Summary
An example for creating your own silver miner portfolio.
This portfolio was constructed over 15 years with the goal of preparing for a silver bull market.
It includes my investment strategy that focuses on the diversification of silver assets to limit risk and maximize returns.
It explains how I utilize an allocation strategy to achieve my investment strategy.
Bet_Noire/iStock via Getty Images Introduction
There are zero silver miner mutual funds and only two silver miner ETFs (that I am aware of). Some investors either do not like ETFs or do not have access to these ETFs in their country. This article gives you an example of how to create your own silver miner portfolio.
This is my personal silver portfolio, which was constructed over 15+ years with the goal of being well-positioned for a once-in-a-lifetime bull market. I think that time has arrived. Gold has closed over $1,950 the past two weeks (which technically is a strong indication of a breakout), and I expect silver to soon close above $28.50 (another important technical level) and confirm gold’s breakout. If that breakout occurs, then silver has the potential to make a run to an ATH (all-time high) above $49.
Many investors are going to be looking at the silver miners if such a historic run occurs. This article will give you some ideas for opportunities for an alternative to silver miner ETFs.
My investment strategy has always been to reduce risk via low allocations and to maximize profit with big upside potential. My goal from the beginning was to achieve a 500% return from my total cost basis. To achieve this lofty goal, I focused on silver investments that had a minimum potential return of 300%.
For these high returns, I used future silver prices for my portfolio construction. My target has always been $100 silver, although $75 silver will likely be high enough to achieve my goals. I have always believed that $50 silver is too low a target for long-term investing. After all, we reached $49 in 2011.
So, here is my silver portfolio broken into categories and allocations. It includes an overview of how each section was constructed and any additional information that may apply. Physical Silver (8%)
This is my largest holding, with a cost basis of 8% (of my total investment portfolio). It includes 100 oz. and 10 oz. bars, plus 1 oz. coins and US junk silver (90% silver pre-1965). My average cost basis is $19 an ounce. You won’t be able to buy silver that cheap, but finding bars with a 15% premium is still possible.
Use these sources to find the lowest prices or available inventory: APMEX.com, SD Bullion, JM Bullion, Provident Metals, or Miles Franklin. Some of these companies occasionally have special sale prices, so get on their email list.
Two good alternatives to physical silver ownership are the ETF PSLV offered by Sprott in Canada, and BullionVault.com. These are good alternatives if you don’t want to store your own silver. I own PSLV and consider it one of the best physical alternatives.
My favorite bar is 10 oz. because 100 oz. bars won’t be as easy to sell when silver reaches $100 ($10,000 per bar). If you live in a country on the metric system, the kilo bar is probably the way to go. Valcambi Swiss kilo bars tend to have low premiums, if you can find them.
The reason why my physical allocation is high (at 8%) is because the risk-reward was compelling for the long term when I was stacking. The odds of silver prices rising well above $19 (my average cost basis) is very good. You will likely be buying silver at higher prices, so you might decrease your allocation. I don’t know if I would use an 8% allocation today if my average cost basis was $30 or higher. At $30, a 300% pre-tax return would require $120 silver. Miner ETFs (5%)
There are two silver miner ETFs: SIL and SILJ . I own both, with a combined cost basis position of 5%. Use these (if they are available in your country) if you want to increase your silver allocation without incurring substantial risk. This was a good alternative for me, because I don’t want to have an allocation higher than 2% for a single stock. Conversely, I don’t mind a 3% to 5% allocation in an ETF. Investment Strategy Alternative
If you are going to invest less than $100,000 in silver and are content with a 200% to 300% […]
Protected by Patchstack