Precious metals, and Gold and Silver miners specifically have been getting some positive attention driven by the recent upward movement in the price of Gold and Silver in the last couple of weeks. In this article, we will cover how First Majestic Silver (AG) could potentially benefit from a rising Spot silver price.
To be able to benefit from the next move in the silver miners we will be mentioning below, investors need to keep the performance of Silver spot price in mind. This will be crucial for a proper management of both risk and eventual profit.
Silver price Outlook
In our most recent Silver price Outlook, we stated that for Silver to be in the Bullish zone, the price of silver has to decisively cross above $18.80. Our intermarket analysis is pointing towards the first signs of a new market trend with Safe Havens on the rise. We are seeing Gold moving higher and close to a major breakout level, the same for the Japanese Yen, U.S. Treasuries are trending higher and stocks are more and more volatile.
While a breakout looks imminent in silver price, we still want to see the confirmation of the bullish trend. We also believe it is time smart investors identify candidates to benefit from the new uptrend. One of the candidates we spotted is First Majestic Silver.
First Majestic Silver (NYSE:AG) (TSX:FR)
First Majestic Silver is a 1.13B Market Cap silver mining company focused on silver production in Mexico. It is currently trading close to its 52 weeks low of 5.92 after a silver production decrease in Q2. According Keith Neumeyer, First Majestic’s CEO “Our second quarter results were unfortunately burdened by a number of labour issues which have since been resolved”.
First Majestic silver corporation is also in the business of selling physical Silver ingots, bars and coins made from silver mined from the company’s mines in Mexico.
What makes First Majestic an interesting play on a rising Silver spot price, is the tight positive correlation of the Stock to rising silver spot prices. This has been the case for many years as shown by the chart below, particularly for the first half of 2009 and 2016.
First Majestic Silver is a high risk high reward set up, therefore investors will need to be cautious when entering this stock. It is still facing a high resistance as shown by the chart below and Silver spot will need to break 18.80 to be in a clear bullish uptrend. But if this turns out to be the beginning of a bullish Silver price run, First Majestic will definitely be an Top performer in the sector.