View Full Version : What Silver Stock to Buy?

02-04-2005, 12:36 PM
I heard that Silver is a good buy right now. Is it still? Are there any Silver related stocks that I should look into more?

I was going to buy my girlfriend some diamond earings and a diamond pendanat for Valentine's Day, costing about $800 together. She figured I might be thinking of a such a purchase and let me know that that would be a waste of money. That's when I got the idea to buy $800 or so of silver stock (it's like jewelry see) and keep until another time when she would feel better about getting an $800 gift... like our anniversary in April or her birthday in September.

I threw the personal story in there for some fluff. Feel free to comment about the validity of her saying the $800 jewelry is a waste. That's another interesting problem.



02-04-2005, 01:28 PM
Feel free to comment about the validity of her saying the $800 jewelry is a waste.

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Well, she's either very practical or she's going to dump you soon.

As for silver stock... As you probably know, precious metals are one the favorite obsessions of crackpot conspiracy theorists. If you want delusional boosterism, check out kitco.com or the finance.yahoo.com pages for PAAS or CDE. You can find plenty of people telling you that the price of silver will go to $100 an ounce.

There is some grain of truth to their arguments. Take a look at the annual report from silverinstitute.org. Long story short, for the last decade or so, more silver has been consumed than produced, with the difference coming from above-ground stores. No one really knows how much is left (one big holder is the Chinese government, which is not exactly transparent), but when stockpiles run out, there's a good chance silver will see a significant spike in price. The other part of the supply/demand story is that as digital photography replaces film, the demand for silver for film will drop off, which could balance out the production/consumption equation.

How can you profit from this? PAAS and CDE are primarily silver miners. They are also unprofitable, even with silver between 6 and 8 recently. The prices of these stocks already anticipate much higher silver prices, and unless the conspiracy nuts are right and silver does go above 10 and stays there, these stocks are not going to gain all that much.

Another option is to actually buy physical silver. This isn't an investment, really, because the transaction costs are high (shipping and ebay or dealer fees). With $800, you can buy a big 100 oz silver bar (try ebay or bulliondirect.com) or 100 1 oz coins, or a big bag of old US coins that contain 90% silver. The value of these coins is basically their silver content. They're pretty cool--I don't know how old you are, but I had never seen a Franklin or Liberty half-dollar or Mercury dime before I bought some.

So you were going to give your girlfriend stock in a silver company? I hope you were planning to sell it and buy something more romantic. My wife never really appreciates my anniversary gifts of S&P 500 index funds...

02-04-2005, 01:28 PM
Some stocks I've run into so far in order of interest: PAAS, SSRI, CDE

I'm pretty naive when it comes to commodities here. I'm looking for something like GLD but for silver.

Thanks again,


02-04-2005, 01:37 PM
Yeah, I'd like to see that too. Closest thing I've found is a closed-end fund CEF, which holds gold and silver bullion. It trades at a premium to its NAV, though.

02-04-2005, 01:44 PM
Freeport McMoran preferred D is a pure silver play although it's a little overpriced and trading at a premium. CEF as mentioned has silver but also gold. I hear a silver etf is in the works like GLD although I'm not sure when.