Silver's Base Price Redefined: Where Does First Majestic's Mani Alkhafaji Lead?
In the world of precious metals, silver is currently experiencing a significant price surge, and the reasons behind this rise are numerous. Mani Alkhafaji, Vice President of Corporate Development and Investor Relations at First Majestic Silver, is one of the experts discussing this trend. First Majestic Silver is a company listed on the Toronto Stock Exchange (TSX) under the ticker symbol AG and on the New York Stock Exchange (NYSE) under the ticker symbol AG. For real-time updates on the organization, you can follow them (@our organization).
The recent rise in silver prices is driven by a combination of geopolitical risks and trade tensions, tight supply market and production decline, surging industrial demand, especially for renewable energy, and strong technical and market sentiment.
Rising geopolitical uncertainties, including past tariff threats such as former U.S. President Trump's proposed 30% tariffs on imports from Mexico and the EU, have spurred safe-haven buying of silver. Mexico, being the world's largest silver producer, is particularly vulnerable, tightening supply further.
Global silver mine production has peaked and declined over the past decade due to depletion of economically viable deposits, leading to a persistent supply deficit. Additionally, aboveground silver stockpiles are dwindling, exacerbating the shortage.
Demand for silver in industrial uses, particularly photovoltaic (solar panel) manufacturing, has skyrocketed. Over the past four years alone, silver used in solar panels has increased by about 143 million ounces, reflecting the broader push towards clean energy.
Technical indicators and increasing open interest in silver futures imply investor accumulation and bullish momentum, suggesting further price gains near and above $40 per ounce.
The current gold-silver ratio, which is approximately 90:1, is substantially higher than the 50-year average of about 60:1. This disparity arises because silver has both a substantial industrial demand component and a supply deficit, unlike gold which is primarily a monetary and investment metal with relatively stable demand. The supply constraints and growing industrial demand for silver suppress its price gains relative to gold.
Mani Alkhafaji suggests that for the price ratio to collapse, the price of silver needs to rise. This would bring the gold-silver ratio closer to its historical average, potentially offering significant opportunities for investors in the silver market.
It is important to note that the author, Charlotte McLeod, has no direct investment interest in any company mentioned in this article. For real-time updates on First Majestic Silver and the silver market, follow them (@our organization).
Investors looking at the silver market might find it attractive due to various factors such as geopolitical risks, trade tensions, tight supply, surging industrial demand, and strong technical sentiment. The vice president of First Majestic Silver, Mani Alkhafaji, highlights that for the gold-silver ratio to collapse and potentially offer significant opportunities in the silver market, the price of silver needs to rise.
