My SIPP has enjoyed bumper returns in 2025, largely thanks to one FTSE 100 holding that’s risen 425%. I’m left wondering if it can continue that momentum in 2026.
What’s driving the move?
What excites me most about Fresnillo (LSE: FRES) is not its gold exposure, but its huge silver portfolio. Annual production is expected to be around 50m ounces over the next few years.
The price of the metal has surged 170% last year to around $75 an ounce, defying everyone’s expectations, including mine.
Years of heavy government spending, persistent budget deficits, and repeated stimulus have pushed central banks to rethink what they hold as reserves. Hard assets have moved back into focus.
Unlike gold, silver sits at the intersection of monetary demand and industrial necessity. Industrial uses now represent the largest portion of global silver demand – around three-fifths of total consumption – driven by solar panels, electrification, electronics, and other structural growth trends.
Supply, meanwhile, is constrained. New mines take years – often more than a decade – to come online. Even modest increases in investment demand can move prices sharply. That combination of structural demand and limited supply shows no signs of abating in the coming years.
Why Fresnillo fits my SIPP
Rather than owning silver bars, which are cumbersome and expensive to store, I get direct exposure to the metal in the ground. For every ounce Fresnillo mines, its all-in sustaining cost sits around $17, meaning today’s silver price flows almost straight through to profits.
That operating leverage explains why the shares have risen sharply this year, helping my SIPP generate a 67% return. But this isn’t about chasing a 425% gain. Inside a pension, time matters more than timing.
The cash the business generates strengthens the balance sheet, supports investment into its exploration portfolio, and boosts dividend payments. At its H1 results, the interim dividend rose 225%, and I’m expecting another bumper payout when it reports full-year results.
Major risks
Silver is notoriously volatile. Sharp pullbacks can happen with little warning, and the miner’s share price moves almost in lockstep with the metal.
Mining and operational risks remain: exploration doesn’t always deliver, costs can rise, and with operations concentrated in Mexico, regulatory or tax changes could affect results.
Commodities are cyclical, and prices that overshoot on the way up can overshoot on the way down. Fresnillo’s exposure to both industrial and investment-driven silver demand makes swings more pronounced.
This is not a stock for the faint-hearted or for short time horizons. Investors need patience and the ability to tolerate volatility inside a long-term SIPP.
Bottom line
Silver is a metal of extremes, and Fresnillo reflects that. Inside a SIPP, though, volatility can be tolerated if the long-term drivers remain intact.
For me, this isn’t about chasing the next surge. It’s about owning a scarce monetary asset at a time when the AI revolution is increasing electricity demand, and the green transition is still in its early stages.
Combined with structural industrial and investment demand, Fresnillo offers the kind of long-term optionality that a SIPP is designed to take advantage of – letting growth compound and income emerge on my terms.
