Valuations for silver producers picked up late in 2009 and remain significantly higher than a year ago, but most stocks in the sector still reflect spot prices below current levels.
The majority of silver equities are reflecting a long-term price for the metal of US$13 per ounce, according to estimates from analysts at RBC Capital Markets. That is an improvement from the US$11 to US$13 range seen last quarter, but it is still well below the spot price around US$16.50.
As for the gold-to-silver price ratio, following a return to historical averages in the low 60s that took most of 2009 to play out, gold has gained the upper hand again in recent months, RBC noted. The ratio has climbed to 68:1.
The analysts believe silver could outperform gold in the near term, which would push the gold-to-silver ratio back towards the low 60s and even into the high 50s. That suggests spot silver will re-test the US$18 to US$20 per ounce level.
RBC continues to forecast US$15 for 2010 and future years.