Peter Krauth of Silver Stock Investor shared various strategies for getting exposure to silver as the metal continues to attract attention.
Silver remains in the limelight, and investor attention isn’t showing signs of dropping.
This increased interest in the white metal began last year, and has had numerous effects on the market, Peter Krauth, editor of Silver Stock Investor, told the Investing News Network.
Looking at demand, about 330 million ounces were absorbed by exchange-traded funds (ETFs) in 2020, while around 200 million ounces went to physical investment outlets such as coins and bars.
The silver market is approximately a billion ounces on an annual basis, said Krauth, which means that last year half of supply was dedicated to just those two types of demand.
“If you factor in all of the demand (last year), including the ETFs … there was actually a supply deficit of 250 million ounces, which is a quarter of the annual supply number. It’s really quite significant, and it’s quite the shock to hit the silver market in such a short time,” he said.
When asked how investors should play the market, Krauth noted that with premiums on physical metal quite high, it may be a good plan to get exposure via a silver ETF and then shift wholly or partially into physical silver when they are lower. His preferred vehicle is the Sprott Physical Silver Trust (ARCA:PSLV).
What about silver stocks? When looking at companies focused on silver, Krauth had two suggestions.
First, he sees opportunity in mid-tier miners with market caps of up to a billion dollars or so. “They are a little bit smaller, and if they are primary silver producers and they have good cost controls, a lot of the increase in the silver price will go to the bottom line and actually help increase profits,” he explained.
Aside from that, Krauth is interested in silver explorers. They can provide leverage, and even if the silver price isn’t moving, these smaller stocks may experience upticks due to a discovery or good drill results.
Watch the interview above for more from Krauth on what’s going on in the silver market.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.