Introduction
This week, the price of gold surpassed $5,200 per ounce, while silver reached an unprecedented high of $112 for the first time in history. For Mexico, the world’s leading silver producer with 23% of global supply, these soaring prices should be a remarkable opportunity. However, the country seems poised to miss out on fully capitalizing this boom.
The Silver Surge: A Structural Deficit and Growing Demand
The silver price surge is not speculative or fleeting; it’s driven by a structural deficit that has persisted for five years. Since 2021, global silver consumption has exceeded production by nearly 800 million ounces, with an expected deficit of 200 million ounces by 2026. The reason for the supply shortfall, despite tripling prices, is straightforward: approximately 70% of silver comes as a byproduct from copper, zinc, and lead mines. Developing primary silver mines takes 10 to 18 years and requires initial investments of $500 to $600 million.
Silver demand is also structural, with the solar industry alone consuming 232 million ounces annually—four times more than in 2015. Additional demand comes from data centers, semiconductors, and large-scale batteries. Each solar panel uses 15 to 25 grams of silver, and electric vehicles consume 67% more silver than gasoline-powered cars.
China’s Geopolitical Influence on Silver Exports
China adds a crucial geopolitical element. Since January, it has implemented a licensing system restricting silver exports to 44 companies, as it refines 60% of the world’s silver. If China decides to limit exports, similar to its actions with rare earths and other critical minerals, the global market will tighten further.
Gold’s Rise: Central Banks’ Purchases and Geopolitical Tensions
In the gold market, central banks have been purchasing record amounts for years. In 2025, they acquired approximately 850 tonnes, and by 2026, it is expected that they will accumulate between 755 and 800 tonnes, close to 26% of annual mine production. Poland bought 67 tonnes, China 45 tonnes, and Brazil 28 tonnes. These purchases are not speculative; they represent diversification of national reserves amidst dollar erosion.
Geopolitical context reinforces this trend. The war in Ukraine, Middle East tensions, the fragmentation of liberal order, and Trump’s tariff threats have pushed investors towards safe-haven assets. The dollar has fallen 10% in the past year, and markets anticipate further Fed rate cuts, reducing the opportunity cost of holding gold.
Implications for Mexico: Challenges and Opportunities
In theory, Mexico should be experiencing a bonanza. Fresnillo, part of Grupo BAL, is the world’s largest primary silver producer. Mexican mining companies benefit from favorable exchange rates, with costs in pesos and sales in dollars, enjoying impressive margins. However, the current mining law makes it nearly impossible to develop new projects due to complex permitting processes, fierce social and political opposition, and security challenges.
Mexico capitalizes on existing resources but fails to strategically exploit this cycle. The ongoing gold and silver price surge may soon repeat in copper, as electrification, data centers, and energy transition drive demand to levels the supply cannot meet. Grupo México, a top global copper producer, prepares for the upcoming boom. However, if Mexico does not address its regulatory and security hurdles, it will once again be a bystander in an opportunity it should seize but doesn’t know—or refuses—to exploit.
Key Questions and Answers
- What is driving the silver and gold price surge? A structural deficit in silver, growing demand from industries like solar and electric vehicles, along with central banks’ purchases of gold.
- How does China influence the silver market? By controlling exports through licensing systems, as it refines 60% of the world’s silver.
- What challenges does Mexico face in capitalizing on this boom? Complex permitting processes, social and political opposition, security issues, and regulatory hurdles.
- What other metals may experience a similar price surge? Copper, driven by electrification, data centers, and energy transition.
