Mexico's second-richest man, Alberto Bailleres, has benefited greatly from his extensive position in precious metals so far this year. Between his majority stake in a pair of Mexican mining companies, Industrias Penoles SAB and Fresnillo Plc, the gold and silver magnate has outpaced his wealthiest counterparts in the growth of his personal assets 2016.
Among the 10 richest individuals across Latin America, Bailleres has been the big winner thus far in 2016. In fact, he has seen his investment in the silver market translate into a $1.3 billion gain for his net worth already this year. That's an increase of nearly 14%, far outpacing any of his counterparts. By comparison, Mexico's richest person, Carlos Slim, has seen his own unbelievable wealth shrink by over $2 billion (-5.4%). Still, it's unlikely that Slim is hurting thanks to his $50-billion investment empire.
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One of the biggest factors that has dented Slim's fortunes is the weakness of the Mexican peso. The peso has fallen farther against the U.S. dollar than virtually any other major currency this year—a boon for Mexico's export revenue, but not for Slim's assets.
On the contrary, the weaker peso has benefited Mr. Bailleres significantly. This is because his mining companies deal in dollars. “The Mexican peso depreciation boosted [Penoles's] quarterly report,” said Bernardo Trejo, an analyst at Invex Casa de Bolsa, a leading Mexican brokerage. “About 95 percent of its income is in U.S. dollars, so the currency effect alone made the report favorable.”
Another source of rising profits for Penoles has obviously been the strength of the precious metals market since the beginning of the year. However, with the Federal Reserve signaling tighter monetary policy in the near future, Bailleres and Penoles have not been resting on their laurels. With the expectation that higher interest rates may pull down the prices of gold and silver, Penoles has been focused on keeping costs down, thereby making its financial affairs more efficient. The company has been the best-performing stock on Mexico's benchmark IPC index, advancing 61%.
In addition to profiting from Penoles's metal operations, which primarily include gold, silver, zinc, and lead, Bailleres has also enjoyed outsized gains from his Fresnillo project. Mexico is among the world's top two silver producers on an annual basis, perennially competing with Peru for the top slot. Fittingly, the Fresnillo mine is actually the largest primary silver mine in the world. The site has been active in extracting metals as far back as 1554, revealing how silver-rich the region has proven to be. So far this year, Fresnillo's share price has also advanced an impressive 44%.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.