Why First Majestic Silver Stock jumped 10% today


What happened

Silver and gold miner stocks First majestic silver (NYSE: AG) rose about 10% on January 20. At around 2 p.m. EST, the stock still had a gain of nearly 9%. There was probably an obvious reason for investor enthusiasm and more to do with the news.

So what

As a precious metals miner, First Majestic Silver’s results are linked to the price of the raw materials it produces. With gold and silver prices rising today, it’s no shock that investors are giving the action a boost. Silver rose a little more than gold, which is not shocking given the metal’s history as a more volatile commodity. But that probably wasn’t the only factor at play.

Image source: Getty Images.

First Majestic also released a pretty impressive business update, given the context of the coronavirus pandemic that ended up shutting down some of its mines in 2020. Total silver production of 11.6 million ounces was in the upper end of the minor’s revised annual forecast range. Fourth-quarter production increased 9% sequentially, with multi-year production highs from two of its major mining assets (San Dimas and La Encantada). While gold production has not been as inspiring, the company ended 2020 with nearly $ 240 million in cash that it can leverage into the development projects it has underway.

Now what

Overall, it makes sense for investors to lift First Majestic shares today given the rise in precious metal prices and a fairly solid trade update. That said, investors shouldn’t be too excited to ever move here. Precious metals are volatile, especially silver, so today’s big gain might disappear tomorrow. However, production figures suggest fourth quarter 2020 and full year results will be pretty good to read when released on February 18.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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