An old saying, paraphrased, is ‘those who sell pickaxes during a gold rush will get rich’.
Currently, this axiom applies to gold and silver mining companies.
We’ve seen a big rally in Gold (GLD), Silver (SLV) and other precious metals ETFs since December.
The potential reasons for this move are myriad: among them are global uncertainty from the new Trump administration, China and India currency and political fluctuations, and U.S. Dollar and interest rate expectations.
But the bottom line is that money is flowing into precious metals and the price action is strong.
It looks like a classic ‘flight to safety’, that should have some legs.
What is the best way to profit from further moves in the yellow and silver metals?
The gold and silver miners are the outperformers and achieving the best gains — these companies are leveraged to gains in the underlying commodities.
And the best way to play this group is through a basket of stocks in an ETF, in my analysis. This lessens the overall volatility and risk compared to an individual company.
My favorite ETF among this group is not widely known… yet.
It is PureFunds ISE Junior Silver ETF (SILJ).
SILJ holds a basket of small-cap silver mining and exploration companies. The ETF has holdings in 25 stocks currently, with the top 3 holdings representing about 41% of its total assets. Those largest holdings are in Pan American Silver (PAAS), Coeur Mining (CDE) and First Majestic Silver (AG)
This ETF simply gives the biggest bang-for-the-buck on rallies in the precious metals.
I looked at relative performance over multiple recent time frames: since the December bottom in gold, year-to-date and since the S&P 500 peaked recently on January 26.
SILJ is outperforming GLD, SLV, Gold Miners ETF (GDX), Junior Gold Miners ETF (GDXJ) and Silver Miners ETF (SIL) over all of these time periods.
And in my analysis, SILJ can achieve potential further gains of 30%+ this year, or even sooner.
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