In an interview, Silver Wheaton (NYSE: SLW) CEO Randy Smallwood said he believes precious metals, including silver, should remain under pressure over the short term because of the ongoing economic crisis in Europe.
“Any strength that comes into the dollar impacts silver." Consequently, over the short term they will “probably see a bit of pressure in the short term,” concluded Smallwood.
Because commodities are acquired in U.S. dollars, those residing outside the United States will pay more for precious metals when the dollar strengthens.
Commenting on the financial health of silver miners, Smallwood added that they're having difficulty acquiring capital because of the fall in price of silver.
The problem is the type of capital being made available via loans would dilute the equity of the miners, something they don't want to participate in.
Smallwood didn't say anything in regard to this, but it does make one wonder if this is an excellent time for Silver Wheaton to enter into more streaming agreements with the miners because of the tight lending market.
The faltering euro zone is also connected to this, as European banks were the top lenders to the miners, and with the challenges there they've tightened up their lending.
Over the long term, because of the growing industrial demand and uses of silver, along with the lower recycling rates, Smallwood says he's extremely "bullish" on the metal over the long haul.
Silver Wheaton closed Tuesday at $27.92, climbing $1.03, or 3.83 percent.