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Wednesday October 17, 2012
ETF expert mines for silver
by Doug Fabian, editor Making Money Alert I like to diversify by investing in silver through an exchange-traded fund called the Global X Silver Miners ETF (SIL). Traditionally viewed as an alternative "safe-haven" investment, silver serves as a potential hedge against inflation and sovereign currency risk. Silver not only is less volatile than gold but it also has a number of industrial uses in manufacturing that help to maintain the precious metal's value. Traditionally viewed by seasoned investors as an alternative "safe-haven" investment, silver serves as a potential hedge against inflation and sovereign currency risk. Due to the hefty fixed costs in silver mining, the mining companies enhance their profitability rapidly when the price of the precious metal rises. The mining companies also lose share value fairly quickly when the price of silver falls. The Global X Silver Miners ETF gives investors access to a broad range of silver mining companies that should benefit from a potential rise in silver prices. Significant barriers to entry in the silver mining industry give existing silver mining companies a first-to-market advantage. For example, the majority of supply increases in 2010 came from existing mining companies that expanded their operations to meet increased demand. In addition, holding a basket of global silver miners through SIL helps reduce single-company risk, contributes geographic diversification to your portfolio and could provide additional income through dividends from the mining companies held by the fund. SIL's five largest holdings recently were: Silver Wheaton, Fresnillo PLC, Industrias Penoles, Pan American Silver and Hecla Mining. Learn more about this financial newsletter at Doug Fabian's Making Money Alert. Related articles: 
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