“The silver price fell 31% during the second quarter which is equal to the largest quarterly drop during the 2008 financial crisis and the third largest quarterly drop in the past 50 years,” said First Majestic Silver CEO Keith Neumeyer. “As such management decided to suspend a portion of silver sales to await a rebound in prices. While the suspension had a negative impact on this quarter's revenue and earnings, we are confident that the silver price will revert back to the mean in the near future. In the meantime, regular sales are no taking place in order to allow silver inventories to return to normal levels.

Eoin Treacy's view Silver prices posted an accelerated peak near $50 in 2011 and hit at least a short-term low near $18 in June. Since silver is so often a by-product of other mining operations, cost of production is harder to quantify than gold. However if a major producer is withholding supply because of low prices we can conclude that supply and demand have returned to some form of equilibrium.

Due to the fact that silver is much more plentiful than gold and has additional industrial applications, ETF holdings of the metal tend to have less of an impact on pricing. However, with the Index of ETF holdings having found support in the region of the 200-day MA from June, what was a headwind has turned into a tailwind for pricing. Silver broke out of a six week range on Monday and a sustained move below $20 would be required to question potential for some additional upside.

There is a high degree of commonality across the silver mining sector but Fortuna Silver is particularly notable for its outperformance. The share bottomed between April and May and has held a progression of higher reaction lows since. It broke out to new recovery highs yesterday and a sustained move below C$3.50 would be required to question medium-term scope for additional higher to lateral ranging.

First Majestic broke downwards from a two-year range in April and has rallied back to test the lower boundary over the last eight weeks. The $15 area represents the first area of potential resistance and a sustained move above it will be required to suggest a return to demand dominance beyond the short term.