What happened

Shares of Coeur Mining (CDE 1.30%) shed 12.8% in September, according to data provided by S&P Global Market Intelligence. That's the second steepest drop the stock has suffered this year, after its sharp dip during the March stock market crash. One factor, which essentially drives Coeur Mining's revenue and profits, is to blame for the stock's September drop: silver prices.

So what

Silver has had a stellar 2020, with prices rallying to multi-year highs until September, when it swiftly reversed course. Over the course of the month, silver prices tumbled nearly 19% after hitting a near seven-year high of around $30 per ounce in the month of August.

Silver bars.

Image source: Getty Images.

Coeur Mining shares, unsurprisingly, tumbled alongside silver prices. Gold prices further exacerbated the stock's fall: Much like silver, gold price also declined in September on a stronger U.S. dollar and low demand for jewelry from key consuming nations, among other factors. Coeur is a pretty diversified miner dealing in both precious metals: In 2019, Coeur generated 69% revenue from silver and 27% from gold, with the remaining split between zinc and lead.

Silver, though, has historically proven to be a volatile metal partly because silver primarily has industrial uses unlike gold which is mainly used for end consumption purposes such as jewelry. That might explain why silver prices lost substantially more ground than gold last month, sending most silver stocks, and not just Coeur Mining, plummeting.

Now what

Speculation is ripe that gold prices could hit record highs this year backed by favorable economic and geo-political catalysts. That could also fuel another rally in silver prices, both of which should bode well for Coeur Mining.

In July, Coeur reported 16% higher sales from gold for its second quarter but a 42% drop in silver sales due to suspension of production at a key mine, Palmarejo in Mexico, in the wake of the COVID-19 pandemic. With the mine up and running again, the company is relying on firm precious metal prices to end 2020 on a strong note. Now whether gold and silver prices prove to be a tailwind or a headwind going forward is something Coeur investors need to keep an eye on.