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Why McEwen Mining, Hecla Mining, and Silvercorp Metals Stocks All Powered Higher Today

By Rich Smith - May 3, 2021 at 5:43PM

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World Bank predicts a (relative) bull market for silver in 2021.

What happened

Shares of silver mining company stocks powered higher in Monday trading, with McEwen Mining (MUX 2.43%) rising 8.3%, Hecla Mining (HL 2.21%) climbing 8.5%, and Silvercorp Metals (SVM 2.64%) closing up 11.7%.

And you can thank the World Bank for that.

Green stock arrow shooting up through the gold numerals 2021

Image source: Getty Images.

So what

In a report released this morning, the World Bank predicted two dreary years of weak pricing for gold through 2022 -- but the news for silver investors is a whole lot happier.  

Gold prices closed Monday about $30 shy of the $1,800-an-ounce mark, but according to the World Bank, it could be a good long while before we see gold hit that mark. To the contrary, say the economists, gold prices will probably average no more than $1,700 an ounce this year -- then fall, not rise, to average $1,600 an ounce in 2022.

Not so with silver. According to the World Bank, silver prices are likely to hold onto much of their recent strength, with average prices up as much as 22% over 2020 levels at about $25 an ounce in 2021.

Now what

If you think that's an opportunity to buy silver stocks, though (and some people must -- that's why the stocks of silver mining companies are going up), here are a couple of caveats to consider:

First, silver prices closed just shy of $27 an ounce today, so even the $25-an-ounce average price that the World Bank is predicting for this year represents a decline from current pricing. And second, the World Bank predicts that silver prices will continue to slide heading into 2022 (alongside gold), falling about 12% to average $22 an ounce next year.

Granted, that implies significantly better prices for silver in both 2021 and 2022 than investors saw in 2020, when prices averaged about $20.50 an ounce. But still, if the World Bank's predictions are correct, investors who reacted to today's news with hope of even more price gains may be making exactly the wrong move.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Silvercorp Metals Inc. Stock Quote
Silvercorp Metals Inc.
SVM
$2.72 (2.64%) $0.07
Hecla Mining Company Stock Quote
Hecla Mining Company
HL
$4.62 (2.21%) $0.10
McEwen Mining Inc. Stock Quote
McEwen Mining Inc.
MUX
$3.37 (2.43%) $0.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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