With volume in the iShares Silver Trust ETF seeing one of its biggest days ever in Monday’s trading session and a recent surge in the price of silver to the highest levels since February 2013, this precious metal has quickly become a focus for both traders and investors alike. While silver has a history of extreme price moves, there are several reasons why both the commodity and companies that offer exposure to the precious metal are worth a look in February and beyond.
Many investors view silver as a means of hedging against inflation or periods of economic uncertainty. It’s also a precious metal that will play a big role in President Joe Biden’s Green New Deal efforts, as it is one of the best conductors of electricity and heat and can be used in things like solar panels and batteries. Individual investors are even rushing out to buy the physical metal, and many retail silver marketplaces are currently having difficulties keeping up with the demand. There are plenty of great reasons supporting the idea that silver could have a strong 2021, which is why we’ve put together a list of 3 silver stocks to watch in February.
1. First Majestic Silver
One of the most common ways that investors look to add exposure to silver without actually buying the precious metal is by investing in silver miners like First Majestic Silver Corp (NYSE:AG). This Canada-based company is involved with the production, development, exploration, and acquisition of mineral properties with an emphasis on silver production. The company owns three silver producing mines in Mexico; the San Dimas Silver & Gold Mine, the Santa Elena Silver & Gold Mine, and the La Encantada Silver Mine.
While some of the company’s silver production took a hit in 2020 thanks to government-related shutdowns in Mexico, First Majestic Silver still reported silver production of 11.6 million ounces in FY 2020. In Q4, the company saw its total production increase by 5% over the prior quarter to 5.5 million silver equivalent ounces. Keep in mind that this stock is highly speculative, and has risen over 54% year-to-date. The company even issued a special notice last week stating “First Silver Corp wishes to confirm that it is not aware of any material, undisclosed information related to the Company that would account for the recent increase in the market price and level of trading volume of its ordinary shares.”
2. Pan American Silver
Next up is Pan American Silver Corp (NASDAQ:PAAS), another silver miner that has operations in Mexico, Peru, Canada, Bolivia, and Argentina. This is one to watch in February as its share price is correlated to the price of silver, which could continue to rally throughout the month. Pan American Silver stock also offers investors a 0.86% dividend yield and the company recently boosted its dividend payout by 40% back in November to $0.07 per common share.
A recurring theme among silver miners last year was the impact of the pandemic on their operations. Pan American issued preliminary 2020 production results a few weeks back which fell below the company’s previously issued guidance range. The company reported that FY 2020 consolidated silver production was 17.3 million ounces compared to the guidance range of 18-19 million ounces. With that said, Pan American Silver Corp also stated that it is expecting a 35% increase in silver production relative to 2020 and record gold production in 2021, making this a stock to watch in February and throughout the year.
3. iShares Silver Trust
If you are looking for a way to take advantage of rising silver prices without actually buying physical silver, the iShares Silver Trust ETF (NYSE:SLV) is a nice option. The purpose of this exchange-traded fund is to reflect generally the performance of the price of silver. With over $14.8 billion total assets and an impressive 2020 performance for the ETF, it’s one of the most well-known options for investors that are interested in silver exposure. It also helps investors that want silver in their portfolio to avoid some of the risks associated with the silver miners.
Keep in mind that this ETF has a 0.5% expense ratio, which can eat into some of your gains over time if you are a long-term holder. Additionally, the 10-year performance of iShares Silver Trust is somewhat concerning, as it is down 2.04% over that timespan as of this writing. With that said, additional economic stimulus and the potential for prolonged economic weakness both make the iShares Silver Trust ETF worth watching going forward.Leave a comment