Keith Neumeyer, CEO of First Majestic Silver, a Canada-based mining company, discussed the silver production deficit in today’s precious metals markets. Neumeyer stated that while retail investors are interested in silver, institutions have to enter the market, supporting the activity of these extractive companies needed for many industrial purposes.
Silver Prices Poised to Rise if Institutions Enter the Market
With the recent upside in gold prices, silver is another precious metal in the sights of retail investors. Keith Neumeyer, CEO of First Majestic Silver, a Canada-based mining company, talked about the current state of the silver market and how its price should be around $70 per ounce. In an interview, Neumeyer stated that there is a looming deficit surrounding the silver market, of about 240 million ounces, a hole that might create a supply crunch soon.
He stated:
The mining sector only produces 850 million ounces a year. You’re in a 240 million deficit. No wonder why we have a $30 silver, it probably should be $50, $60, or $70.
For Neumeyer, this relative price increase lag has two reasons behind it. The first one has to do with the price manipulation that traders, who only see silver and other commodities as numbers on a screen, can exert. He explains that breakouts are taken as sell or purchase signals and that these traders act without considering silver for its true value, as a commodity relevant for industrial purposes.
The second reason is the relative absence of institutional interest and investment in silver. Neumeyer stated that retail investors are part of the market and that they sell a lot of metal to retail investors. “These big institutions should be supporting this sector for extractive purposes because we need these metals. Yet they’re void, they’re not in this market at all,” he stressed.
Other analysts have also foreseen an upcoming increase in silver prices. Recently, Peter Schiff stated that soon $50 would be the floor on silver prices, highlighting the precious metal’s strong performance and forecasting it could go even higher.
