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XMFSinchiruna (27.97)

Any Silver Stock Will Do

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May 12, 2010 – Comments (14)

Any Silver Stock Will Do

http://www.fool.com/investing/general/2010/05/12/any-silver-stock-will-do.aspx

"At the brand new 52-week high for Silver Wheaton (NYSE: SLW), those shares have now advanced 700% since I prodded Fools to discover their value in November of 2008. Still my leading stock pick for 2010, its shares' 38% surge year-to-date has not reduced my expectation of further gains to come. Fools can anticipate another wildly strong quarter this week from this fixed-cost cash-flow machine."

"With all five of the aforementioned silver standouts firmly entrenched among its primary holdings, the newly launched Global X Silver Miners ETF (NYSE: SIL) is like a one-stop shop for highly prospective names in the silver mining industry (names that this Foolish early bird had to select a la carte). I've been investing in this sector for quite a few years now, and for all my exhaustive research, I've gained little advantage over the late-coming Fool who grabs some shares of this top-notch ETF."

"Let's see if I can convey just how strongly I feel about the performance potential of this investment vehicle: Of the 25 stocks presently listed among its holdings, I personally own 16 of them. Accordingly, I have added the ETF to my silverminer CAPS portfolio and marked it as one of my very top picks. I invite you to join me in the CAPS community and let this pick boost your own portfolio's score."

"I'll take it one step further and record my bold prediction here and now: This ETF will outperform the benchmark S&P 500 by at least 200% before I close my CAPS pick within the next five years."

 

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14 Comments – Post Your Own

#1) On May 12, 2010 at 5:47 PM, 100ozRound (29.70) wrote:

I feel like a kid in a candy shop. What to buy??  Hmmm...I can't decide....

 

BTW - I think 200% may be a bit conservative over the next 5 years...

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#2) On May 12, 2010 at 5:47 PM, outoffocus (23.59) wrote:

I dont know how credible this is but its very interesting.

http://www.zerohedge.com/article/first-gold-now-europe-running-out-silver

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#3) On May 12, 2010 at 5:53 PM, XMFSinchiruna (27.97) wrote:

100ozRound

I know. I like to remain conservative with my projections, just as I've always characterized my $2,000 gold target as highly conservative. If you push the mark too far, I think you alienate the readers you're hoping to help.

outoffocus

Thanks for the tip. I'll look into it.

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#4) On May 12, 2010 at 6:08 PM, rd80 (98.66) wrote:

OK  SIL green thumb entered.

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#5) On May 12, 2010 at 7:05 PM, ChrisGraley (30.25) wrote:

Buy SIlver!

It love you long time! 

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#6) On May 13, 2010 at 1:36 AM, rfaramir (29.57) wrote:

In CAPS, I was already long all of these but one, PAAS.  Thanks for pointing it out, but I sure wish I'd jumped in earlier.  In real life, I'm only long SLW and CDE.

But speaking of real buying, how do you purchase any gold or silver stocks?  You are constantly writing about them, how do you ever get a quiet period to buy? 

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#7) On May 13, 2010 at 7:17 AM, XMFSinchiruna (27.97) wrote:

rfaramir

I did all of my buying in 2004 - 2006. I simply don't touch the positions in the companies I write about. If I need to move things around, I generally do so in the smaller names that don't get mentions in my pieces.

That's not to say their aren't times when the requirements of the job get in the way of what I would consider ideal portfolio tweaking. This is a sacrifice I gladly make in order to help my fellow Fools to consider participating in what I contend will be understood by history as the only immutable bull market within a very challenging equity environment.

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#8) On May 13, 2010 at 7:18 AM, XMFSinchiruna (27.97) wrote:

:P   their --> there.

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#9) On May 13, 2010 at 8:08 AM, XMFSinchiruna (27.97) wrote:

FYI - Taseko just secured another $350 million in construction capital for Prosperity, and as they indicated some months ago they did so my selling a gold stream to Franco Nevada for 22% of LOM production. In a sweet detail of the deal, Taseko gets 2 million Franco Nevada warrants.

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#10) On May 13, 2010 at 10:11 PM, rfaramir (29.57) wrote:

Ah, now that you get to the gold miners, I've got some of those, too.  Taseko (TGB), Yamana, Agnico Eagle Mines, Eldorado Gold, and Central Fund of Canada (CEF) for just gold and silver bullion.

If only I could have bought more and earlier... 

And, everyone should take physical delivery of at least a little gold and silver to take down the fraudulent over-leveraged shorts manipulating the market.  I used http://aocsmint.com/ to get a few silver rounds with Ludwig von Mises on them. 

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#11) On May 15, 2010 at 4:48 PM, Jimmy2008 (< 20) wrote:

To Sinchi and other PM experts

In Sinchi's stock picks, there are SLV and GLD. This is very surprising to me. I always thought that there were almost no bullion in SLV and GLD.

Do SIL, GDX, GDXJ and COPX have real stocks they represent? Or, they are just derivative-based index?

I own GDXJ and SIL and am quite worried if they are derivatives.

 

Thanks

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#12) On May 15, 2010 at 6:55 PM, 100ozRound (29.70) wrote:

Do SIL, GDX, GDXJ and COPX have real stocks they represent? Or, they are just derivative-based index?

I own GDXJ and SIL and am quite worried if they are derivatives.

These actually do represent shares of companies.

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#13) On May 16, 2010 at 7:31 AM, XMFSinchiruna (27.97) wrote:

 Jimmy2008

Hi Jimmy, Don't read too much into those CAPS holdings. In the case of GLD, I'm just hoping to get back to a positive pick before closing it out, and IAU and SLV have been on there sonce 2006 and I'm just gambling on the most opportune time to exit those holdings (very soon).

In real life, I would never entertain holding any of these less attractive proxy instruments knowing what I now know... though years ago I did invest in SLV before I understood the nature of the risks.

As 100oz points out, those stock ETFs do own stocks, so you have no need for similar concerns in those instruments. I do own GDXJ in real life, and would own SIL if it weren't rendered rather a silly move by the fact that I own 16 of the ETFs holdings already. :)

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#14) On May 18, 2010 at 9:26 AM, mhy729 (34.10) wrote:

Jimmy2008 and others:

I just looked through the prospectus for Global X's Miners ETFs (including the Silver Miners ETF [SIL]) found here:  http://www.globalxfunds.com/Prospectus/Fund116.pdf

On page 21 it states the following:

ADDITIONAL INFORMATION ABOUT THE FUND’S STRATEGIES AND
RISKS
ADDITIONAL STRATEGIES
In addition to the investment strategies discussed above under Fund Summaries—Principal
Investment Strategies, each Fund may use the following investment strategies:
Derivative Instruments, Cash or Stocks not included in the Underlying Index: Each Fund
may invest up to 20% of its assets in (i) certain futures, options and swap contracts (which may
be leveraged and are considered derivatives), (ii) cash and cash equivalents and (iii) stocks not
included in the Underlying Index that the Adviser believes will help the Fund track the
Underlying Index.
Securities Lending: Each Fund may lend its portfolio securities. In connection with such loans,
the Fund will receive liquid collateral equal to at least 105% of the value of the portfolio
securities being lent. This collateral is marked-to-market on a daily basis.

------------------

Further down on page 22 you will find:

Derivatives Risk
Derivatives risk is the risk that loss may result from a Fund’s investments in options, futures and
swap contracts, which may be leveraged and are types of derivatives. Investments in leveraged
instruments may result in losses exceeding the amounts invested. The Funds may use these
instruments to help the Funds track their Underlying Indexes. Compared to conventional
securities, derivatives can be more sensitive to changes in interest rates or to sudden fluctuations
in market prices and thus a Fund’s losses may be greater if it invests in derivates than if it invests
only in conventional securities.

-----------

I must add that I am rather new to investing and to ETFs, and haven't researched how frequently ETF portfolio managers utilize derivatives to help achieve a fund's goal of index tracking.  Perhaps someone more knowledgable than I could shed some light on this.

SLW and other PM stocks have been on a tear since hitting their lows in late '08 (sorry to have missed that, as I am sure most everyone is).  Even so, I have been following many informative posts here on CAPS and elsewhere on the web, and am quite convinced that gold and silver still have quite a ways to go up.  I am sitting on a small amount of cash at the moment (have an even smaller amount in equities) and am considering buying into the PM sector (thinking about 30% of my total portfolio).  Global X's SIL seems like a very good choice for a silver play as it would give me wide exposure and limit my losses in trading commissions (yeah I'm not working with much money so those commissions are not insignificant if I were to buy stocks individually in multiple companies).  The management fee seems quite small at 0.65%.

I expect there to be some down swings, perhaps even strong ones, but for now it seems inevitable that gold and silver are to rise long-term.  My thanks to helpful CAPS bloggers (in particular TMFSinchiruna and binve) who have done much to educate me on our global financial situation, and what that means for me and my money.  Thanks guys, you guys are awesome!

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