Just like gold, silver is considered a safe-haven metal - people often revert to trading silver and investing in silver stocks in more turbulent times. While more people invest in gold, silver often outperforms gold because it’s a smaller and more volatile market.
Demand for silver appears solid given its use in electronics and batteries. More than half the annual global demand for silver is down to its use in technology and industry.
In 2020, global demand for silver decreased to 896.1 million ounces from 995.4 million ounces in 2019. The most significant drop in consumption came from the silverware and silver jewelry segments. But the market saw higher demand from investment in silver coins and bars, according to the latest supply and demand report by the Silver Institute.
The performance of silver stocks is directly affected by the performance of silver. Let’s find out who are the biggest winners from the potential rise in silver price and the top three silver stocks to watch.
Silver for green initiatives
The arrival of new ‘green companies’ and existing businesses becoming more environmentally friendly could increase demand for silver, causing prices to rise in the near future and longer term. Silver is a vital component in solar energy panels and rechargeable batteries.
This isn’t just about greener startups. Governments are implementing green initiatives, leading to billions of dollars flowing into the sector.
Best silver stocks to watch
What factors should you consider when making a silver mining stocks list? Look at the company’s financial performance and cash flow - assess the best silver stocks to invest in from a fundamental perspective. Study quarterly earnings and the latest company news. You should consider any technical analysis, evaluating a stock’s price performance via technical indicators, for example, RSI (relative strength index) or MACD (moving average convergence divergence). Both indicators will help you spot potential price changes in stock you’re looking to trade.
More investors and traders are asking if now’s a good time to buy silver shares. Silver prices have been on an uptrend since April 2021, trading at $27.76 at the moment of writing (4 June 2021). Here are the top three silver stocks to consider trading right now.
First Majestic Silver Corp
Founded in 2002, First Majestic Silver Corp (AG) is a Canadian-based company with silver mines in Mexico. It has seven producing mines under its control.
AG’s share price is about $17 (as of 4 June 2021). The stock has traded within a tight range for several months. It might take time for the stock to break through the $20 resistance level, something that hasn’t happened since February. AG is making strategic investments that could increase the company’s share price in the near future, such as recently investing in Blackrock Silver.
How is First Majestic Silver Corp different from other silver stocks? It’s one of the best silver stocks with dividends - quarterly dividends of 1% of First Majestic Silver Corp’s net revenue is delivered to stockholders. This bullish sign is likely to attract more investor interest, especially if the price of silver continues to rise.
Pan American Silver
PAAS stock has experienced significant recent growth. Stock in the Canada-based company was $11.77 in March 2020. It’s currently holding strong above $30, and recently broke the 200-day moving average.
The majority of PAAS revenue comes from La Colorado, its mine in Mexico. Pan American Silver also benefits from low operating costs and a strong cash flow. The stock has been quite volatile recently, but the company still remains one of the strongest silver plays to consider. PAAS points out that COVID-19 has affected its operations considerably.
Pan American Silver has 27 years experience operating mines in Latin America. It owns mines in Mexico, Peru, Canada, Bolivia and Argentina. The stock didn’t have the best Q1 2020, but SeekingAlpha views it as a “dip buy.”
It shouldn’t surprise anyone to see Hecla Mining (HL) on a silver mining stocks list considering that it’s one of the largest and most established silver mining companies in the United States, founded in 1891. Hecla Mining is also a player in gold and base metals. The company employs over 1,600 people worldwide.
Hecla Mining is a solid silver momentum play. The company produces a third of all of silver in the United States. As long as analysts are bullish on silver, Hecla Mining will likely remain a stock to hold.
One reason why HL is one of the best silver stocks to invest in is the Lucky Friday mine. Located in northern Idaho, the mine contains deposits of silver, lead and zinc. In 2020, the mine produced about 2 million ounces of silver, a number expected to almost double in 2021 as the company aims to produce from 3.4 to 3.8 million ounces of silver.
HL stock was $1.66 a share on March 20, 2020. A year later in March 2021, it hit $6.50 a share. Hecla mining stock is currently trading at around $9.11 (as of June 4 2021), slightly down on its 52-week high of $9.44. RBC Capital lists HL as a buy, setting a price target of $10.
Three silver stocks to buy now: final thoughts
The price of commodities may continue to rise as traders seek to hedge against inflation - silver is up more than 70% since 2020. Many analysts believe that the price of silver has room to rise.
According to Max Layton, managing director of Commodities Research at Citi Global Markets: “The pandemic resulted in a major decrease in US real interest rates, and a shift in allocations out of wealth and household savings into gold and silver. This more than offset the weakness in industrial consumption, and continues to do so.”
You should always consider technical analysis and market news before figuring out the best silver stocks to invest in. Investors might have a list of their top five silver stocks to buy, only to discover that the company was devastated by the coronavirus pandemic, and doesn’t have the cash flow to survive or make strategic acquisitions.
Be sure to follow the latest silver news at the Capital.com Youtube channel, where we offer silver market recaps, outlooks and latest market analysis. Don’t forget that you can always trade silver and silver stocks with CFDs, and speculate on their ups and downs.