Transcription
Hi everyone, welcome back to the Della Camboni Show. Still on the road here in beautiful Boca Raton attending the Rick Rule Symposium. And joining me now, he's one of your all-time favorite guests. We know we read all the comments. Keith Newire, CEO of First Majestic joins us. Keith, so good to be with you.
>> Danielle, it's great to see you again. I'm so glad that we're outside. You know, the air conditioning in in these buildings are just I don't know. I can't stand too much. It's a little hot out here, but I appreciate you.
>> But I pick outside versus inside.
>> The hair the hair is frizzing a bit, so save those comments, people. Uh, look, more importantly, um, I'm thrilled to be speaking with you. I know you don't you're not doing too many interviews these days, but look, you know what's going on with silver. Uh, uh, you have really good insights. We're trading around $61. I mean, you know, if this was last year, we'd be celebrating, but people, you know, once we get to that 120 mark, people want that back. Keith, what are your what are your initial thoughts on what's been happening here in the silver market?
>> Well, it did get a little bit crazy with, you know, I was it was at V-Rick, you know, I remember on the I when it hit 120 and I'm looking at my phone and, you know, everyone's just, you know, smiling and high-fiving and, you know, and so on, but I I knew it was just getting a little bit too much. Uh, unfortunately, the banks were in a lot of stress at that point. um you know there once it broke through $50 and they went straight to 70 basically and that was all you know real physical buying which took it there. The move from 70 or 80 to 120 was all short covering and that's when the banks were in trouble and we were getting calls from uh places in Europe and throughout the United States looking for physical metal. We did a trade with one group out of the US because we're friends with them and we gave them some physical because our vaults are you know always have silver in them so you know we could do quick transactions if we need to and we took advantage of the price at that time and um um obviously the buyer was quite happy we did that because we took them off a difficult situation I understand but uh you know and the the paper guys got you know they got to a point where they had to get together and and knock it down like they always do. But what's happened is that we're in a new price price environment. I look at copper very similar to how I look at silver. And uh you know when I was running my copper company prior to first Majestica in the '9s uh you know I put the company together we did our PA a$125 copper and uh that was in 9798 and then you know copper hit 60 cents in 2000 and we're going what the heck you know and uh and we really struggled for a couple years you know from 2004 through 2008 copper hit 450 um it corrected to about 250 and now it's at five. Um, so it never actually retraced the entire move and that's where we're going to see in my prediction on silver. So we're not going to see a full retracement. We're now basing out at these levels. And who knows, I think the bottom is in. Um, June is always historically the low. Now, I just had a conversation with a investor just a few minutes ago. If you look at the 30-year chart, you see June is always the worst time for mining stocks or or metals. I don't know why that is, but you look at the 30-year chart, it's clear. It's available on the internet. People can go look at it uh for themselves. And then you know the market usually goes flat July and August and starts to pick up in August September and usually December January are usually the hot months where metals we see it time and time again and that's where we're staying currently right now.
>> So no logical explanation behind the June doldrums.
>> I don't think so. Uh it's just psychology. You know the traders tend to follow trends. You know you're talking about young people behind computer screens that don't have a clue about what they're trading. All they're doing is trading charts. So they know, you know, to get short in February, March. They know to cover their shorts in June, July, and then go long. And uh they do it all the time. And that's just the way the market works.
I want to talk more about the silver distortion that we see, but what do you make of um theories that Jim Rogers has put out, and I had Jim Records on recently talking about this, you know, considered one of the greatest commodity traders, you know, of all time. uh that he said there's never been a time that a any commodity pick any commodity that has risen like silver or gold and has not correct you know if not 50% close to that and then go back up he says every commodity throughout history have you seen that
>> Well, that's my point in copper that's exactly what happened back in early 2000s and uh that's we're we're not going to see sub $50 silver I don't think in our lifetime you know that's maybe sounds like a bold prediction And you know maybe intraday it might break 50. I doubt it. But uh you know we've been basing out here in the mid-50s for the last uh you know couple months now. We you know got through over 60 again and uh you know it looked like it was might might have got up to 65. It's it didn't obviously get there but we're we're sideways market for a couple of months and it's healthy. You know, we need the world needs to wake up to the fact that silver's $60 and it's never going backwards. And uh you know, the the demands for the metal are real and the demand hasn't changed from whether it was $30, $50, $120. The physical demand is still there.
>> But has the purpose changed?
>> Not really. No.
>> What? But is there more physical demand? Are you seeing a trend in where the physical demand is coming from?
>> Well, it's all electronics. Of course, you know, that's the your bigger drive, the biggest drivers. You know, of course, solar panels and electric cars and but you know, you know, people listening to this today, you know, your microwave wouldn't work without silver, your washing machine, your refrigerator, your freezer, you know, your cell phone, your computer. You know, silver is used in everything. And, you know, people aren't about to give up, you know, fancy gadgets. And, uh, you know, people around the world want have fancy gadgets. And, uh, that's just the fact of life. And the miners are producing 860 million ounces over a year and it's stayed flat for 10 years and consumption has gone up from about 800 million to 1.3 billion over that period of time.
>> Well, exactly. So to that point, you've highlighted in the past that over 2 billion ounces of paper silver trade daily versus the roughly 800 to,000 million ounces mined annually. Uh let's talk about these glaring distortions here.
>> Well, Andy Sheckman actually disagrees with me. He thinks the number is probably twice that number. Okay.
>> So, I don't know, but I I use the number two billion ounces because I I these are major exchanges, but it is hard to track obviously. It's uh but nevertheless, that's a lot of silver that trades in the paper market every single day and there has to be a physical supply to back those paper contracts. And we saw in December through February that there was not enough physical supply and that's why the price did what it did because people were scrambling for metal and we felt it as a as a you know, a mining company as I already pointed out and you know, is is quite an interesting phenomenon. So all of a sudden if you look at the cot reports now today u the short position that existed this time last year does not exist today because we've woken the banks up. you know, they they took substantial losses from, you know, December through February and and because that whole move, as I said, some 70 higher, was all of them short coverage?
>> Well, that that was my next question. I mean, it sounds like the banks played what 99% of a role in this.
>> Oh, for sure. Yeah. And they didn't they jack up the margin requirements and uh
>> how about the ComX and the LBMA?
>> Well, they're they're they're part of the system, you know, they're run by the banks. So, the whole thing is a scam. So
>> the whole thing is a scam.
>> Yeah. Well, for sure. Of course it is. You know, it's just unfortunately the way it is. You know, we as mining companies are at the mercy of the financial markets. It's the only industry in the world. Uh there's one of my biggest uh beefs against uh the current pricing system is that we don't control the price of our product. If you're producing jeans or producing an automobile, you can fix the price of your product that you're selling at and make sure you have a profit. for us as a mining company, you know, going back to, you know, 2012 when I made the triple digit uh silver prediction. You know, it took 14 years to hit triple digits, finding, but fundamentally there's been no change. Yeah. In in uh in the way the ME pricing mechanism works. The banks still do the same thing. Uh but there but today I think they've woken up.
Is there any way to break free from that system as a minor, Keith, or are you always going to be handcuffed to that?
>> You just reminded me of the point I was trying to make and u you know as I said you know we as a mining sector have to get together and and set up our own pricing mechanism and I I've said it to other mining companies before we have to stop selling our metal through the current system and uh you know the banks know how much metal we're producing every year
>> and they can hedge that amount according to what their financial you know uh tolerances are
>> and uh you know it's about 300 to on in silver and uh it's it's it's worked for them, you know, decade after decade.
>> So, let's do it. What's the push with let's do this.
>> Okay. Well, let's fill a room up with CEOs and let's create our own. Uh
>> is there do you get feel push back?
>> I've talked to others about it, but there's really just no u this system works so well. So, people say why change it? Because, you know, we we we have, you know, our minds spinning out Dory bars and uh uh we it's a phone call. I phone up one of the our traders and say, "We got 100,000 ounces coming uh um and I want to price it today at, you know, seven bucks." It's done like that and we get a check in two days.
Do you have any insights on uh silver demand and China?
>> Not really. Other than the fact that they're not selling or they're not exporting silver, you know, I think that's common knowledge. Um um other than that, no, you know, they Asia has deemed silver critical metal. Yes. the United States has deemed silver a critical metal. You know, there's talk in Canada and Europe that that that you know, also that's going to happen in those markets as well. You know, we know the issue. You know, we even if silver was $100 today, which it was, you know, earlier, it wouldn't put a dent on supply. It's still not enough because you need 10 years of that price before you incentivize the mining sector to invest the necessary capital to produce more metal. The the mining sector right today is stretched at 850 million ounces. They can't produce more regardless the price.
>> So, you know, we've heard this time and time again, uh, Keith, that once, you know, when gold takes off, silver will take off, you know, threefold, fourfold, fivefold, what, whatever. Um, so with most forecasts that I'm hearing of gold, you know, people sound convinced that gold's going to go back go to 6,000 this year, would if I said, you know, fill in the blank. You wouldn't be surprised if silver were to hit what?
>> You know, I don't
>> I said to you before the interview that don't ask me forecast, but I had you know, you you don't know how how much I got criticized. You know, when I you know, when I put the my prediction out for triple digit silver, you know,
>> he was the OG of this, by the way,
>> in in 2012. Um, you know, and then silver went straight down from the moment I predicted.
>> You took the heat. You took it. So a lot of people were quite critical but you know it did eventually and I was confident it was going to happen. It's just I look at the numbers I look at the supply and demand fundamentals. If you look at we've had six years of deficits it would take 10 first majestics to be starting today to fill that gap.
>> That's that's incredible to think about.
>> 10 first majestics. How is that even possible?
>> No. And 10 Keith new miners.
>> No it's not going to happen.
>> Do you um believe in the reset theory that we will have a financial reset?
>> You know I do. Um, I don't know what it's going to look like. Um, you know, I listen to all the people you listen to and I, of course, I I'm a sponge when it comes to, you know, information, you know, trying to figure it out because I'm, you know, we're producer, so we have to sell our metal. It's our business. So, you know, I always try to get the highest price. So, we hold back metal. We we, you know, we, you know, we try to get the best price we can for for our metal. So, I'm always listening to what the pundits are saying out there and, you know, what we should do. And we carry big inventory. you know, we probably have 500,000 ounces in our vault right now. Um uh and I like having it there, you know, because I'm I consider that money and it's very liquid. We could sell it in a second if we wanted to do it. But um you know, what that reset looks like? Is it US dollar, you know, related? You know, is it uh you know, China, you know, related? Um you know, who really knows? I don't know. It's just you know, and why why would I worry? You know, I we we produce metal. We produce the end product. Our man end product is required to do all the things that the human race wants to do including nuclear and and AI and uh you know, all the you know, gadgets that we want to produce um you know, going forward robotics um you know, without silver nothing works. So I know being the CEO of a silver company I'm in a pretty good spot.
I was going to say with copper uh you know being so popular again do you miss being in fully in copper?
>> No, you know, I ran a copper company for almost 10 years and um um you know, today it's obviously a very large company, but um um No, I like silver. It's just uh it's more sexy.
>> Yeah.
>> You know, and like you could wear silver. You're not going to wear a copper. Likely not. Anyways, I do have a little copper bar.
>> It's it's an incredible community.
>> Yeah. Yeah. And you know, I I look at copper and silver very similarly, but um you know, silver is a much tighter market, much smaller market. And I I you know and there's very few of us you know in the silver market.
Talk to me about first Majestic. What's new and exciting happening?
>> Well, we've got about $1.3 billion in the bank right now US dollar. So, uh we're cash flowing every quarter. And um
>> yeah, the balance sheet is as strong as it's ever been in the company's history. We got four producing mines in Mexico. Uh
>> doing about, you know, 32 million silver equivalent ounces per year. 55% of that silver, 35% that's gold, and the rest is in formulated and zinc. So, we're very highly leveraged to silver and gold prices is exactly what I like and uh always looking for M&A and uh trying to get bigger.
>> Oh, are we going to see a lot more of M&A this year?
>> No, it's it's um as I said, you know, the it's not only the retail investor who needs to or any kind of investor, institutional investor, uh that needs to get used to, you know, $4,000 gold and $50 silver. Um it's also the other mining executives because all the a lot of these mining executives were same you know, were around in 2012 and uh you know, they bought, you know, some assets that uh turned out to be maybe not so good and uh, you know, they regretted it and had there was big write downs uh that the mining sector had to um uh do in 2015 2016 and even first majestic wrote down some assets as well. uh we weren't immune to that uh and uh it was tough. So you know, you today, you know, I think the executives that are are are active or or involved in running these mining companies are way more conservative and way more cautious. I think if if we have these kinds of pricing um or prices uh for the next six months which I think we will then I think you're going to start see acceleration in in M&A. So it's probably not a 2026 story. I think it's more like 2027, 2028.
Keith, uh, as always, I wish you continued success. Look, you were handpicked. Uh, Rickfield doesn't just invite anyone to these conferences. I know there's mining companies banging on the doors to try and get in. So, look, you've been at this conference, I don't even know how many years, as long as I've been here.
>> So, I think Rick and I go back to the early 90s and uh, you know, we uh,
>> I love coming to his conferences and we have tons of shareholders here. Uh, when he was doing it in Carl'sbad, uh, you know, years ago, we had, but it was also wonderful. So, you know, it's great for us to be here because we're very heavily held by retail investors
>> and uh, you know, they like seeing
>> of course and they like connecting. I love being here, too. And uh, it's a great place to bring the family. I mean, can't complain. Beautiful uh Boca Raton. Uh Keith, I wish you continued success. And hey, # tripledigit silver.
>> Don't forget it'll be there again.
>> We're going there. All right. Stay tuned for more great content coming your way.