Of course and in general, there is supposedly a positive mirroring relationship or price correlation between silver bullion and silver mining stocks.
The close relationship between the silver spot price and the companies that mine silver may be stronger in the short-run than in the long-run because silver mine producers are often affected by many other risk reward factors than merely the price of the most shiny white metal (we mentioned many of the risks in the prior section on silver mining stocks).
In this section we are going to host and embed various price charts which convey large amounts of price data over large swaths of time. In doing so we hope to illustrate how silver mining stocks and their respective silver mining stock prices have performed vs silver bullion prices over long spans of time.
Know too, unlike gold mining stocks, there are not handy silver only mining indexes highlighted in mainstream financial markets. Because of this we will have to use GoldChartRUs’ silver 7 sentiment index and charting to garner an idea of silver mining stock performance vs silver bullion over time.
Silver Mining Share Index vs Silver Bullion
Each of the silver mining share indices 7 components are arithmetically averaged giving them an equal weighting This is used to show the current sentiment towards silver.
In general and since the data begins in 1985, silver bullion has outperformed the 7 averaged components of this index.
They include the following inputs:
CDE - FR.TO - HL - PAAS - PENOLES.MX - SSRM - WPM
Silver Spot Price
When the Silver 7 Index / Silver Spot Price ratio is falling, silver bullion is outperforming the 7 major silver mining stock inputs. The opposite is true when the ratio rises (e.g. 2001 to 2003).
Silver Bullion vs Silver Mining Stock Conclusion
When considering the asymmetric risk and reward of overall silver mining share indexes in the 21st Century, the winning asset class has been mixed.
The large 7 silver mining stock indexes we highlighted above performed well before the 2008 financial crisis, since then silver bullion has outperformed them broadly speaking.
In total summation, expertly selected silver mining stocks could possibly make up a small but yet possible outperforming portion of a sophisticated investor’s equity portfolio.
However, hard facts over the long term reflect that silver mining shares are not a prudent long-term strategic investment for most individuals reading this piece.
Physical silver bullion has a long history and a near 6,000 years of proven lasting value. In our opinion, prudent silver bullion allocations could make up an intelligent portion of investor asset allocations.
The downside of silver bullion values versus its potential upside in the coming decade make the trade of some capital for silver bullion a rather easy one for us, especially when all contributing silver value factors are considered.
There is good proven reason that many of the world’s wealthiest families have always held gold bullion to protect their wealth and estates over long spans of time.
Globally, the financial problems we face as a collective species are nearing another crescendo.
In the coming years, we believe investment portfolios without physical precious metal bullion allocations to offset losses in both financial assets and fiat currencies will suffer in value.
Especially versus those who had the wisdom to position themselves prudently with some bullion allocations especially at today’s late 2018 historic silver price levels.
Place your bets wisely, and favor the ones you can physically hold in your hands long term.