The Gold-Silver Price Ratio is Closing and Turning Investor Interest Toward Silver Stocks - Seite 2

Some of the key catalysts that could send silver prices soaring is the reopening of economies in the coming weeks and months, which is expected to boost industrial demand, and a supply crunch due to COVID-19 mine suspensions in prolific silver regions like Mexico. New applications like 5G infrastructure and solar energy are also expected to support rising silver prices, but it's investor interest that will likely be the biggest driver.

"People say silver has industrial uses and the demand isn't there," explained RJO Futures senior commodities broker Bob Haberkorn, who predicts silver to hit $20 in the coming weeks. "Of course, it has industrial use and it has always had industrial use. But it also has always been a flight-to-safety asset, and it has been throughout history."

Silver Producers Focus on Ramping Up Output Post-Pandemic

With the global pandemic causing temporary shutdowns in numerous key mining jurisdictions around the world, a large chunk of silver production was taken offline in the first quarter. The temporary setbacks may have hindered the supply in the first quarter, but operations are starting to come back online and silver producers have ambitious goals for the rest of the year.

Although the circumstances of COVID-19 shutdowns caused silver producers to withdraw their 2020 production guidance, many have reported strong numbers for Q1 2020.

In the first quarter of 2020, First Majestic Silver Corp. (AG) (FR.TO) reported a total production of 6.2 million equivalent ounces of silver, consisting of 3.2 million ounces of silver and 32,202 ounces of gold, which is inline with the previous quarter and 9% above guidance prior to suspension.

In terms of financial results, First Majestic Silver Corp. (AG) (FR.TO) came out of Q1 2020 mostly unscathed by COVID-19 with revenues of $86.1 million, which is only 1% lower than Q1 2019. The slight drop was primarily due to suspending sales in March in an attempt to maximize future profits due to metals market volatility.

The company decided to postpone the sale of 292,000 ounces of silver and 700 ounces of gold, worth approximately $5.3 million at the end of Q1 2020. As of May 2020, First Majestic Silver holds 1,045,342 ounces of silver and 1,459 ounces of gold in inventory.

During that period, however, First Majestic Silver Corp. (AG) (FR.TO) also managed to reduce cash costs by 19% to $5.16 per payable silver ounce, beating previously suspended cost guidance. The company came out with quarterly earnings of $0.04 per share, beating the Zacks Consensus Estimate of $0.03 per share.