Moving into the second half of 2025, investor attention is shifting from gold to silver—the white metal that has quietly outperformed its sister metal. Year-to-date, silver has surged over 30%, surpassing gold’s 26% gain, while the gold-silver ratio remains historically high, signaling significant undervaluation.
Unlike gold, which primarily serves as a safe-haven asset, silver benefits from dual demand drivers: financial hedging and industrial applications, particularly in solar panels and electronics. According to RBC Capital Markets, accelerated global energy transition efforts could widen silver’s industrial supply deficit, potentially pushing prices above $40/oz.
Among Toronto-listed silver miners, First Majestic Silver (TSX:AG) stands out as a prime candidate to capitalize on the rally. The company expects to produce 15.8 million ounces of silver in 2025, alongside meaningful gold byproduct output, which could drive record annual cash flows. While its dividend yield is modest at 0.22%, management has prioritized expansion investments, including efficiency upgrades at its San Dimas mine in Mexico. These improvements may lower unit costs by 12-15%, significantly boosting margins.
Notably, AG’s stock has yet to fully reflect silver’s price surge. While physical silver is up 30% YTD, AG shares have gained only ~18%, trading below their 5-year average P/E. BMO analysts suggest that if silver consolidates above $39/oz, AG’s free cash flow per share could jump 40%, prompting a market re-rating.
Silver is notoriously volatile, with a 22% intra-month swing in June 2025 alone. For Canadian TFSA (Tax-Free Savings Account) holders, we recommend:
Dollar-Cost Averaging (DCA): Spread purchases over time to mitigate timing risks.
Balanced Exposure: Pair AG with lower-beta assets like the Sprott Physical Silver Trust (TSX:PSLV) to dampen portfolio swings.
Despite the bullish setup, investors should monitor:
Fed Policy Shifts: Hawkish moves could pressure precious metals.
Technological Disruption: Silver-free solar cells may erode long-term demand.
Operational Leverage: Mining stocks amplify downside during corrections.
For risk-averse investors, streaming companies like Wheaton Precious Metals (TSX:WPM) offer fixed-cost exposure to silver prices with reduced volatility.
First Majestic Silver combines production growth, cost discipline, and valuation upside, making it a compelling choice as silver’s bull run enters its next phase. While short-term pullbacks are likely, structural demand trends and financial market dynamics support further gains. Investors may consider allocating 5-10% of their portfolio to AG, while tracking solar industry developments and inventory trends.
