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Silver mines will likely be bought by automakers like Tesla, silver to $125 per ounce - Keith Neumeyer
(Kitco News) - Automotive companies like Tesla could soon purchase silver mines, as they seek to control supply over critical metals required for electric vehicles. That's according to Keith Neumeyer, President and CEO of First Majestic Silver who forecasts that this, combined with other demand-driven factors, will send the price of silver up to $125 per ounce.
"They [automobile companies] aren't really aware of the supply-demand fundamentals of the metal," he claimed. "I think as they educate themselves and actually learn the challenges for the silver industry to supply the automotive sector, they will start looking at this industry a lot more aggressively… If I were Elon Musk, I'd be very active in this area."
Neumeyer, who founded First Majestic in 2002 and has four decades of experience in the financial industry, claimed that there would be more vertical integration and consolidated supply chains as automotive manufacturers and the solar industry seek to decrease margins they pay for raw materials.
Speaking at the BMO Global Metals, Mining, & Critical Minerals Conference with Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News, Neumeyer observed that 2023 is the first year that car manufacturers have been present at the conference. Some automotive companies have already bought stakes in minerals companies.
Neumeyer pointed to the fact that silver is needed for car batteries and solar panels to operate efficiently. Neumeyer observed that based on estimates, the average Tesla vehicle contains 1 kilogram of silver. As demand for electrification grows, the silver price is expected to rise.
"The estimated consumption in the solar panel industry is 160 million ounces of silver this coming year, 2023," he claimed. "The electrical automotive sector is estimated to be slightly shy of 100 million ounces of silver… The Silver Institute is projecting an over 200-million-ounce deficit this year."
Neumeyer forecast that silver could rise to $30 per ounce this year, while his medium to long term prediction is triple-digit silver. He suggested that a slowing economy would dampen the price of silver in the short-term
"I think silver is going to be somewhat delayed because of the economy, because it is an industrial metal," he said. "I think we're going to go to triple-digits [in the medium to long-term], and that has been my prediction for a couple of years now. Getting silver to $125 to $150, I think, is reasonable… we're closer to that than we were a couple of years ago. The stars are aligning."
To find out Neumeyer's forecast for the gold price in 2023, watch the video above.
Silver Consortium
Neumeyer is a long-time advocate of silver miners forming a consortium so that they can sell silver directly to consumers, instead of going through derivatives markets like the COMEX and LBMA.
"[The mining sector] is at the mercy of banks, so if [banks] want to move these metals to whatever price they want to move them to, they can do it relatively easily" he claimed. "I wouldn't necessarily call it manipulation. I think it's just managing the book."
The theory that the precious metals prices are manipulated to benefit the short position of commercial banks and governments has been advocated by a number of prominent voices, including mining mogul Frank Giustra.
Neumeyer suggested that this is not necessarily conspiratorial manipulation, as much as economic pressures from banks having to fulfill short positions.
To find out more about First Majestic Silver including its bullion products and mining operations, watch the video above.
Follow Michelle Makori on Twitter: @MichelleMakori
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