In recent developments within the precious metals sector, Keith Neumeyer, CEO of First Majestic Silver, has underscored a mounting deficit in silver production. Neumeyer, speaking on behalf of the Canada-based mining company, emphasized the critical need for institutional investors to engage with the silver market, suggesting their participation could bolster the activities of extractive industries crucial for numerous industrial applications.
Neumeyer highlighted the disparity between retail investor interest and institutional involvement in silver, noting that despite retail enthusiasm, significant institutional backing remains absent. He expressed concerns over the current market dynamics, suggesting that the ongoing deficit—estimated at approximately 240 million ounces—could soon trigger a supply crunch. According to Neumeyer, annual silver production stands at 850 million ounces, leaving a substantial deficit that he believes justifies higher price levels.
“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,” Neumeyer commented during a recent interview.
Neumeyer attributed the slower-than-expected price growth in silver to two primary factors. Firstly, he pointed to market manipulation by traders who view silver and similar commodities merely as figures on a screen, reacting to price breakouts without considering its inherent industrial value. Secondly, he highlighted the absence of institutional support, lamenting their reluctance to participate actively despite the essential role of silver in various industrial processes.
Analysts, including Peter Schiff, have echoed Neumeyer’s sentiment, forecasting an imminent uptick in silver prices. Schiff suggested that $50 could soon become the baseline for silver, buoyed by its robust performance and potential for further appreciation.
In conclusion, while retail investors continue to show interest in silver, the anticipated entry of institutional investors could potentially drive prices higher amid an ongoing deficit in production. The silver market remains poised for significant developments as stakeholders monitor institutional response to the prevailing market conditions.
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