Silver is poised for a breakout, with prices climbing 22% year-to-date to $36.35 per ounce, driven by robust industrial demand and the metal’s safe-haven appeal.

Industrial applications, particularly in solar panels and electric vehicles, account for 55% of demand, and are projected to hit a record 700 million ounces this year. Geopolitical tensions, including U.S. tariff threats and Eastern European and Middle East conflicts, bolster silver’s role as a hedge against economic uncertainty, while a weakening U.S. dollar and anticipated Federal Reserve rate cuts fuel bullish sentiment.

Analysts like Keith Neumeyer predict silver could reach $100 per ounce, with InvestingHaven forecasting $49 in 2025, supported by a supply deficit and constrained mining output. Despite tariff risks dampening short-term industrial demand, silver’s structural bullishness suggests significant upside.

Silver stocks, leveraging rising prices, offer amplified returns compared to physical bullion. While silver miners are rising, and according to The Kobeissi Letter, open interest on silver futures “spiked by $2.8 billion over the last 2 days, the biggest jump in at least a year,” the following two silver stocks just might be the best buys to capitalize on the coming silver surge.

First Majestic Silver: A Pure-Play Silver Powerhouse
First Majestic Silver (AG) is a top pick for investors seeking exposure to silver’s anticipated 2025 rally, given its status as one of the purest silver mining plays. After its $970 million acquisition of Gatos Silver in 2024, over 50% of its revenue now comes from silver, compared to the 30% average by its peers.

First-quarter production hit 5.2 million silver equivalent ounces, with revenue up 12% to $136 million, driven by output at First Majestic’s San Dimas and Santa Elena mines. The Jerritt Canyon restart will add 10% capacity by 2026. First Majestic’s $150 million exploration budget targets new deposits, enhancing long-term growth. Trading at $8.41 per share with a forward P/E of 15x, analysts’ $10 target suggests 28% upside.

Risks include Mexico’s mining regulations and tariff-driven cost hikes, but spiking call volume options suggest the market is expecting a breakout. Indeed, AG stock rocketed 15.5% higher on Thursday and is edging higher another 1.5% in premarket trading Friday.

With a modest dividend yielding 0.2% and a $351 million cash pile ensure stability. With silver prices breaking above $36 per ounce, First Majestic’s high leverage to price spikes makes it a compelling buy for aggressive investors.

Pan American Silver: A Premier Silver Mining Leader
Pan American Silver (PAAS) stands out as a premier silver stock, offering stability and growth potential in 2025’s bullish silver market. As the world’s second-largest silver producer, it boasts 468 million ounces of proven reserves and 20.4 million ounces of annual output across seven mines in the Americas. It will be adding to those resources with its recently announced acquisition of MAG Silver (MAG).

First-quarter revenue grew 29% to $773 million, and it projects $690 million in free cash flow production this year supporting its 1.4% dividend yield. Beyond the MAG Silver acquissition, which is expected to add $98 million in FCF this year, PAAS stock’s growth catalysts include the La Colorada Skarn project, adding 17 million ounces annually by 2027, and potential Escobal mine restarts.

PAAS’ $1.2 billion liquidity and 0.3x net debt-to-EBITDA ratio provide resilience against tariff risks and operational costs. At under $29 per share – PAAS stock jumped 8% yesterday – with a forward P/E of 15x and a $32 per share analyst target, implying 13% upside, the silver miner is undervalued.

A with First Majestic, risks include environmental regulations and silver price volatility, but its diversified assets and strong balance sheet mitigate these. Pan American’s scale and cash flow make it ideal for investors seeking steady returns in a soaring silver market.

— Rich Duprey

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Source: Money Morning