine in Durango, Mexico, and the La Preciosa project, giving it meaningful exposure to both silver and gold. The company has been steadily increasing output, and recent production figures appear to have caught the market’s attention. Investors in the junior and mid-cap mining space are rotating into names with proven operational delivery, and Avino fits that profile.

More broadly, silver miners as a group face a fascinating moment. The gold-silver ratio sits at 65.7, which remains well below the long-term average near 80. That compressed ratio has historically signalled strong relative value for silver, and miners with growing production into that environment tend to attract capital - even during pullbacks in the underlying metal.

Institutional positioning in silver has likely thinned during this correction. Speculative longs that piled in during the run above $80 are being flushed out, but physical demand and industrial consumption remain structurally supportive. Miners delivering volume growth into that dynamic are being rewarded.

Why it matters

When producers rally during a metal sell-off, it typically suggests the market views the correction as temporary and is pricing in a recovery. That is what is happening now.

Silver’s pullback from $86 to $69 is severe, but context matters. Even at current levels, silver is trading at roughly triple its 2020 lows. The industrial demand thesis - driven by solar panel manufacturing, EV infrastructure, and electronics - has not changed. What has changed is short-term sentiment, likely driven by profit-taking and a broader risk-off rotation across commodities.

For Avino specifically, the ability to grow production while maintaining cost discipline is critical. Silver miners live and die by their all-in sustaining costs, and those delivering ounces at $15-18/oz are printing extraordinary margins even at $69 silver. That margin cushion explains why equity investors are not panicking alongside the spot market.

Corrections in precious metals often create the most interesting opportunities in the mining equity space. The companies that emerge from drawdowns with intact production profiles and strengthening balance sheets tend to outperform dramatically when the cycle turns.

What to watch

Several indicators matter over the coming weeks. First, whether silver can hold the $65-67 support zone - a breach below that level would suggest this correction has further to run and would likely drag even the strongest miners lower.

Second, production cost data from mid-tier silver miners will be critical. If companies like Avino can demonstrate stable or falling AISC alongside rising output, the equity premium should hold.

Third, the gold-silver ratio deserves close attention. A move back above 70 would signal silver underperformance is accelerating, while a hold near current levels suggests the market still views silver as the higher-beta play on any precious metals recovery.

Physical silver demand data from industrial consumers could put a floor under prices faster than the spot chart currently suggests. Solar installations globally continue to accelerate, and any uptick in fabrication demand would matter.

This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.