Precious metals have been a store of value for thousands of years, and even today, gold and silver are attractive assets for many investors. Silver in particular draws attention because its lower price makes it more accessible to small investors, and its use in a number of industrial applications gives it some hybrid characteristics of both precious metals and base metals.
You can invest in silver as a physical commodity, but for those who prefer investments that can both grow and provide income, silver stocks have some definite advantages. Below, we'll look more closely at silver mining stocks, silver streaming and royalty companies, and silver exchange-traded funds to see how they can get you the silver exposure you want.
Silver Stock Investment
5-Year Average Annual Return
Pan American Silver (NASDAQ: PAAS)
Hecla Mining (NYSE: HL)
Wheaton Precious Metals (NYSE: WPM)
Global X Silver Miners ETF (NYSEMKT: SIL)
Silver stock ETF
Silver mining stocks have a correlation with silver prices, but investors also have to be aware of the added risks that miners have. Trouble with mining operations can hit a stock hard even if silver prices are strong, and if a particular company's mine assets turn out not to be as valuable as anticipated, then share prices can also fall even in strong markets for the white metal. Silver miners tend to be smaller than their gold mining counterparts, but the largest players in the business have extensive experience they can use to try to avoid common problems that smaller miners face.
Pan American Silver has extensive operations that span the Americas, and it has posted strong results recently. Production levels in 2016 exceeded expectations, and Pan American's 2017 predictions are for even greater production going forward of 24.5 million to 26 million ounces of silver. Like many silver miners, Pan American also has extensive gold production, because the two precious metals are often found together. Acquisitions have also bolstered Pan American's future growth prospects, and efforts to squeeze more silver out of its existing mines are looking increasingly promising.
Hecla Mining has also had a strong recovery lately, seeing silver production jump by nearly half in 2016 compared to 2015 levels to 17.2 million ounces. The San Sebastian mine in Mexico had its first full year of production for Hecla, and it paid off with massive gains. Hecla's calls for 2017 were slightly lower, at 14 million to 15.5 million ounces of silver. But gold also plays a key role for Hecla, and overall production in silver-equivalent ounces is expected to hit new records this year, surpassing even last year's strong performance.
Streaming companies don't engage in mining operations, but they still offer exposure to silver prices. These companies offer financing to miners, providing up-front cash in exchange for the rights to purchase a certain percentage of the mine's silver production at a discounted price. The value of what's known as the streaming interest climbs as prices rise, and streaming companies also benefit if their mining partners boost production.
Wheaton Precious Metals has traditionally been the leader in the silver streaming industry, just having changed its name from Silver Wheaton. The company initially focused almost exclusively on silver streams, but Wheaton has seen the value of diversification and tapped into demand for gold streaming agreements as well. Declining silver production among its partners played a role in the decision to become a more broad-based precious metals streaming specialist, but if you like the business model, you have to be willing to accept some exposure to gold prices as well.
Silver mining ETFs
Exchange-traded funds let you get exposure to a wide range of stocks in a one-stop shopping format, and there's a solid silver mining ETF that gives broad-based exposure to the industry. The Global X Silver Miners ETF has positions in about 30 different stocks related to the silver industry, including Pan American, Hecla, and Wheaton. Holdings span the globe, offering a variety of different types of companies with different operations and mining assets.
The Global X ETF has just over $350 million in assets under management, and its operators charge a 0.65% annual management fee. That's a bit higher than for broader-based stock index ETFs, but it's not so outrageous as to make it untenable for silver investors wanting an easy way to get diversified exposure.
Get your silver stocks here
Silver stocks can be good investments, and these three methods of investing in them give you useful choices. If you like silver's prospects, one of these three silver investments could fit the bill very well for your portfolio.
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