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By Market News Video Staff, Monday, February 21, 1:59 PM ET
Silver as an investment vehicle has often been overlooked in favor of gold. While the SPDR Gold Trust exchange-traded fund (AMEX:GLD) has increased 23.7% in the past twelve months, the corresponding silver exchange-traded fund (AMEX:SLV) has skyrocketed 113.3% in the same time period. In addition to uses in jewelry and as a hedge against inflation, silver is a key component in photovoltaic panels, which means industrial demand for silver is set to increase further as power companies up their utilization of solar energy. Also, China, which has historically been a net exporter of silver, imported a full 14% of global silver production in 2010. In addition to buying silver or stocks in a silver exchange-traded fund, shares in silver-mining corporations offer another an appeal way to maximize value and capture the upside of other complementary base metals while avoiding the trademark volatility of the silver market.
In terms of past performance, Silver Wheaton (NYSE:SLW) is up 150.1% in the past year, outperforming the overall silver market. The company’s share performance in 2011 (0.4%) leaves something to be desired, however, Silver Wheaton closed trading on Friday with one-day gains of 6.6%. The silver miner’s stock is currently at $39.19, which is slightly off from its 52-week high of $42.34.
A recent strong-performing newcomer is Vancouver-based Silvercorp (NYSE:SVM). The Canadian mining company has extensive operations in China and capitalizes on rock-bottom operating costs in the Middle Kingdom. The company’s ADRs are up 99.7% in the past twelve months after only listing in New York in October 2009. In 2009, a period of bullish commodity prices, according to company documents, Silvercorp netted $27.3 million on revenues of $83.5 million, giving the company a net margin of 32.7% for the year. Silvercorp is the largest silver miner in China, which gives the company an excellent opportunity to capitalize on the PRC’s seemingly limitless appetite for silver. The company also has operations in Canada and is also lists in Toronto.
Pan American Silver (NASDAQ:PAAS) was the laggard with gains of “only” 74.5% in the past year. Currently trading at $37.82, stock in the world’s fourth-largest silver miner is still somewhat off from its peak in $42.53 in March 2008. With operations mainly in South America, specifically Peru, Mexico and Argentina, Pan American is largely seen as a high-cost producer.
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