Thanks to the myriad economic dynamics stemming from the post-pandemic new normal, astute market participants are seeking various methods on investing in silver. Fundamentally, silver represents one of the most valuable industrial assets. It garners intense interest among multiple manufacturers because silver is the world’s best conductor of heat and electricity.
Further, because of intense demand, silver appears to be in shortage, according to a CNBC report earlier this year. With few other viable alternatives to the white metal, industrial users have little choice but to pay more. Because of this basic equation, interest regarding investing in silver spiked up. Below are seven ways to play the silver game before prices go parabolic.
|SLV||iShares Silver Trust||$23.73|
|SILJ||ETFMG Prime Junior Silver Miners ETF||$12.04|
|PSLV||Sprott Physical Silver Trust||$8.92|
|WPM||Wheaton Precious Metals||$52.15|
|ASM||Avino Silver & Gold Mines||$0.99|
iShares Silver Trust (SLV)
Although investing in silver presents an attractive proposition at this juncture, the white metal historically presented a volatile picture. Therefore, those wanting exposure to the critical asset but also seeking risk mitigation should consider iShares Silver Trust (NYSEARCA:SLV). An investment that seeks to generally reflect the performance of the silver spot price, SLV offers convenience.
Sure, you can always go to your local coin dealer and buy physical silver bullion. However, one of the basic issues with this common approach to investing in silver centers on security. Unless you have an insurance policy that specifically covers physical bullion, losing your holdings to theft (or other unforeseen incidents) could be devastating. With SLV, you’re largely dealing with market risk.
Now, that’s not to say that the iShares Silver Trust represents the perfect mechanism for investing in silver. As U.S. News & World Report notes in its overview for exchange-traded funds (ETFs), the expense ratio for SLV is 0.5%. That’s rather elevated compared to the category average of 0.65%.
Still, if you’re looking for an easy, convenient and high-volume means to trade silver, SLV is awfully attractive.
ETFMG Prime Junior Silver Miners ETF (SILJ)
As stated above, one of the risks regarding investing in silver focuses on significant volatility. With silver being a precious metal that features highly for industrial and monetary demand, the white metal tends to move with greater gusto than its cousin gold. However, some speculators appreciate this added mobility. For this crowd, the ETFMG Prime Junior Silver Miners ETF (NYSEARCA:SILJ) may be appropriate.
As the name suggests, the SILJ ETF focuses on junior silver-mining enterprises. Unlike their established blue-chip counterparts, junior miners present an aspirational profile. Typically, they’ll conduct operations on promising precious metal projects. However, the chances of finding anything of economic value may be minimal. Therefore, the juniors represent a high-risk, high-reward mechanism for investing in silver.
What SILJ offers is the potential ability to mitigate some downside risk. As an ETF, SILJ enjoys a broad canvas. Therefore, a few enterprises may be able to lift the entire fund higher. However, if SILJ carries too many clunkers, the entire investment could go bad.
Ultimately, it’s your call. However, if you’re looking to roll the dice, SILJ may be one of best ways for investing in silver.
Sprott Physical Silver Trust (PSLV)
Another asset to consider for those interested in investing in silver is Sprott Physical Silver Trust (NYSEARCA:PSLV). Taking its name from Eric Sprott, an early champion of precious metals investing, PSLV garners intense interest among silver bugs. We’re talking about ardent silver investors that forward memes advocating for the ownership of real silver, not fake “paper” silver.
Here’s the deal. I suppose you can make the argument that buying silver-tethered paper assets represents certificates or promises. As we know from the latest geopolitical conflict, promises don’t mean much if the other party doesn’t want to make good on their word. However, silver bullion is incredibly heavy. You think you’re so cool buying 100-ounce silver bricks preparing for Armageddon until you realize these things are cumbersome.
Plus, they’re exhausting to haul around when wearing a gas mask – you preppers know what I’m talking about. So, buying units of the PSLV may be the next best thing to the real deal.
While the idea of investing in silver implies specifically focusing on the white metal, in reality, few mining enterprises have such a narrow view of their operations. That’s because in perhaps most mining projects, silver represents a byproduct of copper, lead and zinc extractions. Therefore, it’s worth considering big blue chips like Newmont (NYSE:NEM).
To be sure, you’re probably not going to accrue outstanding gains from NEM over the long run. For example, since the start of the year, NEM barely moved up above parity. With such a lackluster performance, it’s tempting to consider other means of investing in silver.
At the same time, with such a volatile asset category, it’s good to have some boring names in your portfolio. While Newmont probably won’t make you rich, it should help you stay in the game, so long as the underlying precious metals are cooperative.
Also, Wall Street analysts appreciate NEM, pegging it a consensus moderate buy. Their average price target comes out to $56.53, implying nearly 14% upside potential.
Wheaton Precious Metals (WPM)
Typically, when it comes to discussions about investing in silver, interested market participants learn about two basic approaches: buying physical silver coins and bars or acquiring shares of silver mining firms. However, within the latter category sits an intriguing subsegment called streaming companies. No, we’re not talking about Netflix (NASDAQ:NFLX) but rather Wheaton Precious Metals (NYSE:WPM).
In this case, Wheaton doesn’t conduct mining operations. Instead, it makes an agreement with mining enterprises to purchase all or part of the produced precious metals. In return, the miners receive upfront capital. Further, both parties agree to the terms, thus allowing streaming companies greater price predictability. For those leery of wild volatility, streaming enterprises could be a very smart way of investing in silver.
Indeed, WPM already benefitted handsomely from the advantages associated with the streaming business model. Since the beginning of this year, shares soared over 25%. Because of this momentum, it’s making up for the troubles of 2022. Thus, it’s a worthy idea for investors to consider.
MAG Silver (MAG)
For the final two ideas on investing in silver, I’m going to dedicate the space to what you’re really here for: wild, unadulterated speculation. If that wasn’t what you’re seeking, you may wish to turn away now. For everyone else, MAG Silver (NYSEAMERICAN:MAG) may be enticing enough to convince onlookers to roll the dice. Based in western Canada, MAG bills itself as an emerging Tier 1 silver producer.
Because it’s a risky enterprise, MAG suffered a nearly 12% loss on a year-to-date basis. However, in the past 30 days, it’s been flying, gaining 20% of equity value. Should the fear trade that’s undergirding gold expand in magnitude, MAG may be able to steal off some momentum.
To be fair, though, the underlying enterprise presents a challenging framework. While it enjoys a decently solid balance sheet, it’s also a pre-revenue company. Therefore, you must trust that management knows what it’s doing. That said, analysts peg MAG as a consensus strong buy. Also, their average price target stands at $17.90, implying 28% upside potential.
Avino Silver & Gold Mines (ASM)
At time of writing, shares of Avino Silver & Gold Mines (NYSEAMERICAN:ASM) trade hands at just under a buck. Therefore, ASM is a penny stock – the literal kind. Understandably, this profile won’t be appropriate for all market participants. However, if you’re investing in silver for the chance to strike it rich, Avino could be intriguing.
Primarily, you’re looking at significant mobility in the charts. Since the January opener, ASM gained 36% of equity value. Interestingly, in the past 365 days, ASM poked its head above water to the tune of half-a-percent. Therefore, it largely made up for the terrible backdrop that was 2022.
Financially, Avino presents a curious narrative. In particular, the company benefits from a decently stable balance sheet. Also, on a trailing-year basis, Avino’s profit margins rank among the industry’s top half. Finally, ASM trades at 1.15-times book value, which is noticeably undervalued.
Finally, analysts peg ASM as a consensus moderate buy. Their average price target stands at $1.58, implying nearly 64% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.