Fresnillo slides as silver rally falters after US tariff delay

Fresnillo opened down 1.6% and Endeavour Mining fell 1.8% as a sharp pullback in silver weighed on miners after the US delayed tariffs on critical minerals. Spot silver plunged as much as 7.3% intraday (after a >20% rally over four sessions) and was trading about 3.4% lower at just under $90/oz after touching above $93; spot gold eased to roughly $4,609/oz. The move followed comments from Donald Trump about seeking bilateral supply agreements and possibly using price floors instead of immediate tariffs, prompting profit-taking and underscoring precious metals’ sensitivity to US trade policy shifts.

Analysis

Market structure: The tariff delay removes a near-term scarcity shock and immediately reduces upside pressure on silver while leaving elevated realised and implied volatility. Expect silver-linked equities (pure-play silver miners like Fresnillo LSE:FRES, Pan American NASDAQ:PAAS) to underperform diversified gold producers (Newmont NEM, Barrick GOLD) on a 1–3 month horizon as investors reprice geopolitical premia; a 10–25% intraday range in silver is now plausible over the next 30 days.

Risk assessment: Tail risks include a reversal to tariffs or export restrictions (low-probability but high-impact) which could re-spike silver >$100/oz within 60–180 days, and a faster-than-expected monetary tightening that would sap safe-haven flows. Immediate (days) volatility will remain high; medium-term (weeks–months) depends on US bilateral deals outcome (watch announcements in 30–60 days) and CFTC positioning reports; long-term fundamentals (industrial silver demand for electrification) still supportive.

Trade implications: Tactical plays should prefer options/defined-risk structures to harvest mean-reverting vol while protecting for policy re-escalation. Favor relative-value: long diversified gold producers vs short pure silver exposure; use 1–3 month put spreads on high-beta silver names and sell short-dated volatility once IV > 90-day historical by 40–60%.

Contrarian angles: Consensus treats the tariff delay as de-risking; that may be premature — a negotiated bilateral approach could produce staggered supply-side constraints that re-accelerate prices into H2 2026. If industrial demand growth (photovoltaics, EVs) continues, a 6–18 month framework still supports higher base prices for silver; current pullback can create disciplined layering opportunities at set thresholds (silver $70–80/oz, FRES down 15–30%).

Key Decisions for Investors

• Establish a 2–3% portfolio long in Newmont (NEM) and/or Barrick (GOLD) split equally as defensive exposure to precious metals; scale in over 6 weeks on any miner weakness of 10–20% and target 12–18% upside if metals recover.
• Enter a 1.5–2% pair trade: long NEM (1.5%) and short Fresnillo (FRES.L) (1.5%) for a 3-month horizon; trim if silver falls below $75/oz or if NEM underperforms by >10% relative to FRES.
• Sell short-dated volatility on silver ETFs only with defined risk: establish a 30-day call spread on SLV (sell ATM call, buy +2 strikes) sized to 0.5% portfolio if SLV implied vol exceeds its 90-day average by >50%; use premium to fund a 3-month SLV put spread (buy 1, sell 1 deeper) to hedge policy tail risk.
• Reduce direct exposure to silver-focused juniors (e.g., PAAS, small-cap silver miners) by 50% within 7 trading days if silver closes below $85/oz for three sessions; redeploy proceeds into diversified gold producers or cash until tariff negotiations resolve (watch US announcements in next 30–60 days).