Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Fool’s Silver: Why Most “Silver Miners” Don’t Live Up to Their Name

Commodities / Gold & Silver 2019 Aug 14, 2019 - 04:58 PM GMT

By: MoneyMetals

Commodities

If you buy shares in a silver mining company, you will have to assume additional market risks compared to ownership of silver bullion. You may wish to do so in order to potentially gain leveraged exposure to silver prices.

What you may not realize, however, is that most of the publicly traded “silver” stocks out there are primarily in the business of mining other metals – sometimes gold, often copper, zinc, lead, and other base metals.

Consider Pan American Silver (NYSE:PAAS), a $3.6 billion company that makes up the largest weighting (13.5%) in the Global X Silver Miners ETF (NYSE:SIL).


While Pan American is indeed a producer of silver, its business comes mainly from other metals. According to BMO estimates, only 33% of Pan American Silver’s revenue in 2019 will come from silver production.

Rare is the silver miner that actually derives most of its revenue from silver mining. There are both geological and philosophical reasons behind the paucity of pure silver producers.

Since silver deposits tend to accumulate around other metals, valuable byproducts will be extracted during the mining process. Most silver is produced as a byproduct of mining for base metals, so primary silver mines are few and far between.

Mining company CEOs generally prefer to diversify their revenue streams beyond a single metal to manage risk and become more appealing to Wall Street analysts, bankers, and institutional investors.

Gold and silver bugs who expect mining industry executives to share their bullishness about prices or their commitment to sound money principles will be sorely disappointed. Very few of them are allies to the broader precious metals community.

These companies also tend to be run by geologists, engineers, and accountants who, by their nature, often don’t see the big picture.

A recent and obnoxious example of this problem is Hecla Mining (NYSE:HL), the Idaho-based company that repeatedly refused to support legislative efforts in its home state that nearly ended income taxation on gold and silver.

Add Hecla management’s refusal to reinforce the public policy importance of its own products (to the very state in which it operates) to the reasons this miner’s stock price has gone nowhere but down in recent years, including during silver’s recent rally.

One exception is First Majestic CEO Keith Neumeyer. He is enthusiastic about silver and tuned in to the values and concerns of physical bullion holders. First Majestic Silver (NYSE:AG) is the purest major producer, with 62% of its revenue attributable to its namesake metal.

Of course, you will never find a purer silver play than actual .999 pure silver bullion products.

The further your silver-related investments get from the underlying metal, the more they will be driven by other factors you may not necessarily understand or believe in.

When silver starts becoming a hot commodity again, Wall Street will surely supply a bevy of new “silver” equities and exchange-traded derivative products – most of which will serve to divert casual investors away from investing in silver itself.

Right now one of the easiest – and least efficient – ways for the public to invest in the silver industry is through SIL.

This “Silver Miners” ETF is top heavy with majors that mine mostly other metals. It is also populated with royalty/streaming/exploration companies that do little to no mining. SIL carries an annual expense ratio of 0.65%, which is quite high compared to other passively managed funds.

If your aim is to invest in silver producers, you’re better off focusing on particular companies that deliver the goods. If you lack the time or know-how to pick quality mining stocks, you won’t go wrong by simply owning what they produce via physical bullion.

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2019 Stefan Gleason - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in