Best Silver Stock To Buy 2017 PATCHED
Silver often plays second fiddle to gold when it comes to precious metals. That makes some sense since silver is a much cheaper metal -- its price is just not as captivating. However, like gold, it is considered a store of wealth and has historically been used as a form of currency. So, if you're looking for a precious metal, don't overlook silver stocks and investments. That said, it's pretty easy to find a gold-focused stock, but a lot harder to find one that is focused on silver. Here are a few of the best options for adding silver to your portfolio, including my top pick, Wheaton Precious Metals (NYSE: WPM).
best silver stock to buy 2017
The first way to get silver into your portfolio is through a direct investment in bullion. If you want to prepare for a situation in which fiat currencies are no longer being used (the zombie apocalypse scenario, if you will), then buying silver coins is the best option. In fact, owning some silver in this way isn't a bad idea, just in case. But transaction costs and storage issues make it a less-than-ideal way to get material exposure to the precious metal.
In other words, if you're looking for a silver miner, First Majestic is a focused choice. 2017 is expected to be a rough year production wise, with a drop off from 2016. However, the company has two projects in development that it expects to materially increase production over the next two to four years. And it's been working hard to get costs down, with cash costs and all-in sustaining costs each declining by nearly 40% between 2014 and 2016. The new mines will likely push costs higher in the near term, but that will probably be a temporary issue.
If owning just one miner has you worried, you could also buy iShares MSCI Silver Miners Index ETF. The expense ratio is a scant 0.39%, making it a pretty cheap way to get broad silver mining diversification. The only problem is that when you look at the list of names in the ETF, you quickly see that it includes companies like SSR and Coeur, which we already know are more gold miners than silver miners. So a mining ETF is an option, but perhaps not the best way to get direct exposure to silver.
There is one drawback: Silver is expected to account for around 55% of its production over the next few years. That means you'll get less exposure to silver than you would via an investment in First Majestic. However, I believe the benefits of Wheaton's business model outweigh this issue and make it the best option for investors seeking exposure to silver.
In the end, there are plenty of ways to get exposure to silver. You can buy coins, silver-linked ETFs, silver miners, ETFs that track silver miners, or a streaming company like Wheaton Precious Metals. You have to pick the option that's right for you, but I think Wheaton is the best of the bunch. Its diversification, high margins in good years and bad, and ability to use commodity downturns to grow its business set it apart in important ways. If you want to own a silver stock, I suggest you do a deep dive on Wheaton Precious Metals today.
The silver miners' stocks have surged higher in this young new year, putting the Trumphoria general stock rally to shame. Following its fourth-quarter drubbing, this tiny contrarian sector is embarking on a major new upleg as traders return. Silver stock uplegs tend to grow to massive proportions, and silver mining fundamentals remain strong today. So odds are the silver stocks are going to power far higher in 2017.
Because silver stocks aren't widely followed, most investors and speculators are unaware of this sector's stellar upside potential. Silver mining is a challenging business both geologically and economically, so there aren't many primary silver miners out there. And their stocks' collective market capitalization is small, a rounding error compared to the broader stock markets. That doesn't leave much room for funds to buy.
On top of that, silver itself is essentially a leveraged play on gold. The overwhelmingly dominant driver of silver prices is gold price action. Silver's fortunes are inexorably slaved to gold's own. So the great majority of contrarian capital flowing into precious metals stocks naturally seeks out the far larger gold miners. Silver stocks tend to fly under the radars of fund managers, creating exceptional opportunities.
For decades, silver stocks even lacked a major dedicated index, making their performances relative to gold stocks difficult to track. Thankfully, that started to change in April 2010 when Global X launched its Silver Miners ETF (NYSEARCA:SIL). While SIL is tiny with just $361M in net assets this week, it is still nearly 5x bigger than its next largest competitor. SIL has slowly become the definitive way to track silver stocks as a sector.
This ETF remains far from perfect, with well-known composition problems. SIL's leading component is a major Mexican mining conglomerate commanding 1/8th of this ETF's total weighting. While it is indeed the world's largest silver miner, Industrias Penoles' (OTCPK:IPOAF) silver business only generated about a quarter of its total sales in Q3'16. Its stock doesn't trade like a primary silver miner since silver is a minor side business for it.
Each year, I like to list my top overall silver stocks picks for the upcoming year. As always, the goal is to outperform both the physical price of silver (SLV) as well as silver miners as a whole, using the Global X Silver Miners ETF (NYSEARCA:SIL) as a benchmark index.
Similar to gold stocks, I target silver miners that have low cash operating costs and low all-in sustaining costs, a solid balance sheet with low leverage, strong development projects or strong exploration upside.
You get a lot of leverage to silver with these stocks, making them intriguing options for silver bulls. Every 10% gain or so in physical silver prices should result in 2X-3X or greater gains in the stocks.
I've included a chart below of the performance on silver stocks during its last bull run back in 2010, an image that originally appeared in my top silver stock picks for 2016. During this bull run, several silver stocks returned 3X-4X the price of physical silver, showing you the leverage these stocks can provide during a bull run.
My main tips for readers: I continue to recommend investors consider dollar-cost averaging positions in silver stocks instead of trying to time the market and go all-in at once. Market timing is extremely difficult; silver miners are highly volatile. If you want to buy a silver stock, aim to buy shares on a periodic basis, such as once per month or once every 2 months or once every quarter. If you can, take some profits when your position has surged in value, and look to re-invest on dips.
Callinex has a portfolio of zinc assets that are located in prominent Canadian mining jurisdictions, a proven technical team and cash to fund upcoming drilling campaigns. An added highlight is that the stock also gives exposure to other precious metals, including silver.
If you would like more information on any of our projects, or want to learn more about how the Callinex stock gives you exposure to silver and other secondary metals, please contact investor relations.
In addition to the Excel spreadsheet above, this article covers our top 5 silver stocks today. The companies analyzed primarily focus on silver, but are also engaged in mining of other metals such as gold or zinc.
Glencore, which is the largest company in Switzerland, also has an energy and agricultural products segment. This makes the company the most diversified on this list. Diversification is especially valuable when considering silver stocks, considering the volatility of precious metals prices.
Based on the trailing two semi-annual payments, the stock yields 3.5%, which is relatively high among silver stocks. This makes Fresnillo an appealing pick within the silver stocks, especially for investors looking for higher income.
Investing in silver stocks is best left to those with higher risk tolerances. The companies on this list have each struggled during various portions of the past decade. Some companies have rarely recorded a profit from year to year.
American Eagle Palladium Coins were first released in 2017 as bullion and 2018 as proof. Like the silver coins, the palladium coins re-create historic designs by Adolph Weinman. The obverse features Liberty wearing a cap with wings used on the 1916 Mercury Dime. The reverse shows an eagle grasping a branch first used on the 1907 American Institute of Architects Gold Medal.
And in my opinion, having a small allocation to precious metals like gold and silver is a useful part of diversification, because they are partially uncorrelated with stocks and bonds and have different and unique risks and opportunities. There may be times where a larger allocation is tactically useful as well.
When everyone else was buying wildly overvalued tech stocks during the Dotcom Bubble, Buffett was instead buying cheap things like value stocks and silver. Berkshire officially stated that the reason for the purchase was that due to the supply and demand characteristics of silver, they expected it to appreciate in price. In other words, they correctly thought it was undervalued.
Silver stocks are simply the shares of companies that produce and refine silver. Often, these companies are miners that raise capital to explore, acquire, develop, and produce silver mineral deposits.
However, silver stocks are also correlated to the spot price of silver bullion. Drastic changes in the silver price can cause large swings in the share prices of silver stocks, even if their current fundamentals (revenues, margins, profits, cashflow, earnings, etc.) remain unchanged and no other events take place.
For example, if the price of silver drops sharply, silver stocks will most likely drop along with it, because the market will price in anticipated future losses. In other words, the value of deposits the silver companies own and the silver they could sell would both be worth less. 041b061a72