Beneath the Surface
Marin Katusa: Silver Miner Q4 Earnings Will Set Records
January 16, 2026 • 5 minute, 25 second read
“When Gold argues the cause, eloquence is impotent.”
— Publilius Syrus
January 16, 2026 — Forty-five percent.
That’s the profit margin silver miners are running right now. And a year ago, it was 28%.
At today’s prices approaching $90, S&P Global models show potential profit margins for top producers could rocket toward 150%.
While everyone’s focused on the price, the profit margin story underneath is what actually matters.
The Insane Math Behind $90 Silver
Last year, it cost miners about $20.50 to pull an ounce of silver out of the ground on a Silver price that averaged $28.
The math worked, but nobody got rich.
This year, costs dropped a bit to around $20 per ounce thanks to lower fuel costs and treatment charges that fell nearly 40%.
- When your costs hold flat and prices triple, that’s not good. That’s a generational setup.
We’ve watched margin cycles for twenty years: the 2008 recovery, the 2016 bottom, the COVID snap-back. I can’t recall one moving this fast with this much room still to run.
But don’t get crazy excited yet…
Not Every Miner Wins Equally
Silver stocks have been on a tear in the past year.
- The Silver Small Cap ETF ($SILJ) is up 217%. But the gap between the best and worst operators is blowing wide open.
And you have to know why you’re buying a ticker.
First Majestic for example, was losing money in 2024 with negative margins. Now they’re running 45%, with production jumping over 20% and costs that dropped more than 30%. Their acquisition of Cerro Los Gatos was perfectly timed. They doubled capacity right as prices took off.
Fresnillo is projecting 52% margins, up from 26% – their costs are falling while production holds steady.
Coeur Mining expects 45%-plus after their Rochester expansion in Nevada came online.
Pan American upgraded La Colorada in Mexico and should nearly double margins to 44%.
These aren’t recommendations, but examples to show what’s happening in real-time with silver prices skyrocketing.
Then there’s Hecla, a solid operator. Their primary silver costs on a byproduct basis have risen over 20% according to S&P Global models.
In a race for pure silver leverage, they are currently lagging the aggressive margin expansion seen in peers like First Majestic.
- While the herd piles into the famous names, the real alpha is in the operators who have optimized their mines to print cash at $30 silver…
And are now absolute money fountains at $90+.
The Jurisdiction Premium
But here is where the retail crowd can get stuck, obsessing over headlines.
The “smart money” looks at the financial plumbing.
What you rarely hear discussed is the “SWAP Line” indicator.
The Federal Reserve maintains liquidity backstops with key central banks. This invisible tether keeps an economy plugged into the US financial system. It’s the difference between a volatile market and a solvent one.
This financial reality is why the best operators aren’t leaving Latin America – they are capitalizing on it.
Pan American didn’t run from Mexico; they optimized it. By upgrading La Colorada, they are set to nearly double their margins to 44%. They prioritized the asset over the noise.
First Majestic made the same calculation. Their acquisition of Cerro Los Gatos – smack in the heart of Chihuahua – was perfectly timed. They focused on the high-grade rock and are now printing 45% margins.
When you have a financial backstop, the “risk” is often mispriced. In a margin super-cycle, solvency matters more than silence.
The World Needs More Silver Than It Produces
That’s been true for five straight years.
The Silver Institute puts this year’s shortfall at 117 million ounces. Since 2021, the cumulative gap has hit close to 800 million ounces… almost a full year of global production.
Gone. Absorbed. Not coming back.
Demand keeps climbing.
- Solar panels need it, and global solar PV installations jumped 64% in 2025.
Electric vehicles need two to three times more silver than gas cars.
AI data centers are adding a whole new layer of consumption that barely existed five years ago.
And there’s no good substitute for silver’s conductivity.
Most silver comes as a byproduct from mining copper and zinc. Most people don’t know this but…
- Primary silver miners only account for 28% of total silver production in the world in 2025.
Higher silver prices can’t force more supply. It’s like trying to get more egg whites by raising the price of yolks. The chicken doesn’t care about your economics.
Even so, higher prices have nudged miners back into the field.
In 2025, silver drilling increased about 36% from 2024, reflecting renewed exploration interest.
But the response falls short. Total drill holes in 2025 are around 26% lower than the 2021 peak of about 7,100 holes. That was when activity hit its highest level.
More importantly, most programs focus on infill and step-out drilling at known deposits, not on finding large new systems. High-impact discovery results remain rare.
As the chart above shows, drilling has recovered from recent lows, but not to levels that meaningfully expand global silver supply.
What This Means For You
Most people play silver through ETFs or bullion. They catch the metal’s move but miss the leverage.
Mining stocks amplify everything. First Majestic went from losing money to 45% margins without building anything new. They just held the line on costs while silver did the heavy lifting.
That cuts both ways. If silver drops hard, margins compress just as fast. Same leverage, opposite direction.
The miners with the lowest costs and cleanest balance sheets will hold up best in a pullback and capture the most upside if the deficit keeps grinding.
The Earnings are Coming…
Q4 earnings hit in the next few weeks. The margin expansion I’m describing is about to show up in actual reported numbers.
When companies that were breakeven a year ago start printing 40%-plus margins, analyst models have to reset. Price targets move and capital follows.
Remember that 45% margin figure at the top? That’s the base case using conservative price assumptions.
At current spot, the upside case is three times higher.
Regards,
Marin Katusa
Katusa Research & Grey Swan Investment Fraternity
P.S. from Addison: Marin’s insights are the perfect “chaser” to yesterday’s conversation with Shad Marquitz on Grey Swan Live!
It’s clear that mining stocks haven’t even shown how well the recent price action has done for profitability – and there may be more upside surprises this year, even as metals prices remain volatile.
The replay of yesterday’s Grey Swan Live! with Shad Marquitz is up on the site. Paid-up members can check it out here.
