How to Buy Silver Stocks

Investing in the stock market needn’t be about pursuing technology companies in search of the latest innovation, or investing in ‘big media’ as the economy grows stronger. It needn’t be about finding an incredible opportunity within big exchanges or large companies. In fact, for many of the world’s top investors, the bigger exchanges and more common commodities barely feature in their strategy.

Instead, they view less ‘talked about’ commodities – golds, silvers, and other mining stocks – as an interesting chance to capitalize where others aren’t. With larger companies – public companies that many thought of as ‘too big to fail’ – doing just that, investors are turning to alternative options, and in many cases these options are found in mining stocks that are tied to a valuable physical product.

For the last two years, all the talk has been about gold. It’s been the subject of trashy television ads, most of which claim your used jewelry could be worth a fortune. It’s been the talking point on most of the world’s top investment television shows. It’s been the leading feature in hundreds of magazine articles on smart investments, and for the most part, the hype has backed out in very real results.

But gold isn’t the only commodity success story of the past few years. There’s another precious metal that’s been largely ignored by the investment media – one that’s producing returns just as lucrative as those seen in the gold markets. It’s silver – a commodity that, despite not fetching as much media attention as gold – is every bit as lucrative as a potential stock investment.

The reason for this relative lack of attention may be due to silver not hitting the record highs that are seen in the gold world right now. Gold stocks are touching on the highest levels seen in many years – for some a sign that the market’s worth attention. For others, however, it’s seen as a sign of gold hitting its ‘peak’ – forcing many opportunity investors to look elsewhere for their stock buys.

Silver, however, has started performing incredibly well in the past few months. Just four months ago it saw a twenty percent value gain over as little as twenty-five days – one that’s rarely seen in the gold investment world. Silver stocks, while far from the ‘record levels’ seen by gold are seeing great returns, especially for investors that were willing to take risks when purchasing the stock.

Many mining companies split their attention and mining efforts between gold and silver, often using both as the basis of their sales output. While these are generally a sound investment, there are other options out there that may suit silver-only investors better. Many other mining companies specialize in silver mining only, making them a more focused and potentially more lucrative stock purchase.

Finding these stocks isn’t all that difficult – they’re generally listed on the larger mining exchanges, making purchase simple through a stock broker. Key players such as Hecla Mining – HL – continue to grow after stock fell in the later periods of 2008. Despite not reaching ‘peak’ levels yet, silver is a commodity that’s very much on the rebound in the stock market, making big returns a possibility.

Hecla is a full-featured mining outfit, one that specializes in silver yet maintains a smaller focus on gold mining. It’s the largest of its type in the United States, making it a market leader that is able to grow fairly rapidly in times of high demand. Despite this, it’s slightly hedged against risk, making it an investment opportunity for those that want to avoid potentially unstable ‘upstart’-type stocks.

Others in the industry may specialize in silver processing, putting them in a position where lowered demand for the metal itself may not have such a dramatic effect on valuation. One of the most well-known in this space is Silver Wheaton – a US-based company that specializes in processing metals such as silver. Relatively unhedged, this company has the potential to see very high stock earnings.

That is, of course, should the market play to its favor. When dealing with relatively unhedged stocks such as SLW, it’s important to take the long and short-term factors into account. An rise in the value of silver will help the company in the short term, but due to its lack of hedging against future shifts in the precious metal’s value, it may also be a more risky choice should the market see a downturn.

It’s also important to check that the silver mining or processing companies you’re investing in are based in politically sensible areas. Many of the world’s silver mines operate in countries where the governments aren’t exactly grounded on solid foundations. While this may not seem like a major risk, it can result in issues with production should a government rapidly change its mining policies.

Purchasing silver stocks is, like any other mining commodity investment, a risky one. However, in a world where the ‘value’ of conventional stocks is fairly debatable, precious metals such as silver are far from a poor choice. As with all stock investments, research is essential. Plan ahead and a silver mining stock could very well result in highly lucrative returns on your stock investment capital.

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