Silver prices increased roughly 15% in 2016, and the fundamentals suggest that much bigger gains could be ahead in 2017.
What to do when silver prices are setting up to soar?
The easiest way for investors to benefit is to go buy silver bullion, be it coins or bars. But understand that the returns may not be as lucrative as other types of investments.
Here’s what investors must know: if they believe that silver prices could soar in the coming years, they should pay attention to silver mining companies. Silver mining stocks could provide five to ten times the return over silver prices. The idea behind this is very simple: if silver prices go up by 50%, bullion will go up by that amount, most likely.
For mining companies, it could be different. If a mining company produces an ounce of silver for $10.00 and silver prices increase, its profitability improves immensely. Its stock price will reflect this as well.
One mining company that investors might want to pay attention to is Pan American Silver Corp. (NASDAQ:PAAS). It is one of the largest primary silver producers in the world.
Sources: Lombardi Letter