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Silver's Going Up But What's The Best Way To Play It?

03/05/14 02:44:13 PM
by Matt Blackman

Following its $48 high in April 2011, silver got hammered, dropping to a low of $18.51 in June 2013. Now that it's rising again, where is the best place to be?

Security:   SLV, SIL, PAAS, ASM
Position:   N/A

In my article, "Is It Time to Buy Silver?" we looked at the daily and seasonal composite charts of silver showing the recent bottoms and strongest times to be in this precious and industrial metal.

In this article we look at whether it's been more profitable to buy the silver ETF, the silver mining ETF or a single silver producer. In Figure 1 we compare how the iShares Silver Trust ETF (SLV) has preformed versus the Global X Silver Miners ETF (SIL). Since their latest bottoms, SLV is up just over 12% while SIL has rallied an impressive 34% over roughly the same period.

Figure 1 Daily chart comparing the performance of the iShares Silver Trust ETF (SLV) versus the Global X Silver Miners ETF (SIL) over the last year.
Graphic provided by:
Next we compare one of the better known silver producers — Pan American Silver (PAAS) which is up more than 43% since its bottom in December 2013.

Figure 2 Daily chart of Pan American Silver (PAAS) compared to SLV.
Graphic provided by:
Our third candidate is a company called Avino Silver & Gold (ASM) which as Figure 3 shows bottomed around the same time as PAAS in October 2013, well ahead of SLV but was up more than 108% in early March 2014.

Figure 3 Daily chart of Avino Silver & Gold (ASM) compared to SLV showing how powerfully it rallied after bottoming in October 2013.
Graphic provided by:
If you're a silver trader, it's worthwhile to set up a watchlist of silver ETFs and miners to allow for a quick analysis. I created a list using setting columns for price and volume and sorted by the Price Growth Rate 1 Year to quickly see the best performers. ASM was at the top of the list. I also added Revenue Growth Last 4 Quarters and Earnings Growth Latest Year columns to compare how companies are doing financially. Once you've created a watchlist, you'll be able to scan stocks of interest in under a minute each day.

So buying the Silver Trust ETF has not been the best way to play the latest rally; buying silver miners has been more profitable. But those willing to take on the risk of owning a single producer have enjoyed the greatest profits. The obvious caveat is to be prepared to be quick to exit when the trend changes.

Matt Blackman

Matt Blackman is a full-time technical and financial writer and trader. He produces corporate and financial newsletters, and assists clients in getting published in the mainstream media. He is the host of Matt has earned the Chartered Market Technician (CMT) designation. Find out what stocks and futures Matt is watching on Twitter at

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