Keith Neumeyer: Silver Shortage to Drive Price to Triple Digits
Tom welcomes back Keith Neumeyer, President & CEO of First Majestic Silver Corp. Keith explains why the silver market’s characteristics, in particular, attracted his interest.
During the last year, the production of silver has declined while consumption has been flat. Typically silver is mined at a ratio of about 8 to 1 compared with gold, and therefore silver may be rarer than most people think. In theory, silver today should be worth 1/8th of gold. Keith is reasonably confident the gold-silver ratio will surpass thirty in this bull market.
Much of silver is coming from above-ground reserves, and he now feels that retail investors and not only industry demand will drive this market. The current retail investor silver squeeze movement has a significant effect on supplies, and more importantly, an entire generation of new people are now aware of silver.
Keith discusses how quickly First Majestics shares trade and why there is a significant short position.
The closest comparison with today’s equity markets is likely the 1999-2000 period. There is a lot of excess exuberance in these markets, and we may be reaching a severe correction.
Often directors of companies don’t hold any stocks. When investing, you want to see management have significant investment in the companies they manage. It’s best to get into stocks when no one else wants them, and you know they are good companies.
Keith explains how mining is usually a slow industry that is reluctant to adopt new technology. He discusses the advantages that new technology brings in reducing costs and the significant increases they have obtained in metal recovery.
He discusses the problems with holding back supplies of the metal. These issues include storage issues, accounting problems, and an additional elements of risk.
Time Stamp References:
0:00 – Intro
0:31 – Silver By The Numbers
1:50 – Silver Mining Ratios
2:40 – Price Forecast
3:36 – Industrial Demand
6:56 – Silver Squeeze
8:17 – First Majestic & Shorts
9:42 – Corrections & Price
11:25 – Junior Trading Strategies
12:54 – Management & Risk
14:10 – Playing Juniors
15:30 – Up and Coming Juniors
18:33 – Replacing Resources
20:17 – Partnerships
21:12 – Recovery & Efficiency
24:29 – Withholding Production
27:10 – Local Governments & PR
30:25 – Covid & Safety
33:20 – Sell Direct to Industry?
34:25 – Wrap Up
Talking Points From This Episode
- Silver Market Dynamics, Supply & Production
- WallStreetSilver Reddit Movement
- Management and Sentiment on Juniors
- Mining and Technology
Keith Neumeyer is President & CEO of First Majestic Silver Corp. Mr. Neumeyer has worked in the investment community since 1984. He began his career at some Canadian national brokerage firms. Mr. Neumeyer moved on to work with several publically traded companies in the resource and high technology sectors. Mr. Neumeyer has been the President and Chief Executive Officer of First Silver Reserve Inc. since June 19, 2006. His roles have included senior management positions and directorships responsible for finance, business development, strategic planning, and corporate restructuring.
Mr. Neumeyer was the original and founding President of First Quantum Minerals Ltd. (T-FM) and First Majestic Silver in 2002 and First Mining Finance in 2015. He has also listed several companies on the Toronto Stock Exchange and has extensive experience dealing with the financial, regulatory, legal, and accounting issues relevant to the investment community. Keith also won the E&Y Entrepreneur of the Year Award in 2011 for the Metals & Mining category.