Silver Mining Stocks

Silver Mining Stocks

6 min read

All the glitters isn’t gold. Have the silver mining stocks lost their shimmer? If you’ve spent any amount of time looking at silver mining stocks, you’d realize they are slowing disappearing off the radar.

Perhaps it is due to the expenses related to owning and operating silver mines. I would say the telltale sign of their declines reflected in the number of pure silver mines out there. The last time I checked, there are only about twenty in the entire world. 

WPMWheaton Precious Metals Corp.
AGFirst Majestic Silver Corp.
PAASPan American Silver Corp.
EXKEndeavour Silver Corp
HLHecla Mining Company

In the past seven years, the silver price has dropped significantly. We’ve seen a drop from around $35 per ounce in 2011 to about $18 today.

Understandably, this significant drop has left investors wondering if silvers undervalued? Some investors believe the answer is “yes” — but are they right?

Where does that leave us? Should you invest in silver or chase the gold? Make sure to check out our stock sectors list for stocks moving in all market conditions.

A Few Reasons Why I Like Silver Mining Stocks

A high goldto-silver ratio. In laymen’s terms, the gold: silver ratio refers to how many ounces of silver you’ll need to purchase one ounce of gold.

When we have a high gold: silver ratio, it means silver is a good buy since it is considered cheap relative to gold.

Make sure to check out our trade room where we discuss precious metals among other stocks.

Silver Is Under Valued

In fact, silver mining stocks have been for quite some time. When you look at the gold-to-silver ratio now, it stands at a staggering 1:86.

Put another way, and it means you need 86 ounces of silver to buy only one ounce of gold. If you look at the charts, you’d see that silver has been consolidating for several years and is still below all-time highs of roughly $50 per ounce.

History tends to repeat itself and the gold: silver ratios are no exception. For example, in 1942, the ratio stood at 1:97 but quickly fell to 1:43 in 1946.

In 1968 it was at an incredible 1:18. On a side note, when we considered silver money, it was at 16! In the last 20 years, the usual level was 1:60.

When we have a spike in the ratio, it is followed by a retracement back to typical levels. In other words, this shows silver is due for a retracement back to normal levels, which means the prices are going up.

Silver Is Rare

Silver is rare, and it’s not stockpiled in a warehouse. In fact, the amount of silver bullion inventory available for sale is minuscule compared to gold bullion (about 1%).

That can give silver mining stocks some great value. And we all want great value. Especially if we’re putting precious metals into our portfolio. 

Check out our stock watch lists as we put precious metals on there when the setups are there. 

Silver Is a Consumable Precious Metal

Silver is a consumable precious metal. Next to copper, silver is the most critical commodity in the industrial world. About 80% of the silver mined heads to a fabrication facility.

The metal is used in the production of technological devices such as manufacturing calculators, RFID chips, mobile phone batteries, etc.

And we all know our devices aren’t going anywhere soon, and demand will continue to rise. That means, again, the higher silver price. Next level stock training can help take advantage of any growing demand.

Will Silver Ever Be Worth as Much as Gold?

  • A common question many people ask is whether silver will ever be worth as much as gold? Unless, something happens with our economic system or fiat currency, the chances of silver being more than gold are slim. However, silver does move up with the price of gold.

Supply Deficits for Silver Mining Stocks

Did you know the silver market has been in deficit for years? Shockingly, in 2017 the shortage clocked in at 35.2 million ounces, up from 17.14 million ounces the previous year.

Needless to say, there is a silver shortage. Do you remember what happened with the palladium shortage? Before the shortage, Palladium cost around $300 per oz; today, it is worth more than gold!

There are very few silver mines – at least reputable ones that is. With only a handful worldwide, this creates an enormous investing opportunity.

How to Buy Silver Mining Stocks

  • If you want a simpler and less risky approach to buying silver mining stocks, I suggest purchasing an exchange-traded fund (ETF). An ETF offers you an easy way to gain exposure to silver without owning the actual commodity. They are very popular to trade and less risky than trading silver mining penny stocks.

The good news is that there are several silver and silver-mining funds that do a great job of tracking the metal’s gains and losses. 

One, in particular, you might want to check out is the Global X Silver Miners ETF (SIL). The SIL ETF tracks an index of global silver mining companies and provides investors access to a broad range of silver mining companies.

Now investors can sleep soundly as this fund has liquidity. With average daily volumes of approximately $2.74 million, SIL has the liquidity needed in this relatively volatile market.

Be advised, though, with 23 equities in the fund’s portfolio, the expenses are higher than a straight silver ETF.

One Silver Mining Company You Might Want to Check Out

First Majestic Silver Corp (FR.TO) is one of the fastest earning growth stocks in the silver arena.

First Majestic owns 100% of six producing mines in Mexico and is one of the few large pure silver miners. By the same token, 25 million oz. of sliver is slated for production in 2020 alone.

 Equally important, in Q3 2019, the company reported EPS of $0.04, up from $0.03 in the same period of 2018.

During the first nine months of 2019, EPS was zero, but an improvement from a loss of $0.22 in the same period of 2018. 

Final Thoughts

There is no doubt in my mind that silver is undervalued, and it’s time to chase it. Now is the time to invest and trade in silver mining stocks before the sparkle wears off. How long will silver remain a bargain? Only time will tell. 

The important lesson for today: The silver window is open. Now. Play it smart, head on over to our website for access to thousands of dollars worth of free online trading courses. And — as with so much in life — timing is everything.

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