UPDATE: In a stunning surge, shares of Fresnillo (LSE: FRES) have skyrocketed an astonishing 650% in under two years, driven by silver’s meteoric rise from $20 to nearly $70 an ounce. As the FTSE 100 experiences its best year since the global financial crisis, the question on investors’ minds is whether this extraordinary momentum can continue into 2026.
Silver is not just a precious metal; it’s a powerhouse asset that continues to defy expectations. Recent market trends show structural drivers behind this rally, fueled by persistent government budget deficits and a global shift towards hard assets by central banks. With rising industrial demand and declining supply, the conditions are ripe for silver’s continued ascent.
Fresnillo stands out with its all-in sustaining cost (AISC) at approximately $17 an ounce, creating an exceptional profit margin as silver prices soar. Analysts are already witnessing explosive growth in revenues and dividends, with the company well-positioned to generate substantial cash flow if silver prices hold steady.
However, investors should remain cautious. The silver market is notoriously volatile, and rapid pullbacks can occur unexpectedly. Fresnillo faces risks related to exploration, operational disruptions, and geopolitical challenges, particularly given its operations in Mexico. Any shifts in mining policies or regulations could impact profitability.
Despite these risks, the supply and demand dynamics favor Fresnillo. Mexico, the largest silver producer, cannot quickly ramp up output, and it takes over a decade to bring new discoveries to market. Meanwhile, demand from sectors like solar energy and electronics continues to rise, further bolstering silver’s appeal.
While it may be overly optimistic to expect Fresnillo to continue its unparalleled performance into 2026, the company is undeniably in a strong position. The recent price surge has created a compelling investment opportunity as cash generation remains robust.
Investors are keenly watching how Fresnillo will navigate the challenges ahead and whether silver can maintain its upward trajectory. This roller coaster ride in the precious metals market is far from over, making it a critical moment for investors to consider their positions.
Follow this developing story as we track the latest trends in silver and the performance of Fresnillo. As always, investing in commodities comes with risks, but the current landscape is one that could yield significant rewards for those willing to stay the course.
