Silver (XAG) Daily Forecast: Industrial Demand and Fed Expectations Drive Prices

Rising Industrial Demand and Supply Shortages

A key factor behind silver’s rise is the growing demand for industrial applications, particularly in electronics and renewable energy. Panelists at the 2024 LBMA Precious Metals Conference forecast a supply deficit of 215.3 million ounces, marking the second-largest shortfall in over two decades.

“The supply-demand imbalance is becoming more pronounced,” noted Mitchell Krebs, CEO of Coeur Mining. The mining industry is struggling to meet this increasing demand, with few new sources of silver coming online.

While recycling efforts could ease some of the strain, current technologies are not advanced enough to close the gap significantly. With industrial use accounting for nearly 50% of silver’s demand, the supply shortage is expected to push prices even higher, potentially reaching $45 an ounce—a 40% increase from current levels.

First Majestic Silver’s Production and Market Impact

In the third quarter of 2024, First Majestic Silver (NYSE: AG) produced 5.5 million silver equivalent ounces, a 4% increase from the previous quarter. This brings the company’s year-to-date output to 15.9 million silver equivalent ounces, about 72% of their 2024 production target.

The company’s three underground mines in Mexico—Santa Elena, San Dimas, and La Encantada—contributed to this performance.

Despite strong production numbers, First Majestic’s stock dropped 1.45% to $8.83, possibly reflecting broader market concerns. However, the company’s increased output could stabilize or lift silver prices as supply tightens, provided demand remains robust.