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Production at Tahoe’s Escobal project in Guatemala is due to start in 2014 and is estimated to hit 20 million ounces of silver a year for more than 10 years.

ILYA NAYMUSHIN/REUTERS

Gold's recent rally thanks to the unleashing of quantitative easing measures by the world's central banks has grabbed most of the headlines, but it has nothing over silver. In the past 10 weeks, the precious metal has soared about 26 per cent, versus about 12 per cent for gold.

Price gains of that magnitude often signal caution, and Dundee Securities analyst Dale Mah suggests now is the time.

"Investors have driven up precious metals equities after a spring and summer of uncertainty," said Mr. Mah in a research note today. "The same investors may take profits, whether a portfolio manager padding third-quarter 2012 performance or the retail investor happy to see their holdings finally in the back; we believe a short-term correction is a reality."

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As such, he downgraded two silver companies today to "neutral" ratings from "buy": Fortuna Silver Mines Inc. and Tahoe Resources Inc.

Fortuna has risen 33 per cent since mid-June, getting an added lift from solid second-quarter production, even though there have been production problems at its Caylloma project in Peru and a delay in the permitting of a tailings expansion.

Tahoe Resources has also seen strong price gains, but Mr. Mah notes it has the added negative of operating in the geopoliticaly risky nation of Guatemala. Most recently, the company's Escobal project has been hit with civil unrest, which temporarily disrupted construction.

Despite his cautious stance, Mr. Mah raised his price targets on both stocks, as well as two others, given that their share prices have already surpassed his price targets.

He raised his price target on Fortuna Silver to $5.30 from $5; on Tahoe Resources to $21.20 from $21.10; on First Majestic Silver Corp. to $25.10 from $20.40; and on Great Panther Silver Ltd. to $2.20 from $1.80.

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TD Securities analyst Cherilyn Radbourne has upgraded Canadian National Railway Co. to "buy" from "hold" in the wake of the recent share price dip sparked by an earnings warning from U.S. carrier Norfolk Southern Corp. She believes investors sold CN shares as a "knee-jerk reaction," noting that CN has minimal exposure to the end markets that are under pressure in the rail industry: thermal coal and U.S. grain.

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Upside: Ms. Radbourne maintained a $100 (Canadian) price target.

Also see: Railway shares slide after earnings warning

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Investors should buy shares in PMI Gold Corp. as it moves towards the first gold pour in 2014 at its Obotan project in Ghana, said Raymond James analyst Brad Humphrey. Permitting, financing and a construction decision are all just on the horizon now that a feasibility study is complete. "We consider PMI's Obotan project to be one of the better development projects currently moving forward within the battered developer group," he said.

Upside: Mr. Humphrey initiated coverage with an "outperform" rating and $1.40 price target.

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National Bank Financial has added Paladin Labs Inc. to its "action list" -- a handful of stocks its analysts consider their most compelling investment ideas. Paladin Labs is a specialty pharmaceutical company and National Bank is encouraged by its solid track record of generating record revenue from the acquisition of licensing of sales and marketing rights.

Upside: National Bank Financial analyst Leon Aghazarian has a $51 price target and an "outperform" rating on the stock.

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Canaccord Genuity analyst Nicholas Campbell has initiated coverage on Santacruz Silver Mining Ltd., an emerging junior silver producer with three main projects in Mexico, with a "speculative buy" rating. He likes the company for the production and cash flow that will soon come from its Rosario project, which starts up late this year, its pipeline of other low-capital expenditure projects, and its low valuation relative to peers.

Upside: Mr. Campbell set a $4 price target.

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