Diversifying a portfolio through precious metals can be done in many different ways. Investing in the metals themselves, or products derived from them, is one option to explore. Silver mining stocks, for examples, can yield some good money as well.
The Appeal of Silver Mining Stocks
Given the current price rise of precious metals, the industry appears to be firing on all cylinders. Noting such strong gains would not be possible without the companies providing core services. Mining firms are the lifeblood of gold and silver, and a fair few of them can be traded publicly.
Finding the right silver stocks to invest in, however, is a bit more complex than one would imagine at first. Before making any financial commitment, it is pertinent to note which types of stocks there are and what they represent. Investing blindly is never a smart idea, thus doing research is crucial.
Major Silver Mining Stocks
As the name would suggest, these particular types of stocks are tied to bigger silver mining operations or exploration firms, often spanning multiple active mining locations. More specifically, there aren’t that many firms that fit this category at this time.
While investing in these stocks will often yield positive results, the buy-in price may be relatively steep as well. Given the track record of major silver stocks, the room for potential profit may also be slightly smaller.
Any company capable of producing silver is worth looking into. In virtually all cases, these companies will have active mines, with potentially more in development. Depending on how much metal they can produce on a yearly basis, their market cap will be adjusted accordingly.
One thing to look out for with mid-tier producers is whether they have any outstanding debt. If the debt vastly outweighs cash reserves or yearly production, the investment becomes a lot riskier. Thankfully, most mid-tier producers will have a healthy ratio, but digging into their public finances may be worth one’s while.
Junior Silver Mining Stocks
Junior companies are the up-and-coming investment segment everyone is going crazy about. Given the current conditions surrounding the silver market, these are the companies likely to benefit the most. That trend can reflect favorably upon their stock price as well, although it is never a guarantee for success.
There are many different types of junior silver stocks to explore. This particular market segment goes well beyond the concept of producing gold. Companies currently developing their first mine(s), exploring new locations, or being labeled as “project generators” can all yield significant returns if they turn out to be successful.
The main appeal of junior silver stocks is how they are often cheaper to buy. These are also primarily companies with a market cap well below the $100 million mark. In some cases, new companies can be valued at just $2 million, with major potential for future growth. Every investment carries risks, however, including silver mining stocks.
Keeping tabs on the many gold and silver bugs is crucial before making any investments. Some of these individuals have much broader insights than others. That doesn’t necessarily improve their chances of success, but it is still worth paying attention to.
Who is Egon von Greyerz?
Gold aficionados will have encountered the name of Egon von Greyerz before. He is a well-respected individual in the financial sector, and currently serves as Founder and Managing Partner of Matterhorn Asset Management and GoldSwitzerland. This further affirms his vision on the gold and silver markets, both of which saw ample momentum in 2020 so far.
What makes Egon such an interesting individual is how he foresaw the financial crisis of 2008. Not just the crisis itself, but he warned the world about this problem years in advance. Back in 2002, he effectively recommended investors to begin diversifying their portfolio by looking closer at precious metals. During this time, gold was valued at just $300.
In fact, von Greyerz was confident that allocating up to 50% of one’s portfolio to gold and silver could pay off handsomely. He certainly got that sentiment right, as both gold and silver successfully blew up ever since. A very strong indication of why paying attention to precious metals has always been crucial.
Learning From the Past
Claiming how financial ruin is upon the world is easy. Effectively backing up those claims with evidence and information is something else entirely. Egon von Greyerz learned a lot from his previous jobs in the financial sector.
Not only did he work as a banker in Geneva, he also took the mantle of Finance Director and Vice-Chairman of a FTSE 100 company in the United Kingdom. While those companies proved successful in their own regard, it also exposed the dark side of finance to Egon. There is a lot going on behind the scenes that most people aren’t even aware of in this day and age.
Some Bold Price Predictions
One interesting comment was provided by von Greyerz in a September 2019 interview. At the time, Ego claims how silver could easily hit a value of $666. An ambitious goal, especially when considering where the price is at right now. However, nothing is impossible in the industry, for obvious reasons.
A similar bullish sentiment was uttered as far as gold is concerned. von Greyers stated how gold can hit $10,000 or more with relative ease. At the time, many people deemed this to be impossible, but the price targets aren’t as unusual as some may expect. In fact, several analysts have come out recently to offer very similar price targets, which is pretty interesting to keep an eye on.
In this modern day and age, investing in precious metals is a good idea. Some traders go one step further, and explore the silver exchange-traded products. Several key categories can be identified in this regard.
Physically Backed Products
The most obvious form of silver exchange-traded products are those that are physically backed by actual silver. Speculating on price differences is great, but one rarely has anything to hold in one’s hand. With physically backed funds products, that situation is very different.
Any fund offering such an option often has ample reserves in physical silver. Whether it is bars or coins, their portfolio of net assets are precious metals. A part of it will be cash, to offer some liquidity in case a rebalancing procedure is required due to changing market conditions.
Trading physically backed funds can be done with ease. Several different products can be explored, depending on one’s region. Some of the more famous names include Julius Baer Physical Silver Fund, Sprott Physical Silver Trust, and iShares Silver Trust.This latter one has millions of troy ounces of silver under management.
Another popular option, albeit a far riskier one, is to invest in leveraged ETFs. These silver exchange-traded products can be denominated in either silver, gold, or other precious metals. Investors will leverage their position when they go long or short, depending on how they evaluate the current market sentiment.
Dealing with leveraged positions is always a major risk. If the market evolves in the right direction, big profits can be generated. When the market heads south, however, the losses will be a lot steeper. Investing in these types of silver exchange traded products is not advised for newcomers or people who trade based on emotions.
ETFs Based on Futures
Exploring futures contract trading for silver and gold can be another valuable option. This requires a lot of market insight as one speculates on the price of said commodity month(s) in advance.
Given the sentiment for both silver and gold in 2020, a bullish outlook remains in place. However, blindly investing in futures and expecting the market to remain bullish may not be the most solid strategy either. Always conduct proper research before making any financial commitments.
Albeit the following investment options are a bit out of the ordinary, they can still yield significant results. When looking into silver exchange traded products, the performance tracking indexes are crucial. Different forms exist, as some will track a specific sub-Index, whereas others track silver mine stocks, for example.
In recent years, these indexes have become more popular. That is only normal, as they represent the silver industry on a much broader level .
Thomas Puppendahl is one of those gold bugs who tends to strike a chord with a lot of people. His expertise in the investment sector and global capital markets is put to good use when discussing precious metals.
Who is Thomas Puppendahl?
Thomas has started his career as an analyst in the M&A division of Merrill Lynch in London. Being part of such a vast financial firm at an early stage will often provide invaluable insights into finances and markets. Puppendahl worked on major international deals spanning numerous industries, and became of key value during the 1998 Asia crisis.
His stint in the M&A segment did not end there either. The second major job, for Emgassen & co, revolved primarily around cross-border merger and acquisition transactions. By looking at the bigger picture of the financial sector, Puppendahl eventually made his way into the precious metals industry.
One of the reasons why his ideas are so highly regarded is due to their contrarian nature. Having out-of-the-box ideas in the financial sector is not always appreciated, but it doesn’t make one wrong either. Over the years, Thomas’ contrarian vision on finance has allowed him to become very successful.
Thomas Puppendahl and Precious Metals
Being an active trend watcher in the precious metal sector for 15 years yields a lot of insights. For Thomas, it has become his specialization in recent years. Because of this “shift” in focus, he also became the co-founder of a gold streaming and royalty company based in Singapore.
This latter venture is very intriguing, as it provides development capital to emerging gold producers. Over the past few decades, numerous new entrants have popped up in the precious metal industry. Without an adequate amount of funding, most of these companies would no longer exist today.
He went as far as claiming how the bull market will become a lot more violent, at least for precious metals. Under normal circumstances, that isn’t the best sentiment, but given everything that transpired in 2020, it may just come true.
Clarifying this sentiment, he confirmed that the next three years will see ample market momentum. Both gold and silver will benefit from these trends.
Not only will gold reach a value of $5,000, but silver will push to $50. That latter part is not unlikely, when keeping an eye on the silver-gold ratio. It seems to hover near the 100 mark on a regular basis. If gold surges, so will silver, and it will have 1/100th of the price.
Time will tell if this is indeed the early stage of the bull market for precious metals. Assuming this outlook comes true, the next 36 months will become incredibly entertaining. Keeping a close eye on all markets may prove worthwhile.
Many individuals have expressed their support for precious metals over the years, Rick Rule has proven to be an individual worth keeping an eye on, His predictions and opinions on both silver and gold tend to strike a chord with a lot of people.
Who is Rick Rule?
People unfamiliar with the name may be interested to know that Rick Rule is currently the President and CEO of Sprott US Holdings. Prior to that, he worked in the securities industry since 1974. In the early years of his full-time career, the focus shifted to natural resource security investments. It is this approach that ultimately drove him in the arms of precious metals, such as gold and silver.
Early on, Rule saw a lot of potential in resource investing. More specifically, he was very quick to identify the potential of mining, water utilities, agriculture, and energy.
All of these segments are crucial to most day-to-day business operations, and investing in them is certainly possible. After all, without the proper infrastructure, corporations can’t do much, let alone make money.
Meeting Rick in real life is equally possible, as he is a frequent speaker. Finding him at industry conferences, or even on the radio or television, is not that difficult in this day and age. His opinions and expertise are valued very highly in the industry.
Rick Rule on Silver
Having a strong opinion on different industries will often yield to some bold predictions. When it comes to the silver market, Rick Rule hasn’t shied away from expressing his sentiment at certain times. Just six months ago, Rick claimed how the supply and demand equation for silver could get a lot more complex than most people may think.
In the same video, Rule also hinted at how the coming months could yield some bullish momentum for the silver market. Although he couldn’t predict the COVID-19 outbreak, silver has proven to be incredibly resilient. Value-wise, it has performed as well as anyone could have wanted. There is still more room for a bigger uptrend, but it is difficult to make any adequate predictions in this regard.
Preparing for the Future
Most industry analysts and experts want to inform onlookers and investors as to what decisions to make. Rick Rule goes one step further, as he recently published a video on when to exit gold and silver stocks. It seems now is not the time to do so yet, but things may change significantly over the next 15-18 months.
While some people may not want to think about exiting their positions, it is unavoidable. No market can keep going up forever, thus preparing for what has to happen is never a wasted effort. Following anyone’s advice blindly is never a smart decision, but some of Rule’s remarks should be taken into account.