Warning Signs from the Silver Market that many Investors are Ignoring
Anyone who wants to be active in silver must invest in Mexico. This warning does not come from Goldinvest, but from Keith Neumeyer, the CEO of First Majestic Silver. He repeats this statement like a mantra to emphasize the high importance that the Central American country has for global silver production.
Mexico is by far the largest and thus most important producer of silver, ahead of China. What happens in Mexican silver mining therefore inevitably has consequences for the whole world. The announcement from Fresnillo, the world’s largest silver producer, that its own production declined by twelve percent in the first half of 2025, therefore caused a stir.
As reasons for the very significant decline in production, the company cited lower ore grades and the closure of its own mining operations. Both aspects are likely to worry silver buyers, because after five years of a deficit between supply and demand, the remaining inventories are comparatively low.
Silver Production is Declining Instead of Increasing
An expansion of production would therefore be desirable. However, declining ore grades and the closure of mining operations point in the opposite direction. At this point, the neglect of searching for new deposits, caused by the low silver prices of the last decade, is now taking its toll.
Finding new deposits, checking their economic viability, and finally obtaining approval for new mines, however, takes time. In the past, all these steps could easily take ten to 15 years, but today, due to stricter environmental regulations, it’s more like 15 to 20 years.
Higher environmental standards for the benefit of nature are certainly to be welcomed. However, their effects must also be taken into account in good time, and precisely that has not happened in recent years. A whole series of factors came together and caused an irretrievable loss of time that can hardly be made up.
A Race against Time, Started with Considerable Delay
Since the price of silver remained only slightly above the production costs of many mines until 2022 and 2023, they did not have sufficient financial leeway to find and develop new deposits. Thus, for years, only the bare minimum was done – and that was far too little.
Financial help could have come from the capital market if it had been willing to finance the risky exploration of new deposits. But investors preferred to turn to Bitcoin rather than support the search for new silver deposits in remote regions.
While this is currently changing, and relatively large amounts of venture capital are flowing into the sector compared to previous years, the years lost before are irretrievably gone at this point. What’s more: they threaten to further exacerbate an already tense situation.
A Wave of Demand Meets a Lean Supply
The unique properties of silver have made it a metal that is indispensable today for various applications and industries. Silver has unmatched electrical and thermal conductivity, its reflectivity is exceptional, and its malleability and ductility are excellent.
While silver is not needed in large quantities in most cases, it is indispensable where it is used. More than 80% of silver demand now comes from industrial applications. Every solar panel, every electric car, every 5G antenna, every advanced battery, every precision robot, and every next-generation military system today relies on silver to function efficiently.
For the solar industry alone, a consumption of over 80 million ounces of silver per year is forecast for the coming years. While it is not clear where the silver needed for this will come from in the long term, a new technology, silver solid-state batteries, is pushing into the market, which also and additionally relies on a secure supply of silver.
An Opportunity Investors should Seize
Last year, global industrial silver consumption reached a new high of over 680 million ounces. It is expected to be surpassed again this year, as forecasts for 2025 predict that silver demand will rise to 700 million ounces.
While all these applications are additionally competing for the silver available on the market, the supply from mines has been declining by about seven percent per year since 2016. Although silver recycling has increased, it cannot keep pace with the loss of newly mined silver. It is obvious that this scarcity and the struggle for the last available silver will be decided by price.
Farsighted investors are taking advantage of this opportunity. They are betting on large, well-known silver producers like First Majestic Silver, Coeur Mining, or Silvercorp Metals, on mine developers that will soon go into production like Silver Storm Mining, but also on promising exploration companies like Silver47 Exploration, and of course, on physical silver in the form of coins and bars.
Source: https://goldinvest.de/