Silver's Staggering Supply Shortage Is Creating a Once-in-a-Decade Investment Opportunity

The Math Behind Silver’s Meteoric Rise

Back in 2023, Berkshire Hathaway CEO Warren Buffett made a striking observation at the company’s shareholder meeting. When asked about silver as an investment, he didn’t rely on charts or complex formulas. Instead, he pointed to a simple arithmetic problem: the world was pulling roughly 150 million more ounces of silver out of the ground annually than it was actually producing.

For most commodities, such a deficit would’ve triggered an immediate price explosion. Silver, however, had a hidden advantage—massive stockpiles sitting above ground for decades were quietly covering the gap. But Buffett foresaw an inflection point. One of three things had to give: demand would need to drop, supply would have to surge, or prices would have to climb sharply.

Since industrial applications for silver remain resilient and mine production can’t scale quickly, Buffett essentially eliminated the first two possibilities. He predicted silver prices would need to adjust—potentially dramatically.

Buffett’s Prediction Came True—and Then Some

Three years later, the data tells the story. Silver prices have soared approximately 150% from the time of Buffett’s prediction. The iShares Silver Trust (NYSEMKT: SLV), which holds physical silver, reflected this rally perfectly—though with slight annual underperformance due to management fees.

The supply-demand imbalance persisted exactly as Buffett anticipated. Last year, miners extracted less than 1% more silver than the previous year, while global demand consumed 149 million more ounces than was produced. This fifth consecutive year of deficit spending has created an unprecedented market dynamic.

The bull market isn’t temporary noise. It’s driven by structural forces: the solar panel boom, electric vehicle manufacturing, artificial intelligence infrastructure, and semiconductor production are all consuming silver at record rates. These industries show no signs of slowing.

How to Position Yourself: Beyond ETFs

For investors seeking basic exposure, SLV offers simplicity. Buy the fund, track silver prices, avoid the hassle of physical storage. It’s effective, if unspectacular.

But here’s where it gets interesting: most silver is a byproduct. Miners hunting for gold, copper, lead, or zinc stumble upon silver as an afterthought. One notable exception exists—First Majestic (NYSE: AG).

This Vancouver-headquartered operation, valued at $7.8 billion, is the closest thing to a pure-play silver stock you’ll find. Silver accounts for 57% of revenue, higher than any peer. That concentration matters.

The company just reported record quarterly output of 3.9 million ounces—a 96% year-over-year increase. Of its $139 million revenue jump in Q3, $73 million came from higher silver production volumes alone, with the remaining $66 million from improved prices. This dual earnings driver is significant: First Majestic profits whether silver rallies or production scales.

All-in sustaining costs hover between $14.80 and $15.80 per ounce, meaning profitable mining happens at nearly all current price levels. The company is aggressively expanding capacity to capture this unique window.

The Valuation Question

Yes, the P/E ratio sits at 113—objectively lofty. But context matters. A 96% revenue growth rate justifies a premium. When a company is expanding this aggressively in a tight supply market, valuations tend to compress as earnings catch up.

The Real Risk Nobody’s Discussing

Silver prices will eventually correct. That’s inevitable. But timing matters. The structural demand drivers accelerating this decade—renewables, EVs, AI, semiconductors—are only beginning. A 100+ million ounce annual deficit won’t resolve in 2025 or 2026. It will take years of either demand destruction or supply expansion, neither of which seems imminent.

This is the kind of come stock that appears once per cycle when structural supply constraints meet surging demand. First Majestic gives investors a leveraged way to participate.