With silver currently trading at an incredible discount to gold and the silver supply crunch in full effect, the only question on the table now is how far the silver price will run. Experts are weighing in and their price targets vary, but insiders are loading up in anticipation of historically unprecedented upside.
If anybody has a track record of calling the moves in silver, it’s Keith Neumeyer, founder and CEO of First Majestic Silver (CAD: FR, NYSE: AG). Mr. Neumeyer founded First Majestic back in 2002, and over the years, countless investors have used the company’s shares as a convenient, leveraged, and pure play in silver.
First Majestic owns three producing silver mines in Mexico and, under Mr. Neumeyer’s leadership, the company’s stock has made impressive gains since it went public. But the lion’s share of the gains are still ahead of us if Mr. Neumeyer’s thesis of $100+ silver comes to fruition.
He’s been spot-on many times before, so don’t be surprised if he’s right about this one. Mr. Neumeyer cites a number of factors in silver’s favor, including the government’s penchant for printing money, a global economy in distress, an imbalance in silver’s supply and demand, and gold’s new bull market – plus silver’s consistent record of surging after gold moves up.
To capitalize on this, investors can own silver bullion along with shares of First Majestic Silver stock as the company produces exceptional quantities of silver. Believe it or not, the company produced 6.2 million silver-equivalent ounces in just the first quarter of this year, thereby achieving consolidated average silver recoveries of 89%, the highest in the company’s 17-year history.
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Other highlights of 2020’s first quarter include revenues of $86.1 million; a reduction in cash costs of 19% down to $5.16 per payable silver ounce; super-low all-in sustaining costs (AISC) of $12.99 per payable silver ounce; and mine operating earnings of $21.1 million, up 106% compared to Q1 2019.
The price of silver is already above First Majestic’s AISC of $12.99 per payable silver ounce and the prospect of $100+ silver makes the current share price an outstanding value. The company’s ability to get silver out of the ground at a reduced cost makes First Majestic shares a de-risked proposition for both entry-level and more experienced investors.
For a longer-term perspective, we can observe that at the end of 2019, First Majestic’s three operating mines indicated a whopping 146.5 million silver-equivalent ounces of Proven and Probable Reserves. With so much silver available to this company, a strong move in the spot silver price could have a marked and sustained effect on First Majestic stock shares.
Investors have every right to be concerned about the company’s standing as the coronavirus continues to impact the global economy. Fortunately, Mr. Neumeyer has positive news to share on that front: “To date, First Majestic has not experienced any incidents related to COVID-19 at its sites or corporate offices,” he reports.
A position in First Majestic shares is all that investors need now as we’ll all find out soon enough when – and how far – silver will fly.
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Best Regards,
Tom Beck
Research Partner, PortfolioWealthGlobal.com
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