Silver ETF and Miners Ready To Shine

Excerpt from our One Page Barron's Summary (receive it by email every week by signing up here):

Silver's Golden Moment By Andrew Bary

Highlighted companies: Silver ETF (SLV), Apex Silver (SIL), Coeur d'Alene Mines (CDE), Pan American Silver (PAAS), Hecla Mining (HL), Silver Standard (SSRI), Silver Wheaton (SLW)
Summary: Silver hit a 23-year high recently and has begun emerging from its longtime status as 'gold's poorer cousin.' Now at $12/oz., silver pricing has benefited from its traditional role as a hedge against inflation and from the new iShares Silver Trust ETF, which now holds $1.2 billion of silver -- the equivalent of 15% of annual mine production. Meanwhile, demand from the photography industry, which accounted for 25% of silver use last year, is falling fast amidst the digital photo boom. Given the fact that many large silver miners are in politically unstable regions such as Bolivia and Peru, many prefer buying the silver ETF -- one share equals ten ounces of silver. Individual silver companies are rather small -- the top six combined have a market cap of just $8 billion -- and tend to be volatile and highly valued as opposed to other mining companies. Apex Silver, Silver Standard Resources, and the largest silver stock -- Silver Wheaton -- are actually not producing any silver right now. Silver Wheaton is a Goldcorp (GG) spinoff that owns the rights to future silver production from that mining giant. Pan American Silver 'may be the best mining play because the company's silver output has risen every year for the past decade' and is reducing its exposure to Peru. Apex is 'hostage to the nationalist [Bolivian] government of Evo Morales,' and Coeur d'Alene is also risky because of its high percentage of Bolivian reserves.
Quick comment: The silver ETF was controversial when it launched, as many silver buyers were concerned it would artificially drive up the commodity price, but some now believe that the industrial market for the metal is just no longer there, and all price action is influenced by metals investing. London-based metals expert Roland Watson asks if the old gold/silver ratio of 16 is still alive today. Roger Nusbaum discusses taking risks with junior miners.