The Bullish Case for Silver

A store of value, tech component, and inverse play on base metals

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A Lack of Options

Of course, one of the biggest reasons to seek out silver right now is psychological. There is a lot of risk in the market regarding sovereign debt in Europe and the specter of devalued currencies, and that naturally sparks a run to “save haven” investments like gold and silver.

CDs yield 1.75% at best. Treasuries yield around 1.5% for the 10-year T-Note. Equities are risky and have given up their gains since January …

Where else are you going to park your money?

There always is a risk, and I certainly am not one of those precious metal nuts who believe silver is such a store of value that it can never decline or lose you money. It can, and it might.

However, it’s undeniable that the options out there aren’t so hot. So why not consider a play on silver?

How to Buy Silver

A number of options are out there for investors looking to play silver:

Physical silver: The larger iShares Silver Trust (NYSE:SLV) and the ETFS Silver Trust (NYSE:SIVR) are similar to the SPDR Gold Trust (NYSE:GLD) in that they hold the actual metal as an underlying investment. For folks who want to own physical silver but don’t want to store bars or coins, it’s a decent option.

Silver miners: The Global X Silver Miners ETF (NYSE:SIL) is the easiest way to get diversification on the miners. But if you want to dabble in specific silver-producing stocks, a short list includes Coeur d’Alene Mines (NYSE:CDE), Hecla Mining (NYSE:HL), Pan American Silver (NASDAQ:PAAS) and Silver Standard Resources (NASDAQ:SSRI).

Leveraged silver funds (For aggressive investors only): If you’re a super-aggressive investor looking for a short-term, directional bet on silver, the ProShares Ultra Silver ETF (NYSE:AGQ) will attempt to deliver twice the returns of the precious metal and the ProShares UltraShort Silver ETF (NYSE:ZSL) will attempt to deliver twice the inverse of silver so you profit as silver falls. But beware: Double the movement means double the losses when your bet turns out to be wrong. Also, the 2x relationship is anything but exact and the fees are steep, so holding these investments in the long term can cause any profits to decay, even if you are right.

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace??.com or follow him on Twitter via @JeffReevesIP. As of this writing, Jeff Reeves did not own a position in any of the stocks named here.


Article printed from InvestorPlace Media, http://investorplace.com/2012/06/the-bullish-case-for-silver-slv-sil-slw-cde-hl-paas-ssri/.

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