Silver Producers/Silver Streamers
Trader Scott’s Market Blog
November 29, 2016
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There were some comments from our great readers about doing some research about some silver stocks which were confusing and I need to clarify. My original reply was: “ First of all, FYI – SIL is a big ETF for silver miners. And I’ll give you a list – I am not recommending any of these. But, I do own one of these. SLW, AG, PAAS, EXK, and MUX has a lot of exposure to silver. These are the bigger silver miners. There are also juniors, but that’s out of my realm. Maybe someone else can help with that. There aren’t a lot of pure silver miners, relative to the gold miners.”
To which Jon clarified: “Scott, check out Adam Hamilton’s recent post on goldseek.com. from last Friday. AG, PAAS, and FSM are the largest pure silver producers (SLW is a streamer so no upside for increased production). He gives a breakdown of all the miners held in SIL with AISC, earnings,and other data. Most of the SIL holdings are primary gold producers. Thanks again for your blog!”
And Jon is completely correct. I was mentioning a few of the bigger market capitalizationsilver stocks which I might be more interested in and I actually like the diversity (non pure silver aspect) of SIL, There are a few other bigger silver focused stocks, but this is a start. However, there aren’t a lot of pure silver producers. In fact, there are a lot of gold “producers” who produce quite a bit of silver also, like MUX. And SLW (“Silver” Wheaton) is also involved in gold, etc. So this wordiness is why I decided to do a post about all of this, as my comment was confusing.
First, SIL is the largest “silver” ETF. And while it is certainly more geared towards silver relative to a GDX, it has companies in it which do more than just silver. And I actually like that about it. For instance, SIL has companies in it which have copper operations. And since my belief wasin January (and still is) 2016 is the secular bottom in commodities, and I’m trying to diversify into all commodities into the selling waves this year and early next year. So we have these PM miners which are involved in other operations, like Newmont Gold which actually has copper operations. And the gold miners ETF GDX has Silver Wheaton as one of its’ top holdings. As to SLW, it doesn’t actually produce the metal, it “lends” capital to miners and then is entitled to a part of the production. Here is an explanation. And there are those who think this is a great business model, and there are those who think it’s dangerous. Rob McEwen, who is a very respected mining exec, is not fond of the royalty streaming business model. FNV and RGLD are two more big streamers. I am agnostic on the subject and actually like some of the diversity which each of these options offer. And here is the article by Adam Hamilton which Jon mentioned. It’s a good read.
So to wrap up this mess, I do own silver. But I do not own any royalty streamer, nor any “pure” silver producer – yet. My strategy in this time frame remains the same – slowly accumulating (bigger picture) silver itself and the gold miners, but only into the extreme selling waves. And doing some trading within these areas.
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day.Scott returned to markets over fifteen years ago where he continues as an independent trader.