Why You Must Research Silver Miners Carefully
Now is an excellent time to consider purchasing shares in quality silver mining companies. The price of silver is down nearly 60 percent from its 2011 peak of $48/ounce, and silver mining shares are down as much if not more. Many silver mining stocks are pricing in a disaster because these companies simply cannot turn a profit at $20/ounce silver. But because of this, the price of silver has to rise or else there will be no profit incentive to produce this vital commodity.
However, before buying shares in a company because it calls itself a silver miner or has the word “silver” in its name, do some research first — you may not be getting as much exposure to silver as you expect! The fact of the matter is that silver is, more often than not, mined as a by-product of other metals (e.g. copper, nickel, gold, zinc, and lead), and “primary” silver mines can often get just 60 percent to 70 percent of their revenues from silver.
This isn’t bad in itself, and these companies can do extremely well. But if you want exposure to the silver price you need to make sure you are getting it. Here are a few examples of so-called “silver miners” that have significant exposure to other metals.