Silver Miners Surge as Metal Hits Record High on Fed Cut Bets
Shares of First Majestic and Endeavour Silver post double-digit gains as silver prices top $54, fueled by hopes of looser monetary policy and strong industrial demand.
Silver mining stocks rallied sharply on Friday after the price of the underlying metal surged to a new record, driven by growing investor conviction that the Federal Reserve is preparing to cut interest rates next month.
Shares of First Majestic Silver (AG) jumped more than 12% in morning trading to $15.18, approaching a 52-week high. Endeavour Silver (EXK) saw even stronger gains, soaring over 15% to $9.95. The rally provided a powerful lift to the entire precious metals sector, as spot silver prices climbed past $54 per ounce, eclipsing a previous peak set in October.
The primary catalyst for the move is heightened market expectation of a dovish pivot from the U.S. central bank. Following a series of weaker-than-expected economic data points, traders are now pricing in an over 85% probability of a rate cut at the Federal Reserve's December meeting. Lower interest rates reduce the opportunity cost of holding non-yielding assets like precious metals, increasing their appeal to investors.
Beyond the macroeconomic tailwinds, silver's rally is supported by a robust fundamental picture. The market is on track for its fifth consecutive year of a structural supply deficit, where global demand outstrips available supply. This imbalance is exacerbated by relentless industrial consumption.
Silver is a critical component in many high-growth industries, including the manufacturing of solar panels, electric vehicles, and consumer electronics. Industrial demand is projected to exceed 700 million ounces for the first time, a sign of the metal's essential role in the global economy. This dual identity—as both a monetary asset and an indispensable industrial commodity—provides a firm demand floor that is less sensitive to economic cycles than pure industrial metals.
For mining companies, the sharp increase in silver prices translates directly to improved financials. As primary silver producers, First Majestic and Endeavour Silver benefit from significant operating leverage. Higher spot prices expand their profit margins, boost operating cash flow, and enhance the value of their existing reserves, giving them more capital to fund exploration and future growth.
The strong performance of mining equities reflects investor confidence that these higher commodity prices will be sustained, driven by the compelling combination of looser monetary policy and a persistent supply-demand imbalance. While the sector remains sensitive to shifts in Fed policy and global growth, the current environment has positioned silver and its miners for a strong finish to the year.