Shares of First Majestic Silver (AG +4.12%) are climbing on Monday, up 3.9% as of 3:24 p.m. ET. The move comes as the S&P 500 (^GSPC +1.54%) and the Nasdaq Composite (^IXIC +2.27%) gained 1.5% and 2.2%, respectively.
The silver miner is seeing its stock climb -- as it often does -- alongside the price of silver. Silver futures had one of their best days this year as investors anticipate further rate cuts in December.
NYSE: AG
Key Data Points
While key official data is missing because of the ongoing government shutdown, private data released last week reveal a weakening economy, with one report showing October job cuts totaling 153,074 -- the most on record for an October period since 2003. In light of the concerning data, the market appears confident that the Federal Reserve will cut rates once again in December.
Image source: Getty Images.
Lowered rates can lead to silver gaining as yields from safer assets like bonds fall. Lower rates also tend to lead to inflation and precious metals like silver are often seen as a hedge against currency devaluation.
Silver miners face heightened risk as metal prices retreat
While investors may be tempted to jump in after seeing First Majestic's stock up nearly 100% this year, I would hold off. Silver is sitting near record highs and I think a correction is likely. If silver does fall, the losses for silver mining stocks will be amplified.
