Silver Stocks Roaring in 2022

A quality control agent examines a 2013 enhanced silver eagle silver coin at the United States West Point Mint facility in West Point, N.Y., on June 5, 2013. Shannon Stapleton/Reuters

Commentary

Inflation fears have helped remove some of the tarnish from silver stocks, putting a shine back into precious metal firms.

Silver prices surged this month, shooting up from just below $23 an ounce to over $25 an ounce.

The move was unusual for silver, which typically follows bullish movements in gold and other precious metals.

But when the market made its critical turn to the upside in early February, silver led the way and continued pushing sharply higher, while gold retested its low for the month, before finally making a firm move to join the bullish party that silver started.

Gold and silver bulls have mostly hammered home a single—but for some, very convincing—argument over the past couple of years: Central banks printing money out of thin air will inevitably lead to extremely high inflation, which will catapult the prices of precious metals—the ultimate inflation hedge—ever higher. Price predictions from long-time silver market analysts are commonly quoted in the range of $100-$200 an ounce.

The recent move marks a reversal for the fortune of silver prices which have been in decline since June.

So, if you’re bullish on silver, what’s the best investment to take advantage of rising silver prices? Well, historically, bull markets in silver have led to much higher price appreciation in silver stocks than in physical silver itself. For example, silver’s price surge saw approximately a 10 percent up move in the stock price of First Majestic Silver (NYSE: AG)—although that move was certainly helped by First Majestic’s announcement of a record-high fourth-quarter production level.

Best Silver Stocks

There are several appealing silver stocks to consider. Here are my top three picks (in no particular order) for the start of 2022.

• First Majestic Silver—This Vancouver-based mining company, which has mining properties in both the United States and Mexico, may be a good value play. Despite its pop-up this past week, First Majestic is still fairly near its 52-week low of around $10. When silver hit its 2021 highs around $28 last Spring, First Majestic was selling for more than $17 a share.
• Hecla Mining Company (NYSE: HL)—Hecla Mining has longevity in its favor—it’s been around since 1891. In addition, with properties spread across the United States, Canada, and Mexico, Hecla claims to provide more than 40 percent of the total U.S. silver production. And although silver was mostly in a slump from mid-2020 through most of 2021, over that same timeframe Hecla stock moved from a low of around $1.50 to as high as $9.00. As of March, it’s trading near $6.50, after appearing to have possibly bottomed out around a recognized support level of $5 —which represents about a 50 percent retracement of its previous long-term uptrend.
• Wheaton Precious Metals (NYSE: WPM)—Wheaton is a gold and silver streaming firm. What that means is that rather than being directly exposed to the risks of the mining business, it provides funding to mining ventures in return for the right to buy the mined precious metals at a specified price. Wheaton is sitting pretty with contracts that enable it to buy silver at an average of $5.81 an ounce through 2025. It offers a dividend yield of 1.42 percent.

There’s a good chance that the exploding inflation rate in the United States will continue to push silver prices higher. Other silver stocks you may want to consider include Newmont Mining, Endeavour Silver, and Pan American Silver.