UPDATE: Fresnillo (LSE: FRES) has seen its shares skyrocket by a staggering 650% in just under two years, fueled by silver prices soaring from $20 to nearly $70 an ounce. As the FTSE 100 experiences its best year since the global financial crisis, the question on every investor’s mind is whether this remarkable trend can sustain momentum into 2026.
Silver has once again captivated investors, demonstrating its unique ability to defy traditional market expectations. Analysts have noted that the driving forces behind this rally are more structural than speculative. With governments facing large budget deficits and economic growth slowing, stimulus measures are likely to follow. This has prompted global central banks to rethink their reserve allocations, favoring hard assets like silver over US Treasuries.
What sets Fresnillo apart is its robust financial position. The company’s all-in sustaining cost (AISC) is around $17 per ounce, creating a remarkable profit margin at current silver prices. If these prices hold steady or rise, Fresnillo is poised to generate significant cash flow, bolstering its balance sheet and enhancing shareholder returns.
However, the silver market is known for its volatility, and Fresnillo faces several risks. Operational disruptions, exploration uncertainties, and geopolitical factors, especially in its key market of Mexico, could influence profitability. Changes in mining policies or taxation could also pose challenges.
Despite the inherent risks, the fundamentals remain strong. With a constrained supply and rising industrial demand—driven by applications in solar panels, electronics, and defense—the outlook for silver appears promising.
As investors weigh the potential for Fresnillo to repeat its explosive growth, many are already positioning themselves for continued success. Mark Rogers, an investment expert, emphasizes that even maintaining the current silver price could lead to substantial cash generation for Fresnillo.
While it may be unrealistic to expect another year of 425% gains, the silver market’s resilience and Fresnillo’s advantageous cost structure suggest that the story isn’t over. Investors are advised to keep a close watch on these developments as the year unfolds.
This situation represents a compelling opportunity for those looking to invest in the precious metals sector, especially in light of Fresnillo’s recent performance and the ongoing demand for silver. As the market evolves, staying informed will be crucial for maximizing investment potential.
