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

Money Metals Exchange and its staff do not act as personal investment advisors for any specific individual. Nor do we advocate the purchase or sale of any regulated security listed on any exchange for any specific individual. Readers and customers should be aware that, although our track record is excellent, investment markets have inherent risks and there can be no guarantee of future profits. Likewise, our past performance does not assure the same future. You are responsible for your investment decisions, and they should be made in consultation with your own advisors. By purchasing through Money Metals, you understand our company not responsible for any losses caused by your investment decisions, nor do we have any claim to any market gains you may enjoy. This Website is provided “as is,” and Money Metals disclaims all warranties (express or implied) and any and all responsibility or liability for the accuracy, legality, reliability, or availability of any content on the Website.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD extends gains to fresh seven-week highs

The American dollar is under selling pressure amid a better market mood. EUR/USD above 1.1140 ahead of several Fed’s speakers that can rock markets.

EUR/USD News

GBP/USD trades around 1.29 amid speculation of Brexit vote

GBP/USD is trading around 1.29 as speculation mounts about the fate of the Brexit deal. UK PM Johnson faces a test in parliament after securing an accord with the EU.

GBP/USD News

USD/JPY: struggles near mid-108.00s pivotal point amid weaker USD

US Dollar Index slumped to multi-month lows below 97.50. 10-year US Treasury bond yield adds more than 1% on Friday. Wall Street's main indexes look to start the day little changed.

USD/JPY News

China’s downward economic path offers no escape from its trade problems

There were no surprises in China’s GDP figures as the government portrays an economy slipping steadily lower giving little promise of improvement or support for the waning global expansion.

Read more

Gold turns flat above $1,490 as USD remains under pressure

After dropping to a daily low of $1,485, the XAU/USD pair staged a modest rebound during the American trading hours and turned flat on the day near $1,492.

Gold News

Forex Majors

Cryptocurrencies

Signatures