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Business Times
21 hours ago
- Business
- Business Times
Is the silver squeeze about to get worse?
[SINGAPORE] Silver is flashing red hot signs of a supply squeeze with prices climbing back towards multi-year highs as surging borrowing costs, narrowing future spreads and entrenched structural deficits add fuel to the rally – a trend The Silver Institute expects to extend into a fifth straight year in 2025. On top of tight supply, silver is getting a lift from steady demand in green industries such as solar and electric vehicles (EVs), while talk of Fed rate cuts, gold's shine and the de-dollarisation buzz are all adding to the metal's price momentum. Silver hit a 13-year high of almost US$40 an ounce on Jul 23, before easing to about US$36 by the end of the month. It has since recovered to around US$38 an ounce, 'partly piggybacking on gold's strength and the relative resilience seen in base metals', said Edward Meir, senior metals analyst at Marex. 'The silver market is experiencing notable signs of tightness,' said Christopher Wong, foreign exchange and rates strategist at OCBC. 'On the physical side, supply remains tight while demand is broad-based – spanning industrial users, retail and institutional investors.' Wong noted that the spread between August and December 2025 silver futures has narrowed, underscoring near-term scarcity relative to forward delivery. Meanwhile, silver lease rates – essentially the cost of borrowing physical silver – have surged to over 6 per cent, a level that signals 'severe tightness' in the market. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'On net, this combination of structural deficits, surging borrowing costs and narrowing futures spreads highlights genuine stress in the physical silver market,' he said. Fragmented inventories also play a part in squeezing the physical market of silver. 'Silver is affected by a different kind of trade fragmentation – one driven more by logistical and financial constraints than by geopolitics,' said Patricio Faundez, practice leader of economics at Gem Mining Consulting. 'A large portion of US silver is held by exchange-traded funds and other financial instruments, effectively 'trapping' physical inventories within the country and disrupting the natural arbitrage between markets.' This has caused divergent trends at key hubs. 'Inventories at the London Bullion Market Association have fallen to their lowest levels this year, while the Commodity Exchange inventories in the US have reached record highs,' he added. OCBC forecasts silver prices to reach US$39.70 an ounce by end-2025 and US$42 an ounce by mid-2026, reinforcing a bullish outlook underpinned by 'structural demand drivers and market tightness', Wong said. Strong demand While gold often steals the limelight in times of market stress, silver prices are also lifted by solid industrial use, given its dual role as both a precious and industrial metal. Besides market tightness, a strong industrial demand for silver – particularly in solar panels, EVs and green technology – is further supporting its prices, noted OCBC's Wong. Despite significantly higher prices, silver demand across the industrial spectrum 'remains decent and has yet to show signs of retrenching', noted Marex's Meir. OCBC's Wong said other drivers of the silver rally include expectations of Fed rate cuts, spillover effect of the gold rush, and a de-dollarisation narrative, adding to the bullish sentiment surrounding silver. Shortfall persists, but may recover Meir noted that 'this year's shortfall may not be as high as previous years' due to mining expansions in the US, Peru and India. Still, legacy producers such as Mexico are facing declines. 'Mexican silver production will be down this year due to lower output from the San Julian mine as that facility approaches its end-of-life,' he added. Chinese output is expected to rise 1.3 per cent to 119 million ounces in 2025, while Peru is forecast to grow 2.4 per cent on new projects at Toromocho and Reliquias. Meanwhile, investment flows remain healthy. 'The Silver Institute estimates that 95 million ounces of the metal changed hands in exchange-traded products investments during the first half of 2025, already surpassing the total for all of last year,' said Meir. Retail demand is more uneven. 'European retail demand is stronger than it was in 2024, but still lags the highs made in 2020 to 2022,' he said. 'Indian retail investment demand was impressive through the first half of 2025, posting a 7 per cent year-on-year gain,' but that could slow in the second half. In contrast, US retail interest has dropped sharply. 'Overall US retail demand was down by a whopping 30 per cent so far this year.' Meir remains 'somewhat constructive on silver going into August', pointing to strength in gold and a weaker dollar as potential tailwinds. He expects prices to range between US$35 and US$36 an ounce in the near term. In the long term, with physical silver harder to borrow and the forward curve tightening, OCBC's forecast suggests further upside, especially if investor flows return in force. 'This is not just a price rally,' Wong said. 'This is a reflection of genuine stress and imbalance in the physical silver market.' Beyond the visible supply-demand gap, some analysts point to strains between the paper and physical markets as another source of stress, said Ned Naylor-Leyland, investment manager at Jupiter Gold and Silver Fund. 'The scale of the synthetic derivatives market in silver is disproportionately large, relative to mine supply and available physical markets.' Futures and options have set silver prices since the 1980s, he added. But if a big industrial buyer was ever unable to get the metal it needs, he warned, it could spark a scramble in the physical market and send both silver and mining shares sharply higher.
Yahoo
15-03-2025
- Business
- Yahoo
Is Fortuna Mining Corp. (FSM) the Most Undervalued Silver Mining Stock to Buy According to Analysts?
We recently published a list of . In this article, we are going to take a look at where Fortuna Mining Corp. (NYSE:FSM) stands against other most undervalued silver mining stocks to buy according to analysts. Fueled by growing demand across industrial, investment, and technological sectors, the silver mining industry continues to expand. According to The Business Research Company, the global silver ore industry has grown substantially from $7.87 billion in 2024 to $8.56 billion in 2025 at a CAGR of 8.7%. This has been driven by demand from renewable energy, medical devices, and consumer electronics. Moving forward, the industry is predicted to reach $11.87 billion by 2029 at a CAGR of 8.5%, backed by advancements in recycling initiatives, silver refining, and the rising role of silver in green technologies. Silver prices rose, reaching their highest levels since 2011, surpassing $30 per ounce in 2024 due to the weakening U.S. dollar, inflationary pressures, and geopolitical instability. According to The Silver Institute, short covering and growing silver deliveries to CME warehouses have been fueled by climbing tariffs under the Trump administration, contributing to market volatility. Accordingly, silver Futures produced a 34.97% one-year return as of March 4, 2025, significantly outperforming the market's 12.61% return. This reflects firm investor confidence in silver as a hedge against economic uncertainty. Moreover, according to The Silver Institute, total consumption is forecasted to be 1.2 billion ounces, supporting the statement that silver demand will remain strong in 2025. The report further mentioned that fabrication demand will exceed 700 million ounces for the first time as industrial applications will drive most of the silver demand. Silver is utilized in electric vehicle (EV) manufacturing in charging infrastructure, batteries, and semiconductors, highlighting its significant role in the automotive industry. The S&P Global Mobility forecasts that 2025 global battery electric vehicle sales are expected to reach 1.5 million units, reflecting a 30% growth from 2024 levels and accounting for 16.7% of total global light vehicle sales. Silver consumption is anticipated to rise significantly due to this surge in EV adoption. Backed by the charging station expansion, infrastructure investments, and broader decarbonization efforts, The Silver Institute predicts that in 2025, silver demand will reach 90 million ounces. The firm also highlighted global silver supply is predicted to rise by 3% to 1.05 billion ounces in 2025, marking an 11-year high. Due to increased output in Morocco, China, and Canada, silver mine production is forecasted to reach 844 million ounces. However, additional supply growth could be restricted due to limited capital expenditure in base metal mining and decreasing ore grades. Fueled by higher industrial scrap recovery, silver recycling is predicted to increase by 5%, exceeding 200 million ounces for the first time since 2012. In 2025, the silver market is predicted to remain in a deficit of 149 million ounces despite the rising production, extending its supply shortfall for the fifth consecutive year. WisdomTree report projects that silver prices will be pushed to $40 per ounce by Q3 2025 due to a sustained deficit, coupled with strong industrial and investment demand. Thus, silver remains an attractive investment due to constrained supply, ongoing economic uncertainties, and a strong demand outlook. With this, let us take a look at the 10 most undervalued silver mining stocks to buy according to analysts. To compose our list of the top 10 Most Undervalued Silver Mining Stocks to Buy According to Analysts, we utilized Finviz stock screener to find the 10 largest companies trading below the forward P/E ratio of 15, as of March 5, 2025. Furthermore, Insider Monkey's Hedge Fund database was used to evaluate hedge fund sentiment as of Q4 2024. Finally, the stocks are organized in ascending order based on average upside potential. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). Aerial view of miners extracting precious metal deposits in a quarry. Average Upside Potential: 24.86% Number of Hedge Fund Holders: 19 Forward P/E ratio: 5.91 Fortuna Mining Corp. (NYSE:FSM) is a Canadian precious metals producer that operates five mines across Peru, Burkina Faso, Mexico, Côte d'Ivoire, and Argentina. With zinc and lead as by-products, the company mainly focuses on silver and gold production. To further broaden its portfolio, it is advancing the Diamba Sud Gold project in Senegal. With 69% quarter-over-quarter growth, Fortuna Mining Corp. (NYSE:FSM) achieved a record $95.6 million in free cash flow, delivering a strong financial performance for Q4 ending December 31, 2024. Backed by elevated gold prices and stable cash costs, its full-year free cash flow reached $202.9 million. With cash reserves climbing to $231.3 million, net cash from operations stood at $141.6 million for the quarter and $438.2 million for the year. Despite these financial achievements, Fortuna Mining Corp. (NYSE:FSM) divested the San Jose Mine in Mexico to realign its portfolio. The sale is expected to close in Q1 2025 and includes $6 million in staged payments and up to $11 million in additional proceeds. To advance its main projects, Fortuna allocated a $51 million budget for 2025, including the Séguéla mine in Côte d'Ivoire. Looking ahead, Fortuna Mining Corp. (NYSE:FSM) remains one of the most undervalued stocks as the leach pad expansion project remains on track for completion in the first half of 2025. Overall, FSM ranks 6th on our list of most undervalued silver mining stocks to buy according to analysts. While we acknowledge the potential of FSM, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FSM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
Yahoo
15-03-2025
- Business
- Yahoo
Is Nexa Resources S.A. (NEXA) the Most Undervalued Silver Mining Stock to Buy According to Analysts?
We recently published a list of . In this article, we are going to take a look at where Nexa Resources S.A. (NYSE:NEXA) stands against other most undervalued silver mining stocks to buy according to analysts. Fueled by growing demand across industrial, investment, and technological sectors, the silver mining industry continues to expand. According to The Business Research Company, the global silver ore industry has grown substantially from $7.87 billion in 2024 to $8.56 billion in 2025 at a CAGR of 8.7%. This has been driven by demand from renewable energy, medical devices, and consumer electronics. Moving forward, the industry is predicted to reach $11.87 billion by 2029 at a CAGR of 8.5%, backed by advancements in recycling initiatives, silver refining, and the rising role of silver in green technologies. Silver prices rose, reaching their highest levels since 2011, surpassing $30 per ounce in 2024 due to the weakening U.S. dollar, inflationary pressures, and geopolitical instability. According to The Silver Institute, short covering and growing silver deliveries to CME warehouses have been fueled by climbing tariffs under the Trump administration, contributing to market volatility. Accordingly, silver Futures produced a 34.97% one-year return as of March 4, 2025, significantly outperforming the market's 12.61% return. This reflects firm investor confidence in silver as a hedge against economic uncertainty. Moreover, according to The Silver Institute, total consumption is forecasted to be 1.2 billion ounces, supporting the statement that silver demand will remain strong in 2025. The report further mentioned that fabrication demand will exceed 700 million ounces for the first time as industrial applications will drive most of the silver demand. Silver is utilized in electric vehicle (EV) manufacturing in charging infrastructure, batteries, and semiconductors, highlighting its significant role in the automotive industry. The S&P Global Mobility forecasts that 2025 global battery electric vehicle sales are expected to reach 1.5 million units, reflecting a 30% growth from 2024 levels and accounting for 16.7% of total global light vehicle sales. Silver consumption is anticipated to rise significantly due to this surge in EV adoption. Backed by the charging station expansion, infrastructure investments, and broader decarbonization efforts, The Silver Institute predicts that in 2025, silver demand will reach 90 million ounces. The firm also highlighted global silver supply is predicted to rise by 3% to 1.05 billion ounces in 2025, marking an 11-year high. Due to increased output in Morocco, China, and Canada, silver mine production is forecasted to reach 844 million ounces. However, additional supply growth could be restricted due to limited capital expenditure in base metal mining and decreasing ore grades. Fueled by higher industrial scrap recovery, silver recycling is predicted to increase by 5%, exceeding 200 million ounces for the first time since 2012. In 2025, the silver market is predicted to remain in a deficit of 149 million ounces despite the rising production, extending its supply shortfall for the fifth consecutive year. WisdomTree report projects that silver prices will be pushed to $40 per ounce by Q3 2025 due to a sustained deficit, coupled with strong industrial and investment demand. Thus, silver remains an attractive investment due to constrained supply, ongoing economic uncertainties, and a strong demand outlook. With this, let us take a look at the 10 most undervalued silver mining stocks to buy according to analysts. To compose our list of the top 10 Most Undervalued Silver Mining Stocks to Buy According to Analysts, we utilized Finviz stock screener to find the 10 largest companies trading below the forward P/E ratio of 15, as of March 5, 2025. Furthermore, Insider Monkey's Hedge Fund database was used to evaluate hedge fund sentiment as of Q4 2024. Finally, the stocks are organized in ascending order based on average upside potential. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). A close-up of a large, metallic machine processing ore and minerals in a mine. Average Upside Potential: 30.84% Number of Hedge Fund Holders: 4 Forward P/E ratio: 6.68 Nexa Resources S.A. (NYSE:NEXA), an operator in the global zinc mining and smelting industry, has a broad portfolio that includes six polymetallic mines in Peru and Brazil. The company focuses on sustainable growth through high-return assets, yielding copper, lead, and zinc alongside other by-products. Its main strategic initiatives include the expansion of the Aripuanã project and the integration of the Cerro Pasco mine. Nexa Resources S.A. (NYSE:NEXA) reported $714 million in adjusted EBITDA, an increase of 79%, for the year ended December 31, 2024. Higher by-product volume and strong zinc prices drove its strong performance. In the fourth quarter, revenue increased by 18% to $741 million compared to the previous year, and adjusted EBITDA reached $197 million. The company's strong cash flow was due to its ability to control costs, despite the 11% drop in zinc production quarter over quarter. Furthermore, Nexa Resources S.A.'s (NYSE:NEXA) commitment to improving its precious metal production capabilities was reflected in the Aripuanã mine's output, which saw a remarkable 114% increase in silver production in 2024. The company also focused on strategic divestments and operational improvement, including the sale of non-operational assets like the Morro Agudo complex and the Pucacaca project. Moving forward, Nexa Resources S.A. (NYSE:NEXA) predicts further reductions in cash costs as it anticipates sustained strong performance in 2025, mainly from its zinc production. Its entire production capacity will be supported by the successful installation of a fourth tailings filter at Aripuanã. By positioning itself for continued development and efficiency, the company ranks as one of the most undervalued stocks. Overall, NEXA ranks 5th on our list of most undervalued silver mining stocks to buy according to analysts. While we acknowledge the potential of NEXA, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NEXA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
