(Kitco News) - Keith Neumeyer, president and CEO of First Majestic Silver (TSX:FR) said silver’s $23 resistance level has more to do with sentiment than fundamentals.
In mid-January Neumeyer spoke to Kitco Mining at the Vancouver Resource Investment Conference 2024.
“There's a view out in the marketplace that we're going into a worldwide recession and even though the supply-demand fundamentals for the metal look extremely good… silver just can't seem to get a bid,” he said.
Silver mines produced 830 million ounces of silver last year, against global consumption of 1.2 billion ounces. This year the Silver Institute is forecasting 1.4 billion ounces. “That’s an amazingly large number,” said Neumeyer, noting the silver market only reached a billion ounces of consumption two years ago. “That's a 40 percent move and you're looking at two industries, the solar panel industry, the electric car industry are now consuming about a third of the annual supply of silver. These industries didn't really exist for the most part a decade ago.”
Neumeyer believes silver will follow gold higher once the Federal Reserve cuts interest rates. He predicted that if gold hits $2,100, $2,150, “I think you will start to see silver move.”
The CEO was asked what is happening at Jerritt Canyon, which was recently put on care and maintenance, and whether First Majestic is looking at making any acquisitions.
“We really need another big silver mine in our portfolio,” said Neumeyer, adding that finding a project of sufficient size is difficult. “You could fill your portfolio up with gold mines all day long, but silver mines are just hard to find.”
He said the company plans on spending $10 million on exploration at Jerritt Canyon, out of an exploration budget this year of $35 million.
Asked whether First Majestic Silver is going back to its roots of “one commodity, one country,” Neumeyer pointed out that gold helps pad the bottom line.
“Don't forget, 50 percent of our revenues still come from gold, and gold is a very important part of our portfolio because it stabilizes the business,” he said.
Coverage of the Vancouver Resource Investment Conference 2024 was sponsored by Snowline Gold.