Silver Price is Expected to Catch Up With Growing Demand and Silver Producers in Mexico Look to Expand Production

Nachrichtenquelle: PR Newswire (engl.)
03.06.2020, 14:55  |  718   |   |   

- FN Media Group Presents Market Commentary

NEW YORK, June 3, 2020 /PRNewswire/ -- The silver price per ounce is continuing its march towards $18. Silver demand is continuing to rise, fueled by new applications like 5G infrastructure, electric vehicles (EVs), smart electronics and solar energy panels as well as renewed investor interest. At the same time, the global silver supply fell for the fourth consecutive year in 2019 and will be strained further due to COVID-19 related mining closures. Luckily, silver producers such as Endeavour Silver Corp. (NYSE:EXK) (TSX:EDR), Hecla Mining (NYSE:HL), Coeur Mining, Inc. (NYSE:CDE) and First Majestic Silver Corp. (NYSE:AG) (TSX:FR) have begun reopening their operations in the world's largest silver-producing country.

With the world turning more and more toward green energy sources and new technology applications, the demand for silver is growing along with it. Silver also experienced a 12% increase in investment demand in 2019, which is expected to continue as retail and institutional investors focus their attention on silver's long-term investment. The impending supply squeeze is creating a favorable environment for silver producers, particularly the world's purest silver producer First Majestic Silver Corp. (NYSE:AG) (TSX:FR).

Although First Majestic Silver Corp. (AG) (FR.TO) faced temporary COVID-19 closures at its operations in Mexico alongside its peers, the company still managed to increase its production and strengthen its balance sheet in the first quarter. In Q1, the company reported a total production of 6.2 million equivalent ounces of silver, which consisted of 3.2 million ounces of silver and 32,202 ounces of gold, a 106% increase from Q1 2019 and 9% above guidance despite temporary suspensions.

First Majestic Silver Corp. (AG) (FR.TO) also announced that it has decided to postpone the sale of 292,000 ounces of silver and 700 ounces of gold, roughly $5.3 million worth until the price of silver improves. The company currently holds 1,045,342 ounces of silver and 1,459 ounces of gold in inventory as it patiently waits for the price of silver to rebound.

5G Infrastructure, EVs and Solar Panels Fuel Silver Demand

Industrial applications already make up more than half of global silver demand and are expected to increase by 3% in 2020. According to the Silver Institute, demand from the electrical and electronics sector should account for the majority of the gains. Silver use in 5G-infrastructure and upcoming intelligent electronics is also likely to fuel demand gains.

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